river igaming p.l.c annual report 2019 · envisaged value chain, which together with media247...

River iGaming p.l.c

Annual Report

2019

Company Registration Number: C 83387

River iGaming p.l.c

Page

Annual Report

Directors’ Report 1

Consolidated and Separate Financial Statements:

Statements of Financial Position 4

Statements of Profit or Loss and Other Comprehensive Income 6

Statements of Changes in Equity 8

Statements of Cash Flows 12

Notes to the Financial Statements 14

Independent Auditors’ Report

1

River iGaming p.l.c.

Directors’ Report

For the year ended 31 December 2019

The directors have prepared this report for River iGaming plc (the “Company”) in accordance with

article 177 of the Companies Act, 1995 (Chapter 386, Laws of Malta) (the “Act”) including the

further provisions as set out in the Sixth Schedule to the Act.

Principal activities

The Company is a holding company of a Group which is primarily involved in acquiring, building and

consolidating an ecosystem of companies throughout the iGaming value chain. During 2019, some

of the Group’s subsidiaries were engaged in the provision of online casino games, which activities

were suspended towards the end of 2019. The Group also operates in the online media industry

through another subsidiary and has recently also ventured into the provision of software solution

services through another Group entity.

Directors

Kent Staahle

Lars Carl Fabian Qvist

Kathleen Zarb Adami

Review of business development and financial position

Following the incorporation of River iGaming p.l.c. in late 2017, the Company went on to develop

an organisation that offers all services required in the gaming value chain. Indeed, throughout 2018

and mid-2019, the Group completed four acquisitions. These included a number of online casinos

as well as a content and media agencies.

River Game Operations Limited acquired control of one online casino, Vegas Casino and went on

to develop a second online casino brand – Casonic. It also acquired licenses from the Malta Gaming

Authority and the Swedish Gaming Regulator.

In 2018, another subsidiary company, River UK Casino Limited acquired joint control of four online

casinos operated in the United Kingdom. The Group originally held 70% of the issued share capital

in this entity which together with Gaming Realms p.l.c. provided for joint control. During 2019, the

Group went on to acquire the remaining 30% (“Transaction”) of this Company together with an

additional subsidiary, Bear Group Limited, (which held a number of other intangible assets as well

as UK and Alderney gambling licenses) and a gaming platform, as further explained in notes 14 to

16 to the financial statements. The gaming platform was subsequently transferred onto another

newly formed subsidiary incorporated late in 2018, River Technologies Limited. Through this latter

subsidiary, the Group has ventured into the provision of software solution services. As described

in note 2.2.1 to the financial statements, towards the end of 2019 and in 2020 this subsidiary

continues to increase its customer base.

During the first quarter of 2019, the Group also acquired a content marketing business

(“www.sportsbibelen.com”) which continues to be operated through another subsidiary, Media

247 Limited. The acquisition of Mediafusion Limited was completed in September 2018. This

Company brings to the Group a number of B2B relationships and a different aspect of the

envisaged value chain, which together with Media247 builds further on these B2B relationships.

During the year the Group also held an investment in a new subsidiary, River CB Limited, through

which some software development was carried out.

2


Directors’ Report


Review of business development and financial position (continued)

Towards the end of 2019, the Group revisited its business strategy and a decision was taken to

suspend the B2C operations of River Game Operations Limited, River UK Casino Limited and re-

Bear Group Limited and focus the energy of the Group on the B2B vertical.

In order to finance the Transaction as well as other future capital and operational commitments,

River iGaming p.l.c. entered into a convertible loan agreement.

During the year ended 31 December 2019, the Company sustained a loss amounting to

€16,002,938 and had equity amounting to €740,053 and a working capital of €1,177,687. During

the same period, the Group sustained a loss amounting to €25,600,865 and had a net deficiency

in equity amounting to €12,918,642 and a working capital deficiency of € 2,506,644.

A main subsidiary registered a loss of €10,369,205 arising in the main from the B2C operations.

The equity accounted investees sustained a loss of €421,513 (Group’s share). Following the

acquisition of the full control in this entity, this subsidiary incurred a loss amounting to €14,833,872.

The results from the operation of the other subsidiaries which comprise of holding companies, as

well as media, and software services incurred an aggregate loss of €1,693,849.

The financial position of the Group and that of the Company should be read out in conjunction with

Note 2.2.1 to the financial statements which sets out the basis of the preparation of the financial

statements.

Principal risks and uncertainties

A financial risk management overview is given in note 24 to the financial statements and presents

information about the Group’s exposure to risk, the Group’s objective, policies and processes for

measuring and managing risk and the Group’s management of capital. Apart from the risks

explained under that note and that in note 25, which also form an integral part of this report, another

operational risk is perceived should a breakdown of information technology system occur within

the Group. This is however counter-balanced by contingency plans and disaster site processes,

policies and procedures which will significantly minimise the associated risk.

Future business developments

The Group has set out to rebuild and move towards the new core: SaaS driven B2B and media.

The Directors see a positive future going into 2020 and beyond.

The Group experienced progress in the development of the platform build bringing the product to

the forefront of iGaming. 2020 will see further enhancements to cater for current and future client

needs. The Platform’s unique selling point has created a flexible bespoke product that allows speed

to market with the highest level of quality. This offering has provided the Group with significant

interest in the product.

The Group has also continued to develop on the marketing platform, providing the Group with a

unique B2B product which shall be used to grow the revenue of the media and content vertical.

The Group also intends to link this product with the current services acquired through Media 247

AS. This will provide the Group with the opportunity to cross sell to both revenue streams customer

base.

3


Directors’ Report


Dividend and reserves

The accumulated losses of the Group and the Company at 31 December 2019 amounted to

€17,637,543 and €31,494,112, respectively. These amounts are being carried forward to next year.

In view of the accumulated losses no dividends are being proposed.

Subsequent events

Details of events occurring after the balance sheet date are disclosed in note 28 to the financial

statements.

Financial reporting framework

The directors of the Company have taken cognisance of the requirements promulgated by the

Accounting Profession (General Accounting Principles for Small and Medium-Sized Entities)

Regulations, 2015 (L.N. 289 of 2015) and resolved that they prepare the Company’s and the

Group’s financial statements in accordance with International Financial Reporting Standards as

adopted by the EU.

Lars Carl Fabian Qvist Kent Staahle

Director Director

Registered Office

Regent House

Office 21

Bisazza Street

Sliema SLM 1640

Malta

30 April 2020

4

River iGaming p.l.c

Statements of Financial Position

As at 31 December 2019

Group Company

2019 2018 2019 2018

Note € € € €

ASSETS

Plant and equipment 13 522,293 191,166 448,792 3,088

Right-of-use assets 13 1,749,024 - 1,499,322 -

Intangible assets and goodwill 14 8,024,523 8,243,896 - -

Investment in joint venture 16 - 10,346,075 - 10,794,859

Investment in subsidiary 15 - - 15,004,472 8,959,836

------------------- ------------------- ------------------- ----------------------

Non-current assets 10,295,840 18,781,137 16,952,586 19,757,783

------------------- ------------------- ------------------- ----------------------

Trade and other receivables 11 2,287,118 2,291,090 2,158,037 892,722

Cash and cash equivalents 12 1,643,207 2,294,666 98,802 1,346,242

------------------- ---------------------- ------------------- ----------------------

Current assets 3,930,325 4,585,756 2,256,839 2,238,964

------------------- ---------------------- ------------------- ----------------------

Total assets 14,226,165 23,366,893 19,209,425 21,996,747

========= ========= ========= =========

The accompanying notes are an integral part of these financial statements.

5

River iGaming p.l.c

Statements of Financial Position

As at 31 December 2019


The financial statements on pages 4 to 109 were approved and authorised for issue on 30 April

2020.

Lars Carl Fabian Qvist Kent Staahle

Director Director

Group Company

2019 2018 2019 2018

Note € € € €

EQUITY

Share capital 17 95,084 93,811 95,084 93,811

Share premium 17 17,011,053 16,283,698 17,011,053 16,283,698

Translation reserve 17 197,874 4,984 - -

Other equity component 17 1,271,459 899,945 1,271,459 899,945

Accumulated losses (31,494,112) (5,893,247) (17,637,543) (1,634,605)

------------------ --------------------- ------------------ ----------------------

Net deficiency / Total equity (12,918,642) 11,389,191 740,053 15,642,849

------------------ ---------------------- ------------------ ----------------------

LIABILITIES

Loan payable 18 14,663,571 - 14,663,571 -

Lease liability 27 1,277,858 - 1,091,749 -

Deferred consideration 15 1,634,900 - - -

Fair value of guarantee liability 15 - - 1,634,900 -

Deferred tax liability 10 3,131,509 1,341,678 - -

------------------ ---------------------- ------------------ ----------------------

Non-current liabilities 20,707,838 1,341,678 17,390,220 -

------------------ ---------------------- ------------------ ----------------------

Financial liabilities at fair value

through profit or loss 19 - 1,371,970 - 1,371,970

Deferred consideration 20 - 4,441,829 - 4,441,829

Trade and other payables 21 6,063,341 4,822,225 776,006 540,099

Lease liability 27 373,628 - 303,146 -

------------------ ---------------------- ------------------ ----------------------

Current liabilities 6,436,969 10,636,024 1,079,152 6,353,898

------------------ ---------------------- ------------------ ----------------------

Total liabilities 27,144,807 11,977,702 18,469,372 6,353,898

------------------ ---------------------- ------------------ ----------------------

Total equity and liabilities 14,226,165 23,366,893 19,209,425 21,996,747

======== ========= ======== =========

6

River iGaming p.l.c

Statements of Profit or Loss and Other Comprehensive Income


Group Company

2019 2018 2019 2018

Note € € € €

Revenue 6 7,937,973 2,091,138 960,000 1,200,000

Direct costs (5,362,277) (2,758,909) - -

Directors’ remuneration

and personnel costs

8 (3,741,302) (1,831,678) (688,984) (1,203,423)

Depreciation of plant and

equipment

13 (61,820) (37,271) (3,410) (1,029)

Depreciation of right-of-

use asset

13 (211,818) - - -

Amortisation of

intangible assets

14 (84,156) (75,455) - -

Other operating

expenses

(4,862,002) (3,093,554) (679,903) (1,920,358)

--------------------- --------------------- --------------------- ----------------------

Results from operating

activities

9 (6,385,402) (5,705,729) (412,297) (1,924,810)

--------------------- --------------------- --------------------- ----------------------

Finance income 97 68,558 429,446 87,500

Finance cost (1,143,933) (151,778) (916,121) (146,765)

--------------------- --------------------- --------------------- --------------------

Net finance costs

7 (1,143,836) (83,220) (486,675) (59,265)

--------------------- --------------------- --------------------- --------------------

Share of loss of equity-

accounted investee,

net of tax

16.2.1 (421,513)

(453,768) -

-

Deferred consideration

written off

20 4,706,547 - - -

Gain on disposal of joint

venture

6 8,485 - - -

Fair value movement on:

Contingent

consideration

19 1,371,970 349,470 1,371,970 349,470

Mutual option 19 1,361,511 - 1,361,511 -

Guarantee liability - - (60,712) -

Unclaimed liability

written off

21 3,127,876 - - -

Other income 12,734 - - -

Impairment loss on:

Goodwill and

intangible assets

14 (28,239,237) - - -

Investment in

subsidiaries and intra-

group balances

15 - - (17,776,735) -

--------------------- --------------------- --------------------- ----------------------

Loss before tax (25,600,865) (5,893,247) (16,002,938) (1,634,605)

Tax expense 10 - - - -

--------------------- --------------------- --------------------- ----------------------

Loss for the year /

period

(25,600,865)

(5,893,247)

(16,002,938)

(1,634,605)

========= ======== ========= =========

7

River iGaming p.l.c

Statements of Profit or Loss and Other Comprehensive Income (continued)


Group Company

2019 2018 2019 2018

Note € € € €

Other

comprehensive

income: Items that

are or may be

reclassified to

profit or loss

Foreign operations –

foreign currency

translation

differences

17 192,890

4,984 -

-

--------------------- ------------------- --------------------- ----------------------

Other

comprehensive

income

192,890

4,984 -

-

--------------------- ------------------- --------------------- ----------------------

Total

comprehensive

income for the year

/ period

(25,407,975)

(5,888,263)

(16,002,938)

(1,634,605)

========= ======= ========= =========

Loss per share

Basic loss per share 22 (1.47) (0.40) (0.47) (0.11)

========= ======== ========= =========

Diluted loss per

share

22

(1.47)

(0.40)

(0.47)

(0.11)

========= ======== ========= =========

The accompanying notes are an integral part of these financial statements

8

River iGaming p.l.c

Statement of Changes in Equity – Group


Share

capital

Share

premium

Translation

reserve

Other equity

component

Accumulated

losses

Total

equity

€ € € € € €

Total comprehensive loss for the

period

Loss for the period - - - - (5,893,247) (5,893,247)

Other comprehensive income for the

period - - 4,984 - - 4,984

--------------------- --------------------- --------------------- --------------------- --------------------- ---------------------

Total comprehensive loss - - 4,984 - (5,893,247) (5,888,263)

--------------------- --------------------- --------------------- --------------------- --------------------- ---------------------

Transactions with the owners of the

Company

Issue of ordinary shares 91,971 16,147,198 - - - 16,239,169

Equity-settled share-based payment - - 352,536 352,536

Share options exercised

Share warrants exercised

780

1,060

136,500

-

-

-

-

547,409

-

-

137,280

548,469

--------------------- --------------------- --------------------- --------------------- --------------------- ---------------------

Total transaction with owners of the

Company 93,811 16,283,698 - 899,945 - 17,277,454

--------------------- --------------------- --------------------- --------------------- --------------------- ---------------------

Balance as at 31 December 2018 93,811 16,283,698 4,984 899,945 (5,893,247) 11,389,191

========= ========= ========= ========= ========= =========


River iGaming p.l.c

Statement of Changes in Equity – Group (continued)


9

Share

capital

Share

premium

Translation

reserve

Other equity

component

Accumulated

losses

Total

equity

Note € € € € € €

Balance at 1 January 2019 93,811 16,283,698 4,984 899,945 (5,893,247) 11,389,191

--------------------- --------------------- --------------------- --------------------- --------------------- ---------------------

Total comprehensive loss for the year

Loss for the year - - - - (25,600,865) (25,600,865)

Other comprehensive income for the year - - 192,890 - - 192,890

--------------------- --------------------- --------------------- --------------------- --------------------- ---------------------

Total comprehensive loss - - 192,890 - (25,600,865) (25,407,975)

--------------------- --------------------- --------------------- --------------------- --------------------- ---------------------

Transactions with the owners of the

Company

Issue of ordinary shares 17 1,273 727,355 - - - 728,628

Equity-settled share-based payment 23 - - - 39,973 - 39,973

Share warrants exercised / forfeited 23 - - - (48,153) - (48,153)

Equity component of convertible loan 18 - - - 379,694 - 379,694

--------------------- --------------------- --------------------- --------------------- --------------------- ---------------------

Total transaction with owners of the

Company 1,273 727,355 - 371,514 - 1,100,142

--------------------- --------------------- --------------------- --------------------- --------------------- ---------------------

Balance as at 31 December 2019 95,084 17,011,053 197,874 1,271,459 (31,494,112) (12,918,642)

========= ========= ========= ========= ========= =========

10

River iGaming p.l.c

Statement of Changes in Equity - Company


Share

capital

Share

premium

Other equity

component

Accumulated

losses

Total

equity

€ € € € €

Total comprehensive loss for the period

Loss for the period - - - (1,634,605) (1,634,605)

--------------------- --------------------- --------------------- --------------------- ---------------------

Total comprehensive loss - - - (1,634,605) (1,634,605)

--------------------- --------------------- --------------------- --------------------- ---------------------

Transactions with the owners of the Company

Issue of ordinary shares 91,971 16,147,198 - - 16,239,169

Equity-settled share-based payment - - 352,536 - 352,536

Share options exercised 780 136,500 - - 137,280

Share warrants exercised 1,060 - 547,409 - 548,469

--------------------- --------------------- --------------------- --------------------- ---------------------

Total transaction with owners of the Company 93,811 16,283,698 899,945 - 17,277,454

--------------------- --------------------- --------------------- --------------------- ---------------------

Balance as at 31 December 2018 93,811 16,283,698 899,945 (1,634,605) 15,642,849

========= ========= ========= ========= =========


River iGaming p.l.c

Statement of Changes in Equity – Company (continued)


11

Share

capital

Share

premium

Other equity

component

Accumulated

losses

Total

equity

Note € € € € €

Balance at 1 January 2019 93,811 16,283,698 899,945 (1,634,605) 15,642,849

--------------------- --------------------- --------------------- --------------------- ---------------------

Total comprehensive loss for the year

Loss for the year - - - (16,002,938) (16,002,938)

--------------------- --------------------- --------------------- --------------------- ---------------------

Total comprehensive loss - - - (16,002,938) (16,002,938)

--------------------- --------------------- --------------------- --------------------- ---------------------

Transactions with the owners of the Company

Issue of ordinary shares 17 1,273 727,355 - - 728,628

Equity-settled share-based payment 23 - - 39,973 - 39,973

Share warrants exercised / forfeited 23 - - (48,153) - (48,153)

Equity component of convertible loan 18 - - 379,694 - 379,694

--------------------- --------------------- --------------------- --------------------- ---------------------

Total transaction with owners of the Company 1,273 727,355 371,514 - 1,100,142

--------------------- --------------------- --------------------- --------------------- ---------------------

Balance as at 31 December 2019 95,084 17,011,053 1,271,459 (17,637,543) 740,053

========= ========= ========= ========= =========


12

River iGaming p.l.c

Statements of Cash Flows


Group Company

Notes 2019 2018 2019 2018

€ € € €

Cash flows from

operating activities

Loss for the year / period (25,600,865) (5,893,247) (16,002,938) (1,634,605)

Adjustments for:

Depreciation and

amortisation 13,14

357,794 112,726

3,410 1,029

Share based payments 23 (8,180) 352,536 (8,180) 352,536

Share of loss of equity

accounted investee 16

421,513 453,768

- -

Loss on disposal of plant

and equipment

161,385 -

- -

Gain in fair value of

contingent

consideration 7

- (349,470)

- (349,470)

Interest receivable 7 (97) (5,274) (429,446) (5,274)

Interest payable 7 949,126 37,550 673,265 32,537

Exchange differences 7 (8,966) (40,550) (2,039) (40,550)

Unwinding of interest on

deferred consideration 7

171,697 112,597

171,697 112,597

Deferred consideration

written off 20

(4,706,547) -

- -

Fair value movement on:

Contingent consideration 19 (1,371,970) - (1,371,970) -

Mutual option 19 (1,361,511) - (1,361,511) -

Unclaimed liability

written off 21

(3,127,877) -

- -

Impairment of goodwill,

investment in

subsidiaries and intra-

group receivables 14,15

28,239,237 -

17,776,735 -

------------------- ------------------- ------------------- -------------------

(5,885,261) (5,219,364) (550,977) (1,531,200)

Changes in:

Trade and other receivables

(305,384) (2,291,090) (6,522,655) (892,722)

Trade and other payables 4,377,959 1,591,531 (2,867,597) 538,468

------------------- ------------------- ------------------- -------------------

Cash absorbed by


(1,812,686) (5,918,923)

(9,941,229) (1,885,454)

Interest received 97 5,274 429,446 5,274

Interest paid (275,861) (37,550) - (32,537)

------------------- ------------------- ------------------- -------------------

Net cash used in


(2,088,450) (5,951,199)

(9,511,783) (1,912,717)

------------------- ------------------- ------------------- -------------------

13

River iGaming p.l.c

Statements of Cash Flows (continued)


Group Company

2019 2018 2019 2018

Note € € € €

Cash flows from investing activities

Acquisition of plant and equipment 13

(554,332) (228,437)

(449,114) (4,117)

Acquisition of intangible assets 14 - (2,969,782) - -

Amounts repaid / (advanced) to

subsidiaries, net 15

- -

(5,313,581) (8,408,827)

Acquisition of subsidiaries, net of cash 15 (12,922,333) (425,890) (342,962) (3,600)

Amount advanced to joint venture to

fund business acquisition 16

- (4,694,050)

- (4,694,050)

Acquisition of equity accounted

investee 16

- (7,956)

- (7,956)

------------------- ------------------- ------------------- -------------------

Net cash used in investing activities (13,476,665) (8,326,115) (6,105,657) (13,118,550)

------------------ ------------------- ------------------- -------------------

Cash flows from financing activities

Issue of share capital 17 -

93,811 -

93,811

Share premium 17 - 16,283,698 - 16,283,698

Borrowings 18 15,000,000 - 15,000,000 -

Interest payable 18 (630,000) - (630,000) -

------------------- ------------------- ------------------- -------------------

Net cash from financing activities 14,370,000 16,377,509 14,370,000 16,377,509

------------------- ------------------- ------------------- -------------------

Change in cash and cash equivalents

(1,195,115) 2,100,195

(1,247,440) 1,346,242

Cash and cash equivalent at beginning

of year / period

2,192,280 -

1,346,242 -

Cash held by subsidiary acquired 15 257,745 92,085 - -

Effect of foreign exchange differences

on translation of foreign operations

285,911 -

- -

Movement in player balances (384,811) - - -

------------------- ------------------- ------------------- -------------------

Cash and cash equivalent at end of

year / period 12

1,156,010 2,192,280

98,802 1,346,242

======== ======== ======== ========

Non-cash transactions:

Acquisition of equity accounted

investee

-

6,092,853

-

6,092,853

Financial liabilities at fair value through

profit or loss and deferred

consideration

(1,634,900)

(6,092,853)

(1,634,900)

(6,092,853)

Acquisition of subsidiary through issue

of equity instrument

(728,628)

-

(728,628)

-

Acquisition of intangible assets and

goodwill:

(8,831,065) (5,350,769) - -

Deferred tax liability 3,131,509 1,341,678 - -

Capital creditors - 3,127,877 - -

Other equity component 3,244,412 547,409 - -

Net assets acquired,

including cash

2,455,144

333,805

-

-

======== ======== ======== ========


River iGaming p.l.c

Notes to the Financial Statements


___________________________________________________________________________________

14

1 Reporting entity

River iGaming p.l.c (the “Company”) is a public liability company domiciled and

incorporated in Malta.

