Golden Rim Resources Ltd Annual Report 2023

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A platform for growth Annual Report & Accounts 2023 Gaming Realms plc Annual Report and Accounts 2023 Gaming Realms is an international developer, publisher and licensor of mobile games, building a portfolio of highly popular gaming content and brands. 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. 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 6 8 12 14 www.gamingrealms.com Board and Executive Management Directors’ Report Statement of Directors’ Responsibilities Corporate Governance 16 18 19 20 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 24 30 31 32 33 34 63 64 65 68 Strategic Report 1 2023 Financial Highlights: 2023 Financial Highlights: Revenue increased by 26% to £23.4m (2022: £18.7m) Adjusted EBITDA1 increased by 29% to £10.1m (2022: £7.8m) EBITDA of £9.2m (2022: £7.4m) £23.4m +26% £10.1m +29% £9.2m +24% 2023 2022 £23.4m £18.7m 2023 2022 £10.1m £7.8m 2023 2022 £9.2m £7.4m Licensing revenue increased by 33% to £19.9m (2022: £14.9m) Social publishing revenue fell by 5% to £3.5m (2022: £3.7m) 2023 2022 £19.9m £14.9m 2023 2022 £3.5m £3.7m 1 EBITDA is proﬁt before interest, tax, depreciation and amortisation and is a non-GAAP measure. The Group uses EBITDA and Adjusted EBITDA to comment on its ﬁnancial performance. Adjusted EBITDA is EBITDA excluding share option and related charges and adjusting items, which are signiﬁcant, non-recurring items outside the scope of the Group’s ordinary activities. Adjusting items include management restructuring costs in the year. See Note 5 for further details. Proﬁt before tax for the year increased by 47% to £5.2m (2022: £3.5m) £5.2m +47% Year-end cash balance increased to £7.5m (2022: £2.9m), with the Group remaining debt free £7.5m +155% £7.5m 2023 2022 £5.2m £3.5m 2023 2022 £2.9m Licensing segment generated £11.3m EBITDA (2022: £8.0m) 2023 2022 £11.3m £8.0m Social publishing segment generated £0.8m EBITDA (2022: £1.5m) 2023 2022 £0.8m £1.5m Head ofﬁce costs were £2.9m (2022: £2.0m) and excluding share option and related charges were £2.4m (2022: £1.8m) 2023 2022 £2.9m £2.0m 2023 Operational Highlights: 2023 Operational Highlights: Portfolio of proprietary games Portfolio of proprietary games on the Group’s remote game on the Group’s remote game server (“RGS”) grew to 75 server (“RGS”) grew to 75 (2022: 65) (2022: 65) Launched with 44 new partners Signed licensing deals with for Slingo Originals content Tetris, Relax Gaming and WMG including Bet 365, Betclic, OLG (Provincial Lottery in Ontario) and PENN Entertainment in New Jersey, Michigan and Pennsylvania Granted iGaming Supplier Submitted iGaming Supplier Licenses in West Virginia, Licenses in British Columbia, Sweden and Greece West Virginia, Sweden and Greece, and the Company was granted these licenses in West Virginia, Sweden and Greece Signed licensing deals with Launched Slingo Space Tetris, Relax Gaming for Money Invaders and Slingo Tetris, Train and WMG for Fowl Play, a collaborating with two iconic leading slot game in the Italian games brands market Launched with 44 new Launched in the regulated partners for Slingo Originals market in Portugal content including Bet 365, Betclic, OLG (Provincial Lottery) and Barstool in New Jersey, Michigan and Pennsylvania Increased unique players in Gained ISO 27001 certiﬁcation, content licensing business by 24% an internationally recognised standard for managing information security Increased unique players in Launched Slingo content licensing business Space Invaders by 24% and Tetris Slingo, collaborating with two iconic games brands 1 EBITDA is proﬁt before interest, tax, depreciation and amortisation and is a non-GAAP measure. The Group uses Gained ISO27001 certiﬁcation, EBITDA and Adjusted EBITDA to comment on its ﬁnancial performance. Adjusted EBITDA is EBITDA excluding share option and related charges and adjusting items, which are signiﬁcant, non-recurring items outside the scope of the an internationally Group’s ordinary activities. Adjusting items include management restructuring costs in the year. See Note 5 for recognised standard for further details. managing information security Continued investment in our proprietary RGS platform with the launch of free rounds product Grew the 4ThePlayer library of games distributed on our network to 7 (2022: 3) Corporate GovernanceFinancial Statements2 Gaming Realms plc Annual Report and Accounts 2023 At a Glance 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. Innovation Gaming Realms develops, publishes and licenses mobile gaming content. Integrated Game Development, Licensing and Publishing Game development Brand licensing Game licensing Brand partnerships 2 Mobile Games Studios • London, United Kingdom • Victoria, Canada IP Licensor • North American Lottery Printed Scratch Games – Scientiﬁc Games • Multi-player Bingo - Entain • Global Lottery Mobile Instant Games – IWG • Social Slot Games – Zynga Inc. • iGaming Library – US, UK and EU – US – BetMGM, DraftKings, RSi, Golden Nugget, Betfair/ Fanduel, Caesars Interactive, Resorts, Hardrock, Ocean Resorts, Bally’s, Boyd Interactive, Pokerstars and PlayStar – Europe – Bally’s, Entain, Sky Betting & Gaming, Paddy Power Betfair, 888, Skill On Net, Rank, 32 Red, William Hill, Kindred, Buzz Bingo, Jumpman, Mr Q, Whitehat, Leo Vegas, Betsson, Pokerstars, Betway, Bet365, Sisal, Goldbet, Lottomatica, Snaitech, Betclic, Superbet • 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, Hot Roll • 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 • WMG – Fowl Play • Taito – Space Invaders Growing international partners Strategic Report 3 International growth in regulated markets Regulated markets Live 2024 British Columbia, CA Ontario, CA Quebec, CA Sweden Lithuania Denmark Great Britain Switzerland Italy Spain Pennsylvania, USA Connecticut, USA New Jersey, USA West Virginia, USA Michigan, USA Mexico Colombia Growing US iGaming Market We are focusing on the growing North American market. Estonia & Latvia The Netherlands Romania Greece Malta South Africa $600 $500 $400 $300 $200 $100 R G G M $ $M Feb 2 2 M ar 2 2 Apr 2 2 M ay 2 2 Jun 2 2 Jul 2 2 Aug 2 2 Sep 2 2 O ct 2 2 N ov 2 2 D ec 2 2 Jan 2 3 Feb 2 3 M ar 2 3 Apr 2 3 M ay 2 2 Jun 2 3 Jul 2 3 Aug 2 3 Sep 2 3 O ct 2 2 N ov 2 3 D ec 2 3 Jan 2 4 New Jersey Michigan Pennsylvania Connecticut West Virginia Delaware Source: Vixio Gambling Compliance: State gaming commissions report – Jan 2024 Key focus areas Original Game Content & IP Development We build original content from our London and Vancouver Island Strategic Partners and Licensing Partners include Banijay, Zynga, IWG, Inspired Entertainment, IGT, Responsible Gambling Gaming Realms is committed to providing an environment for customers to play responsibly and 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. 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. 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. 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. 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 licenced 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 are already set to an incredibly high level. Corporate GovernanceFinancial Statements 4 Gaming Realms plc Annual Report and Accounts 2023 Executive Chairman’s Statement The Company continues to deliver on its proven strategy 29% £10.1m Adjusted EBITDA (2022: £7.8m) As we reﬂect on another record year, it is with a sense of achievement and optimism that I present the Chairman’s Statement for Gaming Realms for the year ended 31 December 2023. Despite the challenges posed by a dynamic market environment, our Company has demonstrated resilience, innovation, and strategic foresight, cementing our position as a leading games studio in the international regulated igaming market. During the year, our platform handled wagering of £5.5bn vs £4.7bn in the prior year. Financial Performance Highlights In 2023, Gaming Realms achieved signiﬁcant ﬁnancial milestones, reﬂecting our commitment to delivering sustainable growth and shareholder value. Our revenue saw an impressive increase of 26% to £23.4m (2022: £18.7m), driven by strategic expansion, innovative product launches, and engagement with our partners. Adjusted EBITDA improved markedly to £10.1m (2022: £7.8m), up 29% from the previous year, highlighting our operational efﬁciencies and prudent cost management. Proﬁt before tax reached £5.2m, a testament to our robust business model and the effectiveness of our strategic initiatives. Our balance sheet remains strong, with a healthy cash position of £7.5m (2022: £2.9m) and no debt, ensuring that we are well-placed to pursue future growth opportunities and navigate any market uncertainties. Strategic Achievements 2023 was a year of strategic advancement for Gaming Realms. We expanded our footprint in key markets and launched new gaming titles that have been met with enthusiasm by players globally. Our focus on new engaging mechanics for our Slingo category of games has allowed us to capture new segments of the market and drive user engagement to unprecedented levels. Partnerships have been central to our strategy, and this year we have forged signiﬁcant collaborations with industry leaders, expanding our distribution channels and enhancing our product offerings. This has allowed us to grow in all our key markets. Our commitment to responsible gaming and sustainability has also been a priority, as we continue to invest in technology and initiatives that promote a safe and ethical gaming environment. Looking Back 2023 completed ﬁve years of remarkable progress for Gaming Realms, with an adjusted 2019 EBITDA loss of £0.3m improving annually to an adjusted EBITDA surplus of £10.1m in 2023. This is principally as a result of the 48% compound growth rate in our licensing revenue, a growth from £4.1m in 2019 to £19.9m in 2023. “We expanded our footprint in key markets and launched new gaming titles that have been met with enthusiasm by players globally.” Michael Buckley Executive Chairman Strategic Report 5 Our Company has demonstrated resilience, innovation, and strategic foresight, cementing our position as a leading games studio in the international regulated igaming market. Looking Ahead As we look to the future, Gaming Realms is positioned for continued success. The investments we have made in technology, talent, and market expansion set a solid foundation for growth. We remain committed to innovation, with several exciting new products in the pipeline that promise to redeﬁne the gaming experience for our users. Our strategic focus for the coming year will be on expanding our