TIDMGMR
RNS Number : 7052N
Gaming Realms PLC
26 September 2019
Gaming Realms plc
(the "Company" or the "Group")
Interim results for the six months ended 30 June 2019
Adjusted EBITDA for H1 2019 at breakeven and 167% licensing
revenue growth
Gaming Realms plc (GMR.L), the developer and licensor of mobile
focused, real money games, today announces its interim results for
the six months to 30 June 2019.
Upon completion of the sale of the remaining real money gaming
("RMG") business, announced on 17 July 2019, the remaining business
is now focused on development and licensing of games for third
party real money and social gaming operators. This is the part of
the Company which we have grown organically and is showing
significant growth with some global market leading partners.
Financial highlights:
Like-for-like ongoing business* H1 2019 H1 2018 Movement
GBPm GBPm %
Revenue - Licensing 1.6 0.6 167%
Revenue - Social 1.5 2.1 (29%)
Revenue - Other 0.1 - 100%
-------- -------- ----------
Total 3.2 2.7 18%
* excludes RMG and Affiliates segments classified as
discontinued operations (see note 10)
-- Licensing revenue grew 167% to GBP1.6m (H1/18: GBP0.6m) with
increased distribution and games portfolio
-- Adjusted EBITDA loss for continuing operations reduced to
GBP6,280 (H1/18: Loss of GBP441,133)
-- Social Publishing revenue decreased 29% to GBP1.5m (H1/18:
GBP2.1m) generating EBITDA of GBP0.5m (H1/18: GBP1.0m). However,
after capitalisation of costs the net cash outflow was GBP0.1m
(H1/18: inflow GBP0.4m)
-- EBITDA loss for discontinued Real Money Gaming Operations was
GBP0.9m (H1/18: GBP0.6m profit)
Operational highlights:
-- Entered into an agreement with River iGaming plc ("River"),
to sell the Company's B2C RMG assets, for a total of GBP11.5m, of
which GBP1.5m is deferred for receipt until 31 December 2020. The
Group's cash position today is c.GBP4m following completion of the
deal in July 2019, settlement of certain liabilities connected to
the B2C RMG assets and deal expenses, and further investment in the
Group's operations
-- Licensing highlights include:
-- Went live with tier 1 operator William Hill
-- Released 3 new games into the market
-- Signed worldwide distribution deals with Relax Gaming and Scientific Games
Post-period end trading:
-- Completed the disposal of the RMG business to River
-- The sale of the B2C RMG assets has allowed the Group to
reduce headcount by 45 people and reduce annual costs by
GBP2.0m
-- Licensing revenue increased 88% in the 9 weeks post period
end vs comparative period in 2018
-- Live with 3 new operators (total 37); including News
International and Betsson which could add up to a further 33 new
sites, covering UK and Nordics
-- Significant partnership agreement established with Instant
Win Gaming to distribute Slingo Games into the iLottery market.
This includes a release to The North American Association of State
and Provincial Lotteries (NASPL) and World Lottery Association
(WLA) lottery members worldwide, and is scheduled to go live H2
2020
-- Release of 3 new games including Monopoly Slingo with more
releases scheduled for the remainder of the year
Outlook for FY 2019:
The ongoing success that the Company has had from developing and
licensing real money games gives the Group confidence to commit
additional investment to drive further growth. Therefore, the Group
will continue to be investing significantly into developing new
games and improving its proprietary Remote Game Server platform.
Following the disposal of the RMG business, the board believes the
Group has an adequacy of available cash resources to fund this in
addition to existing known working capital requirements.
Given the growth of this division, we anticipate it becoming
cashflow positive by the end of 2020. As previously disclosed, the
Group is in the latter stages of rationalising its social gaming
division which is no longer a core part of the business. Gaming
Realms will update the market on the conclusion of this process in
due course.
The investment in game development and licencing continues to
yield strong growth. Taking this into account, the Company expects
the 2019 full year to be in line with market expectations as the
current pipeline of new partners go live and new integrations are
completed.
Commenting on the first half performance, Patrick Southon, Chief
Executive, said:
"Our strategy to leverage our market leading 'Slingo Originals'
games library into the UK and international gaming markets
continues to gain momentum. Licensing our content to leading brands
and gaming operators is delivering high margin revenues and the
disposal of the RMG assets has given us greater resources to invest
in content creation. We are currently performing in line with
management's forecasts and with new commercial developments in the
pipeline we are confident in meeting our full year objectives."
For more information contact
Gaming Realms plc
Patrick Southon, CEO
Mark Segal, CFO 0845 123 3773
Peel Hunt LLP, Nomad and Broker
George Sellar, Guy Pengelley 020 7418 8900
Yellow Jersey 020 3004 9512
Charles Goodwin 07747 788 221
Georgia Colkin 07825 916 715
About Gaming Realms
Gaming Realms creates and publishes innovative real money and
social games for mobile, with operations in the UK, U.S. and
Canada. Through its market leading mobile platform and 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.
Business review
Overview
The board is pleased to report that the Group has operated at
almost breakeven at the adjusted EBITDA level on continuing
activities in H1 2019 (H1/18: loss of GBP0.4m). This improvement
was primarily driven through the 167% growth in Licensing revenues
compared with the comparative period, while overall continuing
expenses remained stable at GBP3.2m (H1/18: GBP3.1m).
Licensing
The Group has made significant progress with its licensing
business with revenue increasing 167% to GBP1.6m (H1/18: GBP0.6m)
for the period. This growth is driven by the 13 partners that went
live through 2018 as well as going live in H1 2019 with tier 1
operator, William Hill. 4 Slingo games were released to the market
in H1 2019, with an additional 3 in H2 2019 to date and further
releases planned.
