REG - Gaming Realms PLC - Annual Results 2023
02/04/2024 07:00
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RNS Number : 8922I Gaming Realms PLC 02 April 2024
02 April 2024
Gaming Realms plc
(the "Company" or the "Group")
Annual Results 2023
26% increase in Revenue and 29% increase in Adjusted EBITDA(1 ) in Record
Year
Gaming Realms plc (AIM: GMR), the developer and licensor of mobile focused
gaming content, announces its annual results for the year ended 31 December
2023 and Q1 highlights for 2024.
Gaming Realms' strategic focus on content licensing has driven strong revenue
growth and high margins, expanding in both existing and new markets. With a
strong pipeline of upcoming games and operator partnerships, the Company
expects continued growth in 2024.
2023 Financial Highlights:
· Revenue increased by 26% to £23.4m (2022: £18.7m)
o Licensing revenue increased by 33% to £19.9m (2022: £14.9m)
o Social publishing revenue fell by 5% to £3.5m (2022: £3.7m)
· Adjusted EBITDA increased by 29% to £10.1m (2022: £7.8m)
· EBITDA of £9.2m (2022: £7.4m)
o Licensing segment generated £11.3m EBITDA (2022: 8.0m)
o Social publishing segment generated £0.8m EBITDA (2022: £1.5m)
o Head office costs were £2.9m (2022: £2.0m) and excluding share option
and related charges were £2.4m (2022: £1.8m)
· Profit before tax for the year increased by 47% to £5.2m (2022:
£3.5m)
· Year-end cash balance increased to £7.5m (2022: £2.9m), with
the Group remaining debt free
2023 Operational Highlights:
· Portfolio of proprietary games on the Group's remote game server
("RGS") grew to 75 (2022: 65)
· Granted iGaming Supplier Licenses in West Virginia, Sweden and
Greece
· Launched in the regulated market in Portugal
· Launched with 44 new partners for Slingo Originals content
including Bet365, Beltclic, OLG (Provincial Lottery in Ontario) and PENN
Entertainment in New Jersey, Michigan and Pennsylvania
· Signed licensing deals with Tetris, Relax Gaming for Money Train
and WMG for Fowl Play, a leading slot game in the Italian market
· Increased unique players in the licensing business by 24%
· Launched Slingo Space Invaders and Tetris Slingo, collaborating
with two iconic game brands
· Gained ISO27001 certification, an internationally recognised
standard for managing information security
· Continued investment in our proprietary RGS platform with the
launch of Free Rounds product
· Grew the 4ThePlayer library of games distributed on our network
to 7 (2022: 3)
Q1 2024 Highlights:
· A promising start to 2024, with revenue in line with management
expectations, driven by our core content licensing business showing a 20%
increase in the first two months of the year compared with the same period in
2023
· Launched with 14 new operators including Livescore and DAZN in the
UK, Bet365 in Ontario and Entain in Spain
· Released three new Slingo games, including China Shores Slingo
and Slingo Capital Gains
· Signed distribution agreement with Playtech which will lead to
greater distribution and new market launches
1 EBITDA is profit before interest, tax, depreciation and amortisation and is
a non-GAAP measure. The Group uses EBITDA and Adjusted EBITDA to comment on
its financial performance. Adjusted EBITDA is EBITDA excluding share option
and related charges and adjusting items, which are significant, non-recurring
items outside the scope of the Group's ordinary activities.
Summary:
In North America, our strategic initiatives yielded a 26% increase in content
licensing revenues in 2023, underscoring the popularity of our Slingo games
with our partners and their players. This growth mirrors our achievements
outside North American markets, where we experienced a 33% growth in content
licensing last year, highlighting our global appeal.
Outlook:
Looking forward, the Group is well placed to deliver further growth in new and
existing markets. The launch in the regulated Portuguese market in Q3 2023,
along with securing licenses for West Virginia and Greece, signifies our
ongoing commitment to increasing our distribution and market
diversification. With 14 new partners already launched in 2024, together
with three new Slingo games, the Board is confident in the Group's strategy
and expectations for the rest of the current year.
Commenting on the Group's performance, Mark Segal, CEO, said:
"I am delighted to present another record year for Gaming Realms. Driven by
the growing demand for our Slingo portfolio in the international igaming
markets, revenue grew by 26% with adjusted EBITDA growing 29%. This
demonstrates the operational leverage driven by our content licensing
business.
"We are now licensing our games into 20 regulated markets and have launched
with 44 partners in the year and have 75 live games which demonstrates the
scale of our content licensing business.
"We have had a promising start to 2024, having already launched with 14 new
partners and our new Slingo games, such as Slingo Hot Roll and China Shores
Slingo, driving new players to Slingo. With this momentum, we are excited to
continue delivering further game launches, new partner deals and, with planned
launches in West Virginia and Greece, expanding our global footprint even
further."