international presence, while growing in our existing markets, as well as delivering an innovative Slingo roadmap. We will also continue to prioritise our social responsibilities, ensuring that we contribute positively to the communities we serve. Acknowledgements On behalf of the Board, I extend our thanks to our employees, whose commitment, creativity, and hard work have been instrumental in our achievements. I would also like to thank our shareholders for their continued trust and support. As we move forward, we do so with conﬁdence, guided by a clear strategy and a commitment to excellence. I am optimistic about the future of Gaming Realms plc and look forward to sharing our continued progress in the years to come. Michael Buckley Executive Chairman 28 March 2024 Corporate GovernanceFinancial Statements6 Gaming Realms plc Annual Report and Accounts 2023 Chief Executive’s Review An increased international demand for Slingo Originals portfolio Introduction The Group continued its strong momentum in 2023, increasing revenues by 26% to £23.4m (2022: £18.7m), and Adjusted EBITDA before share option and related charges and adjusting items by 29% to £10.1m (2022: £7.8m). We continue to expand our Slingo Originals game portfolio, which grew by 10 games and now stands at 75, as well as producing bespoke games for our partners. We are investing in our proprietary Remote Game Server “RGS” platform to ensure it scales with the business into new markets and with new operators. Continuing to innovate around our unique Slingo IP and RGS will allow Gaming Realms to deliver on its strategy and continue its impressive growth. This strong performance was driven by revenue growth of 33% in our licensing business to £19.9m (2022: £14.9m) as a result of the increased demand for our Slingo content. 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 58% Adjusted 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 the year. Content licensing revenues grew 30% in 2023 and we increased unique player numbers in the year by 24% to 5 million (2022: 4 million). Our distribution business, where we are launching third-party slots, which complement our Slingo offering, grew in the year with 4ThePlayer and we also produced the ﬁrst two games in partnership with ReelPlay. This is allowing us to utilise the wide distribution on our platform to take market leading slot games into the US market. We are encouraged by the launch of 4ThePlayer and, together with games from ReelPlay, expect to see this area of the business grow. Our growth in Europe has been a combination of launching with new partners and growing with existing ones. During the year, our library of proprietary games increased to 75 and we went live with 44 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. We have been able to launch bespoke games with operators which has allowed our portfolio to increase its promotion. Slingo has also become its own games category, which has been a great asset for our partners in their promotions and marketing. Some of the most notable games released during the period included Slingo Cleopatra with IGT, a partnership with one of the leading suppliers of online and land-based casino games, and two of the largest video game brands with Slingo Space Invaders and Tetris Slingo. North America 2023 was the year when we consolidated our position in the US and Canada, with our content licensing revenues from these markets growing 26% to £8.1m (2022: £6.4m). We have been able to launch with operators over multiple states including Pokerstars launching in three markets, Caesars Entertainment in four markets and PENN Entertainment in ﬁve markets. In March, we launched with our second Canadian lottery when our games ﬁrst went live with the Ontario Lottery and Gaming Corporation. We also continued to launch more content in New Jersey, Michigan and Pennsylvania as we grew in these markets. We still expect to gain a higher market share in Michigan and Pennsylvania, where we have 37 and 27 games live respectively, compared to “The early indicators for 2024 are promising, with growth already observed in the initial months and, with a robust pipeline of opportunities, we are poised for continued success and innovation.” Mark Segal Chief Executive Ofﬁcer Strategic Report 7 During the year, our library of proprietary games increased to 75 and we went live with 44 new partners, all of whom licensed the Company’s Slingo Originals content. the 65 games live in New Jersey. Ontario is continuing to grow quarterly, and we ended the year with our record month in that market. We have also seen great success with our bespoke games in North America. This has been led by our Slingo Red Wings game which BetMGM is using to acquire and retain players off the back of a promotion with the Detroit Red Wings. Europe Our growth in Europe has been a combination of launching with new partners and growing with existing ones. We have taken existing partners into new markets and we have launched Slingo content with 888 in Italy and Romania. We have also launched with market leading partners including Bet365 in the UK, Fortuna Group in Romania, Mr Green in Denmark, Sweden and Spain and with Betclic in Portugal. Revenues in Europe increased 33% to £10.5m in 2023 (2022: £7.9m) with increases in all our key markets of the UK, Italy, Spain and the Netherlands. We are still launching with new partners in these markets as we expand the audience of Slingo games. In December 2023, we obtained our supplier licence in Greece where we expect to go live with our ﬁrst partner shortly. This follows launching in the regulated Portuguese market in the third quarter of 2023. Social Our social business remains a key part of our activities as we bring the Slingo games to a wider audience. Revenue from social decreased by 5% to £3.5m (2022: £3.7m) whilst EBITDA reduced to £0.8m (2022: £1.5m). Social continued to make a cash contribution to the business. Post Period End and Outlook We continue to deliver on our clear strategy 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 I am pleased to see that Gaming Realms has continued to grow in the year to date, with content licensing revenues up 20% in the two months post-year-end compared with the same period in 2023. We have launched three games so far this year, including China Shores Slingo and the launch of Slingo Constitution Hill for the Cheltenham Festival and have gone live with 14 new partners. The early indicators for 2024 are promising, with growth already observed in the initial months and, with a robust pipeline of opportunities, we are poised for continued success. Mark Segal Chief Executive Ofﬁcer 28 March 2024 24% 5 million Unique player numbers in the year (2022: 4 million) Corporate GovernanceFinancial Statements 8 Gaming Realms plc Annual Report and Accounts 2023 Financial Review Scaled growth in new and existing regulated markets Gaming Realms had another strong year in 2023, continuing to deliver on the Group’s core strategy of scaling the licensing business through entry into newly regulated jurisdictions and enhancing the unique Slingo games portfolio. The Group delivered record revenue and EBITDA, while also converting this performance into cash, ending the year with a cash balance of £7.5m (2022: £2.9m). We have also continued to invest in the future success of the business, with increased development spend on the Group’s platform, distribution reach and pipeline of games content. Performance Total Group revenue increased 26% to £23.4m (2022: £18.7m), principally as a result of the continued growth in the licensing segment and in particular the content licensing business. The Group generated EBITDA of £9.2m (2022: £7.4m) and Adjusted EBITDA of £10.1m (2022: £7.8m). 2023 Revenue Other income Marketing expense Operating expense Administrative expense Adjusted EBITDA Share option and related charges Adjusting items EBITDA Amortisation of intangible assets Depreciation of property, plant and equipment Finance expense Finance income Proﬁt before tax 2022 Revenue Other income Marketing expense Operating expense Administrative expense Adjusted EBITDA Share option and related charges EBITDA Amortisation of intangible assets Depreciation of property, plant and equipment Finance expense Finance income Proﬁt before tax Adjusted EBITDA is EBITDA before share option and related charges, and adjusting items. A reconciliation between EBITDA and Adjusted EBITDA is shown below. Management considers Adjusted EBITDA the most appropriate measure to comment on the Group’s underlying ﬁnancial performance. 2023 £ 2022 £ EBITDA 9,235,802 7,446,038 Share option and related charges 632,304 351,726 Adjusting items 193,859 - Adjusted EBITDA 10,061,965 7,797,764 The £0.2m adjusting item relates to a management restructure in the year (2022: £Nil), which is considered by Management as signiﬁcant, non-recurring and outside the scope of the Group’s ordinary activities, so has been presented as an adjusting item. The £1.8m increase in EBITDA generated in 2023 compared with the prior year has seen the Group record another record proﬁt before tax of £5.2m (2022: £3.5m), an increase of £1.6m. Operating expenses are largely revenue related costs including license fees, hosting costs and platform provider fees. Total Group operating expenses were £4.8m, a 24% increase over the £3.9m in the prior year, driven by the growth in licensing segment revenues. Administrative expenses increased to £8.2m (2022: £6.9m) predominantly due to increased staff costs across the business required to deliver on the Group’s growth strategy, along with other incremental business expansion costs. Share option and related charges were £0.6m in 2023 (2022: £0.4m). The following table sets out the split of revenue, Adjusted EBITDA, EBITDA and proﬁt before tax by segment, which is discussed further below. Licensing £ 19,917,366 - (94,533) (3,442,127) (4,763,369) 11,617,337 (103,425) (193,859) Social Publishing £ 3,504,157 139,562 (338,030) (1,359,340) (1,141,114) 805,235 (9,927) - Head ofﬁce £ - - (96,110) - (2,264,497) (2,360,607) (518,952) - 11,320,053 795,308 (2,879,559) (2,488,290) (70,537) (17,279) 96,280 8,840,227 Licensing £ 14,937,036 - (38,391) (2,579,127) (4,176,964) 8,142,554 (149,753) 7,992,801 (1,996,909) (60,215) (10,087) 26,658 5,952,248 (930,857) (70,580) (17,688) (444,661) (135,142) (8,956) 2,820 16,425 (220,997) (3,451,893) Social Publishing £ 3,690,485 112,147 (17,164) (1,308,520) (1,001,569) 1,475,379 (1,666) 1,473,713 (943,384) (59,822) (11,239) Head ofﬁce £ 23,000 - (78,244) - (1,764,925) (1,820,169) (200,307) (2,020,476) (731,086) (138,478) (372,716) - 375,000 459,268 (2,887,756) Total £ 23,421,523 139,562 (528,673) (4,801,467) (8,168,980) 10,061,965 (632,304) (193,859) 9,235,802 (3,863,808) (276,259) (43,923) 115,525 5,167,337 Total £ 18,650,521 112,147 (133,799) (3,887,647) (6,943,458) 7,797,764 (351,726) 7,446,038 (3,671,379) (258,515) (394,042) 401,658 3,523,760 Strategic Report 9 26% 29% 155% £23.4m Group revenues (2022: £18.7m) £10.1m Adjusted EBITDA (2022: £7.8m) £7.5m Year-end cash balance (2022: £2.9m) Licensing Total licensing segment revenues increased 33% to £19.9m (2022: £14.9m), which can be broken down as follows: • Content licensing revenue growth of 30% to £18.6m (2022: £14.3m); and • Brand licensing revenue increased 110% to £1.3m (2022: £0.6m). The segment contributed £11.6m Adjusted EBITDA in 2023 (2022: £8.1m). The amortisation charge for the year increased to £2.5m (2022: £2.0m), reﬂecting the increased investment in development spend in the segment in recent years. Demonstrating this, capitalisation of development spend in the licensing segment increased 24% on the prior year to £3.8m (2022: £3.1m) as the business invests in its RGS platform and content. The impact of the segments increase in EBITDA offset by the increase in amortisation means the segment delivered a proﬁt before tax of £8.8m (2022: £6.0m). the business such as Switzerland and South Africa, the Group is well placed to take advantage of further growth opportunities in 2024. The high margin nature of content licensing revenues gives the business strong operational leverage. This is demonstrated by the 22% increase in total segmental expenses (excluding share option and related charges and adjusting items) to £8.3m (2022: £6.8m), while content licensing revenues have increased at a notably higher rate, 30% over the prior year. The Group released 10 new Slingo games to the market during 2023, including Slingo Space Invaders and Tetris Slingo, 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. Content licensing Content licensing remains the core focus of the Group, with the growth strategy being expansion into new markets as they regulate, growing our unique Slingo games portfolio and developing deeper relationships with our partners to maximise value and engagement. Despite there being no material new markets entered during 2023, content licensing revenue increased 30% to £18.6m (2022: £14.3m). This has been achieved through a blend of launching with 44 new partners in our current markets, delivering exciting and premium quality games during the year, and greater penetration with our existing partners. The 44 new partners we went live with during the year were across a number of global markets, with 24 in North America and 20 in Europe. A further 14 partners have gone live in 2024 to date. In the second half of 2023 the Group was granted supplier licenses in both West Virginia, USA and Greece. Along with other planned new markets for “We have also continued to invest in the future success of the business, with increased development spend on the Group’s platform, distribution reach and pipeline of games content.” Geoff Green Chief Financial Ofﬁcer Corporate GovernanceFinancial Statements10 Gaming Realms plc Annual Report and Accounts 2023 Financial Review Scaled growth in new and existing regulated markets We continue to partner with leading brands that will complement the Slingo format. During 2023 we launched exciting Slingo game collaborations with partners such as Tetris, King Show Games and Taito. A number of further agreements have been entered into to bring new Slingo collaborations to market in 2024, including Fowl Play and Gold Cash. Revenues from North America continued to signiﬁcantly grow for the content licensing business. Revenue from these markets in 2023 was £8.1m, a 26% increase on the £6.4m in the prior year. The region represents 43% of total content licensing revenues (2022: 45%). As new US states regulate igaming and we make further progress in the existing markets, we would expect the region to grow in prominence for the business. Brand licensing The increase in brand licensing revenues in 2023 compared with the prior year is predominantly the result of two brand deals completed in the year, including a deal with Entain to launch Slingo Bingo which went live in May 2023. 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 5% reduction in revenues to £3.5m (2022: £3.7m). During the year £0.3m was invested in marketing spend in the segment with the aim of driving player activity and engagement. As a result, the segment delivered £0.8m Adjusted EBITDA for the year, falling from £1.5m in the prior year. The amortisation charge related to the social publishing segment for the year was £0.9m, a 1% reduction on the prior year (2022: £0.9m). Cashﬂow and Balance Sheet The Group’s cash balance increased by £4.5m in 2023 to £7.5m at 31 December 2023 (2022: £2.9m). 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 £4.6m development costs capitalised in the year discussed above, the remaining movement in cash is substantially explained by the £9.3m (2022: £6.5m) cash inﬂow from operating activities. A reconciliation between proﬁt for the year and cash from operating activities is provided below. The Group remains debt free, following the full repayment of the convertible loan to Gamesys Group in the prior year. Net assets totaled £24.4m (2022: £17.9m). The Group capitalised £4.6m (2022: £4.0m) 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 Cash ﬂows from operating activities Proﬁt for the ﬁnancial year Adjustments for: 2023 £ 2022 £ 5,925,003 3,614,115 Depreciation of property, plant and equipment 276,259 258,515 Loss on disposal of property, plant and equipment 1,571 - 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 3,863,808 3,671,379 (139,562) (112,147) 185,184 121,962 (115,525) (401,658) 43,923 394,042 (757,666) (90,355) (105,268) 54,013 419,961 438,868 Operational costs increased by 4% from the previous year to £1.4m (2022: £1.3m) as a result of increases in the cost of hosting and third-party content fees. The segment continues to have a stable underlying cost base, with administrative expenses of £1.1m (2022: £1.0m). Decrease / (increase) in trade and other receivables 368,986 (1,973,278) Increase in trade and other payables Decrease in other assets 244,710 607,560 - 11,848 Net cash ﬂows from operating activities before taxation 10,211,384 6,594,864 Net tax paid in the year (935,660) (45,213) Net cash ﬂows from operating activities 9,275,724 6,549,651 Strategic Report 11 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 £0.8m (2022: £0.1m) largely relates to the recognition of an additional £1.6m deferred tax asset (see Note 13) and £0.7m corporation tax charge in overseas jurisdictions (2022: £0.3m). The Group delivered record revenue and EBITDA, while also converting this performance into cash. Geoff Green Chief Financial Ofﬁcer 28 March 2024 The high margin nature of content licensing gives the business strong operational leverage. Corporate GovernanceFinancial Statements12 Gaming Realms plc Annual Report and Accounts 2023 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 2023. 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. 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. 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, Chief Executive Ofﬁcer and Chief Financial 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 2023 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, Chief Executive Ofﬁcer and Chief Financial Ofﬁcer have conducted a number of “online” presentations and interviews in order to have greater transparency with shareholders. AGM All three of our Executive Directors attended the 2023 AGM and an average of 42% of the total issued share capital was voted across all resolutions. Shareholders were given the opportunity to send in questions in advance to be answered by the directors at the 2023 AGM on the Group’s strategy and future outlook. The 2024 AGM will be held on 12 June 2024. 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 13 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 3.5 million such options (see Note 23) 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 2023 working with the Regulators on our successful applications for supplier licenses in West Virginia, Greece and Sweden, as well as our pending application in British Columbia. Corporate GovernanceFinancial Statements14 Gaming Realms plc Annual Report and Accounts 2023 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; • UK Gambling Commission; • New Jersey Division for Gaming Enforcement; • Michigan Gaming Control Board; • Pennsylvania Gaming Control Board; • Connecticut Department of Consumer Protection; • Alcohol and Gaming Commission of Ontario; • National Gambling Ofﬁce of Romania; • Malta Gaming Authority; • Swedish Gambling Authority; • Greek Hellenic Gaming Commission; and • West Virginia Lottery Commission. The Group is part way through the process of acquiring a supplier license in British Columbia, and will be pursuing further licenses in regulated markets in 2024, with a focus on U.S. markets as they open. In late 2020, the UK Government launched a review of the Gambling Act 2005, with the aim to ensure it is “ﬁt for the digital age”. The initial ﬁndings report was published in 2023, however the detailed consultations on each section are still ongoing, with new guidance and regulations yet to be issued. 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 potential disruption in the UK market. 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 Europe. 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 15 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 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 2023 Strategic Report on pages 1 to 15 has been approved by the Board of Directors. On behalf of the Board: Mark Segal Chief Executive Ofﬁcer 28 March 2024 Corporate GovernanceFinancial Statements 1616 Gaming Realms plc Annual Report and Accounts 2023 Board and Executive Management Michael Buckley Executive Chairman Mark Segal Chief Executive Ofﬁcer Geoff Green Chief Financial Ofﬁcer Geoff Green was appointed as Gaming Realms’ Chief Financial 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. 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. 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, part of the ITV Network, 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. Corporate Governance 1717 JR MW MB AM Jim Ryan Non-executive Director Mark Wilson Non-executive Director Mark Blandford Non-executive Director Anna Massion 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 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. 