Social publishing
Social Publishing delivered GBP0.5m, in H1 2019, of adjusted
EBITDA profit (H1/18: GBP1.0m). Marketing spend in this segment was
reduced by 48% and other administrative and operating expenses
remained stable at GBP0.9m. The Group is in the latter stages of
rationalizing this division.
Discontinued operations
Discontinued operations relate to B2C RMG and affiliates. The
loss before tax for the period from discontinued operations was
GBP0.7m (H1/18: GBP0.3m profit). In July 2019, after the period end
the Group concluded the sale of its RMG assets to River.
The Group continues to review its allocation of resources and
investment.
Consolidated statement of comprehensive income
for the 6 months ended 30 June 2019
6M
6M 30 June
Note 30 June 2019 2018
Unaudited Unaudited
Continuing GBP GBP
------------------------------------------ ----- --------------------------------- -------------------------------
Revenue 2 3,188,364 2,703,068
Marketing expenses (113,220) (194,862)
Operating expenses (717,162) (658,615)
Administrative expenses (2,785,160) (2,188,936)
Share-based payments - (154,986)
------------------------------------------ ----- --------------------------------- -------------------------------
Adjusted EBITDA - total (946,052) 195,462
Adjusted EBITDA - discontinued 10 (939,772) 636,595
------------------------------------------ ----- --------------------------------- -------------------------------
Adjusted EBITDA - continuing 2 (6,280) (441,133)
Loss on disposal 15 (320,853) (53,198)
Restructuring expenses (100,045) -
EBITDA - continuing 2 (427,178) (494,331)
----- ---------------------------------
Amortisation of intangible assets 6 (1,535,449) (2,085,703)
Depreciation of property, plant
and equipment 5 (141,617) (68,943)
Finance expense 3 (378,446) (511,774)
Finance income 3 25,738 88,012
------------------------------------------ ----- --------------------------------- -------------------------------
Loss before tax (2,456,952) (3,072,739)
Tax credit 104,835 194,557
------------------------------------------ ----- --------------------------------- -------------------------------
Loss for the financial period
- continuing (2,352,117) (2,878,182)
(Loss) / profit for the financial
period - discontinued 10 (829,041) 254,008
------------------------------------------ ----- --------------------------------- -------------------------------
Loss for the financial period
- total (3,181,158) (2,624,174)
------------------------------------------ ----- --------------------------------- -------------------------------
Other comprehensive income
Items that will or may be reclassified
to profit or loss:
Exchange gain arising on translation
of foreign operations 25,418 195,067
------------------------------------------ ----- --------------------------------- -------------------------------
Total other comprehensive income 25,418 195,067
------------------------------------------ ----- --------------------------------- -------------------------------
Total comprehensive income (3,155,740) (2,429,107)
------------------------------------------ ----- --------------------------------- -------------------------------
Loss attributable to:
Owners of the parent (3,120,172) (2,618,121)
Non-controlling interest (60,986) (6,053)
--------------------------------- -------------------------------
(3,181,158) (2,624,174)
------------------------------------------ ----- --------------------------------- -------------------------------
Total comprehensive income attributable
to:
Owners of the parent (3,094,754) (2,423,054)
Non-controlling interest (60,986) (6,053)
------------------------------------------ ----- --------------------------------- -------------------------------
(3,155,740) (2,429,107)
------------------------------------------ ----- --------------------------------- -------------------------------
(Loss)/gain per share Pence Pence
Basic and diluted - continuing 4 (0.83) (1.01)
Basic and diluted - discontinued 4 (0.29) 0.09
------------------------------------------ ----- --------------------------------- -------------------------------
Basic and diluted - total (1.12) (0.92)
------------------------------------------ ----- --------------------------------- -------------------------------
Consolidated statement of financial position
as at 30 June 2019
Note 30 June 31 December
2019 2018
Unaudited Audited
GBP GBP
-------------------------------------- ----- ------------- -------------
Non-current assets
Intangible assets 6 12,366,894 12,848,623
Other investments 424,089 535,130
Property, plant and equipment 5 1,040,069 127,556
Other assets 150,922 132,577
-------------------------------------- ----- ------------- -------------
13,981,974 13,643,886
-------------------------------------- ----- ------------- -------------
Current assets
Trade and other receivables 7 1,817,707 2,681,500
Deferred consideration 302,723 665,690
Cash and cash equivalents 8 277,510 467,033
-------------------------------------- ----- ------------- -------------
2,397,940 3,814,223
Assets classified as held for
sale 11 10,795,969 11,392,013
-------------------------------------- ----- ------------- -------------
Total assets 27,175,883 28,850,122
-------------------------------------- ----- ------------- -------------
Current liabilities
Trade and other payables 9 4,731,391 2,484,592
Liabilities classified as held
for sale 11 4,101,471 4,830,076
-------------------------------------- ----- ------------- -------------
8,832,862 7,314,668
-------------------------------------- ----- ------------- -------------
Non-current liabilities
Deferred tax liability 543,982 607,943
Other Creditors 13 3,031,870 3,004,602
Derivative liabilities 13 200,000 200,000
-------------------------------------- ----- ------------- -------------
3,775,852 3,812,545
-------------------------------------- ----- ------------- -------------
Total liabilities 12,608,714 11,127,213
-------------------------------------- ----- ------------- -------------
Net assets 14,567,169 17,722,909