These consolidated financial statements comprise the Company and its subsidiaries

(collectively referred to as the “Group” and individually “Group companies”).

2 Basis of preparation

2.1 Statement of compliance

These consolidated and separate financial statements have been prepared and presented

in accordance with International Financial Reporting Standards as adopted by the EU. All

references in these consolidated and separate financial statements to IAS, IFRS or SIC/

IFRIC interpretations refer to those adopted by the EU. They have also been drawn up in

accordance with the provision of the Companies Act, 1995 (Chapter 386, Laws of Malta),

to the extent that such provisions do not conflict with the applicable framework.

These are the first set of the Group and the Company’s consolidated and separate financial

statements in which IFRS 16 Leases has been applied. The related changes to significant

accounting policies are described in note 4.

2.2 Basis of measurement

These consolidated and separate financial statements have been prepared on the historical

cost basis except for derivative financial instruments and contingent consideration

assumed in a business combination which are measured at fair value.

2.2.1 Going concern basis

As at 31 December 2019, the Company and the Group registered a loss amounting to

€16,002,938 (2018: €1,634,605) and €25,600,865 (2018: €5,893,247) respectively, and as

at that date the working capital of the Company stood at €1,177,687 (2018: deficiency of

€4,114,934) whereas that of the Group reflected a working capital deficiency of €2,506,644

(2018: €6,050,268).

During financial reporting period ended 31 December 2019, the Group has suspended the

activities of components which carried out online iGaming activities (“B2C”), following a

re-alignment of its strategy to concentrate its business activities on its B2B offering. In that

regard, the Group has two operating components as at 31 December 2019 (operating

within the online casino space), one of which offered platform services and provided

games whilst the other carried out marketing and content creation activities.

River iGaming p.l.c



___________________________________________________________________________________

15

2 Basis of preparation (continued)

2.2 Basis of measurement (continued)

2.2.1 Going concern basis (continued)

As per the projections prepared by the directors, the sub-subsidiary offering the platform

services and games is expected to be the sole cash flow generating component within the

Group. In that regard, during the financial year ended 31 December 2019, that component

has managed to secure two contracts: (i) an indefinite contract for the provision of services

to third party and (ii) another service contract (renewable annually, for a period of five years)

with a related company not forming part of the Group. Even though formal agreements are

not yet in place, that sub-subsidiary has been provided with a written confirmation by the

related company stating that it is its intention to extend the contract for a further period (at

the end of 2020) and to further any business opportunities together during 2020 and in the

years to come. In addition, the sub-subsidiary’s directors are also considering other

business opportunities for generating income, with negotiations ongoing with a number of

potential clients.

The Group continues to operate a central treasury approach whereby any funding

requirements are channelled through the Company. In addition to the projected cash

inflows from the sub-subsidiary noted in the previous paragraph, the Group has secured,

post period-end, additional funding in the form of a loan of €1.6 million from one of the

Company’s shareholders to support its activities. In addition, the directors have initiated

discussions with potential lenders for an additional funding of €0.4 million during 2020. In

the absence of successful conclusion of the latter funding, or in the case of additional

funding requirements, the directors intend to invite existing shareholders to invest,

underpinning its renewed business strategy.

The directors have prepared a forecast for a period of twelve months to 31 December

2020, which sets out the expected level of net cash flows that the Group is expected to

generate through the above avenues, together with the related working capital needs and

financial obligations of the Group and the Company.

Based on the foregoing, the directors are of the view that the service contracts in place

held by one of the operating components (noted above) together with the above funding

should continue to meet the level of cash required to enable the Group and the Company

to honour their various financial commitments, fund their own operations and continue to

operate as a going concern. The directors therefore believe that it continues to be

appropriate to adopt the going concern basis underlying the basis of preparation of the

financial statements.

In the event that either (i) one or both of the existing service contracts held by the sub-

subsidiary company are discontinued, without new contracts being won to compensate

for the lost business or (ii) the Group fails to raise the required additional funding to provide

for its needs (including, also those of the Company), there exists a material uncertainty

that may cast significant doubt on the Company’s and the Group’s ability to continue as a

going concern. The financial statements do not include any adjustments that could result

should any of the above service contracts be terminated, or the alternative plans or funding

arrangements not materialising.

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2.3 Functional and presentation currency

These financial statements are presented in Euro (€), which is the Company’s functional

currency.

2.4 Use of judgements and estimates

In preparing these consolidated and separate financial statements, management has made

judgements and estimates that affect the application of the Group’s accounting policies

and the reported amounts of assets, liabilities, income and expenses. Actual results may

differ from these estimates. Estimates and underlying assumptions are reviewed on an

ongoing basis. Revisions to estimates are recognised prospectively.

2.4.1 Judgements, assumptions and estimation uncertainties

Information about judgements, assumptions and estimation uncertainties at 31 December

2019 that have the a significant risk of resulting in a material adjustment to the carrying

amount of assets and liabilities in the next financial year is include in the following notes:

· Note 14: Intangible assets and goodwill

· Note 15: Investments: Business combinations

· Note 16: Equity accounted investee: whether the Group has joint control over an

investee

· Note 23: Share-based payment arrangements

· Note 24: Financial instruments – fair values and risk management

Estimates were primarily used to determine the fair value of financial instruments for which

no active market exists and the measurement of intangible assets and goodwill. Such

estimates are based on the basis described in the relevant accounting policies (see note

3).

In the opinion of the directors, the accounting estimates and judgements made in the

course of preparing these financial statements are not difficult to reach, subjective or

complex to a degree which would warrant their description as significant and critical in

terms of the requirements of IAS 1 Presentation of Financial Statements.

2.4 Use of judgements and estimates

2.4.2 Measurement of fair values

A number of the Group’s accounting policies and disclosures require the measurement of

fair values, for both financial and non-financial assets and liabilities.

The Group regularly reviews significant unobservable inputs and valuation adjustments. If

third party information is used to measure fair values, then the Group assesses the

evidence obtained from third parties to support the valuation in accordance with IFRSs as

adopted by the EU. Significant valuation issues are reported to the Group’s Board of

Directors.

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2.4 Use of judgements and estimates (continued)

2.4.2 Measurement of fair values

A number of the Group’s accounting policies and disclosures require the measurement of

fair values, for both financial and non-financial assets and liabilities.

The Group regularly reviews significant unobservable inputs and valuation adjustments. If

third party information is used to measure fair values, then the Group assesses the

evidence obtained from third parties to support the valuation in accordance with IFRSs as

adopted by the EU.

Significant valuation issues are reported to the Group’s Board of Directors.

When measuring the fair value of an asset or a liability, the Group uses observable market

data as far as possible. Fair values are categorised into different levels in a fair value

hierarchy based on the inputs used in the valuation techniques as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2: inputs other than quoted prices included in Level 1 that are observable for the

asset or liability, either directly (i.e. as price) or indirectly (i.e. derived from prices).

• Level 3: inputs for the asset or liability that are not based on observable market data

(unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability fall into different levels

of the fair value hierarchy, then the fair value measurement is categorised in its entirety in

the same level of the fair values hierarchy as the lowest level input that is significant to the

entire measurement.

The Group recognises transfers between levels of the fair value hierarchy at the end of the

reporting period during which the change has occurred. Fair values have been determined

based on the following methods.

2.4.2.1 Non-derivative financial assets measured at amortised cost

The fair value of non-derivative financial assets measured at amortised cost is estimated

as the present value of future cash flows, discounted at the market rate of interest at the

reporting date. The carrying amount of cash and cash equivalents and trade and other

receivables is a reasonable approximation of their fair value.

2.4.2.2 Non-derivative financial liabilities measured at amortised cost

The fair value of non-derivative financial liabilities measured at amortised cost is calculated

based on the present value of future principal and interest cash flows, discounted at the

market rate of interest at the reporting date. The carrying amounts of the deferred

consideration and trade and other payables are a reasonable approximation of fair value.

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2.4 Use of judgements and estimates (continued)

2.4.2 Measurement of fair values (continued)

2.4.2.3 Financial assets and liabilities at fair value through profit or loss

2.4.3.1 Contingent consideration and mutual call-put option

The fair value of the earn-out payment (contingent consideration), is described in note 19.2,

and the fair value of the mutual call and put option, described in note 19.2, and are

estimated using a Monte Carlo simulation valuation technique, which considers the

present value of the probability-weighted expected future financial outcome, discounted

using a risk-adjusted discount rate (including non-performance risk). The fair value is

estimated in the currency of the expected payment, namely the Great British Pound

(“GBP”), and translated into Euro at each measurement date.

Where applicable, further information about the assumptions made in measuring fair

values is included in the notes.

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3 Significant accounting policies

The Group has consistently applied the following accounting policies to all periods

presented in these financial statements, except as mentioned in note 4 following the

adoption of newly effective standards as from 1 January 2019. The comparative amounts

represent the results of the 14 months period ended 31 December 2018 and the state of

affairs as at that date.

3.1 Basis of consolidation

3.1.1 Business combinations

The Group accounts for business combinations using the acquisition method when control

is transferred to the Group. The consideration transferred in the acquisition is generally

measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises

is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or

loss immediately. Transaction costs are expensed when incurred, except if related to the

issue of debt or equity securities.

The consideration transferred does not include amounts related to the settlement of pre-

existing relationships. Such amounts are generally recognised in profit or loss.

Any contingent consideration is measured at fair value at the date of acquisition. If an

obligation to pay contingent consideration that meets the definition of a financial

instrument is classified as equity, then it is not remeasured and settlement is accounted

for within equity. Otherwise, other contingent consideration is remeasured at fair value at

each reporting date and subsequent changes in the fair value of the contingent

consideration are recognised in profit or loss.

3.1.2 Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is

exposed to, or has rights to, variable returns from its involvement with the entity and has

the ability to affect those returns through its power over the entity. The financial

statements of subsidiaries are included in the consolidated financial statements from the

date on which control commences until the date that control ceases.

3.1.3 Non-controlling interests

Non-controlling interests (“NCI”) are measured initially at their proportionate share of the

acquiree’s identifiable net assets at the date of acquisition. Changes in the Group’s

interest in a subsidiary that do not result in a loss of control are accounted for as equity

transactions.

3.1.4 Loss of control

When the Group loses control over a subsidiary, it derecognises the assets and liabilities

of the subsidiary, and any related NCI and other components of equity. Any resulting gain

or loss is recognised in profit or loss. Any interest retained in the former subsidiary is

measured at fair value when control is lost.

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3 Significant accounting policies (continued)

3.1 Basis of consolidation (continued)

3.1.5 Interests in equity-accounted investees

The Group's interests in equity-accounted investees comprises an interest in a joint

venture.

A joint venture is an arrangement in which the Group has joint control, whereby the Group

has rights to the net assets of the arrangement, rather than rights to its assets and

obligations for its liabilities.

Interests in joint ventures are accounted for using the equity method. They are initially

recognised at cost, which includes transaction costs. Subsequent to initial recognition, the

consolidated financial statements include the Group's share of the profit or loss and other

comprehensive income (“OCI”) of equity-accounted investees, until the date on which

joint control ceases.

Investments in equity-accounted investees are stated in the financial statements of the

Company at cost less impairment, if any. Any amounts advanced / incurred for which

settlement is neither planned nor likely to occur in the foreseeable future, are treated as

an extension to the Company’s net investment therein and included in the carrying amount.

3.1.6 Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising

from intra-group transactions, are eliminated. Unrealised gains arising from transactions

with equity-accounted investees are eliminated against the investment to the extent of the

Group's interest in the investee. Unrealised losses are eliminated in the same way as

unrealised gains, but only to the extent that there is no evidence of impairment.

3.2 Investment in subsidiaries

Investments in subsidiaries are shown in the statement of financial position of the

Company at cost less accumulated impairment losses.

Amounts advanced by the Company to its subsidiaries and other amounts incurred for

which settlement is neither planned nor likely to occur in the foreseeable future, are treated

as an extension to the Company’s net investment in those subsidiary companies and

included as part of the carrying amount of investment in subsidiaries.

3.3 Foreign currency

3.3.1 Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of

Group companies at exchange rates at the dates of the transactions.

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3.3 Foreign currency (continued)

3.3.1 Foreign currency transactions (continued)

Monetary assets and liabilities denominated in foreign currencies are translated to the

functional currency at the exchange rate at the reporting date. Non-monetary assets and

liabilities that are measured at fair value in a foreign currency are translated to the functional

currency at the exchange rate when the fair value was determined. Non-monetary items

that are measured based on historical cost in foreign currency are translated at the

exchange rate at the date of the transaction. Foreign currency differences are generally

recognised in profit or loss.

3.3.2 Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value

adjustments arising on acquisition are translated into Euro at the exchange rates at the

reporting date. The income and expenses of foreign operations are translated into Euro at

the exchange rates at the dates of the transactions.

Foreign currency differences are recognised in OCI and accumulated in the translation

reserve, except to the extent that the translation difference is allocated to NCI.

When a foreign operation is disposed of in its entirety or partially such that control,

significant influence or joint control is lost, the cumulative amount in the translation reserve

related to that foreign operation is reclassified to profit or loss as part of the gain or loss

on disposal. If the Group disposes of part of its interest in a subsidiary but retains control,

then the relevant proportion of the cumulative amount is reattributed to NCI. When the

Group disposes of only part of an associate or joint venture while retaining significant

influence or joint control, the relevant proportion of the cumulative amount is reclassified

to profit or loss.

3.4 Discontinued operation

A discontinued operation is a component of the Group’s business, the operations and cash

flows of which can be clearly distinguished from the rest of the Group and which:

- Represents a separate major line of business or geographic area of operations;

- Is part of a single co-ordinated plan to dispose of a separate major line of business or

geographic area of operations; or

- is a subsidiary acquired exclusively with a view to resale.

Classification as a discontinued operation occurs at the earlier of disposal or when the

operation meets the criteria to be classified as held-for-sale.

When an operation is classified as a discontinued operation, the comparative statement of

profit or loss and OCI is re-presented as if the operation has been discontinued from the

start of the comparative year.

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3.5 Revenue

Under IFRS 15, revenue is recognised when a customer obtains control of the goods or

services and is measured based on the consideration specified in a contract with a

customer and excludes amounts collected on behalf of third parties.

3.5.1 Nature of services

The Group’s revenue is primarily derived from casino style games over the internet

(“iGaming activities”). In addition, the Group also generates revenue through white-label

arrangements and also offers marketing services and support and the offering of platform

and other games.

In relation to the iGaming activities carried out by the Group, akin to fixed-odds betting,

when a wager is placed by a punter on such activities, the pay-out is typically known at the

outset. While iGaming wagering contracts that fall within this category meet the definition

of a financial instrument and are within the scope of IFRS 9 Financial Instruments, and

excluded from the scope of IFRS 15 Revenue from Contracts with Customers, the impact

of having revenue classified under one standard and not the other is neutral on revenue

recognition or the Group’s financial statements. The other revenue streams generated by

the Group fall within the scope of IFRS 15 Revenue from Contracts with Customers.

3.5.2 Performance obligations identified and the recognition of revenue

Revenue is measured based on the consideration specified in the contract with a

customer. As described above, the Group recognises revenue when it transfers control

over a good or service to a customer.

Information about the nature and timing of satisfaction of performance obligations in

contracts with customers in relation to each revenue stream, including any significant

payment terms, are as follows:

3.5.2.1 iGaming operations

Transactions in which the Group takes a position against its punters, (and as such the value

of the individual bet (contract) is contingent on the outcome of a specified event and the

Group is not, therefore, normally guaranteed a specific commission or return), are classified

as derivative financial instruments. These derivative financial instruments are initially

measured at fair value. Subsequent to initial recognition, such derivatives are measured at

fair value, and changes therein are generally recognised in profit or loss in accordance with

IFRS 9 Financial Instruments, within the revenue line as this represents the Group’s

principal activity. Any iGaming activities not yet concluded by the reporting date (“open

bets”) are measured at fair value and included within liabilities.

As described below, other iGaming transactions, such as those in which the Group

receives a commission based on the amount wagered are recognised and measured in

accordance with IFRS 15 Revenue from Contracts with Customers (and as such not

accounted for as derivatives, because the fair value of such contracts do not fluctuate

based on an underlying variable).

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3.5 Revenue (continued)

3.5.2 Performance obligations identified and the recognition of revenue (continued)

Bonuses (including free bets) granted to punters are recognised as a liability when the

punter fulfils the criteria to qualify for the bonus offered and the cost of such and other

promotional costs is accounted for as an offset to revenue. All jackpots which pertain to

the Group are recognised as a liability, whereas in respect of any pooled jackpots the Group

recognises as an expense the amount contributed towards the pool.

3.5.2.2 White-label arrangements

Revenue from the white-label arrangements in place arises from a commission earned on

iGaming transactions on casino style games entered into by punters of the counterparty.

The obligation of the counterparty is to settle these bets to the respective player accounts

held with such counterparty once the outcome of the event is known and hence the

amount of the winning and losing bets is determinable. The commission, accruing to the

Group is calculated on the amount of the winning customer bets, and is recognised on this

settlement date and settled within the time window allowed in the revenue share

agreement.

3.5.2.3 Media

The Group offers a variety of media options, which in the main comprise of search engine

optimization (“SEO”), gathering of market intelligence, media production and / or media

production and airing thereof in one or more consecutive instances.

Such services are identified as distinct performance obligations when the following criteria

are met:

- the customer can benefit from the good or services on its own or in conjunction with

other readily available resources; and

- the Group’s promise to transfer the service to the customer is separately identifiable from

other promises in the contract.

As there are no distinct services to be provided for SEO and the gathering of market

intelligence, only one performance obligation arises, that being, the provision of a product

or service, with the performance obligation crystallising when the relative service is

provided, and revenue is thus recognised at a point in time.

Specifically for the revenue arising under media production and airing thereof in one or

more consecutive instances, the above criteria are met and two performance obligations

arise, with revenue from the production of the video being recognised at a point in time,

whereas that arising in relation to the airing thereof would be recognised over time. In the

instances where the client just undertakes a] the production of the video and b] the airing

thereof, is independently done by the customer, then there is just one performance

obligation, with the revenue of the former being recognised at a point in time.

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3.5 Revenue (continued)

3.5.2 Performance obligations identified and the recognition of revenue (continued)

3.5.2.3 Media (continued)

The Group’s amount of consideration which it expects to be entitled to in exchange for

transferring of services to a customer is determined on a per-service usage basis, and is

payable in accordance with customary payment terms. Accordingly a transaction price is

determined separately for each performance obligation.

