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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Gaming Realms Plc | LSE:GMR | London | Ordinary Share | GB00BBHXD542 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 36.00 | 35.80 | 36.40 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Computer Related Svcs, Nec | 18.76M | 3.61M | 0.0123 | 29.27 | 105.72M |
From Apr 2019 to Apr 2024
TIDMGMR
RNS Number : 4758D
Gaming Realms PLC
27 April 2017
Gaming Realms plc
("Gaming Realms" or the "Company")
Final Results for the year ended 31 December 2016
2016 Revenue Growth of 60%
Gaming Realms is a rapidly growing developer, publisher and licensor of mobile real money and social games. It creates unique and innovative real money online games and brands from which it generates revenue through real money gaming, social publishing and IP and content licensing.
2016 Financial Highlights:
-- Revenue grew by more than 60% to GBP34.0m (2015: GBP21.2m) for the year ended 31 December 2016. 106% growth excluding disposed non-core assets.
o Real money gaming revenue increased by 100% to GBP21.5m (2015: GBP10.8m).
o Daily social publishing revenue rose by 22% to GBP21,600 (2015: GBP17,747).
o Licensing revenue increased 700% to GBP0.8m (2015: GBP0.1m).
-- Improved profitability trend with H2/16 adjusted EBITDA of GBP2.0m (H2/15: loss GBP1.7m). -- Total new depositing players increased 47% to 249,355 (2015: 169,988).
-- Full year adjusted EBITDA loss reduced to GBP1.0m (2015: GBP4.1m) which includes an adjusted EBITDA loss of GBP1.8m (10 August 2015 to 31 December 2015: GBP1.5m) from social publishing.
2016 Operational Highlights:
-- Game library growth to 8 proprietary games on our Grizzly platform.
-- Own game content and IP generated 44% (2015: 34%) of real money gaming and social publishing revenue.
-- Strategic brand partnership deployments with Britain's Got Talent, the X Factor, Express Newspapers and Deal or No Deal.
-- Integration of real money gaming and social game development roadmap:
o Deployment of Slingo Arcade on Facebook and mobile featuring Slingo real money games and lottery game library.
-- IP licensing deals with Zynga and Scientific Games generated c. GBP0.7m in revenue in 2016.
-- Development of Remote Game Server completed for licensing of content to adjacent markets. Ready to generate new revenue vertical in 2017.
Current Trading Q1 2017:
-- Real money gaming, social publishing and licensing revenue growth c. 19% year-on-year. -- Content platform approved in New Jersey, USA:
o 4 new licensees - Caesar's Interactive, Pala Interactive, Resorts and one other US casino operator.
Patrick Southon, CEO of Gaming Realms said:
"2016 has been another year of progress for Gaming Realms. Rapidly growing revenues, reduced losses and EBITDA positive in H2. Having scaled the business our plan is to be profitable in 2017 by continuing to drive top line growth and allocating our capital towards real money gaming and content licensing, the most profitable parts of our business."
Enquiries:
Gaming Realms plc 0845 123 3773 Patrick Southon, CEO Mark Segal, CFO Peel Hunt LLP 020 7418 8900 Dan Webster Adrian Trimmings George Sellar Instinctif 020 7457 2020 Matthew Smallwood Justine Warren
About Gaming Realms
Gaming Realms, founded in 2012, creates and publishes innovative real money and social games for mobile, with operations in the UK and North America. 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 and driving market growth. The Gaming Realms management team includes accomplished entrepreneurs and experienced executives from a wide range of leading gaming and media companies who have significant experience of growing and managing businesses to a substantial size.
Chairman's Statement
2016 has been another year of significant progress for Gaming Realms. Revenue increased by more than 60% to GBP34.0m (2015: GBP21.2m). The Group also delivered its first profitable reporting period in H2/16 with an adjusted EBITDA profit of GBP2.0m (H2/15: loss of GBP1.7m), reinforcing the Board's view that its strategy of investing in high quality, high value assets and the focus on execution has allowed the Group to achieve strong top line growth while delivering an improving bottom line performance.
During the first half of 2016 non-core assets, including our bingo sites on a third-party platform were disposed of, focusing the Group on our own platform. In addition, we disposed of QuickThink Media to Ayima, integrating our in-house digital marketing agency with a high growth full service agency in exchange for an equity stake in Ayima.
2016 has also been the first full year of integration and operation of the Slingo IP and social publishing business acquired from Real Networks in H2/15. In addition to driving significant new content for our real money gaming business, this acquisition has delivered third party royalty savings as well as providing a significant new addressable market for Gaming Realms' game content, IP and marketing capability. During the year we created and deployed several new social apps and integrated aspects of the business with our real money gaming business. Through further operational synergies as well as innovative new product growth, it is our expectation that these investments and enhancements to the way we operate will deliver greater profitability in 2017.
The Board continues to review growth opportunities in adjacent markets for our existing content. The acquisition of the Slingo brand and IP has allowed us to achieve significant licensing partnerships with Scientific Games, Zynga and Instant Win Gaming which are already yielding c. GBP0.7m in recurring revenue with limited recurring cost.
With increased focus on producing our own proprietary games for our real money gaming business, we are developing additional high margin revenue opportunities in social and real money game content licensing markets. These will come on stream in 2017.
We are delighted with the performance of our real money gaming business in which we were awarded the Mobile Casino Product of the Year award by eGaming Review. This is a strong endorsement of our execution in 2016 and how our mobile first strategy is yielding significant growth over the twelve-month period.