An analyst briefing will be held virtually at 09:30am today. To attend, please
email gamingrealms@yellowjerseypr.com
(mailto:gamingrealms@yellowjerseypr.com) .
The Company also notes that it will be hosting an online presentation to
retail investors on Tuesday 09 April at 10:00am. Those wishing to join the
presentation are requested to sign up to Investor Meet Company for free and
add to meet Gaming Realms via:
https://www.investormeetcompany.com/gaming-realms-plc/register-investor
(https://www.investormeetcompany.com/gaming-realms-plc/register-investor)
Enquiries
Gaming Realms plc 0845 123 3773
Michael Buckley, Executive Chairman
Mark Segal, CEO
Geoff Green, CFO
Peel Hunt LLP - NOMAD and joint broker
020 7418 8900
George Sellar
Lalit Bose
Investec - Joint broker
020 7597 4000
Bruce Garrow
Ben Farrow
Lydia Zychowska
Yellow Jersey PR 07747 788 221
Charles Goodwin
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. As the creator of a variety of Slingo(TM), bingo,
slots and other games, we use our proprietary data platform to build and
engage global audiences. 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
As we reflect on another record year, it is with a sense of achievement and
optimism that I present the Chairman's Statement for Gaming Realms for the
year ended 31 December 2023. Despite the challenges posed by a dynamic market
environment, our Company has demonstrated resilience, innovation, and
strategic foresight, cementing our position as a leading games studio in the
international regulated igaming market. During the year, our platform
handled wagering of £5.5bn vs £4.7bn in the prior year.
Financial Performance Highlights
In 2023, Gaming Realms achieved significant financial milestones, reflecting
our commitment to delivering sustainable growth and shareholder value. Our
revenue saw an impressive increase of 26% to £23.4m (2022: £18.7m), driven
by strategic expansion, innovative product launches, and engagement with our
partners. Adjusted EBITDA improved markedly to £10.1m (2022: £7.8m), up 29%
from the previous year, highlighting our operational efficiencies and prudent
cost management.
Profit before tax reached £5.2m, a testament to our robust business model and
the effectiveness of our strategic initiatives. Our balance sheet remains
strong, with a healthy cash position of £7.5m (2022: £2.9m) and no debt,
ensuring that we are well-placed to pursue future growth opportunities and
navigate any market uncertainties.
Strategic Achievements
2023 was a year of strategic advancement for Gaming Realms. We expanded our
footprint in key markets and launched new gaming titles that have been met
with enthusiasm by players globally. Our focus on new engaging mechanics for
our Slingo category of games has allowed us to capture new segments of the
market and drive user engagement to unprecedented levels.
Partnerships have been central to our strategy, and this year we have forged
significant collaborations with industry leaders, expanding our distribution
channels and enhancing our product offerings. This has allowed us to grow in
all our key markets. Our commitment to responsible gaming and sustainability
has also been a priority, as we continue to invest in technology and
initiatives that promote a safe and ethical gaming environment.
Looking Back
2023 completed five years of remarkable progress for Gaming Realms, with an
adjusted 2019 EBITDA loss of £0.3m improving annually to an adjusted EBITDA
surplus of £10.1m in 2023. This is principally as a result of the 48%
compound growth rate in our licensing revenue, a growth from £4.1m in 2019 to
£19.9m in 2023.
Looking Ahead
As we look to the future, Gaming Realms is positioned for continued success.
The investments we have made in technology, talent, and market expansion set a
solid foundation for growth. We remain committed to innovation, with several
exciting new products in the pipeline that promise to redefine the gaming
experience for our users.
Our strategic focus for the coming year will be on expanding our international
presence, while growing in our existing markets, as well as delivering an
innovative Slingo roadmap. We will also continue to prioritise our social
responsibilities, ensuring that we contribute positively to the communities we
serve.
Acknowledgements
On behalf of the Board, I extend our thanks to our employees, whose
commitment, creativity, and hard work have been instrumental in our
achievements. I would also like to thank our shareholders for their continued
trust and support.
As we move forward, we do so with confidence, guided by a clear strategy and a
commitment to excellence. I am optimistic about the future of Gaming Realms
plc and look forward to sharing our continued progress in the years to come.
Michael Buckley
Executive Chairman
Chief Executive's Review
Introduction
The Group continued its strong momentum in 2023, increasing revenues by 26% to
£23.4m (2022: £18.7m), and Adjusted EBITDA before share option and related
charges and adjusting items by 29% to £10.1m (2022: £7.8m). We continue to
expand our Slingo Originals game portfolio, which grew by 10 games and now
stands at 75, as well as producing bespoke games for our partners. We are
investing in our proprietary Remote Game Server "RGS" platform to ensure it
scales with the business into new markets and with new operators. Continuing
to innovate around our unique Slingo IP and RGS will allow Gaming Realms to
deliver on its strategy and continue its impressive growth.
