A platform
for growth
Annual Report
& Accounts 2022
Gaming Realms plc Annual Report and Accounts 2022
Through its 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.
Gaming Realms is
an international
developer, publisher
and licensor of
mobile games,
building a portfolio
of highly popular
gaming content and
brands.
Contents
Strategic
Report
Corporate
Governance
Financial
Statements
Highlights
At a Glance
Executive Chairman’s Statement
Chief Executive’s Review
Financial Review
Engaging with Stakeholders
Principal Risks and Uncertainties
1
2
4
5
6
10
12
Board and Executive Management
Directors’ Report
Statement of Directors’ Responsibilities
Corporate Governance
14
16
17
18
www.gamingrealms.com
Independent Auditor’s Report
Consolidated Statement of
Comprehensive Income
Consolidated Statement of Financial
Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes
in Equity
Notes to the Consolidated
Financial Statements
Parent Company Statement of Financial
Position
Parent Company Statement of Changes
in Equity
Notes to the Parent Company
Financial Statements
Company Information
22
28
29
30
31
32
63
64
65
69
Strategic Report
Strategic Report
1
2022 Financial Highlights:
Revenue
increased by 27% to £18.7m
(2021: £14.7m)
EBITDA1
of £7.4m (2021: £5.1m), with operating margins
increasing with scale
2022
2021
£18.7m
£14.7m
2022
2021
£7.4m
£5.1m
Licensing revenue increased
by 35% to £14.9m
(2021: £11.1m)
Social publishing revenue
increased by 3% to £3.7m
(2021: £3.6m)
Licensing segment
generated £8.0m
EBITDA (2021: £6.4m)
Social publishing
segment generated
£1.5m EBITDA
(2021: £1.2m)
Head office costs
were £2.0m
(2021: £2.5m)
2022
2021
£14.9m
£11.1m
2022
2021
£3.7m
£3.6m
2022
2021
£8.0m
2022
£6.4m
2021
£1.5m
£1.2m
2022
2021
£2.0m
£2.5m
EBITDA
before share option and related
charges increased 34% to £7.8m
(2021: £5.8m)
Profit before tax for the year
increased 224% to £3.5m
(2021: £1.1m)
Year-end cash balance
of £2.9m (2021: £4.4m) after
making a repayment to Gamesys
Group of £3.4m resulting in the
Group ending the year debt free
2022
2021
£5.8m
£7.8m
2022
2021
£3.5m
£1.1m
2022
2021
£2.9m
£4.4m
2022 Operational Highlights:
Portfolio of proprietary games
on the Group’s remote game
server (“RGS”) grew to 65
(2021: 53)
Launched in 3 newly regulated
iGaming markets in North
America; Ontario, Quebec and
Connecticut
Launched in 3 further
European regulated iGaming
markets; Spain, Denmark and
Belgium
Launched with 56 new
partners for Slingo Originals
content including Pokerstars,
Betway, Loto Quebec,
Lottomatica and Snaitech
Signed licensing deals with
Konami Gaming and Taito
Corporation
Increased unique players in
licensing business by 19%
Phase one of the migration
to a more dynamically scalable
next-gen RGS platform
Launched the first 3 games in
Europe and North America
for 4ThePlayer on our distribution
network
1 EBITDA is profit before interest, tax, depreciation, amortisation and impairment expenses and is a non-GAAP measure. The Group uses EBITDA to comment on its financial
performance. EBITDA before share option and related charges is also discussed above which is EBITDA with the share option and related charge in the income statement added
back on the basis it is a material non-cash charge.
Governance ReportFinancial Statements 2
Gaming Realms plc Annual Report and Accounts 2022
At a Glance
Innovation
Gaming Realms develops, publishes and licenses mobile gaming content
Integrated Game Development, Licensing and Publishing
As the creator of a
variety of Slingo™,
bingo, slots and
other casual
games, we use our
proprietary content
to create a “Slingo”
genre of games
for our partners
internationally.
Gaming Realms
has partnered
with some of the
most successful
and popular global
platforms and
operators.
Game development
Brand licensing
2 Mobile Games Studios
• London, United Kingdom
• Victoria, Canada
Game licensing
• iGaming Library – US, UK
and EU
– US – BetMGM, DraftKings, RSi, Golden
Nugget, Betfair/Fanduel, Caesars
Interactive, Resorts, Hardrock, Ocean
Resorts, Bally’s, Boyd Interactive, PointsBet
and Kindred
– Europe – Bally’s, Entain, Sky Betting
& Gaming, Paddy Power Betfair, 888,
Skill On Net, Rank, 32 Red, William Hill,
Kindred, Buzz Bingo, Jumpman, Whitehat,
Leo Vegas, Betsson, Pokerstars, Betway,
Sisal, Goldbet, Lottomatica, Snaitech
IP Licensor
• North American Lottery Printed
Scratch Games – Scientific Games
• Global Electronic Gaming Machines –
Scientific Games
• Global Lottery Mobile Instant Games – IWG
• Social Slot Games – Zynga Inc.
Brand partnerships
• Banijay - Deal or No Deal
• Fremantle - Britain’s Got
Talent, The X Factor, The Price Is Right
• Sony – Who Wants to Be a Millionaire
• Scientific Games – Rainbow Riches
• Inspired Entertainment – Centurion, Reel King
• NetEnt – Starburst
• King Show Games – Lucky Larry Lobstermania,
Stinkin’ Rich
• Playtech – Fluffy Favourites
• Everi – Shark Week
• IGT – Da Vinci Diamonds, Cleopatra
• Pragmatic Play – Sweet Bonanza
• Warner Discovery – Deadliest Catch
• Tetris – Tetris
• Relax Gaming – Money Train
Growing international partners
Strategic Report
3
Estonia & Latvia
The Netherlands
Czech Republic
Romania
Greece
Malta
South Africa
International growth in regulated markets
Regulated markets
Live
2023
British Columbia, CA
Alberta, CA
Sweden
Lithuania
Denmark
Great Britain
Ontario, CA
Quebec, CA
Pennsylvania, USA
Connecticut, USA
New Jersey, USA
Italy
Spain
Portugal
Michigan, USA
Mexico
Colombia
Growing US iGaming Market
We are focusing on the growing North American market.
$600M
$500M
$400M
$300M
$200M
$100M
$M
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New Jersey
Delaware
Pennsylvania
West Virginia
Michigan*
Connecticut
Source: Eilers&Krejcik All States Casino report – Jan 2023 *Michigan online casino values are estimated
Key focus areas
Original Game Content & IP
Development
We build original content from
our London and Vancouver Island
game studios incorporating social meta games
and real money mechanics with Slingo and
other well-known brands.
Advanced Mobile Gaming
Platform
We have invested significantly
in our Remote Gaming Server
“RGS”, which hosts and distributes our game
portfolio. The scalable platform facilitates
future growth through existing infrastructure
for new games and distribution.
Highly Experienced Team
As we have transitioned our core
focus to the licensing business,
we have built up a high-quality
management team of sector specialists to
drive the implementation of our strategy.
Strategic Partners and
Licensing
Partners include Banijay, Zynga,
IWG, Inspired Entertainment, IGT,
King Show Games and Scientific Games.
Not only do we leverage our own IP across
multiple brands, but we also license Slingo
into markets adjacent to the Group’s core
mobile gaming business.
Data and Algorithmic
Optimisation
“It’s all about the data” – we put
the customer first, developing
engaging content and using data to enhance
the development feedback loop.
Responsible Gambling
Gaming Realms is committed to
providing an environment for
customers to play responsibly and
securely. Since commencing operations, we have
had measures in place to encourage responsible
play – to keep it fun – and have provided tools
to help keep customers’ gaming and spending
within their control.
In addition, we fund research, education
and treatment of problem gambling through
donations to GambleAware.
We always ensure that Responsible Gambling is at
the heart of our game design process and have
built a tool for both our partners and players to
set their own limits on stakes and features within
games. We only contract with licensed partners,
ensuring that the players are given a high level
of protection through these operators. As our
games are certified in highly regulated markets
such as the US, UK and Sweden, the standards we
have to provide for our games and RGS systems
in terms of player protection is already set to an
incredibly high level.
Governance ReportFinancial Statements 4
Gaming Realms plc Annual Report and Accounts 2022
Executive Chairman’s Statement
The Company continues to deliver on its proven strategy
I am delighted to
report that 2022
was another year of
profitable growth
for the Company,
with reported
EBITDA growing
by 34% to £7.8m
(2021: £5.8m) before share option and
related charges. The distribution of our
content has continued to expand on a
global level, strengthening our position
as a leading supplier of games to the
international regulated iGaming market.
Slingo has also cemented its position
as a category in its own right, allowing
us to partner with leading games and
entertainment brands and immerse them
into the Slingo format.
North America remains Gaming Realms’
largest territory for content licensing,
with revenues increasing 112% on the
prior year, bolstered by launching in
the newly regulated markets of Ontario
and Connecticut. This now sees us
represented in all five of the key iGaming
jurisdictions in the region. Importantly,
we continued to grow in New Jersey,
the first state we entered back in 2017,
as well as build further market share in
Michigan and Pennsylvania. We now have
contracts in place with operators in the
U.S. that represent 95% of the market.
Like North America, Europe is still seeing
new countries open to the regulated
iGaming market. During 2022, we
launched in Spain, Denmark and Belgium
through our operating partners and are
encouraged by the early success we are
experiencing. Despite the UK being one
of the more mature markets, we have
continued to grow, with our new games
proving very popular, whilst in Italy we
have taken further market share.
During the year we strengthened
the Company’s board with the
appointment of Anna Massion as a
Non-Executive Director. Anna brings
extensive experience as an investor
and advisor to gaming companies
and has also joined the Audit and
Remuneration Committees. Since the
year end, Mark Segal has become CEO
(having previously been CFO), whilst
Geoff Green has joined the Board and
become CFO (having previously been
Finance Director). Mark and Geoff have
developed a strong working partnership
in recent years, and we look forward to
this continuing as the Company’s growth
continues.
It is important to highlight that the
success we have achieved would not
have happened without our fantastic
staff. The Gaming Realms team has
continued to demonstrate their
outstanding commitment and creativity,
and on behalf of the shareholders and
the Board I would like to thank everyone
for their endeavours throughout the year.
With a strong pipeline of new
partnerships and games set to launch,
the outlook for 2023 is encouraging
as the Company continues to deliver
on its proven strategy. It is highly likely
that additional states within America
will commence the process to regulate
iGaming within the next two years.
With a strong
pipeline of new
partnerships
and games set
to launch, the
outlook for 2023 is
encouraging as the
Company continues
to deliver on its
proven strategy.
This process, coupled with the
development of other new markets, will
lead to increased distribution of group
products. Your Board views the future
of the Company with optimism and
confidence.
Michael Buckley
Executive Chairman
31 March 2023
Slingo has also cemented
its position as a category in
its own right, allowing us to
partner with leading games
and entertainment brands
and immerse them into the
Slingo format.
Strategic Report
Strategic Report
5
Chief Executive’s Review
An increased international demand for Slingo Originals portfolio
The Group made
strong progress
during 2022,
increasing revenues
by 27% to £18.7m
(2021: £14.7m),
and EBITDA before
share option and
related charges
by 34% to £7.8m (2021: £5.8m). We
invested heavily in our proprietary
Remote Game Server “RGS” platform
and expanded into multiple regulated
markets. We also increased our Slingo
Originals game portfolio to 65 with the
addition of 12 new games, as well as a
series of bespoke branded games for our
partners.
This strong performance resulted in
revenue growth of 35% in our licensing
business to £14.9m (2021: £11.1m)
and we are continuing to see good
momentum with increased international
demand for our Slingo Originals
portfolio. The combination of growing
the distribution of our games via our
RGS, close control of overheads and the
operational leverage of the Group led to
the licensing business achieving a 54%
EBITDA margin.
Licensing business
The focus of the Group remains to deliver
growth in its content licensing business.
The continued expansion of our Slingo
portfolio and growth in distribution
through more operators in Europe
and North America underpinned our
performance throughout 2022. Content
licensing revenues grew 57% in 2022 and
we increased unique player numbers in
the year by 19% to 4 million (2021: 3.36
million).
During the year, our library of proprietary
games increased to 65 and we went
live with 56 new partners, all of whom
licensed the Company’s Slingo Originals
content. This illustrates the strong
demand for our gaming content and our
ability to offer something different to the
rest of the market with our unique Slingo
format.
the excitement of the World Cup with
Slingoooal, which initially went live
exclusively with its operator partners at
Flutter Entertainment via Sky Betting &
Gaming Vegas in November.
Slingo Rainbow Riches, based on the
popular Rainbow Riches franchise, has
been a substantial hit across our markets,
and we were delighted to receive a
nomination at the SBC CasinoBeats Game
Developer Awards for this game. Later in
the year, we were the proud winners of
the ‘Mobile Supplier of the Year’ award at
the Global B2B EGR Awards.
North America
As previously announced, we made
further significant inroads into the
regulated North American iGaming
market, adding Connecticut, Quebec and
Ontario to territories we distribute our
content. In Connecticut, which has only
two operators, we entered the market
with our partner DraftKings Inc., and our
content will launch on FanDuel later this
year.
With the Slingo brand already present in
the Quebec lottery market, in March we
launched on Loto-Québec, on its iGaming
platform, whilst in April we expanded
our reach into Canada by going live in
Ontario with Rush Street Interactive,
Kindred and BetMGM.
Our performance in New Jersey, Michigan
and Pennsylvania continues to be
strong as we launch new exciting Slingo
content and go live with new partners.
In particular we have strong growth
potential in Michigan and Pennsylvania,
where we have 22 and 14 games live
respectively, compared to the 59 games
live in New Jersey.
Europe
At the start of the year, the Group
entered the regulated Spanish market
with long-term strategic partner Gamesys
(now part of Bally’s Corporation) under
its Monopoly and Botamania brands and
later launched with Yo Bingo (part of
Rank Group).
Some of the most notable games
released during the period included
Slingo Shark Week with the Discovery
Channel, a partnership which was
later extended through the creation
of Slingo Deadliest Catch, a tribute to
one of Discovery’s most successful TV
productions. We also helped to capture
In the first half of the year, the Slingo
games portfolio went live with
Lottomatica which is Italy’s largest
operator, and subsequently with Snaitech
in the second half of the year. There was
further progress in the Italian market
with Slingo Davinci Diamonds going
exclusively live with Sisal, one of the
country’s largest betting companies,
whilst in the Netherlands we launched
with partners Bingoal and Betnation.
Other European expansion came in
Denmark via Betsson, an existing partner,
and in Belgium through a partnership
deal with Napoleon.
In November, we successfully obtained
our full gaming licence from the National
Gambling Office in Romania. With this
in place, we are now looking forward to
launching more Slingo content in the
country with additional operators whilst
continuing to work with our current
aggregation partners.
Social
Our social business remains an important
way to bring the Slingo Games to a
wider audience. Revenue from social
increased by 3% to £3.7m (2021: £3.6m)
whilst EBITDA grew to £1.5m (2021:
£1.2m). Importantly, our social business
continued to provide a positive cash
contribution to the Group.
Post Period End and Outlook
We continue to deliver on the clear
strategy set out and Gaming Realms
continues to focus on the following areas:
• International expansion – particularly in
the US and European regulated markets
• Adding new distributors, operators and
licensors
• Further penetration with existing
distributors and operators driven by new
games
Gaming Realms has seen this momentum
continue into 2023, with excellent
growth in the year to date, with revenues
53% up in the two months post year-
end compared with the same period in
2022. Content licensing revenues have
increased 59% in the same period. We
have launched 3 games so far this year,
including Slingo Cleopatra and have gone
live with 13 new partners.
The Group has a strong pipeline of new
opportunities in our current markets,
in particular where we have recently
launched. As a result, the Board expects
to have another strong year in 2023.
Mark Segal
Chief Executive Officer
31 March 2023
Governance ReportFinancial Statements 6
Gaming Realms plc Annual Report and Accounts 2022
Financial Review
Scaled growth in new and existing regulated markets
Overview
Overall, Gaming
Realms had a very
strong 2022. The
Group’s financial
results for the year
demonstrate the
continued delivery
of the Group’s core strategy; scaling the
licensing business through entry into new
regulated jurisdictions and enhancing the
unique Slingo games portfolio.
By the end of the year, the Group became
debt free following the full repayment
of the outstanding convertible loan
balance to Gamesys Group (part of Bally’s
Corporation).
Performance
Group revenues increased 27% to £18.7m
(2021: £14.7m), principally as a result
of the continued growth in the licensing
segment and in particular the content
licensing business, supported by modest
growth in social publishing revenues.
The Group generated EBITDA of £7.4m
(2021: £5.1m) and £7.8m before share
option and related charges (2021: £5.8m).
The £2.3m growth in EBITDA generated
compared with the prior year has seen the
Group record a profit before tax of £3.5m
(2021: £1.1m), an increase of £2.4m on
the prior year.
Operating expenses are largely revenue
related costs including license fees,
hosting costs and platform provider fees.
Total Group operating expenses were
£3.9m, a 32% increase over the £2.9m
in the prior year, driven by the growth in
licensing segment revenues.
Administrative expenses increased to
£6.9m (2021: £5.7m) predominantly due
to increased staff costs in the licensing
segment required to deliver the segments
growth, along with other incremental
business expansion costs.
Share option and related charges were
£0.4m in 2022 (2021: £0.7m).
The following table sets out the split of
revenue, EBITDA and profit before tax
by segment, which is discussed further
below.
27%
£18.7m
Group revenues
(2021: £14.7m)
46%
£7.4m
EBITDA
(2021: £5.1m)
2022
Revenue
Other income
Marketing expense
Operating expense
Administrative expense
Share option and related charges
EBITDA
Amortisation of intangible assets
Depreciation of property, plant and equipment
Finance expense
Finance income
Profit before tax
2021
Revenue
Other income
Marketing expense
Operating expense
Administrative expense
Share option and related charges
EBITDA
Amortisation of intangible assets
Depreciation of property, plant and equipment
Impairment of goodwill
Finance expense
Finance income
Profit before tax
Licensing
£
14,937,036
-
(38,391)
(2,579,127)
(4,176,964)
(149,753)
7,992,801
(1,996,909)
(60,215)
(10,087)
26,658
5,952,248
Licensing
£
11,100,085
-
(20,348)
(1,645,538)
(2,889,706)
(170,062)
6,374,431
(1,357,625)
(26,475)
-
(7,353)
26,496
5,009,474
Social Publishing
£
3,690,485
112,147
(17,164)
(1,308,520)
(1,001,569)
(1,666)
1,473,713
(943,384)
(59,822)
(11,239)
-
459,268
Social Publishing
£
3,567,616
130,878
(282,579)
(1,301,320)
(920,178)
(7,441)
1,186,976
(987,286)
(47,717)
(73,677)
(20,005)
-
58,291
Head office
£
23,000
-
(78,244)
-
(1,764,925)
(200,307)
(2,020,476)
(731,086)
(138,478)
(372,716)
375,000
(2,887,756)
Head office
£
-
-
(76,303)
-
(1,856,570)
(521,691)
(2,454,564)
(719,388)
(142,642)
-
(662,577)
-
(3,979,171)
Total
£
18,650,521
112,147
(133,799)
(3,887,647)
(6,943,458)
(351,726)
7,446,038
(3,671,379)
(258,515)
(394,042)
401,658
3,523,760
Total
£
14,667,701
130,878
(379,230)
(2,946,858)
(5,666,454)
(699,194)
5,106,843
(3,064,299)
(216,834)
(73,677)
(689,935)
26,496
1,088,594
Strategic Report
7
The core focus of the Group continues to
be growing the content licensing business
by way of expanding into new regulated
territories, growing our unique Slingo
games portfolio and developing deeper
relationships with existing partners to
maximise value and engagement.