-------------------------------------- ----- ------------- -------------
Equity
Share capital 12 28,442,874 28,442,874
Share premium 87,198,410 87,198,410
Merger reserve (67,673,657) (67,673,657)
Foreign exchange reserve 1,936,871 1,911,453
Retained earnings (35,428,667) (32,308,495)
-------------------------------------- ----- ------------- -------------
Total equity attributable to owners
of the parent 14,475,831 17,570,585
-------------------------------------- ----- ------------- -------------
Non-controlling interest 91,338 152,324
-------------------------------------- ----- ------------- -------------
Total equity 14,567,169 17,722,909
-------------------------------------- ----- ------------- -------------
Consolidated statement of cash flows
for the 6 months ended 30 June 2019
Note 30 June 30 June
2019 2018
Unaudited Unaudited
GBP GBP
----------------------------------------------- ------ ------------ ------------
Cash flows from operating activities
Loss for the period (3,181,158) (2,624,174)
Adjustments for:
Depreciation of property, plant and
equipment 5 147,430 75,093
Amortisation of intangible fixed assets 6 1,535,449 2,462,140
Finance income (299,589) (88,012)
Finance expense 3 378,446 511,774
Income tax credit (104,835) (194,557)
Unrealised currency translation gains 538 38,272
Loss / (profit) on disposal of property,
plant and equipment 28,747 (11,734)
Loss on disposal of assets 84,377 43,748
Share of loss of associate 10 157,307 -
Share based payments expense - 154,986
Decrease in trade and other receivables 1,319,608 673,969
Decrease in trade and other payables (476,085) (2,202,200)
----------------------------------------------- ------ ------------ ------------
Net cash flows used in operating activities
before taxation (409,765) (1,160,695)
----------------------------------------------- ------ ------------ ------------
Tax credit received in the period 39,988 -
----------------------------------------------- ------ ------------ ------------
Net cash flows used in operating activities (369,777) (1,160,695)
----------------------------------------------- ------ ------------ ------------
Investing activities
Acquisition of property, plant and equipment 5 (110,678) (23,503)
Capitalised development costs 6 (1,532,978) (1,464,628)
Proceeds from disposal of assets - 1,849,133
Interest received 3,705 58,253
Receipt of deferred consideration 385,000 -
----------------------------------------------- ------ ------------ ------------
Net cash (used in) / from investing
activities (1,254,951) 419,255
----------------------------------------------- ------ ------------ ------------
Financing activities
Cost relating to issue of convertible
debt - (24,846)
Interest paid (191,309) (107,831)
----------------------------------------------- ------ ------------ ------------
Net cash used in financing activities (191,309) (132,677)
----------------------------------------------- ------ ------------ ------------
Net decrease in cash and cash equivalents (1,816,037) (874,117)
Cash and cash equivalents at beginning
of period 8 1,550,140 1,319,098
Exchange gain / (losses) on cash and
cash equivalents 1,992 (16,440)
----------------------------------------------- ------ ------------ ------------
Cash and cash equivalents at end of
period 8 (263,905) 428,541
----------------------------------------------- ------ ------------ ------------
Consolidated statement of changes in equity
for the 6 months ended 30 June 2019
Total
Foreign Shares to equity
Share Share Merger Exchange to be Retained holders Non-controlling Total
capital premium reserve Reserve issued earnings of parents interest equity
GBP GBP GBP GBP GBP GBP GBP GBP GBP
1 January 2018 28,442,874 87,198,410 (67,673,657) 1,419,842 145,000 (33,530,345) 16,209,345 169,824 16,379,170
---------------- ----------- ----------- ------------- ---------- -------- ------------- ------------ ----------------- ------------
Loss for the
period - - - - - (2,618,121) (2,618,121) (6,053) (2,624,174)
Other
comprehensive
income - - - 195,067 - - 195,067 - 195,067
Total
comprehensive
income /
(loss) for
the period - - - 195,067 - (2,618,121) (2,423,054) (6,053) (2,429,107)
---------------- ----------- ----------- ------------- ---------- -------- ------------- ------------ ----------------- ------------
Contributions
by and
distributions
to owners
Share-based
payment
on share
options - - - - - 154,986 154,986 - 154,986
30 June 2018
(unaudited) 28,442,874 87,198,410 (67,673,657) 1,614,909 145,000 (35,993,480) 13,941,277 163,771 14,105,049
---------------- ----------- ----------- ------------- ---------- -------- ------------- ------------ ----------------- ------------
31 December
2018 28,442,874 87,198,410 (67,673,657) 1,911,453 - (32,308,495) 17,570,585 152,324 17,722,909
---------------- ----------- ----------- ------------- ---------- -------- ------------- ------------ ----------------- ------------
Loss for the
period - - - - - (3,120,172) (3,120,172) (60,986) (3,181,158)
Other
comprehensive
income - - - 25,418 - - 25,418 - 25,418
Total
comprehensive
income/(loss)
for the
period - - - 25,418 - (3,120,172) (3,094,754) (60,986) (3,155,740)
---------------- ----------- ----------- ------------- ---------- -------- ------------- ------------ ----------------- ------------
Contributions
by and
distributions
to owners
Share-based - - - - - - - - -
payment
on share
options
30 June 2019
(unaudited) 28,442,874 87,198,410 (67,673,657) 1,936,871 - (35,428,667) 14,475,831 91,338 14,567,169
---------------- ----------- ----------- ------------- ---------- -------- ------------- ------------ ----------------- ------------
Notes forming part of the consolidated financial statements
For the 6 months ended 30 June 2019
1. Accounting policies
General Information
Gaming Realms plc ("the Company") and its subsidiaries (together
"the Group").
The Company is admitted to trading on AIM of the London Stock
Exchange. It is incorporated and domiciled in the UK. The address
of its registered office is Two Valentine Place, London,
SE18QH.