This strong performance was driven by revenue growth of 33% in our licensing
business to £19.9m (2022: £14.9m) as a result of the increased demand for
our Slingo content. The combination of growing the distribution of our games
via our RGS, close control of overheads and the operational leverage of the
Group led to the licensing business achieving a 58% Adjusted EBITDA margin.
Licensing business
The focus of the Group remains to deliver growth in its content licensing
business. The continued expansion of our Slingo portfolio and growth in
distribution through more operators in Europe and North America underpinned
our performance throughout the year. Content licensing revenues grew 30% in
2023 and we increased unique player numbers in the year by 24% to 5 million
(2022: 4 million).
During the year, our library of proprietary games increased to 75 and we went
live with 44 new partners, all of whom licensed the Company's Slingo Originals
content. This illustrates the strong demand for our gaming content and our
ability to offer something different to the rest of the market with our unique
Slingo format. We have been able to launch bespoke games with operators which
has allowed our portfolio to increase its promotion. Slingo has also become
its own games category, which has been a great asset for our partners in their
promotions and marketing.
Some of the most notable games released during the period included Slingo
Cleopatra with IGT, a partnership with one of the leading suppliers of online
and land-based casino games, and two of the largest video game brands with
Slingo Space Invaders and Tetris Slingo.
Our distribution business, where we are launching third-party slots, which
complement our Slingo offering, grew in the year with 4ThePlayer and we also
produced the first two games in partnership with ReelPlay. This is allowing us
to utilise the wide distribution on our platform to take market leading slot
games into the US market. We are encouraged by the launch of 4ThePlayer and,
together with games from ReelPlay, expect to see this area of the business
grow.
North America
2023 was the year when we consolidated our position in the US and Canada, with
our content licensing revenues from these markets growing 26% to £8.1m (2022:
£6.4m). We have been able to launch with operators over multiple states
including Pokerstars launching in three markets, Caesars Entertainment in four
markets and PENN Entertainment in five markets.
In March, we launched with our second Canadian lottery when our games first
went live with the Ontario Lottery and Gaming Corporation.
We also continued to launch more content in New Jersey, Michigan and
Pennsylvania as we grew in these markets. We still expect to gain a higher
market share in Michigan and Pennsylvania, where we have 37 and 27 games live
respectively, compared to the 65 games live in New Jersey. Ontario is
continuing to grow quarterly, and we ended the year with our record month in
that market.
We have also seen great success with our bespoke games in North America. This
has been led by our Slingo Red Wings game which BetMGM is using to acquire and
retain players off the back of a promotion with the Detroit Red Wings.
Europe
Our growth in Europe has been a combination of launching with new partners and
growing with existing ones. We have taken existing partners into new markets
and we have launched Slingo content with 888 in Italy and Romania. We have
also launched with market leading partners including Bet365 in the UK, Fortuna
Group in Romania, Mr Green in Denmark, Sweden and Spain and with Betclic in
Portugal.
Revenues in Europe increased 33% to £10.5m in 2023 (2022: £7.9m) with
increases in all our key markets of the UK, Italy, Spain and the Netherlands.
We are still launching with new partners in these markets as we expand the
audience of Slingo games.
In December 2023, we obtained our supplier licence in Greece where we expect
to go live with our first partner shortly. This follows launching in the
regulated Portuguese market in the third quarter of 2023.
Social
Our social business remains a key part of our activities as we bring the
Slingo games to a wider audience. Revenue from social decreased by 5% to
£3.5m (2022: £3.7m) whilst EBITDA reduced to £0.8m (2022: £1.5m). Social
continued to make a cash contribution to the business.
Post Period End and Outlook
We continue to deliver on our clear strategy and 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
I am pleased to see that Gaming Realms has continued to grow in the year to
date, with content licensing revenues up 20% in the two months post-year-end
compared with the same period in 2023. We have launched three games so far
this year, including China Shores Slingo and the launch of Slingo Constitution
Hill for the Cheltenham Festival and have gone live with 14 new partners.
The early indicators for 2024 are promising, with growth already observed in
the initial months and, with a robust pipeline of opportunities, we are poised
for continued success.
Mark Segal
Chief Executive Officer
Financial Review
Gaming Realms had another strong year in 2023, continuing to deliver on the
Group's core strategy of scaling the licensing business through entry into
newly regulated jurisdictions and enhancing the unique Slingo games
portfolio.
The Group delivered record revenue and EBITDA, while also converting this
performance into cash, ending the year with a cash balance of £7.5m (2022:
£2.9m).
We have also continued to invest in the future success of the business, with
increased development spend on the Group's platform, distribution reach and
pipeline of games content.
Performance
Total Group revenue increased 26% to £23.4m (2022: £18.7m), principally as a
result of the continued growth in the licensing segment and in particular the
content licensing business.
The Group generated EBITDA of £9.2m (2022: £7.4m) and Adjusted EBITDA of
£10.1m (2022: £7.8m).