35%
£14.9m
Licensing segment
revenues
(2021: £11.1m)
Licensing
Licensing segment revenues in total
increased 35% to £14.9m (2021:
£11.1m), which can be broken down as
follows:
these new partners were within these
newly entered regulated markets and 39
in existing markets in Europe and North
America. A further 13 partners have gone
live in 2023 to date.
Brand licensing
The fall in brand licensing revenues in
2022 compared with the prior year is
predominantly the result of a significant
deal completed in the prior year.
• Content licensing revenue growth of
57% to £14.3m (2021: £9.1m); and
• Brand licensing revenue falling 68% to
£0.6m (2021: £2.0m).
The segment contributed £8.0m EBITDA
in 2022 (2021: £6.4m).
The amortisation charge for the year
increased to £2.0m (2021: £1.4m),
reflecting the increased investment in
development spend in the segment in
recent years. The impact of the segments
increase in EBITDA offset by the increase
in amortisation, means the segment
delivered a profit before tax of £6.0m
(2021: £5.0m).
Content licensing
The core focus of the Group continues to
be growing the content licensing business
by way of expanding into new regulated
territories, growing our unique Slingo
games portfolio and developing deeper
relationships with existing partners to
maximise value and engagement.
During the year, the Group entered a
further 6 regulated markets globally. In
North America, the Group launched its
content in the Canadian provinces of
Ontario following the market opening,
and Quebec in the first half of 2022,
while launching in the U.S. state of
Connecticut in the second half of the
year, making it the fourth U.S. state where
the Group is licensed. In Europe, the
Group launched in the regulated markets
of Spain, Denmark and Belgium during
the year.
In total the Group went live with a further
56 partners during 2022. Of this, 17 of
The Group released 12 new Slingo games
to the market during 2022, including
Slingo Deadliest Catch and Slingo Da
Vinci Diamonds, along with a series of
bespoke Slingo branded games for our
partners. Slingo continues to prove highly
popular with our partners and players.
Slingo is a unique genre of game in the
market, which is driving engagement with
partners.
The Group continues to identify and
partner with leading brands in the
industry that will complement the
Slingo format and engage players.
During the year we released new Slingo
collaborations with key partners including
Everi, Warner Discovery and IGT. A number
of further agreements have been entered
into to bring new Slingo collaborations
to market in 2023, including Tetris and
Money Train.
Revenues from North America continue
to grow in prominence for the content
licensing business. Revenue from these
markets in 2022 was £6.4m, a 112%
increase on the £3.0m in the prior year.
The region now represents 45% of total
content licensing revenues (2021: 33%).
We anticipate this will increase further
in 2023 with a full year of trading in
Ontario, Quebec and Connecticut, along
with further penetration in existing North
American markets.
The operational leverage of the content
licensing business has meant that total
segmental expenses (excluding share
option and related charges) increased by
49% to £6.8m (2021: £4.6m), a lower
rate than the 57% which content licensing
revenues increased over the prior year.
The Group’s Slingo brand is well-known by
consumers, which allows us to license this
brand into adjacent markets where the
right opportunities arise, such as physical
and digital lottery scratch games.
Social publishing
The Group’s social publishing business
reported a 3% increase in revenues
to £3.7m (2021: £3.6m), despite a
94% reduction in segmental marketing
expenses in the year to £0.02m (2021:
£0.3m).
Operational costs, which are largely
driven by revenues, increased by 1%
from the previous year to £1.3m (2021:
£1.3m).
The 9% increase in segmental
administrative expenses is due to
continued investment in the development
and operational team, with the segment
continuing to have a stable underlying
fixed cost base. Excluding staff costs,
segmental administrative expenses
remained stable with the prior year,
increasing by 1%.
As a result, the segment delivered £1.5m
EBITDA for the year, a 24% increase on the
£1.2m in 2021.
The amortisation charge related to the
social publishing segment for the year
was £0.9m, a 4% reduction on the prior
year (2021: £1.0m). The growth in the
segment’s EBITDA has therefore seen the
social publishing business deliver profit
before tax of £0.5m (2021: 0.1m).
Governance ReportFinancial Statements 8
Gaming Realms plc Annual Report and Accounts 2022
Financial Review
Scaled growth in new and existing regulated markets
Cashflow and Balance Sheet
The Group’s cash balance decreased
by £1.5m in 2022 (2021: increased by
£2.3m) to £2.9m at 31 December 2022
(2021: £4.4m).
In December 2022, the Group paid
Gamesys Group £3.4m as full repayment
of the convertible loan and related
charges (see Note 21), leaving the Group
debt free. Excluding this debt repayment,
the Group would have reported a £1.9m
increase in its cash balance in 2022.
The Group capitalised £4.0m (2021:
£3.4m) into intangible assets as
development costs during the year.
This £0.6m increase over the prior year
represents an increase in investment in
both the licensing and social publishing
segments. This investment is to both
expand the Group’s unique game
portfolio across both segments and
develop the Group’s proprietary RGS
platform with enhanced capabilities, scale
and features.
Aside from the £3.4m debt repayment
and £4.0m development costs capitalised
in the year discussed above, the remaining
movement in cash is substantially
explained by the £6.5m (2021: £5.0m)
cash inflow from operating activities.
A reconciliation between profit for the
year and cash from operating activities is
provided below.
Net assets totaled £17.9m
(2021: £13.1m).
Cash flows from operating activities
Profit for the financial year
Adjustments for:
Depreciation of property, plant and equipment
Loss on disposal of property, plant and equipment
Loss on disposal of intangible assets
Impairment of goodwill
Amortisation of intangible fixed assets
Other income
Other income received during the year
Finance income
Finance expense
Tax credit
Exchange differences
Share based payment expense
Increase in trade and other receivables
Increase in trade and other payables
Decrease in other assets
Net cash flows from operating activities before taxation
Net tax paid in the year
Net cash flows from operating activities
2022
£
2021
£
3,614,115
1,254,152
258,515
-
-
-
3,671,379
(112,147)
121,962
(401,658)
394,042
(90,355)
54,013
438,868
(1,973,278)
607,560
11,848
6,594,864
(45,213)
6,549,651
216,834
2,125
(2,004)
73,677
3,064,299
(130,878)
117,591
(26,496)
689,935
(165,558)
22,374
466,254
(745,778)
208,400
-
5,044,927
(77,152)
4,967,775
Strategic Report
9
There has been a £2.1m increase in the
trade and other receivables balance,
which is a result of the £2.1m increase
in trade receivables (see Note 18). This
increase is a result of the revenue growth
from the prior year along with the timing
of invoicing and cash collection around
the year-end. As discussed in Note 18, no
impairment provision has been recorded
from the Group’s expected credit loss
assessment on these receivables.
Going concern
In adopting the going concern basis of
preparation in the financial statements,
the Directors have performed both
qualitative and quantitative assessments
of the associated risks facing the business
and its ability to meet its short and
medium-term forecasts. The forecasts
were subject to stress testing to analyse
the reduction in forecast cash flows
required to bring about insolvency of the
Company unless capital was raised. In
such cases it is anticipated that mitigation
actions, such as reduction in overheads
could be implemented to stall such an
outcome.
The Directors confirm their view that they
have carried out a robust assessment of
the emerging and principal risks facing
the business. As a result of the assessment
performed, the Directors consider that
the Group has adequate resources to
continue its normal course of operations
for the foreseeable future.
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 as we
continue to execute our strategy and
invest in the growth of the business.
Corporation and deferred taxation
The current year tax credit of £0.1m
(2021: £0.2m) largely relates to the
recognition of a £0.3m deferred tax asset
(see Note 12), £0.3m corporation tax
charge in overseas jurisdictions (2021:
£0.05m) and the unwind of deferred tax
of £0.1m (2021: £0.1m) which arose on
prior year business combinations.
The Group’s
Slingo brand is
well-known by
consumers, which
allows us to license
this brand into
adjacent markets
where the right
opportunities arise,
such as physical
and digital lottery
scratch games.
Geoff Green
Chief Financial Officer
31 March 2023
The Group continues to identify and partner
with leading brands in the industry that will
complement the Slingo format and engage
players. During the year we released new
Slingo collaborations with key partners
including Everi, Warner Discovery and IGT.
Governance ReportFinancial Statements 10
Gaming Realms plc Annual Report and Accounts 2022
The Board regularly reviews the
Company’s principal stakeholders
and how it engages with them. This
is achieved through information
provided by management and also by
direct engagement with stakeholders
themselves.
Engaging with Stakeholders
The Board recognises that Gaming
Realms has a number of stakeholders,
including shareholders, customers,
employees, suppliers and regulators. The
Board is cognizant of its responsibility
to understand each of their views and
does this through a variety of methods,
which are continually reviewed to
remain effective. Updates are provided
and discussed at Board and relevant
Committee meetings. Throughout
this Annual Report, we have provided
information on some of the initiatives
and approaches undertaken in relation to
stakeholder engagement by the Group
during 2022.
Section 172 statement
The Board of Directors, in line with their
duties under section 172 (“s172”) of
the Companies Act 2016, act in a way
they consider, in good faith, would be
most likely to promote the success of the
Company for the benefit of its members
as a whole, and in doing so have regard to
a range of matters when making decisions
for the long term. Key decisions and
matters that are of strategic importance
to the Company are appropriately
informed by s172 factors.
Section 172 of the Companies Act
2006 requires Directors to take into
consideration the interests of stakeholders
and other matters in their decision
making. The Directors continue to have
regard to the interests of the Company’s
employees and other stakeholders, the
impact of its activities on the community,
the environment and the Company’s
reputation for good business conduct,
when making decisions. In this context,
acting in good faith and fairly, the
Directors consider what is most likely to
promote the success of the Company for
its members in the long term. We explain
in this Annual Report, and below, how the
Board engages with stakeholders.
Shareholders
The Board is committed to maintaining constructive dialogue with shareholders and ensuring that it has a deep understanding
of their views. It also recognises that shareholders consider a range of environmental, social and governance matters. The Chair
and Chief Executive Officer, on behalf of the Board, meet shareholders regularly and report to the Board on these discussions.
All Directors are also available to meet institutional investors on request.
Some of the activities undertaken during 2022 are summarised below:
• The Company has engaged with an Investor Relations consultant.
• The Chair engaged with key shareholders on corporate governance matters.
• The Non-Executive Directors have engaged with stakeholders during the year.
• Private individual shareholders were communicated with via the Company Secretary.
• The Chairman and Chief Executive Officer have conducted a number of “online” presentations and interviews in order to have
greater transparency with shareholders.
• The Board determined that the repayment of the loan during the year to Gamesys Group (see Note 21) as opposed to actively
pursing a conversion was more value accretive to shareholders and prevented against dilution.
AGM
Due to COVID-19 restrictions only two of our Directors attended the 2022 AGM and an average of 32% of the total issued share
capital was voted across all resolutions. Shareholders were given the opportunity to send in questions in advance to be an-
swered by the directors at the 2022 AGM on the Group’s strategy and future outlook.
The 2023 AGM will be held on 31 May 2023. Separate resolutions are proposed on each item of business.
Website and shareholder communications
Further details on the Group, our business and key financial dates can be found on our corporate website:
www.gamingrealms.com
Players
We always ensure that Responsible Gambling is at the heart of our game design process and have recently built a tool for
operators to configure stakes within games in order to manage their players responsibly. We only contract with licensed
partners, ensuring that the players are given a high level of protection through these operators. As our games are certified in
highly regulated markets such as the UK, USA and Sweden, the standards we have to provide for our games and RGS systems in
terms of player protection is already set to an incredibly high level.
Strategic Report
11
Customers
We are providing our customers with an increasing portfolio of unique games each year. We are making significant improve-
ments to our platform in order to prepare for large scale growth.
We ensure our games and platform are fully tested before each new launch and adhere to any regulations required for them.
Trust is important to our customers and their end users, and our competitive customer offering is maintained through our
unique Slingo IP, together with constant communication and emphasis on accounts management.
We have invested in account managers who work closely with our B2B partners to ensure good relationships and that we get
maximum exposure for our content.
Employees
Employee engagement is critical to our future success. In a year of hybrid remote working, our employees have worked hard to
support the business and sustain our culture.
Empowerment, career development, health and well-being and social responsibility are all areas our employees have told us
they consider important in the workplace.
The Board gains an understanding of the views of our employees and the culture of the organisation through visits to our
offices, one-to-one meetings, Board presentations and via assessment of office wide engagement scores and views.
We continue to monitor and develop our approach to performance management, to promote a culture of continuous
improvement.
As a method of retaining its Executive Team, senior management and key employees, the Group issues share options linked to
future service periods. During the year the Group granted 3.9 million such options (see Note 24) to its Executive Directors and
certain employees.
Suppliers
We have established long-term partnerships that complement our in-house expertise and have built a network of specialised
partners within the industry and beyond.
We have an open, constructive and effective relationship with all suppliers through regular meetings which provide both parties
the ability to feedback on successes, challenges and the future roadmap.
Our procurement policy includes a commitment to sustainable procurement and mitigation against the risk of modern slavery,
anti-bribery and corruption, and data protection/privacy breaches across our supply chain. We aim to operate to the highest
professional standards, treating our suppliers in a fair and reasonable manner and settling invoices promptly.
We regularly monitor the relationship and engagement approach with our third-party suppliers.
Regulators
We have an open and transparent dialogue with the regulatory and industry bodies that we work with.
The Group has a compliance team to ensure that all regulatory guidelines are met in its gambling operations. The Group also
maintains close legal counsel to advise on any changes to the regulatory framework, as well as updates on territories currently
outside the Group’s activities.
We have spent 2022 working with the Regulators on our successful applications for supplier licenses in Romania, Ontario and
Connecticut.
Governance ReportFinancial Statements 12
Gaming Realms plc Annual Report and Accounts 2022
Principal Risks and Uncertainties
The Board constantly monitors and assesses risks and uncertainties within the Group’s trading activities. There will always be a
level of risk that needs to be evaluated against the Group’s potential returns in any activity.
Risk
How this Risk is managed
Regulatory and Legislation
Online gambling and gaming are subject to a dynamic and complex
regulatory regime.
The Group now holds supplier licences from the following regulators;
the UK Gambling Commission, the New Jersey Division for Gaming
Enforcement, the Michigan Gaming Control Board, the Pennsylvania
Gaming Control Board, the Connecticut Department of Consumer
Protection, the Alcohol and Gaming Commission of Ontario, the
National Gambling Office of Romania and the Malta Gaming Authority.
The Group is in the process of applying for supplier licenses in both
Greece and British Columbia, and will be pursuing further licenses in
regulated markets in 2023.
In December 2020, the UK Government launched a review of the
Gambling Act 2005, with the aim to ensure it is “fit for the digital age”.
This review is still ongoing, with new guidance yet to be released.
It is key to the Group to maintain compliance with all licences and
any new ones that are required. These are critical to the continuing
operation of the Group’s gambling activities and also the production
and supply of its unique content into both its operations and other third
parties.
The Board considers this to be a greater risk than the previous year due
to the Group operating in more regulated territories and the soon to be
published UK Government white paper on gambling reform.
Taxation Risk
From the end of 2014, the gaming industry has been subject to point
of consumption tax in relation to gambling activities within the UK.
The rate increased to 21% in April 2019. There is a risk that increased
gaming duty or taxes in the UK or other significant jurisdictions for the
Group impacts revenues generated.
The Board considers this risk to remain static with the previous year.
Residency
The Group has legal entities in several jurisdictions, including US,
Canada, Malta and the UK.
The Board considers this risk to remain static with the previous year.
Competition
The online and free to play gaming markets are highly competitive in
North America and the UK. Failure to be able to hold a competitive
advantage would result in attracting less players and have lower
engagement on our apps and sites.
The Board considers this risk to remain static with the previous year.
The Group has a compliance team to ensure that all regulatory
guidelines are met in its gambling operations, including any potential
changes arising from the UK Government’s review of the Gambling
Act 2005. The Group also maintains close legal counsel to advise
on any changes to the regulatory framework, as well as updates on
territories currently outside the Group’s activities.
The licensing business operates in multiple jurisdictions reducing the
impact of individual jurisdiction specific tax changes. The tax liability
is borne by the operator.
The Group has undertaken a detailed transfer pricing exercise to
ensure that revenue and profits are attributed correctly between the
operating locations and continues to monitor taxation policies in all
jurisdictions.
In following the Group’s strategy of developing new unique IP and
content, the Group feels well placed to be able to compete in the
markets it operates in. It invests significant resource to be able to
improve its development and operations. We have protected the
Slingo mark and game mechanics through various registered marks
and patents that the Group owns.
Diverse products and geographies also help to diversify the risk.
Strategic Report
13
Risk
How this Risk is managed
Time to Market
The Group invests highly in technology and bringing new products
and games to market. A delay in time to market will result in a loss of
competitive advantage, a loss in potential revenue and also increasing
cost of development.
The Group has invested highly in having a dual product track to allow
its products and games to be ready for both licensing and publishing
exploitation in the same release.
Extensive work is undergone on the planning stage to ensure that
timeframes can be met, and products go live at the highest standard.
The Board considers this risk to remain static with the previous year.
Dependence on technology
As a provider of online gambling services, the Group’s business is reliant
on technology and advanced information systems. If the Group does not
invest in the maintenance and further development of its technology
systems, there is a risk that these systems may not cope with the needs
of the business and may fail. The Group is reliant on the Internet and
is vulnerable to activities such as distributed denial of service attacks,
other forms of cyber-crime and a wide range of malicious viruses.
The Board considers this risk to remain static with the previous year.
Dependence on third-party service providers
The Group engages with a number of providers for cloud-based
technology and remote deployment, as well as other important service
providers. In the event that there is any interruption to the products or
services provided by third parties, problems in supplying the products,
one or more ceased to be provided or are provided on onerous terms to
the Group, this may have an adverse effect on the Group’s business and
performance.
The Board considers this risk to remain static with the previous year.
The Team
The ability to carry out the Group’s strategy is dependent on the
engagement of its senior management team, its technology,
commercial and operations teams. The Group operates with a small
team across 2 main locations.
If key employees leave, there is a risk of loss of knowledge.
The Board considers this risk to remain static with the previous year.
Business disruption
Business disruptions may occur where the Group’s workforce is unable to
work or communicate, including due to pandemics such as COVID-19.
Such disruptions affect the global economy and therefore our B2B
operators and end users, if spending and confidence are significantly
affected.
The Board considers this risk to remain static with the previous year.
The Group continues to invest in its proprietary platform to ensure
the necessary features and functionality meet partner needs. In
addition, it has adopted industry standard protections to detect
intrusions or other security breaches and implements preventative
measures to protect against sabotage, hackers, viruses and other
cyber-crime.
The Group also holds relevant insurance to cover against this.
