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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% | 31.20 | 31.20 | 31.70 | 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 | 25.77 | 93.09M |
From Apr 2019 to Apr 2024
TIDMGMR
RNS Number : 2784Y
Gaming Realms PLC
08 September 2020
Gaming Realms plc
(the "Company" or the "Group")
Interim Results
Revenue growth of 66%
High margin revenue growth resulting in significant operational leverage - adjusted EBITDA growing from GBP(0.1)m to GBP1.24m
Gaming Realms plc (AIM: GMR) is pleased to announce its interim results for the six months to 30 June 2020 (the "Period" or "H1'20").
The Company grew revenues 66% from GBP3.1m in H1'19 to GBP5.2m in H1'20. The Group's revenues generate high margins, and in combination with a relatively stable fixed cost base, resulted in Adjusted EBITDA growing from GBP(0.1)m to GBP1.24m. Adjusted EBITDA margin for the Period was 23.9%.
About Gaming Realms
Introduction
Gaming Realms is a developer and licensor of award-winning real money games. It is the owner of Slingo(R), a highly popular and unique game genre which combines elements of slot, bingo and table gameplay. In a highly crowded online casino games market (with most operators having hundreds of games on their sites), it is apparent that Slingo games are able to get to the forefront of players attention, through its unique brand and format.
The Company's real money Slingo games are licensed by some of the biggest online gaming operators in the world, including DraftKings, Sky Betting & Gaming and GVC ("Operators"). The games are primarily distributed to these Operators, via global distribution partners such as Scientific Games and Relax Gaming ("Distributors") using the Company's proprietary Remote Game Server ("RGS") platform.
In addition to licensing its real money games, the Company also generates revenue from licensing the Slingo brand/IP to adjacent markets (e.g. lottery scratch cards), and from publishing its Slingo games in the social casino market.
The Company has an experienced team of 62 employees, based in London, New Jersey and Vancouver Island, who are focused on increasing distribution, the development of new games and the RGS.
Markets - large and growing
The Company's games are distributed globally. In H1'20, 56% of revenues were generated in the US with the balance generated in other markets. The international online casino market is a large and high growth market, having grown at a compound rate of 11% over the last five years and today is worth $17.2bn. The newly regulated US online gaming market presents a significant opportunity for the Company going forward, and is expected to grow at a compound rate of 17% from 2020 to 2025, expected to be worth $6.1bn by 2025. The Company already licenses its games in the regulated New Jersey market, which, year-on-year grew 94.7% with the Company maintaining its market share of 3.5% of total gross gaming revenues. Subject to regulatory approvals, the Company expects to be licensing its games in Pennsylvania by the start of 2021, followed by Michigan and further states thereafter as and when they regulate.
Route to market - strong relationships and scalable
The Company's strong relationships with Distributors and Operators has been key to unlocking new markets and to further penetrate existing markets. The Company's business model of primarily using Distributors to access Operators, and Operators to access end players, is highly scalable - as demonstrated by the financial performance in the Period, during which the Company has been able to grow revenues with little additional variable cost, resulting in significant operational leverage.
Gaming Realms also has strong relationships with consumer brand owners such as Hasbro and Endemol, where the Company has created unique Slingo games - such has Slingo Monopoly and Slingo Deal or No Deal respectively. This product innovation shows how Slingo continues to be very popular with players.
Growth strategy
The Company has clear and attainable growth opportunities:
-- Expanding internationally - specifically focusing on newly regulated US markets such as Pennsylvania and Michigan;
Hot Features
Premium
-- Adding new Distributors, Operators and IP licensees ("Customers"); and
-- Further penetrating existing Customers, primarily through continuing to extend our game portfolio.
Financial highlights for the Period:
H1 2020 H1 2019 Movement
*
GBPm GBPm %
Revenue - Licensing 3.4 1.7 104%
Revenue - Social 1.8 1.4 29%
Revenue - Other 0.0 0.1 (97%)
-------- -------- ----------
Total 5.2 3.1 66%
Adjusted EBITDA1 [1] 1.24 (0.1)
* H1/19 excludes RMG segment classified as discontinued operations (see note 11)
-- Licensing revenue grew 104% to GBP3.4m (H1'19: GBP1.7m) due to an increase in distribution and an expanded games portfolio;
-- Social revenue increased 29% to GBP1.8m (H1'19: GBP1.4m) due to an increase in new Slingo content being produced and also improved player management and new player engagement features ;
-- Revenue growth has benefitted from the effects of the COVID-19 lockdown, however, the Company has maintained similar levels of growth post Period-end, giving the Board confidence in the future performance of the Company; and
-- Adjusted EBITDA for continuing operations increased to GBP1.24m (H1'19: Loss of GBP0.1m) due to the high margin nature of Licensing and the relatively stable fixed cost base, resulting in significant operational leverage being achieved.