3.5.2.4 Management fees and the provision of platform services and related games

The Company earns management fee income from services it renders to its subsidiaries.

Such services are deemed to comprise of a series of distinct services treated as a single

performance obligation satisfied over time. Accordingly, revenue is recognised over the

service period. The transaction price is determined on a per-contract basis. In relation to

the provision of platform services and related games, revenue is recognised over time by

reference to the fixed fee charged which arises on a monthly basis.

3.6 Employee benefits

3.6.1 Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is

recognised for the amount expected to be paid if the Group has a present legal or

constructive obligation to pay this amount as a result of past service provided by the

employee and the obligation can be estimated reliably.

The grant-date fair value of equity-settled share-based payment arrangements granted to

employees is generally recognised as an expense, with a corresponding increase in equity,

over the vesting period of the awards. The amount recognised as an expense is adjusted

to reflect the number of awards for which the related service and non-market performance

conditions are expected to be met, such that the amount ultimately recognised is based

on the number of awards that meet the related service and non-market performance

conditions at the vesting date. For share-based payment awards with non-vesting

conditions, the grant-date fair value of the share-based payment is measured to reflect

such conditions and there is no true-up for differences between expected and actual

outcomes.

3.6.3 Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related

service is provided. Prepaid contributions are recognised as an asset to the extent that a

cash refund or a reduction in future payments is available.

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3.6 Employee benefits (continued)

3.6.4 Termination benefits

Termination benefits are expensed at the earlier of when the Group can no longer withdraw

the offer of those benefits and when the Group recognises costs for a restructuring. If

benefits are not expected to be settled wholly within 12 months of the reporting date, then

they are discounted.

3.7 Finance income and costs

The Group and the Company’s finance income and finance costs include bank interest

receivable and payable, realised and unrealised foreign exchange gains and losses,

unwinding of interest on deferred consideration and movements in fair value of contingent

consideration. Interest income and interest expense is recognised using the effective

interest method. Dividend income is recognised in profit or loss on the date on which the

Group’s right to receive payment is established.

The ‘effective interest rate’ is the rate that exactly discounts estimate future cash

payments or receipts through the expected life of the financial instruments to:

- the gross carrying amount of the financial asset; or

- the amortised cost of the financial liability.

In calculating interest income and expense, the effective interest rate is applied to the

gross carrying amount of the asset (when the asset is not credit-impaired) or to the

amortised cost of the liability. However, for financial assets that have become credit-

impaired subsequent to initial recognition, interest income is calculated by applying the

effective interest rate to the amortised cost of the financial asset. If the asset is no longer

credit-impaired, then the calculation of interest income reverts to the gross basis.

3.8 Income tax

Income tax expense comprises current and deferred tax. It is recognised in profit or loss

except to the extent that it relates to a business combination, or items recognised directly

in equity or in other comprehensive income.

3.8.1 Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or

loss for the year and any adjustment to tax payable or receivable in respect of previous

years. The amount of current tax payable or receivable is the best estimate of the tax

amount expected to be paid or received that reflects uncertainty related to income taxes,

if any. It is measured using tax rates enacted or substantively enacted at the reporting

date. Current tax also includes any tax arising on dividends. Current tax assets and liability

are offset only if certain criteria are met.

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3.8 Income tax

3.8.2 Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying

amounts of assets and liabilities for financial reporting purposes and the amounts used for

taxation purposes.

Deferred tax is not recognised for:

— temporary differences on the initial recognition of assets or liabilities in a

transaction that is not a business combination and that affects neither accounting

nor taxable profit or loss;

— temporary differences related to investments in subsidiaries, associates and joint

arrangements to the extent that the Group is able to control the timing of the

reversal of the temporary differences and it is probable that they will not reverse

in the foreseeable future; and

— taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognised for unused tax losses, tax credits and deductible

temporary differences to the extent that it is probable that future taxable profits will be

available against which they can be used. Future taxable profits are determined based on

the reversal of relevant taxable temporary differences. If the amount of taxable temporary

differences is insufficient to recognise a deferred tax asset in full, then future taxable

profits, adjusted for reversals of existing temporary differences, are considered, based on

the business plans for individual subsidiaries in the Group. Deferred tax assets are

reviewed at each reporting date and are reduced to the extent that it is no longer probable

that the related tax benefit will be realised; such reductions are reversed when the

probability of future taxable profits improves.

Unrecognised deferred tax assets are reassessed at each reporting date and recognised

to the extent that it has become probable that future taxable profits will be available against

which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary

differences when they reverse, using tax rates enacted or substantively enacted at the

reporting date.

The measurement of deferred tax reflects the tax consequences that would follow from

the manner in which the Group expects, at the reporting date, to recover or settle the

carrying amounts of its assets and liabilities.

Deferred tax assets and liabilities are offset only if certain criteria are met.

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3.9 Plant and equipment

3.9.1 Recognition and measurement

Items of plant and equipment are measured at cost less accumulated depreciation and any

accumulated impairment losses. Cost includes expenditure that is directly attributable to

the acquisition of the asset. Purchased software that is integral to the functionality of the

related item of plant and equipment is capitalised as part of that equipment.

If significant parts of an item of plant and equipment have different useful lives, then they

are accounted for as separate items (major components) of equipment. Any gain or loss

on disposal of an item of plant and equipment is recognised in profit or loss.

3.9.2 Subsequent expenditure

Subsequent expenditure is capitalised only if it is probable that the future economic

benefits associated with the expenditure will flow to the Group.

3.9.3 Depreciation

Depreciation is calculated to write off the cost of items of plant and equipment less their

estimated residual values using the straight–line method over their estimated useful lives,

and is generally recognised in profit or loss.

The estimated useful lives of items of plant and equipment are as follows:

• furniture and fixtures 10 years

• computer equipment 4 years

• other equipment 5 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date

and adjusted if appropriate.

3.10 Intangible assets and goodwill

3.10.1 Recognition and measurement

Intangible assets that are acquired by the Group and have finite useful lives are measured

at cost less accumulated amortisation and any accumulated impairment losses. Intangible

assets comprise brands, domain names, other IP rights and software.

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3.10 Intangible assets and goodwill (continued)

3.10.1 Recognition and measurement (continued)

Goodwill that arises upon the acquisition of subsidiaries or businesses represents the

excess of the cost of the acquisition over the Group’s interest in the net fair value of the

identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess is

negative, it is recognised immediately in profit or loss. Subsequent to initial recognition,

goodwill is measured at cost less accumulated impairment losses.

3.10.2 Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits

embodied in the specific asset to which it relates. All other expenditure, including

expenditure on any internally generated goodwill and brands, is recognised in profit or loss

as incurred.

3.10.3 Amortisation

Amortisation is calculated to write off the cost of intangible assets less their estimated

residual values using the straight-line method over their estimated useful lives, and is

generally recognised in profit or loss.

The estimated useful lives are as follows:

- IP rights 3.3 years

- software 4 years

Amortisation methods, useful lives and residual values are reviewed at each reporting date

and adjusted if appropriate. For intangible assets that have an indefinite useful life, such

assets are not amortised but tested annually for impairment.

3.11 Assets held for sale

Non-current assets, or disposal groups comprising assets and liabilities, are classified as

held-for-sale if it is highly probable that they will be recovered primarily through sale rather

than continuing use.

Such assets, or disposal group, are generally measured at the lower of their carrying

amount and fair value less costs to sell. Any impairment loss on a disposal group is

allocated first to goodwill, and then to the remaining assets and liabilities on a pro-rata

basis, except that no loss is allocated to financial assets and deferred tax assets, which

continue to be measured in accordance with the Group’s other accounting policies.

Impairment losses on initial classification as held-for-sale or held-for-distribution and

subsequent gain and losses on remeasurement are recognised in profit or loss. Once

classified as held-for-sale, intangible assets and plant and equipment are no longer

amortised or depreciated, and any equity-accounted investee is no longer equity

accounted.

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3.12 Financial instruments

IFRS 9 sets out requirements for recognising and measuring financial assets, financial

liabilities and some contracts to buy or sell non-financial items.

3.12.1 Recognition and initial measurement

Trade receivables are initially recognised when they are originated. All other financial assets

and financial liabilities are initially recognised when the Group becomes a party to the

contractual provisions of the instrument.

A financial asset (unless it is a trade receivable without a significant financing component)

or financial liability is initially measured at fair value plus, for an item not at Fair Value

Through Profit or Loss (“FVTPL”), transaction costs that are directly attributable to its

acquisition or issue. A trade receivable without a significant financing component is initially

measured at the transaction price.

3.12.2 Classification and subsequent measurement of financial assets and financial

liabilities

On initial recognition, a financial asset is classified as measured at: amortised cost; Fair

Value Through Other Comprehensive Income (“FVOCI”) – debt investment; FVOCI – equity

investment; or FVTPL. Financial assets are not reclassified subsequent to their initial

recognition unless the Group changes its business model for managing assets, in which

case all affected financial assets are reclassified on the first reporting period following the

change in the business model. The classification of financial assets under IFRS 9 is

generally based on the business model in which a financial asset is managed and its

contractual cash flow characteristics.

A financial asset is measured at amortised cost if it meets both of the following conditions

and is not designated as at FVTPL:

— it is held within a business model whose objective is to hold assets to collect

contractual cash flows; and

— its contractual terms give rise on specified dates to cash flows that are solely

payments of principal and interest on the principal amount outstanding.

For financial assets at amortised cost, these assets are subsequently measured at

amortised cost using the effective interest method. The amortised cost is reduced by

impairment losses. Interest income, foreign exchange gains and losses and impairment

are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit

or loss.

The Group and the Company’s financial asset comprise cash and cash equivalents and

trade and other receivables.

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3.12 Financial instruments (continued)

3.12.2 Classification and subsequent measurement of financial assets and financial

liabilities (Continued)

Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability

is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is

designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair

value and net gains and losses, including any interest expense, are recognised in profit or

loss. Other financial liabilities are subsequently measured at amortised cost using the

effective interest method. Interest expense and foreign exchange gains and losses are

recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit

or loss.

The Group’s financial assets and liabilities measured at FVTPL comprise a mutual call and

put option and contingent consideration assumed in a business combination. The Group

and the Company’s financial liabilities at amortised cost comprise trade and other payables

and deferred consideration payable to a related party.

3.12.3 Derecognition

Financial assets

The Group derecognises a financial asset when the contractual rights to the cash flows

from the financial asset expire, or it transfers the rights to receive the contractual cash

flows in a transaction in which substantially all of the risks and rewards of ownership of

the financial asset are transferred or in which the Group neither transfers nor retains

substantially all of the risks and rewards of ownership and it does not retain control of the

financial asset.

Financial liabilities

The Group derecognises a financial liability when its contractual obligations are discharged

or cancelled, or expire. The Group also derecognises a financial liability when its terms are

modified and the cash flows of the modified liability are substantially different, in which

case a new financial liability based on the modified terms is recognised at fair value.

On derecognition of a financial liability, the difference between the carrying amount

extinguished and the consideration paid (including any non-cash assets transferred or

liabilities assumed) is recognised in profit or loss.

3.12.4 Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the

statement of financial position when, and only when, the Group currently has a legally

enforceable right to set off the amounts and it intends either to settle them on a net basis

or to realise the asset and settle the liability simultaneously.

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3.12 Financial instruments (continued)

3.12.5 Ordinary share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue

of ordinary shares, net of tax effects, are recognised as a deduction from equity. Income

tax relating to transaction costs of an equity transaction is accounted for in accordance

with IAS 12.

3.12.6 Derivative financial instruments

Derivative financial instruments including open bets are initially measured at fair value.

Subsequent to initial recognition, such derivatives are measured at fair value, and changes

therein are generally recognised in profit or loss.

3.12.7 Compound financial instruments

Compound financial instruments issued by the Group comprise a convertible loan

denominated in euro that can be converted to ordinary shares at the option of the holder,

when the number of shares to be issued is fixed and does not vary with changes in fair

value.

The liability component of compound financial instruments is initially recognised at the fair

value of a similar liability that does not have an equity conversion option. The equity

component is initially recognised as the difference between the fair value of the compound

financial instrument as a whole and the fair value of the liability component. Any directly

attributable transaction costs are allocated to the liability and equity components in

proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial

instrument is measured at amortised cost using the effective interest method. The equity

component of a compound financial instrument is not remeasured.

Interest related to the financial liability is recognised in profit or loss. On conversion at

maturity, the financial liability is reclassified to equity and no gain or loss is recognised.

3.13 Impairment

3.13.1 Financial assets

The Group recognises loss allowances for Expected Credit Losses (“ECLs”) on financial

assets at amortised cost, namely trade and other receivables (including short term balances

receivable from related undertakings) and cash at bank.

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3.13 Impairment (continued)

3.13.1 Financial assets (continued)

Under IFRS 9, loss allowances are measured on either of the following bases:

— 12-month ECLs: these are ECLs that result from possible default events within the

12 months after the reporting date (or a shorter period if the expected life of the

instrument is less than 12 months); and

— lifetime ECLs: these are ECLs that result from all possible default events over the

expected life of a financial instrument.

The Group measures loss allowances for trade receivables without a significant financing

component and contract assets at an amount equal to lifetime ECLs.

When determining whether the credit risk of a financial asset has increased significantly

since initial recognition and when estimating ECLs, the Group considers reasonable and

supportable information that is relevant and available without undue cost or effort. This

includes both quantitative and qualitative information and analysis, based on the Group’s

historical experience and informed credit assessment and including forward-looking

information.

The Group assumes that the credit risk on a financial asset has increased significantly if it

is more than 30 days past due.

The Group considers a financial asset to be in default when:

— the borrower is unlikely to pay its credit obligations to the Group in full, without

recourse by the Group to actions such as realising security (if any is held); or

— the financial asset is more than 90 days past due.

The maximum period considered when estimating ECLs is the maximum contractual

period over which the Group is exposed to credit risk.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as

the present value of all cash shortfalls (i.e. the difference between the cash flows due to

the entity in accordance with the contract and the cash flows that the Group expects to

receive). ECLs are discounted at the effective interest rate of the financial asset. In the

case of interest free financial assets, such as trade receivables, ECLs are not discounted.

At each reporting date, the Group assesses whether financial assets carried at amortised

cost are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that

have a detrimental impact on the estimated future cash flows of the financial asset have

occurred.

Loss allowances for financial assets measured at amortised cost are deducted from the

gross carrying amount of the assets. Impairment losses related to trade and other

receivables, including contract assets, are presented separately in the statement of profit

or loss and OCI.

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3.13 Impairment (continued)

3.13.2 Non-financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets

to determine whether there is any indication of impairment. If any such indication exists,

then the asset’s recoverable amount is estimated. Goodwill is tested annually for

impairment.

For impairment testing, assets are grouped together into the smallest group of assets that

generates cash inflows from continuing use that are largely independent of the cash

inflows of other assets or Cash Generating Units (“CGUs”). Goodwill arising from a

business combination is allocated to CGUs or groups of CGUs that are expected to benefit

from the synergies of the combination.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair

value less costs to sell. Value in use is based on the estimated future cash flows,

discounted to their present value using a pre-tax discount rate that reflects current market

assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its

recoverable amount.

Impairment losses are recognised in profit or loss. They are allocated first to reduce the

carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying

amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment

loss is reversed only to the extent that the asset’s carrying amount does not exceed the

carrying amount that would have been determined, net of depreciation or amortisation, if

no impairment loss had been recognised.

3.13.3 Equity-accounted investees

The impairment assessment in respect of equity-accounted investees comprises two

successive steps:

(1) apply the equity method to recognise the investor’s share of any impairment

losses for the investee’s identifiable assets.

(2) when there is an indication of a possible impairment, test the investment as a

whole and recognise any additional impairment loss.

An impairment loss in respect of an equity-accounted investee is measured by comparing

the recoverable amount of the investment with its’ carrying amount. An impairment loss

is recognised in profit or loss and is reversed if there has been a favourable change in the

estimates used to determine the recoverable amount.

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3.14 Leases

The Group has applied IFRS 16 using the modified retrospective approach and therefore

the comparative information has not been restated and continues to be reported under IAS

17 and IFRIC 4. The details of accounting policies under IAS 17 and IFRIC 4 are disclosed

separately.

Policy applicable from 1 January 2019

At inception of a contract, the Group assesses whether a contract is, or contains, a lease.

A contract is, or contains, a lease if the contract conveys the right to control the use of an

identified asset for a period of time in exchange for consideration. To assess whether a

contract conveys the right to control the use of an identified asset, the Group assesses

whether:

- the contract involves the use of an identified asset – this may be specified explicitly or

implicitly, and should be physically distinct or represent substantially all of the capacity

of a physically distinct asset. If the supplier has a substantive substitution right, then

the asset is not identified;

- the Group has the right to obtain substantially all of the economic benefits from use of

the asset throughout the period of use; and

- the Group has the right to direct the use of the asset. The Group has this right when it

has the decision-making rights that are most relevant to changing how and for what

purpose the asset is used. In rare cases where the decision about how and for what

purpose the asset is used is predetermined, the Group has the right to direct the use

of the asset if either:

- the Group has the right to operate the asset; or

- the Group designed the asset in a way that predetermines how and for what

purpose it will be used.

This policy is applied to contracts entered into, or changed, on or after 1 January 2019.

At commencement or on modification of a contract that contains a lease component, the

Group allocates the consideration in the contract to each lease component on the basis of

its relative stand-alone prices. However, for the leases of property the Group has elected

not to separate non-lease components and account for the lease and non-lease

components as a single lease component.

As a lessee

The Group recognises a right-of-use asset and a lease liability at the lease commencement

date. The right-of-use asset is initially measured at cost, which comprises the initial amount

of the lease liability adjusted for any lease payments made at or before the

commencement date, plus any initial direct costs incurred and an estimate of costs to

dismantle and remove the underlying asset or to restore the underlying asset or the site

on which it is located, less any lease incentives received.

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3.14 Leases (continued)

Policy applicable from 1 January 2019 (continued)

As a lessee (continued)

The right-of-use asset is subsequently depreciated using the straight-line method from the

commencement date to the end of the lease term, unless the lease transfers ownership

of the underlying asset to the Group by the end of the lease term or the cost of the right-

of-use asset reflects that the Group will exercise a purchase option. In that case the right-

of-use asset will be depreciated over the useful life of the underlying asset, which is

determined on the same basis as those of plant and equipment. In addition, the right-of-

use asset is periodically reduced by impairment losses, if any, and adjusted for certain

remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are

not paid at the commencement date, discounted using the interest rate implicit in the lease

or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. The

Group uses its incremental borrowing rate as the discount rate.

The Group determines its incremental borrowing rate by obtaining interest rates from

various external financing sources and makes certain adjustments to reflect the terms of

the lease and type of the asset leased.

Lease payments included in the measurement of the lease liability comprise the following:

- fixed payments, including in-substance fixed payments;

- variable lease payments that depend on an index or a rate, initially measured using the

index or rate as at the commencement date;

- amounts expected to be payable under a residual value guarantee; and

- the exercise price under a purchase option that the Group is reasonably certain to

exercise, lease payments in an optional renewal period if the Group is reasonably

certain to exercise an extension option, and penalties for early termination of a lease

unless the Group is reasonably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is

remeasured when there is a change in future lease payments arising from a change in an

index or rate, if there is a change in the Group’s estimate of the amount expected to be

payable under a residual value guarantee, if the Group changes its assessment of whether

it will exercise a purchase, extension or termination option or if there is a revised in-

substance fixed lease payment.

When the lease liability is remeasured in this way, a corresponding adjustment is made to

the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying

amount of the right-of-use asset has been reduced to zero.

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3.14 Leases (continued)

Policy applicable from 1 January 2019 (continued)

Short-term leases and leases of low-value assets

The Group has elected not to recognise right-of-use assets and lease liabilities for leases

of low-value assets and/or leases that have a lease term of 12 months or less. The Group

recognises the lease payments associated with these leases as an expense on a straight-

line basis over the lease term. As at reporting date, the Group had no similar lease

contracts.

Policy applicable before 1 January

For contracts entered into before 1 January 2019, the Group determined whether the

arrangement was or contained a lease based on the assessment of whether:

- fulfilment of the arrangement was dependent on the use of a specific asset or assets;

and

- the arrangement had conveyed a right to use the asset. An arrangement conveyed the

right to use the asset if one of the following was met:

- the purchaser had the ability or right to operate the asset while obtaining or

controlling more than an insignificant amount of the output;

- the purchaser had the ability or right to control physical access to the asset while

obtaining or controlling more than an insignificant amount of the output; or

- facts and circumstances indicated that it was remote that other parties would take

more than an insignificant amount of the output, and the price per unit was neither

fixed per unit of output nor equal to the current market price per unit of output.