Our investment in producing our own content and developing this on our own platform has allowed us greater flexibility to deliver high rate revenue growth. As we scale revenue across our fixed costs this will deliver increased margin and enable us to achieve greater bottom line contribution. Using our own platform has reduced content royalties by 39% in the last year alone. In addition, the revenue from new content distribution and further IP licensing will further drive high margin revenue across the same fixed costs.
In summary, the Group has never been in a better position to drive further profitable growth across our real money gaming and content licensing revenue streams.
Real money gaming delivered year on year revenue growth of c. 100%. The Group could have shown a small profit for the year had we decided to invest less heavily in the development and marketing of our new social publishing business. The social publishing EBITDA loss was GBP1.8m (10 August 2015 to 31 December 2015: GBP1.5m) due to new app development and new launches including the successful Slingo Arcade featuring our Slingo Original content.
Outlook for 2017
The Board has approved the 2017 operating plan which is to drive continued top line growth in UK real money gaming operations on our Grizzly platform and balance that with continuing to improve bottom line contribution from social publishing and content licensing. As in 2016, we will invest significantly in marketing during H1 particularly focused on the real money gaming business through strategic TV partnerships to build awareness and play frequency and reap the benefits of a scaled player base across the full year.
Following the disposal of our non-core assets in 2016, and as we continue to scale the business, we are now focused on profitable growth. We will allocate our capital and resources on the most profitable areas particularly real money gaming and our new content licensing revenue stream. Our plan is to achieve profitability for the full year in 2017.
We have announced an extension to our presence in New Jersey, having achieved both product and platform approval. With the addition of several new licensees including Caesar's Interactive, Pala Interactive, Resorts and one other US operator, we will introduce our real money Slingo games into the territory. We will continue to benefit from the investment in development and integration synergies which were undertaken during 2016 in our social publishing business.
Michael Buckley
Chairman
Chief Executive's Review
Overview
In 2016, the Group achieved market leading growth in its UK real money gaming business, integrated its new social business, built award winning content to complement its newly acquired IP and executed unique strategic partnerships with globally recognized brand licensors and gaming licensees.
The investment in both our proprietary platform and marketing has resulted in excellent growth in a competitive UK market place by allowing us to focus on a younger mobile based audience. Mobile now accounts for 84.0% (2015: 78.3%) of our player base.
Growth in 2016 has been supported by key media deals with Fremantle including the X Factor and Britain's Got Talent, which have allowed us to offer a more targeted gambling offering to our key demographic. We have augmented this by the in-house creation of 8 new unique 'Slingo Original' mobile games, which account for over GBP101m (2015: GBP56m) in wagering on the platform or 17% of the gross gaming revenue for the year. The most recent game Magic Mine is truly original in combining skill and chance as it attempts to mirror the 'fun element' of many social games, which are lacking in harder edged gambling products.
Overall wagering has increased by 51% to GBP609m (2015: GBP404m) and deposits have more than doubled to GBP49.0m (2015: GBP24.0m). As a more established platform we have been able to reduce bonus costs to 29% (2015: 43%) of gross gaming revenue and lessen direct costs associated with the operation to 35% (2015: 42%) of revenue. This has allowed greater focus on marketing and revenue growth in the year.
Demand for our unique content has been such that it has led to the development of a Remote Game Server ("RGS") which allows our 'Slingo Original' games to be licensed to third party operators as premium content. This will form an increasing part of our strategy in 2017 as we look to differentiate ourselves from our competitors, as well as expand the reach of our content into new territories. Licensing deals to Zynga, Scientific Games and Instant Win Games in 2016 have paved the way for further deployment of our content into new jurisdictions such as Quebec through the Provincial Lottery monopoly and New Jersey through iGaming and Pala Interactive.
We have further integrated the social business, bought from Real Networks in 2015, with the creation of a shared development path which now allows us to deliver content simultaneously to both real money gaming and social audiences. The first offering in this regard is Slingo Arcade which, following launch in late Q4/16 rapidly has become the second highest grossing social app, scaling to an average of $8,000 per day in March 2017. In future, emphasis will be on using this channel to monetize content developed for real money gaming similar to licensing our content to third party operators. This will have resulted in a reduction in headcount from 53 in June 2016 to approximately 29 in June 2017 within social publishing.
Disposal of non-core assets
During the year we disposed of our non-core legacy third party platform assets which has allowed us to focus resources on our higher margin proprietary mobile gaming platform and our own high performance game content.
The disposal of our in-house digital marketing agency in a strategic partnership between Gaming Realms and Ayima, has allowed the Group to benefit from an enlarged marketing capability. We have been seeing the benefits of this on our acquisition channels on Grizzly.
Marketing
As a result of our marketing strategy our cost per acquisition on our Grizzly platform was GBP86 (2015: GBP79), one of the lowest across the industry for a UK casino and we gained 116,349 (2015: 78,198) new depositing players in the year. Our revenue per depositing player increased 22% to GBP153 (2015: GBP125) which is reflective of the greater operational improvements in the business despite a lower than normal gaming margin in H2.
Market overview
We are continuing to focus on the younger more casual gambling demographic. We are targeting them through mobile delivery and original game IP. This is enabling us to acquire and engage players away from the more crowded, male orientated sportsbook market. The 25 to 34 year-old group are our largest segment accounting for over 40% of all players. A result of our content strategy, women are delivering higher lifetime values on the platform despite the fact that the active players, male to female ratio is 50:50.