Operational highlights:
International expansion and increased distribution:
-- Went live with five tier-1 Operators: Gamesys, Sky Betting & Gaming, 888 Casino in the UK, DraftKings in New Jersey, US, and Caliente in Mexico;
-- Filed for game content supplier licence in Pennsylvania.
Extending game portfolio:
-- Released four new games into the market, including Slingo Centurion in partnership with Inspired Entertainment. The Group now has 40 games in its portfolio (Dec'19: 34 games).
Post-Period end trading:
Financial highlights:
-- Licensing revenue increased 140% in the two months post Period-end compared to the same period in 2019;
-- Social revenue increased 56% in the two months post Period-end compared to the same period in 2019;
-- Cash balance of GBP1.9m as at 31 August 2020; and
-- The Board expects FY20 to be cash flow positive as a result of high margin growth offsetting development costs spent on new games and the RGS platform.
Operational highlights:
International expansion and increased distribution :
-- Live with three new Operators (total 53); including Jumpman Gaming, White Hat Gaming and MrQ;
-- Distribution deal signed with Oryx Gaming a major European games distributor; and -- Direct integration and expanded deal in US with Rush Street Interactive.
Extending game portfolio:
-- Release of two new Slingo games
Outlook for FY20:
Gaming Realms has made considerable progress during the first half of the year in delivering on its long-term growth strategy of developing and licensing games using its proprietary Slingo IP. The Group added four new games to its Slingo Originals portfolio, taking the total number of games to 40. This momentum is expected to continue into the second half with the roll-out of additional proprietary content to take advantage of an increasing number of players globally.
The Company has strategically expanded its network of distribution partners in order to bring its Slingo Originals content to a greater international audience. Recent partnership agreements with DraftKings and Oryx Gaming have consolidated and expanded Gaming Realms' presence in the US and Europe respectively, and the business continues to increase its US footprint with planned launches in Pennsylvania and Michigan over the next 18 months. The Group will make further license applications in the US as more states move to regulate online casinos.
As Gaming Realms' investment in game development and licensing continues to yield strong growth, the Company expects trading for FY20 to be in line with market expectations. The Company enters H2'20 in a strong position and will be updating shareholders on its progress in due course.
Commenting on the first half performance, Michael Buckley, Executive Chairman, said:
"Our exceptional performance in the first half of this year is testament to the strength of the Company's strategy of developing and licensing games to market-leading brands and gaming operators using our Slingo IP, which continues to deliver high margin revenues. Whilst our results were enhanced during the COVID-19 period of self-isolation, I am pleased to say revenues in the second half are holding onto levels achieved during the first six months.
"We are delighted to report that our innovative Slingo Originals content continues to gain momentum, reaching new international audiences thanks to our global network of distribution partners. We remain committed to building on this, and growing our global reach during the second half of the year by investing in our unique content and securing further strategic partnership deals. Our planned expansion into Pennsylvania and Michigan is hugely exciting and is set to significantly increase our foothold in the US, whilst reducing our dependency on the UK market.
"The Group is currently performing in line with market expectations and, with a number of new commercial developments in the pipeline, the Board is confident in the future performance of the business."
Enquiries
Gaming Realms plc 0845 123 3773 Michael Buckley, Executive Chairman Mark Segal, CFO Peel Hunt LLP - NOMAD and broker 020 7418 8900 George Sellar Andrew Clark Will Bell Yellow Jersey 020 3004 9512 Charles Goodwin Georgia Colkin Annabel Atkins
Business review
Overview
Overall Group revenues increased 66%, while total continuing expenses increased by 22% compared to the previous period. As a result, the Board is pleased to report that the Group has achieved EBITDA positivity for the Period, delivering GBP1.2m of adjusted EBITDA in the period compared with an adjusted EBITDA loss of GBP0.1m in the previous period. The high revenue growth achieved was primarily driven by the 104% growth in Licensing revenues compared with the comparative period, supplemented by the strong performance of the Social business.
Licensing
The Licensing business has continued the strong momentum built up through 2019, with revenue for the Period increasing 104% to GBP3.4m (H1'19: GBP1.7m). This growth is driven by the 14 partners that went live through 2019 as well as a further eight partners going live in H1'20. Four Slingo games were released to the market in H1'20 (H1'19: three games), with an additional two games in H2'20 to date and further releases planned. The GBP1.7m increase in Licensing revenues compared with H1'19 was achieved both organically, with a GBP0.8m increase in revenues generated from existing partners, and through increased distribution, with GBP0.9m revenues generated from integrations what went live after 30 June 2019.
Social
The Social business has seen a strong period of growth, with revenues increasing 29% to GBP1.8m (H1'19: GBP1.4m). The business delivered GBP0.8m of adjusted EBITDA in H1'20 (H1'19: GBP0.4m). This delivery was despite marketing spend reducing to GBP0.03m in H1'20 compared to GBP0.1m in the previous period. Operating and administrative expenses remained in line with the prior period at GBP0.9m in H1 2020 (H1'19: GBP0.9m).
