3rd Quarter Results

Gamesys Group plc

Results for the Three and Nine Months Ended 30 September 2019

Q3 Reported revenues increase 23% and 20% pro-forma

International drives the top line and JPJ UK returns to growth, confident in 2019 outlook

LONDON, 13 November 2019 - Gamesys Group plc (LSE: GYS) (the 'Group', 'Gamesys') (formerly JPJ Group plc), the parent company of the online gaming group that provides online bingo and casino games to a global consumer base, announces its results for the three and nine months ended 30 September 2019.

Financial summary[1],[2]

Pro-forma financial summary[5]

Financial highlights for Q3 2019

·; Strong reported financial performance

o Gaming revenue rose 23% year-on-year (20% excluding the Gamesys Acquisition results), mainly as a consequence of high organic growth[6] in markets outside the UK and after including four days of trading from the acquired Gamesys brands (contributing £2.3 million)

o Adjusted EBITDA3 decreased 8% year-on-year principally due to the impact from higher UK gaming taxes introduced in the period

o Adjusted net income3 decreased by 20% reflecting the reduction in EBITDA

·; Pro-forma financial performance5 in Q3 2019 reflects accelerating growth in the acquired Gamesys brands of Virgin Games, Virgin Casino, Heart Bingo and Monopoly Casino

o Group gaming revenue rose 20% year-on-year

o Acquired Gamesys brands grew revenues 22% year-on-year, driven by strong organic growth6 at Virgin Games, Virgin Casino, Heart Bingo and Monopoly Casino

o Adjusted EBITDA3 decreased 4% year-on-year further reflecting the impact of higher UK gaming taxes

·; Completion of acquisition of Gamesys (Holdings) Limited on 26 September 2019

o Extended existing debt facilities by £173.6 million to part-fund the cash component of the acquisition of Gamesys (Holdings) Limited of £237.3 million (net of gains from hedging)

o Adjusted net debt[7] of £484.7 million

o Consequently, adjusted net leverage ratio[8] of 3.02x increased from 2.47x at 30 June 2019

·; Following another strong quarter, the Board remains confident on the outlook for the remainder of the year

Operational highlights for Q3 2019

·; Successful completion of the Gamesys Acquisition

·; Continued high growth of international revenues at Vera&John

·; A return to revenue growth at Jackpotjoy UK as the impact of enhanced responsible gambling measures annualises

·; Ongoing improvement in core KPIs[9],[10],[11] year-on-year:

o Average Active Customers per Month9,10,11 grew to 248,945 in the twelve months to 30 September 2019, an increase of 7% year-on-year

o Average Real Money Gaming Revenue per Month9,10,11 grew to £27.5 million, an increase of 13% year-on-year

o Monthly Real Money Gaming Revenue per Average Active Customer9,10,11 of £110, an increase of 6% year-on-year

Business segments highlights for Q3 2019 (reported)

·; Jackpotjoy10 (56% of Group revenue) - increase in gaming revenue of 5% year-on-year due to a return to growth at Jackpotjoy UK and double digit growth from Botemania in Spain as well as the inclusion of four days of revenue generated by the brands purchased as part of the Gamesys Acquisition. On a like-for-like basis, revenues in the segment were broadly flat; the decline in adjusted EBITDA3 reflects the impact of higher gaming taxes in the UK, increased marketing spend as well as recent regulatory changes in Sweden.

·; Vera&John (44% of Group revenue) - high growth in international markets reflected in an increase in gaming revenue of 57% (or 55% on a constant currency basis[12]) which translates into an adjusted EBITDA3 increase of 22%.

Outlook

Strong trading in the third quarter supports management's confidence in the full-year outturn. Our expectation that Jackpotjoy UK would return to growth in H2 2019 has been confirmed in these numbers and our major international markets and the acquired Gamesys brands are delivering high growth.

