TGS P.L.C Individual Financial Statements Final 2021

Company Registration Number: C 72231

TOGETHER GAMING SOLUTIONS P.L.C.

Annual Report and Financial Statements

31 December 2021

TOGETHER GAMING SOLUTIONS P.L.C.

Annual Report and Financial Statements - 31 December 2021

Pages

Directors’ report 1 - 7

Corporate Governance – Statement of Compliance 8 - 10

Statement of financial position 11

Statement of comprehensive income 12

Statement of changes in equity 13

Statement of cash flows 14

Notes to the financial statements 15 - 43

Independent auditors’ report 44 - 50

TOGETHER GAMING SOLUTIONS P.L.C.

Annual Report and Financial Statements - 31 December 2021

Directors’ report

The board of directors present the audited financial statements of Together Gaming Solutions p.l.c. (the

“Company”) registration number C 72231 for the year ended 31 December 2021. The Company is a

subsidiary of Gameday Group plc and is part of the broader group of companies of Gameday Group plc as

the parent undertaking (the “Group”).

The Company has its head office and registered address at The Burlington Complex, Level 1, Dragonara

Road, St. Julians STJ3141, Malta.

Principal activities

The Company is the B2B service provider arm of the Group and owner of the Group’s key intellectual

property asset (the “Intangible Asset”) mainly the ‘AleAcc’ iGaming platform (the “Platform”) that it provides

to its clients under a Malta Gaming Authority B2B licence. The Company offers its iGaming platform as a

‘turnkey’ solution to various licensed operators (including the Group’s licensed B2C iGaming operator). The

Company also offers its iGaming platform to third party white label iGaming operators as part of a full-

service ‘white label’ solution for launching and operating online casino and sportsbook websites.

The Company previously also owned the Bethard Brand (the “Brand”), including the Bethard, Fastbet and

Betive domains, which it licensed to other Group Companies (operating under the Brand). On 18 June

2021, the Company transferred the Brand to a fellow subsidiary company at fair value which equated to

book value as part of a wider group restructuring exercise which included the sale of the Group’s B2C

gaming activity by the Group’s parent company to a third-party. This transaction followed a strategic

decision by the Group (following industry developments in the B2C market over the past year) to focus on

its B2B business, with the Company being at the forefront of this new strategy. Consequently, the Company

shall no longer be licencing the Brand to other Group companies. To this end, the Company intends to

increase its B2B marketing activities and will continue to provide full white label solution services to third-

party white label iGaming operators, as well as, offering ‘turnkey’ solution of the Company’s proprietary

iGaming platform to licensed third-party B2C operators. Currently, the Group intends to retain its B2C

licences solely for the purposes of supporting the Company’s B2B business and white label clients.

Review of the business

During the year, revenue was mainly generated from three different streams: white label services; licensing

of the Brand (Royalties); and turnkey services. Following the disposal of the Brand on 18 June 2021,

revenue from Royalties and Turnkey fees generated from the Brand discontinued. Whilst this had an impact

on short-term profitability, the disposal generated initial proceeds of €16,198,432 and the Company

refocused its efforts on generating third party B2B revenue in order to drive future growth.

During the year under review, revenue totalled €8,982,530 (2020: €15,794,016). Net of directly attributable

costs, the revenue of the Company as disclosed in the financial statements amounted to €3,810,743 (2020:

€9,123,628) corresponding to a year-on-year decrease of 58%. As described above, the revenue decrease

was mainly attributable to the sale of the Brand which resulted in significantly lower Royalty income.

Revenue during 2021 was derived from: i) licensing of the Brand (Royalties) amounting to €1,730,059

(2020: €5,803,910); ii) leasing of the platform (Turnkey services) amounting to €514,693 (2020: €598,429);

and iii) White label services amounting to €1,565,991 (2020: €2,721,289).

Cost of sales amounted to €2,577,627 (2020: €6,685,922) and mainly consisted of marketing costs relating

to the Brand of €1,287,325 (2020: €4,969,317) and other direct costs (including platform costs) of

€1,290,302 (2020: €1,716,605).

TOGETHER GAMING SOLUTIONS P.L.C.

Annual Report and Financial Statements - 31 December 2021

Directors’ report - continued

Review of the business - continued

Other expenses amounted to €3,413,346 (2020: €3,455,233) and mainly consisted of depreciation and

amortisation amounting to €2,496,410 (2020: €2,309,193) and employee benefit expenses (including

director fees) amounting to €358,613 (2020: €349,628). The increase in personnel costs related to

recruitment made during the year that was required to meet the Company’s extended operational activity.