The results for the six months ended 30 June 2019 and 30 June
2018 are unaudited.
Basis of preparation
The financial information for the year ended 31 December 2018
included in these financial statements does not constitute the full
statutory accounts for that year. The Annual Report and Financial
Statements for 2018 have been filed with the Registrar of
Companies. The Independent Auditors' Report on the Annual Report
and Financial Statement for 2018 was unqualified, did not draw
attention to any matters by way of emphasis, and did not contain a
statement under 498(2) or 498(3) of the Companies Act 2006.
This interim report, which has neither been audited nor reviewed
by independent auditors, was approved by the board of directors on
25 September 2019. The financial information in this interim report
has been prepared in accordance with the recognition and
measurement requirements of International Financial Reporting
Standards as adopted for use in the EU (IFRSs). The accounting
policies applied by the Group in this financial information are the
same as those applied by the Group in its financial statements for
the year ended 31 December 2018 and which will form the basis of
the 2019 financial statements.
The consolidated financial statements are presented in
Sterling.
Going concern
The Group meets its day-to-day working capital requirements from
the cash flows generated by its trading activities and its
available cash resources. These are supplemented when required by
the Group's bank overdraft facility, which is available until April
2020.
After the period end on 17 July 2019, the Group concluded the
sale of the remaining B2C RMG business to River. On completion of
the transaction, the Group received initial consideration of
GBP7.35m, with a further GBP1.5m receivable on or before 31
December 2020. Further, the transaction resulted in River assuming
the GBP2.65m net liability position of Bear Group Limited at the
point of disposal.
The Group's strategic forecasts, based on reasonable
assumptions, together with the above RMG disposal, indicate that
the Group will be able to operate within the level of its currently
available resources.
The directors therefore have a reasonable expectation that the
Group has adequate resources to continue in existence for the
foreseeable future. Accordingly, these financial statements have
been prepared on a going concern basis.
Changes in significant accounting policies
Except as described below, the accounting policies applied in
these interim financial statements are the same as those applied in
the latest annual financial statements.
The changes in accounting policies are also expected to be
reflected in the Group's consolidated financial statements as at
and for the year ended 31 December 2019.
The Group has adopted IFRS 16: Leases from 1 January 2019.
Several other amendments and interpretations apply for the first
time in 2019, but do not have an impact on the interim consolidated
financial statements of the Group. The Group has not early adopted
any other standard, interpretation or amendment that has been
issued but is not yet effective.
IFRS 16: Leases
IFRS 16 'Leases' has replaced IAS 17 in its entirety. The
distinction between operating leases and finance leases for lessees
is removed and it results in most leases being recognised on the
Statement of Financial Position as a right-of-use asset and a lease
liability. For leases previously classified as operating leases,
the lease cost has changed from an in-period operating lease
expense to recognition of depreciation of the right-of-use (ROU)
asset and interest expense on the lease liability.
The Group has applied IFRS 16 using the modified retrospective
approach. A lease liability has been recognised equal to the
present value of the remaining lease payments discounted using an
incremental borrowing rate. A ROU asset has been recognised equal
to the lease liability adjusted for prepaid and accrued lease
payments.
The Group has applied the below practical expedients permitted
under the modified retrospective approach;
-- Exclude leases for measurement and recognition for leases
where the term ends within 12 months from the date of initial
application and account for these leases as short-term leases;
-- Applied portfolio level accounting for leases with similar characteristics;
-- Excluded initial direct costs from measuring the right of use
asset at the date of initial application; and
-- Used hindsight when determining the lease term if the
contract contains options to extend or terminate the lease.
The table below presents the cumulative effects of the items
affected by the initial application on the statement of financial
position as at 1 January 2019:
1 January
2019 (as
previously IFRS 16 1 January
reported) adoption 2019
GBP GBP
-------------------------- ------------------------ ------------------------ ---------------------
Non-current assets
Property, plant and
equipment 127,556 455,008 582,564
-------------------------- ------------------------ ------------------------ ---------------------
Total assets 28,850,122 455,008 29,305,130
-------------------------- ------------------------ ------------------------ ---------------------
Current liabilities
Lease liabilities - (115,964) (115,964)
Non-current liabilities
Lease liabilities - (339,044) (339,044)
-------------------------- ------------------------ ------------------------ ---------------------
Total liabilities (11,127,213) (455,008) (11,582,221)
-------------------------- ------------------------ ------------------------ ---------------------
Net assets 17,722,909 - 17,722,909
-------------------------- ------------------------ ------------------------ ---------------------
In measurement of the lease liability, the Group discounted
future lease payments using the nominal incremental borrowing rate
at 1 January 2019, being 14.5%.
As a result of initially applying IFRS 16, the right-of-use
asset and lease liability recognised as at 30 June 2019 are
GBP889,270 and GBP906,075 respectively. Under IFRS 16, the Group
has recognised amortisation and interest costs, as opposed to an
operating lease expense. During the six months ended 30 June 2019,
the Group recognised GBP85,187 of additional depreciation charges
and GBP43,829 of additional interest costs from leases.
The impact on EBITDA as a result of the implementation of IFRS
16 is an increase of GBP102,432 during the six months ended 30 June
2019, and a decrease of GBP26,913 in the Group's net profit.