Adjusted EBITDA is EBITDA before share option and related charges, and
adjusting items. A reconciliation between EBITDA and Adjusted EBITDA is
shown below. Management considers Adjusted EBITDA the most appropriate measure
to comment on the Group's underlying financial performance.
2023 2022
£ £
EBITDA 9,235,802 7,446,038
Share option and related charges 632,304 351,726
Adjusting items 193,859 -
Adjusted EBITDA 10,061,965 7,797,764
The £0.2m adjusting item relates to a management restructure in the year
(2022: £Nil), which is considered by Management as significant, non-recurring
and outside the scope of the Group's ordinary activities, so has been
presented as an adjusting item.
The £1.8m increase in EBITDA generated in 2023 compared with the prior year
has seen the Group record another record profit before tax of £5.2m (2022:
£3.5m), an increase of £1.6m.
Operating expenses are largely revenue related costs including license fees,
hosting costs and platform provider fees. Total Group operating expenses were
£4.8m, a 24% increase over the £3.9m in the prior year, driven by the growth
in licensing segment revenues.
Administrative expenses increased to £8.2m (2022: £6.9m) predominantly due
to increased staff costs across the business required to deliver on the
Group's growth strategy, along with other incremental business expansion
costs.
Share option and related charges were £0.6m in 2023 (2022: £0.4m).
The following table sets out the split of revenue, Adjusted EBITDA, EBITDA and
profit before tax by segment, which is discussed further below.
Licensing Social publishing Head Office Total
2023 £ £ £ £
Revenue 19,917,366 3,504,157 - 23,421,523
Other income - 139,562 - 139,562
Marketing expense (94,533) (338,030) (96,110) (528,673)
Operating expense (3,442,127) (1,359,340) - (4,801,467)
Administrative expense (4,763,369) (1,141,114) (2,264,497) (8,168,980)
Adjusted EBITDA 11,617,337 805,235 (2,360,607) 10,061,965
Share option and related charges (103,425) (9,927) (518,952) (632,304)
Adjusting items (193,859) - - (193,859)
EBITDA 11,320,053 795,308 (2,879,559) 9,235,802
Amortisation of intangible assets (2,488,290) (930,857) (444,661) (3,863,808)
Depreciation of property, plant and equipment (70,537) (70,580) (135,142) (276,259)
Finance expense (17,279) (17,688) (8,956) (43,923)
Finance income 96,280 2,820 16,425 115,525
Profit before tax 8,840,227 (220,997) (3,451,893) 5,167,337
Licensing Social Head Office Total
publishing
2022 £ £ £ £
Revenue 14,937,036 3,690,485 23,000 18,650,521
Other income - 112,147 - 112,147
Marketing expense (38,391) (17,164) (78,244) (133,799)
Operating expense (2,579,127) (1,308,520) - (3,887,647)
Administrative expense (4,176,964) (1,001,569) (1,764,925) (6,943,458)
Adjusted EBITDA 8,142,554 1,475,379 (1,820,169) 7,797,764
Share option and related charges (149,753) (1,666) (200,307) (351,726)
EBITDA 7,992,801 1,473,713 (2,020,476) 7,446,038
Amortisation of intangible assets (1,996,909) (943,384) (731,086) (3,671,379)
Depreciation of property, plant and equipment (60,215) (59,822) (138,478) (258,515)
Finance expense (10,087) (11,239) (372,716) (394,042)
Finance income 26,658 - 375,000 401,658
Profit before tax 5,952,248 459,268 (2,887,756) 3,523,760
Licensing
Total licensing segment revenues increased 33% to £19.9m (2022: £14.9m),
which can be broken down as follows:
· Content licensing revenue growth of 30% to £18.6m (2022:
£14.3m); and
· Brand licensing revenue increased 110% to £1.3m (2022: £0.6m).
The segment contributed £11.6m Adjusted EBITDA in 2023 (2022: £8.1m).
The amortisation charge for the year increased to £2.5m (2022: £2.0m),
reflecting the increased investment in development spend in the segment in
recent years. Demonstrating this, capitalisation of development spend in the
licensing segment increased 24% on the prior year to £3.8m (2022: £3.1m) as
the business invests in its RGS platform and content. The impact of the
segments increase in EBITDA offset by the increase in amortisation means the
segment delivered a profit before tax of £8.8m (2022: £6.0m).
Content licensing
Content licensing remains the core focus of the Group, with the growth
strategy being expansion into new markets as they regulate, growing our unique
Slingo games portfolio and developing deeper relationships with our partners
to maximise value and engagement.
Despite there being no material new markets entered during 2023, content
licensing revenue increased 30% to £18.6m (2022: £14.3m). This has been
achieved through a blend of launching with 44 new partners in our current
markets, delivering exciting and premium quality games during the year, and
greater penetration with our existing partners.
The 44 new partners we went live with during the year were across a number of
global markets, with 24 in North America and 20 in Europe. A further 14
partners have gone live in 2024 to date.