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. 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 23 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. Financial StatementsStrategic Report 1818 Gaming Realms plc Annual Report and Accounts 2023 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 £4.6m (2022: £4.0m) of development costs (see Note 15). During the year, the Group claimed Research and Development relief as per Notes 4 and 13 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 28 March 2024 and signed on its behalf by Mark Segal Chief Executive Ofﬁcer 28 March 2024 Directors’ Report The Directors present their Annual Report together with the audited ﬁnancial statements for the year ended 31 December 2023. 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 2023. 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 • Geoff Green • Anna Massion Jim Ryan • • Mark Wilson • Mark Blandford 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 30. The Company will not be paying a dividend this year (2022: none). Post balance sheet events There were no signiﬁcant events impacting the Company that occurred after 31 December 2023. 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 14, 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 21 to the ﬁnancial statements. Corporate Governance 1919 Statement of Directors’ Responsibilities 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 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. Financial StatementsStrategic Report2020 Gaming Realms plc Annual Report and Accounts 2023 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 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 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. Corporate Governance 2121 5. Maintain the board as a well- functioning, balanced team led by the chair The Board comprises the Executive Chairman, two Executive Directors and four Non-Executive Directors. Michael Buckley, the Executive Chairman, is responsible for the running of the Board and is supported by Mark Segal and Geoff Green, the Chief Executive Ofﬁcer and Chief Financial Ofﬁcer respectively. 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 16 board meetings. Attendance records were: Board Member Meetings Attended Michael Buckley Mark Segal Geoff Green* Jim Ryan Mark Wilson Mark Blandford Anna Massion 16 16 15 16 16 16 16 6. Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities * Geoff Green, appointed on 1 February 2023 was eligible to attend 15 meetings 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 16 of the 2023 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. Financial StatementsStrategic Report2222 Gaming Realms plc Annual Report and Accounts 2023 Corporate Governance continued 7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement 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 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 may be required; and • Succession planning. 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 Executive Ofﬁcer, 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. Corporate Governance 2323 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 Anna Massion and comprises Jim Ryan and Mark Wilson. The Company will continue to review the corporate governance framework as the business grows. Roles of the Board, Executive 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 Financial StatementsStrategic Report24 Gaming Realms plc Annual Report and Accounts 2023 • 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. Independent auditor’s report to the members of Gaming Realms plc 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 2023 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 2023 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 material accounting information. 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 25 Overview Coverage Key audit matters 98% (2022: 100%) of Group proﬁt before tax 100% (2022: 100%) of Group revenue 100% (2022: 99%) of Group total assets Revenue Recognition (licensing revenue) Capitalisation of development cost related to platform 2023 2022 Materiality Group ﬁnancial statements as a whole £416k (2022: £225k) based on 8.1% of Group proﬁt before tax (2022: 1.2% of Group revenue) 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 speciﬁed audit procedures on certain account balances and analytical review procedures by the Group audit team. Strategic ReportCorporate Governance26 Gaming Realms plc Annual Report and Accounts 2023 Independent auditor’s report to the members of Gaming Realms plc continued 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. Key audit matter Revenue recognition – Licencing Revenue (with reference to notes 1 and 3) Capitalisation of development costs (with reference to notes 1 and 15) 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 required by Directors 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 £19.9m (2022: £14.9m). 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 existing and new contracts: • We reviewed the terms of a sample of agreements 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. Key observations Based on the work performed, we consider that revenue has been recognised appropriately and in accordance with the Group’s revenue recognition accounting policy and IFRS 15 requirements. The Group incurs material expenditure on the internal development of intangible assets for RGS platform. Capital costs comprise of payroll and external development costs. Such expenditure should only be capitalised when it meets the criteria of applicable accounting standards. Due to judgement being required by Directors in determining the projects and 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. Our procedures included the following: • We assessed whether the capitalisation policies adopted by the Group comply with applicable accounting standards. • We challenged Director’s project analysis to check that the projects capitalised met the criteria of applicable accounting standards. This included: - For a sample of projects ensuring that projects met capitalisation criteria of IAS 38; - 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. Capitalised development costs in the year for RGS platform were £1.5m (2022: £1.5m). Key observations Based on the work performed, we consider Director’s judgements to be appropriate and adequate. Financial Statements 27 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 £000 225 Based on 1.2% of Group revenue. Revenue was a fundamental KPI and a key focus area for investors. 2023 £000 139 2022 £000 63 Based on 1% of total assets of Parent Company. Based on 1% of total assets of Parent Company. Total assets are considered to be the most appropriate benchmark as the principal activity of the Parent Company is a holding company. Materiality 2023 £000 416 Basis for determining materiality Based on 8.1% of Group proﬁt before tax. Proﬁt before tax is considered as the most appropriate benchmark in current year instead of revenue. As the Group has been proﬁtable since past few years and proﬁt before tax is the key focus area for the stakeholders therefore, materiality is based on proﬁt before tax. Further, Materiality has also been benchmarked against prior year basis and underlying performance. Rationale for the benchmark applied Performance materiality Basis for determining performance materiality Rationale for the percentage applied for performance materiality 312 169 104 47 Based on 75% of the Group Materiality. Based on 75% of the Parent Company Materiality. Based on history of minimal adjustments, with few accounts subject to estimation and management’s attitude to adjustments. Based on history of minimal adjustments, few accounts subject to estimation and management’s attitude to adjustments. Component materiality For the purposes of our Group audit opinion, we set materiality for each signiﬁcant component of the Group and other components subject to speciﬁed audit procedures, apart from the Parent Company whose materiality is set above, based on a percentage of between 50% and 80% (2022: 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 £139k to £333k (2022: £112k to £220k). In the audit of each component, we further applied performance materiality levels of 75% (2022: 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 £21k (2022: £11k). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds. Strategic ReportCorporate Governance28 Gaming Realms plc Annual Report and Accounts 2023 Independent auditor’s report to the members of Gaming Realms plc continued 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. 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: Financial Statements 29 Non-compliance with laws and regulations Based on: • Our understanding of the Group and the industry in which it operates; • Discussion with management, those charged with governance, legal and Compliance Director and Audit Committee; and • Obtaining an understanding of the Group’s policies and procedures regarding compliance with laws and regulations; We considered the signiﬁcant laws and regulations to be Companies Act 2006, applicable accounting frameworks and AIM rules. The Group is also subject to laws and regulations in jurisdictions where it holds gaming licenses. Non-compliance of these laws and regulations could have a material effect on the amount or disclosures in the ﬁnancial statements, for example through the imposition of ﬁnes or litigations. Our procedures in respect of the above included: • Enquiries of Directors and those responsible for legal and compliance procedures to understand how the Group is complying with those legal and regulatory frameworks; • We assessed compliance with laws and regulations through enquiry with Directors, the Audit Committee and the Legal and Compliance Director and through review of minutes of meeting of those charged with governance for any instances of non- compliance with laws and regulations; • Conﬁrmation that the Group and Parent Company held gaming licenses for various territories of operation through inspection of licenses; • Review of correspondence with regulatory and tax authorities for any instances of non-compliance with laws and regulations; • Review of ﬁnancial statement disclosures against the requirements of the applicable accounting framework and agreeing to supporting documentation; • Involvement of tax specialists in the audit; • Review of legal expenditure accounts to understand the nature of expenditure incurred. Fraud We assessed the susceptibility of the ﬁnancial