Cash
The Company's cash position at 30 June 2020 was GBP0.8m. As at 31 August 2020, the Company's cash position was GBP1.9m. The Company incurred a significant working capital outflow in H1'20, which reversed post Period-end. The Company is due deferred consideration of GBP1.5m at 31 December 2020 from the sale of its B2C real money gaming ("B2C RMG") assets last year to River. The Company has a convertible loan of GBP3.5m owed to Gamesys Group plc, due for repayment on 31 December 2022.
Discontinued operations
Discontinued operations in the previous period relate to the B2C RMG assets referred to above. The loss before tax for the previous period from discontinued operations was GBP0.8m.
Consolidated statement of comprehensive income
for the 6 months ended 30 June 2020
6M 6M
30 June 2019
30 June 2020 *
Unaudited Unaudited
Continuing Note GBP GBP
------------------------------------------ ----- --------------------------------- -------------------------------
Revenue 2 5,180,058 3,122,752
Marketing expenses (101,408) (113,220)
Operating expenses (1,043,235) (717,162)
Administrative expenses (3,007,154) (2,815,364)
Share-based payments 13 (40,075) -
Adjusted EBITDA - continuing 2 1,239,067 (102,096)
Restructuring expenses 4 (250,881) (100,045)
Loss on disposal 4 - (320,853)
EBITDA - continuing 2 988,186 (522,994)
----- ---------------------------------
Amortisation of intangible assets 7 (1,393,651) (1,535,449)
Depreciation of property, plant
and equipment 6 (108,464) (89,844)
Finance expense 3 (287,335) (363,917)
Finance income 3 108,686 42,016
------------------------------------------ ----- --------------------------------- -------------------------------
Loss before tax (692,578) (2,470,188)
Tax credit 62,881 104,835
------------------------------------------ ----- --------------------------------- -------------------------------
Loss for the financial year -
continuing (629,697) (2,365,353)
Loss for the financial year -
discontinued 11 - (829,041)
------------------------------------------ ----- --------------------------------- -------------------------------
Loss for the financial year -
total (629,697) (3,194,394)
------------------------------------------ ----- --------------------------------- -------------------------------
Other comprehensive income
Items that will or may be reclassified
to profit or loss:
Exchange gain arising on translation
of foreign operations 489,466 25,418
------------------------------------------ ----- --------------------------------- -------------------------------
Total other comprehensive income (140,231) (3,168,976)
------------------------------------------ ----- --------------------------------- -------------------------------
Total comprehensive income
------------------------------------------ ----- --------------------------------- -------------------------------
Loss attributable to:
Owners of the parent (627,692) (3,120,172)
Non-controlling interest (2,005) (60,986)
--------------------------------- -------------------------------
(629,697) (3,181,158)
------------------------------------------ ----- --------------------------------- -------------------------------
Total comprehensive income attributable
to:
Owners of the parent (138,226) (3,094,754)
Non-controlling interest (2,005) (60,986)
------------------------------------------ ----- --------------------------------- -------------------------------
(140,231) (3,155,740)
------------------------------------------ ----- --------------------------------- -------------------------------
Loss per share Pence
Basic and diluted - continuing 5 (0.22) (0.81)
Basic and diluted - discontinued 5 - (0.29)
------------------------------------------ ----- --------------------------------- -------------------------------
Basic and diluted - total (0.22) (1.10)
------------------------------------------ ----- --------------------------------- -------------------------------
Consolidated statement of financial position
as at 30 June 2020
30 June 31 December
2020 2019
Unaudited Audited
Note GBP GBP
-------------------------------------- ----- ------------- -------------
Non-current assets
Intangible assets 7 11,958,091 11,702,553
Other investments 262,936 289,511
Property, plant and equipment 6 673,121 760,763
Finance lease asset 70,522 157,166
Other assets 151,725 150,885
-------------------------------------- ----- ------------- -------------
13,116,395 13,060,878
-------------------------------------- ----- ------------- -------------
Current assets
Trade and other receivables 8 3,010,548 1,850,863
Deferred consideration 1,395,706 1,298,663
Finance lease asset 159,515 126,354
Cash and cash equivalents 9 846,793 2,626,837
-------------------------------------- ----- ------------- -------------
5,412,562 5,902,717
-------------------------------------- ----- ------------- -------------
Total assets 18,528,957 18,963,595
-------------------------------------- ----- ------------- -------------
Current liabilities
Trade and other payables 10 1,847,409 2,125,257
Lease liabilities 295,105 256,527
-------------------------------------- ----- ------------- -------------
2,142,514 2,381,784
-------------------------------------- ----- ------------- -------------
Non-current liabilities
Deferred tax liability 421,457 457,492
Other Creditors 14 3,216,030 3,126,673
Derivative liabilities 14 272,000 272,000
Lease liabilities 497,588 646,122
-------------------------------------- ----- ------------- -------------
4,407,075 4,502,287
-------------------------------------- ----- ------------- -------------
Total liabilities 6,549,589 6,884,071
-------------------------------------- ----- ------------- -------------
Net assets 11,979,368 12,079,524
-------------------------------------- ----- ------------- -------------