In the second half of 2023 the Group was granted supplier licenses in both
West Virginia, USA and Greece. Along with other planned new markets for the
business such as Switzerland and South Africa, the Group is well placed to
take advantage of further growth opportunities in 2024.
The high margin nature of content licensing revenues gives the business strong
operational leverage. This is demonstrated by the 22% increase in total
segmental expenses (excluding share option and related charges and adjusting
items) to £8.3m (2022: £6.8m), while content licensing revenues have
increased at a notably higher rate, 30% over the prior year.
The Group released 10 new Slingo games to the market during 2023, including
Slingo Space Invaders and Tetris Slingo, along with a series of bespoke Slingo
branded games for our partners. Slingo continues to prove highly popular
with our partners and players. Slingo is a unique genre of game in the market,
which is driving engagement with partners.
We continue to partner with leading brands that will complement the Slingo
format. During 2023 we launched exciting Slingo game collaborations with
partners such as Tetris, King Show Games and Taito. A number of further
agreements have been entered into to bring new Slingo collaborations to market
in 2024, including Fowl Play and Gold Cash.
Revenues from North America continued to significantly grow for the content
licensing business. Revenue from these markets in 2023 was £8.1m, a 26%
increase on the £6.4m in the prior year. The region represents 43% of total
content licensing revenues (2022: 45%). As new US states regulate igaming and
we make further progress in the existing markets, we would expect the region
to grow in prominence for the business.
Brand licensing
The increase in brand licensing revenues in 2023 compared with the prior year
is predominantly the result of two brand deals completed in the year,
including a deal with Entain to launch Slingo Bingo which went live in May
2023.
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,
such as physical and digital lottery scratch games.
Social publishing
The Group's social publishing business reported a 5% reduction in revenues to
£3.5m (2022: £3.7m).
During the year £0.3m was invested in marketing spend in the segment with the
aim of driving player activity and engagement.
Operational costs increased by 4% from the previous year to £1.4m (2022:
£1.3m) as a result of increases in the cost of hosting and third-party
content fees.
The segment continues to have a stable underlying cost base, with
administrative expenses of £1.1m (2022: £1.0m).
As a result, the segment delivered £0.8m Adjusted EBITDA for the year,
falling from £1.5m in the prior year.
The amortisation charge related to the social publishing segment for the year
was £0.9m, a 1% reduction on the prior year (2022: £0.9m).
Cashflow and Balance Sheet
The Group's cash balance increased by £4.5m in 2023 to £7.5m at 31 December
2023 (2022: £2.9m).
The Group remains debt free, following the full repayment of the convertible
loan to Gamesys Group in the prior year.
The Group capitalised £4.6m (2022: £4.0m) into intangible assets as
development costs during the year. This £0.6m increase over the prior year
represents an increase in investment in both the licensing and social
publishing segments. This investment is to both expand the Group's unique game
portfolio across both segments and develop the Group's proprietary RGS
platform with enhanced capabilities, scale and features.
Aside from the £4.6m development costs capitalised in the year discussed
above, the remaining movement in cash is substantially explained by the £9.3m
(2022: £6.5m) cash inflow from operating activities. A reconciliation between
profit for the year and cash from operating activities is provided below.
2023 2022
£ £
Cash flows from operating activities
Profit for the financial year 5,925,003 3,614,115
Adjustments for:
Depreciation of property, plant and equipment 276,259 258,515
Loss on disposal of property, plant and equipment 1,571 -
Amortisation of intangible fixed assets 3,863,808 3,671,379
Other income (139,562) (112,147)
Other income received during the year 185,184 121,962
Finance income (115,525) (401,658)
Finance expense 43,923 394,042
Tax credit (757,666) (90,355)
Exchange differences (105,268) 54,013
Share based payment expense 419,961 438,868
Decrease / (increase) in trade and other receivables 368,986 (1,973,278)
Increase in trade and other payables 244,710 607,560
Decrease in other assets - 11,848
Net cash flows from operating activities before taxation 10,211,384 6,594,864
Net tax paid in the year (935,660) (45,213)
Net cash flows from operating activities 9,275,724 6,549,651
Net assets totalled £24.4m (2022: £17.9m).
Going concern
In adopting the going concern basis of preparation in the financial
statements, the Directors have performed both 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 cash flows 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 as
we continue to execute our strategy and invest in the growth of the business.
Corporation and deferred taxation
The current year tax credit of £0.8m (2022: £0.1m) largely relates to the
recognition of an additional £1.6m deferred tax asset and £0.7m corporation
tax charge in overseas jurisdictions (2022: £0.3m).