As a lessee

Assets held under other leases were classified as operating leases and were not

recognised in the Group’s statement of financial position. Payments made under operating

leases were recognised in profit or loss on a straight-line basis over the term of the lease.

Lease incentives received were recognised as an integral part of the total lease expense,

over the term of the lease.

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3.15 Fair value measurement

‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability

in an orderly transaction between market participants at the measurement date in the

principal or, in its absence, the most advantageous market to which the Group has access

at that date. The fair value of a liability reflects its non-performance risk.

The determination of fair value for financial assets and liabilities for which there is no

observable market price requires the use of valuation techniques as described in note 24.

For financial instruments that trade infrequently and have little price transparency, fair value

is less objective, and requires assumptions reflecting observable market data depending

on liquidity, concentration, uncertainty of market factors, pricing assumptions and other

risks affecting the specific instrument.

Observable inputs reflect market data obtained from independent sources, while

unobservable inputs reflect the Group’s market assumptions. Preference is given to

observable inputs.

The best evidence of the fair value of a financial instrument on initial recognition is normally

the transaction price – i.e. the fair value of the consideration given or received. If the Group

determined that the fair value on initial recognition differs from the transaction price and

the fair value is evidence neither by a quoted price in an active market for an identical asset

or liability nor based on a valuation technique for which any unobservable inputs are judged

to be insignificant in relation to the measurement, then the financial instrument is initially

measured at fair value, adjusted to defer the difference between the fair value on initial

recognition and the transaction price. Subsequently, that difference is recognised in profit

or loss on an appropriate basis over the life of the instrument but no later than when the

valuation is wholly supported by observable market data or the transaction is closed.

3.16 International Financial Reporting Standards in issue but not yet effective

A number of new standards are effective for annual periods beginning after 1 January 2019

and earlier application is permitted; however, the Group has not early adopted the new or

amended standards in preparing these financial statements.

The following amended standards and interpretations are not expected to have a significant

impact on the Group’s consolidated financial statements:

- Amendments to References to Conceptual Framework in IFRS Standards

- Definition of a Business (Amendments to IFRS 3)

- Definition of Material (Amendments to IAS 1 and IAS 8)

- IFS 17 Insurance Contracts

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4 Changes in significant accounting policies

Except for the changes below, the Group has consistently applied the accounting policies

to all periods presented in these consolidated financial statements.

The Group applied IFRS 16 with a date of initial application of 1 January 2019.

The Group applied IFRS 16 using the modified retrospective approach, under which the

lessee shall recognise:

- a lease liability at the date of initial application for leases previously classified as an

operating lease applying IAS 17, with the present value of the remaining lease

payments discounted using the lessee’s incremental borrowing rate at the date of initial

application, and

- right-of-use asset recognised at an amount equal to the lease liability, adjusted by the

amount of prepaid / acquired lease payments relating to that lease recognised in the

statement of financial position immediately before the date of initial application.

The comparative information presented for 2018 is not re-stated i.e. presented as

previously reported, under IAS 17 and related interpretations.

The details of the changes in accounting policies are disclosed below. Additionally, the

disclosure requirement in IFRS 16 have not generally been applied to comparative

information.

4.1 Definition of a lease

Previously, the Group determined at contract inception whether an arrangement was or

contained a lease under IFRIC 4 Determining whether an Arrangement contains a Lease.

The Group now assesses whether a contract is or contains a lease based on the definition

of a lease, as explained in Note 3.14.

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4 Changes in significant accounting policies (continued)

4.1 Definition of a lease (continued)

On transition to IFRS 16, the Group elected to apply the practical expedient to grandfather

the assessment of which transactions are leases. The Group applied IFRS 16 only to

contracts that were previously identified as leases. Contracts that were not identified as

leases under IAS 17 and IFRIC 4 were not reassessed for whether there is a lease under

IFRS 16. Therefore, the definition of a lease under IFRS 16 was applied only to contracts

entered into or changed on or after 1 January 2019.

4.2 As a lessee

As a lessee, the Group previously classified leases as operating or finance leases based

on its assessment of whether the lease transferred significantly all of the risks and rewards

incidental to ownership of the underlying asset to the Group. Under IFRS 16, the Group

recognises right-of-use assets and lease liabilities for all these leases – i.e. these leases

are on-balance sheet.

4.2.1 Leases classified as operating leases under IAS 17

On transition, lease liabilities were measured at the present value of the remaining lease

payments, discounted at the Group’s incremental borrowing rate as at 1 January 2019 (see

Note 4.3). Right-of-use assets are measured at either:

- their carrying amount as if IFRS 16 had been applied since the commencement date,

discounted using the lessee’s incremental borrowing rate at the date of initial

application, or

- an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued

lease payments – the Group applied this approach to all its leases.

The Group has tested its right-of-use assets for impairment on the date of transition and

has concluded that there is no indication that the right-of-use assets are impaired.

The Group used the following practical expedients when applying IFRS 16 to leases

previously classified as operating leases under IAS 17. In particular, the Group:

- applied a single discount rate to a portfolio of leases with reasonably similar

characteristics;

- relied on previous assessments on whether the leases are onerous;

- excluded initial direct costs from the measurement of the right-of-use asset at the date

of initial application; and

- used hindsight when determining the lease term.

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4.3 Impact on financial statements

On transition to IFRS 16, the Group recognised an additional €447,355 of right-of-use

assets, inclusive of accrued lease payment of €23,000 and €424,355 by way of lease

liabilities.

When measuring the lease liability for the lease that was classified as operating leases

under IAS 17, the Group discounted lease payments using its incremental borrowing rate

at 1 January 2019, which was 8% on the leased property.

On transition to IFRS 16, the Group recognised additional right-of-use assets and additional

lease liabilities, recognising the difference in retained earnings. The impact on transition is

summarised below.

€

Leased property

Operating lease commitment at 31 December 2018 as disclosed

in the Group’s consolidated financial statements 465,000

Less: discounted using the incremental borrowing rate

at 1 January 2019 (40,645)

Lease liabilities recognised at 1 January 2019 424,355

Add: lease prepayment 23,000

Less: Lease payments (186,000)

Add: finance costs recognised in statement of profit or loss

as at 31 December 2019 29,189

Less: effect of early termination* (290,544)

Lease liabilities recognised at 31 December 2019 -

* Effective 31 December 2019, the Company terminated the above-mentioned leases and

in tandem entered into a new lease agreement with a third party for the lease of office and

parking spaces at a different location in Malta (note 27).

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4.3 Impact on financial statements (continued)

The associated right-of-use assets for the property leases was measured at the amount

equal to the lease liability, adjusted by the amount of the lease payments relating to that

lease recognised in the balance sheet as at 31 December 2018. There were no onerous

lease contracts that would have required an adjustment to the right-of-use assets at the

date of initial application. The recognised right-of-use assets relate to the lease of office

and parking spaces (property):

€

Right-of-use assets

Lease liabilities recognised as at 1 January 2019 424,355

Less: previously recognised accrued lease payments relating to

water space under IAS 17

23,000

Right-of-use assets recognized at 1 January 2019 447,355

Less: Depreciation costs recognised in statement of

profit or loss as at 31 December 2019 (165,955)

Less: Effect of early termination (281,400)

Right-of-use assets recognised at 31 December 2019 -

The change in accounting policy affected the following items in the balance sheet on 1

January 2019:

i. right-of-use assets – increased by €447,355

ii. prepayments – decreased by €23,000

iii. lease liabilities – increased by €447,355

As a result of the above, profit before tax decreased, while EBITDA as at 31 December

2019 all increased as a result of the change in accounting policy.

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5 Operating segments and discontinued operations

5.1 Operating segments

Operating segments are based on the reports reviewed by the CEO of the Group which

are in turn forwarded for review to the Board of Directors of the Company. During the year

ended 31 December 2019, the Group principally consists of the Company and a number

of intermediate holding companies which hold investments in other operating subsidiaries

that carry out marketing and iGaming activities from Malta on the strength of the license it

holds from the Malta Gaming Authority and through white-label arrangements in place with

another iGaming group situated in the United Kingdom. Within this context the Group

considers that the primary drivers of its business are the jurisdictions from which it

generates its iGaming business which in the main are the United Kingdom and the rest of

the EU excluding the United Kingdom. The Group has a number of brands which all revolve

around the provision of casino style games which in-turn attract business from the

jurisdictions referred to above. During the first quarter of 2019, the Group also acquired a

content marketing business (“www.sportsbibelen.com”) which continues to be operated

through another subsidiary, which together with the marketing company referred to above

brings to the Group a number of B2B relationships. Other B2B operations run through

another subsidiary comprise also the provision of software solution services.

In order to assess the performance of the operating segments, the CEO principally makes

reference to the Gross Gaming Revenue (“GGR”) or top line generated by the Group solely

from casino style games and the other income streams. Segment revenues excludes

central costs that are invariably incurred in support of the Group, which costs are not

allocated to the operating segments in view of the fact that such allocation would be

arbitrary. The measure also excludes the impact of any depreciation and amortisation, and

finance costs and income. The group is structured in such a way that it follows an

integrated business model approach and as such insofar as an internal reporting is

concerned, assets and liabilities are not allocated to the operating segments.

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5 Operating segments and discontinued operations (continued)

5.1 Operating segments (continued)

The segment information provided to the CEO for the reportable segments is as follows:

31 December 2019:

United

Kingdom

EU

excluding

United

Kingdom

Total

€ € €

Gross iGaming Revenue 3,234,626 2,621,660 5,856,286

Revenue from marketing activities - 1,228,887 1,228,887

Revenue from software support services - 732,800 732,800

Revenue from management services - 120,000 120,000

------------------ ----------------- -------------------

Segment revenue 3,234,626 4,703,347 7,937,973

---------------- -----------------

Depreciation and amortisation (357,794)

Other operating expenses (13,965,581)

Net finance costs (1,143,933)

Other items (17,650,017)

Share of results of equity accounted investee (420,913) (600) (421,513)

---------------- ---------------- -------------------

Segment loss before taxation (25,600,865)

=========

31 December 2018:

United

Kingdom

EU

excluding

United

Kingdom

Total

€ € €

Gross iGaming Revenue - 1,190,642 1,190,642

Share of iGaming revenue from white-label

arrangements

- 672,521 672,521

Revenue from marketing activities - 227,975 227,975

------------ ----------------- -------------------

Segment revenue - 2,091,138 2,091,138

------------ -----------------

Depreciation and amortisation (112,726)

Other operating expenses (7,334,671)

Net finance costs (83,220)

Share of results of equity accounted investee (453,768) - (453,768)

---------------- ---------------- -------------------

Segment loss before taxation (5,893,247)

=========

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5.2 Discontinued Operations

In December 2019, following a strategic decision to place greater focus on the Group’s

B2B key competences, the B2C operations were suspended. In view of the fact that the

B2C segment was not previously classified as a discontinued operation and the above

decision was taken very close to the year end, the comparative consolidated statement of

profit or loss and other comprehensive income reflects the results from both the B2B and

B2C verticals and in lieu, the comparison of the results from continuing and discontinuing

operations are being analysed as per the below. The figures for discontinuing operations

reflect those of River UK Casino Limited, River Game Operations Limited and its immediate

parent RGO Holding Limited. These entities were responsible for the iGaming operations

and white label arrangements of the Group.

In this regard, the following are the amounts arising from the continuing and discontinuing

operations, taking into account also the elimination of all intragroup transactions such that

the individual amounts are reconciled to the Group’s results.

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5.2 Discontinued Operations

2019 Continuing

Operations

Discontinued

Operations Aggregated

Eliminations The Group

€ € € € €

Revenue 4,716,690 6,571,716 11,288,407 (3,350,434) 7,937,973

Direct costs (1,222,034) (4,296,203) (5,518,238) 155,961 (5,362,277)

Directors’ remuneration and personnel costs (2,170,818) (1,647,126) (3,817,943) 76,641 (3,741,302)

Depreciation (99,345) (139,631) (238,976) (34,662) (273,638)

Amortisation (3,201) (80,955) (84,156) - (84,156)

Other operating expenses (3,399,060) (4,624,318) (8,023,378) 3,161,376 (4,862,002)

Results from operating activities (2,177,768) (4,216,517) (6,394,284) 8,882 (6,385,402)

-

Finance income 436,775 74,361 511,136 (511,039) 97

Finance cost (1,140,279) (498,923) (1,639,202) 495,269 (1,143,933)

Net finance costs (703,504) (424,562) (1,128,066) (15,770) (1,143,836)

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5.2 Discontinued Operations (continued)

2019 Continuing

Operations

Discontinued



€ € € € €

Share of loss of equity accounted investees, net of tax

- - - (421,513) (421,513)

Deferred consideration written off - 4,706,547 4,706,547 - 4,706,547

Gain on disposal of joint venture - - - 8,485 8,485

Fair value movement on: - -

Contingent consideration 1,371,970 - 1,371,970 - 1,371,970

Mutual option 1,361,511 - 1,361,511 - 1,361,511

Unclaimed liability written off - 3,127,876 3,127,876 - 3,127,876

Other income - 12,734 12,734 - 12,734

Impairment loss on:

Goodwill and intangible assets - (28,181,419) (28,181,419) (57,818) (28,239,237)

Loss before tax (147,790) (24,975,341) (25,123,131) (477,734) (25,600,865)

Income tax expense - - - - -

Loss for the year (147,790) (24,975,341) (25,123,131) (477,734) (25,600,865)

Foreign operations - foreign currency translation 2,864 195,010 197,874 (4,984) 192,890

Total comprehensive income for the year (144,926) (24,780,331) (24,925,257) (482,718) (25,407,975)

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5.2 Discontinued Operations (continued)

2018 Continuing

Operations

Discontinued



€ € € € €

Revenue 1,652,566 1,863,217 3,515,783 (1,424,644) 2,091,138

Direct costs (345,839) (2,623,018) (2,968,857) 209,948 (2,758,909)

Directors’ remuneration and personnel costs (1,225,926) (605,752) (1,831,678) - (1,831,678)

Depreciation (10,598) (26,673) (37,271) - (37,271)

Amortisation - (75,455) (75,455) - (75,455)

Other operating expenses (2,277,266) (2,031,052) (4,308,318) 1,214,764 (3,093,554)

Results from operating activities (2,207,064) (3,498,734) (5,705,798) 68 (5,705,729)

Finance income 14,436 54,111 68,547 - 68,558

Finance cost - (151,838) (151,838) 71 (151,778)

Net finance income / (costs) 14,436 (97,727) (83,291) 71 (83,220)

Share of loss of equity accounted investees, net of tax - - - (453,768) (453,768)

Fair value movement on contingent consideration 349,470 - 349,470 - 349,470

Loss before tax (1,843,158) (3,596,461) (5,439,619) (453,629) (5,893,247)

Income tax expense - - - - -

Loss for the period (1,843,158) (3,596,461) (5,439,619) (453,629) (5,893,247)

Foreign operations - foreign currency translation - - - 4,984 4,984

Total comprehensive income for the period (1,843,158) (3,596,461) (5,439,619) (448,645) (5,888,263)

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48

6 Revenue

6.1 Revenue streams

The Group in the main generated revenue through the following activities:

▪ iGaming activities: games of chance where the Group takes a position against the

player;

▪ iGaming activities operated through white-label arrangements;

▪ Marketing activities such as: search engine optimization, gathering of market

intelligence, media production and / or media production and airing thereof in one or

more consecutive instances;

▪ Software support services such as: licensing of a remote gaming software, IT support

and infrastructure support services; and

▪ Management services.

Group

2019

2018

€ €

Revenue streams

iGaming operations 5,856,286 1,190,642

White-label arrangements - 672,521

Marketing activities 1,228,887 227,975

Software support services 732,800 -

Management services 120,000 -

---------------- ----------------

7,937,973 2,091,138

======= =======

Company

The Company earns management fee income from its subsidiaries amounting to €960,000

(2018: €1,200,000).

6.2 Disaggregation of revenue from contracts with customers

In the following table, revenue is disaggregated by primary geographical market, major

goods and services and timing of revenue recognition. The table also includes a

reconciliation of the disaggregated revenue with the Group’s major product and service

lines, which are its reportable segments (see note 5).

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49

6 Revenue (continued)

6.2 Disaggregation of revenue from contracts with customers (continued)

Primary geographical markets

United

Kingdom

EU excluding

United

Kingdom

Total

31 December 2019 € € €

Major product/services

iGaming operations 3,234,626 2,621,660 5,856,286

Marketing activities - 1,228,887 1,228,887

Software support - 732,800 732,800

Management services - 120,000 120,000

---------------- ---------------- ----------------

3,234,626 4,703,347 7,937,973

======= ======= =======

Timing of revenue

recognition

Transferred at a point in time 3,234,626 3,850,547 7,085,173

=======

Transferred over time 852,800 852,800

---------------- ----------------

4,703,347 7,937,973

======= =======

31 December 2018

Major product/services

iGaming operations - 1,190,642 1,190,642

White-label arrangements - 672,521 672,521

Marketing activities - 227,975 227,975

---------------- ---------------- ----------------

- 2,091,138 2,091,138

======= ======= =======

White-label arrangements 1,562,468

=======

Timing of revenue

recognition

Transferred at a point in time 1,562,468 2,017,596 2,017,596

=======

Transferred over time 73,542 73,542

---------------- ----------------

2,091,138 2,091,138

======= =======

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50

6 Revenue (continued)

6.3 Contract balances

As at 31 December 2018 and 2019, the Group did not have any contract assets as the Group’s

rights to consideration for satisfied performance obligations was fully completed and billed in

full by the reporting date. At 31 December 2019, the Group had received an advanced

consideration (contract liabilities) of €400,000 (2018: nil) from a customer in relation to support

services for which revenue is recognised over time (note 21).

7 Net finance income

Group Company

2019 2018 2019 2018

€ € € €

Finance income

Interest income from related

parties

- 5,014 429,389 5,014

Other interest income 97 260 57 260

Net realised exchange gains - 63,284 - 82,226

------------ ---------------- ----------------

----------------

97 68,558 429,446 87,500

------------ ---------------- ----------------

----------------

Finance costs

Interest expense from

related parties

- (37,550) - (32,537)

Interest on convertible bond (673,265) - (673,265) -

Other interest expense (275,861) - - -

Net unrealised exchange

losses

(8,966)

(1,631)

(62,751)

(1,631)

Net realised exchange losses (14,144) - (8,408) -

Unwinding of interest on

deferred consideration

(171,697)

(112,597)

(171,697)

(112,597)

------------ ---------------- ----------------

----------------

(1,143,933) (151,778) (916,121) (146,765)

--------------- ---------------- ----------------

----------------

Net finance costs (1,143,836) (83,220) (486,675) (59,265)

======== ======= ======= =======

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51

8 Directors’ remuneration and personnel expenses

8.1 Directors’ remuneration incurred by the Group and the Company during the year is

analysed as follows:

Group Company

2019 2018 2019 2018

€ € € €

Directors’ remuneration 842,198 478,431 503,462 375,494

======= ======= ======= =======

8.2 Personnel expenses incurred by the Group and the Company during the period are

analysed as follows:

Group Company

2019 2018

2019 2018

€ € € €

Wages and salaries 3,124,914 612,618 201,509 322,922

Social security contribution 230,701 25,963 12,056 6,817

Bonus costs - 270,000 - 220,000

Share-based payments 39,973 352,536 39,973 232,349

Other costs 42,844 92,130 (41,725) 59,926

Recharged to third parties (539,328) - -

Recharged to subsidiaries - - (26,291) (14,085)

--------------- ---------------- ---------------- ----------------

Personnel expenses 2,899,104 1,353,247 185,522 827,929

--------------- ---------------- ---------------- ----------------

Director’s remuneration and

personnel expense 3,741,302

1,831,678 688,984

1,203,423

======= ======= ======= =======

8.3 The weekly average number of persons employed by the Group during the year was as follows:

Group Company

2019 2018 2019 2018

€ € € €

Management and administration 15 5 3 3

Operating 57 9 3 1

-------------- --------------- ---------------- ----------------

72 14 6 4

======= ======= ======= =======

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9 Result from operating activities

9.1 The result from operating activities are stated after charging professional expenses:

Group Company

2019 2018 2019 2018

€ € € €

Auditors’ remuneration 92,500 81,500 19,000 36,500

Assurance services 26,000 - 26,000 -

Tax services 19,000 25,000 19,000 25,000

Advisory services 32,783 62,830 30,783 62,830

-------------- --------------- -------------- ---------------

170,283 169,330 94,783 124,330

====== ====== ====== ======

The following remuneration was also incurred by the joint ventures:

2019 2018

€ €

Auditors’ remuneration 5,000 10,000

Advisory services - 11,800

------------ ------------

5,000 21,800

===== =====

Group’s share therein 2,500 15,260

===== =====

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10 Taxes

10.1 There is no income tax expense recognised in the statement of profit or loss and other

comprehensive income for both the Group and the Company in view of the amount of tax

losses and capital allowances available.