6M 6M
30 June 30 June
2019 2018
GBP GBP
--------------------------------- --------------------- ------------------------
EBITDA reported - continuing (427,178) (494,331)
Impact of IFRS 16 (102,432) -
--------------------------------- --------------------- ------------------------
EBITDA reported - continuing -
prior to impact of IFRS 16 (529,610) (494,331)
--------------------------------- --------------------- ------------------------
Set out below, are the carrying amount of the Group's
right-of-use asset and lease liability and the movement during the
period:
Right
of use Lease
asset liability
GBP GBP
--------------------------------- ------------------------ ------------------------
As at 1 January 2019 455,008 455,008
Leases entered into during the
period 519,449 519,449
Amortisation of ROU asset (85,187) -
Interest expense - 43,829
FX on lease liability - 5,605
Payments - (117,816)
As at 30 June 2019 889,270 906,075
--------------------------------- ------------------------ ------------------------
The lease liability at 1 January 2019 can be reconciled to the
operating lease commitments as of 31 December 2018 as follows:
GBP
---------------------
Minimum lease payments under operating
leases at 31 December 2018 380,900
Short term leases not recognised
as liabilities (109,026)
Sub-lease to recognise as liability
under IFRS 16 302,546
Gross lease liabilities as at
1 January 2019 574,420
Effect of discounting at incremental
borrowing rate (119,412)
Present value of lease liabilities
at 1 January 2019 455,008
---------------------
As a lessor
The Group has one leased property which is also sublet. The
accounting policies applicable to the Group as a lessor are not
different from those under IAS 17.
Adjusted EBITDA
EBITDA is a non-GAAP company specific measure defined as loss
before tax adjusted for finance income and expense, depreciation
and amortisation.
Adjusted EBITDA excludes non-recurring material items which are
outside the normal scope of the Group's ordinary activities.
Adjusted EBITDA is considered to be a key performance measure by
the Directors as it serves as an indicator of financial
performance. The adjusting items are separately disclosed in order
to enhance the reader's understanding of the Group's profitability
and cash flow generation. Adjusting items include EBITDA from
discontinued operations and costs arising from a fundamental
restructuring of the Group's operations.
2. Segment information
The Board is the Group's chief operating decision-maker.
Management has determined the operating segments based on the
information reviewed by the Board for the purposes of allocating
resources and assessing performance.
The Group has two continuing reportable segments.
-- Licensing - B2B brand and content licensing to partners in the US and Europe; and
-- Social publishing - provides B2C freemium games to the US and Europe.
The results of the discontinued segments are included in note
10. Management do not report segmental assets and liabilities
internally and as such an analysis is not reported.
Revenue by product
6M 6M
30 June 30 June
2019 2018
GBP GBP
------------------------------------- --------------------------- ---------------------------
Licensing 1,649,576 628,215
Social publishing 1,452,376 2,074,853
Other 86,412 -
------------------------------------- --------------------------- ---------------------------
Total - continuing 3,188,364 2,703,068
------------------------------------- --------------------------- ---------------------------
Real money gaming - discontinued
(note 10) 5,762,066 8,262,231
Affiliate marketing - discontinued
(note 10) - 170,384
------------------------------------- --------------------------- ---------------------------
Total 8,950,430 11,135,683
------------------------------------- --------------------------- ---------------------------
Geographical information
The Group considers that its primary geographic regions are the
UK, including Channel Islands, USA and the rest of the world. No
revenue is derived from real money gaming in the US. With the
exception of the ROU assets recognised on adoption of IFRS 16 (see
note 1), all of the Group's non-current assets are based in the
UK.
External revenue
by location of customers
6M 6M
30 June 30 June
2019 2018
GBP GBP
-------------------------------- --------------------------- -------------------------
UK, including Channel Islands - 34,568
US 2,175,422 2,462,436
Rest of the World 1,012,942 206,064
-------------------------------- --------------------------- -------------------------
Total - continuing 3,188,364 2,703,068
-------------------------------- --------------------------- -------------------------
Adjusted EBITDA
Licensing Social Head Office Total 6M
publishing 30 June
2019
H1 2019 GBP GBP GBP GBP
----------------- ---------------------------- ---------------------------- ---------------------------- ----------------------------
Revenue 1,649,576 1,452,376 86,412 3,188,364
Marketing
expense - (104,692) (8,529) (113,220)
Operating
expense (279,976) (436,249) (936) (717,162)
Administrative
expense (646,539) (437,851) (1,279,872) (2,364,262)
Share-based - - - -
payments
----------------- ---------------------------- ---------------------------- ---------------------------- ----------------------------
Adjusted EBITDA
- continuing 723,061 473,584 (1,202,925) (6,280)
----------------- ---------------------------- ---------------------------- ---------------------------- ----------------------------
Loss on
disposal (320,853)
Restructuring
expenses (100,045)
----------------- ---------------------------- ---------------------------- ---------------------------- ----------------------------
EBITDA -
continuing (427,178)
----------------- ---------------------------- ---------------------------- ---------------------------- ----------------------------
Licensing Social Head Office Total 6M
publishing 30 June
2018
H1 2018 GBP GBP GBP GBP
----------------- ---------------------------- ---------------------------- ---------------------------- ----------------------------
Revenue 628,215 2,074,853 - 2,703,068
Marketing
expense - (202,542) 7,680 (194,862)
Operating
expense (88,679) (569,536) (400) (658,615)
Administrative
expense (456,890) (285,438) (1,393,410) (2,135,738)
Share-based
payments - - (154,986) (154,986)
----------------- ---------------------------- ---------------------------- ---------------------------- ----------------------------
Adjusted EBITDA
- continuing 82,646 1,017,337 (1,541,116) (441,133)
----------------- ---------------------------- ---------------------------- ---------------------------- ----------------------------
Loss on
disposal (53,198)
----------------- ---------------------------- ---------------------------- ---------------------------- ----------------------------
EBITDA -
continuing (494,331)
----------------- ---------------------------- ---------------------------- ---------------------------- ----------------------------
3. Finance income and expense
6M 6M
30 June 30 June
Note 2019 2018
GBP GBP
--------------------------------------- ------ ----------------------------- -----------------------------
Finance income
Interest received 3,705 58,253
Unwind of interest on deferred
consideration receivable 22,033 -
Fair value gain on other investments - 29,759
--------------------------------------- ------ ----------------------------- -----------------------------
Total finance income 25,738 88,012
--------------------------------------- ------ ----------------------------- -----------------------------
Finance expense
Bank & loan interest paid 68,917 52,439
Fair value loss on other investments 111,041 -
Effective interest on other
creditor 13 198,488 459,335
--------------------------------------- ------ ----------------------------- -----------------------------
Total finance expense 378,446 511,774
--------------------------------------- ------ ----------------------------- -----------------------------
4. Loss per share
Basic profit / (loss) per share is calculated by dividing the
result attributable to ordinary shareholders by the weighted
average number of shares in issue during the period. For fully
diluted loss per share, the weighted average number of ordinary
shares is adjusted to assume conversion of dilutive potential
ordinary shares. The Group's potentially dilutive securities
consist of share options, performance shares and a convertible
bond. As the continuing operations of the Group are loss making,
none of the potentially dilutive securities are currently
dilutive.