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 2,095,248 1,605,782
Retained earnings (38,158,218) (37,570,601)
-------------------------------------- ----- ------------- -------------
Total equity attributable to owners
of the parent 11,904,657 12,002,808
-------------------------------------- ----- ------------- -------------
Non-controlling interest 74,711 76,716
-------------------------------------- ----- ------------- -------------
Total equity 11,979,368 12,079,524
-------------------------------------- ----- ------------- -------------
Consolidated statement of cash flows
for the 6 months ended 30 June 2020
30 June 30 June
2020 2019
Unaudited Unaudited
Note GBP GBP
----------------------------------------------- ------ ------------ ------------
Cash flows from operating activities
Loss for the period (629,697) (3,194,394)
Adjustments for:
Depreciation of property, plant and
equipment 6 108,464 95,657
Amortisation of intangible fixed assets 7 1,393,651 1,535,449
3,
Finance income 11 (108,686) (315,867)
Finance expense 3 287,335 363,917
Income tax credit (62,881) (104,835)
Exchange differences (127,423) 538
Loss on disposal of property, plant
and equipment - 28,747
Loss on disposal of assets - 84,377
Share of loss of associate 11 - 157,307
Share based payments expense 13 40,075 -
(Increase) / decrease in trade and other
receivables (1,152,422) 1,319,608
Decrease in trade and other payables (293,848) (319,024)
Increase in other assets (840) -
Net cash flows used in operating activities
before taxation (546,272) (348,520)
----------------------------------------------- ------ ------------ ------------
Tax credit received in the period - 39,988
----------------------------------------------- ------ ------------ ------------
Net cash flows used in operating activities (546,272) (308,532)
----------------------------------------------- ------ ------------ ------------
Investing activities
Acquisition of property, plant and equipment 6 (18,891) (110,678)
Capitalised development costs 7 (1,099,406) (1,532,978)
Interest received 3 1 3,705
Finance lease asset - sublease receipts 83,700 52,611
----------------------------------------------- ------ ------------ ------------
Net cash used in investing activities (1,034,596) (1,587,340)
----------------------------------------------- ------ ------------ ------------
Financing activities
Receipt of deferred consideration - 385,000
IFRS 16 lease payments (167,193) (113,856)
Interest paid (116,669) (191,309)
----------------------------------------------- ------ ------------ ------------
Net cash (used in) / from financing
activities (283,862) 79,835
----------------------------------------------- ------ ------------ ------------
Net decrease in cash and cash equivalents (1,864,730) (1,816,037)
Cash and cash equivalents at beginning
of period 2,608,455 1,550,140
Exchange gain on cash and cash equivalents 84,686 1,992
----------------------------------------------- ------ ------------ ------------
Cash and cash equivalents at end of
period 828,411 (263,905)
----------------------------------------------- ------ ------------ ------------
Consolidated statement of changes in equity
for the 6 months ended 30 June 2020
Total
Foreign to equity
Share Share Merger Exchange Retained holders Non-controlling Total
capital premium reserve Reserve earnings of parents interest equity
GBP GBP GBP GBP GBP GBP GBP GBP
---------------- ----------- ----------- ------------- ---------- ------------- ------------ ----------------- ------------
1 January 2019 28,442,874 87,198,410 (67,673,657) 1,911,453 (32,308,495) 17,570,585 152,324 17,722,909
---------------- ----------- ----------- ------------- ---------- ------------- ------------ ----------------- ------------
Adjustment on
the initial
application
of IFRS 16 - - - - 69,591 69,591 - 69,591
---------------- ----------- ----------- ------------- ---------- ------------- ------------ ----------------- ------------
Adjusted
balance at 1
January
2019 28,442,874 87,198,410 (67,673,657) 1,911,453 (32,238,904) 17,640,176 152,324 17,792,500
---------------- ----------- ----------- ------------- ---------- ------------- ------------ ----------------- ------------
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
for the year - - - 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 (35,359,076) 14,545,422 91,338 14,636,760
---------------- ----------- ----------- ------------- ---------- ------------- ------------ ----------------- ------------
1 January 2020 28,442,874 87,198,410 (67,673,657) 1,605,782 (37,570,601) 12,002,808 76,716 12,079,524
---------------- ----------- ----------- ------------- ---------- ------------- ------------ ----------------- ------------ Loss for the period - - - - (627,692) (627,692) (2,005) (629,697) Other comprehensive income - - - 489,466 - 489,466 - 489,466 ---------------- ----------- ----------- ------------- ---------- ------------- ------------ ----------------- ------------ Total comprehensive income for the year - - - 489,466 (627,692) (138,226) (2,005) (140,231) ---------------- ----------- ----------- ------------- ---------- ------------- ------------ ----------------- ------------ Contributions by and distributions to owners Share-based payment on share options - - - - 40,075 40,075 - 40,075 30 June 2020 (unaudited) 28,442,874 87,198,410 (67,673,657) 2,095,248 (38,158,218) 11,904,657 74,711 11,979,368 ---------------- ----------- ----------- ------------- ---------- ------------- ------------ ----------------- ------------
Notes forming part of the consolidated financial statements
For the 6 months ended 30 June 2020
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 2020 and 30 June 2019 are unaudited.