Financing costs amount to €969,903 (2020: €639,554) which mainly relate to the 5.9% interest on the bonds

issued by the Company in July 2019. A related party owning 26.19% of the bonds issued, waived its rights

to receive the related bond interest for the year ended 2021. Finance costs for the period amounting to

€969,903 are net of €309,037 relating to this waiver.

The Company registered a loss for the year amounting to €4,144,547 (2020: €1,343,687).

Following the disposal of the Brand and the restructuring of the Group, the Company is now focusing its

efforts on developing its B2B activities to replace discontinued revenue streams with third party business

from white label and turnkey services.

Management expects that, following the disposal of the Brand and the restructuring of its business, there

will be a short-to-medium-term mismatch between revenues and operational costs which is expected to

result in short-to-medium-term losses. Nevertheless, the Company expects revenues from its new B2B

initiatives to reach levels that match its operational cost base by late 2022 and to consistently outweigh

operational costs by 2023.

Financial Position

The Company’s financial position is set out in the statement of financial position on page 11.

At 31 December 2021, the Company’s total asset base stood at €36,683,864 (2020: €46,633,014). The

main assets of the Company following the sale of the Brand, comprise the technology platform (the

“Platform”) which is stated at a net book value of €10,885,068 (2020: €12,332,841) and trade and other

receivables of €9,920,737 (2020: €7,713,551) of which €8,569,237 (2020: €6,576,910) are related party

receivables.

During the year, the Company de-recognised a Deferred Tax asset of €1,040,371 which was previously

recognised in 2020 relating to the Brand.

Following the sale of the Brand, an initial payment of €16,198,432 was received by the Company hence

significantly improving the Company’s liquidity position with a current asset ratio of 11.9 at the end of 2021

(2020: 1.02).

The Company’s main liabilities are €20,000,000 (2020: €20,000,000) bonds issued to the public during the

year 2019 and trade payables amounting to €2,078,462 (2020: €8,234,878).

Included in trade and other receivables at year-end is a balance receivable from Gameday Group plc of

€8,801,568 in connection with the disposal of the Brand. As disclosed in the subsequent event note in

these financial statements, on 25 March 2022, an intra-group restructuring exercise took place resulting in

the settlement of part of this balance amounting to €5,185,521 through the transfer and subsequent

cancellation of a number of the Company's bonds at a selling price of €99 per bond, being the average

market price on the date of sale. These bonds had a total nominal value of €5,237,900. The remaining

balance owed by the parent company to the Company at 25 March 2022 stood at €3,616,047.

TOGETHER GAMING SOLUTIONS P.L.C.

Annual Report and Financial Statements - 31 December 2021

Directors’ report - continued

Financial Position - continued

During the year, the Company’s share capital remained constant at €20,580,000 in line with 2020. The

Company’s debt leverage at 31 December 2021 was less than 50% (2020: less than 50%) and its liquidity

position remains sufficient for the Company to continue to honour its liabilities for the foreseeable future.

Results and dividends

The financial results are set out in the statement of comprehensive income on page 12. During the year,

the directors did not declare any dividend (2020: Nil).

Principal risks and uncertainties faced by the Company

Exposure to online Gambling Industry

The Company’s main objective is to operate software and iGaming platforms and to provide related services

to software and iGaming companies. The Company does not conduct any online gambling operations;

however, it is dependent on the online gambling industry, which includes its primary client and the rest of

its customers. The entire revenue stream of the Company is concentrated within the iGaming sector and is

subject to this concentration risk and performance risk of this sector.

Constant changing laws and regulations

The laws and regulations surrounding the online gambling industry are complex, constantly evolving and in

some cases, also subject to uncertainty and restrictions. Laws and gaming regulations are constantly being

introduced in various European and other countries thus prohibiting or restricting operations therein. Future

changes to laws and regulations, could have a material adverse effect on the Group’s business, financial

condition and the results of its operations. During H2 2021, Germany regulated its Gaming industry

impacting negatively revenues for several gaming operators and white label operators across the Gaming

Industry. In line with all other gaming operators, the Company, the revenue of which is also directly

dependent on the online Gambling industry, experienced reduced revenues consequent to this regulatory

development. The Company expects further jurisdictions to regulate their gaming industry with the

consequence that there would be similar impacts on revenues.

COVID-19 and its further potential impact on financial and operational performance

All of the Company’s revenue streams are dependent on the operational performance of the Company’s

Gaming operator clients including white label operators and licensed gaming operators.

COVID-19 and its adverse implication on the worldwide economy persisted during 2021. Temporary

regulatory restrictions were extended in a number of jurisdictions to safeguard vulnerable players during

this period. The persistence of the pandemic created instability in the gaming industry overall, with a direct

negative impact on overall revenues generated by gaming operators and white label operators.

