Gaming Realms narrows loss as it exits real money gaming business

(Sharecast News) - Real money mobile games developer and licensor Gaming Realms reported a 167% improvement in its licensing revenue in its first half on Thursday, to £1.6m.
The AIM-traded firm noted that, upon completion of the sale of its remaining real money gaming operations, as it announced on 17 July, the remaining business was now focused on the development and licensing of games for third-party real money and social gaming operators.

It noted that was the part of the company which it had grown organically, adding that it was showing "significant" growth with a number of global partners.

The firm's adjusted EBITDA loss for continuing operations for the six months ended 30 June narrowed to £6,280 from £0.44m year-on-year.

It said its social publishing revenue fell 29% to £1.5m, generating EBITDA of £0.5m, down from £1.0m.

However, after capitalisation of costs, the net cash outflow was £0.1m, swinging from an inflow of £0.4m in the same period last year.

The EBITDA loss for the discontinued real money gaming operations totalled £0.9m, swinging from a £0.6m profit year-on-year.

On the operational front, Gaming Realms noted that it had entered into an agreement with River iGaming during the period, to sell its real money gaming assets for a total of £11.5m, of which £1.5m was deferred for receipt until 31 December next year.

The group said its cash position as of Thursday was around £4m following the completion of the deal in July, settlement of certain liabilities connected to the real money gaming assets and deal expenses, and further investment in its operations.

It said its licensing highlights for the period included going live with tier 1 operator William Hill, releasing three new games into the market, and signing worldwide distribution deals with Relax Gaming and Scientific Games.

Since the period ended, Gaming Realms noted that it had completed the disposal of its real money gaming assets business to River, which had allowed it to reduce its headcount by 45 people and reduce annual costs by £2.0m.

Licensing revenue was ahead 88% in the nine weeks post-period end, over the comparative period in 2018.

The company had also gone live with three new operators since the end of the first half, including News International and Betsson, which could add up to a further 33 new sites covering the UK and Nordic territories.

A "significant" partnership agreement had been established with Instant Win Gaming to distribute Slingo Games into the iLottery market, the board also reported.

That included a release to the North American Association of State and Provincial Lotteries and World Lottery Association lottery members worldwide, which was scheduled to go live in the second half of 2020.

Gaming Realms said it had released three new games since the end of the first half, including Monopoly Slingo, with more releases scheduled for the rest of the year.

Looking ahead, the company said the ongoing success it had seen from developing and licensing real money games gave it confidence to commit additional investment to drive further growth.

As a result, the board said it would continue to be investing "significantly" into developing new games and improving its proprietary 'Remote Game Server' platform.

Following the disposal of the real money gaming business, the board said it believed the group had an "adequacy" of available cash resources to fund that, in addition to existing known working capital requirements.

Given the growth of the division, Gaming Realms said it expected to become cash flow positive by the end of 2020.

As the board had previously disclosed, the group was in the latter stages of rationalising its social gaming division, which was no longer a core part of the business.

Gaming Realms said it would update the market on the conclusion of that process in due course.

The investment in game development and licencing was continuing to yield "strong" growth, the board noted, adding that it expected the 2019 full-year to be in line with market expectations, as its current pipeline of new partners went live and new integrations were completed.

"Our strategy to leverage our market leading 'Slingo Originals' games library into the UK and international gaming markets continues to gain momentum," said chief executive officer Patrick Southon.

"Licensing our content to leading brands and gaming operators is delivering high margin revenues and the disposal of the RMG assets has given us greater resources to invest in content creation.

"We are currently performing in line with management's forecasts and with new commercial developments in the pipeline we are confident in meeting our full year objectives."