Geoff Green
Chief Financial Officer
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
2023 2022
£ £
Revenue 23,421,523 18,650,521
Other income 139,562 112,147
Marketing expenses (528,673) (133,799)
Operating expenses (4,801,467) (3,887,647)
Administrative expenses (8,168,980) (6,943,458)
Share option and related charges (632,304) (351,726)
EBITDA before adjusting items 9,429,661 7,446,038
Adjusting items (193,859) -
EBITDA 9,235,802 7,446,038
Amortisation of intangible assets (3,863,808) (3,671,379)
Depreciation of property, plant and equipment (276,259) (258,515)
Finance expense (43,923) (394,042)
Finance income 115,525 401,658
Profit before tax 5,167,337 3,523,760
Tax credit 757,666 90,355
Profit for the financial year 5,925,003 3,614,115
Other comprehensive income
Items that will or may be reclassified to profit or loss:
Exchange (loss) / gain arising on translation of foreign operations (105,004) 131,432
Total other comprehensive income (105,004) 131,432
Total comprehensive income 5,819,999 3,745,547
Profit attributable to:
Owners of the parent 5,925,003 3,614,115
5,925,003 3,614,115
Total comprehensive income attributable to:
Owners of the parent 5,819,999 3,745,547
5,819,999 3,745,547
Earnings per share Pence Pence
Basic 2.02 1.24
Diluted 1.96 1.21
Consolidated Statement of Financial Position
As at 31 December 2023
31 December 31 December
2023
2022
£ £
Non-current assets
Intangible assets 13,272,711 12,422,852
Property, plant and equipment 367,092 535,409
Deferred tax asset 1,891,000 287,407
Other assets 139,531 138,798
15,670,334 13,384,466
Current assets
Trade and other receivables 5,060,528 5,336,330
Cash and cash equivalents 7,455,316 2,922,775
12,515,844 8,259,105
Total assets 28,186,178 21,643,571
Current liabilities
Trade and other payables 3,383,248 3,270,319
Lease liabilities 52,135 217,731
3,435,383 3,488,050
Non-current liabilities
Deferred tax liability 219,921 75,592
Lease liabilities 133,445 167,680
353,366 243,272
Total liabilities 3,788,749 3,731,322
Net assets 24,397,429 17,912,249
Equity
Share capital 29,366,782 29,200,676
Share premium 87,732,888 87,653,774
Merger reserve (67,673,657) (67,673,657)
Foreign exchange reserve 1,444,697 1,549,701
Retained earnings (26,473,281) (32,818,245)
Total equity 24,397,429 17,912,249
Consolidated Statement of Cash Flows
For the year ended 31 December 2023
2023 2022
£ £
Cash flows from operating activities
Profit for the financial year 5,925,003 3,614,115
Adjustments for:
Depreciation of property, plant and equipment 276,259 258,515
Loss on disposal of property, plant and equipment 1,571 -
Amortisation of intangible fixed assets 3,863,808 3,671,379
Other income (139,562) (112,147)
Other income received during the year 185,184 121,962
Finance income (115,525) (401,658)
Finance expense 43,923 394,042
Tax credit (757,666) (90,355)
Exchange differences (105,268) 54,013
Share based payment expense 419,961 438,868
Decrease / (increase) in trade and other receivables 368,986 (1,973,278)
Increase in trade and other payables 244,710 607,560
Decrease in other assets - 11,848
Net cash flows from operating activities before taxation 10,211,384 6,594,864
Net tax paid in the year (935,660) (45,213)
Net cash flows from operating activities 9,275,724 6,549,651
Investing activities
Acquisition of property, plant and equipment (89,715) (124,104)
Acquisition of intangible assets (157,751) (125,684)
Capitalised development costs (4,633,403) (4,009,171)
Interest received 85,679 -
Net cash used in investing activities (4,795,190) (4,258,959)
Financing activities
Repayment of convertible loan and additional charges - (3,375,000)
Principal paid on lease liability (236,659) (163,638)
Issue of share capital on exercise of options 245,220 13,332
Interest paid (28,538) (186,880)
Net cash used in financing activities (19,977) (3,712,186)
Net increase / (decrease) in cash and cash equivalents 4,460,557 (1,421,494)
Cash and cash equivalents at beginning of year 2,922,775 4,412,375
Exchange gain / (loss) on cash and cash equivalents 71,984 (68,106)
Cash and cash equivalents at end of year 7,455,316 2,922,775
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
Share capital Share premium Merger reserve Foreign Exchange Reserve Retained earnings Total to equity
£ £ £ £ £ £
1 January 2022 28,970,262 87,370,856 (67,673,657) 1,418,269 (36,977,228) 13,108,502
Profit for the year - - - - 3,614,115 3,614,115
Other comprehensive income - - - 131,432 - 131,432
Total comprehensive income for the year - - - 131,432 3,614,115 3,745,547
Contributions by and distributions to owners
Share-based payment on share options - - - - 438,868 438,868
Exercise of options 13,332 - - - - 13,332
Conversion of loan 217,082 282,918 - - 106,000 606,000
31 December 2022 29,200,676 87,653,774 (67,673,657) 1,549,701 (32,818,245) 17,912,249
1 January 2023 29,200,676 87,653,774 (67,673,657) 1,549,701 (32,818,245) 17,912,249
Profit for the year - - - - 5,925,003 5,925,003
Other comprehensive income - - - (105,004) - (105,004)
Total comprehensive income for the year - - - (105,004) 5,925,003 5,819,999
Contributions by and distributions to owners
Share-based payment on share options - - - - 419,961 419,961
Exercise of options 166,106 79,114 - - - 245,220
31 December 2023 29,366,782 87,732,888 (67,673,657) 1,444,697 (26,473,281) 24,397,429
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
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 2023.