The Company’s primary client had revenue exposure to sports betting of 39% in 2020 and nearly 37%

during H1 2021. The latter percentage decreased during Q1 2021 due to pressures resulting from regulatory

restrictions. Casino revenues represented 61% of the total revenue for H2 2020; whilst for the H1 2021,

total casino revenues represented 63% of the total revenues. Notwithstanding responsible gaming

regulatory restrictions being extended, casino activity showed positive recovery for this client, as it shifted

its focus on less restrictive markets which consequently resulted in more casino revenue in the period 2021

compared to H2 2020. The revenues generated from this main client were parted ways following the sale

of the Brand intangible asset on 18 June 2021.

TOGETHER GAMING SOLUTIONS P.L.C.

Annual Report and Financial Statements - 31 December 2021

Directors’ report - continued

COVID-19 and its further potential impact on financial and operational performance - continued

Revenues generated from Turnkey services and white label services may be also subject to the same

aforementioned pressures.

Establishing Revenue growth from diversified B2B activities

Prior to the disposal of the Brand, the Company’s performance was highly dependent on the performance

of Bethard, a related party from which it generated a substantial part of its revenues. Following the sale of

the Brand and discontinuation of this revenue stream, the Company needs to re-focus its efforts in attracting

new customers in order to develop its revenues to present levels and beyond, in order to consistently

sustain its operational cost-base and generate profits. Such efforts are expected to take time in order to

yield the necessary results and whilst management is confident that its initiatives will generate the required

results, this may take longer than expected to materialize.

In addition to the above, the Directors also consider the following risks as being relevant to the Company:

• Global economic uncertainties following the armed conflict between Russia and Ukraine;

• Consolidation of Gambling regulation across Europe;

• Compliance and regulatory risk, being the risk relating to regulation that could result in restrictions

in its customers' operations and risks associated with unregulated markets;

• Credit risk, being the risk that customers do not pay for the services rendered;

• Impairment risk of intangible assets, being the risk that long term assets such as intangibles are

particularly at risk of impairment due to the fact that the carrying value may be impacted by several

unwarranted events and economic circumstances. Intangible assets having an indefinite useful life

are tested for impairment on an annual basis to ensure the Company's total asset value is not

overstated on the statement of financial position after taking into consideration events and

economic circumstances that occur between annual impairment tests in order to determine if it is

"more likely than not" that the market value of the indefinite useful life intangible asset has dropped

below its carrying value;

• Technological and systems development; and

• Dependence on key individuals having technical expertise of iGaming software development and

its associated technology.

The aforementioned risks are not an exhaustive list of potential risks and uncertainties faced by the

Company. If any of the risks occur, the Company’s business operations, financial condition, and operating

results may be adversely affected.

Going concern assessment

A baseline scenario of profitability and liquidity projections for the period 2022 to 2023 has been reset

adopting prudent and cautious assumptions in the light of the disposal of the Brand and the consequent

need to build-up new revenues. The revised projections also take into account the disruptions being caused

by the continuing COVID-19 pandemic and the restrictions and regulations arising therefrom.

The prudent base case scenario anticipates a slow ramp-up of white label and turnkey business as the

Company refocuses its effort on attracting new B2B customers following the disposal of the Brand. Whilst

the projections indicate that 2022 revenue is likely to fall short of the Company’s operating cost base,

management expects a positive EBITDA in 2023. Operating cash flows are projected to be positive

throughout the projected period and whilst investment in new marketing initiatives and development of the

Company’s technology platform are expected to eat into some of the existing cash reserves, the projections

indicate sufficient liquidity for the foreseeable future.

TOGETHER GAMING SOLUTIONS P.L.C.

Annual Report and Financial Statements - 31 December 2021

Directors’ report - continued

Going concern assessment - continued

Accordingly, Management and the Board are confident that the Company is well positioned to meet its

commitments for at least the next twelve months and accordingly concur with the going concern

assumptions for the preparation of these financial statements. Reference should also be made to Note 1.1

to these financial statements.

Performance expectations 2022

Following the disposal of the Brand, Management’s focus in 2022 will be on developing its B2B business

and attracting new customers and developing markets in order to return revenue to pre-disposal levels and

beyond and in order to cover its operational cost-base and generate profits. In the meantime, the Company

continues to face challenges relating to the ongoing pandemic, geopolitical instability from the current

conflict in Ukraine, as well as increased gaming regulation in traditional markets. Management recognises

that such initiatives will require time to materialise and accordingly expects revenue to fall short of the

Company’s operational cost base in 2022. Notwithstanding this, operational cash flows for 2022 are

expected to be positive due to working capital changes resulting primarily from an increase in related party

payables following the Group restructuring relating to the disposal of the brand.

