Gaming Realms PLC Announces Interim Results

• Content licensing revenue grows by 57% to £6.4m
• EBITDA^[1] of £3.5m^[2] with a 41% EBITDA margin

LONDON, UK / ACCESSWIRE / September 20, 2022 / Gaming Realms plc (the "Company" or the "Group") (AIM:GMR), the developer and licensor of mobile focused gaming content, is pleased to announce its interim results for the six months to 30 June 2022 (the "Period" or "H1'22").

Financial highlights:

* Brand licensing revenue decreased due to a significant, non-recurring deal positively impacting revenues in H1 2021.

• Total revenue grew 10% from £7.7m in H1'21 to £8.5m in H1'22. Group EBITDA grew 12% to £3.5m² (H1'21: £3.1m), representing a 41% EBITDA margin (H1'21: 40%). Excluding brand licensing, revenue grew 36% from £6.0m in H1'21 to £8.2m in H1'22
• Total licensing revenues grew 15% to £6.7m (H1'21: £5.8m), with content licensing revenue up 57% to £6.4m (H1'21: £4.1m)
• Revenues from North America of £4.7m representing 55% of total revenue
• Social revenue decreased 7% to £1.8m (H1'21: £1.9m), but with a reduction in related expenses, this segment increased its EBITDA by 13%
• Profit before tax increased 66% to £1.3m (H1'21: £0.8m)

Operational highlights:

• Granted Online Gaming Service Supplier License in Connecticut with launch expected in Q4'22
• Granting of iGaming Supplier License in Ontario and subsequent launch with 8 operators
• Launched in additional regulated markets in Spain and Denmark
• Launched Slingo content with WLA member Loto-Quebec
• Launched games distribution business with 4ThePlayer in New Jersey
• Released 8 new games into the market, including Slingo Shark Week and Slingo DaVinci Diamonds. The Group now has 61 games in its portfolio (Dec'21: 53 games, Jun'21: 48 games)

Post period-end:

• Licensing revenue increased 53% in the two months post period-end compared to the same period in 2021
• Launched Betway and Pokerstars in Europe
• Released two new Slingo games: Slingo Stampede and Slingo Stinkin' Rich

Outlook for FY22:

Gaming Realms has continued to progress during the first half of the year, with its core strategy of developing and licensing games globally to market-leading brands and operators delivering high margin revenues.

This growth is expected to continue into the second half of the year as the Company matures in its key markets. In addition, the Group is aiming to launch in Connecticut, Portugal and Greece, as well as forecasting growth from the recently launched markets of Michigan, Pennsylvania, Ontario, Spain and the Netherlands.

The European market continues to be the largest contributor to content licensing revenues and, with the launch of 8 games plus entry into new regulated markets, has grown 19% period on period. We have more direct integrations with partners, which improves margins and strengthens these relationships.

Our revenues from North American content licensing have increased 160% period on period, with the region accounting for 45% of content licensing revenue. New Jersey continues to be our leading market, but Pennsylvania and Michigan are growing strongly as we launch more games with new partners. At 30 June 2022, we were live with 7 games in Pennsylvania across 6 partners and 17 games across 7 partners in Michigan.

In total we have launched with 26 partners in H1 2022 (H1'21: 11). This growth is supported by the launch of premium games, including Slingo Shark Week and Slingo Da Vinci Diamonds. We are continuing to invest in our remote game server and in the period launched our aggregation business in New Jersey with 4ThePlayer.

The Group is continuing to deliver on its clear strategy, expanding into new markets and launching content which is proving popular with players. It has a strong pipeline of deals and integrations and the Board expects trading for FY'22 to be in line with market expectations.

Commenting on the first half performance, Michael Buckley, Executive Chairman, said:

"The Group has delivered another period of strong growth supported by our ongoing expansion into newly regulated markets in North America and Europe, with content licensing revenue increasing by 57%. Whilst brand licensing declined in the period under review, as a result of the significant contract in last year's comparative period, this was more than made up by increased income from our core content licensing. The growth in licensing income has continued into the second half of this year, with licensing revenues for July and August 2022 being 53% higher than the comparative months in 2021.

"We have also continued to expand on our existing partnerships, adding new content through our direct integration agreements, as well as signing new licensing deals and launching a series of new games.

"Whilst we are mindful of the impact of higher inflation throughout global markets, the outlook for the Group remains positive. The Group has a strong new business pipeline and will also see additional revenues coming from North America, as well as from the new market entries in Europe. As such we expect to deliver on market expectations for the full year."

An analyst briefing will be held virtually at 9:30am today. To attend, please contact Yellow Jersey on [email protected].

The Company also notes that it will be hosting an online presentation to retail investors on Friday 23rd September at 1pm. Those wishing to join the presentation are requested to register via the following link: Meeting Registration.

Enquiries

Business review

The Group delivered overall revenue growth of 10% to £8.5m (H1'21: £7.7m), driven by the Group's core content licensing business. Total expenses increased 2%, which resulted in a 25% increase in total EBITDA generated across the Group to £3.3m (H1'21: £2.7m).

The Group recorded a profit before tax for the period of £1.3m, a 66% increase on the same period in 2021.

Licensing

Licensing segment revenues increased 15% to £6.7m (H1'21: £5.8m), which is broken down as:

• Content licensing revenue growth of 57% to £6.4m (H1'21: £4.1m); and
• Brand licensing revenue reduced 82% to £0.3m (H1'21: £1.7m).

The segment delivered £3.6m EBITDA in the period, an 8% overall uplift over the £3.4m in H1'21.

Content licensing

The core focus of the Group remains delivering growth in the content licensing business. Continued growth in the games portfolio and increasing the distribution footprint to an increased number of operators in Europe and North America underpins the current period's performance.

During the period, the Group began operating with partners in three additional regulated markets, Ontario, Spain and Denmark. Outside of going live with partners in these newly entered markets, we also went live with a further 18 partners during the period in existing markets in Europe and North America.

An additional 8 new Slingo games were released to the market during the period, bringing the Group's games portfolio to 61 games at the period end (H1'21: 48 games).

This all resulted in a 57% increase in content licensing revenues to £6.4m (H1'21: £4.1m).

Brand licensing

Revenues from the Group's brand licensing activities, which are non-core, fell 82% to £0.3m (H1'21: £1.7m). This is a result of a significant brand deal completed in the comparative period which did not repeat in the period.

Social

Revenues in the Group's social publishing business reduced 7% to £1.8m in the period (H1'21: £1.9m) as a result of a reduction in marketing during the period.

However, with total segment expenses (excluding share option and related charges) reducing by 16% to £1.1m (H1'21: £1.3m), the segment actually delivered EBITDA growth of 13% to £0.7m (H1'21: £0.6m).

The reduction in total segmental expenses comprises a 21% fall in operating costs, which are largely revenue driven, and a 99% reduction in marketing costs from the previous period.

Cashflow and balance sheet

The Group's cash balance at 30 June 2022 was £4.0m, a reduction of £0.4m from the £4.4m reported at 31 December 2021.

The current period fall in cash was largely driven by the £2.0m cash inflow from operations, offset by £2.1m development costs capitalised during the period and £0.2m acquisition of tangible and intangible assets.

Subsequent to the period end, the cash balance increased to £4.6m at 31 August 2022, with negative working capital movements in the first half of the year reversing.

The Group has a convertible loan of £3.0m owed to Gamesys Group plc (see Note 11), due for repayment in December 2022.

Net assets totalled £16.1m (31 December 2021: £13.1m).

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SOURCE: Gaming Realms PLC