Key Goals for 2017
-- Allocation of capital and investment to the most profitable business segments i.e. real money gaming and content licensing.
-- Focus on scaling UK real money gaming business for full year double digit revenue and profit growth.
-- New regulated third party licensees for Gaming Realms proprietary content.
-- Profitability in social publishing through integrated content development, marketing capability and focused marketing spend.
-- Continued proprietary content development available across all revenue streams -- Further expansion of strategic media partnerships across all revenue streams
Patrick Southon
Chief Executive Officer
Financial Review
Overview
Gaming Realms has delivered year-on-year revenue growth of more than 60% to GBP34.0m (2015: GBP21.2m). This growth is a result of our proprietary platform scaling in both real money gaming and social publishing. Real money gaming on the Grizzly platform has grown 100% to GBP21.5m (2015: GBP10.8m), with social gaming and licensing adding GBP8.7m (2015: GBP2.5m) of which content licensing was GBP0.8m (2015: GBP0.1m). In addition affiliate marketing of GBP1.8m (2015: GBP2.1m) and disposed white label operations and agency business of GBP1.9m (2015: GBP5.7m) included below under real money gaming and marketing services. Adjusted EBITDA loss was GBP1.0m (2015: GBP4.1m) because of the investment in social publishing which contributed an adjusted EBITDA loss of GBP1.8m (10 August 2015 to 31 December 2015: GBP1.5m) due to continued app development and new launches including Slingo Arcade.
Marketing for the year, excluding disposed assets, was GBP13.9m (2015: GBP9.1m) as the Group continued to acquire players to grow its platform and revenues.
During the year, Gaming Realms disposed of its non-core legacy third party assets and its digital agency assets into a strategic partnership with Ayima. This has resulted in a profit on disposal in the year of GBP0.3m.
2016
Hot Features
Premium
Real money
gaming
and marketing Social Total
services gaming Licensing Other 2016
GBP GBP GBP GBP GBP
---------------- --------------- ------------ ---------- ------------ -------------
Revenue 25,241,659 7,884,101 786,843 45,515 33,958,118
Marketing
expense (10,847,107) (3,937,053) - (26,756) (14,810,916)
Operating
expense (7,729,060) (1,608,789) - - (9,337,849)
Administrative (3,815,567) (4,140,794) (343,488) (2,526,921) (10,826,770)
---------------- --------------- ------------ ---------- ------------ -------------
Adjusted
EBITDA* 2,849,925 (1,802,535) 443,355 (2,508,162) (1,017,417)
---------------- --------------- ------------ ---------- ------------ -------------
2015
Real money
gaming
and marketing Social Total
services gaming Licensing Other 2015
GBP GBP GBP GBP GBP
---------------- --------------- ------------ ---------- ------------ -------------
Revenue 18,640,602 2,413,566 123,592 30,686 21,208,446
Marketing
expense (10,040,166) (1,404,699) - (65,890) (11,510,755)
Operating
expense (5,163,629) (561,626) - - (5,725,255)
Administrative (4,268,580) (1,940,543) (19,332) (1,851,397) (8,079,852)
---------------- --------------- ------------ ---------- ------------ -------------
Adjusted
EBITDA* (831,773) (1,493,302) 104,260 (1,886,601) (4,107,416)
---------------- --------------- ------------ ---------- ------------ -------------
Income statement items
Like-for-like revenue growth (excluding the disposed assets) was 106% to GBP32.0m (2015: GBP15.5m) driven by the increase in real money gaming and social publishing.
Real money gaming and marketing services
The increase in revenue in real money gaming to GBP21.5m (2015: GBP10.8m) reflects the continuing investment into development, GBP1.5m (2015: GBP1.8m) and marketing GBP9.6m (2015: GBP6.7m). The marketing performance has exceeded expectations in the year delivering 116,349 (2015: 78,198) new depositing players at a cost per acquisition of GBP86 (2015: GBP79). Marketing services including disposed non-core assets contributed GBP3.7m (2015: GBP7.8m) to Group revenue, of which affiliate marketing services contributed GBP1.8m (2015: GBP2.1m) in revenue.
Operating expenses include point of consumption tax, third party royalties and transaction costs. The total cost of GBP10.8m (2015: GBP10.0m) includes the increased costs of GBP7.6m (2015: GBP4.6m) with respect to our real money gaming vertical, because of the increase in revenue and size of the operation. However, due to operational leverage that scale gives us, we saw a reduction in the year to 35% (2015: 42%) as a proportion of revenue.
Real money gaming and marketing services delivered positive adjusted EBITDA of GBP2.8m (2015: loss of GBP0.8m).
Social gaming and licensing
Key highlights for 2016 include:
-- Completed development of RGS enabling a single development platform for our real money gaming operations, social publishing and content licensing.
-- Investments in regulatory approvals in New Jersey provides a new high margin growth market for our proprietary content.
-- New IP licensing revenue from Zynga and Scientific Games.
-- 22% annualised social publishing revenue growth despite limited impact of new investment in Slingo Arcade which was launched in December 2016.
-- Growth in player base to 1.2m (2015: 1.0m) average monthly active users.
Dividend
During the year, Gaming Realms did not pay an interim or final dividend. The Board of Directors are not proposing a final dividend for the current year.
Corporation and deferred taxation
The Group received GBP27,961 (2015: GBP213,083) in research and development credits in the year and has recognised the unwind of deferred tax of GBP248,941 (2015: GBP122,692) on business combinations.