Basis of preparation
The financial information for the year ended 31 December 2019 included in these financial statements does not constitute the full statutory accounts for that year. The Annual Report and Financial Statements for 2019 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statement for 2019 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 7 September 2020. 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 2019 and which will form the basis of the 2020 financial statements.
The consolidated financial statements are presented in Sterling.
Going concern
The Group meets its day-to-day working capital requirements from the cash flows generated by its trading activities and its available cash resources.
The Group prepares cash flow forecasts and re-forecasts regularly as part of the business planning process. A re-forecasting process has been completed for H2 2020 to 2022 in light of current business performance and economic situation given the uncertainty arising from the COVID-19 pandemic. These forecasts show that the Group will continue to have sufficient cash resources available to meet its liabilities as they fall due.
Accordingly, these financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Group will realise its assets and discharge its liabilities in the normal course of business.
Changes in significant accounting policies
In preparing the Group financial statements for the current period, the Group has adopted the following amendments to IFRSs:
-- IAS 8 (amended): Accounting Policies, Changes in Accounting Estimates and Errors
-- IFRS 3 (amended): Business Combinations -- IFRS 7 (amended): Financial Instruments: Disclosures -- IFRS 16 (amended): Leases
All adopted new and revised standards have not had a significant impact on the results or net assets of the Group.
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, costs arising from a fundamental restructuring of the Group's operations and relocation costs.
Restatement of comparatives
The comparative results for the period ending 30 June 2019 have been restated following an update in accounting for a property lease that the Group sub-leases. Previously a right-of-use (ROU) asset was recognised, however in line with IFRS 16 this has been reversed and a finance lease asset recognised with sub-lease receipts reducing the asset and interest income earned on the unwind over the lease term. The impact of this restatement on the previous period income statement is a reduction in revenue of GBP65,612, a reduction in EBITDA of GBP95,816 and an increase in loss before tax of GBP13,237. The restatement increased net assets at 30 June 2019 by GBP69,591 to GBP14,636,760 as shown in the statement of changes in equity, from the previously reported GBP14,567,169. This item was correctly accounted for in the financial statements for the year ended 31 December 2019 so there will be no restatement required in the 2020 financial statements.
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 segment are included in note 10. Management do not report segmental assets and liabilities internally and as such an analysis is not reported.
Revenue
The Group has disaggregated revenue into various categories in the following table which is intended to:
-- Depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic date; and
-- Enable users to understand the relationship with revenue segment information provided below.
Social
Licensing publishing Other Total
H1 2020 continuing GBP GBP GBP GBP
revenue
-------------------------- ----------- ------------- ------- ----------
Primary geographical markets
UK, including
Channel Islands 226,376 - - 226,376
USA 1,092,749 1,809,774 2,400 2,904,923
Isle of Man 1,295,490 - - 1,295,490
Rest of the World 753,269 - - 753,269
-------------------------- ----------- ------------- ------- ----------
3,367,884 1,809,774 2,400 5,180,058
-------------------------- ----------- ------------- ------- ----------
Contract counterparties
Direct to consumers
(B2C) - 1,809,774 - 1,809,774
B2B 3,367,884 - 2,400 3,370,284
-------------------------- ----------- ------------- ------- ----------
3,367,884 1,809,774 2,400 5,180,058
-------------------------- ----------- ------------- ------- ----------
Timing of transfer of goods
and services
Point in time 3,207,576 1,809,774 2,400 5,019,750
Over time 160,308 - - 160,308
-------------------------- ----------- ------------- ------- ----------
3,367,884 1,809,774 2,400 5,180,058
-------------------------- ----------- ------------- ------- ----------
Social
Licensing publishing Other Total
H1 2019 continuing GBP GBP GBP GBP
revenue
-------------------------- ----------- ------------- ------- ----------
Primary geographical markets
UK, including
Channel Islands 28,540 - - 28,540
USA 756,664 1,398,767 41,287 2,196,718
Isle of Man 601,971 - - 601,971
Rest of the World 267,400 - 28,123 295,523
-------------------------- ----------- ------------- ------- ----------
1,654,575 1,398,767 69,410 3,122,752
-------------------------- ----------- ------------- ------- ----------
