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Gaming Realms - Interim Results Update

• Strong numbers posted for H1 2021, in line with expectations

  Revenues for the six months to 30th June 2021 rose by 50% to £7.7 million. This was mainly driven by the Licensing division, where revenues grew by 73% to £5.8 million. This was complimented by a 7% revenue increase in the smaller Social Publishing division to £1.9 million. Boosted by the operational gearing, adjusted EBITDA profits (before share option and related charges) grew by 144% to £3.1 million.

• Pennsylvania launch and Michigan expansion set to boost H2

  Following the award of relevant licences, Gaming Realms’ Slingo games went live in the US state of Michigan in late June and in Pennsylvania in early September, both with partner BetMGM. Further launches are expected with additional operators across all US territories, boding well for further content licensing growth in H2. The outlook is positive, with revenues up by 28% in the two months since June and the full year numbers set to be in line with market expectations.

• Further international growth opportunities provide long-term potential

  New licensing opportunities are being pursed within the US as new states announce their intention to regulate iGaming. Alongside further European launches, the company will shortly commence the process of obtaining an iGaming licence in Ontario, Canada, a market believed to have the potential to be bigger than any one of the US states that have been regulated so far.

• No changes to forecasts, shares remain undervalued

  With FY2021 expected to be in line with expectations we are retaining our forecast for £5.4 million of EBITDA this year, rising to £8 million in FY2022. Making small updates to our valuation model our target price rises from 51p to 53.13p, implying upside of 42%. We update coverage of Gaming Realms and retain our stance of Conviction Buy.