The financial information set out in this document does not constitute the
Group's statutory accounts for the year ended 31 December 2023 or 31 December
2022.
Statutory accounts for the year ended 31 December 2022 have been filed with
the Registrar of Companies and those for the year ended 31 December 2023 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 2023 is unmodified.
The independent auditor's reports on the Annual Report and Accounts for the
year ended 31 December 2023 and 31 December 2022 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 2026 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 various macro-economic uncertainties such as inflation, recession
fears and the war in Ukraine, these cash flow forecasts have been subject to
short- and medium-term stress testing, scenario modelling and sensitivity
analysis through to June 2025, 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
The following amendments are effective for the year beginning 1 January 2023:
· Disclosure of Accounting Policies (Amendments to IAS 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).
These amendments did not have a material impact on the Group, however the
accounting policies included within this note have changed as a result.
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
2024:
· IFRS 16 Leases (Amendment - Liability in a Sale and Leaseback);
· IAS 1 Presentation of Financial Statements (Amendment -
Classification of Liabilities as Current or Non-current); and
· IAS 1 Presentation of Financial Statements (Amendment -
Non-current Liabilities with Covenants).
The following amendments are effective for the period beginning 1 January
2025:
· IAS 21 The Effects of Changes in Foreign Exchange rates
(Amendment- Lack of exchangeability)
The Group is currently assessing the impact of these new accounting standards
and amendments. The Group does not expect any of the standards or amendments
issued by the IASB, but not yet effective, to have a material impact on the
Group.
2. Adjusted EBITDA
EBITDA is profit before interest, tax, depreciation and amortisation and is a
non-GAAP measure. Adjusted EBITDA is EBITDA before adjusting items, which
are items that Management considers to be significant, non-recurring and
outside the scope of the Group's ordinary activities that may distort an
understanding of financial performance or impair comparability.
Adjusted EBITDA is stated before adjusting items as follows:
2023 2022
£ £
Restructuring costs 193,859 -
Adjusting items 193,859 -
Restructuring costs of £0.2m in 2023 (2022: £Nil) relate to a management
restructure during the year.
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
2023 £ £ £ £
Revenue 19,917,366 3,504,157 - 23,421,523
Other income - 139,562 - 139,562
Marketing expense (94,533) (338,030) (96,110) (528,673)
Operating expense (3,442,127) (1,359,340) - (4,801,467)
Administrative expense (4,763,369) (1,141,114) (2,264,497) (8,168,980)
Share option and related charges (103,425) (9,927) (518,952) (632,304)
EBITDA before adjusting items 11,513,912 795,308 (2,879,559) 9,429,661
Adjusting items (193,859) - - (193,859)
EBITDA 11,320,053 795,308 (2,879,559) 9,235,802
Amortisation of intangible assets (2,488,290) (930,857) (444,661) (3,863,808)
Depreciation of property, plant and equipment (70,537) (70,580) (135,142) (276,259)
Finance expense (17,279) (17,688) (8,956) (43,923)
Finance income 96,280 2,820 16,425 115,525
Profit before tax 8,840,227 (220,997) (3,451,893) 5,167,337
Licensing Social Head Office Total
publishing
2022 £ £ £ £
Revenue 14,937,036 3,690,485 23,000 18,650,521
Other income - 112,147 - 112,147
Marketing expense (38,391) (17,164) (78,244) (133,799)
Operating expense (2,579,127) (1,308,520) - (3,887,647)
Administrative expense (4,176,964) (1,001,569) (1,764,925) (6,943,458)
Share option and related charges (149,753) (1,666) (200,307) (351,726)
EBITDA 7,992,801 1,473,713 (2,020,476) 7,446,038
Amortisation of intangible assets (1,996,909) (943,384) (731,086) (3,671,379)
Depreciation of property, plant and equipment (60,215) (59,822) (138,478) (258,515)
Finance expense (10,087) (11,239) (372,716) (394,042)
Finance income 26,658 - 375,000 401,658
Profit before tax 5,952,248 459,268 (2,887,756) 3,523,760
4. Taxation
2023 2022
£ £
Current tax
Current tax charge (745,653) (312,922)
Adjustment for current tax of prior periods 43,160 (8,414)
Total current tax (702,493) (321,336)
Deferred tax
Recognition of deferred tax asset 1,603,593 287,407
Overseas temporary differences (143,434) 124,284
Total deferred tax credit 1,460,159 411,691
Total tax credit 757,666 90,355
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:
2023 2022
£ £
Profit before tax for the year 5,167,337 3,523,760
Expected tax at effective rate of corporation tax in the UK of 23.52% (2022: 1,215,358 669,514
19.0%)
Expenses not deductible for tax purposes 47,717 141,812
Income not chargeable for tax purposes (32,825) (71,278)
Share scheme deductions under Part 12 CTA 09 (62,044) -
Effects of overseas taxation 292,759 (93,850)
Adjustment for tax in respect of prior periods (43,160) 8,414
Research and development tax credit (159,701) (131,100)
Movement in deferred tax not previously recognised (590,553) (326,460)
Difference between current and deferred tax rates (30,116) -
Recognition of deferred tax asset on losses previously unrecognised (1,395,101) (287,407)
(757,666) (90,355)
The Group has a net corporation tax payable at the balance sheet date of
£34,670 (2022: £276,123) being the £702,493 current tax charge for the
year, less £935,660 payments made during the year (including settlement of
the brought forward payable) and £8,286 of foreign exchange differences
relating to US corporation tax payments.