Mark Segal
Chief Financial Officer
Consolidated Statement of Profit and Loss and Other Comprehensive Income
For the year ended 31 December 2016
1 January 1 January
2016 to 2015 to
31 December 31 December
2016 2015
Note GBP GBP
----------------------------------- ----- ------------- -------------
Revenue 33,958,118 21,208,446
Marketing expenses (14,810,915) (11,510,755)
Operating expenses (9,337,851) (5,725,255)
Administrative expenses (10,826,769) (8,079,852)
----------------------------------- ----- ------------- -------------
Adjusted EBITDA* (1,017,417) (4,107,416)
Acquisition costs 2 - (318,853)
Profit on disposal of digital
marketing agency and third-party
platform driven website
properties 2 318,834 -
Share-based payment (993,349) (673,730)
----------------------------------- ----- ------------- -------------
EBITDA (1,691,932) (5,099,999)
----------------------------------- ----- ------------- -------------
Amortisation of intangible
assets (3,979,941) (2,230,940)
Depreciation of property,
plant and equipment (120,789) (59,861)
Finance expense 5 (1,178,154) (393,579)
Finance income 5 3,022 7,579
----------------------------------- ----- ------------- -------------
Loss before tax (6,967,794) (7,776,800)
Tax credit 6 272,451 335,775
----------------------------------- ----- ------------- -------------
Loss for the financial
year (6,695,343) (7,441,025)
----------------------------------- ----- ------------- -------------
Other comprehensive income
Items which may change
in future periods:
Exchange losses arising
on translation of foreign
operations 1,836,352 605,546
----------------------------------- ----- ------------- -------------
Total other comprehensive
income 1,836,352 605,546
----------------------------------- ----- ------------- -------------
Total comprehensive income (4,858,991) (6,835,479)
----------------------------------- ----- ------------- -------------
Loss attributable to:
Owners of the parent (6,685,120) (7,441,025)
Non-controlling interest (10,223) -
(6,695,343) (7,441,025)
Total comprehensive income
attributable to:
Owners of the parent (4,882,234) (6,835,479)
Non-controlling interest 23,243 -
----------------------------------- ----- ------------- -------------
(4,858,991) (6,835,479)
----------------------------------- ----- ------------- -------------
Loss per share
Basic and diluted (pence) 7 (2.55) (3.45)
--------------------------- ------- -------
Consolidated Statement of Financial Position
As at 31 December 2016
31 December 31 December
2016 2015
Note GBP GBP
------------------------------- ----- ------------- -------------
Assets
Non-current assets
Property, plant and equipment 373,307 189,652
Goodwill 8 16,545,864 18,092,116
Available for sale investment 3 540,000 -
Intangible assets 8 12,115,973 10,835,685
Other assets 152,000 152,000
------------------------------- ----- ------------- -------------
29,727,144 29,269,453
------------------------------- ----- ------------- -------------
Current assets
Trade and other receivables 3,347,595 4,018,084
Cash and cash equivalents 2,616,267 2,536,388
------------------------------- ----- ------------- -------------
5,963,862 6,554,472
------------------------------- ----- ------------- -------------
Total assets 35,691,006 35,823,925
------------------------------- ----- ------------- -------------
Liabilities
Current liabilities
Trade and other payables 7,058,781 4,327,965
Deferred and contingent
consideration 3,135,356 4,990,966
------------------------------- ----- ------------- -------------
10,194,137 9,318,931
------------------------------- ----- ------------- -------------
Non-current liabilities
Deferred tax liability 1,202,889 1,232,597
Deferred and contingent
consideration - 2,474,533
1,202,889 3,707,130
------------------------------- ----- ------------- -------------
Total liabilities 11,397,026 13,026,061
------------------------------- ----- ------------- -------------
Net assets 24,293,980 22,797,864
------------------------------- ----- ------------- -------------
Equity
Share capital 9 27,413,329 24,920,829
Share premium 87,095,455 85,127,955
Merger reserve (67,673,657) (68,393,657)
Foreign exchange reserve 2,408,432 605,546
Retained earnings (25,154,580) (19,462,809)
------------------------------- ----- ------------- -------------
Total equity attributable
to owners of the parent 24,088,979 22,797,864
------------------------------- ----- ------------- -------------
Non-controlling interest 205,001 -
------------------------------- ----- ------------- -------------
Total equity 24,293,980 22,797,864
------------------------------- ----- ------------- -------------
Consolidated Statement of Cash Flows
For the year ended 31 December 2016
2016 2015
Note GBP GBP
----------------------------------- ----- ------------ ------------
Cash flows from operating
activities
Loss for the year (6,695,343) (7,441,025)
Adjustments for:
Depreciation of property,
plant and equipment 120,789 59,861
Amortisation of intangible
fixed assets 8 3,979,941 2,230,940
Finance income 5 (3,022) (7,579)
Finance expense 5 36,850 21,409
Movement in deferred and
contingent consideration 5 1,141,304 372,170
Contingent consideration
on prior period acquisitions - 105,000
Unrealised currency translation
gains (191,548) -
Unwind of deferred tax
recognised on business
acquisitions 6 (248,941) (122,692)
Loss on disposal of property,
plant and equipment 6,531 42,372
Loss on disposal of intangible
assets 8 - 106,043
Profit on disposal of digital
marketing agency and third-party
platform driven website
properties 3 (318,834) -
Share-based payment expense 993,349 673,730
----------------------------------- ----- ------------ ------------
Increase/(decrease) in
trade and other receivables 643,961 (1,177,150)
Increase in trade and other
payables 2,759,244 1,458,801
Decrease in other assets - 6,500
----------------------------------- ----- ------------ ------------
Net cash flows from operating
activities 2,224,281 (3,671,620)
----------------------------------- ----- ------------ ------------