The Group uses reliable and well-known suppliers and ensures that
contractual agreements with key partners offer adequate protection.
The Group continues to invest in its employees to ensure that it can
attract, recruit and maintain a high-quality team. During the year,
The Group has made a number of hires in key positions to ensure the
team is appropriate for the next phase of the Company’s growth.
The Group actively monitors developments which may affect its
operations and the Directors have taken practical steps to mitigate
disruption this is causing to the business.
The Group’s workforce is predominantly based in the UK, Canada
and the US. We have successfully migrated to a home working model
during the pandemic. Our colleagues’ mental and physical well-being
is being closely monitored and managed with training and support
for all employees.
The 2022 Strategic Report on pages 1 to 13 has been approved by the Board of Directors.
On behalf of the Board:
Michael Buckley
Executive Chairman
31 March 2023
Governance ReportFinancial Statements
14
Gaming Realms plc Annual Report and Accounts 2022
Board and Executive Management
Michael Buckley
Executive Chairman
Michael Buckley was Chairman of Cashcade, founded in 2000. Cashcade became a leading UK-based online
gaming company prior to its sale to PartyGaming plc in 2009 for an aggregate sale consideration of £96m
for shareholders.
Michael has invested in and been Chairman of a number of public companies. These include SelecTV plc,
a producer of comedy and comedy drama series for television such as Lovejoy, Birds of a Feather and The
New Statesman. SelecTV invested in a consortium which in 1991 won the franchise to create Meridian
Television of which Michael was a founding Director. He was also Chairman of Pacific Media plc, which
invested in a number of internet backbone companies in Asia during the 1990s as well as creating a chain
of movie theatres in South East Asia in partnership with United Artists Theatre Circuit Inc. Michael has held
other public and private company directorships, having obtained a professional qualification as a chartered
accountant in the UK.
Mark Segal
Chief Executive Officer
Mark Segal joined Gaming Realms in May 2013 having left bwin.party as Finance Director for the bingo
vertical. Previous to that Mark was Finance Director of Cashcade until it was acquired by PartyGaming plc in
July 2009. Mark was responsible for the full finance function, including commercial negotiations, business
intelligence and operational support in the business, and was involved in the sale to PartyGaming plc and
acquisition by Cashcade of Independent Technology Ventures in July 2007. Prior to joining Cashcade, in
May 2005, Mark spent five years at the accountancy firm Martin Greene Ravden, where he qualified as a
chartered accountant in 2003.
Geoff Green
Chief Financial Officer
Geoff Green was appointed as Gaming Realms’ Chief Financial Officer after the year end, on 1 February
2023, having joined the Group in July 2019 and was previously Finance Director in support of the CFO. Prior
to Gaming Realms, Geoff spent 8 years at BDO LLP, where he qualified as a chartered accountant in 2013.
Governance Report
15
JR
MW
MB
AM
Jim Ryan
Non-executive Director
Jim Ryan is the CEO of Pala Interactive, LLC a real money gambling operator and B2B platform provider
focused on the US regulated online gaming market. Prior to Pala Interactive, Jim was the Co-CEO of bwin.
party digital entertainment plc. He has spent the last 22 years of his career in leadership roles within the
online gaming sector. Jim has led a number of the industry’s largest merger and acquisition transactions
which include the merger of PartyGaming plc and bwin, the acquisitions of Cashcade (Foxy Bingo) and
the World Poker Tour and the sale of St Minver Limited to GTECH. Jim held senior posts at four publicly
listed companies. In addition to his role of CEO of PartyGaming plc and Co-CEO of bwin.party digital
entertainment plc he was President and Chief Executive Officer of Excapsa Software Inc. and as Chief
Financial Officer of CryptoLogic Inc. and Chief Financial Officer of SXC Health Solutions Corp and was
CEO of St. Minver Limited. Jim also held senior management posts at Procuron Inc., Metcan Information
Technologies Inc. and Epson Canada Limited. Educated at Brock University (Goodman School of Business)
in Ontario, Canada, where he obtained a business degree with first class honours, Jim obtained professional
qualifications as a chartered accountant and certified public accountant from the Canadian Institute of
Chartered Accountants.
Mark Wilson
Non-executive Director
Mark Wilson is a strategic adviser and investor in media, gaming and real estate. Mark has held multiple
senior leadership positions, serving as CEO of Television Games Network, Executive Chairman of Music
Choice International, President of Hubbard Enterprises, Managing Member of New Mexico Gaming LLC,
and General Counsel and Corporate Secretary of Churchill Downs. He received a Juris Doctorate from the
University of Louisville.
Mark Blandford
Non-executive Director
Mark was the owner of a traditional ‘bricks and mortar’ bookmaker’s chain for over 15 years, then
recognised the potential of the internet in the mid 1990’s. In 1998 he founded Sportingbet.com, and in
2001 floated the company on AIM. Mark stepped down from the Board of Sportingbet in 2007 before its
eventual sale in 2013 for £485m, with the assets being split between William Hill and GVC. In 2002, Mark
was awarded AIM Entrepreneur of the Year.
After stepping down from the board of Sportingbet, Mark has become an active, successful and widely
followed investor in the digital pay2play entertainment space.
Anna Massion
Non-executive Director
On November 1, 2022 Anna Massion was appointed as a member of the board of the Company. Ms.
Massion currently serves as an Independent Non-Executive Director on several boards including Playtech
PLC, PlayAGS, Betmakers AU and Artemis Strategic Investment Corp. Previously, Ms. Massion was a Senior
Analyst for PAR Capital Management from February 2014 through June 2019. Ms. Massion has also served
as a Director of Gaming, Lodging and Leisure Research at Hedgeye Risk Management, LLC from November
2008 through February 2014, Vice President/Senior Research Analyst at Marathon Asset Management from
April 2008 through October 2008 and at JP Morgan from September 2001 through March 2008 as a Vice
President on the Proprietary Trading Desk from 2004. Ms. Massion holds a Bachelor of Science in Economics,
Concentration in Finance, Minor in Russian and a Master of Business Administration in Finance, Major in
Finance from The Wharton School at the University of Pennsylvania.
Strategic ReportFinancial Statements
16
Gaming Realms plc Annual Report and Accounts 2022
Research and development
The Group maintains its level of
investment in software development
activities. In the opinion of the Directors,
continued investment in this area is
essential to strengthen the Group’s
market position for future growth. During
the year, the Group capitalised £4.0m
(2021: £3.4m) of development costs
(see Note 14).
During the year, the Group claimed
Research and Development relief as
per Notes 4 and 12 to the financial
statements.
Future developments
Future developments are discussed in
the Executive Chairman’s Statement on
page 4.
The Directors report was approved on
behalf of the Board on 31 March 2023
and signed on its behalf by
Michael Buckley
Executive Chairman
31 March 2023
Directors’ Report
The Directors present their Annual
Report together with the audited
financial statements for the year ended
31 December 2022.
The Group meets its day-to-day working
capital requirements from the cash flows
generated by its trading activities and its
available cash resources.
Principal activities
The Group’s principal activities
during the year were that of content
development and licensing to real
money and social gaming customers in
Europe and North America.
These financial statements present the
results of the Group for the year ended
31 December 2022.
Names of Directors and dates of any
changes
The Directors who served during the year
and to the date of this report were:
• Michael Buckley
• Mark Segal
• Jim Ryan
• Mark Wilson
• Mark Blandford
• Anna Massion (appointed 1 November
2022)
• Geoff Green (appointed 1 February
2023)
Directors’ and Officers’ liability
insurance
The Group has purchased and maintains
appropriate insurance cover in respect
of Directors’ and Officers liabilities. The
Group has also entered into qualifying
third-party indemnity arrangements
for the benefit of all its Directors, in a
form and scope which comply with the
requirements of the Companies Act
2006.
Results and dividends
The results for the year are set out on
page 28. The Company will not be
paying a dividend this year (2021: none).
Post balance sheet events
There were no significant events
impacting the Company that occurred
after 31 December 2022.
Going concern
Under Company law, the Company’s
Directors are required to consider
whether it is appropriate to prepare the
financial statements on the basis that
the Group and Company are a going
concern.
As disclosed further in Note 1 of the
financial statements, whilst there are a
number of risks to the Group’s trading
performance as summarised on page
12, the Group is confident of its ability
to continue to meet its liabilities as they
fall due. The Group’s strategic forecasts,
based on reasonable assumptions,
indicate that the Group should be able to
operate within the level of its currently
available resources. After making
enquiries and after consideration of the
Group’s existing operations, cash flow
forecasts and assessment of business,
regulatory and financing risks, the
Directors have a reasonable expectation
that the Group and Company have
adequate resources to continue in
operational existence for the foreseeable
future.
Accordingly, they continue to adopt the
going concern basis in preparing the
Annual report and Accounts.
Disclosure to auditors
The Directors who held office at the
date of approval of this Directors’ report
confirm that, as far as they are aware,
there is no relevant audit information of
which the Company’s auditor is unaware;
and each Director has taken all the
steps that ought to have been taken as
a Director to make themselves aware of
any relevant audit information and to
establish that the Company’s auditor is
aware of that information.
BDO LLP have expressed their willingness
to continue in office and a resolution to
reappoint them will be proposed at the
Annual General Meeting in accordance
with Section 489 of the Companies Act
2006.
Financial instruments
Details of the Group’s financial risk
management objectives and policies
are included in Note 22 to the financial
statements.
Governance Report
17
Statement of Directors’ Responsibilities
2006. They are also responsible for
safeguarding the assets of the Company
and hence for taking reasonable steps for
the prevention and detection of fraud
and other irregularities.
Website publication
The Directors are responsible for
ensuring the Annual Report and the
financial statements are made available
on a website. Financial statements are
published on the Company’s website
in accordance with legislation in the
UK governing the preparation and
dissemination of financial statements,
which may vary from legislation in other
jurisdictions. The maintenance and
integrity of the Company’s website is
the responsibility of the Directors. The
Directors’ responsibility also extends to
the ongoing integrity of the financial
statements contained therein.
The Directors are responsible for
preparing the Annual Report and
financial statements in accordance with
applicable law and regulations.
Company law requires the Directors
to prepare financial statements for
each financial year. Under that law
the Directors have elected to prepare
the Group financial statements
in accordance with UK adopted
International Accounting Standards
and the company financial statements
in accordance with United Kingdom
Generally Accepted Accounting Practice
(United Kingdom Accounting Standards
and applicable law). Under company
law the Directors must not approve
the financial statements unless they
are satisfied that they give a true and
fair view of the state of affairs of the
Group and Company and of the profit
or loss of the Group for that period. The
Directors are also required to prepare
financial statements in accordance with
the rules of the London Stock Exchange
for companies trading securities on the
Alternative Investment Market (‘AIM’).
In preparing these financial statements,
the Directors are required to:
• Select suitable accounting policies and
then apply them consistently;
• Make judgements and accounting
estimates that are reasonable and
prudent;
• State whether they have been
prepared in accordance with UK
adopted International Accounting
Standards in conformity with the
requirements of the Companies
Act 2006, subject to any material
departures disclosed and explained in
the financial statements; and
• Prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping
adequate accounting records that
are sufficient to show and explain the
Company’s transactions and disclose
with reasonable accuracy at any time
the financial position of the Company
and enable them to ensure that the
financial statements comply with the
requirements of the Companies Act
Strategic ReportFinancial Statements 18
Gaming Realms plc Annual Report and Accounts 2022
Corporate Governance
Chairman’s Introduction
The Directors recognise the importance of good corporate governance and have chosen to apply the Quoted Companies Alliance
Corporate Governance Code (the ‘QCA Code’). The QCA Code was developed by the QCA in consultation with a number of
significant institutional small company investors, as an alternative corporate governance code applicable to AIM companies.
The underlying principle of the QCA Code is that “the purpose of good corporate governance is to ensure that the company
is managed in an efficient, effective and entrepreneurial manner for the benefit of all shareholders over the longer term”. The
Group is not in compliance with all aspects of the Code due to the size and relative stage of development of the business, but
remains committed to developing its compliance position over time as the business grows and matures. To see how the Company
addresses the key governance principles defined in the QCA Code please refer to the Company’s website and the below table.
(The Company has not prepared an official Chairman’s corporate governance statement).
The principles of the Quoted Company Alliance (QCA) Code
QCA Code Principle
What we do and why
1. Establish a strategy
and business model
which promote
long-term value for
shareholders
The Company develops, publishes and licenses mobile real money and social games. 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. Our goal is to try to beat the
market by investing in unique content and relationships with partners.
We do that through:
• Investing in unique mobile content and features on our gaming platform
• Investing with discipline, because we are able to test new opportunities before we roll them out
• Using data and technology to continuously improve. We are able to AB test all developments in
games and platform and able to deploy only the best
• We generate revenue by licensing our unique gaming content and Slingo brand to online real
money gaming operators, social publishing operators, lotteries and land-based gambling games
manufacturers
Key Challenges in implementing the strategy:
• Regulatory framework is continually changing for Gambling which requires constant updates and
development work per territory
• Continuing to create best in class Games to licence to operators
• Having technical resource to integrate the games onto Client sites
Please refer to our website for further details on how we comply with this requirement of the QCA
code: https://www.gamingrealms.com/wp-content/uploads/Statement-of-Compliance-with-the-
QCA-Corporate-Governance-Code-2020-02.pdf
Please refer to our website for further details on how we comply with this requirement of the QCA
code: https://www.gamingrealms.com/wp-content/uploads/Statement-of-Compliance-with-the-
QCA-Corporate-Governance-Code-2020-02.pdf
The Board recognises that maintaining sound controls and discipline is critical to managing the
downside risks to our plan.
To continue the improvement in this area we are adding to our existing controls department,
expanding the remit of the compliance teams, and engaging with external advisors to ensure
we remain compliant with regulations in all territories we will be working in and continued tight
control on investment as we continue to develop the platform and the games content.
Both the Board and senior managers are responsible for reviewing and evaluating risk and the
Executive Directors meet at least monthly to review ongoing trading performance, discuss
budgets and forecasts and new risks associated with ongoing trading.
2. Seek to understand
and meet shareholder
needs and
expectations
3. Take into account
wider stakeholder and
social responsibilities
and their implications
for long-term success
4. Embed effective
risk management,
considering both
opportunities and
threats, throughout
the organisation
Governance Report
19
5. Maintain the board as
a well- functioning,
balanced team led by
the chair
The Board comprises the Executive Chairman, one Executive Director (two after the year-end)
and four Non-Executive Directors. Michael Buckley, the Executive Chairman, is responsible for the
running of the Board and is supported by Mark Segal, the Chief Executive Officer. Michael has
executive responsibility for running the Group’s business and implementing Group strategy. The
Board has 4 Non-Executive Directors and is able to govern on an effective basis.
The Directors considered to be independent are Jim Ryan, Mark Wilson, Mark Blandford and
Anna Massion.
Key Board activities this year included:
• Input into the accelerating growth plan
• Considered our financial and non-financial policies
• Discussed strategic priorities, including expansion into new territories
• Discussed the Group’s capital structure and financial strategy
• Reviewed the Group risk register, including Compliance
• Reviewed feedback from shareholders post full and half year results
The Board is supported by the Audit and Remuneration Committees. The Committees’ roles and
members are available on the Company’s website.
During the year there were 11 board meetings. Attendance records were:
Board Member
Meetings Attended
Michael Buckley
Mark Segal
Jim Ryan
Mark Wilson
Mark Blandford
Anna Massion*
11
11
11
11
11
2
* Anna Massion, appointed on 1 November 2022
6. Ensure that between
them the Directors
have the necessary
up-to-date experience,
skills and capabilities
The Board is satisfied that, between the Directors, it has an effective and appropriate balance
of skills and experience, including in the areas of international online gambling, international
licensing, finance, innovation, and marketing. All Directors receive regular and timely information
on the Group’s operational and financial performance. Relevant information is circulated to the
Directors in advance of meetings. The business reports monthly on its headline performance
against its agreed budget, and the Board reviews the monthly update on performance and any
significant variances are reviewed at each meeting.
The Board makes decisions regarding the appointment and removal of Directors, and there is a
formal, rigorous and transparent procedure for appointments.
Full details of the Board members and their experience and skills can be found on page 14 of the
2022 Annual Report or via the Investor link on Gaming Realms plc’s website.
The Board has not sought external advice on any significant matter, apart from advice sought
in the normal course of business from our lawyers and tax compliance and other advisors. No
external advisors have been engaged by the Board of Directors, except as noted above.
A Board evaluation process will be carried out annually going forward as part of a wider strategy
review and future planning discussion. The process will be led by the Chairman and every
three years with the help of an external facilitator, the Board will be challenged to review its
performance and effectiveness objectively. During this process the Board will consider:
• Performance of the Board against the current strategy;
• Effectiveness of the Board in areas such as supervision, leadership and
management of personnel and risk areas;
• Areas of weakness either at Board level or executive management level
for which recruitment may be required; and
• Succession planning.
7. Evaluate Board
performance
based on clear and
relevant objectives,
seeking continuous
improvement
Strategic ReportFinancial Statements 20
Gaming Realms plc Annual Report and Accounts 2022
Corporate Governance continued
8. Promote a culture that
is based on ethical
values and behaviours
9. Maintain governance
structures and
processes that
are fit for purpose
and support good
decision-making by
the Board
10. Communicate
how the Company
is governed and
is performing
by maintaining
a dialogue with
shareholders and
other relevant
stakeholders
Our long-term growth is underpinned by our corporate culture and core beliefs. As part of a new
starter pack all new employees are provided with the core values in which the Group operates.
At Gaming Realm’s we take pride in our work ethic, creativity and cooperative team dynamic. It
is important to us to keep moving forward as a company, producing innovative work, reflecting
on mistakes, and striving to improve with each new project. None of this is achievable without
strong relationships and a collaborative working environment, which is at the core of our company
ethos and success. The culture of the Company is to ensure we operate in an environmentally
friendly way, with an energy efficient approach. The Group has policies in the following areas to
help promote ethical values and behaviour: whistleblowing, antibribery, anti-slavery, fraud, equal
opportunities, disciplinary and grievance procedures, health and safety. These policies form part of
a globally applicable Group Policy Handbook and Code of Conduct.
Please refer to our website for further details on how we comply with this requirement
of the QCA code:
https://www.gamingrealms.com/wp-content/uploads/Statement-of-Compliance-with-the-QCA-
Corporate-Governance-Code-2020-02.pdf
The Company communicates with shareholders through the Annual Report and Accounts, full-year
and half-year announcements, the Annual General Meeting (AGM) and one-to-one meetings with
large existing or potential new shareholders.
The Board receives regular updates on the views of shareholders through briefings and reports
from the Executive Chairman, Chief Financial Officer and the Company’s brokers. The Company
communicates with institutional investors through briefings with management.
In addition, analysts’ notes and brokers’ briefings are reviewed to achieve a wide understanding of
investors’ views. The Company completes regular employee surveys to maintain an open dialogue
with employees.
There is a requirement to prepare both an Audit Committee report and a Remuneration report.
These have not been done in this report but we will look to publish such reports in the future.