statements to material misstatement, including fraud. Our risk assessment procedures included: • Enquiry with Directors and those charged with governance regarding any known or suspected instances of fraud; • Obtaining an understanding of the Group’s policies and procedures relating to: - Detecting and responding to the risks of fraud; and - Internal controls established to mitigate risks related to fraud. • Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud; • Discussion amongst the engagement team as to how and where fraud might occur in the ﬁnancial statements; • Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud. Based on our risk assessment, we identiﬁed fraud risks in relation to management override of controls and overstatement of revenue during the year speciﬁcally through manual journal entries where incentive might exist to accelerate earnings: • Testing journal entries throughout the year, particularly on revenue and consolidation journals, which met a deﬁned risk criteria, by agreeing to supporting documentation where we considered there to be a higher risk of potential fraud and other adjustment; • Assessing whether the judgements made by Directors, are indicative of a potential bias, and evaluating the business rationale of any signiﬁcant transactions that are unusual or outside the normal course of business. This included those set out in the key audit matters section of our report; • Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud. We also communicated relevant identiﬁed laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities 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. Charles Morelli (Senior Statutory Auditor) For and on behalf of BDO LLP, Statutory Auditor London, United Kingdom 28 March 2024 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). Strategic ReportCorporate Governance30 Gaming Realms plc Annual Report and Accounts 2023 Consolidated Statement of Comprehensive Income For the year ended 31 December 2023 Revenue Other income Marketing expenses Operating expenses Administrative expenses Share option and related charges EBITDA before adjusting items Adjusting items EBITDA Amortisation of intangible assets Depreciation of property, plant and equipment 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 (loss) / gain arising on translation of foreign operations Total other comprehensive income Total comprehensive income Proﬁt attributable to: Owners of the parent Total comprehensive income attributable to: Owners of the parent Note 3 4 23 11 5 11 15 16 12 12 13 2023 £ 2022 £ 23,421,523 18,650,521 139,562 112,147 (528,673) (133,799) (4,801,467) (3,887,647) (8,168,980) (6,943,458) (632,304) (351,726) 9,429,661 7,446,038 (193,859) - 9,235,802 7,446,038 (3,863,808) (3,671,379) (276,259) (43,923) 115,525 (258,515) (394,042) 401,658 5,167,337 3,523,760 757,666 90,355 5,925,003 3,614,115 (105,004) (105,004) 131,432 131,432 5,819,999 3,745,547 5,925,003 3,614,115 5,925,003 3,614,115 5,819,999 3,745,547 5,819,999 3,745,547 Earnings per share Basic Diluted 14 14 Pence 2.02 1.96 Pence 1.24 1.21 *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 34 to 62 form part of these ﬁnancial statements. Consolidated Statement of Financial Position As at 31 December 2023 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 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 31 31 December 2023 £ 31 December 2022 £ Note 15 16 13 17 13,272,711 12,422,852 367,092 1,891,000 139,531 535,409 287,407 138,798 15,670,334 13,384,466 18 5,060,528 5,336,330 7,455,316 2,922,775 12,515,844 8,259,105 28,186,178 21,643,571 19 20 13 20 22 22 3,383,248 3,270,319 52,135 217,731 3,435,383 3,488,050 219,921 133,445 353,366 75,592 167,680 243,272 3,788,749 3,731,322 24,397,429 17,912,249 29,366,782 29,200,676 87,732,888 87,653,774 (67,673,657) (67,673,657) 1,444,697 1,549,701 (26,473,281) (32,818,245) 24,397,429 17,912,249 The notes on pages 34 to 62 form part of these ﬁnancial statements. The ﬁnancial statements were approved and authorised for issue by the Board of Directors on 28 March 2024 and were signed on its behalf by: Mark Segal Chief Executive Ofﬁcer Strategic ReportCorporate Governance 32 Gaming Realms plc Annual Report and Accounts 2023 Consolidated Statement of Cash Flows For the year ended 31 December 2023 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 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 Decrease / (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 Interest received Net cash used in investing activities Financing activities 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 ﬁnancing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Exchange gain / (loss) on cash and cash equivalents Cash and cash equivalents at end of year The notes on pages 34 to 62 form part of these ﬁnancial statements. Note 2023 £ 2022 £ 16 16 15 4 12 12 13 23 16 15 15 12 20 22 5,925,003 3,614,115 276,259 1,571 258,515 - 3,863,808 3,671,379 (139,562) (112,147) 185,184 121,962 (115,525) (401,658) 43,923 (757,666) (105,268) 419,961 394,042 (90,355) 54,013 438,868 368,986 (1,973,278) 244,710 - 607,560 11,848 10,211,384 6,594,864 (935,660) (45,213) 9,275,724 6,549,651 (89,715) (157,751) (124,104) (125,684) (4,633,403) (4,009,171) 85,679 - (4,795,190) (4,258,959) - (3,375,000) (236,659) (163,638) 245,220 (28,538) 13,332 (186,880) (19,977) (3,712,186) 4,460,557 (1,421,494) 2,922,775 4,412,375 71,984 (68,106) 7,455,316 2,922,775 Financial Statements 33 Consolidated Statement of Changes in Equity For the year ended 31 December 2023 1 January 2022 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 23) Share capital £ Share premium £ Merger reserve £ Foreign Exchange Reserve £ Retained earnings £ Total to equity £ 28,970,262 87,370,856 (67,673,657) 1,418,269 (36,977,228) 13,108,502 - - - - - - - - - - - - - - - - 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 Exercise of options (Note 22) 13,332 Conversion of loan 31 December 2022 217,082 282,918 29,200,676 87,653,774 (67,673,657) 1,549,701 (32,818,245) 17,912,249 1 January 2023 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 23) Exercise of options (Note 22) 31 December 2023 29,200,676 87,653,774 (67,673,657) 1,549,701 (32,818,245) 17,912,249 - - - - - - - - 166,106 79,114 - - - - - - 5,925,003 5,925,003 (105,004) - (105,004) (105,004) 5,925,003 5,819,999 - - 419,961 419,961 - 245,220 29,366,782 87,732,888 (67,673,657) 1,444,697 (26,473,281) 24,397,429 The notes on pages 34 to 62 form part of these ﬁnancial statements. Strategic ReportCorporate Governance 34 Gaming Realms plc Annual Report and Accounts 2023 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 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. 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 2026 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 2025, 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. Adoption of new and revised standards The following amendments are effective for the year 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). These amendments did not have a material impact on the Group, however the accounting policies included within this note have changed as a result. 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. Financial Statements 35 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 following amendments are effective for the period beginning 1 January 2025: » IAS 21 The Effects of Changes in Foreign Exchange rates (Amendment- Lack of exchangeability) 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. 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. Adjusted EBITDA The Board of Directors believes that in order to best represent the trading performance and results of the Group, the reported numbers should exclude certain one-off items. The Group therefore presents adjusted results, as described in Note 5, which differ from statutory results due to the exclusion of these items. Management regularly uses the adjusted ﬁnancial measures internally to understand, manage and evaluate the business and make operating decisions. These adjusted measures are among the primary factors management uses in planning for and forecasting future periods. EBITDA is a non-GAAP Company speciﬁc measure deﬁned as proﬁt or loss before tax adjusted for ﬁnance income and expense, depreciation and amortisation. Adjusted EBITDA excludes non-recurring signiﬁcant items which are outside the normal scope of the Group’s ordinary activities which the directors consider to be one-off in nature that should be brought to the reader’s attention in understanding the Group’s ﬁnancial performance. The adjusting items are separately disclosed in order to enhance the reader’s understanding of the Group’s proﬁtability and cash ﬂow generation. Adjusting items in the current year relate to management restructuring costs. Strategic ReportCorporate Governance 36 Gaming Realms plc Annual Report and Accounts 2023 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 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 11. 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 37 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. 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 ReportCorporate Governance38 Gaming Realms plc Annual Report and Accounts 2023 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 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. 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. 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) The Group has material development spend on internally developed products which fall into two categories; (i) build of new games content to be released in the licensing and social publishing segments, and (ii) platform enhancements and development. 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 used or sold; » adequate resources are available to complete the development; » there is an intention to complete and use or sell the product; » the Group is able to use or sell the product; » use or sale of the product will generate future economic beneﬁts; and » expenditure on the project can be measured reliably. Once a product is either used or distributed, capitalised development costs in relation to that product are amortised over the period the Group expects to beneﬁt from using or selling the product 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. Financial Statements 39 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: 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 ReportCorporate Governance40 Gaming Realms plc Annual Report and Accounts 2023 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 2. Critical ccounting 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 assumptions 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 15. (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 periodically reviewed to conﬁrm they are still appropriate. (c) Recognition of deferred tax assets The Group has material unused tax losses carried forward at the balance sheet date. A deferred tax asset of £1.9m (2022: £0.3m) has been recognised in respect of the Group’s historic UK trading losses which are being carried forward (see Note 13). The increase in the asset recognised compared with the prior year is a result of the improvement in current trading along with the Directors future anticipated performance of the Group. 