10.2 The tax expense for the year and the result of the accounting loss multiplied by the tax

rate applicable in Malta of 35%, are reconciled as follows:

Group Company

2019 2018 2019 2018

€ € € €

Loss before tax (25,600,865) (5,893,247) (16,002,938) (1,634,605)

------------------- ----------------- ------------------- ------------------

Tax at the applicable statutory tax rate 8,960,303 2,062,636 5,601,029 572,112

Tax effect of:

Share of loss of equity accounted

investees, net of tax

(147,529) (158,819) - -

Non-allowable expenses (6,383,220) (360,342) (6,379,811) (292,660)

Non-taxable income 3,849,053 1,085,755

Deduction taken on intangible assets 1,233,704 - - -

Movement in deferred tax not

recognised

(5,701,217) (1,543,475) (306,973) (279,452)

Deferred tax recognised upon former

equity-accounted investee now

consolidated

(1,811,094) - - -

---------------- ------------------- --------------- -------------------

Income tax credit / (expense) - - - -

======== ======== ======== ========

10.3 Recognised deferred tax liabilities

Group

Acquired in

business

combinations

Balance at

31

December2018

Acquired in

business

combinations

Reversal of

deferred tax

previously

taken

upon initial

recognition

Balance at

31

December2019

€ € € € €

Brands and domain

names and IP rights

(1,341,678)

(1,341,678)

(3,131,509)

1,341,678

(3,131,509)

------------------ ------------------ ------------------ ------------------ ------------------

Deferred tax liabilities (1,341,678) (1,341,678) (3,131,509) 1,341,678 (3,131,509)

======== ======== ======== ======== ========

10.4 Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the following net deductible

temporary differences. In assessing the amount to be recognised the Group and the

Company have taken into account tax planning opportunities, the extent of taxable

temporary differences that are expected to reverse and the extent of future taxable profits

available to the Group and the Company in the foreseeable future.

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54

10 Taxes (continued)

Group

2019 2018

€ €

Plant and equipment 10,193 3,070

Unrealised exchange differences 3,451 757

Unabsorbed capital allowances 182,015 36,384

Unabsorbed tax losses 7,049,033 1,503,264

---------------- ----------------

7,244,692 1,543,475

======= =======

Company 2019 2018

€ €

Unrealised exchange differences 22,534 571

Unabsorbed capital allowances 1,554 360

Unabsorbed tax losses 562,337 278,521

---------------- ----------------

586,425 279,452

====== =======

11 Trade and other receivables

11.1

Note Group Company

2019 2018 2019 2018

€ € € €

Trade receivables 819,135 782,182 6,874 719

Amounts due from subsidiary

undertakings 11.2 - - 1,896,198 23,370

Amounts due from other related

undertakings 11.2 843,503 835,485 52,425 835,485

Other receivables 509,921 526,900 155,904 8,650

Prepayments 114,559 146,523 46,636 24,498

---------------- ---------------- ---------------- ----------------

2,287,118 2,291,090 2,158,037 892,722

======= ======= ======= =======

11.2 Amounts due from subsidiary and other related undertakings for the Group and the

Company are unsecured, interest free and repayable on demand.

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12 Cash and cash equivalents

12.1

Group Company

2019 2018 2019 2018

€ € € €

Cash at bank and in hand 1,296,374 1,452,150 98,802 1,346,242

Amounts held with payment providers 116,152 328,847 - -

Funds in transit 230,680 513,669 - -

---------------- ---------------- --------------- ----------------

Cash and cash equivalents

in the statement of financial

position

1,643,207

2,294,666 98,802

1,346,242

Funds held on behalf of players 21.1 (487,197) (102,386) - -

---------------- ---------------- --------------- ----------------

Cash and cash equivalents in

the statement of cash flows

1,156,010

2,192,280 98,802

1,346,242

======= ======= ====== =======

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13 Plant and equipment and Right-of-use assets

13.1 Group

Furniture and

fixtures

Computer

equipment

Other

equipment

Leasehold

improvements Total

Right-of-use

assets

€ € € € € €

Cost

Additions 116,309 64,285

47,843 -

228,437 -

---------------- ---------------- ---------------- ---------------- ---------------- ----------------

Balance at 31 December

2018 116,309

64,285 47,843 -

228,437 -

---------------- ---------------- ---------------- ---------------- ---------------- ----------------

Recognised upon adopting

IFRS 16 - - - - - 447,355

Additions 26,112 91,755 471 435,994 554,332 1,794,887

Disposals (136,423) (85,669) - - (222,092) -

Effect of terminating lease - - - - - (447,355)

---------------- ---------------- ---------------- ---------------- ---------------- ----------------


2019 5,998

70,371

48,314 435,994 560,677 1,794,887

---------------- ---------------- ---------------- ---------------- ---------------- ----------------

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13 Plant and equipment and Right-of-use assets (continued)

13.1 Group (continued)

Furniture and

fixtures

Computer

equipment

Other

equipment

Leasehold

improvements Total

Right-of-use

assets

€ € € € € €

Depreciation

Depreciation for the period 11,631 16,071 9,569 - 37,271 -

---------------- ---------------- ---------------- ---------------- ---------------- ----------------


2018 11,631

16,071

9,569 - 37,271 -

---------------- ---------------- ---------------- ---------------- ---------------- ----------------

Depreciation for the year 14,242

37,909

9,669 - 61,820 211,818

Effect of termination of

lease -

-

- - - (165,955)

Released on disposal (25,273) (35,434) - -

(60,707) -

---------------- ---------------- ---------------- ---------------- ---------------- ----------------


2019 600

18,546 19,238 - 38,384 45,863

---------------- ---------------- ---------------- ---------------- ---------------- ----------------

Carrying amounts

At 31 December 2018 104,678 48,214 38,274 - 191,166 -

======= ======= ======= ======= ======= =======

At 31 December 2019 5,398 51,825 29,076 435,994 522,293 1,749,024

======= ======= ======= ======= ======= =======

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13 Plant and equipment and Right-of-use assets (continued)

13.2 Company

Furniture and

fixtures

Computer

equipment Other equipment

Leasehold

improvements Total

€ € € € €

Cost

Additions - 4,117 - 4,117 -

---------------- ---------------- ---------------- ---------------- ----------------

Balance at 31 December 2018 - 4,117 - 4,117 -

---------------- ---------------- ---------------- ---------------- ----------------

Additions 5,997 7,122 435,995 449,114 1,499,322

---------------- ---------------- ---------------- ---------------- ----------------

Balance at 31 December 2019 5,997 11,239 435,995 453,231 1,499,322

---------------- ---------------- ---------------- ---------------- ----------------

Depreciation

Depreciation for the period - 1,029 - 1,029 -

---------------- ---------------- ---------------- ---------------- ----------------

Balance at 31 December 2018 - 1,029 - 1,029 -

---------------- ---------------- ---------------- ---------------- ----------------

Depreciation for the year 600 2,810 - 3,410 -

---------------- ---------------- ---------------- ---------------- ----------------

Balance at 31 December 2019 600 3,839 - 4,439 -

---------------- ---------------- ---------------- ---------------- ----------------

Carrying amounts

At 31 December 2018 - 3,088 - 3,088 -

======= ======= ======= ======= =======

At 31 December 2019 5,397 7,400 435,995 448,792 1,499,322

======= ======= ======= ======= =======

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59

14 Intangible assets and goodwill - Group

14.1 Group

Goodwill

Brand and

domain and

IP rights

Computer

software

Total

€ € € €

Cost

Acquisitions 4,151,134 3,833,366 334,851 8,319,351

----------------- ----------------- -------------- ----------------

Balance at 31 December 2018 4,151,134 3,833,366 334,851 8,319,351

----------------- ----------------- ------------- ----------------

Balance at 1 January 2019 4,151,134 3,833,366 334,851 8,319,351

Arising upon former equity

accounted investee now a

subsidiary 12,095,001 8,477,700 - 20,572,701

Acquisitions 1,126,566 - 5,447,306 6,573,872

----------------- ----------------- -------------- ----------------

Balance at 31 December 2019 17,372,701 12,311,066 5,782,157 35,465,924

----------------- ----------------- ------------- ----------------

Amortisation and impairment

loss

Amortisation for the period - - 75,455 75,455

----------------- ----------------- ------------ ------------

Balance at 31 December 2018 - - 75,455 75,455

----------------- ----------------- ------------- ------------

Balance at 1 January 2019 - - 75,455 75,455

Charge for the year - - 84,156 84,156

Impairment loss 15,291,437 12,780,389 167,411 28,239,237

Effect of exchange difference (488,124) (469,323) - (957,447)

----------------- ----------------- -------------- ----------------

Balance at 31 December 2019 14,803,313 12,311,066 327,022 27,441,401

----------------- ----------------- ------------- ----------------

Carrying amount

At 31 December 2018 4,151,134 3,833,366 259,396 8,243,896

======= ======= ======= =======

At 31 December 2019 2,569,388 - 5,455,135 8,024,523

======= ======= ======= =======

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14 Intangible assets and goodwill – Group (continued)

14.2 Impairment testing of CGUs containing goodwill and intangible assets with an

indefinite useful life

For the purposes of impairment testing, goodwill and intangible assets with indefinite

useful lives have been allocated to the Group’s CGUs (operating divisions) as follows:

31 December 2019

iGaming operations: EU excluding United Kingdom segment

- Goodwill 2,708,312

- Intangible assets with indefinite useful lives 3,833,366

- Goodwill, brand, domain and IP rights attributable to

former joint venture, now a subsidiary

20,572,701

iGaming operations: United Kingdom segment

- Goodwill -

Marketing activities: Media


Marketing activities: Sportsbibelen


Technology activities: Grizzly platform

- Intangible assets with indefinite useful lives 5,447,306

At 31 December 2019 the remaining goodwill totalling €2,569,388 comprises that arising

from the acquisition during the year of Media 247 AS (€1,126,566) and Mediafusion

Limited (€1,142,822), in the prior period. Computer software represents in the main the

unamortised cost arising as a result of the acquisition of the Grizzly platform during the

year. The directors have evaluated for impairment the respective intangible assets as

detailed further below.

iGaming operations: EU excluding United Kingdom segment

The recoverable amount of this CGU was based on its value in use, determined by

discounting the future cash flows to be generated from the continuing use of the CGU.

In this respect, given that these iGaming operations have been suspended on the 23

December 2019, no future cash flows are expected, thereby resulting a value in use of

€Nil. As a result, the carrying amount of the goodwill that existed at the subsidiary

company level and that arising on acquisition and the related intangible assets (other than

the Grizzly platform – see below) from this segment were fully impaired.

River iGaming p.l.c



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61



indefinite useful life (continued)

Marketing activities: Media



The key assumptions used in the estimation of value in use were as follows:

31 December 2019

Pre-tax discount rate 18.5%

Years 2-10 profit annual growth rate 10%

Terminal period growth rate 2%

The discount rate was a pre-tax measure based on the EUR risk free rate and risk premiums

to reflect both the increased risk of investing in equities generally and the systematic risk

of the specific CGU.

The discounted cash flow model included one year of budgeted profit, extrapolated at the

expected long-term annual growth rate estimated by management. Budgeted profit was

based on expectations of future outcomes taking into account present internal transfer

pricing at market rates and external revenues.

The estimated recoverable amount of the CGU exceeded its carrying amount by

approximately €1.4 million. A reasonably possible change in the certain assumptions could

cause the carrying amount to exceed the recoverable amount. The following table shows

the amount by which these assumptions would need to change individually for the

estimated recoverable amount to be equal to the carrying amount.

31 December 2019

Pre-tax discount rate 14%

Years 2-10 profit annual growth rate (18)%

Marketing activities: Sportsbibelen




31 December 2019



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62







The discounted cash flow model included one year of budgeted profit, extrapolated at the





approximately €0.5 million. A reasonably possible change in the certain assumptions could




31 December 2019



Technology activities:




31 December 2019

Pre-tax discount rate 31.8%

Years 1-2 budgeted gross profit €4 million





The discounted cash flow model included two years of budgeted profit, extrapolated at the





approximately €7 million. A reasonably possible change in the certain assumptions could




River iGaming p.l.c



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63




31 December 2019


Years 1-2 budgeted gross profit €(2.4 million)


14.2.1 Key assumptions and sources of estimation uncertainty

Key judgements and assumptions concerning the future and other key sources of

estimation uncertainty which materially impacted the impairment assessment at the

reporting date, include the projection of revenue in the coming years, and the execution

risk associated with the attainment of the projected capabilities by the Group. The directors

are satisfied that the judgements made are appropriate to the circumstances but, as with

all projections relating to future events, there is a degree of uncertainty inherent in the

figures and, it is possible, based on existing knowledge, that actual results may differ from

assumptions. Sustained variations from expectation would have a material impact on the

impairment assessment, and hence, the carrying amount at which intangible assets are

stated on the statement of financial position at 31 December 2019.The directors believe

that the amount of cash flows that the Group will continue to generate will be sufficient to

support the carrying amount of the intangible assets.

15 Investments

15.1 Investments in subsidiaries

At reporting date, the Company held directly or indirectly the following investment in

subsidiaries:

Name of entity Ownership interest Registered

office

Nature

of

business

River Technologies Holding

Limited

100% owned subsidiary of River

iGaming p.l.c.

Malta Holding

company

(dormant)

River Technologies Limited 100% owned subsidiary of River

Technologies Holding Limited

Malta Software

solution

services

River UK Casino Limited 100% owned subsidiary of River

iGaming plc

Malta iGaming

services

(now

dormant)

River Marketing Services

Limited

100% owned subsidiary by River

UK Casino Limited

Malta Dormant

Company

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64

15 Investments (continued)

15.1 Investments in subsidiaries (continued)


office

Nature of

business

River Game Intelligence

Holding Limited


iGaming p.l.c.

Malta Holding

company

Mediafusion Limited 100% owned subsidiary of River

Game Intelligence Holding Limited

Malta Marketing

services

Mediafusion AS


Game Intelligence Holding Limited

Norway

Support

services

RGO Holding Limited 100% owned subsidiary of River

iGaming p.l.c.

Malta Holding

company

River Game Operations

Limited

100% owned subsidiary of RGO

Holding Limited

Malta iGaming

services

(now

dormant)

Media 247 AS 100% owned subsidiary by River

iGaming plc

Norway Affiliate

Bear Group Limited 100% owned subsidiary by River

Game operations Limited

Malta iGaming

services

(now

dormant)

All group companies were incorporated or acquired during 2018.

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65


15.1 Investments in subsidiaries (continued)

Company

Equity

subscribed

Amounts

advanced*

Fair value of

guarantee

liability (see

note 15.2)

Fair value of

share

warrants

(see note

17.6)

Other cost

capitalised

as part of

investment Total

€ € € € € €

At beginning of the year 3,600 8,408,827 - 547,409 - 8,959,836

Acquisition of Media 247 AS 1,068,181 - - - - 1,068,181

Acquisition of River UK Casino Limited 3,409 - - - - 3,409

Amounts repaid - (5,820,176) - - - (5,820,176)

Amounts advanced - 11,133,757 - - - 11,133,757

Movement for the year - - 1,488,428 - - 1,488,428

Transfer from investment in joint venture 7,956 - - - 10,760,947 10,794,859

-------------- ---------------- --------------- ---------------- ---------------- ----------------

1,083,146 13,722,408 1,488,428 547,409 10,760,947 27,628,294

Impairment loss during the year (12,565) (1,824,354) - (10,760,947) (12,623,822)

-------------- ---------------- --------------- ---------------- ---------------- ----------------

At 31 December 2019 1,070,581 11,898,054 1,488,428 547,409 - 15,004,472

====== ======= ====== ====== ====== =======

* Amounts advanced have been capitalised as they represent an extension of the Company’s investment in certain of its subsidiaries.

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66


15.2 Business combinations - 2018

During the period, the Group obtained control (see notes 15.2.1 and 15.2.2 below) and

joint control (see note 16) over a number of businesses.

Management has determined that the initial accounting for the business combinations

was incomplete by the end of the reporting period ending 31 December 2018 (pending

a thorough valuation of the acquired businesses given also the close proximity of the

acquisitions to the reporting date), which is the period in which the business

combinations had occurred. The Group, as the acquirer, thus reported provisional

amounts in its financial statements, and therefore the fair value adjustments on the

intangible assets and the resulting goodwill arising out of these business combinations,

in terms of the purchase price allocation exercises carried out, had been measured on

a provisional basis.

15.2.1 Acquisition of the VegasCasino business

On 17 January 2018, River Game Operations Limited (RGO), a limited liability company

incorporated under the laws of Malta and a fully owned subsidiary of the Company,

entered into a Sale and Purchase Agreement (“Agreement”) for the purchase of the

“VegasCasino” business.

Under the terms of the Agreement, RGO agreed to buy a group of assets comprising a

business in terms of IFRS 3 Business Combinations, which includes brand and domain

names.

On 8 August 2018, the transfer of the domain name was registered in the name of River

Game Operations Limited (RGO). Therefore control over the Vegas Casino business had

been transferred to the Group on the said date, which is the date of acquisition in terms

of IFRS 3.

15.2.1.1 Consideration transferred

The purchase consideration of the business amounted to €5,200,000, payable in two

instalments:

— The first instalment, €2,100,000, was paid in cash on signing of the Agreement, and

— the second instalment, €3,100,000, was payable in cash upon satisfaction of all the

obligations for the transfer of business as set out in the Agreement. Although all of

the obligations for the transfer of business were satisfied, the second instalment

was still unpaid at the prior period reporting date, and this amount was recognised

as a liability on the statement of financial position (see also note 21.3).

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67


15.2 Business combinations - 2018 (continued)

15.2.1.2 Acquisition-related costs

The Group incurred acquisition-related costs of €107,915 on legal fees and due diligence

costs, recognised in the consolidated statement of profit or loss. These costs had been

included in ‘other operating expenses’ in 2018.

15.2.1.3 Identifiable assets acquired and liabilities assumed

The Group acquired brand and domain names recognised at the date of acquisition at

€3,833,366 and deferred tax liabilities amounting to €1,341,678.

15.2.1.4 Measurement of fair values

The valuation technique used for measuring the fair value of the brand and domain

names was the relief-from-royalty method. The relief-from-royalty method considers the

discounted estimated royalty payments that are expected to be avoided as a result of

the brand and domain names being owned.

15.2.1.5 Goodwill

Goodwill arising from the acquisition had been recognised as follows:

Note €

Consideration transferred (satisfied in cash) 5,200,000

Fair value of identifiable net assets:

Brand and domain names 14 (3,833,366)

Deferred tax liability 10 1,341,678

-------------------

Goodwill on acquisition 14 2,708,312

========

The goodwill was mainly attributable to the synergies expected to be achieved from the

integration of the business acquired with the rest of the Group. None of the goodwill

arising is deductible for tax purposes. The goodwill arising from the acquisition of Vegas

Casino had been allocated to the ‘EU excluding United Kingdom’ segment.

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15.2 Business combinations - 2018 (continued)

15.2.2 Acquisition of MediaFusion

On 15 February 2018, River Game Intelligence Holding Limited (RGI), a limited liability

company incorporated under the laws of Malta and a fully owned subsidiary of the

Company, entered into a Sale and Purchase Agreement (“Agreement”) and an

amendment to this agreement (“Amendment Agreement”), by virtue of which the Group

agreed to purchase all of the share capital in Mediafusion Limited.

On 28 September 2018, the agreement was signed and the first instalment was paid.

The second instalment was paid at the end of October 2018. As the share transfer was

effected on 28 September 2018, when the completion conditions were satisfied and

with RGI obtaining 100% of the share capital of Mediafusion Limited, this was

determined to be the date of acquisition in terms of IFRS 3.