Neil Goulden, Executive Chairman, Gamesys Group plc commented:

"I am pleased to report that the Group has delivered another stand-out quarter of revenue growth alongside the expected EBITDA impact from higher gaming taxes. Pro-forma revenues5 were up 20% in Q3 2019, principally due to the exceptional performance of Vera&John in its international footprint and the high growth in the acquired Gamesys brands, as well as a return to revenue growth in Jackpotjoy UK.

During the quarter, the Group successfully completed the Gamesys Acquisition, creating a leading UK and international operator and offering customers an even greater choice of major brands and different games. It is also worth noting that from 2020 our Q1 and Q3 updates will be shorter form trading updates in line with general UK practice. This reflects the fact that the Group's reporting requirements in Canada will no longer oblige us to report consolidated financial statements for the respective three and nine month periods."

Lee Fenton, Chief Executive Officer, Gamesys Group plc, commented:

"It is a very exciting time for all involved at Gamesys Group plc. The successful combination of two leading and complementary businesses with a unique technology offering, a strong pool of talent and an enhanced portfolio of brands, ensures the Group is in a strong position to take advantage of future growth possibilities and we are already reaping the benefits in terms of operating performance. Q3 has seen excellent growth across the acquired Gamesys brands, an outstanding performance at Vera&John and a return to growth at Jackpotjoy UK which helps underpin our confidence in the outlook."

Conference call

A conference call for analysts and investors will be held today at 1.00pm GMT / 8.00am ET. To participate, interested parties are asked to dial +44 (0) 20 3003 2666 (UK shareholders); +1 866 378- 3566 (Canada); or +1 866 966-5335 (US), 10 minutes prior to the scheduled start of the call using the reference "Gamesys"'. A replay of the conference call will be available for 30 days by dialling +44 (0) 20 8196 1998 or + 1 866 595 5357 and using reference 2081546#. A transcript will also be made available on Gamesys Group plc's website at www.gamesysgroup.com/investors

Note regarding non-IFRS financial measures

The following non-IFRS definitions are used in this release because management believes that they provide additional useful information regarding ongoing operating and financial performance. Readers are cautioned that the definitions are not recognised measures under IFRS, do not have standardised meanings prescribed by IFRS, and should not be considered in isolation or construed to be alternatives to revenues and net income/(loss) and comprehensive income/(loss) for the period determined in accordance with IFRS or as indicators of performance, liquidity or cash flows. Our method of calculating these measures may differ from the method used by other entities. Accordingly, our measures may not be comparable to similarly titled measures used by other entities or in other jurisdictions.

Adjusted EBITDA, as defined by the Group, is income from continuing operations before interest expense including accretion (net of interest income), income taxes, amortisation and depreciation, share-based compensation, severance costs, fair value adjustments on contingent consideration, transaction related costs and foreign exchange (gain)/loss. Management believes that Adjusted EBITDA is an important indicator of the issuer's ability to generate liquidity to service outstanding debt and uses this metric for such purpose. The exclusion of share-based compensation eliminates non-cash items and the exclusion of fair value adjustments on contingent consideration, severance costs, transaction related costs and foreign exchange (gain)/loss eliminates items which management believes are either non-operational and/or non-routine. 

Adjusted Net Income, as defined by the Group, means net income from continuing operations plus or minus items of note that management may reasonably quantify and believes will provide the reader with a better understanding of the Group's underlying business performance. Adjusted Net Income is calculated by adjusting net income for accretion on financial liabilities, amortisation of acquisition related purchase price intangibles (including non-compete clauses), share-based compensation, severance costs, fair value adjustments on contingent consideration, transaction related costs and foreign exchange (gain)/loss. The exclusion of accretion on financial liabilities and share-based compensation eliminates the non-cash items and the exclusion of amortisation of acquisition related purchase price intangibles (including non-compete clauses), fair value adjustments on contingent consideration, severance costs, transaction related costs and foreign exchange (gain)/loss eliminates items which management believes are non-operational and/or non-routine. Adjusted Net Income is considered by some investors and analysts for the purpose of assisting in valuing a company.