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 13. Financial Statements 41 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 commitments 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 £4.6m (2022: £4.0m). See Note 15. (c) 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 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. To the extent that the ﬁnal outcome of such matters differs to management’s assessment at any reporting dates, such differences 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 25 to the ﬁnancial statements. Strategic ReportCorporate Governance42 Gaming Realms plc Annual Report and Accounts 2023 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 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 11. B2B licensing revenue by primary geographical market is split according to the location of the operator. In 2023 there was one customer (2022: one customer) who individually accounted for more than 10% of total revenue of the Group. Total revenue from this customer in 2023 was £2,344,286 (2022: £2,672,153). 2023 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 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 Licensing £ Social publishing £ Other £ Total £ 1,101,487 - 8,099,555 3,504,157 1,093,050 3,766,252 4,203,155 1,653,867 - - - - 19,917,366 3,504,157 - 3,504,157 19,917,366 - 19,917,366 3,504,157 - - - - - - - - - - 1,101,487 11,603,712 1,093,050 3,766,252 4,203,155 1,653,867 23,421,523 3,504,157 19,917,366 23,421,523 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 Financial Statements 43 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 2023 £ - - 2022 £ 600,000 600,000 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 2023 £ 2022 £ 139,562 112,147 139,562 112,147 5. Adjusted EBITDA EBITDA is proﬁt before interest, tax, depreciation and amortisation and is a non-GAAP measure. Adjusted EBITDA is EBITDA before adjusting items, which are items that Management considers to be signiﬁcant, non-recurring and outside the scope of the Group’s ordinary activities that may distort an understanding of ﬁnancial performance or impair comparability. Adjusted EBITDA is stated before adjusting items as follows: Restructuring costs Adjusting items Restructuring costs of £0.2m in 2023 (2022: £Nil) relate to a management restructure during the year. 2023 £ 193,859 193,859 2022 £ - - Strategic ReportCorporate Governance 44 Gaming Realms plc Annual Report and Accounts 2023 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 6. 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 Low value and short term leases Foreign exchange loss/ (gain) 7. 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 - Other Note 10 23 16 15 2023 £ 2022 £ 5,154,730 4,596,796 2,905,326 2,582,636 1,968,783 1,528,098 911,676 738,919 632,304 351,726 528,673 133,799 276,259 258,515 3,863,808 3,671,379 4,325 - 144,165 (111,557) 2023 £ 35,000 98,000 - 38,612 20,000 - 2022 £ 30,000 90,750 3,000 50,785 54,850 4,713 191,612 234,098 8. 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 Compensation for loss of ofﬁce 2023 £ 2022 £ 2,301,993 1,914,893 43,805 40,162 368,746 394,149 74,350 - 2,788,894 2,349,204 Financial Statements 45 9. Directors’ remuneration The following table presents the Directors’ remuneration of the Company for the year ended 31 December 2023. Michael Buckley Mark Segal Geoff Green Jim Ryan Mark Wilson Mark Blandford Anna Massion Salary and fees £ Bonus £ Beneﬁts £ 2023 Total £ 2022 Total £ 290,000 147,253 - 437,253 357,500 315,000 222,615 150,000 61,941 16,441 10,447 50,000 50,000 50,000 53,750 - - - - - - - - 554,056 372,896 222,388 50,000 50,000 50,000 53,750 - 50,000 50,000 50,000 8,333 958,750 431,809 26,888 1,417,447 888,729 The Directors’ ordinary shares in the Company, were as follows: Michael Buckley Mark Segal Jim Ryan Mark Wilson Mark Blandford Anna Massion 2023 No. of shares 2022 No. of shares 25,700,000 25,700,000 740,761 740,761 1,153,845 1,153,845 1,153,845 1,153,845 12,598,738 11,730,000 33,250 - 41,380,439 40,478,451 Directors’ interests in long-term incentive plans The Directors’ interests in share options, over ordinary shares in the Company, were as follows: Michael Buckley Mark Segal Options at 1 Jan 2023 Options granted Options exercised Options lapsed Options at 31 Dec 2023 Exercise price Date of grant 1 2 3 4 5 1 2 3 4 5 2,000,000 5,769,229 1,000,000 500,000 - - - - - 1,000,000 3,000,000 3,076,923 1,000,000 500,000 - - - - - 1,000,000 - - - - - - - - - - - - - - - - - - - - 2,000,000 5,769,229 £0.10 02-Jun-20 £0.20 28-Jul-20 1,000,000 £0.325 06-Jan-22 500,000 £0.325 06-Jan-22 1,000,000 £0.00 02-Aug-23 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 1,000,000 £0.00 02-Aug-23 Strategic ReportCorporate Governance 46 Gaming Realms plc Annual Report and Accounts 2023 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 9. Directors’ remuneration (continued) Geoff Green Options at 1 Jan 2023 Options granted Options exercised Options lapsed Options at 31 Dec 2023 Exercise price Date of grant 350,000 50,000 150,000 - - - - 500,000 3 5 - - - - - - - - 350,000 £0.10 01-May-20 50,000 £0.20 26-Nov-20 150,000 £0.325 06-Jan-22 500,000 £0.00 02-Aug-23 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. 5 On 2 August 2023, the Company granted these equity settled awards to certain Directors, which vest on 30 June 2026. 10. Employee beneﬁt expenses 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 2023 were £68,326 (2022: £20,600). The average number of employees was 78 (2022: 67). Employee beneﬁt expenses (including directors) comprise: Wages and salaries Share option and related charges (Note 23) Social security contributions and similar taxes Pension contributions Staff costs capitalised in respect of internally generated intangible assets 2023 £ 2022 £ 6,572,848 5,615,054 632,304 351,726 668,009 585,604 224,994 179,845 8,098,155 6,732,229 (2,311,121) (1,783,707) 5,787,034 4,948,522 Financial Statements 47 11. 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 2023 Revenue Other income Marketing expense Operating expense Administrative expense Share option and related charges EBITDA before adjusting items Adjusting items EBITDA Amortisation of intangible assets Depreciation of property, plant and equipment Finance expense Finance income Profit before tax 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 Licencing £ Social Publishing £ 19,917,366 3,504,157 - 139,562 Head Ofﬁce £ Total £ - - 23,421,523 139,562 (94,533) (338,030) (96,110) (528,673) (3,442,127) (1,359,340) - (4,801,467) (4,763,369) (1,141,114) (2,264,497) (8,168,980) (103,425) (9,927) (518,952) (632,304) 11,513,912 795,308 (2,879,559) 9,429,661 (193,859) - - (193,859) 11,320,053 795,308 (2,879,559) 9,235,802 (2,488,290) (930,857) (444,661) (3,863,808) (70,537) (17,279) 96,280 (70,580) (17,688) 2,820 (135,142) (276,259) (8,956) 16,425 (43,923) 115,525 8,840,227 (220,997) (3,451,893) 5,167,337 Licencing £ 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) (4,176,964) (1,001,569) (1,764,925) (6,943,458) (149,753) (1,666) (200,307) (351,726) 7,992,801 1,473,713 (2,020,476) 7,446,038 (1,996,909) (943,384) (731,086) (3,671,379) (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 The Group’s non-current assets (excluding deferred tax assets) by geographical area are detailed below. UK USA Canada Malta 2023 £ 2022 £ 12,723,635 12,038,678 1,642 1,040 1,054,057 1,043,871 - 13,470 13,779,334 13,097,059 Strategic ReportCorporate Governance 48 Gaming Realms plc Annual Report and Accounts 2023 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 12. Finance income and expense Finance income Interest received 2023 £ 2022 £ 85,679 - Net release of derivative liability on non-conversion of loan 21 - 375,000 Interest income on unwind of deferred income Total ﬁnance income 29,846 26,658 115,525 401,658 Finance expense Bank interest paid and bank fees Fair value movement on derivative liability Effective interest on other creditor Interest expense on lease liability Total ﬁnance expense 13. Taxation Current tax Current tax charge Adjustment for current tax of prior periods Total current tax Deferred tax Recognition of deferred tax asset Overseas temporary differences Total deferred tax credit Total tax credit 21 21 20 28,538 20,445 - - 15,385 43,923 112,000 237,157 24,440 394,042 2023 £ 2022 £ (745,653) (312,922) 43,160 (8,414) (702,493) (321,336) 1,603,593 287,407 (143,434) 124,284 1,460,159 411,691 757,666 90,355 Financial Statements 49 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 23.52% (2022: 19.0%) Expenses not deductible for tax purposes Income not chargeable for tax purposes Share scheme deductions under Part 12 CTA 09 Effects of overseas taxation Adjustment for tax in respect of prior periods Research and development tax credit Movement in deferred tax not previously recognised Difference between current and deferred tax rates Recognition of deferred tax asset on losses previously unrecognised 2023 £ 2022 £ 5,167,337 3,523,760 1,215,358 47,717 (32,825) (62,044) 292,759 (43,160) 669,514 141,812 (71,278) - (93,850) 8,414 (159,701) (131,100) (590,553) (326,460) (30,116) - (1,395,101) (287,407) (757,666) (90,355) The Group has a net corporation tax payable at the balance sheet date of £34,670 (2022: £276,123) being the £702,493 current tax charge for the year, less £935,660 payments made during the year (including settlement of the brought forward payable) and £8,286 of foreign exchange differences relating to US corporation tax payments. Deferred Tax The analysis of deferred tax included in the ﬁnancial statements at the end of the year is as follows: Deferred tax assets Tax losses carried forward Deferred tax assets Deferred tax liabilities Overseas temporary differences Business combinations - acquired intangibles Deferred tax liabilities Net deferred tax asset The deferred tax included in the Group income statement is as follows: Deferred tax asset recognised for losses Overseas