In 2022, the Company is expected to generate additional cash from the deferred proceeds of the disposal

of the Brand as well as interest income from the investment of excess cash balances. Management

envisages significant investment in marketing initiatives to kick-start new B2B initiatives and continued

investment in the technology platform. Such investment activities together with Bond interest obligations

are expected to exceed the positive operating cash flows and the deferred proceeds from the disposal of

the brand resulting in a reduction in liquidity as the Company invests in developing future growth.

Whilst the prevailing volatile economic environment has hindered performance in the first quarter of the

year, management nevertheless expects the Company to be on course to achieve its performance

expectations for the year. Whilst such expectations forecast a temporary decrease in profitability and

liquidity, management expects the investment in 2022 to place the Company in a position to generate

positive EBITDA in 2023 and net profits in 2024.

Directors

The directors of the Company who held office during the year were:

Mr. Erik Johan Sebastian Skarp

Mr. Benjamin Delsinger

Mr. Edward Licari

Mr. Etienne Borg Cardona – resigned on 31 December 2021

Mr. Kari Pisani

Mr. Michael Warrington

Mr. David Bonnet – appointed 10 January 2022

Mr. Edward Licari also held the office of Company Secretary during the year.

The Board meets on a regular basis to discuss performance, position and other matters. The Company’s

Articles of Association require each director to retire from office at least once every three years, with retiring

directors eligible for re-election.

TOGETHER GAMING SOLUTIONS P.L.C.

Annual Report and Financial Statements - 31 December 2021

Directors’ report - continued

Statement of directors’ responsibilities for the financial statements - continued

The directors are required by the Companies Act (Cap. 386) to prepare financial statements which give a

true and fair view of the state of affairs of the Company as at the end of each reporting period and of the

profit or loss for that period.

In preparing the financial statements, the directors are responsible for:

• ensuring that the financial statements have been drawn up in accordance with International

Financial Reporting Standards as adopted by the EU;

• selecting and applying appropriate accounting policies;

• making accounting estimates that are reasonable in the circumstances; and

• ensuring that the financial statements are prepared on the going concern basis unless it is

inappropriate to presume that the Company will continue in business as a going concern.

The directors are also responsible for designing, implementing and maintaining internal control relevant to

the preparation and the fair presentation of the financial statements that are free from material

misstatement, whether due to fraud or error, and that comply with the Companies Act (Cap. 386). 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.

The financial statements of the Company for the year ended 31 December 2021 are included in the Annual

Report 2021, which is made available on the Company’s website. The directors are responsible for the

maintenance and integrity of the Annual Report on the website in view of their responsibility for the controls

over, and the security of, the website. Access to information published on the Company’s website is

available in other countries and jurisdictions, where legislation governing the preparation and dissemination

of financial statements may differ from requirements or practice in Malta.

Auditors

PricewaterhouseCoopers resigned from the post of auditors to the Company with effect from 30 August

2021. RSM Malta was appointed as auditors of the Company on 15 October 2021.

Disclosure in terms of the Capital Markets Rules

Going concern statement pursuant to Capital Markets Rule 5.62

During the period, the Company leased its Brand and offered its Platform as a turnkey solution to licensed

B2C iGaming operators. Furthermore, the Company (together with the Group’s licensed B2C iGaming

operators) offers its Platform to white label iGaming operators as part of a full-service ‘white label’ solution

for launching and operating online casino and sportsbook websites. On 18 June 2021, the Company

transferred its Brand to Prozone Limited being a Group subsidiary, in preparation for the sale of the Group’s

B2C business which took place on 1 July 2021.

The aforementioned sale transaction followed a recent strategic decision by the Group (following industry

developments in the B2C market over the past year) to focus on its B2B business, with the Company at the

forefront of this new strategy. To this end, the Company intends to increase its B2B marketing activities and

will continue to provide full white label services to third-party branded casino/sportsbook websites, as well

as, standalone licensing of the Company’s proprietary iGaming platform to licensed third-party B2C

operators. The Group intends to retain its B2C licences solely for the purposes of supporting the Company’s

B2B business and white label clients.

TOGETHER GAMING SOLUTIONS P.L.C.

Annual Report and Financial Statements - 31 December 2021

Directors’ report - continued

Statement of directors’ responsibilities for the financial statements - continued

Notwithstanding the above transaction, the Company’s revenues