The purchase consideration of the business amounted to €1,695,331, comprising the

following:

— 212,000 share warrants in River iGaming p.l.c. to the sellers, the fair value

measurement of which amounted to €547,409 as at date of acquisition, and

— cash consideration of GBP500,896 (€562,807) payable in two instalments, being:

— GBP237,491 (€266,845) payable on completion of the terms of the

agreement; and

— GBP263,405 (€295,962) payable on a deferred payment date.

— Settlement of pre-existing relationship amounting to €585,115.


The following table summarises the recognised amounts of assets that had been

acquired at the date of acquisition:

€

Cash 92,085

Trade and other receivables 111,382

Property and equipment 47,843

--------------

Net identifiable assets and liabilities 251,310

======

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15.2 Business combinations – 2018 (continued)

15.2.2.3 Goodwill

Goodwill arising from the acquisition had been recognised as follows:

€

Consideration transferred 1,695,331

Fair value of identifiable net liabilities (206,976)

-------------------

1,488,355

Exchange differences (45,533)

------------------

Goodwill on acquisition (1,442,822)

========

The goodwill was mainly attributable to the synergies expected to be achieved from the

Company's iGaming operations leading to significant savings on customer acquisition

costs and marketing expenses. The goodwill arising from the acquisition of Mediafusion

had been allocated to the ‘EU excluding United Kingdom’ segment.

15.3 Business combinations – 2019

During the year, the Group obtained control (see notes 15.3.1 and 15.3.2.) of other

businesses, as follows:

15.3.1 Acquisition of River UK Casino Limited

As explained in note 16.2, on 21 February 2019, the Group has, through a number of its

subsidiaries, signed an agreement to acquire the remaining 30% of River UK Casino

Limited, a B2B platform, as well as the share capital of another entity originally owned

by the seller. The agreement was subject to a number completion conditions that were

satisfied by the 17 July 2019. Following this, the Company obtaining 100% of the share

capital of River UK Casino Limited, and this was determined to be the date of acquisition

in terms of IFRS 3. The acquisition method was applied to this business combination

achieved in stages including; (a) recognising and measuring the consideration transferred

and (b) recognising and measuring the assets acquired and liabilities assumed.

In accounting for this step acquisition, the fair value of any non-controlling equity interest

in the acquire that was held immediately before control was obtained, was used in the

determination of goodwill (if any), that is, it was re-measured to fair value at the date of

acquisition, with any resulting gain or loss, recognised in profit or loss. This treatment

effectively considered that any investment in the acquiree that was held before obtaining

control was sold, and subsequently repurchased at the date of acquisition. On obtaining

control, any amounts recognised in other comprehensive income related to the

previously held equity interest were recognised on the same basis as would have been

required if the Company had disposed of the equity interest directly. Accordingly, the

resulting gain on the previously held interest in River UK is classified as follows:

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15.3.1 Acquisition of River UK Casino Limited (continued)

€

Fair value of 70% interest in River UK Casino Limited at 17 July 2019 6,312,874

Carrying amount of equity accounting investee at 17 July 2019 (6,312,874)

-------------------

-

Cumulative unrealised gains previously recognised

in other comprehensive income 8,485

--------------------

Gain on previously held interest in River UK Casino Limited

recognised in profit or loss 8,485

========


The purchase consideration of the business amounts to GBP11,500,000, payable in two

instalments:

— The first instalment, GBP7,350,000, was paid in cash upon satisfaction of the

completion conditions; and

— the second instalment, GBP1,500,000, is payable in cash within 18 months of the

first instalment;

— Settlement of pre-existing relationship amounting to GBP2,650,000.

Deferred consideration: The second instalment referred to above amounting to

GBP1,500,000, has been included within non-current liabilities. The amount recognised

in this respect is of €1,634,900.


The Group did not incur any additional acquisition-related costs as any such amounts had

already been incurred as part of the acquisition of the previous equity investment held.

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15.3.1 Acquisition of River UK Casino Limited (continued)


€

Goodwill recognised in the separate financial statements 8,817,321

Brand, domain and IP rights 8,447,700

Grizzly platform 4,819,435

Other net assets and liabilities acquired (13,037,501)

------------------

Net assets at date of acquisition 9,046,955

=======


The valuation technique used for measuring the fair value of the assets acquired as per

the above were arrived at by reference to the economic benefits that are expected to be

derived therefrom.

15.3.1.5 Goodwill

Goodwill arising from the acquisition has been recognised as follows:

GBP €

Consideration transferred 11,500,000 12,324,635

-------------------

Goodwill recognised in the separate financial statements 8,817,321

Brand, domain and IP rights 8,447,700

Grizzly platform 4,819,435

Other net assets and liabilities acquired (13,037,501)

-----------------

Net assets at date of acquisition 9,046,955

------------------

Goodwill arising on acquisition 3,277,680

=======

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15.3.1.6 Impairment

On the 23 December 2019, the operations of the “River UK” casino run out of River UK

Casino Limited were suspended. As a result, the recoverable amount of the

aforementioned intangible assets, determined on a value-in-use basis, was lower than

its carrying amount, resulting in the amounts invested by way of equity subscribed and

amounts considered as part of the Company’s net investment in the investee were

impaired in full.

15.3.2 Acquisition of Media 247 AS

On 2 May 2019, the Group acquired 100% of the shares and voting interests in Media

247 AS. Media 247 is a content marketing Company which operates two niche viral

magazines, Sportsbibelen and Gaffa. Sportsbibelen, with the domain

“sportsbibelen.com”, is Media247's core business and one of Norway’s leading sport

focused viral magazines.


NOK €

Cash 2,792,897 597,698

Equity Instruments (254,543 shares issued) 6,999,933 728,628

-------------------- --------------------

Total consideration transferred 9,792,830 1,326,326

--------------------

Less cash and cash equivalents acquired (257,745)

------------------

1,068,581

--------------------

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15.3.2 Acquisition of Media 247 AS (continued)

15.3.2.1 Consideration transferred (continued)

Equity instruments issued

The fair value of the ordinary shares issued was determined at NOK 27.50 per share.


The Group incurred acquisition-related costs of €44 thousand relating to external fees

and due diligence costs. These costs have been included in ‘other operating expenses’

in the consolidated statement of profit or loss and OCI.


The following table summarises the recognised amounts of assets acquired and

liabilities assumed at date of acquisition.

NOK €

Trade and other receivables 1,213,090 188,898

Cash and cash equivalents 1,655,215 257,745

Loans and borrowings (1,189,200) (185,178)

Trade and other payables (2,223,499) (346,236)

------------------ -----------------

Total identifiable net liabilities acquired (544,394) (84,771)

------------------ ----------------


The valuation technique used for measuring the fair value of the assets acquired as per

the above were arrived at by reference to the economic benefits that are expected to

be derived therefrom.

15.3.2.5 Goodwill

Goodwill arising from the acquisition has been recognised as follows:

NOK €

Consideration transferred 9,792,830 1,524,908

Trade and other receivables 1,213,090 188,898

Cash and cash equivalents 1,655,215 257,745

Loans and borrowings (1,189,200) (185,178)

Trade and other payables (2,223,499) (643,551)

------------------ ---------------

Goodwill on acquisition 9,248,436 1,142,822

------------------ ----------------

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16 Investment in joint venture

16.1 The Company held ownership interests directly in River UK Casino Limited. Up to the date

the Company acquired full ownership and control (see below), the Group’s interest in River

UK Casino Limited was considered as a material joint venture.


office

Nature

of

business

River UK Casino Limited 70% owned joint venture of


Malta iGaming

services

River Marketing Services Ltd 100% owned subsidiary of River

UK Casino Limited

UK Support

services

16.2 River UK Casino Limited is a limited liability company incorporated on 26 June 2018 under

the laws of Malta to hold assets of a UK-based business. In the comparative period, the

Group had, through River UK Casino Limited, entered into agreements with a seller to

manage the business acquired. Closing conditions to the agreements were satisfied on 17

August 2018 and the completion cash payment was also completed on the same date.

The agreements stipulated that the Group would have a 70% equity interest in River UK

Casino Limited whilst the parent of the group selling the UK-based business (GMR) would

acquire 30% equity interest. Further to the completion cash payment, the acquisition also

included a deferred consideration payable in August 2019 (see note 20), an earn-out

payment in June 2019 and a combination of a call and put option (‘mutual option’) which

gave the Group the option to acquire full ownership interest of River UK Casino Limited by

September 2020 at a variable price based on a valuation of 5.5 times River UK Casino’s

EBIT (uncapped) for the twelve month period to 30 June 2020, adjusted for normalised

working capital and excluding amortisation, which exposed both parties to variable returns

(see note 19.2).

During the period up to exercise of the mutual option, there were specific conditions

dictating unanimous consent between the Group and GMR, with respect to certain

reserved matters relating to the relevant activities. The Group considers that both parties

are exposed to variable returns from their investment in River UK Casino Limited, and both

parties had the ability to affect those returns through their power over the investee. River

UK Casino Limited was thus jointly controlled between the Group and GMR. As this

comprised an investment in a joint venture, the joint venture had been equity-accounted

for in these consolidated financial statements (and accounted for at cost by the Company)

up to the date that the Company acquired full ownership and control therein.

On 21 February 2019, the Company acquired the remaining 30% of River UK Casino

Limited and effectively this company become a fully owned subsidiary. During the year,

RGO Holding Limited subscribed to a 50% equity stake in River CB Limited, resulting in an

investment of €600.

The following is summarised financial information for River UK Casino Limited based on

its latest financial statements available.

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16 Investment in joint venture (continued)

16.2 (continued)

16.2.1 Summarised financial information

River UK Casino Ltd.

Percentage ownership interest 70%

---------------

2018

€

Non-current assets 18,289,101

Current assets 7,452,360

of which cash and cash equivalents 11,179

Non-current liabilities (3,303,506)

of which trade payables -

Current liabilities (7,636,714)

of which trade payables (30,224)

-------------------

Net assets (100%) 14,801,241

-------------------

Group’s share of net assets (70%) 10,360,868

Cost of investment in underlying investees (12,939)

-------------------

Carrying amount of interest in equity

accounted investee

10,347,929

========

Revenue 1,348,923 1,562,468

Depreciation and amortisation (942,273) (626,084)

Interest income/(expense) (23) (329)

Other operating expenses (1,007,931) (1,803,424)

Income tax credit - 219,129

----------------- ----------------

Loss and total comprehensive income (100%) (601,304) (648,240)

----------------- ----------------

Group’s share of loss and total comprehensive

income (70%)

(420,913)

(453,768)

======== ========

River CB Limited 50%

Loss and total comprehensive income (100%) (1,200) -

_________ _________

Group’s share of loss and total comprehensive income

(50%)

(600) -

===== =====

Share of loss of equity accounted investees, net of tax

(421,513)

(453,768)

======== ========

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16 Investment in joint venture (continued)

16.2 (continued)

16.2.2 Reconciliation of carrying amount

Group Company

2019 2018 2019 2018

Note € € € €

River UK Casino Limited

Equity subscribed by the

Company

7,956

-----------

7,956

-----------

7,956

-----------

7,956

-----------

Amounts capitalised as part of

the Company’s

net investment in the

investee:

Completion cash payment

4,694,050

4,694,050

4,694,050

4,694,050

Deferred cash payment 4,361,413 4,371,413 4,371,413 4,371,413

Earn-out 1,721,440 1,721,440 1,721,440 1,721,440

------------------ ------------------ ------------------ ------------------

10,786,903 10,786,903 10,768,903 10,786,903

======= ======== ======= =======

Share of loss for the period

(421,513)

(453,768)

-

-

======= ======== ======= =======

Share of foreign currency

translation differences

3,501

4,984

-

-

======= ======== ======= =======

Effect of disposal of investment in

investee before obtaining

control which investment was

subsequently repurchased

(10,377,447)

-

(10,768,903)

-

Carrying amount at 31

December

-

10,346,075

-

10,794,859

======= ======== ======= =======

River CB Limited

Equity subscribed by intermediate

holding

600

-

-

-

Share of loss for the year (600) - - -

--------------- --------------- --------------- ---------------

Carrying amount at 31

December

-

-

-

-

====== ====== ====== ======

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17 Capital and reserves

17.1 Authorised share capital

At 31 December 2018 and 2019, the authorised share capital of the Company comprised

2,000,000,000 ordinary shares with a nominal value of €0.005 each.

17.2 Issued share capital

Company

The nominal value of the Company’s shares is of €0.005 each, analysed as follows:

No. €

On formation as at 8 November 2017 10,000,000 50,000

Issued during the period:

Issued on 3 January 2018 1,099,998 5,500

Issued on 14 February 2018 163,650 818

Issued on 15 March 2018 1,686,544 8,433

Issued on 10 August 2018 5,600,000 28,000

Issued on 12 October 2018 212,000 1,060

----------------- -----------------

On issue as at 31 December 2018 - fully paid up 18,762,192 93,811

======== ========

No. €

On issue at 1 January 2019 – fully paid up 18,762,192 93,811

Issued during the period:

Issued on 2 May 2019 254,543 1,273

----------------- -----------------

On issue as at 31 December 2019 - fully paid up 19,016,735 95,084

======== ========

The shares issued on 15 March 2018 includes 156,000 shares issued in connection with

share options exercised, whereas the 212,000 shares issued on 12 October 2018 relate to

the share warrants issued and exercised (see note 17.6).

During the year ended 31 December 2019, the Company issued 254,543 ordinary shares

at a €0.005 nominal value per share and €2.857 share premium per share. The 254,543

ordinary shares were issued as a result of the acquisition of Media 247 A.S. (note 15).

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17 Capital and reserves (continued)

17.3 Share premium

The balance on the share premium account, which is not distributable, is composed as

follows:

€

Premium on issued effected on:

3 January 2018 134,530

14 February 2018 89,189

15 March 2018 1,475,726

10 August 2018 14,584,253

------------------

Balance at 31 December 2018 16,283,698

========

€

Balance at 1 January 2019 16,283,698

Premium on issued effected on:

2 May 2019 727,355

------------------

Balance at 31 December 2019 17,011,053

========

17.4 Shareholders’ rights

Holders of ordinary shares are entitled to receive dividends as declared from time to time

and are entitled to one vote per share at meetings of the Company. All shares rank equally

with regard to the Company’s residual assets.

17.5 Translation reserve

The translation reserve comprises all foreign currency differences arising from the

translation of the financial statements of foreign operations. This reserve is not

distributable.

17.6 Other equity component

This component of equity, which is not distributable, comprises the following:

• The equity-settled share-based payment relates to share options granted by the

Company to certain members of the executive management together with an

forfeitures (see note 23).

• Included therein is an amount of €547,409 representing the fair value of 212,000 share

warrants which had been issued as payment to the former minority shareholders of

the business acquired by River Game Intelligence Holdings Limited (Mediafusion

Limited) in the comparative period (see note 15).

• An amount of €379,694 has been included as part of other equity and relates to the

equity component of the convertible loan obtained during the year representing the

conversion right of the lender (see note 18).

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18 Loans and borrowings

18.1 Convertible loan agreement

Pursuant to a Convertible Loan Agreement (“Agreement”) dated 21 February 2019, the

Group signed an Agreement with a third party, whereby the lender had agreed to make

available a loan by way of senior debt (by way of a first ranking general hypothec, and shall

unless otherwise agreed by the lender or by operation of law, rank prior to the claims of all

creditors of the Group, whether secured or unsecured) obligation to the Group for the

purpose of funding working capital requirements and other financial commitments.

Following the above, the lender made available to the Group a term loan in the aggregate

amount of €15 million. The loan, is subject to interest at the rate of 8% per annum and is

repayable in full on the lapse of a three year period commencing on the date of the last

drawdown. The lender has the right but not the obligation to exercise a conversion right,

to convert the loan into the Company’s equity. The conversion price shall be equivalent to

NOK 21 per share equal to €2.12 based on a fixed exchange rate of 9.897.

In accordance with the above, the terms of the above loan agreement are equivalent to a

compound financial instrument. The equity component was initially recognised as the

difference between the fair value of the compound financial instrument as a whole, and

the fair value of the liability component as follows:

Number of Convertible Bonds 7,075,472

Term 3

Conversion price €2.12

Total proceeds €15,000,000

Interest rate per annum 8%

Prevailing interest rate for a similar bond without

conversion rights 9%

Determination of liability component €

Present value of principal payable at the end of three years 11,582,752

Present value of interest payable annually in arrears for three years 3,037,554

-----------------

Total liability component 14,620,306

Equity component (by deduction) 379,694

------------------

Proceeds of the convertible loan 15,000,000

========

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18 Loans and borrowings (continued)

18.1 Convertible loan agreement (continued)

The convertible loan consists of two tranches amounting to a total of €15,000,000

convertible into an estimated 7,075,472 shares. The conversion price is of NOK 21 per

share (Eur 2.12). The drawdown of the tranches were subject to a number of conditions

which were fulfilled. The drawdown of the first tranche of €3,000,000 was completed on

24 April 2019. The remaining balance was drawn on 11 July 2019.

€

Proceeds from issue of convertible notes 15,000,000

Amount classified as equity (379,694)

Unwinding of interest at the prevailing interest rate 43,265

--------------------

Carrying amount of liability at 31 December 2019 14,663,571

========

19 Financial assets and liabilities at fair value through profit or loss

19.1 Mutual call-put option

As part of the share purchase agreement entered into during the comparative period, the

counterparty retained an interest in River UK Casino Limited subject to a mutual call and

put option arrangement which in terms of the original agreement could be exercised by no

later than 30 September 2020. In respect of this retained interest, as at 30 June 2019, the

Group had been granted a call option and the counter party has been granted a put option,

which, if either is exercised, would result in the Group acquiring such 30% interest from

the counterparty by no later than 31 October 2020, for a purchase price cash consideration

based on a valuation of 5.5 times River UK Casino’s EBIT (uncapped) for the twelve month

period to 30 June 2020, adjusted for normalised working capital and excluding

amortisation. To exercise such option, the Company had to give the counter-party 30-days’

notice of exercise of the call option no later than 31 August 2020.

This original agreement was superseded by a new agreement which became effective on

the 17 July 2019 and which resulted in the Group becoming the full and sole shareholder

of River UK Casino Limited.Through this agreement, this mutual call and put option

arraignment was extinguished. The fair value of the mutual call and put option at the date

when the new agreement was signed amounted to €1,361,511

The fair value of the above mutual call and put option, described above, was estimated

using a Monte Carlo simulation valuation technique, which considers the present value of

the probability-weighted expected future financial outcome, discounted using a risk-

adjusted discount rate (including non-performance risk). The fair value was estimated in

the currency of the expected payment, namely the Great British Pound (“GBP”),and

translated into Euro exchange rate prevailing at each measurement date.

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(continued)

19.1 Mutual call-put option (continued)

The model made the significant assumption that the earnings before interest, tax and

amortisation arising on the investment in the joint venture (“EBITA”) for the twelve month

periods ending (“LTM”) 30 June 2020, as well as the market multiple at the mutual

option’s time of exercise, all follow normal probability distributions. The following

significant unobservable inputs were used:

Significant unobservable input 31 December 2019 31 December 2018

Mean EBITA LTM 30 June 2020 - £3,750,000

Mean Market EBITA multiple at exercise: - 5.5x

Risk-adjusted discount rate -

8.00%

The estimated fair value of the mutual option increased / (decreased) if the mean expected

market EBITA at exercise is higher / (lower). For mean expected market EBITAs above /

(below) 5.5x, the estimated fair value of the mutual option would be positive / (negative),

more positive / (negative) if the mean EBITA LTM 30 June 2020 were higher, or discount

rate were lower, and less negative / (positive) if the mean EBITA LTM 30 June 2020 were

lower or discount were higher. When the fair value of the mutual option is positive it is

presented as a financial asset, and when negative it is presented as a financial liability.

The EBITA means and volatility were based on the Group’s budgets and performance up

to the measurement date, the EBITA market multiple mean and volatility were based on

discounted cash flow valuation of the underlying and the Group’s judgement, and the

discount rates were based on adjusted market rates. The fair value measurement of the

mutual option fell within Level 3 of the fair value hierarchy. There were no transfers

between levels during the current and comparative periods.

