LONDON & DUBLIN--(BUSINESS WIRE)--

GAN plc (“GAN” or the “Group”), a leading B2B supplier of Internet gaming enterprise software-as-a-service solutions to the US land-based casino Industry, announces results for the twelve months ended December 31, 2017.

The full Chairman’s Report and Financial and Operational Review are available on GAN’s website at www.gan.com.

Financial Overview

• Gross Income of £41.1m (2016: £31.7m) an increase of 30% on 2016
• Net Revenue of £9.1m (2016: £7.8m) an increase of 17% on 2016
• Clean EBITDA¹ profit of £0.5m (2016: loss of £0.9m)
• Loss before tax of £4.2m (2016: £5.2m) and loss per share of £0.05 (2016: £0.06)
• Loss after tax of £3.5m (2016: £3.8m)
• Cash and cash equivalents at the end of the year of £2.7m (2016: £3.2m)
• Net Assets at the end of the year of £7.6m (2016: £10.9m)
• Raised £2m in April 2017 through an unsecured 9% convertible loan note

Strategic & Operating Developments

• Launched Simulated Gaming™ in the US for five new US casino clients (2016: three)
• Signed two US casino clients for real money Regulated Gaming in New Jersey and European markets, respectively
• Regulation of Internet gaming in Pennsylvania completed October 30, 2017 becoming the fourth US State to regulate Internet gaming
• Continued delivery of Betfair’s fast-growing New Jersey Internet casino business BetfairCasino.com supported by GAN’s Internet gaming platform, content & supporting services
• GAN’s US patent number 8,821,296 (“Patent”) for linking a patron’s rewards account to their Internet gaming account successfully licensed for real money Internet gaming for the third time to a US casino in New Jersey
• Continued investment in US infrastructure: licensing, offices and people
• Post period end preparations underway for GAN to launch Parx Casino in Pennsylvania for Internet gaming with the Pennsylvanian Internet gaming market anticipated to commence in H2 2018
• Post period end strategic relationship with SBTECH for delivery of Internet sports betting to selected existing and new US clients, conditional on the Supreme Court of the US repealing in full or part the long-standing Federal US ban on sports betting outside the State of Nevada
• The Company monitors its financing on an ongoing basis and, post period end, having noted in particular the regulatory developments in respect of real money Internet gaming in the US, is currently considering options to enable it to respond to the opportunity that it considers these developments represent

Dermot Smurfit, CEO of GAN commented:

“2017 saw GAN deliver its first full year of positive EBITDA since 2013 following a lengthy investment cycle to position GAN as a market leader in the US casino Industry delivering Internet gaming solutions for real money Regulated Gaming and Simulated Gaming which is deployed in advance of regulation. GAN’s performance to date in 2018 is in line with our expectations.

GAN has continued to position its business to capture growth in emerging online gaming markets in the US. 2017 saw significant progress with the launch of five new clients of Simulated Gaming™, together with a number of significant commercial and strategic developments the most significant of these was the passage into law of legislation on October 30, 2017 permitting 12.8m Pennsylvanian residents to play real money Internet casino games starting in H2 2018. GAN’s client of Simulated Gaming in Pennsylvania, Parx Casino, is the largest single casino property by market share in Pennsylvania. Parx has engaged GAN to start the long-anticipated preparatory works to launch its real money Internet gaming website from GAN’s GameSTACK™ Internet gaming system, previously deployed by GAN on-property. GAN is positioned for substantial growth in regulated real-money Internet gaming in the US following the commencement of Pennsylvania’s Internet gaming market.

New Jersey’s Internet gaming market out-performed our full year expectations with gross gaming revenues up 30% year on year to $246m while we won our second client for New Jersey real money Internet gaming currently anticipated to launch in H1 2018. We are increasingly confident in the long-term prospects for intra-State real-money gaming in the US and believe Pennsylvania may now serve as a catalyst for other US States to regulate Internet gaming and, in the event the US Supreme Court ruling lifts the long-standing Federal ban, the incremental opportunity of Internet sports betting.

The States of Michigan and New York also appears to be in the process of regulating Internet gaming with a number of legislative bills actively considered in 2017 of which derivative bills are expected to be the subjects of legislative action in 2018. GAN has been selected as the exclusive platform for Simulated Gaming™ for three clients with casino properties located in either Michigan or New York and is positioned for substantial growth in regulated real-money gaming should suitable legislation be enacted in 2018.

Throughout 2017 GAN’s Simulated Gaming™ enterprise solution continued to prove its ability to support the core on-property gaming business of US casino clients. GAN’s increasing body of evidence demonstrated that Simulated Gaming™ together with GAN’s US-patented reward points integration system is a highly cost-effective marketing tool for land-based casinos, which increases on-property gaming rather than cannibalising it. GAN’s Simulated Gaming is proven to reactivate long-term lapsed patrons on-property, increase on-property visitation by existing patrons and generate incremental income online for GAN and the casino.

Simulated Gaming™ continues to represent a significant US market opportunity which is immediately addressable and not contingent on the pace of regulation nor dependant on US casino clients’ making material investment in digital user acquisition as the majority of Simulated Gaming™ revenues are derived from the casino clients’ existing patrons. Marketing Services provided to US casino clients represents a significant opportunity for GAN not only to increase professional service fees but also to support casino clients in scaling their Simulated Gaming™ revenues by delivering enhanced patron marketing.

GAN’s US Patent for linking US casino patrons’ rewards account to their Internet gaming account held within an Internet gaming system (marketed as the iBridge Framework™) withstood an ex parte challenge in 2017 and was re-confirmed as valid by the US Patent Office in H1 2017. GAN’s Patent licensing program has made substantial progress in H2 2017 by placing diverse US casino operators on notice of GAN’s US-patented Intellectual property rights and inviting commercial licensing discussions which are ongoing. We remain highly confident in the significant strategic value to GAN of this Patent which has now been licensed three times for real money Internet gaming in the States of Pennsylvania and New Jersey as well as thirteen times for Simulated Gaming nationwide.

We also remain confident in our prospects for 2018 and beyond. For 2018, we forecast material growth of both Simulated Gaming™ and real money Internet gaming undertaken for US clients in New Jersey, Pennsylvania and Europe’s diverse regulated markets. Our US Patent licensing program which commenced in H2 2017 may also represent a new source of patent licensing revenues for GAN in 2018 and beyond.

We believe your Company has developed considerable momentum in the US market and that the Company is well-positioned to secure additional profitable opportunities from incremental US States which regulate real money Internet gaming over time.”

Results Conference Call

The GAN management team will host a conference call for analysts & institutional investors at 16.00 BST (11.00 ET / 08:00 PT) on March 29, 2018 the timing of which reflects the significantly increased holdings of GAN’s publicly traded equity by US-based institutional investors. Those wishing to dial in should contact The Equity Group on the details below:

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