Investing activities
Acquisition of subsidiary,
net of cash acquired 10 18,759 (6,652,050)
Purchases of property,
plant and equipment (289,256) (68,055)
Purchase of intangibles 8 (3,969,611) (1,805,913)
Proceeds from disposal
of third-party platform
driven website properties 1,200,000 -
Interest received 5 3,022 7,579
----------------------------------- ----- ------------ ------------
Net cash from investing
activities (3,037,086) (8,518,439)
----------------------------------- ----- ------------ ------------
Financing activities
Proceeds of Ordinary Share
issue 4,025,000 12,500,000
Issuance cost of shares (45,000) (501,534) Payment of deferred consideration (3,071,447) (1,250,000) Repayment of other loans - (14,504) Interest paid 5 (36,850) (21,409) Net cash from financing activities 871,703 10,712,553 Net increase/(decrease) in cash and cash equivalents 58,898 (1,477,506) Cash and cash equivalents at beginning of year 2,516,820 3,994,326 ----------------------------------- ----- ------------ ------------ Exchange gains on cash and cash equivalents 21,747 - ----------------------------------- ----- ------------ ------------ Cash and cash equivalents at end of year 2,597,465 2,516,820 ----------------------------------- ----- ------------ ------------
Consolidated Statement of Changes in Equity
For the year ended 31 December 2016
Total
Foreign to equity
Share Share Merger exchange Retained holders Non-controlling Total
capital premium reserve reserve earnings of parent interest equity
GBP GBP GBP GBP GBP GBP GBP GBP
----------------- ----------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
1 January
2015 19,517,049 78,119,547 (69,334,935) - (12,695,514) 15,606,147 - 15,606,147
Loss for the
year - - - - (7,441,025) (7,441,025) - (7,441,025)
Other
comprehensive
income - - 605,546 - 605,546 - 605,546
----------------- ----------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
Total
comprehensive
income for
the year - - - 605,546 (7,441,025) (6,835,479) - (6,835,479)
----------------- ----------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
Contributions
by and
distributions
to owners
Shares issued
as part of
the
consideration
in a business
combination 413,722 - 941,278 - - 1,355,000 - 1,355,000
Shares issued
as part of
the capital
raising 4,990,058 7,509,942 - - - 12,500,000 - 12,500,000
Cost of issue
of Ordinary
Share capital - (501,534) - - - (501,534) - (501,534)
Share-based
payment on
share options - - - - 673,730 673,730 - 673,730
----------------- ----------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
31 December
2015 24,920,829 85,127,955 (68,393,657) 605,546 (19,462,809) 22,797,864 - 22,797,864
----------------- ----------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
Loss for the
year - - - - (6,685,120) (6,685,120) (10,223) (6,695,343)
Other
comprehensive
income - - - 1,802,886 - 1,802,886 33,466 1,836,352
----------------- ----------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
Total
comprehensive
income for
the year - - - 1,802,886 (6,685,120) (4,882,234) 23,243 (4,858,991)
----------------- ----------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
Contributions
by and
distributions
to owners
Shares issued
as part of
the
consideration
in a business
combination 480,000 - 720,000 - - 1,200,000 - 1,200,000
Shares issued
as part of
the capital
raising 2,012,500 2,012,500 - - - 4,025,000 - 4,025,000
Cost of issue
of Ordinary
Share capital - (45,000) - - - (45,000) - (45,000)
Share-based
payment on
share options - - - - 993,349 993,349 - 993,349
Non-controlling
interests
on acquisition
of subsidiary - - - - - - 181,758 181,758
----------------- ----------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
31 December
2016 27,413,329 87,095,455 (67,673,657) 2,408,432 (25,154,580) 24,088,979 205,001 24,293,980
----------------- ----------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
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 One Valentine Place, London, SE1 8QH.
Basis of preparation
The principal accounting policies adopted in the preparation of the consolidated financial statements are set out below.
The consolidated financial statements are presented in sterling.
These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) as adopted by the EU.
The financial information set out in this document does not constitute the Group's statutory accounts for the year ended 31 December 2015 or 31 December 2016.
Statutory accounts for the year ended 31 December 2015 have been filed with the Registrar of Companies and those for the year ended 31 December 2016 will be delivered to the Registrar in due course; both have been reported on by independent auditors. The independent auditors' reports on the Annual Report and Accounts for the year ended 31 December 2015 and 31 December 2016 were 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.
The preparation of financial statements in compliance with adopted IFRSs requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies.
Basis of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the Company as at 31 December 2016 and the results of all subsidiaries for the year then ended.
Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.
Going concern
The financial statements have been prepared on a going concern basis. In August 2017 the final deferred consideration of $4m falls due to Real Networks from the acquisition made on 10 August 2015. The Directors have received draft terms, subject to normal commercial agreements, for an external debt facility of up to GBP5m and therefore have confidence that sufficient funds can be raised. The Directors will consider the approval of this external debt facility along with other options available to them.
Having reviewed the forecasts of the business and based on the status of current discussions with regards additional investment or financing, the Directors have a reasonable expectation to believe it is appropriate to continue to prepare the financial statements on a going concern basis.
