Losses widen at GAN

News on 28 Sep 2018

Online gambling B2B technology provider GameAccount Network (GAN)  posted its six-month performance numbers for the first half of 2018 Friday, reporting that despite promising future developments in the United States lying ahead, it had experienced widening losses after tax at GBP 2.9 million.

Nevertheless, the board noted that the company had performed “in line with market expectations”, highlighting the following indicators:

* More than 28 percent increase in gross income to GBP 23.8 million (H1 2017: GBP 18.6 million);

* Group Net Revenue up 11 percent at GBP 4.6 million (H1 2017: GBP 4.1 million);

* Recurring revenues up by 19 percent YoY and now account for 92 percent of Net Revenue;

* USA and Italian activity accounted for 61 percent and 38 percent of Net Revenue, respectively;

* Clean EBITDA loss of GBP 467,000 (H1 2017: profit of GBP 24,000);

* Loss after tax of GBP 2.9 million (H1 2017: loss after tax of GBP 2 million);

* Cash and cash equivalents at 30 June 2018 of GBP 5.1 million (GBP 2.7 million at 31 December 2017);

* A subscription by new investors for 15,000,000 new shares in the capital of the company raised gross proceeds of GBP 7.5 million;

* The Company elected to redeem and repay in full, with interest, the GBP 2,001,483 nine percent Convertible Unsecured Loan Notes 2022 issued by GAN in April 2017;

* Net Assets at 30 June 2018 of GBP 12.3 million (H1 2017: GBP 9 million)

Operational highlights included:

* US Supreme Court decision overturning PASPA puts the company in a strong position in the States;

* Entered into a multi-year extension with key client Paddy Power Betfair Plc for the continued provision of platform services in New Jersey’s fast-growing Internet gaming market and the integration of their nominated Sports betting application from third party provider IGT, Inc, substantially completed in the period;

* Commenced a significant expansion of engineering resources principally in Sofia, Bulgaria with secondary recruitment in Las Vegas, Nevada in order to meet existing and expected demand from both existing clients and new clients for incremental real money Internet gambling services (particularly for sports betting in the US) and Simulated Gaming;

* Opened ‘GAN Digital’ in Tel Aviv, Israel, an in-house marketing agency to provide digital user acquisition & retention services to selected GAN clients worldwide;

* Announced a strategic relationship with SBTECH to serve real money sports betting to GAN’s diverse US casino operator clients;

* Signed a multi-year agreement with GOLDBET Srl a leading Italian Internet sports betting & casino gaming operator in Italy’s regulated market;

* Signed the Mississippi Band of Choctaw Indians as a new client of Simulated Gaming expected to launch in Q4 2018;

* Launched Internet sports betting in New Jersey delivered for Paddy Power Betfair plc’s FanDuel Group, GAN’s first US client to operate Internet sports betting via the GAN Platform;

* Extended for a multi-year period the existing agreement with Pennsylvania’s largest land-based casino, Parx Casino, in order to prepare for the commencement of real money Internet gaming, real money Internet sports betting and on-property retail sports betting delivered via the GAN platform. Pennsylvania’s real money Internet gambling market is now expected to commence in early 2019;

* Launched real money internet gaming for GAN’s second New Jersey client, Ocean Resort Casino (“ORC”), supported by GAN’s turnkey managed services comprising technical operations management, software development, customer services & payments management together with associated regulatory consultancy;

* Full marketing of GAN’s Overseas Internet Casino in Europe commenced on 12 September 2018. This followed an extended period in Q3 restructuring operational arrangements to ensure an efficient deployment of the previously-reported $10 million in user acquisition marketing provided to GAN, to develop their Internet gambling business in European regulated markets.

Dermot Smurfit, CEO of GAN commented: “Regulatory delays will impact US real money gaming results in H2 2018, but we will continue to invest in resources to prepare for 2019 and beyond.

“By way of outlook on 2019, the recent launch of internet sports betting, the company’s current sales pipeline and existing contracted clients are projected to significantly enhance GANs revenue and EBITDA prospects.”

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