Contract counterparties
Direct to consumers
(B2C) - 1,398,767 - 1,398,767
B2B 1,654,575 - 69,410 1,723,985
-------------------------- ----------- ------------- ------- ----------
1,654,575 1,398,767 69,410 3,122,752
-------------------------- ----------- ------------- ------- ----------
Timing of transfer of goods
and services
Point in time 1,477,273 1,398,767 69,410 2,945,450
Over time 177,302 - - 177,302
-------------------------- ----------- ------------- ------- ----------
1,654,575 1,398,767 69,410 3,122,752
-------------------------- ----------- ------------- ------- ----------
Adjusted EBITDA
Social
Licensing publishing Head Office Total
H1 2020 GBP GBP GBP GBP
----------------- ---------------------------- ---------------------------- -------------------------- ----------------------------
Revenue 3,367,884 1,809,774 2,400 5,180,058
Marketing
expense (8,608) (34,051) (58,749) (101,408)
Operating
expense (515,894) (529,567) 2,226 (1,043,235)
Administrative
expense (1,112,048) (413,001) (1,231,224) (2,756,273)
Share-based
payments - - (40,075) (40,075)
----------------- ---------------------------- ---------------------------- -------------------------- ----------------------------
Adjusted EBITDA
- continuing 1,731,334 833,155 (1,325,422) 1,239,067
----------------- ---------------------------- ---------------------------- -------------------------- ----------------------------
Restructuring
expenses (250,881)
Loss on -
disposal
----------------- ---------------------------- ---------------------------- -------------------------- ----------------------------
EBITDA -
continuing 988,186
----------------- ---------------------------- ---------------------------- -------------------------- ----------------------------
Social
Licensing publishing Head Office Total
H1 2019 GBP GBP GBP GBP
----------------- ---------------------------- ---------------------------- ---------------------------- ----------------------------
Revenue 1,654,575 1,398,767 69,410 3,122,752
Marketing
expense - (104,691) (8,529) (113,220)
Operating
expense (279,976) (436,250) (936) (717,162)
Administrative
expense (646,539) (468,055) (1,279,872) (2,394,466)
Share-based - - - -
payments
----------------- ---------------------------- ---------------------------- ---------------------------- ----------------------------
Adjusted EBITDA
- continuing 728,060 389,771 (1,219,927) (102,096)
----------------- ---------------------------- ---------------------------- ---------------------------- ----------------------------
Restructuring
expenses (100,045)
Loss on
disposal (320,853)
----------------- ---------------------------- ---------------------------- ---------------------------- ----------------------------
EBITDA -
continuing (522,994)
----------------- ---------------------------- ---------------------------- ---------------------------- ----------------------------
3. Finance income and expense
6M 6M
30 June 30 June
2020 2019
GBP GBP
--------------------------------------- ------------------------------ ---------------------------
Finance income
Interest received 1 3,705
Interest income on finance lease
asset 11,642 16,278
Interest income on unwind of
deferred consideration receivable 97,043 22,033
---------------------------------------- ------------------------------ ---------------------------
Total finance income 108,686 42,016
---------------------------------------- ------------------------------ ---------------------------
Finance expense
Bank interest paid 8,722 25,374
Fair value loss on other investments 26,575 111,041
Effective interest on other creditor 213,304 198,488
Interest expense on lease liability 38,734 29,014
---------------------------------------- ------------------------------ ---------------------------
Total finance expense 287,335 363,917
---------------------------------------- ------------------------------ ---------------------------
4. Adjusted EBITDA
EBITDA and Adjusted EBITDA are non-GAAP measures and exclude exceptional items, depreciation, and amortisation. Exceptional items are those items the Group considers to be non-recurring or material in nature that may distort an understanding of financial performance or impair comparability.
Adjusted EBITDA is stated before exceptional items as follows:
6M 6M
30 June 30 June
2020 2019
GBP GBP
------------------------- ---------- ----------
Restructuring expenses (250,881) (100,045)
Loss on disposal - (320,853)
------------------------- ---------- ----------
Adjusting items (250,881) (420,898)
------------------------- ---------- ----------
Restructuring expenses
Restructuring costs of GBP0.3m (H1 2019: GBP0.1m) were incurred relating to redundancy, consulting and relocation costs.
Loss on disposal
GBP0.3m of expenses were incurred in the prior period associated with the B2C RMG disposal completed in July 2019. These expenses associated with the B2C RMG disposal were subsequently included in the profit on disposal of the segment that was disclosed in the 2019 full year financial statements. No such expenses occurred in H1 2020.