2. Adjusted EBITDA
2016 2015
GBP GBP
---------------------------- ---------- ----------
Acquisition costs - (318,853)
Profit on disposal of 318,834 -
digital marketing agency
and third-party platform
driven website properties
Share-based payments (993,349) (673,730)
----------------------------- ---------- ----------
(674,515) (992,583)
---------------------------- ---------- ----------
3. Profit on disposal
Disposal of third-party platform driven website properties
On 4 March 2016, the Group disposed of its third-party platform driven website properties, for a total consideration of GBP2.4m. Black Spark Media Limited paid the Group an upfront cash payment of GBP1.2m with the remaining GBP1.2m payable by Silverspin Media Limited, was settled by way of waiving the final earn out payment to the previous shareholders of Blueburra Holding Limited. This is due as part of the three-year earn out and is being settled at a reduced rate by the Group. Chris Phillips and Scott Logan, shareholders of Silverspin Media, and were Directors of the Company's subsidiaries Blueburra Holdings Limited and Digital Blue Limited at the time of the disposal and are therefore classified as related parties. The above waiving of GBP1.2m contingent consideration in exchange for the disposal of assets constitutes a major non-cash transaction in the year. An additional GBP500,000 is receivable under a transitional services agreement over a 5-month period with Black Spark Media Limited.
2016
GBP
-------------------------------------- ----------
Consideration received
Cash consideration 1,200,000
Contingent consideration waived with
respect to the Blueburra Holdings
Limited 1,200,000
-------------------------------------- ----------
2,400,000
-------------------------------------- ----------
Net assets disposed:
Property, plant and equipment 427
Intangible 246,081
Goodwill 2,266,241
Trade and other receivables 14,763
Trade and other payables (108,060)
-------------------------------------- ----------
2,419,452
-------------------------------------- ----------
Loss on disposal of the third-party
platform driven website properties (19,452)
-------------------------------------- ----------
Disposal of digital marketing agency
On 6 June 2016, the Group entered into a strategic partnership with digital marketing company Ayima Limited. Under the terms of the partnership, the Group has agreed to contribute assets comprising its external digital marketing agency to Ayima Limited. As consideration for the disposal of the Assets, the Group were issued shares to 10% of the enlarged issued share capital of Ayima Limited. The 10% shares have been valued at approximately GBP540,000, based on a valuation performed by an external advisor. This is a level 3 valuation as defined by IFRS 13. The valuation is based on the net present value of future results. The directors consider the value unchanged at the reporting date.
2016
GBP
---------------------------------------- ---------
Consideration received
Available-for-sale investment in Ayima
Limited 540,000
Net assets disposed:
Property, plant and equipment 4,190
Goodwill 247,524
Trade and other payables (50,000)
---------------------------------------- ---------
201,714
---------------------------------------- ---------
Profit on disposal of the digital
marketing agency 338,286
---------------------------------------- ---------
4. 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 three reportable segment. The social publishing provides freemium games to the US and Europe. Licensing includes IP brand and content licensing to partners in the US and Europe. The real money gaming products and marketing services operates our brands and provides other digital marketing services to both gaming and non-gaming clients in the UK.
During the year, the Group disposed of the digital marketing agency and third-party platform driven website properties previously included in the real money gaming and marketing services segments.
Revenue by product:
2016 2015
GBP GBP
--------------------------------- ----------- -----------
Real money gaming and affiliate
marketing 23,313,208 12,933,225
Disposed white label and
agency business 1,928,451 5,707,377
Social publishing 7,884,101 2,413,566
Licensing 786,843 123,592
Other 45,515 30,686
--------------------------------- ----------- -----------
33,958,118 21,208,446
--------------------------------- ----------- -----------
There was 0 (2015: 1) customer who generated more than 10% of total revenue. Total sales to this customer, which received marketing services in the prior year were GBP1,296,670.
Geographical information
The Group considers that its primary geographic regions are the UK, including Channel Islands, US and the Rest of World. No revenue is derived from real money gaming in the US. Revenues from customers outside the UK (including Channel Islands) and US are not considered sufficiently significant to warrant separate reporting. All non-current assets are based in the UK.