6M 6M
30 June 30 June
Note 2019 2018
GBP GBP
------------------------------------------- ------ ------------ ------------
Loss after tax - continuing (2,352,117) (2,878,182)
(Loss) / profit after tax - discontinued 10 (829,041) 254,008
------------------------------------------- ------ ------------ ------------
Loss after tax - total (3,181,158) (2,624,174)
------------------------------------------- ------ ------------ ------------
Number Number
------------------------------------------- ------ ------------ ------------
Weighted average number of ordinary
shares used in calculating basic
loss per share 12 284,428,747 284,428,747
------------------------------------------- ------ ------------ ------------
Weighted average number of ordinary
shares used in calculating dilutive
loss per share 284,428,747 284,428,747
------------------------------------------- ------ ------------ ------------
Pence Pence
------------------------------------------- ------ ------------ ------------
Basic and diluted loss per share
- continuing (0.83) (1.01)
Basic and diluted (loss) / profit
per share - discontinued (0.29) 0.09
------------------------------------------- ------ ------------ ------------
Basic and diluted loss per share
- total (1.12) (0.92)
------------------------------------------- ------ ------------ ------------
5. Property, plant and equipment
Computers Office
ROU lease Leasehold and related furniture
assets improvements equipment and equipment Total
GBP GBP GBP GBP GBP
-------------------------- ------------------------- --------------- -------------- ---------------- ----------
Cost
Balance at 31 December
2018 - 197,580 180,899 92,475 470,954
Additions arising
from IFRS 16 adoption 455,008 - - - 455,008
Additions 519,449 67,309 12,539 30,830 630,127
Reclassified as held
for sale - - (1,125) - (1,125)
Disposals - (179,438) (12,304) (46,456) (238,198)
Exchange differences - (1,730) 1,164 1,091 525
Balance at 30 June
2019 974,457 83,721 181,173 77,940 1,317,291
-------------------------- ------------------------- --------------- -------------- ---------------- ----------
Accumulated deprecation
Balance at 31 December
2018 - 148,968 126,631 67,799 343,398
Depreciation charge 85,187 31,736 22,920 7,587 147,430
Reclassified as held
for sale - - (4,770) (1,043) (5,813)
Disposals - (173,275) (12,082) (24,094) (209,451)
Exchange differences - (246) 1,016 888 1,658
At 30 June 2019 85,187 7,183 133,715 51,137 277,222
-------------------------- ------------------------- --------------- -------------- ---------------- ----------
Net book value
At 31 December 2018 - 48,612 54,268 24,676 127,556
-------------------------- ------------------------- --------------- -------------- ---------------- ----------
At 30 June 2019 889,270 76,538 47,458 26,803 1,040,069
-------------------------- ------------------------- --------------- -------------- ---------------- ----------
6. Intangible assets
Customer Development Domain Intellectual
Goodwill database Software costs names Property Total
GBP GBP GBP GBP GBP GBP GBP
---------- ----------- ---------- ------------- -------- -------------- -----------
Cost
Balance at 31
December 2018 7,056,768 1,582,190 1,488,600 9,708,137 29,418 6,194,372 26,059,485
Additions - - - 1,532,978 - - 1,532,978
Disposals - - - (144,766) - - (144,766)
Reclassified
as held for sale - - - (420,242) - - (420,242)
Exchange differences 19,718 5,819 (4,474) 784 36 32,933 54,816
Balance at 30
June 2019 7,076,486 1,588,009 1,484,126 10,676,891 29,454 6,227,305 27,082,271
----------------------- ---------- ----------- ---------- ------------- -------- -------------- -----------
Accumulated amortisation and
impairment
Balance at 31
December 2018 1,650,000 1,582,190 1,407,255 5,923,789 29,418 2,618,210 13,210,862
Amortisation
charge - - 75,226 1,078,771 - 381,452 1,535,449
Disposals - - - (60,389) - - (60,389)
Reclassified - - - - - - -
as held for sale
Exchange differences - 5,819 (4,634) 512 36 27,722 29,455
Balance at 30
June 2019 1,650,000 1,588,009 1,477,847 6,942,683 29,454 3,027,384 14,715,377
----------------------- ---------- ----------- ---------- ------------- -------- -------------- -----------
Net book value
At 31 December
2018 5,406,768 - 81,345 3,784,348 - 3,576,162 12,848,623
----------------------- ---------- ----------- ---------- ------------- -------- -------------- -----------
At 30 June 2019 5,426,486 - 6,279 3,734,208 - 3,199,921 12,366,894
----------------------- ---------- ----------- ---------- ------------- -------- -------------- -----------
7. Trade and other receivables
30 June 31 December
2019 2018
GBP GBP
------------------------------ ------------------------ -------------
Trade and other receivables 1,170,938 1,541,665
Prepayments and accrued
income 646,769 1,139,835
------------------------------ ------------------------ -------------
1,817,707 2,681,500
------------------------------ ------------------------ -------------
All amounts shown fall due for payment within one year.