temporary differences Unwind of deferred tax liability on business combinations Exchange differences Total deferred tax credit 2023 £ 2022 £ 1,891,000 287,407 1,891,000 287,407 (219,921) - - (75,592) (219,921) (75,592) 1,671,079 211,815 2023 £ 2022 £ 1,603,593 287,407 (219,921) - 75,592 124,284 895 - 1,460,159 411,691 Strategic ReportCorporate Governance 50 Gaming Realms plc Annual Report and Accounts 2023 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 13. Taxation (continued) The deferred tax movement on the balance sheet is as follows: As at the start of the year Deferred tax asset recognised for losses Unwind of deferred tax liability on business combinations Overseas temporary differences Exchange differences As at the end of the year 2023 £ 2022 £ 211,815 (199,876) 1,603,593 75,592 (219,026) (895) 287,407 124,284 - - 1,671,079 211,815 The Group has unused UK tax losses carried forward as at the balance sheet date of £28.4m (2022: £30.6m) and US tax losses carried forward of $3.9m (2022: $3.9m). Given the Group now has a three-year track record of delivering pre-tax proﬁts, along with expected future proﬁtability levels forecast by management, the Directors have recognised a deferred tax asset of £1.9m (2022: £0.3m) relating to unused tax losses that are expected to be offset against the Group’s taxable proﬁts generated over the following two accounting periods (2022: one accounting period). The Directors consider two years to be prudent and appropriate for a number of factors, including the changing and uncertain regulatory environment, notably but not limited to the UK, and uncertainty around the timing of entry into planned new markets. Management have based their assessment on the latest Group forecasts approved by the Board. No deferred tax has been recognised on £20.8m (2022: £29.4m) of UK losses carried forward that are not expected to be utilised over the next two accounting periods. No deferred tax has been recognised on $3.9m (2022: $3.9m) of US tax losses carried forward, as the Directors do not anticipate future proﬁts in the Company where these losses reside. No deferred tax asset is recognised in respect of potential share scheme deductions under part 12 of the Corporation Tax Act 2009, since management have restricted the deferred tax asset recorded on unused UK losses to two years. The unrecognised deferred tax asset on unexercised share options is £1,057,112. 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. 14. 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 23) and a convertible loan that was repaid in full during the prior year. The convertible loan was anti-dilutive in the prior year so was not included in the diluted EPS calculation. Proﬁt after tax attributable to the owners of the parent Company Financial Statements 51 2023 £ 2022 £ 5,925,003 3,614,115 Number Number Denominator - basic Weighted average number of ordinary shares 292,715,123 291,655,659 292,715,123 291,655,659 9,961,871 7,057,892 302,676,994 298,713,551 Pence Pence 2.02 1.96 1.24 1.21 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 15. Intangible assets Cost Goodwill £ Customer database £ Software £ Development costs £ Licenses £ Domain names £ Intellectual Property £ Total £ At 1 January 2022 6,673,924 1,490,537 1,354,602 17,843,431 247,322 8,874 5,859,424 33,478,114 Additions - Exchange differences 125,326 - - 54,229 4,009,171 71,455 - 14,080 694 - - - - 4,134,855 140,100 At 31 December 2022 6,799,250 1,490,537 1,408,831 21,866,682 319,471 8,874 5,859,424 37,753,069 Additions Disposals - - Exchange differences (53,694) - 16,627 4,633,403 141,124 (5,124) - - - - (80,398) (36,573) (292) - - - - - - 4,791,154 (85,522) (90,559) At 31 December 2023 6,745,556 1,485,413 1,425,458 26,463,512 379,905 8,874 5,859,424 42,368,142 Accumulated amortisation and impairment At 1 January 2022 1,650,000 1,490,537 1,310,294 12,475,353 43,469 8,874 4,683,679 21,662,206 Amortisation charge Exchange differences - - - - 73,177 2,781,155 85,961 - (3,368) - - - 731,086 3,671,379 - (3,368) At 31 December 2022 1,650,000 1,490,537 1,383,471 15,253,140 129,430 8,874 5,414,765 25,330,217 Amortisation charge Disposals Exchange differences - - - - 33,347 (5,124) - - - 3,239,928 - (13,137) 145,874 (80,398) 65 - - - 444,659 3,863,808 - - (85,522) (13,072) At 31 December 2023 1,650,000 1,485,413 1,416,818 18,479,931 194,971 8,874 5,859,424 29,095,431 Net book value At 31 December 2022 5,149,250 At 31 December 2023 5,095,556 - - 25,360 6,613,542 190,041 8,640 7,983,581 184,934 - - 444,659 12,422,852 - 13,272,711 * Brought forward cost and accumulated amortisation has been updated. No changes to net book value at 31 December 2022 or 31 December 2023 in total or by category. The Group has no contractual commitments for development costs (2022: none). Strategic ReportCorporate Governance 52 Gaming Realms plc Annual Report and Accounts 2023 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 15. Intangible assets (continued) Goodwill The Group has 2 Cash Generating Units (“CGUs”) (2022: 2) for which the carrying amount of goodwill is allocated as follows: Licensing Social Publishing 2023 £ 2022 £ 4,929,352 4,975,634 166,204 173,616 5,095,556 5,149,250 Impairment of goodwill 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 2023 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 2026, 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: 2023 Licensing Social Publishing 2022 Licensing Social Publishing Discount rate Long−term growth rate * 22.8% 22.8% 19.0% 19.0% 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. Financial Statements 53 16. Property, plant and equipment Cost At 1 January 2022 Additions Disposals Exchange differences At 31 December 2022 Additions Disposals Exchange differences At 31 December 2023 Accumulated deprecation At 1 January 2022 Depreciation charge Disposals Exchange differences At 31 December 2022 Depreciation charge Disposals Exchange differences At 31 December 2023 Net book value At 31 December 2022 At 31 December 2023 ROU lease assets* £ Leasehold improvements £ Computers and related equipment £ Ofﬁce furniture and equipment £ Total £ 720,042 181,228 (121,966) 5,021 784,325 67,481 - - 329,375 121,306 - 65,262 1,182,160 2,798 305,332 - (121,966) 279 4,038 1,825 11,163 67,760 454,719 69,885 1,376,689 25,893 - (4,686) 805,532 - - (190) 67,570 73,876 (3,362) (4,223) 521,010 15,839 - (1,292) 84,432 115,608 (3,362) (10,391) 1,478,544 405,927 37,202 198,057 56,395 154,349 13,579 84,605 5,982 697,581 258,515 (121,966) - - - (121,966) 3,215 191 2,196 1,548 441,525 50,972 284,858 63,925 159,083 12,311 - (258) 600,350 342,800 205,182 - (190) 63,093 16,788 4,477 101,360 (1,791) (2,686) 381,741 3,505 - (1,162) 66,268 7,150 841,280 276,259 (1,791) (4,296) 1,111,452 169,861 139,269 5,960 18,164 535,409 367,092 * See Note 20 for further analysis by lease category. Strategic ReportCorporate Governance 54 Gaming Realms plc Annual Report and Accounts 2023 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 17. Other assets Other assets 2023 £ 2022 £ 139,531 138,798 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 2023 £ 2022 £ 3,024,745 3,497,710 134,558 223,113 145,506 280,912 1,678,112 1,412,202 5,060,528 5,336,330 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 2023. 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 (2022: None). 19. Trade and other payables Trade payables Other payables Tax and social security Accruals and deferred income 2023 £ 727,706 157,785 368,894 2022 £ 669,024 118,777 464,557 2,128,863 2,017,961 3,383,248 3,270,319 The carrying value of trade and other payables classiﬁed as ﬁnancial liabilities measured at amortised cost approximates fair value. Financial Statements 55 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 2022 Additions Amortisation Exchange differences At 31 December 2022 Additions Amortisation Exchange differences At 31 December 2023 Lease liabilities At 1 January 2022 Additions Lease payments Interest expense Exchange differences At 31 December 2022 Additions Lease payments Interest expense Exchange differences At 31 December 2023 Ageing of lease liabilities Current Non-current Land and buildings £ Motor vehicles £ 308,017 181,228 (150,861) 1,805 340,189 25,893 (156,472) (4,428) 205,182 6,099 - (3,488) - 2,611 - (2,611) - - Land and buildings £ Motor vehicles £ 335,176 181,228 (160,071) 24,219 2,267 382,819 25,893 (234,010) 15,328 (4,450) 185,580 Total £ 314,116 181,228 (154,349) 1,805 342,800 25,893 (159,083) (4,428) 205,182 Total £ 341,114 181,228 (163,638) 24,440 2,267 385,411 25,893 5,938 - (3,567) 221 - 2,592 - (2,649) (236,659) 57 - - 2023 £ 52,135 133,445 185,580 15,385 (4,450) 185,580 2022 £ 217,731 167,680 385,411 Strategic ReportCorporate Governance 56 Gaming Realms plc Annual Report and Accounts 2023 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 21. 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 Lease liability Amortised cost Fair Value 2023 £ 2022 £ 2023 £ 2022 £ 7,455,316 2,922,775 3,159,303 3,643,216 1,260,642 1,101,410 139,531 138,798 885,491 787,801 2,128,863 1,417,961 185,580 385,411 - - - - - - - - - - - - - - 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. 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 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) and Euros (EUR). 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. Financial Statements 57 As of 31 December 2023 the Group’s net exposure to foreign exchange risk was as follows: Net foreign currency ﬁnancial assets US Dollar Euro Other 2023 £ 2022 £ 2,358,406 1,973,465 857,828 - 996,279 153,892 3,216,234 3,123,636 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 £643,247 (2022:£624,727). A 20% weakening in the exchange rates would, on same basis reduce proﬁt after tax and decrease net assets by £643,247. (2022: £624,727). 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 2023 Trade and other payables Accruals Lease liability Total At 31 December 2022 Trade and other payables Accruals Lease liability Total Within 1 year £ 1−2 years £ Over 2 years £ 885,491 2,128,863 67,327 3,081,681 - - 46,060 46,060 - - 94,273 94,273 Within 1 year £ 1−2 years £ Over 2 years £ 885,492 2,089,463 232,035 3,206,990 - - 61,566 61,566 - - 120,317 120,317 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 (2022: £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. 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 ReportCorporate Governance 58 Gaming Realms plc Annual Report and Accounts 2023 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 21. 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 lease liabilities (see Note 20). A reconciliation between the opening and closing balances of these items is provided below. 