For the fair value of the mutual option, reasonably possible changes at the reporting date

to one of the significant unobservable inputs, holding other inputs constant, would have

had the following effects:

Impact on profit or loss

Change in input Decrease Increase

€ €

31 December 2019:

Market EBITA multiple at

exercise

±0.5x - -

31 December 2018:

Market EBITA multiple at

exercise

±0.5x (392,408) 392,408

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(continued)

19.2 Contingent consideration

In relation to the investment in River UK Casino Limited, the Group had originally agreed

to pay the selling shareholders an earn-out payment of 70% of 5.5 x EBIT for the 12 month

period ending 30 June 2019 minus the initial and deferred cash consideration of £8.4

million, payable in cash no later than 31 August 2019, and subject to a maximum capped

earn out payment on cash of £14.7 million (based on 70% of 5.5 times £6 million EBIT

minus £8.4 million in respect of the initial cash and deferred consideration). As at 30 June

2019 based on the results till that date, the earn out did not come to fruition and as a result

the fair value previously included as contingent consideration in the statement of financial

position extant as at 31 December 2018, amounting to €1,371,970 was recognised as

income in profit or loss following the attainment of control.

19.3 Reconciliation of opening and closing balances

The following table shows a reconciliation from the opening balances to the closing

balances for Level 3 fair values.

Contingent

consideration

Mutual

option

€ €

Assumed in business combination (1,721,440) -

Net change in fair

value (unrealised) 349,470 -

------------------- ----------------

Balance at 31 December 2018 (1,371,970) -

Change in fair value 1,371,970 1,361,511

Waiving off mutual option at the point of the

agreement as entered into

-

(1,361,511)

------------------- -----------------

Balance at 31 December 2019 - -

======== =======

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20 Deferred consideration

20.1 In the prior period, at Company Level the deferred consideration comprised an amount of

€4441,829 payable to the former joint venture, River UK Casino Limited. Following the

acquisition of the full control in this subsidiary. Given that the original agreement that had

been entered into was subsequently superseded through a new agreement entered into

as part of the acquisition of Bear Group Limited and the other related assets, the deferred

consideration previously recognised in the separate financial statements of River UK

Casino Limited as a payable to a third party amounting to €4,706,547 was waived and as

such, at Group level, recognised as income in profit or loss.

21 Trade and other payables

21.1

Group Company

2019 2018 2019 2018

Note € € € €

Trade payables 2,219,408 459,076 82,786 12,517

Amounts due to related

undertakings

21.2

-

2,250

-

2,250

Funds held on behalf of

players

12.1 487,197 102,386 - -

Capital creditor 21.3 - 3,127,877 - -

Jackpot liability - 131,527 - -

Other payables 131,019 198,877 - 198,877

Accruals 2,825,717 800,232 693,220 326,455

Deferred income 400,000 - - -

---------------- ---------------- ---------------- ----------------

6,063,341 4,822,225 776,006 540,099

======= ====== ======= ======

21.2 Amounts due to related undertakings for the Group and the Company are unsecured,

interest free and repayable on demand.

21.3 This amount refers to the unsettled portion amounting to €3.1 million out of the original

purchase consideration amounting to €5.2 million incurred in connection with the

acquisition of Vegas Casino by one of the Group’s subsidiaries (note 15). During the year

and agreement was entered into with such a creditor whereby the creditor waived his right

to receive this amount and accordingly this unclaimed liability was written off to profit or

loss.

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22 Loss per share

22.1 Basic loss per share

The calculation of basic EPS has been based on the following loss attributable to ordinary

shareholders and weighted-average number of ordinary shares outstanding.

22.1.1 Loss attributable to ordinary shareholders (basic)

Group Company

2019 2018 2019 2018

€ € € €

Loss for the period,

attributable to the

owners of the

Company (25,600,865) (5,893,247)

(16,002,938) (1,634,605)

======== ======== ======== ========

22.1.2 Weighted-average number of ordinary shares (basic)

Group Company

2019 2018 2019 2018

No. No. No. No.

Issued ordinary shares at

beginning of year

18,762,192 10,000,000

18,762,192 10,000,000

Effect of share options

exercised

- 159,222

- 159,222

Effect of shares issued during

the year

169,463 4,556,635

169,463 4,556,635

------------------ ------------------ ------------------ -----------------

Weighted-average number

or ordinary shares at 31

December 2018

18,931,655 14,715,857

18,931,655 14,715,857

======== ======== ======== =======

22.2 Diluted loss per share

The calculation of diluted EPS has been based on the following loss attributable to ordinary

shareholders and weighted-average number of ordinary shares outstanding after

adjustment for the effects of all dilutive potential ordinary shares.

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22 Loss per share (continued)

22.2 Diluted loss per share (continued)

22.2.1 Loss attributable to ordinary shareholders (diluted)

Group Company

2019 2018 2019 2018

€ €

€

€

Loss for the period,

attributable to the owners of

the Company (basic EPS) (25,600,865) (5,893,247)

(16,002,938) (1,634,605)

------------------ ----------------- ---------------- -----------------

Loss for the year,

attributable to the owners

of the Company (diluted) (25,600,865) (5,893,247)

(16,002,938) (1,634,605)

======== ======= ======= =======

22.2.2 Weighted-average number of ordinary shares (diluted)

Group Company

2019 2018 2019 2018

€ € € €

Weighted-average number of

shares (basic) 18,931,655 14,715,857 18,931,655 14,715,857

Effect of conversion of

convertible instruments - 158,205 - 158,205

Effect of share options on issue - 8,680 - 8,680

----------------- ----------------- ----------------- -----------------

Weighted-average number or

ordinary shares at

31 December 18,931,655 14,882,742 18,931,655 14,882,742

======= ======= ======= =======

The average market value of the Company’s shares for the purpose of calculating the

dilutive effect of share options was based on quoted market prices for the year during

which the options were outstanding.

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23 Share-based payment arrangements

23.1 Description of equity-settled share-based payment arrangements

To provide certain members of the executive management with a continued incentive and

exposure to the development of the Group, certain members of the Executive

Management have been granted the following options for shares in the Company:

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23 Share-based payment arrangements (continued)

23.1 Description of equity-settled share-based payment arrangements (continued)

Grant date Options

Options to subscribe for shares (in the

form of depository receipts)

Exercise Period

Options to subscribe for shares (in the

form of depository receipts)

Exercise Period

Options to subscribe for

shares (in the form of depository

receipts)

Exercise Period

Number Strike price (NOK) Start End

Number Strike price

Start End

Number Strike price

Start End

07-Mar-18 Listing

120,000 8.52

Listing issue and for a period of three years

thereafter 36,000 8.5162


thereafter 18,000 8.5162


thereafter

07-Mar-18 Tranche 1

65,000 15.50 08-Nov-18 08-Nov-21 19,500 15.5 01-Dec-18 01-Dec-21 10,000 15.5 01-Dec-19 01-Jan-22

07-Mar-18 Tranche 2

32,500 31.00 08-Nov-19 08-Nov-22 9,750 31 01-Dec-19 01-Dec-22 5,000 31 01-Dec-20 01-Jan-23

25-Jun-18 Tranche 3

20,000 8.52 18-Oct-18 17-Oct-21 - - - - - - - -

25-Jun-18 Tranche 4

13,000 15.50 18-Apr-19 17-Apr-22 - - - - - - - -

25-Jun-18 Tranche 5

5,000 31.00 20-Apr-20 19-Apr-23 - - - - - - - -

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23.1 Description of equity-settled share-based payment arrangements (continued)

As per the terms and conditions of the options, each of the options gives the holders the

right, but not the obligation, to subscribe for or purchase (at the Company's choice) one

share, corresponding to one ordinary share in the Company. The Board may at any time

resolve to terminate all or some of the issued options against payment to the relevant

option holder of an NOK amount equalling the value of the options calculated as the

difference between the market value of the option shares at such time less the strike price

for such option shares. Upon expiration of the relevant exercise periods, the relevant

options will lapse.

23.2 Measurement of fair values

The fair value of the employee share options has been measured using the Black-Scholes

formula. Service and non-market performance conditions attached to the arrangements

were not taken into account in measuring fair value. The inputs used in the measurement

of the fair values at grant date of the equity-settled share-based payment plans were as

follows.

Equity-settled share options

31 December 2018 and 31 December 2019

Listing Tranche 1 Tranche 2 Tranche 3 Tranche 4 Tranche 5

Fair value at grant

date NOK 10.46 NOK 13.76 NOK 13.20 NOK 27.02 NOK 25.67 NOK 24.72

Share price at grant

date NOK 18.50 NOK 18.50 NOK 18.50 NOK 31.50 NOK 31.50 NOK 31.50

Exercise price NOK 8.52 NOK 15.50 NOK 31.00 NOK 8.52 NOK 15.50 NOK 31.00

Expected volatility

(weighted-average) 110% 110% 110% 110% 110% 110%

Expected life

(weighted-average) 0.4 Years 3.7 years 4.7 years 3.3 Years 3.8 years 4.8 years

Expected dividends 0% 0% 0% 0% 0% 0%

Risk-free interest

rate (interbank

rate) 0.2% 1.7% 1.9% 1.70% 1.80% 1.95%

Expected volatility has been based on an evaluation of historical volatility from listing date.

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23.3 Reconciliation of outstanding share options

The number and weighted-average exercise prices of share options under the share option

programmes were as follows:

Number of

options

Weighted average exercise price

(EUR equivalent)

31 December 2018

Outstanding at 8 November 2017 - -

Granted during the period 353,750 NOK 13.96 (€ 1.45)

Forfeited during the period (29,250) NOK 20.67 (€ 2.17)

Exercised during the period (156,000) NOK 8.52 (€ 0.90)

--------------

Outstanding at 31 December 168,500 NOK 17.84 (€ 1.79)

======

Exercisable at 31 December 168,500 NOK 17.86 € 1.80

======

31 December 2019

Outstanding at 1 January 168,500 NOK 17.84 (€ 1.79)

Forfeited during the period (33,000) NOK 14.04 (€1.45)

--------------

Outstanding at 31 December 135,500 NOK 18.76 (€1.90)

======

Exercisable at 31 December 135,500 NOK 18.76 (€1.90)

======

The options outstanding at 31 December 2019 had an exercise price in the range of €0.88

to €3.14 and a weighted-average contractual life of 2.91 years.

23.4 Expense recognised in profit or loss

Equity-settled share-based payment transactions expensed during 2019 within “Personnel

expenses” in profit or loss amounted to €39,973 (2018: €352,536) and €39,973 (2018:

€232,349) for the Group and the Company respectively.

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24 Financial instruments – fair values and risk management

24.1 Overview

This note presents information about the Group’s exposure to risk, the Group’s objectives,

policies and processes for measuring and managing risk, and the Group’s management of

capital.

The directors of the Group have the overall responsibility for the establishment and

oversight of the Group’s risk management framework.

The Group’s risk management policies are established to identify and analyse the risk faced

by the Group, to set appropriate risk limits and controls and to monitor risks and adherence

to limits. Risk management policies and systems are reviewed regularly to reflect changes

in market conditions and the Group’s activities. The Group, through its training and

management standards and procedures, aims to develop a disciplined and constructive

control environment in which all employees understand their roles and obligations.

24.2 Credit risk

Credit risk is the risk of financial loss to the Group or the Company if a counterparty to a

financial instrument fails to meet its contractual obligations and arises principally from the

Group and the Company’s trade and other receivables and cash and cash equivalents.

The Group’s and Company’s exposure to credit risk is influenced mainly by the individual

characteristics of each counterparty. However, management also considers the factors

that may influence the credit risk of its counterparties, including the default risk associated

with the country of operation. The Group and the Company allocate each exposure to a

credit risk grade which is defined using qualitative and quantitative factors that are

indicative of the risk of default and are aligned to external credit rating definitions from

agencies.

The carrying amount of the trade and other receivables (excluding prepayments) and cash

and cash equivalents of the Group and the Company represents the maximum exposure

to credit risk.

24.2.1 Trade and other receivables

Credit risk of the Company’s trade and other receivables arises primarily from the amounts

due from subsidiary undertakings, repayment of which is under the control of Group

management.

Credit risk of the Group’s trade and other receivables arises primarily from marketing and

technology services rendered to counterparties and other receivables which mainly

comprise indirect tax receivable from the taxation authorities.

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24 Financial instruments – fair values and risk management (continued)

24.2 Credit risk (continued)

24.2.1 Trade and other receivables (continued)

As at 31 December 2019, the probability of default on these exposures was substantially

low for both the Group and the Company. The Group’s and the Company’s counterparties

operate from strong jurisdictions, namely Malta, the United Kingdom and Norway, with

credit ratings from Standards and Poor of A-, AA, and AAA, respectively. During the year,

there were no events that potentially indicate that there was a significant increase in credit

risk associated to the Group’s or the Company’s counterparties, and therefore, the

resultant ECL on trade and other receivables is considered insignificant. During the year,

impairment losses on intra-group balances amounting to €7,003,223 were recognised in

profit or loss as a result of their respective financial positions.

24.2.2 Cash and cash equivalents

As at 31 December 2019, the Group and the Company held cash at bank of €1,296,374

(2018: €1,452,150) and €98,802 (2018: €1,346,242) respectively, which were held with

various finance institutions carrying low credit risk ratings of AA- and A+ as per Standards

and Poor, and accordingly a low probability of default. Furthermore, these financial

institutions operate in strong jurisdictions and carry strong ratings of AAA by Standards and

Poor. Resultantly, the ECL on the cash at bank for the Group and the Company is also

considered insignificant.

The Group also held other cash equivalents amounting to €346,832 (2018: €842,516) with

different payment providers as at 31 December 2019. The credit risk on these amounts is

minimal as these amounts are settled in full within a short period of time.

24.3 Liquidity risk

Liquidity risk is the risk that the Company or the Group will encounter difficulty in meeting

the obligations associated with its financial liabilities that are settled by delivering cash or

another financial asset. The Company’s and Group’s approach to managing liquidity is to

ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities

when due, under both normal and stressed conditions, without incurring unacceptable

losses or risking damage to their reputation.

The main financial liabilities of the Company and the Group comprise the convertible loan

payable, lease liabilities and trade and other payables.

The following are the remaining gross and undiscounted contractual maturities of financial

liabilities at reporting date.

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24.3 Liquidity risk (continued)

Group

2019

Carrying

amount

Contractual

cash flows

Less than 1

year

1-2 years 2-3 years 3-4 years 4-5 years

€ € € € € € €

Non-derivative financial

liabilities

Loan payable 14,663,571 18,000,000 1,200,000 1,200,000 15,600,000 - -

Lease liability 1,651,486 1,879,142 387,994 702,994 702,994 72,994 12,166

Deferred consideration 1,634,900 1,763,047 - 1,763,047 - - -

Trade and other payables 6,063,341 6,063,341 6,063,341 - - - -

--------------- --------------- --------------- --------------- --------------- --------------- ---------------

24,013,298 27,705,530 7,651,335 3,666,041 16,302,994 72,994 12,166

======== ========= ========= ======== ======== ======== ========

2018

Carrying

amount

Contractual

cash flows

Less than 1

year


€ € € € € € €


liabilities

Trade and other payables 4,822,225 4,822,225 4,822,225 - - - -

Contingent consideration 1,371,970 2,060,300 2,060,300 - - - -

Deferred consideration 4,441,829 4,695,203 4,695,203 - - - -

--------------- --------------- --------------- --------------- --------------- --------------- ---------------

10,636,024 11,577,728 11,577,828 - - - -

======== ========= ========= ======== ======== ======== ========

Derivative financial liabilities

Mutual call and put option

-

-

-

-

-

-

-

======== ========= ========= ======== ======== ======== ========

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Company

2019

Carrying

amount

Contractual

cash flows

Less than 1

year


€ € € € € € €


liabilities

Loan payable 14,663,571 18,000,000 1,200,000 1,200,000 15,600,000 - -

Lease liability 1,394,896 1,575,000 315,000 630,000 630,000 - -

Trade and other payables 776,006 776,006 776,006 - - - -

--------------- --------------- --------------- --------------- --------------- --------------- ---------------

16,834,473 20,351,006 2,291,006 1,830,000 16,230,000 - -

======== ========= ========= ======== ======== ======== ========

2018 ======== ========= ========= ======== ======== ======== ========

Carrying

amount

Contractual

cash flows

Less than 1

year


€ € € € € € €


liabilities

Trade and other payables 540,099 540,099 540,099 - - - -

Contingent consideration 1,371,970 2,060,300 2,060,300 - - - -

Deferred consideration 4,441,829 4,695,203 4,695,203 - - - -

--------------- --------------- --------------- --------------- --------------- --------------- ---------------

6,353,898 7,295,602 7,295,602 - - - -

======== ========= ========= ======== ======== ======== ========

Derivative financial

liabilities

Mutual call and put option

-

-

-

-

-

-

-

======== ========= ========= ======== ======== ======== ========

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As at 31 December 2019, the Group and the Company had a negative working capital

respectively. Subsequent to reporting date, the Group has secured funding which shall

amongst others assist in managing its working capital and continue funding its operations

and financial obligations (see note 2.2.1).

24.4 Market risk

Market risk relates to the risk that changes in market prices, such as interest rates and

foreign exchange rates, will impact the Group‘s and the Company‘s income or the value of

their financial instruments. The objective of market risk management is to manage and

control market risk exposures within acceptable parameters, while optimising the return.

24.4.1 Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument

will fluctuate because of changes in market interest rates.

As at 31 December 2019 and 2018, the Group and the Company are minimally exposed to

interest risk emanating from balances with related parties.

24.4.2 Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will

fluctuate because of changes in foreign exchange rates. Currency risk does not arise from

non-monetary items or from financial instruments denominated in the functional currency

of the Group companies.

The Group companies are exposed to currency risk mainly on financial instruments that

are denominated in a currency other than the functional currency (the Euro), primarily the

Sweden Kronor (SEK), Norway Kroner (NOK), British Sterling (GBP), Canadian Dollar (CAD),

and New Zealand Dollar (NZD).

The summary quantitative data about the Group’s and the Company’s exposure to currency

risk as reported to the management of the Group is as follows.

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24.4 Market risk (continued)

24.4.2 Currency risk (continued)

Group

EUR equivalent

GBP SEK NOK CAD NZD

2019 Cash and cash

equivalents 1,161,557 12,057 47,267 2,359 8,355

Trade and other

receivables 179,314 - 269,749 - -

-------------- ------------ ------------ ------------ ------------

Total assets 1,340,871 12,057 317,016 2,359 8,355

========= ======== ======== ======= ======== Trade and other

payables (3,148,592) (16,671) (495,710) (2,150) (113)

Lease liability - - (256,590) - -

Deferred

consideration (1,634,900) - - - -

-------------- ------------ ------------ ------------ ------------ Total liabilities (4,776,492) (16,671) (752,300) (2,150) (113)

========== ====== ======== ====== ======== Net balance sheet

exposure (EUR

equivalent) (3,435,621) (4,614) (435,285) 209 8,242

======== ======= ======== ======= ======= Net balance sheet

exposure (foreign

currency)

(2,923,026) (48,207) (4,293,566) 305 13,724

========== ======== ======== ======= =======

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EUR equivalent

GBP SEK NOK CAD NZD

2018

Cash and cash

equivalents 2,129 66,253 64,491

1,773

7,482

Trade and other

receivables - - 252 - -

Amounts due from

other related

parties

779,814

-

-

-

-

-------------- ------------ ------------ ------------ ------------ Total assets 781,943 66,253 64,743 1,773 7,482

========= ======== ======== ======= ======== Trade and other

payables (157,262) (42,207) (84,229)

(116)

(537)

Deferred

consideration (4,441,829) - - - -

Contingent

consideration (1,371,970) - - - -

---------------- ---------- ------------- ---------- -------------

Total liabilities (5,971,061) (42,207) (84,229)

(116)

(537)

========== ====== ======== ====== ======== Net balance sheet

exposure (EUR

equivalent)

(5,189,118)

24,046

(19,486)

1,657

6,945

======== ======= ======== ======= ======= Net balance sheet

exposure

(foreign

currency) (4,641,822) 246,591 (193,849)

2,586

11,845

========== ======== ======== ======= =======

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Company

EUR equivalent

2019 GBP SEK NOK

Cash and cash equivalents 12,170 - 905

-------------- ------------ ------------ Total assets 12,170 - 905

========= ======== ========

Trade and other payables - (251) (505)

---------------- ---------- ------------- Total liabilities - (251) (505)

========== ====== ========

Net balance sheet

exposure (EUR

equivalent) 12,170 (251) 400

======== ======= ========

Net balance sheet

exposure (foreign

currency) 10,354 (2,625) 3,945

========== ======== ========

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EUR equivalent

2018 GBP SEK NOK

Cash and cash equivalents 41 588 8,306

Amounts due from other

related parties

779,814

-

-

-------------- ------------ ------------ Total assets 779,855 588 8,306

========= ======== ========

Trade and other payables - - (5,691)

Deferred consideration (4,441,829) - -

Contingent consideration (1,371,970) - -

---------------- ---------- ------------- Total liabilities (5,813,799) - (5,691)

========== ====== ========

Net balance sheet

exposure (EUR

equivalent) (5,033,944)

588

2,615

======== ======= ========

Net balance sheet

exposure (foreign

currency) (4,503,014) 6,035 26,013

========== ======== ========

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The following significant exchange rates were applied during the period:

Average rate Reporting date

spot rate

2019 2018 2019 2018

GBP 0.8778 0.8847 0.8508 0.8945

SEK 10.5891 10.2583 10.4468 10.2548

NOK 9.8511 9.5957 9.8638 9.9483

CAD 1.4855 1.5294 1.4598 1.5605

NZD 1.6998 1.7065 1.6653 1.7056

A reasonably possible 5 percent strengthening of the Euro against the GBP, SEK, NOK,

CAD and NZD at 31 December would have affected the measurement of financial

instruments denominated in a foreign currency and affected equity and profit or loss by

the amounts shown below. This analysis assumes that all other variables, remain constant.

