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Gaming Realms PLC - Interim results

RNS Number : 0842C
Gaming Realms PLC
27 September 2018
 

Gaming Realms plc

 

(the "Company" or the "Group")

 

Interim results for the six months ended 30 June 2018

 

Positive Adjusted EBITDA for H1 2018 of £0.4m, up £1.5m from H1 2017 loss of £1.1m
 

 

Gaming Realms plc (GMR.L), the developer, publisher and licensor of mobile real money and social games, today announces its interim results for the six months to 30 June 2018.

 

Financial highlights:

 

 Like-for-like ongoing business*

H1 2018

H1 2017

 Movement

 

 £m

 £m

 %

 Revenue - Real Money & Licensing

4.8

3.7

28%

 Revenue - Social

2.1

4.0

(48%)

 Total

6.8

7.7

(11%)

 

 

 

 

 Marketing spend - Real Money & Licensing

1.9

2.7

(31%)

 Marketing spend - Social

0.2

1.6

(88%)

 Total

2.1

4.4

(53%)

* excludes UK B2C brands sold post-period end

 

 UK B2C brands sold post period end

H1 2018

H1 2017

 Movement

 

 £m

 £m

 %

 Revenue - Real Money 

4.1

7.2

(43%)

 Marketing spend - Real Money

0.7

2.0

(65%)

 

·      Real Money revenue excluding UK B2C brands sold to River UK Casino post-period end increased by 18% to £4.1m (H1/17: £3.5m)

·      Licensing revenue increased by 175% to £0.6m (H1/17: £0.2m)

Social publishing revenue decreased by 48% to £2.1m (H1/17: £4.0m) with a reduction in marketing spend of 88% to £0.2m (H1/17: £1.7m)

 Group

H1 2018

H1 2017

 Movement

 

 £m

 £m

 %

 Total revenue excluding disposals **

11.0

15.0

(27%)

 Adjusted EBITDA before Share Based Payments

0.4

(1.1)

n/a

** excludes £0.2m in respect of affiliate business disposed May 2018 (H1/17 £0.7m)

·      Adjusted EBITDA before share-based payments increased by £1.5m to £0.4m (H1/17: loss of £1.1m)

·      Decrease in Group revenue driven by Social

·      Cash at bank at 30 June 2018 was £0.4m before the receipt of the £4.2m cash payment from River UK Casino for the sale of the UK B2C brands

·      Capitalised development costs were £1.5m in the period (H1/17: £1.7m) as there was further investment in content and platform development

Operational highlights:  

·      6 new contracts signed to license the Company's 'Slingo Originals' portfolio of games in New Jersey and Europe (H1 2017: 4 licenses signed)

·      Launch of new 'white label' real money gambling sites for Health Lottery

·      Sale of Affiliate Business for £2.4m

Post-period end trading:

·      Disposal of 70% of UK B2C brands to River UK Casino for up to £23.1m, with £4.2m received in August 2018. Of the remaining £18.9m, £4.2m will be received upon the completion of the June 2019 audit and up to £14.7m will be subject to the earn out for the same period

·      Licensing revenue increased 88% in the 9 weeks post period end

·      Real Money Gaming revenue, excluding UK B2C brands sold, increased 10% in the 9 weeks post period end

·      Successful launch, on time and on budget, of a new faster mobile optimized gambling platform

·      Launch of 'Slingo Originals' games on GVC and Rank, also on time and budget, which have both been very well received 

Outlook for FY 2018:

Following the sale of the UK B2C brands the business will be focussed on executing the following growth strategy to create value for shareholders:

·      Expand existing market-leading 'Slingo Originals' library with additional internally developed content

·      Sign further licensing deals for proprietary 'Slingo Originals' content, which will deliver higher margin returns

·      Grow Partnership base in the Real Money B2B business. This will diversify customer concentration, provide a higher quality of income, increase revenues and allow the sharing of marketing spend. The business has a market leading proprietary platform for gaming products which needs to be built upon

·      Maximise the earn out from the B2C sale to River UK Casino

The Board expects the Company to continue to incur capital expenditure on game and platform development, of approximately £2.5m per annum. However, given the sale of the assets to River UK Casino, the Board believes that the Group will have sufficient cash resources to cover these costs until such time as the Group is cash generative after all capitalised costs.