Governance Report
21
Roles of the Board, Chairman, Chief
Executive Officer and Chief Financial
Officer
The Board is responsible for the long-
term success of the Company. There is
a formal schedule of matters reserved
to the Board. It is responsible for overall
Group strategy; approval of major
investments (whether Capex or Opex);
approval of the annual and interim
results; annual budgets; dividend
policy; and Board structure. It monitors
the exposure to key business risks
and reviews the strategic direction of
all trading subsidiaries, their annual
budgets and their performance in
relation to those budgets. There is a
clear division of responsibility at the
head of the Company. The Chairman is
responsible for running the business of
the Board and for ensuring appropriate
strategic focus and direction. The
Chairman, Chief Executive Officer and
Chief Financial Officer are responsible
for proposing the strategic focus to
the Board, implementing it once it has
been approved and overseeing the
management of the Company through
the Executive Team.
All Directors receive regular and
timely information on the Group’s
operational and financial performance.
Relevant information is circulated to
the Directors in advance of meetings.
The business reports monthly on its
headline performance against its agreed
budget, and the Board reviews the
monthly update on performance and
any significant variances are reviewed at
each meeting. Senior executives below
Board level maybe invited to attend
Board meetings where appropriate
to present business updates. Board
meetings throughout the year are held at
the Company’s Head Office in London.
Executive Team
The Executive Team consists of Michael
Buckley, Mark Segal and Geoff Green
with input from the vertical directors
and teams. They are responsible for
formulation of the proposed strategic
focus for submission to the Board, the
day-to-day management of the Group’s
businesses and its overall trading,
operational and financial performance
in fulfilment of that strategy, as well
as plans and budgets approved by the
Board of Directors. It also manages
and oversees key risks, management
development and corporate
responsibility programmes. The Executive
team reports to the plc Board on issues,
progress and recommendations for
change. The controls applied by the
Executive Team to financial and non-
financial matters are set out earlier in this
document, and the effectiveness of these
controls is regularly reported to the Audit
Committee and the Board.
Board committees
The Board is supported by the Audit
and Remuneration committees. Each
committee has access to such resources,
information and advice as it deems
necessary, at the cost of the Company,
to enable the committee to discharge its
duties.
The Audit Committee has the primary
responsibility of monitoring the quality
of internal controls and ensuring that
the financial performance of the Group
is properly measured and reported on.
It will receive and review reports from
the Group’s management and external
auditors relating to the interim and
annual accounts and the accounting
and internal control systems in use
throughout the Group. The Audit
Committee will meet not less than
twice in each financial year and will
have unrestricted access to the Group’s
external auditors. The Audit Committee
is chaired by Jim Ryan and also comprises
Mark Blandford and Anna Massion.
The Remuneration Committee reviews
the performance of the executive
directors and make recommendations
to the Board on matters relating to their
remuneration and terms of service.
The Remuneration Committee also
makes recommendations to the Board
on proposals for the granting of share
options and other equity incentives
pursuant to any employee share option
scheme or equity incentive plans in
operation from time to time. The
Remuneration Committee meets as
and when necessary. In exercising this
role, the directors shall have regard to
the recommendations put forward in
the QCA Guidelines. The Remuneration
Committee is chaired by Mark Wilson and
comprises Jim Ryan and Anna Massion.
The Company will continue to review the
corporate governance framework as the
business grows.
Strategic ReportFinancial Statements 22
Gaming Realms plc Annual Report and Accounts 2022
Independent auditor’s report to the members
of Gaming Realms plc
• Enquiry with Directors, review of board
minutes and review of external resources
to identify any key future events that
may have been omitted from cash flow
forecasts which would impact future
cash flows and cash reserves.
• Assessing the appropriateness of
assumptions made in the Directors’
stress testing, scenario modelling
and sensitivity analysis, and the
appropriateness of the mitigating
actions including challenging whether
other reasonably possible scenarios
could occur.
• Considering the adequacy of the
disclosures relating to Going Concern
included within the annual report
against the requirements of the
accounting standards and consistency of
the disclosure against the going concern
assessment.
Based on the work we have performed,
we have not identified any material
uncertainties relating to events
or conditions that, individually or
collectively, may cast significant doubt
on the Group and the Parent Company’s
ability to continue as a going concern
for a period of at least twelve months
from when the financial statements are
authorised for issue.
Our responsibilities and the
responsibilities of the Directors with
respect to going concern are described
in the relevant sections of this report.
Opinion on the financial statements
In our opinion:
•
•
•
•
the financial statements give a true
and fair view of the state of the
Group’s and of the Parent Company’s
affairs as at 31 December 2022 and
of the Group’s profit for the year then
ended;
the Group financial statements
have been properly prepared in
accordance with UK adopted
international accounting standards;
the Parent Company financial
statements have been properly
prepared in accordance with United
Kingdom Generally Accepted
Accounting Practice; and
the financial statements have been
prepared in accordance with the
requirements of the Companies Act
2006.
We have audited the financial
statements of Gaming Realms plc
(the ‘Parent Company’) and its
subsidiaries (the ‘Group’) for the year
ended 31 December 2022 which
comprise the Consolidated Statement
of Comprehensive Income, the
Consolidated and Parent Company
Statements of Financial Position, the
Consolidated and Parent Company
Statements of Changes in Equity, the
Consolidated Statement of Cash Flows
and notes to the financial statements,
including a summary of significant
accounting policies.
The financial reporting framework that
has been applied in the preparation
of the Group financial statements
is applicable law and UK adopted
international accounting standards. The
financial reporting framework that has
been applied in the preparation of the
Parent Company financial statements
is applicable law and United Kingdom
Accounting Standards, including
Financial Reporting Standard 101
Reduced Disclosure Framework (United
Kingdom Generally Accepted Accounting
Practice).
Basis for opinion
We conducted our audit in accordance
with International Standards on
Auditing (UK) (ISAs(UK)) and applicable
law. Our responsibilities under those
standards are further described in the
Auditor’s responsibilities for the audit
of the financial statements section of
our report. We believe that the audit
evidence we have obtained is sufficient
and appropriate to provide a basis for
our opinion.
Independence
We remain independent of the Group
and the Parent Company in accordance
with the ethical requirements that are
relevant to our audit of the financial
statements in the UK, including the FRC’s
Ethical Standard as applied to listed
entities, and we have fulfilled our other
ethical responsibilities in accordance
with these requirements.
Conclusions relating to going
concern
In auditing the financial statements, we
have concluded that the Directors’ use
of the going concern basis of accounting
in the preparation of the financial
statements is appropriate. Our evaluation
of the Directors’ assessment of the Group
and the Parent Company’s ability to
continue to adopt the going concern
basis of accounting included:
A critical evaluation of Directors’
assessment of the entity’s ability to
continue as a going concern by:
• Evaluating the process the Directors
followed in making their assessment,
including confirming that the
assessment and underlying projections
were prepared by appropriate
individuals with sufficient knowledge
of the detailed figures as well as an
understanding of the entities markets,
strategies and risks.
• Understanding, challenging and
corroborating the key assumptions
included by the Directors in their cash
flow forecasts against prior year, our
knowledge of the business and industry,
and other areas of the audit.
Financial Statements
23
Overview
Coverage
Key audit
matters
100% (2021: 100%) of Group profit before tax
100% (2021: 100%) of Group revenue
99% (2021: 99%) of Group total assets
Revenue Recognition
(Licensing revenue)
Capitalisation of Development costs
2022
2021
Materiality Group financial statements as a whole
£225k (2021: £175k) based on 1.2% (2021: 1.2%) of Group revenue.
Key audit matters
Key audit matters are those matters
that, in our professional judgement,
were of most significance in our audit of
the financial statements of the current
period and include the most significant
assessed risks of material misstatement
(whether or not due to fraud) that we
identified, including those which had
the greatest effect on: the overall audit
strategy, the allocation of resources in
the audit, and directing the efforts of the
engagement team. These matters were
addressed in the context of our audit of
the financial statements as a whole, and
in forming our opinion thereon, and we
do not provide a separate opinion on
these matters.
An overview of the scope of our audit
Our Group audit was scoped by obtaining
an understanding of the Group and its
environment, including the Group’s
system of internal control, and assessing
the risks of material misstatement in the
financial statements. We also addressed
the risk of management override of
internal controls, including assessing
whether there was evidence of bias by
the Directors that may have represented
a risk of material misstatement.
In determining the scope of our audit
we considered the level of work to be
performed at each component in order
to ensure sufficient assurance was gained
to allow us to express an opinion on
the financial statements of the Group
as a whole. We tailored the extent of
the work to be performed on each
component based on our assessment of
the risk of material misstatement at each
component.
The Group consists of the Parent
Company and eight subsidiaries. Two of
the subsidiaries and the Parent Company
were considered to be significant
components and were subject to a full
scope audit by the Group audit team.
The financial information of other
components not considered significant
were subject to analytical review
procedures by the Group audit team.
Strategic ReportGovernance Report 24
Gaming Realms plc Annual Report and Accounts 2022
Independent auditor’s report to the members
of Gaming Realms plc continued
Key audit matter
Revenue recognition
– Licencing Revenue
(with reference to notes
1 and 3)
Licencing revenues include a number of
significant transactions where contracts
entered during the current and previous
year span multiple accounting periods
and include minimum guarantees and/or
uncertain future events.
There are significant judgements and
estimates required by management in
determining the performance obligations
in these contracts, whether revenue
should be recorded at a point in time or
over a period of time and the amount
of revenue to be recognised. For
these reasons, Licensing revenues was
considered to be a Key Audit Matter.
License revenue for the year was £14.9m
(2021: £11.1m).
Capitalisation of
development costs
(with reference to notes
1 and 14)
The Group incurs material expenditure on
the internal development of intangible
software assets. Such expenditure
should only be capitalised when it meets
the criteria of applicable accounting
standards.
Due to judgement being required by
management in determining costs that
meet the criteria for capitalisation, this
was considered to be an area of focus for
our audit, and hence a Key Audit Matter.
Capitalised development costs in the year
were £4.0m (2021: £3.4m).
How the scope of our audit addressed the key audit
matter
We assessed whether the revenue recognition policies
adopted by the Group was in accordance with applicable
accounting standards.
For key contracts:
• We reviewed the terms to assess whether the revenue
had been recognised in accordance with the Group’s
accounting policy and whether any other terms within
the contract had any material accounting or disclosure
implications;
• We challenged the significant judgements by reviewing
the underlying terms of the contracts, identifying
the performance obligations, and assessing whether
performance obligations had been met in order to
recognise revenue;
• We inspected supporting documentation of the
satisfaction of the performance obligation; and
Where revenue recognition included minimum
guarantees and/or was based on uncertain future
events, we challenged management’s forecasts of
future revenue to be earned under these contracts
based on historical sales data and agreed to supporting
documentation where relevant. This included
assessing the appropriateness of the discount rate and
performing sensitivity analysis on the forecasts.
Key observations
Based on the work performed we did not identify any
instances which may suggest that revenue has not been
recognised appropriately and in accordance with the
Group’s revenue recognition accounting policy.
Our procedures included the following:
- We assessed whether the capitalisation policies
adopted by the Group comply with applicable
accounting standards.
- We challenged management’s project analysis to
check that the projects capitalised met the criteria of
applicable accounting standards. This included:
• Agreeing a sample of costs capitalised in the year to
source documentation;
• Agreeing the accuracy of time capitalised to related
timecards and payroll records; and
• Inspecting evidence of the projects subsequent
launch or intention to launch.
Key observations
Based on the work performed, we consider
management’s judgements to be appropriate and
adequate.
Financial Statements
25
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We
consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of
reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these
levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the
particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance
materiality as follows:
Group financial statements
Parent company financial statements
2022
£
£225k
2021
£
£175k
2022
£
£63k
2021
£
£94k
Materiality
Basis for determining
materiality
Based on 1.2% of Group revenue (2021 – 1.2%)
Rationale for the
benchmark applied
Revenue is a fundamental KPI and a key focus area
for investors.
Based on 1% of total
assets of Parent
Company.
Based on 0.45% of
total assets of Parent
Company.
Total assets was considered to be the most
appropriate benchmark as the principal activity of
the Parent Company is a holding company.
Performance
materiality
Basis for determining
performance
materiality
£169k
£131k
£47k
£70k
75% of Group materiality based on history of
minimal adjustments, with few accounts subject
to estimation and management’s attitude to
adjustments.
75% of Parent Company materiality based on
history of minimal adjustments, few accounts
subject to estimation and management’s attitude
to adjustments.
Component materiality
We set materiality for each significant component of the Group based on a percentage of between 50% and 98% of Group
materiality dependent on the size and our assessment of the risk of material misstatement of that component. Component
materiality ranged from £112k to £220k (2021: £81k to £170k). In the audit of each component, we further applied
performance materiality levels of 75% of the component materiality to our testing to ensure that the risk of errors exceeding
component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £10.6k (2021:
£8.7k). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information included in the
Annual Report and Accounts, other than the financial statements and our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course
of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
Strategic ReportGovernance Report 26
Gaming Realms plc Annual Report and Accounts 2022
Independent auditor’s report to the members
of Gaming Realms plc continued
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the
Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and
Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
Matters on which we are
required to report by
exception
• the information given in the Strategic report and the Directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
• the Strategic report and the Directors’ report have been prepared in accordance with applicable
legal requirements.
In the light of the knowledge and understanding of the Group and Parent Company and its
environment obtained in the course of the audit, we have not identified material misstatements in
the strategic report or the Directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies
Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate
for our audit have not been received from branches not visited by us; or
• the Parent Company financial statements are not in agreement with the accounting records and
returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud is detailed below:
• We obtained an understanding of the legal and regulatory framework applicable to the Group and the industry in which it
operates and determined that the most significant laws and regulations are the Companies Act 2006, applicable accounting
frameworks and AIM Rules. We identified these areas of laws and regulations as those that could reasonably be expected to
have a material effect on the financial statements from sector experience and through discussion with management and those
charged with governance.
• We assessed compliance with these laws and regulations through enquiry with management, the Audit Committee and the
Legal and Compliance Director and through review of board meeting minutes.
• We confirmed that the Group held gaming licenses for the various territories of operation.
• We reviewed the financial statement disclosures against the requirements of the applicable accounting framework and
underlying supporting documentation.
Financial Statements
27
We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur,
by meeting with management from across the Group to understand where they considered there was a susceptibility to fraud.
Our audit planning identified fraud risks in relation to management override of controls and revenue recognition, with the
consideration of the risk around revenue recognition and our response expanded upon as a Key Audit Matter above;
• We obtained an understanding of the processes and controls that the Group has established to address risks identified, or that
otherwise prevent, deter and detect fraud; and how management monitors that processes and controls;
• In response to the risk of fraud in relation to management override of controls, our procedures included journal entry
testing, with a focus on large or unusual transactions based on our knowledge of the business, by agreeing to supporting
documentation;
• We communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and
remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that
the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as
fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent
limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the
events and transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company’s members as a
body, for our audit work, for this report, or for the opinions we have formed.
Dominic Stammers (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
31 March 2023
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Strategic ReportGovernance Report 28
Gaming Realms plc Annual Report and Accounts 2022
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
Revenue
Other income
Marketing expenses
Operating expenses
Administrative expenses
Share option and related charges
EBITDA
Amortisation of intangible assets
Depreciation of property, plant and equipment
Impairment of goodwill
Finance expense
Finance income
Profit before tax
Tax credit
Profit for the financial year
Other comprehensive income
Items that will or may be reclassified to profit or loss:
Exchange gain arising on translation of foreign operations
Total other comprehensive income
Total comprehensive income
Profit attributable to:
Owners of the parent
Non-controlling interest
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interest
Earnings per share
Basic
Diluted
Note
3
4
24
10
14
15
14
11
11
2022
£
2021*
£
18,650,521
14,667,701
112,147
130,878
(133,799)
(379,230)
(3,887,647)
(2,946,858)
(6,943,458)
(5,666,454)
(351,726)
(699,194)
7,446,038
5,106,843
(3,671,379)
(3,064,299)
(258,515)
(216,834)
-
(73,677)
(394,042)
(689,935)
401,658
26,496
3,523,760
1,088,594
12
90,355
165,558
3,614,115
1,254,152
131,432
131,432
39,153
39,153
3,745,547
1,293,305
3,614,115
1,257,698
-
(3,546)
3,614,115
1,254,152
3,745,547
1,296,851
-
(3,546)
3,745,547
1,293,305
13
13
Pence
1.24
1.21
Pence
0.44
0.42
* Comparative numbers for the year ended 31 December 2021 have been restated. See Note 1 for further details.
** EBITDA is a non-GAAP measure used to represent the trading performance and results of the Group. EBITDA is defined as profit before tax
adjusted for finance income and expense, depreciation and amortisation.
The notes on pages 32 to 62 form part of these financial statements.
Consolidated Statement of Financial Position
As at 31 December 2022
Non-current assets
Intangible assets
Property, plant and equipment
Deferred tax asset
Other assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Other Creditors
Derivative liabilities
Non-current liabilities
Deferred tax liability
Lease liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Merger reserve
Foreign exchange reserve
Retained earnings
Total equity
Financial Statements
29
31 December
2022
£
31 December
2021
£
Note
14
15
12
17
12,422,852
11,815,598
535,409
287,407
138,798
484,578
-
150,646
13,384,466
12,450,822
18
5,336,330
3,260,687
2,922,775
4,412,375
8,259,105
7,673,062
21,643,571
20,123,884
19
20
21
21
12
20
23
23
3,270,319
2,241,114
217,731
172,887
-
-
3,489,278
744,000
3,488,050
6,647,279
75,592
167,680
243,272
199,876
168,227
368,103
3,731,322
7,015,382
17,912,249
13,108,502
29,200,676
28,970,262
87,653,774
87,370,856
(67,673,657)
(67,673,657)
1,549,701
1,418,269
(32,818,245)
(36,977,228)
17,912,249
13,108,502
The notes on pages 32 to 62 form part of these financial statements.
The financial statements were approved and authorised for issue by the Board of Directors on 31 March 2023 and were signed on its behalf by:
Michael Buckley
Executive Chairman
Strategic ReportGovernance Report
30
Gaming Realms plc Annual Report and Accounts 2022
Consolidated Statement of Cash Flows
For the year ended 31 December 2022
Cash flows from operating activities
Profit for the financial year
Adjustments for:
Depreciation of property, plant and equipment
Loss on disposal of property, plant and equipment
Loss on disposal of intangible assets
Impairment of goodwill
Amortisation of intangible fixed assets
Other income
Other income received during the year
Finance income
Finance expense
Tax credit
Exchange differences
Share based payment expense
Increase in trade and other receivables
Increase in trade and other payables
Decrease in other assets
Net cash flows from operating activities before taxation
Net tax paid in the year
Net cash flows from operating activities
Investing activities
Acquisition of property, plant and equipment
Acquisition of intangible assets
Capitalised development costs
Disposal of other investments
Interest received
Finance lease asset - sublease receipts
Net cash used in investing activities
Financing activities
Receipt of deferred consideration
Repayment of convertible loan and additional charges
Principal paid on lease liability
Issue of share capital on exercise of options
Interest paid
Net cash (used in) / from financing activities
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange loss on cash and cash equivalents
Cash and cash equivalents at end of year
The notes on pages 32 to 62 form part of these financial statements.