Group Company

2019 2018

2019

2018

€ € € €

GBP 171,781 259,456 (609) 251,697

SEK 231 (1,202) 13 (29)

NOK 21,764 974 (20) (131)

CAD (10) (83) - -

NZD (412) (347) - -

------------- ------------- ------------- ------------- Total 193,354 258,798 (616) 251,537

======== ======== ======== ========

A 5 percent weakening of the euro against the above currencies at 31 December would

have had the equal but opposite effect on the above currencies to the amounts shown

above, on the basis that all other variables remain constant.

The directors believe that the Group’s currency risk is not significant in relation to the

Group’s transactions as it retains bank accounts in the above currencies and effects

deposits and withdraws in such currencies.

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24.5 Accounting classification and fair value (continued)

The Group

31 December 2019 31 December 2018

Carrying Fair Value Carrying Fair Value

Amount Level 1 Level 2 Level 3 Amount Level 1 Level 2 Level 3

€ € € € € € € €

Financial assets at fair value

Mandatory at FVPL – Other

Mutual option - - - - - - - -

Financial assets not measured at fair value

Financial assets at amortised cost

Trade and other receivables 2,287,118 - - - 2,291,090 - - -

Cash and cash equivalents 1,643,207 - - - 2,294,666 - - -

Financial liabilities measured at fair value

Financial liabilities measured at fair value through

profit or loss

Contingent consideration - - - - (1,371,970) - - (1,371,970)

Financial liabilities not measured at fair value

Other financial liabilities

Trade and other payables (6,063,341) - - - (4,822,225) - - -

Deferred consideration (1,643,900) - - - (4,441,829) - - -

Loan payable (14,663,571) - - - - - - -

========= ========= ========= ========= ========= ========= ========= =========

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24.5 Accounting classification and fair value (continued)

The Company

31 December 2019 31 December 2018

Carrying Fair Value Carrying Fair Value

Amount Level 1 Level 2 Level 3 Amount Level 1 Level 2 Level 3

€ € € € € € € €

Financial assets at fair value

Mandatory at FVPL – Other

Mutual option - - - - - - - -

Financial assets not measured at fair value

Financial assets at amortised cost

Trade and other receivables 2,158,037 - - - 892,722 - - -

Cash and cash equivalents 98,802 - - - 1,346,242 - - -

Financial liabilities measured at fair value

Financial liabilities measured at fair value through

profit or loss

Contingent consideration - - - - (1,371,970) - - (1,371,970)

Guarantee liability (1,634,900) - - (1,634,900) - - - -

Financial liabilities not measured at fair value

Other financial liabilities

Trade and other payables (776,006) - - - (540,099) - - -

Deferred consideration - - - - (4,441,829) - - -

Loan payable (14,663,571) - - - - - - -

========= ========= ========= ========= ========= ========= ========= =========

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24.6 Fair values versus carrying amounts

The carrying amount of financial assets and liabilities that are measured at amortised cost

approximates the fair value at the reporting date. The other financial liabilities are

measured at fair value. Open bets approximated their fair values. Open bets are classified

as Level 3 in the fair value hierarchy since significant unobservable inputs are utilised in

the establishment of fair value. The fair value of such bets is purely based on expectations

as to the outcome of the bets. Changes in these expectations are not expected to have a

material effect on their carrying amounts.

24.7 Capital management

The Company’s and Group’s policy is to maintain a strong capital base so as to maintain

investor, creditor and market confidence and to sustain future development of the

business.

The Company is required to hold regulatory capital for its public limited company status in

accordance with Article 104(1) to Article 104(3) of the Companies Act, 1995 (Chapter 386,

Laws of Malta). The minimum capital requirement must be maintained at all times

throughout the period. As at 31 December 2019, as the net assets were more than half of

its called up issued share capital, the Company was deemed to be in compliance with the

requirements of the Companies Act.

24.8 Financial guarantees

The Company is committed to provide the necessary financial support to its subsidiary

companies as and when the need arises.

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25 Operational risk

25.1 The Group holds iGaming licenses issued by the Malta Gaming Authority, and the Swedish

Gaming Authority. Furthermore, during 2019 the Group operated under a white-label

agreement with an entity that held a licence issued by Curacao eGaming and the UK

Gambling Commission, until such time that it acquired this entity (refer to note 15).

Following this, the said agreement continued to exist as an agreement between two

subsidiaries within the Group.

On the strength of the above, the Group was engaged in online gaming with punters with

an emphasis on European countries. The Group operated within a rapidly evolving legal

and regulatory environment. During the recent past, various jurisdictions have introduced

a swath of legislation meant to regulate the sector resulting in requiring operators to hold

specific licenses and be subject to gaming and related taxes. The divergence in

interpretation of the different legislative frameworks and the stand taken by regulators,

together with the trend of regularisation continues, and a number of countries are in the

process of issuing similar regimes in the near future. Such changes to the regulatory,

legislative and fiscal regimes within the iGaming space could result in the Group being

liable for additional costs in order to comply with the above, which costs cannot be

quantified in view of the uncertainty of future events not within the control of the Group.

The directors of the Group do not anticipate that the outcome of such events, if any, should

have a material adverse effect upon the Group’s financial position. This is particularly the

case in view of the fact the Group has seized it B2C operations on 23 December 2019.

26 Related parties

26.1 Ultimate controlling party

The Company is the ultimate parent company of the Group.

Skandinaviska Enskilda Banken AB (PUBL) (“Bank”) is acting as Registrar in respect of

depositary receipts issued by the Bank in respect of the ordinary shares of the Company

held by the Bank.

As at 31 December 2019 and 2018, the said depositary receipts are registered in the

Norwegian Central Securities Depository (the “VPS”). All the depositary receipts,

amounting to 99% of the ordinary shares of the Company’s issued share capital, were

registered in the Norwegian Central Securities Depository (the “VPS”). All the depositary

receipts registered in VPS have a corresponding number of Company ordinary shares

registered in the Company’s shareholders register in Malta in the name of Skandinaviska

Enskilda Banken AB.

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26 Related parties (continued)

26.1 Ultimate controlling party

The Company is the ultimate parent company of the Group.

Skandinaviska Enskilda Banken AB (PUBL) (“Bank”) is acting as Registrar in respect of

depositary receipts issued by the Bank in respect of the ordinary shares of the Company

held by the Bank.

As at 31 December 2019 and 2018, the said depositary receipts are registered in the

Norwegian Central Securities Depository (the “VPS”). All the depositary receipts,

amounting to 99% of the ordinary shares of the Company’s issued share capital, were

registered in the Norwegian Central Securities Depository (the “VPS”). All the depositary

receipts registered in VPS have a corresponding number of Company ordinary shares

registered in the Company’s shareholders register in Malta in the name of Skandinaviska

Enskilda Banken AB.

As at 31 December 2019 and 2018, the largest holders of depositary receipts

(“Shareholders”) were Tigerstaden AS, Middelborg Invest AS (both having the same

registered address as at the reporting date) and Klein Invest AS a company registered in

Norway with its registered address at Hans Nielsen Hauges gt37C, Oslo 0481. As at the

date of approval of the financial statements, none of the Shareholders had ultimate control

of the Company.

Also the Bank produces consolidated financial statements – refer to

https://sebgroup.com/investor-relations. No other entity in the Group produces

consolidated financial statements.

26.2 Key management personnel and director transactions

The only transaction during the period undertaken between the Company and the directors

related to the remuneration paid which amounted to €503,462 (2018: €375,494) (see note

8.1).

Similarly, at Group level, the only transaction during the year related to the directors’

remuneration paid which amounted to €842,198 (2018: €478,431) (see note 8.1).

26.3 Other related party transactions and balances

The directors consider the Company and the other undertakings within or outside the

Group to be related parties in so far as such parties are ultimately owned and controlled by

the Company.

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26.3 Other related party transactions and balances (continued)

The Group

Amounts due

by / (to)

related undertakings

2019

2018

€ €

Balance at 1 January (4,980,564) -

Effect of prior period transactions with former

coventurer now eliminated on consolidation

(1,654,900) -

Management fee income

(including VAT)

141,600

-

Management fee cost (2,000) -

Recharging of expenses

by the Company to

827,658

-

Funds advanced to 2,833 8,075

Payments to (29,130) -

Payments by the Company on behalf of 158,682 585,817

Wages and salaries paid by the Company on behalf

off

556,266 240,981

Deferred consideration payable to - (4,441,829)

Contingent consideration payable to - (1,371,970)

Unwinding of interest on deferred consideration (171,697) -

Settlement of deferred consideration 4,628,855 -

Fair value movement of contingent consideration 1,371,970 -

Foreign exchange differences (6,070) (1,638)

------------------- -------------------

Balance at 31 December 843,503 (4,980,564)

======== ========

River iGaming p.l.c


For the period from 8 November 2017 to 31 December 2018

106


26.3 Other related party transactions and balances (continued)

The Company

Amounts due from/(to)

subsidiary undertakings

Amounts due from/(to) other

related undertakings

2019 2018

2019 2018

€ € € €

Balance at 1 January 8,432,197 -

(4,980,564) -

Management fee

(including VAT) 991,200

1,416,000 141,600

-

Recharging of expenses

by the Company to 305,621

179,493 65,523

-

Funds advanced to 3,869,923 1,993,532 2,833 8,075

Funds advanced from (828,608) (125,450) - -

Payments to - - 2,250 -

Payments on behalf of the Company (54,956) - - -

Payments by the

Company on behalf of 1,241,942

4,603,421 127,740

585,817

Wages and salaries paid by the

Company 804,685

- 556,266

240,981

Receipts from (125,000) - (31,381) -

Receipts by the Company on behalf of (877,978) - - -

Issue of share options - 120,187 - -

Deferred consideration payable to

-

- -

(4,441,829)

Contingent consideration payable to

-

- -

(1,371,970)

Transfers of shares to 240,000 -

Loans provided to 11,133,757 - - -

Interest income 429,389 5,014 - -

Unwinding of interest on deferred

consideration - - (171,697) -

Fair value movement of contingent

consideration - - 1,371,970 -

Settlement of deferred consideration - - 4,628,855

Consideration paid on behalf of the

Company (6,218,675) - - -

Guarantee liability payable to (1,488,428) - - -

Fair value movement of guarantee

liability (60,712) - - -

Foreign exchange differences

(72,569)

- (6,070)

(1,638)

Re-allocation of balances 1,654,900 - (1,654,900) -

Provision on related party balances (5,152,913) - - -

------------------ ------------------ ------------------ -------------------

Balance at 31 December 13,983,775 8,432,197 52,425 (4,980,564)

======== ======== ======== ========

Information on amounts due from / (to) related parties are set out in notes 11and 21 to

these financial statements.

River iGaming p.l.c



107

27 Leases

The Group

During 2018, one of the subsidiary companies had entered into a lease agreement for the

lease of office space located in Malta. The lease was for a period of three years (initial

period). After the initial period (effective July 2021), the subsidiary had the option to extend

the lease by a further two years. The rent for the leased premises is of €186,000 per annum

which is increased by 3% at the end of the initial period. Previously, this lease was

classified as an operating lease under IAS 17 Leases. This lease was terminated at 31

December 2019 and in lieu thereof a new lease agreement with another third party was

entered into by the Company for the rental of office space for a period of 36 months. The

rent for the leased premises is of €630,000 per annum.

During the current year, in addition to the above, another subsidiary rents out office space

in Norway for a monthly rent of NOK 60,000 payable monthly in advance, for a period up

to February 2024, while another subsidiary rents out office space in London for annual rent

of £60,498, for a period up to May 2021, which rent increases to £67,408 as from the

second year. As a result of the termination of the B2C operations, this lease was

terminated. No Right-of-Use asset and related lease liability has been recognised for this

and the similar lease previously held by a fellow subsidiary company referred to above.

Information about leases for which the Company and the Group is a lessee is presented

below.

27.1 Right-of-use assets

Right-of-use assets related to leased property, are disclosed in note 13 to the financial

statements.

27.2 Amounts recognised in profit or loss

Group Company Subsidiaries

€ € €

2019 – Leases under IFRS 16

Interest on lease liabilities 42,408 - 42,408

Amortisation related to leases 211,818 - 211,818

---------------- ---------------- ----------------

254,226 - 254,226

2018 – Operating leases under IAS 17

Lease expenses 106,731 - 106,731

---------------- ---------------- ----------------

River iGaming p.l.c



108

27 Leases (continued)

27.3 Amounts recognised in statement of cash flows

Group Company

Subsidiaries

€ € €

Total cash outflow for leases for

the year 235,994 - 235,994

======= ===== =======

27.4 Lease liabilities

At 31 December 2019, lease liabilities are analysed as follows:

Group Company Subsidiaries

€ € €

Non-current lease liabilities 1,277,858 1,091,750 186,108

Current lease liabilities 373,628 303,146 70,482

---------------- ----------------- ----------------

Total lease liabilities 1,651,486 1,394,896 256,590

======= ======= ======

The terms and conditions of the lease liabilities are as follows:

31 December 2019

Currency Incremental

borrowing rate

as at inception

Year of

maturity

Face

value

Carrying

amount

Lease liabilities € 8% 2022 1,575,000 1,394,896

Lease liabilities NOK 8% 2024 3,000,000 2,530,957

====== ======

The incremental borrowing rate has been determined by reference to the rate of interest

that as a lessee, the Company or subsidiaries would have to pay to borrow from its bankers

over a similar term, and with a similar security, the funds necessary to obtain an asset of

a similar value to the right-of-use assets in a similar economic environment.

In addition to the above, during the year the Group, through two of its subsidiaries, has

entered into agreements for leases which are not included with lease liabilities in view of

the fact that the leases are for a period of less than 12 months. The lease expense for

these leases as included with other operating expenses is of €56,572.

River iGaming p.l.c



109

28 Subsequent events

Following the balance sheet date, the Covid-19 outbreak has expanded into a pandemic.

While the nature of the Group’s operations, that is, the offering of IT services as well as

the use of technology should help in ensuring an un-interrupted operation, the Group

continues to follow closely the recommendations and directions issued by the authorities

both locally and overseas to ensure that there is no business interruption. In this regard,

the Group has implemented its business continuity plan which considers various steps that

will continue to be taken depending on the circumstances. Following the outbreak of the

pandemic both locally and overseas the Company continues to provide its B2B services.

KPMG 92, Marina Street Pietà, PTA 9044 Malta Telephone (+356) 2563 1000 Fax (+356) 2566 1000 Website www.kpmg.com.mt

KPMG, a Maltese civil partnership and a member firm of the KPMG

network of independent member firms affiliated with KPMG International

Cooperative (“KPMG International”), a Swiss entity.

The firm is registered as a

partnership of Certified Public

Accountants in terms of the

Accountancy Profession Act.

A list of partners and directors of

the firm is available at 92,

Marina Street, Pietà, PTA9044,

Malta.

Independent Auditors’ Report

To the Shareholders of River iGaming p.l.c.

1 Report on the Audit of the Financial Statements Opinion We have audited the financial statements of River iGaming p.l.c. (the “Company”) and of the Group of which the Company is the parent, which comprise the statements of financial position as at 31 December 2019, the statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising significant accounting policies and other explanatory information. In our opinion, the accompanying financial statements: (a) give a true and fair view of the financial position of the Company and of the Group

as at 31 December 2019, and of their financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the EU; and

(b) have been properly prepared in accordance with the provisions of the Companies Act, 1995 (Chapter 386, Laws of Malta) (the “Act”).

Basis for opinion We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We are independent of the Company and the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants, together with the ethical requirements that are relevant to our audit of the financial statements in accordance with the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the Accountancy Profession Act (Chapter 281, Laws of Malta), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.












Malta.

Independent Auditors’ Report (continued) To the Shareholders of River iGaming p.l.c. Material uncertainty related to going concern We draw attention to Note 2.2 in the financial statements which explains that the Group has a working capital deficiency, with both the Company and the Group having registered losses during the period. As indicated in that note, the Group has re-aligned its operational strategy. As a result of that process, the directors are projecting that one of the sub-subsidiaries will be the sole cashflow generating component within the Group. As indicated in Note 2.2, that sub-subsidiary currently has only two contracted streams of revenue, and in the absence of new business being secured, the discontinuation of one or both contracts, would negatively impact the cashflows available to the Group. That note further indicates that the Group is required to raise additional funding to support its activities, though such funding has not yet been secured. These circumstances, along with other matters as set forth in Note 2.2 in the financial statements, indicate that a material uncertainty exists that may cast significant doubt on the Company’s and the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Other information The directors are responsible for the other information. The other information comprises the ‘Directors’ Report’, but does not include the financial statements and our auditors’ report thereon. Our opinion on the financial statements does not cover the directors’ report, on which we report separately below in our ‘Report on Other Legal and Regulatory Requirements’.












Malta.

Independent Auditors’ Report (continued) To the Shareholders of River iGaming p.l.c. Responsibilities of the directors for the financial statements The directors are responsible for the preparation of financial statements that (a) give a true and fair view in accordance with IFRS as adopted by the EU, and (b) are properly prepared in accordance with the provisions of the Act, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the Company’s and the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company and/or the Group or to cease operations, or have no realistic alternative but to do so. The directors are also responsible for overseeing the financial reporting process. Auditors’ responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. ‘Reasonable assurance’ is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.












Malta.

Independent Auditors’ Report (continued) To the Shareholders of River iGaming p.l.c. Auditors’ responsibilities for the audit of the financial statements (continued)

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s and the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of

accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's and the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company and/or the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.












Malta.

Independent Auditors’ Report (continued) To the Shareholders of River iGaming p.l.c.

2 Report on Other Legal and Regulatory Requirements Opinion on the directors’ report The directors are responsible for preparing a directors’ report in accordance with the provisions of article 177 of the Act. We are required to consider whether the information given in the directors’ report for the accounting period for which the financial statements are prepared is consistent with those financial statements; and, if we are of the opinion that it is not, we shall state that fact in our report. We have nothing to report in this regard. Pursuant to article 179(3) of the Act, we are also required to:

• express an opinion on whether the directors’ report has been prepared in accordance with the applicable legal requirements; and

• state whether, in the light of the knowledge and understanding of the entity and its environment obtained in the course of our audit of the financial statements, we have identified material misstatements in the directors’ report, giving an indication of the nature of any such misstatements.

In such regards:

• in our opinion, the directors’ report has been prepared in accordance with the applicable legal requirements; and

• we have not identified material misstatements in the directors’ report.












Malta.

Independent Auditors’ Report (continued) To the Shareholders of River iGaming p.l.c. Matters on which we are required to report by exception by the Act Pursuant to articles 179(10) and 179(11) of the Act, we have nothing to report to you with respect to the following matters:

• proper accounting records have not been kept; or

• the financial statements are not in agreement with the accounting records; or

• we have not obtained all the information and explanations which, to the best of our knowledge and belief, we require for the purpose of our audit.

The Principal authorised to sign on behalf of KPMG on the audit resulting in this independent auditors’ report is Giles Schembri. KPMG 30 April 2020 Registered Auditors

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