External External
revenue revenue
by location by location
of customers of customers
2016 2015
GBP GBP
------------------------------- -------------- --------------
UK, including Channel Islands 23,925,469 17,656,043
US 6,754,016 1,752,753
Rest of the World 3,278,633 1,799,650
------------------------------- -------------- --------------
33,958,118 21,208,446
------------------------------- -------------- --------------
Segmental reporting for the year is as below:
Real
money
gaming
and marketing Social Other Total
services gaming Licensing ^ 2016
GBP GBP GBP GBP GBP
----------------- --------------- ------------ ---------- ------------ -------------
Revenue 25,241,659 7,884,101 786,843 45,515 33,958,118
Marketing
expense (10,847,107) (3,937,053) - (26,756) (14,810,916)
Operating
expense (7,729,060) (1,608,789) - - (9,337,849)
Administrative (3,815,567) (4,140,794) (343,488) (2,526,921) (10,826,770)
----------------- --------------- ------------ ---------- ------------ -------------
Adjusted
EBITDA 2,849,925 (1,802,535) 443,355 (2,508,162) (1,017,417)
----------------- --------------- ------------ ---------- ------------ -------------
Profit on
disposal
of digital
marketing
agency and
third-party
platform
driven website
properties 318,834
Share-based
payment (993,349)
----------------- --------------- ------------ ---------- ------------ -------------
EBITDA (1,691,932)
----------------- --------------- ------------ ---------- ------------ -------------
Amortisation
of Intangible
assets (3,979,941)
Depreciation
of property,
plant and
equipment (120,789)
Finance expense (1,178,154)
Finance income 3,022
----------------- --------------- ------------ ---------- ------------ -------------
Loss before
tax (6,967,794)
----------------- --------------- ------------ ---------- ------------ -------------
Real
money
gaming
and marketing Social Total
services gaming Licensing Other^ 2015
GBP GBP GBP GBP GBP
----------------- --------------- ------------ ---------- ------------ ------------- Revenue 18,640,602 2,413,566 123,592 30,686 21,208,446 Marketing expense (10,040,166) (1,404,699) - (65,890) (11,510,755) Operating expense (5,163,629) (561,626) - - (5,725,255) Administrative (4,268,580) (1,940,543) (19,332) (1,851,397) (8,079,852) ----------------- --------------- ------------ ---------- ------------ ------------- Adjusted EBITDA (831,773) (1,493,302) 104,260 (1,886,601) (4,107,416) ----------------- --------------- ------------ ---------- ------------ ------------- Listing and acquisition costs (318,853) Share-based payment (673,730) ----------------- --------------- ------------ ---------- ------------ ------------- EBITDA (5,099,999) ----------------- --------------- ------------ ---------- ------------ ------------- Amortisation of Intangible assets (2,230,940) Depreciation of property, plant and equipment (59,861) Finance expense (393,579) Finance income 7,579 ----------------- --------------- ------------ ---------- ------------ ------------- Loss before tax (7,776,800) ----------------- --------------- ------------ ---------- ------------ -------------
^ Other segment noted above includes unallocated head office activities. Management do not report segmental assets and liabilities internally and as such an analysis is not reported.
5. Finance income and expense
2016 2015
GBP GBP
---------------------------- ---------- ----------
Finance income
Interest received 3,022 7,579
---------------------------- ---------- ----------
Total finance income 3,022 7,579
---------------------------- ---------- ----------
Finance expense
Bank interest expense paid 36,850 21,409
Deferred and contingent
consideration movement 292,212 233,053
Fair-value adjustment of
contingent consideration - (134,017)
Foreign exchange movement
on deferred consideration 849,092 273,134
---------------------------- ---------- ----------
Total finance expense 1,178,154 393,579
---------------------------- ---------- ----------
The deferred consideration in relation to the acquisition from RealNetworks, Inc. was retranslated at the year-end exchange rate which resulted in a GBP849,092 (2015: GBP273,134) charge in the current year.
6. Tax expense
2016 2015
GBP GBP
------------------------------- -------- --------
Tax expense
Current tax expense
Adjustment for over provision (4,451) -
in prior periods
Current tax credit on losses
for the period 27,961 213,083
------------------------------- -------- --------
Total current tax 23,510 213,083
------------------------------- -------- --------
Deferred tax expense
Origination and reversal of
temporary differences 248,941 122,692
------------------------------- -------- --------
Total deferred tax 248,941 122,692
------------------------------- -------- --------
Total tax expense 272,451 335,775
------------------------------- -------- --------
The reasons for the difference between the actual tax charge for the period and the standard rate of corporation tax in the UK applied to profits for the year are as follows:
2016 2015
GBP GBP
----------------------------------- ------------ ------------
Loss for the period (6,967,794) (7,776,800)
Expected tax at effective
rate of corporation tax in
the UK of 20% (2015: 20.25%) (1,393,559) (1,574,802)
Expenses not deductible for
tax purposes 224,896 273,077
Depreciation in excess of
capital allowances 7,543 18,501
Effects of overseas taxation (224,795) 316,501
Unwind of deferred tax recognised
on business acquisitions (248,941) (122,692)
Research & development tax
credit (27,961) (213,083)
Adjustment for over provision
in prior periods 4,451 -
Tax losses carried forward 1,385,915 966,723
----------------------------------- ------------ ------------
Total tax credit (272,451) (335,775)
----------------------------------- ------------ ------------
7. Loss per share
Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of shares in issue during the year. For fully diluted loss per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of dilutive potential ordinary shares. The Group's potentially dilutive securities consist of share options and performance shares. As the Group is loss-making, none of the potentially dilutive securities are currently dilutive.