Note
2022
£
2021
£
15
15
14
14
14
4
11
11
12
24
15
14
14
16
11
21
20
23
3,614,115
1,254,152
258,515
216,834
-
-
-
2,125
(2,004)
73,677
3,671,379
3,064,299
(112,147)
(130,878)
121,962
(401,658)
394,042
(90,355)
54,013
438,868
117,591
(26,496)
689,935
(165,558)
22,374
466,254
(1,973,278)
(745,778)
607,560
11,848
208,400
-
6,594,864
5,044,927
(45,213)
(77,152)
6,549,651
4,967,775
(124,104)
(125,684)
(141,546)
(323,608)
(4,009,171)
(3,435,308)
-
-
-
362,436
145
146,505
(4,258,959)
(3,391,376)
-
972,554
(3,375,000)
-
(163,638)
(388,494)
13,332
418,221
(186,880)
(215,169)
(3,712,186)
787,112
(1,421,494)
2,363,511
4,412,375
2,086,785
(68,106)
(37,921)
2,922,775
4,412,375
Financial Statements
31
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Share
capital
£
Share
premium
£
Merger
reserve
£
Foreign
Exchange
Reserve
£
Retained
earnings
£
Total to
equity
holders of
parents
£
Non−
controlling
interest
£
Total
equity
£
1 January 2021
28,664,731 87,258,166 (67,673,657) 1,379,116 (38,768,257) 10,860,099
70,623 10,930,722
Profit for the year
Other comprehensive
income
Total comprehensive
income for the year
Contributions by and
distributions to owners
Share-based payment on
share options (Note 24)
Exercise of options
(Note 23)
Recycling of non-
controlling interest
-
-
-
-
-
-
-
-
305,531
112,690
-
-
-
-
-
-
-
-
-
1,257,698
1,257,698
(3,546)
1,254,152
39,153
-
39,153
-
39,153
39,153
1,257,698
1,296,851
(3,546)
1,293,305
-
-
-
466,254
466,254
-
418,221
-
-
466,254
418,221
67,077
67,077
(67,077)
-
31 December 2021
28,970,262 87,370,856 (67,673,657) 1,418,269 (36,977,228) 13,108,502
- 13,108,502
1 January 2022
28,970,262 87,370,856 (67,673,657) 1,418,269 (36,977,228) 13,108,502
- 13,108,502
Profit for the year
Other comprehensive
income
Total comprehensive
income for the year
Contributions by and
distributions to owners
Share-based payment on
share options (Note 24)
Exercise of options
(Note 23)
Conversion of loan
(Note 21)
-
-
-
-
13,332
-
-
-
-
-
217,082
282,918
-
-
-
-
-
-
-
3,614,115
3,614,115
131,432
-
131,432
131,432
3,614,115
3,745,547
-
-
-
438,868
438,868
-
13,332
106,000
606,000
-
-
-
-
-
-
3,614,115
131,432
3,745,547
438,868
13,332
606,000
31 December 2022
29,200,676 87,653,774 (67,673,657) 1,549,701 (32,818,245) 17,912,249
- 17,912,249
The notes on pages 32 to 62 form part of these financial statements.
Strategic ReportGovernance Report
32
Gaming Realms plc Annual Report and Accounts 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
1. Accounting policies
General information
Gaming Realms Plc (the “Company”) and its subsidiaries (together the “Group”).
The Company is admitted to trading on the Alternative Investment Market (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, SE1 8QH.
The consolidated financial statements are presented in British Pounds Sterling.
Basis of preparation
The Group financial statements have been prepared in accordance with UK adopted international accounting standards in
conformity with the requirements of the Companies Act 2006.
The Group financial statements have been prepared on the historical cost basis, except where certain assets or liabilities are held
at amortised cost or at fair value as described in the accounting policies below.
Restatement of comparatives
Management have reviewed the classification of certain items included the comparative statement of comprehensive income for
the year ended 31 December 2021 and made the following restatements:
» Management believes the presentation of hosting costs as an operating expense rather than an administrative expense more
accurately reflects the function of the expense. Therefore £744,539 of hosting costs incurred in the comparative year have been
reclassified from administrative expenses to operating expenses. This reclassification has no impact on reported EBITDA, profit
before tax or net assets for the comparative year.
» The Group receives a research and development tax credit in the Canadian province of British Columbia, in respect of its social
segment development activities performed there. In the comparative year, the research and development tax credit of £130,878
was presented within the tax credit in the consolidated statement of comprehensive income, which has been reclassified and
presented as other income. This restatement increases the comparative years EBITDA from £4,975,965 as previously reported, to
£5,106,843, and increases profit before tax from £957,716 as previously reported to £1,088,594. There is no change in profit for
the year or net assets as a result of this reclassification.
Basis of consolidation
The Group financial statements incorporate the financial statements of the Company and entities controlled by the Company
(subsidiaries). Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over the investee.
The results of subsidiaries acquired or disposed of during the period are included in the Consolidated Statement of Comprehensive
Income from the effective date of acquisition up to the effective date of disposal. Where necessary, adjustments are made to the
financial statements of subsidiaries to bring the accounting policies used in line with those used by the Group.
All intra-Group transactions, balances, income and expenses are eliminated on consolidation.
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 at least bi-annually as part of the business planning process. The Directors
have reviewed forecast cash flows for the period to December 2025 and consider that the Group will have sufficient cash
resources available to meet its liabilities as they fall due for at least the forthcoming 12 months from the date of the approval of
the financial statements.
Given the various macro-economic uncertainties such as inflation, recession fears and the war in Ukraine, these cash flow
forecasts have been subject to short- and medium-term stress testing, scenario modelling and sensitivity analysis through to June
2024, which the Directors consider sufficiently robust. Scenarios considered include but are not limited to; failure to expand
into planned new regulated jurisdictions during the forecast period and a significant reduction in trading cash flows compared
to Group forecasts. The Directors note that in an extreme scenario, the Group also has the option to rationalise its cost base
including cuts to discretionary capital, marketing and overhead expenditure. The Directors consider that the required level of
change to the Group’s forecast cash flows to give a rise to a material risk over going concern are sufficiently remote.
Accordingly, these financial statements have been prepared on the basis of accounting principles applicable to a going concern,
which assumes that the Group and the Company will realise its assets and discharge its liabilities in the normal course of business.
Management has carried out an assessment of the going concern assumption and has concluded that the Group and the
Company will generate sufficient cash and cash equivalents to continue operating for the next 12 months.
Financial Statements
33
Adoption of new and revised standards
The following amendments are effective for the year beginning 1 January 2022:
» Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);
» Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
» Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and
» References to Conceptual Framework (Amendments to IFRS 3).
These amendments did not have a material impact on the Group.
There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are
effective in future accounting periods that the Group has decided not to adopt early.
The following amendments are effective for the period beginning 1 January 2023:
» Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);
» Definition of Accounting Estimates (Amendments to IAS 8); and
» Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).
The following amendments are effective for the period beginning 1 January 2024:
» IFRS 16 Leases (Amendment – Liability in a Sale and Leaseback);
» IAS 1 Presentation of Financial Statements (Amendment – Classification of Liabilities as Current or Non-current); and
» IAS 1 Presentation of Financial Statements (Amendment – Non-current Liabilities with Covenants).
The Group is currently assessing the impact of these new accounting standards and amendments. The Group does not expect any
of the standards or amendments issued by the IASB, but not yet effective, to have a material impact on the Group.
Business combinations
On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of
acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired, including separately
identifiable intangible assets, is recognised as goodwill. Any discount on acquisition, i.e. where the cost of acquisition is below
the fair value of the identifiable net assets acquired, is credited to the Statement of Comprehensive Income in the period of
acquisition.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the
identifiable assets and liabilities, including separately identifiable intangible assets, of a subsidiary, associate or jointly controlled
entity at the date of acquisition.
Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less accumulated impairment. On disposal
of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in the determination of the
profit or loss on disposal.
Cost comprises the fair value of assets given, liabilities assumed and equity instruments issued, plus the amount of any non-
controlling interests in the acquiree plus, if the business combination is achieved in stages, the fair value of the existing equity
interest in the acquiree.
Contingent consideration is initially recognised at fair value on the date of acquisition and subsequently remeasured subsequently
through profit or loss.
Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the consolidated statement
of comprehensive income. Where the fair value of identifiable assets, liabilities and contingent liabilities exceed the fair value of
consideration paid, the excess is credited in full to the consolidated statement of comprehensive income on the acquisition date.
EBITDA
EBITDA is a non-GAAP Company specific measure defined as profit or loss before tax adjusted for finance income and expense,
depreciation and amortisation.
Strategic ReportGovernance Report 34
Gaming Realms plc Annual Report and Accounts 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
1. Accounting policies (continued)
Revenue
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on
behalf of third parties. The Group recognises revenue when it transfers control over a product or service to a customer.
Performance obligations and timing of revenue recognition
Revenue comprises licensing of content and IP, and social publishing.
The following is a description of the principal activities – separated by reportable segments – from which the Group generates its
revenue. For more detailed information about reportable segments see Note 10.
The Group accounts for revenue as principal where it is the licenced entity in the provision of gaming services to end users
and controls the service provision. Where the Group is considered to be acting as agent in the service provision, revenues are
recognised net.
Licensing revenue
Licensing revenue derives from contractual relationships for the right to use of intellectual property and the amount of
consideration receivable is dependent upon the value of sales the customer makes using the IP.
For content licensing, revenue is sales-based dependent on the activity of the Group’s customers. Revenue is recognised as the
usage occurs by the customer (under the IFRS 15 royalty exception).
Any minimum guarantees are recognised at a point in time when the control of the licence is passed to the customer.
For brand licensing, revenue is recognised at a point in time when there are no further monetary or financial obligations to be
fulfilled by the licensor. However, where the Group has ongoing obligations, licensing fees are further analysed for the contractual
service provision and recognised either at point in time or over time, applying the royalty exception as applicable.
Determining the transaction price
Most of the Group’s revenue is derived from fixed price contracts and therefore the amount of revenue to be earned from each
contract is determined by reference to those fixed prices and rates.
Contracts where the transaction price is not fixed are royalties which are accounted for in accordance with the usage-based
royalty exception in IFRS 15.
Allocating amounts to performance obligations
For most contracts, there is a fixed amount for each wager or credit purchased and only one performance obligation, being the
honouring of the outcome of the wager/purchase. Therefore, there is no judgement involved in allocating the contract price.
Licensing contracts work on a sales-based royalty. Therefore, there is no judgement involved in allocating the contract price.
Social publishing revenue
Social publishing revenue derives from the purchase of credits and awards on social gaming sites. In addition, revenue is
generated from in app advertisements.
Revenue is recognised at a point in time when the user credit has been purchased as there is no further service to be delivered
and credits are non-refundable. In app advertising revenue is recognised at a point in time when the advertisement is displayed,
or offer has been completed by the customer and confirmed by third-party reports.
Other income
The Group receives government grants in respect of its research and development activities performed. This is presented as other
income in the consolidated statement of comprehensive income and is recognised in the same period as the expenses incurred in
performing the applicable activities.
Leases
Group as a lessee
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
» Leases of low value assets; and
» Leases with a duration of 12 months or less.
Financial Statements
35
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with
the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily
determinable, in which case the Group’s incremental borrowing rate on commencement of the lease is used. Variable lease
payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial
measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable
lease payments are expensed in the period to which they relate.
On initial recognition, the carrying value of the lease liability also includes:
» amounts expected to be payable under any residual value guarantee;
» the exercise price of any purchase option granted in favour of the group if it is reasonable certain to assess that option; and
» any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being
exercised.
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and
increased for:
» lease payments made at or before commencement of the lease;
» initial direct costs incurred; and
» the amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset
(typically leasehold dilapidations).
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the
remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease
term.
When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee
extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to
make over the revised term, which are discounted using a revised discount rate. The carrying value of lease liabilities is similarly
revised when the variable element of future lease payments dependent on a rate or index is revised, except the discount rate
remains unchanged. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the
revised carrying amount being amortised over the remaining (revised) lease term. If the carrying amount of the right-of-use asset
is adjusted to zero, any further reduction is recognised in profit or loss.
Foreign currency
The financial information of the Group is prepared in British Pounds Sterling, which is the currency that best reflects the economic
substance of the underlying events and circumstances relevant to the Group. The Group has subsidiaries with functional currencies
of British Pounds Sterling, U.S. Dollars, Euros and Canadian Dollars.
Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in
which they operate (their “functional currency”) are recorded at the rates ruling when the transactions occur. Foreign currency
monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the
retranslation of unsettled monetary assets and liabilities are recognised immediately in the statement of comprehensive income.
Foreign exchange differences arising from financing transactions are recognised in finance income/loss, differences arising from
trading balances are recognised in administration costs.
On consolidation, the results of overseas operations are translated into sterling at rates approximating to those ruling when the
transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those
operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net
assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and
accumulated in the foreign exchange reserve.
Exchange differences recognised as profit or loss in Group entities’ separate financial statements on the translation of long-term
monetary items forming part of the Parent company’s net investment in the overseas operation concerned are reclassified to
other comprehensive income and accumulated in the foreign exchange reserve on consolidation.
On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to
that operation up to the date of disposal are transferred to the consolidated statement of comprehensive income as part of the
profit or loss on disposal.
Strategic ReportGovernance Report 36
Gaming Realms plc Annual Report and Accounts 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
1. Accounting policies (continued)
Impairment of non-financial assets
Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually. Other
non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying
amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in
use and fair value less costs to sell), the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the
smallest group of assets to which it belongs for which there are separately identifiable cash flows; its cash generating units
(“CGUs”). Goodwill is allocated on initial recognition to each of the Group’s CGUs that are expected to benefit from a business
combination that gives rise to the goodwill.
Impairment charges are included in the income statement, except to the extent they reverse gains previously recognised in other
comprehensive income. An impairment loss recognised for goodwill is not reversed.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with
original maturities of three months or less and – for the purpose of the statement of cash flows - bank overdrafts. Bank overdrafts
are shown within trade and other payables in current liabilities on the consolidated statement of financial position.
Share-based payments
Where equity-settled share options are awarded to employees, the fair value of the options at the date of grant is charged to the
consolidated statement of comprehensive income over the vesting period. Non-market vesting conditions are taken into account
by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the number of options that eventually vest. Non-vesting conditions and market
vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a
charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for
failure to achieve a market vesting condition or where a non-vesting condition is not satisfied.
Where equity instruments are granted to persons other than employees, the consolidated statement of comprehensive income is
charged with the fair value of goods and services received.
The fair value of share options issued without market-based vesting conditions is measured by the application of the Black-Scholes
option pricing model by reference to the grant date of the options. The fair value of share options issued with market-based
vesting conditions is measured by use of the Monte Carlo method.
Externally acquired intangible assets
Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their
useful economic lives.
Intangible assets are recognised on business combinations if they are separable from the acquired entity or arise from other
contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques (see
section related to critical estimates and judgements below).
Internally generated intangible assets (development costs)
Expenditure on internally developed products is capitalised if it can be demonstrated that:
» it is technically feasible to develop the product for it to be sold;
» adequate resources are available to complete the development;
» there is an intention to complete and sell the product;
» the Group is able to sell the product;
» sale of the product will generate future economic benefits; and
» expenditure on the project can be measured reliably.
Capitalised development costs are amortised over the periods the Group expects to benefit from selling the products developed.
Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are
recognised in the consolidated statement of comprehensive income as incurred.
The significant intangibles recognised by the Group, their useful economic lives and the methods used to determine the cost of
intangibles acquired in a business combination are as follows:
Financial Statements
37
Intangible asset
Customer databases
Development costs
Intellectual property
Domain names
Software
Useful economic life
1–2 years
3-5 years
8 years
2-3 years
3-5 years
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly
attributable costs and the estimated present value of any future unavoidable costs of dismantling and removing items. The
corresponding liability is recognised within provisions.
Depreciation is provided on all property, plant and equipment at rates calculated to write off the cost less estimated residual
value, of each asset evenly over its expected useful life as follows:
Office, furniture and equipment
20% per annum straight-line
Computer equipment
Leasehold improvements
33% per annum straight-line
Over the life of the lease
Reserves
The following describes the nature and purpose of each reserve within equity:
Reserve
Share capital
Share premium
Merger reserve
Description and purpose
Nominal value of shares subscribed for.
Amount subscribed for share capital in excess of nominal value.
Adjustments arising on the reverse transaction and the excess of the fair value over nominal value for shares
issued in business combinations qualifying for merger relief under the Companies Act 2006.
Retained earnings
All other net gains and losses and transactions with owners not recognised elsewhere.
Foreign exchange reserve
Gains/losses arising on retranslating the net assets of overseas operations into sterling.
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement
of financial position differs from its tax base, except for differences arising on:
» The initial recognition of goodwill
» The initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction
affects neither accounting nor taxable profit
» Investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the
difference and it is probable that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against
which the difference can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting
date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).
Strategic ReportGovernance Report 38
Gaming Realms plc Annual Report and Accounts 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
2. Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated
based on historical experience and other factors, including expectations of future events that are believed to be reasonable under
the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assump-
tions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below.
Estimates
(a) Impairment of goodwill and other intangible assets
Goodwill and other intangible assets are reviewed for impairment and their values are written down on the basis of the Group’s
expectations of future economic benefits expected to be received. Any process which attempts to estimate future outcomes to
determine the recoverable amount is subject to uncertainty. The recoverable amount is determined based on the lower of value
in use calculations, which require the estimate of future cash flows and the choice of discount rate to calculate the present value
of the cash flows. Calculations are based on management’s forecasts for the period, and past experience of the same or similar
assets. Where it is believed that the estimation uncertainty can give rise to material differences in asset carrying values, this will
be stated in the relevant notes to the financial statements. For both CGU’s impairment reviews were performed over, a reasonably
possible change to an input to the impairment review calculation (such as WACC, long term growth rate, reduction in medium
term cash flows) would not result in an impairment. See Note 14.
(b) Amortisation of development costs
Capitalised development costs are subject to amortisation over the estimated useful life and reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable. The estimated useful life of these
assets is based on management’s estimates of the period over which the assets are expected to generate revenue and are periodi-
cally reviewed to confirm they are still appropriate.
(c) Fair Value Measurement
A number of assets and liabilities included in the Group’s financial statements require measurement at, and/or disclosure of, fair
value.
The fair value measurement of the Group’s financial and non-financial assets and liabilities utilises market observable inputs and
data as far as possible. Inputs used in determining fair value measurements are categorised into different levels based on how
observable the inputs used in the valuation technique utilised are (the ‘fair value hierarchy’):
» Level 1: Quoted prices in active markets for identical items (unadjusted)
» Level 2: Observable direct or indirect inputs other than Level 1 inputs
» Level 3: Unobservable inputs (i.e. not derived from market data)
The classification of an item into the above levels is based on the lowest level of the inputs used that has a significant effect on
the fair value measurement of the item. Transfers of items between levels are recognised in the period they occur.
The Group measures a number of items at fair value:
» Other investments (Note 16)
» Financial instruments (Note 22)
For more detailed information in relation to the fair value measurement and sensitivities of the items above, please refer to the
applicable notes.