8. Cash and cash equivalents
30 June 31 December
Note 2019 2018
GBP GBP
------------------------------- ------ -------------------------- ----------------------------
Cash and cash equivalents 277,510 467,033
Cash - held for sale 11 447,961 1,101,489
Restricted cash (18,382) (18,382)
Bank overdraft (970,994) -
------------------------------- ------ -------------------------- ----------------------------
Cash and cash equivalents
for Statement of cash flows (263,905) 1,550,140
------------------------------- ------ -------------------------- ----------------------------
Restricted cash relates to funds held in Swiss subsidiaries
which are currently undergoing liquidation. The funds are
restricted and are not included in the consolidated statement of
cash flows.
In July 2019, the bank overdraft was repaid in full on receipt
of the proceeds received on the RMG B2C disposal (see note 15).
9. Trade and other payables
30 June 31 December
Note 2019 2018
GBP GBP
--------------------------- ------ ------------------------ ----------------------------
Trade and other payables 3,209,567 1,896,184
Bank Overdraft 8 970,994 -
Accruals 550,830 588,408
--------------------------- ------ ------------------------ ----------------------------
4,731,391 2,484,592
--------------------------- ------ ------------------------ ----------------------------
The carrying value of trade and other payables classified as
financial liabilities measured at amortised cost approximates fair
value.
10. Discontinued operations
At the period end, the Group was sufficiently progressed with
active discussions concerning the remainder of the B2C real money
gaming brands and real money gaming platform, that these elements
have been classified as held for sale as at 30 June 2019. The sale
of the real money gaming assets completed in July 2019 (see note
15).
During the prior period, on 22 March 2018 the Group sold its
Affiliate Marketing CGU.
The results of both the real money gaming and affiliate
marketing segments are therefore presented as discontinued
operations in these financial statements.
Results of discontinued operations:
6M 6M
30 June 30 June
2019 2018
Unaudited Unaudited
B2C RMG GBP GBP
------------------------------- ---------------------------- ----------------------------
Revenue 5,762,066 8,262,231
Marketing expenses (640,772) (2,583,698)
Operating expenses (4,493,143) (3,479,517)
Administrative expenses (1,567,923) (1,610,505)
-------------------------------- ---------------------------- ----------------------------
EBITDA - RMG (939,772) 588,511
----------------------------
Amortisation of intangible
assets - (376,437)
Depreciation of property,
plant and equipment (5,813) (6,150)
Share of loss of associate (157,307) -
Finance income 273,851 -
------------------------------- ---------------------------- ----------------------------
(Loss) / profit for the
period - RMG (829,041) 205,924
-------------------------------- ---------------------------- ----------------------------
Affiliate Marketing
------------------------------- ---------------------------- ----------------------------
Revenue - 170,384
Marketing expenses - (20,834)
Operating expenses - (15,809)
Administrative expenses - (85,657)
-------------------------------- ---------------------------- ----------------------------
EBITDA - Affiliate Marketing - 48,084
-------------------------------- ---------------------------- ----------------------------
EBITDA for the period -
discontinued (939,772) 636,595
-------------------------------- ---------------------------- ----------------------------
(Loss) / profit for the
period - discontinued (829,041) 254,008
-------------------------------- ---------------------------- ----------------------------
11. Assets and liabilities classified as held for sale
The following major classes of assets and liabilities have been
classified as held for sale in the consolidated statement of
financial position at 30 June 2019 and 31 December 2018. These
assets and liabilities were disposed of on completion of the real
money gaming assets disposal in July 2019 (see note 15).
30 June 31 December
Note 2019 2018
GBP GBP
-------------------------------- ------ ----------- ------------
Non-current assets
Intangible assets - goodwill 1,699,000 1,699,000
Intangible assets - platform
development costs 1,687,030 1,266,788
Investment in associate 2,110,885 2,268,192
Property, plant and equipment 8,100 12,789
Other assets 32,000 32,000
---------------------------------------- ----------- ------------
5,537,015 5,278,769
--------------------------------------- ----------- ------------
Current assets
Trade and other receivables 913,717 1,388,330
Deferred consideration 3,897,276 3,623,425
Cash and cash equivalents 447,961 1,101,489
---------------------------------------- -----------
Assets held for sale 10,795,969 11,392,013
---------------------------------------- ----------- ------------
Current liabilities
Trade and other payables 4,101,471 4,830,076
---------------------------------------- ----------- ------------
Liabilities held for sale 4,101,471 4,830,076
---------------------------------------- ----------- ------------
12. Share capital
Ordinary Shares
30 June 30 June 31 December 31 December
2019 2019 2019 2019
Number GBP Number GBP
---------------------
Ordinary shares of 284,428,747 28,442,874 284,428,747 28,442,874
------------ ----------- ------------ ------------
10 pence each
--------------------- ------------ ----------- ------------ ------------
13. Arrangement with JackpotJoy
In December 2017 the Group entered into a complex transaction
with Jackpotjoy plc and Group companies (together 'Jackpotjoy
Group'). The transaction includes a GBP3.5m secured convertible
loan agreement alongside a 10-year framework services agreement for
the supply of various real money services.