5 . Loss per share
Basic 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
2020 2019
Note GBP GBP
--------------------------------------- ------ ------------ ------------
Loss after tax - continuing (627,692) (2,291,131)
Loss after tax - discontinued 10 - (829,041)
--------------------------------------- ------ ------------ ------------
(Loss) / profit after tax - total (627,692) (3,120,172)
--------------------------------------- ------ ------------ ------------
Number Number
--------------------------------------- ------ ------------ ------------
Weighted average number of ordinary
shares used in calculating basic
loss per share 11 284,428,747 284,428,747
--------------------------------------- ------ ------------ ------------
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 (0.22) (0.81)
Basic and diluted loss per share
- discontinued - (0.29)
--------------------------------------- ------ ------------ ------------
Basic and diluted loss per share
- total (0.22) (1.10)
--------------------------------------- ------ ------------ ------------
6. Property, plant and equipment
Computers Office
ROU lease Leasehold and related furniture
assets improvements equipment and equipment Total
GBP GBP GBP GBP GBP
-------------------------- ----------- --------------- -------------- ---------------- ----------
Cost
At 1 January 2020 760,334 76,532 182,195 75,766 1,094,827
Additions - - 17,588 1,303 18,891
Exchange differences 2,745 153 2,608 796 6,302
At 30 June 2020 763,079 76,685 202,391 77,865 1,120,020
-------------------------- ----------- --------------- -------------- ---------------- ----------
Accumulated deprecation
At 1 January 2020 116,172 13,891 150,757 53,244 334,064
Depreciation charge 82,173 8,723 13,593 3,975 108,464
Exchange differences 1,098 (266) 1,092 2,447 4,371
At 30 June 2020 199,443 22,348 165,442 59,666 446,899
-------------------------- ----------- --------------- -------------- ---------------- ----------
Net book value
At 31 December 2019 644,162 62,641 31,438 22,522 760,763
-------------------------- ----------- --------------- -------------- ---------------- ----------
At 30 June 2020 563,636 54,337 36,949 18,199 673,121
-------------------------- ----------- --------------- -------------- ---------------- ----------
7. Intangible assets
Customer Development Domain Intellectual
Goodwill database Software costs names Property Total
GBP GBP GBP GBP GBP GBP GBP
---------- ----------- ---------- ------------- -------- -------------- -----------
Cost
At 1 January
2020 6,849,048 1,520,509 1,420,374 11,798,373 9,053 5,962,772 27,560,129
Additions - - - 1,099,406 - - 1,099,406
Exchange differences 370,764 105,230 84,803 14,169 628 414,250 989,844
At 30 June
2020 7,219,812 1,625,739 1,505,177 12,911,948 9,681 6,377,022 29,649,379
----------------------- ---------- ----------- ---------- ------------- -------- -------------- -----------
Accumulated amortisation
and impairment
At 1 January
2020 1,650,000 1,520,509 1,420,374 7,986,035 9,053 3,271,605 15,857,576
Amortisation
charge - - - 1,004,210 - 389,441 1,393,651
Exchange differences - 105,230 84,803 12,621 628 236,779 440,061
At 30 June
2020 1,650,000 1,625,739 1,505,177 9,002,866 9,681 3,897,825 17,691,288
----------------------- ---------- ----------- ---------- ------------- -------- -------------- -----------
Net book value
At 31 December
2019 5,199,048 - - 3,812,338 - 2,691,167 11,702,553
----------------------- ---------- ----------- ---------- ------------- -------- -------------- -----------
At 30 June
2020 5,569,812 - - 3,909,082 - 2,479,197 11,958,091
----------------------- ---------- ----------- ---------- ------------- -------- -------------- -----------
8. Trade and other receivables
30 June 31 December
2020 2019
GBP GBP
-------------------------- ---------- ------------
Trade receivables 1,829,002 974,321
Other receivables 153,286 145,855
Tax and social security 107,546 123,919
Prepayments and accrued
income 920,714 606,768
--------------------------- ---------- ------------
3,010,548 1,850,863
-------------------------- ---------- ------------
All amounts shown fall due for payment within one year.
9. Cash and cash equivalents
30 June 31 December 30 June
2020 2019 2019
GBP GBP GBP
-------------------------------- --------- ------------ ----------
Cash and cash equivalents 846,793 2,626,837 277,510
Cash - held for sale - - 447,961
Restricted cash (18,382) (18,382) (18,382)
Bank overdraft - - (970,994)
--------------------------------- --------- ------------ ----------
Cash and cash equivalents for
Statement of Cash Flows 828,411 2,608,455 (263,905)
--------------------------------- --------- ------------ ----------
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.
10. Trade and other payables
30 June 31 December
2020 2019
GBP GBP
-------------------------- ---------- ------------
Trade payables 175,786 488,755
Other payables 472,983 634,807
Tax and social security 100,929 170,931
Accruals 1,097,711 830,764
--------------------------- ---------- ------------
1,847,409 2,125,257
-------------------------- ---------- ------------
The carrying value of trade and other payables classified as financial liabilities measured at amortised cost approximates fair value.
11. Discontinued operations
At the previous 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 were classified as held for sale as at 30 June 2019. The sale of the real money gaming assets completed in July 2019 and details of the transaction were fully disclosed in the 2019 financial statements.