Alongside building on this strategy, Gaming Realms will continue to evaluate strategic opportunities for our non-core activities such as the social publishing business. 

Patrick Southon, Chief Executive, said:

 

 "Our strategy moving forward is to leverage our real money gaming platform and our market leading 'Slingo Originals' games library into the UK and international gaming markets.  We believe that licensing our platform and content to leading brands and gaming operators will deliver high margin revenues, and we have been very pleased with the results of our efforts over the first half of 2018. We look forward to delivering news about more developments on our strategy during the second half of the year."

 

 

For more information contact

 

Gaming Realms plc

Patrick Southon, CEO

Mark Segal, CFO

 

 0845 123 3773

Peel Hunt LLP, Nomad and Broker

Dan Webster, George Sellar

 

020 7418 8900

 

Yellow Jersey

020 7457 2020

Charles Goodwin

07747 788 221

Georgia Colkin

08725 916 715

 

 

 

 

 

 

About Gaming Realms

 

Gaming Realms creates and publishes innovative real money and social games for mobile, with operations in the UK, U.S and Canada. Through its market-leading mobile platform and unique IP and brands, Gaming Realms is bringing together media, entertainment and gaming assets in new game formats. The Gaming Realms management team includes accomplished entrepreneurs and experienced executives from a wide range of leading gaming and media companies.

 

Business review

 

Overview

 

The Board is pleased to report that the Group has generated positive Adjusted EBITDA before Share Based Payments of £0.4m during the first half of the year (H1/17: £1.1m loss). This improvement was primarily due to the Group's cost synergy execution and focused marketing strategy in the period, which included a reduction in marketing spend of £3.6m to £2.8m (H1/17: £6.4m).

 

Gaming Realms has undergone a number of changes in recent months as part of the Group's strategy to focus on international licensing and content development. Whilst this transition is ongoing, the Board believes that Gaming Realms is now in a stronger position to capitalise on its skill set of creating entertaining, immersive gaming content which plays to a licensing-focused model, led by its popular Slingo gaming format.

 

Real money gaming

 

The Group's real money division has undergone significant change with the disposal of the affiliate marketing business and, since the period end, the sale of a 70% stake in most of its UK online casino B2C business to River UK Casino Limited. Excluding disposals to River UK Casino, real money revenues grew by 18% despite a significant reduction in marketing spend, illustrating the quality of our real money games portfolio and player loyalty. Whilst the Group now holds a minority stake, it will be working closely with River UK Casino to improve the platform, with revenue generated becoming a significant source of income for the Group's B2B platform.

 

Licensing

 

The Group has made significant progress with its licensing business with a number of high-profile agreements for Slingo Originals content signed in the period, which includes those with 888 Holdings, GVC, Sony Pictures Television and Golden Nugget Casino, one of New Jersey's largest casino operators. Licensing revenue has increased 175% to £0.6m (H1/17: £0.2m) during the period as the Slingo format went live on 6 new licensee platforms. The Group is already experiencing the benefits of the stable, higher margin revenues this brings and expects this to continue as licensees grow player numbers and new agreements are signed.

 

Social publishing

 

Social Publishing continues to generate a profit each month following the closure of Seattle operations in H2 2017 and minimal investment in marketing.

 

The Group continues to review its allocation of resources and investment.

 

 

 

 

 

 

Consolidated statement of comprehensive income

for the 6 months ended 30 June 2018

 

 

Note

6M 30 Jun 18

6M 30 Jun 17

 

 

Unaudited

Unaudited

 Continuing

 

 £

 £

 Revenue

2

10,965,299

14,979,111

 Marketing expenses

 

(2,778,560)

(6,443,240)

 Operating expenses

 

(4,138,132)

(4,748,425)

 Administrative expenses

 

(3,799,441)

(5,465,868)

 Share-based payments

 

(154,986)

(373,049)

 

 

 

 

 Adjusted EBITDA total

 

195,462

(1,474,541)

 Adjusted EBITDA - discontinued

Quick facts: Gaming Realms PLC

Price: 8.35

Market: AIM
Market Cap: £23.75 m
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