(d) Arrangement with Gamesys Group plc
The arrangements entered into with Gamesys Group plc in 2017 are complex. The initial recognition involves estimating the fair
value of the derivative liability, and estimating the initial carrying value of the loan liability using a suitable discount rate. The
values computed reflected the directors’ expectations of the timing and quantum of expected cash outflows on the loan and the
probability of the conversion option being exercised. Had these estimates changed, it would have impacted the carrying amounts
of the conversion option and the loan. In December 2022, the convertible loan was repaid in full therefore bringing the loan and
conversion option balances to £Nil. See Note 21 for further detail.
(e) Impairment of financial assets and expected credit losses
Loss allowances for financial assets are based on assumptions about the risk of default and expected loss rates. The Group uses
judgement in making these assumptions and selecting the inputs to the impairment calculations based on the Group’s past
history, existing market conditions as well as forward looking estimates at the end of each reporting period. See Note 18 for
further detail.
Financial Statements
39
(f) Recognition of deferred tax assets
The Group has material unused tax losses carried forward at the balance sheet date. A deferred tax asset of £0.3m has been
recognised in respect of the Group’s historic UK trading losses which are being carried forward (see Note 12). The utilisation of
these losses is dependent on the existence of future taxable profits, to which the tax losses can be applied against.
In assessing the quantum and probability of recovery of tax losses carried forward, the Directors have reviewed the Group’s three-
year forecasts used for both the going concern assessment and annual impairment testing, which have been approved by the
Board. The process of forecasting future performance is inherently subject to estimation uncertainty. To the extent assumptions
regarding future profitability change, there can be an increase or decrease in the amounts recognised in respect of deferred tax
assets as well as the amounts recognised in income in the period in which the change occurs.
Taxation information, including deferred tax assets, is presented in Note 12.
Judgements
(a) Revenue recognition
Certain brand licensing agreements involve judgement over the nature, timing and extent of the Group’s activities in fulfilling
contractual performance obligations. This judgement therefore impacts the timing of revenues recognised for such agreements.
On a contract-by-contract basis, the Group assesses its expected ongoing commitments to fulfil its contractual obligations. Where
an agreement provides the right for a customer to use the Group’s intellectual property and there are no significant ongoing com-
mitments for the Group to satisfy, the performance obligation is considered to be satisfied at a point in time, when the associated
revenues are recognised. However, where there is expected to be significant ongoing commitment for the Group, revenues are
recognised over time with the satisfaction of the performance obligations.
(b) Capitalisation of development costs
The identification of development costs that meet the criteria for capitalisation is dependent on management’s judgement and
knowledge of the work done. Development costs of gaming software platforms are separately identified. Key judgements relate
to the separately identified projects, the expected future benefits and the useful economic life and are based on the information
available at each period end. Economic success of any development is assessed on a reasonable basis but remains uncertain at the
time of recognition. Development costs capitalised total £4.0m (2021: £3.4m). See Note 14.
(c) Deferred tax
Deferred tax assets and liabilities are recognised for temporary differences and for tax losses carried forward to the extent they
are considered recoverable. The assessment of temporary differences and tax losses carried forward is based on management’s
estimates of future taxable profits against which the temporary differences and losses carried forward may be utilised.
Given the Group’s recent record of profitability, along with recently prepared Group forecasts which have been approved by the
Board, the Directors judged it appropriate to recognise a deferred tax asset of £0.3m (2021: £Nil). This involves an assessment of
when those assets are likely to reverse, and a judgement as to whether or not there will be sufficient taxable profits available to
offset the assets when they do reverse. See Note 12.
(d) Arrangement with Gamesys Group plc
The agreement with Gamesys Group plc allows for early settlement of the loan if a change of control occurs. The directors’ have
used their judgement in order to determine that the probability of a change in control is low. Had this judgement been different,
the Group may be liable, if the option is exercised, to make an additional cash payment to Gamesys Group plc earlier than the end
of the term. See Note 21 for more detail.
(e) Taxes
Judgement is required to interpret international tax laws relating to e-commerce in order to identify and value provisions in
relation to indirect taxes. The principal risks relating to the Group’s tax liabilities arise from domestic and international tax laws
and practices in the e-commerce environment which continues to evolve. The Group is basing its tax provisions on current (and
enacted but not yet implemented) tax rules and practices, together with advice received, where necessary, from provisional advis-
ers, and believes that its accruals for tax liabilities are adequate for all open enquiry years based on its assessment of many factors
including past experience and interpretations of tax law. The Group monitors changes in legislation and updates its tax liabilities
accordingly, However, due to different interpretations and evolving practice there is a risk that additional liabilities could arise.
To the extent that the final outcome of such matters differs to management’s assessment at any reporting dates, such differenc-
es may impact the financial results or contingent liabilities disclosed in the period in which such determination is made. Further
details can be found in Note 26 to the financial statements.
Strategic ReportGovernance Report 40
Gaming Realms plc Annual Report and Accounts 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
3. Revenue from contracts with customers
Disaggregation of 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 in Note 10.
B2B licensing revenue by primary geographical market is split according to the location of the operator.
In 2022 there was one customer (2021: one customer) who individually accounted for more than 10% of total revenue of the
Group. Total revenue from this customer in 2022 was £2,672,153 (2021: £1,635,877).
2022 revenue
Primary geographical markets
UK (including Channel Islands)
USA
Isle of Man
Malta
Gibraltar
Rest of the World
Contract counterparties
Direct to consumers (B2C)
B2B
Timing of transfer of goods and services
Point in time
Over time
Licensing
£
Social
publishing
£
Other
£
Total
£
831,518
-
23,000
854,518
6,480,346
3,690,485
672,098
2,838,486
3,079,594
1,034,994
-
-
-
-
-
-
-
-
-
10,170,831
672,098
2,838,486
3,079,594
1,034,994
14,937,036
3,690,485
23,000
18,650,521
-
3,690,485
-
3,690,485
14,937,036
-
14,937,036
3,690,485
23,000
23,000
14,960,036
18,650,521
14,937,036
3,690,485
23,000
18,650,521
-
-
-
-
14,937,036
3,690,485
23,000
18,650,521
Financial Statements
41
Licensing
£
Social
publishing
£
Other
£
Total
£
764,759
-
4,460,407
3,567,616
2,390,623
2,055,937
533,251
895,108
-
-
-
-
11,100,085
3,567,616
-
3,567,616
11,100,085
-
11,100,085
3,567,616
11,019,931
3,567,616
80,154
-
11,100,085
3,567,616
-
-
-
-
-
-
-
-
-
-
-
-
-
764,759
8,028,023
2,390,623
2,055,937
533,251
895,108
14,667,701
3,567,616
11,100,085
14,667,701
14,587,547
80,154
14,667,701
2021 revenue
Primary geographical markets
UK (including Channel Islands)
USA
Isle of Man
Malta
Gibraltar
Rest of the World
Contract counterparties
Direct to consumers (B2C)
B2B
Timing of transfer of goods and services
Point in time
Over time
Remaining performance Obligations
The vast majority of the Group’s contracts are for services that will be provided within the next 12 months. Certain licence
contracts have been entered into for which both:
» the original contractual period was greater than 12 months; and
» the Group’s right to consideration does not correspond directly with the performance.
The amount of revenue that will be recognised in future periods on these contracts when those remaining performance
obligations will be satisfied is:
Next 12 months
2022
£
600,000
600,000
2021
£
-
-
Strategic ReportGovernance Report
42
Gaming Realms plc Annual Report and Accounts 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
4. Other income
The Group receives government grants in respect of its research and development activities performed in certain jurisdictions in
which the Group operates. Amounts recognised in the income statement are summarised below.
Other income
5. Expenses by nature
Profit before interest and tax has been arrived at after charging/(crediting):
Employee benefit expenses (excluding share option and related charges)
License and platform fees
IT software and hosting costs
Legal, professional and consulting
Share option and related charges
Marketing expenses
Depreciation of property, plant and equipment
Amortisation of intangible assets
Foreign exchange (gain) / loss
6. Auditor’s remuneration
During the year the Group obtained the following services from the Company’s auditor:
Fees payable to the Company's auditor for the audit of the Group's annual accounts
Fees payable to the Company's auditor for the audit of the subsidiary financial statements
Fees payable to the Company's auditor for the review of the interim statement
Fees payable to the Company's auditor for other services:
- Tax compliance services
- Research and development tax credit services
- Tax advisory services
- Other
2022
£
2021
£
112,147
130,878
112,147
130,878
Note
2022
£
2021
£
9
4,596,796
3,626,086
2,582,636
2,184,605
1,528,098
899,653
738,919
748,697
351,726
699,194
133,799
379,230
258,515
216,834
3,671,379
3,064,299
(111,557)
43,247
24
15
14
2022
£
30,000
90,750
3,000
50,785
54,850
-
4,713
2021
£
25,000
65,000
3,000
31,000
-
18,853
37,945
234,098
180,798
Financial Statements
43
7. Key management personnel remuneration
During the year the Group paid the following remuneration to the key management personnel (which include directors) of the
consolidated entity:
Short-term benefits of key management personnel
Post-employment benefits of key management personnel
Share-based benefits of key management personnel
2022
£
2021
£
1,914,893
1,572,932
40,162
29,813
394,149
384,598
2,349,204
1,987,343
8. Directors’ remuneration
The following table presents the Directors’ remuneration of the Company for the year ended 31 December 2022.
Michael Buckley
Mark Segal
Jim Ryan
Mark Wilson
Mark Blandford
Anna Massion
Chris Ash
Salary and fees
£
275,000
275,000
50,000
50,000
50,000
8,333
-
Bonus
£
82,500
82,500
Benefits
£
2022 Total
£
2021 Total
£
-
357,500
375,000
15,396
372,896
389,891
-
-
-
-
-
-
-
-
-
-
50,000
50,000
50,000
8,333
40,000
40,000
40,000
-
-
30,000
708,333
165,000
15,396
888,729
914,891
The Directors’ ordinary shares in the Company, were as follows:
Michael Buckley
Mark Segal
Jim Ryan
Mark Wilson
Mark Blandford
2022
No. of shares
2021
No. of shares
25,700,000
26,500,000
740,761
740,761
1,153,845
1,153,845
1,153,845
1,153,845
11,730,000
10,380,000
40,478,451
39,928,451
Strategic ReportGovernance Report
44
Gaming Realms plc Annual Report and Accounts 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
8. Directors’ remuneration (continued)
Directors’ interests in long-term incentive plans
The Directors’ interests in share options, over ordinary shares in the Company, were as follows:
Options at 1
Jan 2022
Options
granted
Options
exercised
Options
lapsed
Options at
31 Dec 2022
Exercise
price
Michael Buckley
Mark Segal
1
2
3
4
1
2
3
4
2,000,000
5,769,229
-
-
-
-
1,000,000
500,000
3,000,000
3,076,923
-
-
-
-
1,000,000
500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Date of
grant
02-Jun-20
28-Jul-20
2,000,000
5,769,229
£0.10
£0.20
1,000,000
£0.325
06-Jan-22
500,000
£0.325
06-Jan-22
3,000,000
£0.10
02-Jun-20
3,076,923
£0.20
28-Jul-20
1,000,000
£0.325
06-Jan-22
500,000
£0.325
06-Jan-22
1 On 2 June 2020, the Company granted these equity settled awards to certain Directors, which vest in three equal tranches on 3 February
2021, 2022 and 2023 subject to certain performance criteria.
2 On 28 July 2020, the Company granted these equity settled awards to certain Directors, which vest in two equal tranches 12 and 24 months
from the date of grant.
3 On 6 January 2022, the Company granted these equity settled awards to certain Directors. The options vest immediately on certain non-
market-based conditions occurring and lapse on the third anniversary of grant if the conditions do not occur.
4 On 6 January 2022, the Company granted these equity settled awards to certain Directors, which vest in three equal tranches on 15 October
2022, 2023 and 2024.
9. Employee benefit expenses
Employee benefit expenses (including directors) comprise:
Wages and salaries
Share option and related charges (Note 24)
Social security contributions and similar taxes
Pension contributions
Staff costs capitalised in respect of internally generated intangible assets
2022
£
2021
£
5,615,054
4,518,267
351,726
699,194
585,604
448,778
179,845
136,046
6,732,229
5,802,285
(1,783,707)
(1,484,505)
4,948,522
4,317,780
The Group makes contributions to defined contribution plans and has no further payment obligations once the contributions
have been paid. The contributions are recognised as employee benefit expense when they are due. The assets of the individual
schemes are held separately from those of the Group in independently administered funds. Unpaid contributions at 31 December
2022 were £20,600 (2021: £27,321).
The average number of employees was 67 (2021: 60).
Financial Statements
45
10. 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 2 reportable operating segments:
» Licensing - brand and content licensing to partners in Europe and the US
» Social Publishing - providing freemium games to the US
2022
Revenue
Other income
Marketing expense
Operating expense
Licensing
£
Social Publishing
£
Head office
£
Total
£
14,937,036
3,690,485
23,000
18,650,521
-
(38,391)
112,147
(17,164)
-
112,147
(78,244)
(133,799)
(2,579,127)
(1,308,520)
-
(3,887,647)
Administrative expense
(4,176,964)
(1,001,569)
(1,764,925)
(6,943,458)
Share option and related charges
(149,753)
(1,666)
(200,307)
(351,726)
EBITDA
7,992,801
1,473,713
(2,020,476)
7,446,038
Amortisation of intangible assets
(1,996,909)
(943,384)
(731,086)
(3,671,379)
Depreciation of property, plant and equipment
Finance expense
Finance income
Profit before tax
2021
Revenue
Other income
Marketing expense
Operating expense
(60,215)
(10,087)
26,658
(59,822)
(11,239)
(138,478)
(372,716)
(258,515)
(394,042)
-
375,000
401,658
5,952,248
459,268
(2,887,756)
3,523,760
Licensing
£
Social Publishing
£
Head office
£
11,100,085
3,567,616
-
130,878
-
-
Total
£
14,667,701
130,878
(20,348)
(282,579)
(76,303)
(379,230)
(1,645,538)
(1,301,320)
-
(2,946,858)
Administrative expense
(2,889,706)
(920,178)
(1,856,570)
(5,666,454)
Share option and related charges
(170,062)
(7,441)
(521,691)
(699,194)
EBITDA
6,374,431
1,186,976
(2,454,564)
5,106,843
Amortisation of intangible assets
(1,357,625)
(987,286)
(719,388)
(3,064,299)
Depreciation of property, plant and equipment
(26,475)
Impairment of goodwill
Finance expense
Finance income
Profit before tax
-
(7,353)
26,496
(47,717)
(73,677)
(20,005)
-
(142,642)
-
(662,577)
(216,834)
(73,677)
(689,935)
-
26,496
5,009,474
58,291
(3,979,171)
1,088,594
Strategic ReportGovernance Report
46
Gaming Realms plc Annual Report and Accounts 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
10. Segment information (continued)
The Group’s non-current assets (excluding deferred tax assets) by geographical area are detailed below.
UK
USA
Canada
Malta
11. Finance income and expense
Finance income
Interest received
2022
£
2021
£
12,038,678
11,869,577
1,040
821
1,043,871
567,648
13,470
12,776
13,097,059
12,450,822
2022
£
-
2021
£
145
-
19,087
7,264
26,496
Net release of derivative liability on non-conversion of loan
21
375,000
Interest income on unwind of deferred income
Interest income on unwind of finance lease asset
Total finance income
26,658
-
401,658
Finance expense
Bank interest paid
Fair value loss on other investments
Fair value movement on derivative liability
Effective interest on other creditor
Interest expense on lease liability
Total finance expense
12. Taxation
Current tax
Current tax (charge) / credit
Adjustment for current tax of prior periods
Total current tax
Deferred tax
Recognition of deferred tax asset
Unwind of deferred tax
Total deferred tax credit
Total tax credit
20,445
-
20,238
38,855
112,000
117,000
237,157
468,339
24,440
45,503
394,042
689,935
21
21
20
2022
£
2021
£
(312,922)
(8,414)
(321,336)
38,310
4,952
43,262
287,407
-
124,284
122,296
411,691
122,296
90,355
165,558
Financial Statements
47
The reasons for the difference between the actual tax credit for the period and the standard rate of corporation tax in the UK
applied to profits for the year are as follows:
Profit before tax for the year
Expected tax at effective rate of corporation tax in the UK of 19.0% (2021: 19.0%)
Expenses not deductible for tax purposes
Income not chargeable for tax purposes
Effects of overseas taxation
Adjustment for tax in respect of prior periods
Research and development tax credit
Movement in deferred tax not previously recognised
Recognition of deferred tax asset
2022
£
2021
£
3,523,760
1,088,594
669,514
206,833
141,812
274,425
(71,278)
(24,867)
(93,850)
(38,310)
8,414
(4,952)
(131,100)
-
(326,460)
(578,687)
(287,407)
-
(90,355)
(165,558)
The Group’s corporation tax payable at the balance sheet date is £256,123 (2021: receivable of £112,133) being the £321,336
current tax charge for the year, less £65,213 payments made during the year.
Deferred Tax Asset
The Group has unused UK tax losses carried forward as at the balance sheet date of £30.6m (2021: £32.4m) and US tax losses
carried forward of $3.9m (2021: $3.9m). Given the Group recorded a pre-tax profit in both the current and prior year, along
with expected future profitability levels, the Directors have recognised a deferred tax asset of £0.3m (2021: £Nil) relating to
unused tax losses that are expected to be offset against the Group’s taxable profits generated in the following accounting period.
Management have based their assessment on the latest Group forecasts approved by the Board.
The amount of the asset is determined using tax rates that have been enacted or substantively enacted at the balance sheet date
and are expected to apply when the deferred tax assets are recovered. From April 2023, there is no longer a single Corporation
Tax rate for non-ring fence profits. At the Spring Budget 2021, the UK government announced that the Corporation Tax main rate
for non-ring fence profits would increase to 25% for profits above £250,000.
Deferred Tax Liability
At 1 January 2022
Unwind of deferred tax recognised on business acquisitions
Exchange differences
At 31 December 2022
2022
£
2021
£
199,876
320,913
(124,284)
(122,296)
-
1,259
75,592
199,876
The Group’s closing overall deferred tax asset at the balance sheet date is £211,815 (2021: deferred tax liability of £199,876),
comprises the deferred tax asset on unused tax losses of £287,407 (2021: £Nil) and the deferred tax liability of £75,592 (2021:
£199,876).
Strategic ReportGovernance Report
48
Gaming Realms plc Annual Report and Accounts 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
13. Earnings per share
Basic earnings per share is calculated by dividing the result attributable to ordinary shareholders by the weighted average number
of shares in issue during the year. The calculation of diluted EPS is based on the result attributable to ordinary shareholders and
weighted average number of ordinary shares outstanding after adjusting for the effects of all dilutive potential ordinary shares.
The Group’s potentially dilutive securities consist of share options (see Note 24) and a convertible loan (see Note 21). The
convertible loan was anti-dilutive in both the current and prior years and so was ignored in calculating diluted EPS.