2023 Opening balance New leases entered into during the year Cash paid Unwind of discount Exchange differences Carried forward 2022 Fair value of debt host £ Obligation to provide free services £ Fair value of derivative liability £ - - - - - - - - - - - - - - - - - - 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 Unwind of discount Exchange differences Change in fair value Release of liability on non-conversion Carried forward - (3,166,435) - - - (60,000) (500,000) 237,157 - - - - - - - - - - - (375,000) - (106,000) - - 112,000 (375,000) Lease liability £ 385,411 25,893 (236,659) 15,385 (4,450) 185,580 Lease liability £ 341,114 181,228 (163,638) - - 24,440 2,267 - - - 385,411 Financial Statements 59 22. Share capital Ordinary shares Ordinary shares of 10 pence each 293,667,839 29,366,782 292,006,775 29,200,676 The increase of 1,661,064 ordinary shares relates to the exercise of share options during the year (see Note 23). The changes in share capital and share premium as a result of these events is shown below. 2023 Number 2023 £ 2022 Number 2022 £ At 1 January 2022 Exercise of share options Conversion of loan At 31 December 2022 Exercise of share options At 31 December 2023 Share capital £ Share premium £ 28,970,262 13,332 217,082 29,200,676 166,106 29,366,782 87,370,856 - 282,918 87,653,774 79,114 87,732,888 23. 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 2022 Granted during the year Exercised during the year Number of options outstanding at 31 December 2022 Granted during the year Forfeited during the year Exercised during the year Number of options outstanding at 31 December 2023 Exercisable at 31 December 2023 Weighted average exercise price (pence) 16.39 32.50 10.00 18.76 - 28.08 14.76 16.61 17.34 Number 23,133,169 3,900,000 (133,332) 26,899,837 3,455,000 (266,668) (1,661,064) 28,427,105 22,388,771 Strategic ReportCorporate Governance 60 Gaming Realms plc Annual Report and Accounts 2023 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 Options to subscribe under various schemes, including those noted in Directors’ interests in Note 9, are shown in the table below: Date granted Exercise price (pence) Exercisable between 2023 Number of shares 2022 Number of shares Approved 2 April 2014 Approved 19 February 2015 Approved 15 October 2015 Approved 10 November 2015 Approved 28 July 2016 Unapproved 28 July 2016 Approved 1 May 2020 Unapproved 1 May 2020 Unapproved 1 May 2020 Approved 2 June 2020 Approved 28 July 2020 Approved 26 November 2020 Unapproved 26 November 2020 Approved 5 January 2021 Unapproved 6 January 2022 Unapproved 6 January 2022 Approved 6 January 2022 Unapproved 2 August 2023 23.00 33.00 25.13 25.00 20.00 20.00 10.00 10.00 10.00 20.00 20.00 20.00 20.00 22.40 32.50 32.50 32.50 0.00 1 April 2017 to 1 April 2024 771,003 1,015,199 19 February 2018 to 19 February 2025 15 October 2018 to 15 October 2025 10 November 2018 to 10 November 2025 28 July 2018 to 28 July 2026 28 July 2018 to 28 July 2026 172,475 450,000 184,975 167,500 30,000 172,475 475,000 560,175 167,500 30,000 3 February 2021 to 1 May 2030 700,000 1,333,336 3 February 2021 to 1 May 2030 1,300,000 1,300,000 1 May 2020 to 1 May 2030 750,000 750,000 3 February 2021 to 2 June 2030 5,000,000 5,000,000 1 August 2021 to 28 July 2030 8,846,152 8,846,152 26 November 2021 to 26 November 2030 2,350,000 2,500,000 26 November 2021 to 26 November 2030 500,000 1 January 2022 to 5 January 2031 - 500,000 350,000 6 January 2022 to 6 January 2025 2,000,000 2,000,000 15 October 2022 to 6 January 2032 1,000,000 1,150,000 15 October 2022 to 6 January 2032 750,000 750,000 1 July 2023- 30 June 2033 3,455,000 - 28,427,105 26,899,837 During the year 3,455,000 share options were granted to certain directors and employees. The shares options vest on 30 June 2026 providing an associated service condition is satisﬁed. The share options were valued as follows: Grant date No. of options Vesting date Model used Share price at date of grant (pence) Expected option life Dividend yield Fair value per option at grant date (pence) Exercise price (pence) Exercisable to 2 August 2023 3,455,000 30 June 2026 Black Scholes 35.00 3 years n/a 0.35 - 30 June 2033 Financial Statements 61 The share option and related charges income statement expense comprises: IFRS 2 share-based payment charge Direct taxes related to share options 2023 £ 419,961 212,343 632,304 2022 £ 438,868 (87,142) 351,726 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 £419,961 (2022: £438,868). 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 charge for the year was £212,343 (2022: credit of £87,142). 24. 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 in New Jersey, Pennsylvania and Ontario. During the year, total license fees earned by the Group were $84,630 (2022: $15,697) with $13,613 due at 31 December 2023 (2022: $366). During the prior year the Group began distributing its content to certain North American partners via Pala’s B2B platform distribution network, with platform fees of $18,626 being incurred (2022: $1,477) with $3,566 unpaid at 31 December 2023 (2022: $984). During the year £165,000 (2022: £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 £437,253 (2022: £357,500) shown in Note 9. No amounts were owed at 31 December 2023 (2022: £Nil). The details of key management compensation are set out in Note 8. Strategic ReportCorporate Governance 62 Gaming Realms plc Annual Report and Accounts 2023 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 25. 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. 26. 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 2023 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 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 2023 £ 31 December 2022 £ 5,662,961 5,662,961 56,440 139,531 183,773 138,798 5,858,932 5,985,532 4 6,785,937 9,534,411 925,003 96,230 7,710,940 9,630,641 13,569,872 15,616,173 5 8,915,499 8,335,358 18,801 147,305 8,934,300 8,482,663 - - 20,908 20,908 8,934,300 8,503,571 4,635,572 7,112,602 6 29,366,782 29,200,676 88,452,888 88,373,774 2,683,702 2,683,702 (115,867,800) (113,145,550) 4,635,572 7,112,602 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 £3,142,211 (2022: £1,790,759). The notes on pages 65 to 67 form part of these ﬁnancial statements. The ﬁnancial statements were approved and authorised for issue by the Board of Directors on 28 March 2024 and were signed on its behalf by: Mark Segal Chief Executive Ofﬁcer Strategic ReportCorporate Governance 64 Gaming Realms plc Annual Report and Accounts 2023 Parent Company Statement of Changes in Equity For the year ended 31 December 2023 1 January 2022 Loss for the year Share-based payment on share options Exercise of options Conversion of loan 31 December 2022 Loss for the year Share-based payment on share options Exercise of options 31 December 2023 Share capital £ Share premium £ Merger reserve £ Retained earnings £ Total equity £ 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 - - - - 166,106 79,114 - - - (3,142,211) (3,142,211) 419,961 - 419,961 245,220 29,366,782 88,452,888 2,683,702 (115,867,800) 4,635,572 The notes on pages 65 to 67 form part of these ﬁnancial statements. Financial Statements 65 Notes to the Parent Company Financial Statements For the year ended 31 December 2023 1. Principal accounting policies These ﬁnancial statements present the results of Gaming Realms plc for the year ended 31 December 2023. 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 2023. 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; a) 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. Strategic ReportCorporate Governance 66 Gaming Realms plc Annual Report and Accounts 2023 Notes to the Parent Company Financial Statements For the year ended 31 December 2023 2. Investments At 31 December 2022 and 31 December 2023 Details of the Company’s investments can be found in Note 26 of the consolidated ﬁnancial statements. Investment in subsidiary undertakings £ 5,662,961 3. Property, plant and equipment Cost At 1 January 2023 Additions At 31 December 2023 Accumulated deprecation and impairment At 1 January 2023 Depreciation charge At 31 December 2023 Net book value At 31 December 2022 At 31 December 2023 4. Trade and other receivables Amounts due from Group companies Tax and social security Other debtors Prepayments and accrued income ROU lease assets £ Leasehold improvements £ Computers and related equipment £ Ofﬁce furniture and equipment £ Total £ 603,097 60,968 - - 603,097 60,968 438,445 121,138 559,583 44,298 12,194 56,492 14,133 1,737 15,870 11,725 1,567 13,292 20,000 698,198 6,072 7,809 26,072 706,007 19,957 514,425 243 135,142 20,200 649,567 164,652 43,514 16,670 4,476 2,408 2,578 43 183,773 5,872 56,440 2023 £ 2022 £ 6,616,495 9,304,706 24,388 86,992 1,262 - 143,792 142,713 6,785,937 9,534,411 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 (2022: £Nil). Financial Statements 67 2023 £ 2022 £ 7,762,248 7,546,692 46,531 140,687 1,026,726 618,627 79,994 29,352 8,915,499 8,335,358 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 6. Called up share capital Allotted, called up and fully paid Ordinary shares of 10 pence each 293,667,839 29,366,782 292,006,775 29,200,676 2023 Number 2023 £ 2022 Number 2022 £ Allotted and fully paid up At 1 January 2022 Exercise of options Conversion of loan At 31 December 2022 Exercise of options At 31 December 2023 £ 28,970,262 13,332 217,082 29,200,676 166,106 29,366,782 7. Employee information The Company had an average of 7 (2022: 6) employees during the year. The employee costs for the Company were £1,643,601 (2022: £1,201,297). Details of Directors’ remuneration can be found in Note 9 of the consolidated ﬁnancial statements. 8. Related party transactions During the year £165,000 (2022: £150,000) of consulting fees were paid to Dawnglen Finance Limited, a company controlled by Michael Buckley. No amounts were owed at 31 December 2023 (2022: £Nil). The details of key management compensation are set out in Note 8 of the consolidated ﬁnancial statements. Strategic ReportCorporate Governance 68 Gaming Realms plc Annual Report and Accounts 2023 Company Information Directors Michael Buckley, Executive Chairman Mark Segal, Chief Executive Ofﬁcer Geoff Green, Chief Financial Ofﬁcer Jim Ryan, Non-executive Director Mark Wilson, Non-executive Director Mark Blandford, Non-executive Director Anna Massion, Non-executive Director 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 Gaming Realms plc Two Valentine Place London SE1 8QH UK www.gamingrealms.com

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