2016 2015
GBP GBP
-------------------------------------- ------------ ------------
Loss after tax (6,695,343) (7,441,025)
-------------------------------------- ------------ ------------
Number Number
-------------------------------------- ------------ ------------
Weighted average number of
ordinary shares used in calculating
basic loss per share 262,432,743 215,672,706
-------------------------------------- ------------ ------------
Weighted average number of
ordinary shares used in calculating
dilutive loss per share 262,432,743 215,672,706
-------------------------------------- ------------ ------------
Basic and diluted loss per
share (pence) (2.55) (3.45)
-------------------------------------- ------------ ------------
8. Intangible assets
Customer Development Domain Intellectual
Goodwill database Software costs names property Total
GBP GBP GBP GBP GBP GBP GBP
------------------- ------------ ---------- ---------- ------------ -------- ------------- ------------
Cost
Balance at
1 Jan 2015 13,543,905 3,189,553 361,684 1,082,811 26,514 - 18,204,467
Acquired
through business
combination 4,300,671 1,289,563 1,039,236 - 320,832 5,076,493 12,026,795
Additions - - - 1,805,913 - - 1,805,913
Disposals - - (361,684) - - - (361,684)
FX movement 247,540 64,532 52,005 - 16,055 277,886 658,018
------------------- ------------ ---------- ---------- ------------ -------- ------------- ------------
At 31 December
2015 18,092,116 4,543,648 1,091,241 2,888,724 363,401 5,354,379 32,333,509
------------------- ------------ ---------- ---------- ------------ -------- ------------- ------------
Acquired
through business
combination
(Note 10) 75,413 - 217,216 - - - 292,629
Additions - - - 3,969,611 - - 3,969,611
Disposals (2,513,765) (698,446) - - - - (3,212,211)
FX movement 892,100 266,769 230,043 - 66,217 1,047,051 2,502,180
------------------- ------------ ---------- ---------- ------------ -------- ------------- ------------
At 31 December
2016 16,545,864 4,111,971 1,538,500 6,858,335 429,618 6,401,430 35,885,718
------------------- ------------ ---------- ---------- ------------ -------- ------------- ------------
Amortisation
Balance at
1 Jan 2015 - 857,986 222,834 365,795 428 - 1,447,043
Disposals - - (255,641) - - - (255,641)
FX movement - (4,711) (3,797) - (1,172) (6,954) (16,634)
Amortisation
charge - 1,202,670 172,321 554,061 46,325 255,563 2,230,940
------------------- ------------ ---------- ---------- ------------ -------- ------------- ------------
At 31 December
2015 - 2,055,945 135,717 919,856 45,581 248,609 3,405,708
------------------- ------------ ---------- ---------- ------------ -------- ------------- ------------ Amortisation charge - 1,156,153 440,219 1,517,989 132,965 732,615 3,979,941 Disposals - (452,365) - - - - (452,365) FX movement - 81,939 67,052 260 20,386 120,960 290,597 ------------------- ------------ ---------- ---------- ------------ -------- ------------- ------------ At 31 December 2016 - 2,841,672 642,988 2,438,105 198,932 1,102,184 7,223,881 ------------------- ------------ ---------- ---------- ------------ -------- ------------- ------------ Net book value At 1 January 2015 13,543,905 2,331,567 138,850 717,016 26,086 - 16,757,424 ------------------- ------------ ---------- ---------- ------------ -------- ------------- ------------ At 31 December 2015 18,092,116 2,487,703 955,524 1,968,868 317,820 5,105,770 28,927,801 ------------------- ------------ ---------- ---------- ------------ -------- ------------- ------------ At 31 December 2016 16,545,864 1,270,299 895,512 4,420,230 230,686 5,299,246 28,661,837 ------------------- ------------ ---------- ---------- ------------ -------- ------------- ------------
9. Share capital
Ordinary shares
2016 2016 2015 2015
Number GBP Number GBP
----------------- ------------ ----------- ------------ -----------
Ordinary shares
of 10 pence
each 274,133,292 27,413,329 249,208,292 24,920,829
----------------- ------------ ----------- ------------ -----------
On 2 March 2016, 7,625,000 shares were issued at GBP0.20 per share for a total consideration of GBP1,525,000.
On 9 June 2016, 4,800,000 shares were issued at GBP0.25 per share to the previous shareholders of Blueburra Holdings Limited to satisfy the final GBP1,200,000 share element of vendor consideration.
On 2 September 2016, 12,500,000 shares were issued at GBP0.20 per share for a total consideration of GBP2,500,000.
10. Business combinations during the YEAR
Acquisition of Hullabu Inc
On 22 July 2016, Blastworks Inc acquired 62.5% of the share capital of Hullabu Inc a company that develops and publishes social games. Hullabu Inc in conjunction with Blastworks Inc, developed, published and marketed the Hidden Artefacts game, the acquisition of Hullabu Inc is expected to expedite the development and growth of Hidden Artefacts. Details of the fair value of identifiable assets and liabilities acquired and purchase consideration and goodwill are as follows:
Book Adjustment Fair
value GBP value
GBP GBP
----------------------------- -------- ----------- ----------
Software - 217,216 217,216
Trade and other receivables 378,344 - 378,344
Cash 18,759 - 18,759
Trade and other payables (2,516) (127,114) (129,630)
Total net assets 394,587 90,102 484,689
----------------------------- -------- ----------- ----------
Less: Non-controlling
interest at fair value (181,758)
----------------------------- -------- ----------- ----------
Total attributable net
assets 302,931
----------------------------- -------- ----------- ----------
GBP
--------------------------------------- --------
Deferred consideration - Loan note 378,344
--------------------------------------- --------
Total consideration 378,344
--------------------------------------- --------
Goodwill arising on acquisition (Note
8) 75,413
--------------------------------------- --------
The existing shareholders of Hullabu Inc, issued new shares equating to 62.5% of the overall share capital of Hullabu Inc in exchange for a loan note of $500,000. The loan is expected to be repaid monthly over a twelve-month period.
Goodwill recognised in the acquisition of Hullabu Inc relates to the presence of certain intangible assets such as an experienced workforce, which do not qualify for separate recognition. Prior to acquisition for the period 1 January 2016 to 21 July 2016, the revenue generated was $111,123 and loss after tax was $34,670. Since acquisition, Hullabu Inc generated $124,285 in revenue and loss after tax of $109,604.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR IFMLTMBITBIR
(END) Dow Jones Newswires
April 27, 2017 02:01 ET (06:01 GMT)
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