Profit after tax attributable to the owners of the parent Company
2022
£
2021
£
3,614,115
1,257,698
Number
Number
Denominator - basic
Weighted average number of ordinary shares
291,655,659
288,496,688
Denominator - diluted
Weighted average number of ordinary shares
Weighted average number of option shares
Weighted average number of shares
Basic earnings per share
Diluted earnings per share
291,655,659
288,496,688
7,057,892
13,140,665
298,713,551
301,637,353
Pence
Pence
1.24
1.21
0.44
0.42
Financial Statements
49
14. Intangible assets
Cost
Goodwill
£
Customer
database
£
Software
£
Development
costs
£
Licenses
£
Domain
names
£
Intellectual
Property
£
Total
£
At 1 January 2021
6,697,219 1,475,650 1,384,223
14,232,892
-
8,785
5,786,179
29,584,948
Additions
Disposals
-
(73,677)
-
-
76,286
3,435,308
247,322
(212,215)
(198,043)
Exchange differences
50,382
14,886
14,122
-
-
-
-
-
3,758,916
(483,935)
89
58,568
138,047
At 31 December 2021
6,673,924 1,490,536 1,262,416
17,470,157
247,322
8,874
5,844,747
32,997,976
Additions
Disposals
-
-
Exchange differences
125,326
-
-
-
54,229
4,009,171
71,455
-
-
-
14,086
-
694
-
-
-
-
-
-
4,134,855
-
140,106
At 31 December 2022
6,799,250 1,490,536 1,316,645
21,493,414
319,471
8,874
5,844,747
37,272,937
Accumulated amortisation and impairment
At 1 January 2021
1,650,000 1,475,650 1,384,223
10,030,745
-
8,785
3,898,422
18,447,825
Amortisation charge
Impairment
Disposals
-
73,677
(73,677)
-
-
-
-
-
(212,215)
(200,047)
31,978
2,269,464
43,469
Exchange differences
-
14,886
14,122
2,227
-
-
-
719,388
3,064,299
-
-
73,677
(485,939)
89
51,192
82,516
-
-
-
-
-
At 31 December 2021
1,650,000 1,490,536 1,218,108
12,102,389
43,469
8,874
4,669,002
21,182,378
Amortisation charge
Disposals
Exchange differences
-
-
-
-
-
-
73,177
2,781,155
85,961
-
-
-
(3,672)
-
-
-
-
-
731,086
3,671,379
-
-
-
(3,672)
At 31 December 2022
1,650,000 1,490,536 1,291,285
14,879,872
129,430
8,874
5,400,088
24,850,085
Net book value
At 31 December 2021
5,023,924
At 31 December 2022
5,149,250
-
-
44,308
5,367,768
203,853
25,360
6,613,542
190,041
-
-
1,175,745
11,815,598
444,659
12,422,852
The Group has no contractual commitments for development costs (2021: none).
Goodwill
The Group has 2 Cash Generating Units (“CGUs”) (2021: 2) for which the carrying amount of goodwill is allocated as follows:
Licensing
Social Publishing
2022
£
2021
£
4,975,634
4,867,609
173,616
156,315
5,149,250
5,023,924
Strategic ReportGovernance Report
50
Gaming Realms plc Annual Report and Accounts 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
14. Intangible assets (continued)
The Group is required to test, on an annual basis, whether goodwill has suffered any impairment. A detailed impairment test was
undertaken at 31 December 2022 to assess whether the carrying value of assets was supported by its recoverable amount.
The recoverable amount is the higher of fair value less costs of disposal, and value in use. The use of this method requires the
estimation of future cash flows and the determination of a discount rate in order to calculate the present value of the cash flows.
No indicators of impairment arose as a result of this review.
The recoverable amounts of both CGUs have been determined from value in use calculations based on cash flow projections from
formally approved budgets. Cash flow projections have been prepared by management for a three-year period to 31 December
2025, which have been presented and approved by the Board. These projections have been extended by a further 2 years using
estimated growth rates to give 5-year projections. Other major assumptions are as follows:
2022
Licensing
Social Publishing
2021
Licensing
Social Publishing
Discount
rate
Long−term
growth rate *
19.0%
19.0%
16.0%
16.0%
2%
2%
2%
2%
* The growth rate assumptions apply only to the period beyond the formal budgeted period with the value in use calculation based on an
extrapolation of the budgeted cash flows for year 5.
The discount rates used in discounting the projected cash flows are based on the Group’s Weighted Average Cost of Capital, after
considering the specific risks of the different CGU’s.
The discount rates used have been considered based on the risks involved in each of the underlying business units and terminal
growth rates and reflect the expected growth in underlying EBITDA expected from these units. These CGUs have been considered
for impairment and sensitivities have been calculated around the terminal growth rates and discount factors used together with
specific scenarios including the loss of revenue where those revenues might be considered to be at risk.
No indicators of impairment have arisen as a result as the impact of all sensitivities were judged to be within tolerable levels.
The £73,677 impairment charge in the prior year related to goodwill held in Hullabu Inc., which was dissolved on 31 December
2021.
Financial Statements
51
15. Property, plant and equipment
Cost
At 1 January 2021
Additions
Disposals
Exchange differences
At 31 December 2021
Additions
Disposals
Exchange differences
At 31 December 2022
Accumulated deprecation
At 1 January 2021
Depreciation charge
Disposals
Exchange differences
At 31 December 2021
Depreciation charge
Disposals
Exchange differences
At 31 December 2022
Net book value
At 31 December 2021
At 31 December 2022
ROU lease
assets*
£
Leasehold
improvements
£
Computers and
related equipment
£
Office furniture
and equipment
£
Total
£
769,613
76,059
-
-
2,077
771,690
181,228
(121,966)
5,021
835,973
-
(13,474)
250
62,835
-
-
278
63,113
304,667
151,613
29,717
16,084
-
(13,474)
1,294
457,574
154,349
(121,966)
3,211
493,168
228
32,555
13,579
-
192
46,326
206,367
139,219
(35,530)
1,269
311,325
121,306
-
4,036
436,667
172,932
40,590
(34,859)
993
179,656
84,605
-
2,195
266,456
77,209
1,129,248
2,327
(16,682)
755
141,546
(65,686)
4,351
63,609
1,209,459
2,798
305,332
-
(121,966)
1,824
68,231
11,159
1,403,984
61,139
8,547
(15,228)
638
55,096
5,982
568,455
216,834
(63,561)
3,153
724,881
258,515
-
(121,966)
1,547
62,625
7,145
868,575
314,116
342,805
30,280
16,787
131,669
170,211
8,513
5,606
484,578
535,409
* See Note 20 for further analysis by lease category.
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52
Gaming Realms plc Annual Report and Accounts 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
16. Other investments
At 1 January 2021
Change in fair value
Disposal
At 31 December 2021 and 31 December 2022
Other investments
£
401,291
(38,855)
(362,436)
-
The other investment balance comprised a 6.6% interest in Ayima Group AB (“Ayima”). The shares of Ayima are quoted on
AktieTorget, a Nordic stock exchange (www.aktietorget.se). The investment was remeasured each reporting period to fair value
based on the quoted share price.
During the prior year the Group disposed of its entire shareholding in Ayima, generating cash proceeds of £362,436 bringing the
investment balance to £Nil.
17. Other assets
Other assets
2022
£
2021
£
138,798
150,646
Other assets represent the rental deposit on operating leases and deposits held with third-party suppliers.
18. Trade and other receivables
Trade receivables
Other receivables
Tax and social security
Prepayments and accrued income
2022
£
2021
£
3,497,710
1,372,749
145,506
280,912
41,957
394,749
1,412,202
1,451,232
5,336,330
3,260,687
The carrying value of trade and other receivables classified at amortised cost approximates fair value.
All amounts shown fall due for payment within one year.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss
provision for trade receivables. To measure expected credit losses on a collective basis, trade receivables are grouped based on
similar credit risk and aging.
Management have assessed the expected loss rate based on the Group’s historical credit losses experienced over the five-year
period ended 31 December 2022. The historical loss rates are then adjusted for current and forward-looking information on
macroeconomic factors affecting the Group’s customers. On the basis of this review, no impairment has been recorded (2021:
None).
19. Trade and other payables
Trade payables
Other payables
Tax and social security
Accruals and deferred income
Financial Statements
53
2022
£
669,024
118,777
464,557
2021
£
531,939
158,726
236,491
2,017,961
1,313,958
3,270,319
2,241,114
The carrying value of trade and other payables classified as financial liabilities measured at amortised cost approximates fair value.
20. Leases
Group as a lessee
Set out below, are the carrying amount of the Group’s right-of-use asset and lease liability, along with the movements during the
year.
Right-of-use assets
At 1 January 2021
Amortisation
Exchange differences
At 31 December 2021
Additions
Amortisation
Exchange differences
At 31 December 2022
Lease liabilities
At 1 January 2021
Lease payments
Interest expense
Exchange differences
At 31 December 2021
Additions
Lease payments
Interest expense
Exchange differences
At 31 December 2022
Current
Non-current
Land and buildings
£
Motor vehicles
£
455,359
(148,125)
783
308,017
181,228
(150,861)
1,810
340,194
9,587
(3,488)
-
6,099
-
(3,488)
-
2,611
Land and buildings
£
Motor vehicles
£
Total
£
464,946
(151,613)
783
314,116
181,228
(154,349)
1,810
342,805
Total
£
684,034
(388,494)
45,503
71
341,114
181,228
674,927
(384,942)
45,120
71
335,176
181,228
(160,071)
24,219
2,267
382,819
2022
£
217,731
167,680
385,411
9,107
(3,552)
383
-
5,938
-
(3,567)
(163,638)
24,440
2,267
385,411
221
-
2,592
2021
£
172,887
168,227
341,114
Strategic ReportGovernance Report
54
Gaming Realms plc Annual Report and Accounts 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
21. Arrangement with Gamesys Group plc
In December 2017 the Group entered into a complex transaction with Gamesys Group plc and group companies (together
“Gamesys Group”). The transaction included a £3.5m 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 £3.5m of
services were provided free-of-charge within the first 5 years.
The convertible loan had a duration of 5 years and carried interest at 3-month LIBOR plus 5.5%, which was later updated to a fixed
5.75% following the cessation of LIBOR on 31 December 2021. It was secured over the Group’s Slingo assets and business. At any
time after the first year, Gamesys Group plc could have elected 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 was lower than 10p (nominal value), then the shares could have been 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 Gamesys Group plc. Under this arrangement, the maximum dilution to Gaming Realms shareholders would have been
approximately 11%, assuming the convertible loan is converted in full.
The option violated 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 was determined at each reporting date with changes recognised in profit or loss. The
initial fair value was £0.6m based on a probability assessment of conversion and future share price. This is a level 3 valuation as
defined by IFRS 13.
The initial fair value of the host debt was calculated as £2.7m, being the present value of expected future cash outflows. The
initial rate used to discount future cashflows was 14.1%, being the Group’s incremental borrowing rate. This 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 cashflows are based on directors’ judgement that a change in control event would
not occur. Subsequently the loan is carried at amortised cost. The residual £0.2m of proceeds were allocated to the obligation to
provide free services.
On 23 February 2022, Bally’s Corporation (owner of Gamesys Group) exercised their option to convert £500,000 of the
£3,500,000 convertible loan into Gaming Realms plc ordinary shares. The issue of 2,170,817 new ordinary shares to satisfy the
conversion resulted in an increase in share capital of £217,082 and share premium of £282,918 (see Note 23). As a result of the
conversion, a £106,000 reclassification from the derivative liability into retained earnings was made, being 14.29% (the portion
of the total loan converted) of the derivative liability held at the time of conversion.
On 9 December 2022, the Group paid Gamesys Group a sum of £3,375,000 as full repayment of the remaining £3,000,000
principal loan balance plus related charges.
Prior to repayment, the fair value of the conversion feature was assessed to be £750,000 (31 December 2021: £744,000)
based on revised probabilities of when and if the option would be exercised, with the £112,000 increase recorded as a finance
expense (see Note 11). The key inputs into the valuation model included timing of exercise by the counterparty (based on a
probability assessment) and the share price. Following repayment of the loan, the derivative liability balance held of £750,000,
less £375,000 of repayment charges included in the above £3,375,000 final payment was released to the income statement as
finance income (see Note 11).
Financial Statements
55
At 1 January 2021
Utilisation of free services
Effective interest
Interest paid
Change in fair value
At 31 December 2021
At 1 January 2022
Utilisation of free services
Effective interest
Interest paid
Partial conversion of loan
Change in fair value
Repayment of loan
At 31 December 2022
Fair value of debt
host
£
3,155,870
-
468,339
(194,931)
-
Obligation to
provide free
services
£
149,000
(89,000)
-
-
-
3,429,278
60,000
Fair value
of derivative
Liability
£
Total
£
627,000
3,931,870
-
-
-
117,000
744,000
(89,000)
468,339
(194,931)
117,000
4,233,278
3,429,278
-
237,157
(166,435)
(500,000)
-
(3,000,000)
-
60,000
(60,000)
-
-
-
-
-
-
744,000
4,233,278
-
-
-
(106,000)
112,000
(60,000)
237,157
(166,435)
(606,000)
112,000
(750,000)
(3,750,000)
-
-
22. Financial instruments and risk management – Group
The Group is exposed through its operations to risks that arise from use of its financial instruments. The Group’s financial assets
and liabilities are shown on the face of the consolidated statement of financial position and are presented in the table below by
category, as defined by IFRS 9 ‘Financial Instruments’.
Financial assets
Cash and cash equivalents
Trade and other receivables
Accrued income
Other assets
Financial liabilities
Trade and other payables
Accruals
Other creditors
Derivative liability
Lease liability
Amortised cost
Fair Value
2022
£
2021
£
2022
£
2021
£
2,922,775
4,412,375
3,643,216
1,414,706
1,101,410
1,239,634
138,798
150,646
787,801
690,665
1,417,961
1,313,958
-
-
3,489,278
-
385,411
341,114
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
744,000
-
Financial assets and financial liabilities are recognised on the balance sheet when the Group becomes a party to the contractual
provisions of the instrument.
The Group classifies its financial instruments in the following categories:
» Financial assets held at amortised cost;
» Financial assets held at fair value;
» Financial liabilities held at amortised cost; and
» Financial liabilities held at fair value.
Strategic ReportGovernance Report
56
Gaming Realms plc Annual Report and Accounts 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
22. Financial instruments and risk management – Group (continued)
The classification depends on the purpose for which the financial assets and liabilities were acquired. Management determines the
classification of its financial instruments at initial recognition or in certain circumstances on modification.
In the Directors’ opinion, there is no material difference between the book value and the fair value of any of the financial
instruments.
The Group has some exposure to credit risk and liquidity risk. There has been no material change to the financial instruments
used within the business during the year except for contingent consideration and therefore no material changes to the risk
management policies put in place by the Board which are now discussed below.
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies. Whilst
acknowledging this responsibility, it has delegated the authority and day to day responsibility for designing and operating systems
and controls which meet these risk management objectives to the finance and administration function. The Board regularly
reviews the effectiveness of these processes in meeting its objectives and considers any necessary changes in response to changes
within the business or the environment in which it operates.
Currency risk
The Group is exposed to currency risk on translation and on sales and purchases that are denominated in a currency other than
Pounds Sterling (GBP). The currency in which these transactions are primarily denominated is US Dollars (USD).
The Group’s policy is, where possible to allow Group entities to settle liabilities denominated in their functional currency with the
cash generated from their own operations in that currency. Where Group entities have liabilities denominated in a currency other
than their functional currency cash already denominated in that currency will, where possible, be transferred from elsewhere in
the Group.
As of 31 December 2022 the Group’s net exposure to foreign exchange risk was as follows:
Net foreign currency financial assets
US Dollar
Euro
Other
2022
£
2021
£
1,973,465
1,043,049
996,279
153,892
238,309
69,901
3,123,636
1,351,259
The effect of a 20% strengthening in Sterling against other currencies, all other variables held constant, have resulted in a increase
in profit and an increase in net assets of £624,727 (2021: increase in profit and increase of net assets of £270,252). A 20%
weakening in the exchange rates would, on same basis reduce profit after tax and decrease net assets by £624,727. (2021:
reduce profit after tax and decrease net assets by £270,252).
Financial Statements
57
Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the finance charges and principal repayments on its debt
instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.
The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. The
ongoing lease liabilities are included in the Group’s cash flow modelling.
The following table sets out the undiscounted contractual cash flows:
At 31 December 2022
Trade and other payables
Accruals
Other creditors
Lease liability
Total
At 31 December 2021
Trade and other payables
Accruals
Other creditors
Lease liability
Total
Within 1 year
£
1−2 years
£
Over 2 years
£
787,801
1,417,961
-
232,035
2,437,797
-
-
-
-
-
-
61,566
61,566
120,317
120,317
Within 1 year
1−2 years
Over 2 years
£
690,665
1,313,958
3,489,278
192,981
5,686,882
£
-
-
-
£
-
-
-
154,220
154,220
21,368
21,368
Credit risk
The Group’s trading is mainly exposed to credit risk through credit sales in both the Licencing and Social Publishing segments.
Generally, receivables are due and collected within 30 days of invoice or contract. See Note 18 for further detail on receivables
exposure and expected credit loss analysis.
Management considered the credit risk and the counterparty debt risk and recognised an impairment provision of £Nil (2021:
£Nil). In the opinion of management, the credit risk to cash and lease deposits is immaterial.
See further disclosure on results of expected credit losses in Note 18.
Financial liabilities measured at fair value
The fair value hierarchy of financial liabilities measured at fair value is provided.
The fair value of derivative liabilities totalling £Nil (2021: £0.7m) was 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 measurement hierarchy is based on the inputs to valuation techniques used to measure fair value. The inputs are
categorised into three levels, with the highest level (level 1) given to inputs for which there are unadjusted quoted prices in active
markets for identical assets or liabilities and the lowest level (level 3) given to unobservable inputs. Level 2 inputs are directly or
indirectly observable inputs other than quoted prices.
Capital management
The Group is funded through shareholders’ funds. The Group monitors its capital structure, which comprises all components of
equity (i.e. share capital, share premium, non-controlling interest and retained earnings) and monitors external debt. The Group is
not subject to any externally imposed capital requirements.
Strategic ReportGovernance Report
58
Gaming Realms plc Annual Report and Accounts 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
22. Financial instruments and risk management – Group (continued)
Changes in liabilities
IAS 7 requires an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising
from financing activities, including both cash and non-cash changes. The Group’s liabilities arising from financing activities consist
of the Gamesys Group plc arrangement (see Note 21), Derivative liability (see Note 21), an obligation to provide free services (see
Note 21) and lease liabilities (see Note 20). A reconciliation between the opening and closing balances of these items is provided
below.
2022
Opening balance
3,429,278
60,000
744,000
Fair value
of debt host
£
Obligation to
provide free services
£
Fair value of
derivative liability
£
New leases entered into during the year
Cash paid
Utilisation of free services
Partial conversion of loan (Note 21)
Unwind of discount
Exchange differences
Change in fair value (Note 21)
Release of liability on non-conversion (Note 21)
Carried forward
-
(3,166,435)
-
-
-
(60,000)
(500,000)
237,157
-
-
-
-
-
-
-
-
-
-
-
(375,000)
-
(106,000)
-
-
112,000
(375,000)
2021
Opening balance
Cash paid
Free service utilisation
Unwind of discount
Exchange differences
Change in fair value
Carried forward
Fair value
of debt host
£
Obligation to
provide free services
£
Fair value of
derivative liability
£
149,000
627,000
3,155,870
(194,931)
-
468,339
-
-
-
(89,000)
-
-
-
-
-
-
-
117,000
744,000
3,429,278
60,000
-
385,411
Lease
liability
£
341,114
181,228
(163,638)
-
-
24,440
2,267
-
-
Lease
liability
£
684,034
(388,494)
-
45,503
71
-
341,114
Financial Statements
59
23. Share capital
Ordinary shares
Ordinary shares of 10 pence each
292,006,775
29,200,676
289,702,626
28,970,262
The increase of 2,304,149 ordinary shares relates to (i) the exercise of share options during the year (see Note 24), and (ii) the
partial conversion of the convertible loan (see Note 21). The changes in share capital and share premium as a result of these
events is shown below.