Deferred Tax
The analysis of deferred tax included in the financial statements at the end
of the year is as follows:
2023 2022
£ £
Deferred tax assets
Tax losses carried forward 1,891,000 287,407
Deferred tax assets 1,891,000 287,407
Deferred tax liabilities
Overseas temporary differences (219,921) -
Business combinations - acquired intangibles - (75,592)
Deferred tax liabilities (219,921) (75,592)
Net deferred tax asset 1,671,079 211,815
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 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 that was repaid in full during the prior year. The
convertible loan was anti-dilutive in the prior year so was not included in
the diluted EPS calculation.
2023 2022
£ £
Profit after tax attributable to the owners of the parent Company 5,925,003 3,614,115
Number Number
Denominator - basic
Weighted average number of ordinary shares 292,715,123 291,655,659
Denominator - diluted
Weighted average number of ordinary shares 292,715,123 291,655,659
Weighted average number of option shares 9,961,871 7,057,892
Weighted average number of shares 302,676,994 298,713,551
Pence Pence
Basic earnings per share 2.02 1.24
Diluted earnings per share 1.96 1.21
6. Intangible assets
Goodwill Customer database Software Development costs Licenses Domain names Intellectual Property Total
£ £ £ £ £ £ £ £
Cost
At 1 January 2022 6,673,924 1,490,537 1,354,602 17,843,431 247,322 8,874 5,859,424 33,478,114
Additions - - 54,229 4,009,171 71,455 - - 4,134,855
Exchange differences 125,326 - - 14,080 694 - - 140,100
At 31 December 2022 6,799,250 1,490,537 1,408,831 21,866,682 319,471 8,874 5,859,424 37,753,069
Additions - - 16,627 4,633,403 141,124 - - 4,791,154
Disposals - (5,124) - - (80,398) - - (85,522)
Exchange differences (53,694) - - (36,573) (292) - - (90,559)
At 31 December 2023 6,745,556 1,485,413 1,425,458 26,463,512 379,905 8,874 5,859,424 42,368,142
Accumulated amortisation and impairment
At 1 January 2022 1,650,000 1,490,537 1,310,294 12,475,353 43,469 8,874 4,683,679 21,662,206
Amortisation charge - - 73,177 2,781,155 85,961 - 731,086 3,671,379
Exchange differences - - - (3,368) - - - (3,368)
At 31 December 2022 1,650,000 1,490,537 1,383,471 15,253,140 129,430 8,874 5,414,765 25,330,217
Amortisation charge - - 33,347 3,239,928 145,874 - 444,659 3,863,808
Disposals - (5,124) - - (80,398) - - (85,522)
Exchange differences - - - (13,137) 65 - - (13,072)
At 31 December 2023 1,650,000 1,485,413 1,416,818 18,479,931 194,971 8,874 5,859,424 29,095,431
Net book value
At 31 December 2022 5,149,250 - 25,360 6,613,542 190,041 - 444,659 12,422,852
At 31 December 2023 5,095,556 - 8,640 7,983,581 184,934 - - 13,272,711
7. Share capital
Ordinary shares
2023 2023 2022 2022
Number £ Number £
Ordinary shares of 293,667,839 29,366,782 292,006,775 29,200,676
10 pence each
The increase of 1,661,064 ordinary shares relates to the exercise of share
options during the year. The changes in share capital and share premium as a
result of these events is shown below.
Share capital Share premium
£ £
At 1 January 2022 28,970,262 87,370,856
Exercise of share options 13,332 -
Conversion of loan 217,082 282,918
At 31 December 2022 29,200,676 87,653,774
Exercise of share options 166,106 79,114
At 31 December 2023 29,366,782 87,732,888
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