Results of discontinued operations:
6M 6M
30 June 30 June
2020 2019
GBP GBP
--------------------------------------- ----------------------------- ---------------------------
Revenue - 5,762,066
Marketing expenses - (640,772)
Operating expenses - (4,493,143)
Administrative expenses - (1,567,923)
EBITDA for the period - discontinued - (939,772)
----------------------------
Depreciation of property, plant
and equipment - (5,813)
Share of loss of associate - (157,307)
Finance income - 273,851
Loss for the period - discontinued - (829,041) ---------------------------------------- ---------------------------- ---------------------------
12. Share capital
30 June 30 June 31 December 31 December
2020 2020 2019 2019
Ordinary shares Number GBP Number GBP
Ordinary shares
of 284,428,747 28,442,874 284,428,747 28,442,874
------------ ----------- ------------ ------------
10 pence each
------------------ ------------ ----------- ------------ ------------
13. Share based payments
On 1 May 2020, certain employees of the Group were granted a total of 6,650,000 share options, which vest in three equal tranches on 3 February 2021, 3 February 2022 and 3 February 2023. The options have an exercise price of 10 pence per share.
On 2 June 2020, the two Executive Directors of the Group were each granted 3,000,000 share options, which vest in three equal tranches on 3 February 2021, 3 February 2022 and 3 February 2023. The vesting of each tranche is subject to delivery of adjusted EBITDA targets for the financial years ending 31 December 2020, 2021 and 2022. The options have an exercise price of 10 pence per share.
For both grants, the fair value of each tranche is being charged to the income statement over the vesting period. This resulted in a share-based payment charge for the period of GBP40,075 (H1 2019: GBPnil).
On 1 May 2020, a consultant of the Group was granted 750,000 replacement share options in lieu of waiving the rights over 5,750,000 options that had previously been granted (whilst an employee of the Group) but not exercised. The replacement options have an exercise price of 10 pence per share and are immediately fully vested. The fair value of the replacement options was calculated to be lower than the share options being waived, and as such no share based payment charge has been recognised in the income statement.
14. Arrangement with Gamesys Group plc (previously Jackpotjoy Group)
In December 2017 the Group entered into a complex transaction with Gamesys Group plc (previously 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. 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, Gamesys Group plc may elect to convert all or part of the principal amount into ordinary shares of Gaming Realms plc at a discount of 20% to the share price prevailing at the time of conversion. To the extent that the price per share at conversion is lower than 10p (nominal value), then the shares can be converted at nominal value with a cash payment equal to the aggregate value of the convertible loan outstanding multiplied by the shortfall on nominal value payable to 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 2020 was GBP0.3m (31 December 2019: GBP0.3m) 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 1 January 2020 2,925,673 201,000 272,000 3,398,673
Utilisation of free
services - (16,000) - (16,000)
Effective interest 213,304 - - 213,304
Interest paid (107,947) - - (107,947)
---------------------- ---------- ---------------- ---------------- ----------
At 30 June 2020 3,031,030 185,000 272,000 3,488,030
---------------------- ---------- ---------------- ---------------- ----------
15. Related party transactions
Jim Ryan is a Non-Executive Director of the Company and the CEO of Pala Interactive, which has a real-money online bingo site in New Jersey. During the period, total license fees earned by the Group were $22,592 (H1 2019: $6,507) with $7,599 due at 30 June 2020 (30 June 2019: $1,390).
Jim Ryan is a Non-Executive Director of Gamesys Group plc. In December 2017 the Group entered into a 10-year framework services agreement and a 5-year convertible loan agreement for GBP3.5m with Gamesys Group plc (previously Jackpotjoy Group) (see Note 13).
During the period GBP48,333 (H1 2019: GBP75,000) of consulting fees were paid to Dawnglen Finance Limited, a company controlled by Michael Buckley. No amounts were owed at 30 June 2020 (30 June 2019: GBPnil).
16. Events after reporting date
On 28 July 2020, the Group's two executive Directors were granted a total of 8,846,153 share options in replacement of their existing options for B shares, which were due to lapse on 31 July 2020. The replacement options vest in two equal tranches on 1 August 2021 and 1 August 2022, with all options having an exercise price of 20 pence per share.
[1] EBITDA is profit before interest, tax, depreciation, amortisation and impairment expenses and is a non-GAAP measure. Adjusted EBITDA is EBITDA excluding non-recurring material items which are outside the normal scope of the Group's ordinary activities. The Group uses EBITDA and Adjusted EBITDA to comment on its financial performance. Adjusting items include EBITDA from discontinued operations, costs arising from a fundamental restructuring of the Group's operations and relocation costs. See note 4 for further details.
* Comparative numbers for the period ended 30 June 2019 have been restated. See note 1 for further details.
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IR KKOBBFBKDFCK
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