2022
Number
2022
£
2021
Number
2021
£
At 1 January 2021
Exercise of share options
At 31 December 2021
Exercise of share options
Conversion of loan
At 31 December 2022
Share capital
£
Share premium
£
28,664,731
305,531
28,970,262
13,332
217,082
29,200,676
87,258,166
112,690
87,370,856
-
282,918
87,653,774
24. Share-based payments
Gaming Realms 2013 EMI Plan
On 1 August 2013 the Company adopted the Gaming Realms 2013 EMI Plan to allow, at the discretion of the Board, eligible
employees to be granted EMI or non-EMI options at an exercise price to be determined by the Board not less than the nominal
value of a share. Options will vest subject to such time based and share price performance-based conditions as the Board may
determine.
Options to acquire ordinary shares under the EMI plan may be granted up to a maximum of £3m (based on the market value of
the shares placed under option at the date of the grant).
No consideration is payable for the grant of the option and the options are not transferable or assignable. Cash consideration is
paid to the Company by the employee at the point that the share options are exercised.
The following table illustrates the number and weighted average exercise price of share options:
Outstanding at 1 January 2021
Granted during the year
Forfeited during the year
Exercised during the year
Number of options outstanding at 31 December 2021
Granted during the year
Exercised during the year
Number of options outstanding at 31 December 2022
Exercisable at 31 December 2022
Weighted
average
exercise price
(pence)
15.60
22.40
10.00
13.69
16.39
32.50
10.00
18.76
19.06
Number
27,708,858
350,000
(1,833,335)
(3,055,301)
23,170,222
3,900,000
(133,332)
26,936,890
21,470,218
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60
Gaming Realms plc Annual Report and Accounts 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
24. Share-based payments (continued)
Options to subscribe under various schemes, including those noted in Directors’ interests in Note 8, are shown in the table below:
Date granted
Exercise price
(pence)
Exercisable between
Approved
2 April 2014
23.00 1 April 2017 to 1 April 2024
Approved
19 February 2015
33.00 19 February 2018 to 19 February 2025
Approved
15 October 2015
25.13 15 October 2018 to 15 October 2025
Approved
10 November 2015
25.00 10 November 2018 to 10 November 2025
Approved
28 July 2016
20.00 28 July 2018 to 28 July 2026
Unapproved
28 July 2016
20.00 28 July 2018 to 28 July 2026
Approved
1 May 2020
10.00 3 February 2021 to 1 May 2030
Unapproved
1 May 2020
10.00 3 February 2021 to 1 May 2030
Unapproved
1 May 2020
10.00 1 May 2020 to 1 May 2030
Approved
2 June 2020
20.00 3 February 2021 to 2 June 2030
Approved
28 July 2020
20.00 1 August 2021 to 28 July 2030
2022
Number of
shares
2021
Number of
shares
992,252
172,475
535,000
560,175
167,500
30,000
992,252
172,475
535,000
560,175
167,500
30,000
1,333,336
1,466,668
1,300,000
1,300,000
750,000
750,000
5,000,000
5,000,000
8,846,152
8,846,152
Approved
26 November 2020
20.00 26 November 2021 to 26 November 2030
2,500,000
2,500,000
Unapproved
26 November 2020
20.00 26 November 2021 to 26 November 2030
Approved
5 January 2021
22.40 1 January 2022 to 5 January 2031
Unapproved
6 January 2022
32.50 6 January 2022 to 6 January 2025
Unapproved
6 January 2022
32.50 15 October 2022 to 6 January 2032
Approved
6 January 2022
32.50 15 October 2022 to 6 January 2032
500,000
350,000
2,000,000
1,150,000
750,000
500,000
350,000
-
-
-
26,936,890
23,170,222
During the year 3,900,000 share options were granted to certain employees as follows.
On 6 January 2022, the Group’s two Executive Directors were granted 2,000,000 options, which vest upon certain non-market-
based conditions. The fair value of options granted were determined using the Black-Scholes model and the following principal
assumptions were used in the valuation.
Grant date
No. of options
Vesting date
Model used
Share price at date of grant (pence)
Volatility
Expected option life
Dividend yield
Risk free investment rate
Fair value per option at grant date (pence)
Exercise price (pence)
Exercisable to
6 Jan 2022
2,000,000
6 Jan 2022
Black Scholes
32.50
70%
3 years
n/a
0.83%
0.15
32.50
6 Jan 2025
On 6 January 2022, the Group’s two Executive Directors and certain employees were granted 1,900,000 share options. The fair
value of options granted were determined using Black-Scholes models and the following principal assumptions were used in the
valuation.
Grant date
No. of options
Vesting date
Model used
Share price at date of grant (pence)
Volatility
Expected option life
Dividend yield
Risk free investment rate
Fair value per option at grant date (pence)
Exercise price (pence)
Exercisable to
The share option and related charges income statement expense comprises:
IFRS 2 share-based payment charge
Direct taxes related to share options
Financial Statements
61
6 Jan 2022
6 Jan 2022
6 Jan 2022
633,332
633,334
633,334
15 Oct 2022
15 Oct 2023
15 Oct 2024
Black Scholes
Black Scholes
Black Scholes
32.50
79%
32.50
72%
32.50
70%
2 years
3 years
4 years
n/a
0.81%
0.14
32.50
n/a
0.90%
0.15
32.50
n/a
0.90%
0.17
32.50
6 Jan 2032
6 Jan 2032
6 Jan 2032
2022
£
438,868
(87,142)
351,726
2021
£
466,254
232,940
699,194
IFRS 2 (Share-based payments) requires that the fair value of such equity-settled transactions are calculated and systematically
charged to the statement of comprehensive income over the vesting period. The total fair value that was charged to the income
statement in relation to the equity-settled share-based payments was £438,868 (2021: £466,254).
Where individual EMI thresholds are exceeded or when unapproved share options are exercised by overseas employees, the Group
is subject to employer taxes payable on the taxable gain on exercise. Since these taxes are directly related to outstanding share
options, the income statement charge has been included within share option and related charges. The Group uses its closing
share price at the reporting date to calculate such taxes to accrue. The tax related income statement credit for the year was
£87,142 (2021: charge of £232,940).
Strategic ReportGovernance Report
62
Gaming Realms plc Annual Report and Accounts 2022
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
25. 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 casino and
bingo site in New Jersey and Ontario. During the year, total license fees earned by the Group were $15,697 (2021: $38,937)
with $366 due at 31 December 2022 (2021: $4,351). During the year the Group began distributing its content to certain North
American partners via Pala’s B2B platform distribution network, with platform fees of $1,477 being incurred (2021: $Nil) with
$984 unpaid at 31 December 2022 (2021: $Nil).
Jim Ryan was a Director of Bally’s Corporation (“Bally’s”) until his resignation on 16 January 2023, and was previously a Non-
Executive Director of Gamesys Group prior to its acquisition by Bally’s. Management have assessed that Bally’s are not a related
party to the Group in the current year. See Note 21 for transactions with this party in the comparative year.
During the year £150,000 (2021: £150,000) of consulting fees were paid to Dawnglen Finance Limited, a company controlled
by Michael Buckley, which is included in the remuneration figure of £357,500 (2021: £375,000) shown in Note 8. No amounts
were owed at 31 December 2022 (2021: £Nil).
The details of key management compensation are set out in Note 7.
26. Contingent liabilities
Judgement is required to interpret international tax laws relating to e-commerce in order to identify and value provisions in
relation to indirect taxes. The principal risks relating to the Group’s tax liabilities arise from domestic and international tax laws
and practices in the e-commerce environment which continues to evolve. The Group is basing its tax provisions on current (and
enacted but not yet implemented) tax rules and practices, together with advice received, where necessary, from professional
advisers, and believes that its accruals for tax liabilities are adequate for all open enquiry years based on its assessment of many
factors including past experience and interpretations of tax law. The Group monitors changes in legislation and updates its tax
liabilities accordingly. However, due to different interpretations and evolving practice there is a risk that additional liabilities could
arise.
27. Subsidiaries
The subsidiaries of the Company, all of which have been included in these consolidated financial statements, are as follows:
Name
Registered Office
Country of
Incorporation
Principal activity
Proportion held by
Parent Company
Proportion
held by Group
Blastworks Limited
2 Valentine Place, London, SE1 8QH
Alchemybet Limited
2 Valentine Place, London, SE1 8QH
Blastworks Inc.
300 Deschutes Way SW, Tumwater,
WA 98501
UK
UK
USA
IP owner
100%
Software Developer
100%
Social publishing
operator
100%
Backstage
Technologies, Inc.
808 Douglas Street, Victoria, BC,
V8W 2B6
Canada
Software Developer
100%
Alchemybet Malta
Holdings Limited
MK Business Centre, 115A Floor 2,
Valley Road, Birkirkara, BKR 9022
Alchemybet Malta
Limited
MK Business Centre, 115A Floor 2,
Valley Road, Birkirkara, BKR 9022
Malta
Malta
Holding company
100%
License holder
0%
Blueburra Holdings
Limited
49 Victoria Street, Douglas, Isle of
Man, IM1 2LD
Digital Blue Limited
49 Victoria Street, Douglas, Isle of
Man, IM1 2LD
Isle of Man
Marketing services
100%
Isle of Man
Marketing services
0%
100%
100%
100%
100%
100%
100%
100%
100%
Parent Company Statement of Financial Position
As at 31 December 2022
Company number: 04175777
Non-current assets
Investment in subsidiary undertakings
Property, plant and equipment
Other assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Other Creditors
Derivative liabilities
Non-current liabilities
Lease liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Merger reserve
Retained earnings
Total equity
Financial Statements
63
Note
2
3
31 December
2022
£
31 December
2021
£
5,662,961
5,662,961
183,773
138,798
319,600
138,798
5,985,532
6,121,359
4
9,534,411
14,725,367
96,230
67,103
9,630,641
14,792,470
15,616,173
20,913,829
5
6
6
8,335,358
8,526,244
147,305
141,290
-
-
3,489,278
744,000
8,482,663
12,900,812
20,908
20,908
167,856
167,856
8,503,571
13,068,668
7,112,602
7,845,161
7
29,200,676
28,970,262
88,373,774
88,090,856
2,683,702
2,683,702
(113,145,550)
(111,899,659)
7,112,602
7,845,161
As permitted by section 408 of the Companies Act 2006, a separate profit and loss account of the Company is not presented. The
Company’s loss for the financial year was £1,790,759 (2021: £2,350,124).
The notes on pages 65 to 68 form part of these financial statements.
The financial statements were approved and authorised for issue by the Board of Directors on 31 March 2023 and were signed on
its behalf by:
Michael Buckley
Executive Chairman
Strategic ReportGovernance Report
64
Gaming Realms plc Annual Report and Accounts 2022
Parent Company Statement of Changes in Equity
For the year ended 31 December 2022
1 January 2021
Loss for the year
Share-based payment on share options
Exercise of options
31 December 2021
Loss for the year
Share-based payment on share options
Exercise of options
Conversion of loan
31 December 2022
Share
capital
£
Share
premium
£
Merger
reserve
£
Retained
earnings
£
Total
equity
£
28,664,731
87,978,166
2,683,702
(110,015,789)
9,310,810
-
-
-
-
305,531
112,690
-
-
-
(2,350,124)
(2,350,124)
466,254
-
466,254
418,221
28,970,262
88,090,856
2,683,702
(111,899,659)
7,845,161
-
-
13,332
217,082
-
-
-
282,918
-
-
-
-
(1,790,759)
(1,790,759)
438,868
-
106,000
438,868
13,332
606,000
29,200,676
88,373,774
2,683,702
(113,145,550)
7,112,602
The notes on pages 65 to 68 form part of these financial statements.
Financial Statements
65
Notes to the Parent Company Financial Statements
For the year ended 31 December 2022
1. Principal accounting policies
These financial statements present the results of Gaming Realms plc for the year ended 31 December 2022.
The Company is the ultimate parent company of the Gaming Realms Group and is admitted to trading on the Alternative
Investment Market (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, SE1 8QH.
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework
(FRS 101).
The financial statements are prepared under the historical cost convention. No profit and loss account is presented by the
Company as permitted by Section 408 of the Companies Act 2006.
The financial statements are prepared in British Pounds Sterling.
Basis of preparation
The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended
31 December 2022.
The Company has taken advantage of the following disclosure exemptions under FRS 101:
a) IFRS 2 Share-based Payment disclosure, the share-based payment arrangement concerns its own equity instruments and its
separate financial statements are presented alongside the consolidated financial statements of the Group;
b) IFRS 7 Financial Instruments disclosures, given that equivalent disclosures are included in the consolidated financial statements
of the Group in which the entity is consolidated;
c) IFRS 13 Fair Value Measurement disclosures;
d) Certain disclosures required by IAS 1 Presentation of Financial Statements, including certain comparative information in respect
of share capital movements;
e) IAS 7 Statement of Cash Flows and related notes;
f) IAS 24 Related Party Disclosures relating to key management personnel compensation; and
g) IAS 24 Disclosure of related party transactions entered into between two or more members of a group, given that any
subsidiary which is party to the transaction is wholly owned by such a member.
Investments
Investments in subsidiaries and associates are stated at cost less provision for impairment in value, except for investments acquired
before 1 October 2013 (date of adoption of IFRS) where shares issued to effect business combinations and the conditions of the
Companies Act 2006 are met, merger relief was applied and the resulting investment is recorded at the nominal value of the
shares issued.
Taxation
Current tax, including UK corporation tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws
that have been enacted or substantively enacted by the balance sheet.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date,
where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have
occurred at the balance sheet date.
Deferred tax is measured at the average tax rates that are expected to apply in the period in which the timing differences are
expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Foreign currencies
Transactions denominated in foreign currencies are recorded at exchange rates as of the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates of exchange prevailing at that
date.
Financial liabilities
Financial liabilities held by the company consist of trade payables, long-term borrowings and other short-term monetary liabilities,
which are held at amortised cost, and derivative liabilities which are held at fair value through profit and loss.
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66
Gaming Realms plc Annual Report and Accounts 2022
Notes to the Parent Company Financial Statements
For the year ended 31 December 2022
2. Investments
At 1 January 2021
Change in fair value
Additions
Disposals
At 31 December 2021
Additions
At 31 December 2022
Investment
in subsidiary
undertakings
£
Other
investments
£
5,129,119
401,291
-
(38,855)
533,842
-
-
(362,436)
5,662,961
-
5,662,961
-
-
-
Details of the Company’s investments can be found in Note 27 of the consolidated financial statements.
The other investments balance relates to the Company’s interest in Ayima shares. See Note 16 of the consolidated accounts for
further information.
3. Property, plant and equipment
Cost
At 1 January 2022
Additions
At 31 December 2022
Accumulated deprecation and impairment
At 1 January 2022
Depreciation charge
At 31 December 2022
Net book value
At 31 December 2021
At 31 December 2022
ROU lease
assets
£
Leasehold
improvements
£
Computers
and related
equipment
£
Office
furniture and
equipment
£
Total
£
654,745
60,968
-
-
654,745
60,968
368,079
122,014
490,093
32,105
12,195
44,300
12,435
2,651
15,086
10,853
1,475
12,328
19,047
747,195
-
2,651
19,047
749,846
16,558
427,595
2,794
138,478
19,352
566,073
286,666
164,652
28,863
16,668
1,582
2,758
2,489
(305)
319,600
183,773
4. Trade and other receivables
Amounts due from Group companies
Tax and social security
Other debtors
Prepayments and accrued income
Financial Statements
67
2022
£
2021
£
9,304,706
14,588,109
86,992
-
-
92
142,713
137,166
9,534,411
14,725,367
The balances due from fellow Group companies are repayable on demand and interest free. Management has assessed its
receivables from Group companies using a forward-looking expected credit loss model. The methodology used in determining
the amount of provision as at the reporting date is that of lifetime expected credit losses which is defined as a credit loss estimate
of the present value of cash shortfalls over the expected life of the financial assets (receivables from Group companies). The
expected credit loss charge in the year was calculated to be £Nil (2021: £Nil).
5. Trade and other payables
Creditors: amounts falling due within one year
Amounts due to Group companies
Trade creditors
Accruals and deferred income
Tax and social security
2022
£
2021
£
7,546,692
7,654,870
140,687
35,674
618,627
764,760
29,352
70,940
8,335,358
8,526,244
6. Other creditors & derivative liability
See Note 21 of the consolidated accounts for further information.
7. Other creditors & derivative liability
Allotted, called up and fully paid
Ordinary shares of 10 pence each
292,006,775
29,200,676
289,702,626
28,970,262
2022
Number
2022
£
2021
Number
2021
£
Allotted and fully paid up
At 1 January 2021
Exercise of options
At 31 December 2021
Exercise of options
Conversion of loan
At 31 December 2022
£
28,664,731
305,531
28,970,262
13,332
217,082
29,200,676
Strategic ReportGovernance Report
68
Gaming Realms plc Annual Report and Accounts 2022
Notes to the Parent Company Financial Statements
For the year ended 31 December 2022
8. Employee information
The Company had an average of 6 (2021: 6) employees during the year.
The employee costs for the Company were £1,201,297 (2021: £1,151,117).
Details of Directors’ remuneration can be found in Note 8 of the consolidated financial statements.
9. Related party transactions
During the year £150,000 (2021: £150,000) of consulting fees were paid to Dawnglen Finance Limited, a company controlled
by Michael Buckley. No amounts were owed at 31 December 2022 (2021: £Nil).
The details of key management compensation are set out in Note 7 of the consolidated financial statements.
Details of Directors’ remuneration can be found in Note 8 of the consolidated financial statements.
Financial Statements
69
Company Information
Directors
Michael Buckley, Executive Chairman
Mark Segal, Chief Executive Officer
Geoff Green, Chief Financial Officer (appointed 1 February 2023)
Jim Ryan, Non-executive Director
Mark Wilson, Non-executive Director
Mark Blandford, Non-executive Director
Anna Massion, Non-executive Director (appointed 1 November 2022)
Company Secretary
Mark Segal
Auditors
BDO LLP, 55 Baker Street, London, W1U 7EU
Bankers
Barclays Bank plc, 1 Churchill Place, London, E14 5HP
Nominated advisors and Joint Brokers
Peel Hunt, 120 London Wall, London, EC2Y 5ET
Joint Brokers
Investec, 30 Gresham Street, London, EC2V 7QN
Solicitors
Memery Crystal LLP, 44 Southampton Buildings, London WC2A 1AP
Registrars
Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS13 8AE
Registered office
Two Valentine Place, London, SE1 8QH
Registered Number
04175777
Strategic ReportGovernance Report
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Gaming Realms plc Annual Report and Accounts 2022
Notes
Gaming Realms plc
Two Valentine Place
London
SE1 8QH
UK
www.gamingrealms.com