The convertible loan principal of GBP3.5m was paid directly by
Jackpotjoy Group to RealNetworks to settle the outstanding $4.5m
(GBP3.4m) deferred consideration obligation, with the excess cash
of GBP0.1m transferred to the Group. Under the framework services
agreement the first GBP3.5m of services are provided free of charge
within the first 5 years.
The convertible loan has a duration of 5 years and carried
interest at 3-month LIBOR plus 5.5%. It is secured over the Group's
Slingo assets and business. At any time after the first year,
Jackpotjoy Group 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 Jackpotjoy Group. Under this arrangement the maximum
dilution to Gaming Realms shareholders will be approximately 11%
assuming the convertible loan is converted in full.
The option violates the fixed-for-fixed criteria for equity
classification as the number of shares is variable and as a result
is classified as a liability.
The fair value of the conversion feature is determined each
reporting date with changes recognised in profit or loss. The
initial fair value was GBP0.6m based on a probability assessment of
conversion and future share price. This is a level 3 valuation as
defined by IFRS 13. The fair value as at 30 June 2019 was GBP0.2m
(31 December 2018: GBP0.2m) based on revised probabilities of when
and if the option will be exercised. The key inputs into the
valuation model included timing of exercise by the counterparty
(based on a probability assessment) and the share price.
The initial fair value of the host debt was calculated as
GBP2.7m, being the present value of expected future cash outflows.
The rate used to discount future cash flows was 14.1%, being the
Group's incremental borrowing rate. The rate was calculated by
reference to the Group's cost of equity in the absence of reliable
alternative evidence of the Group's cost of borrowing given it is
predominantly equity funded. Expected cash flows are based on the
directors' judgement that a change in control event would not
occur. Subsequently the loan is carried at amortised cost.
The residual GBP0.2m of proceeds were allocated to the
obligation of provide free services.
Fair Fair
value Obligation value
of debt to provide of derivative
host free services Liability Total
GBP GBP GBP GBP
----------------------------- ---------- ---------------- ---------------- ----------
At 31 December 2018 2,795,602 209,000 200,000 3,204,602
Utilisation of free
services - (4,999) - (4,999)
Effective interest (14.4%) 198,488 - - 198,488
Interest paid (166,221) - - (166,221)
At 30 June 2019 2,827,869 204,001 200,000 3,231,870
----------------------------- ---------- ---------------- ---------------- ----------
14. Related party transactions
Jim Ryan is a non-executive Director of the Group and the CEO of
Pala Interactive. On 22 March 2016, Pala Interactive launched a
real-money online bingo site in New Jersey. The Bingo software is
provided by AlchemyBet Limited on a revenue share basis. During the
period, the total licence fees earned were $6,507 (H1 2018: $8,146)
with $1,390 due at 30 June 2019 (30 June 2018: $nil).
Jim Ryan is a non-executive Director of JackpotJoy Plc. In
December 2017 Gaming Realms entered into a 10-year framework
services agreement and a 5-year convertible loan agreement for
GBP3.5m with the Jackpotjoy Group (see note 13).
During the period GBP75,000 (H1 2018: GBP75,000) of consulting
fees were paid to Dawnglen Finance Limited, a company controlled by
Michael Buckley. No amounts were owed at the period end (H1 2018:
GBPnil).
Atul Bali is an advisor of Gamerail Entertainment LLC, a social
lottery gaming company. During H1 2018, a balance of $253,454
receivable in Blastworks, Inc. which arose from historical
transactions was fully provided for. No services were provided in
2018.
Atul Bali is an advisor to Instant Win Gaming. In April 2016,
Instant Win Gaming entered into an agreement with Bear Group
Limited to supply Instant Win Games on its online gaming websites.
During the period ended 30 June 2018, the total revenue share
payable by Bear Group Limited for the supply of game content
totalled GBP22,033 with GBP5,280 owed at 30 June 2018.
In addition, Instant Win Gaming has entered into a licensing
agreement with Blastworks Limited for the Slingo Brand. Instant Win
Game licensed the Slingo Brand to create and distribute Slingo
Branded Instant Win Games. During the period to 30 June 2018, total
license fees earned were GBP18,781, with GBP2,227 due at 30 June
2018.
Atul resigned on 30 June 2018 and therefore the above entities
ceased to be a related party on this date.
15. Events after reporting date
On 17 July 2019, the Group completed the proposed transaction to
(i) sell the entire issued share capital of Bear Group Limited,
(ii) license the Company's real money gaming platform, and (iii)
sell the Company's residual interest in River UK Casino Limited, to
River iGaming plc.
The cash consideration of the transaction is GBP11.5m on a
cash-free, debt-free basis. The transaction terminated the GBP4.2m
deferred consideration due on 31 August 2019 and the put/call
option over the Group's 30% shareholding of River UK Casino. The
Company has received an initial cash sum of GBP7.35m, with a
deferred consideration of GBP1.5m due on or before 31 December
2020. As part of the transaction, River has assumed GBP2.65m, being
the net liabilities of Bear Group Limited.
Included within the GBP0.3m loss on disposal expenses incurred
during the period, are GBP0.2m of expenses associated with the
above B2C RMG disposal. These expenses associated with the B2C RMG
disposal will be included in the profit on disposal of the segment
presentation which will be included in the 2019 full year financial
statements.
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 or visit www.rns.com.
END
IR CKPDDKBKBQCB
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