Diluted Adjusted Net Income per share from continuing operations, as defined by the Group, means Adjusted Net Income divided by the diluted weighted average number of shares outstanding, calculated using the IFRS treasury method, for the applicable period. Management believes that Diluted Adjusted Net Income per share from continuing operations assists with the Group's ability to analyse Adjusted Net Income on a diluted weighted average per share basis.

Cautionary Note Regarding Forward Looking Information

This release contains certain information and statements that may constitute 'forward-looking information' (including future-oriented financial information and financial outlooks) within the meaning of applicable laws, including Canadian securities laws. Often, but not always, forward-looking information can be identified by the use of words such as 'plans', 'expects', 'estimates', 'projects', 'predicts', 'targets', 'seeks', 'intends', 'anticipates', 'believes', or 'is confident of' or the negative of such words or other variations of or synonyms for such words, or state that certain actions, events or results 'may', 'could', 'would', 'should', 'might' or 'will' be taken, occur or be achieved. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause actual results, performance, achievements or developments to be materially different from those anticipated by the Group and expressed or implied by the forward-looking statements. Forward-looking information contained in this release includes, but is not limited to, statements with respect to the Group's future financial performance, the future prospects of the Group's business and operations, the Group's growth opportunities and the execution of its growth strategies, the future performance of the Jackpotjoy segment, the possibility of the Group drawing on the RCF, and the statements made under the heading 'Outlook' of this release. Certain of these statements may constitute a financial outlook within the meaning of Canadian securities laws. These statements reflect the Group's current expectations related to future events or its future results, performance, achievements or developments, and future trends affecting the Group. All such statements, other than statements of historical fact, are forward-looking information. Such forward-looking information is based on a number of assumptions which may prove to be incorrect, including, but not limited to, the ability of the Group to secure, maintain and comply with all required licences, permits and certifications to carry out business in the jurisdictions in which it currently operates or intends to operate; governmental and regulatory actions, including the introduction of new laws or changes in laws (or the interpretation thereof) related to online gaming; general business, economic and market conditions (including market growth rates and the withdrawal of the UK from the European Union); the Group operating in foreign jurisdictions; the competitive environment; the expected growth of the online gaming market and potential new market opportunities; anticipated and unanticipated costs; the protection of the Group's intellectual property rights; the Group's ability to successfully integrate and realise the benefits of its completed acquisitions; the Group's relationship with third parties; the ability of the Group to service its debt obligations; and the ability of the Group to obtain additional financing, if, as and when required. Such statements could also be materially affected by risks relating to the lack of available and qualified personnel or management; stock market volatility; taxation policies; competition; foreign operations; the Group's limited operating history and the Group's ability to access sufficient capital from internal or external sources. However, whether actual results and developments will conform with the expectations and predictions contained in the forward-looking information is subject to a number of risks and uncertainties, many of which are beyond the Group's control, and the effects of which can be difficult to predict, including that the assumptions outlined above may not be accurate. For a description of additional risk factors, see Schedule 'A' attached to Gamesys Group plc's most recently filed annual information form. Although the Group has attempted to identify important factors that could cause actual results, performance, achievements or developments to differ materially from those described in forward-looking statements, there may be other factors that cause actual results, performance, achievements or developments not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results, performance, achievement or developments are likely to differ, and may differ materially, from those expressed in or implied by the forward-looking information contained in this release. Accordingly, readers should not place undue reliance on forward-looking information. While subsequent events and developments may cause the Group's expectations, estimates and views to change, the Group does not undertake or assume any obligation to update or revise any forward-looking information, except as required by applicable securities laws. The forward-looking information contained in this release should not be relied upon as representing the Group's expectations, estimates and views as of any date subsequent to the date of this release. The forward-looking information contained in this release is expressly qualified by this cautionary statement. Investors should not place undue reliance on forward-looking statements as the plans, intentions or expectations upon which they are based might not occur.

Any future-oriented financial information or financial outlooks in this release (including any such information or outlooks under the heading 'Outlook' on page 3 of this release) are based on certain assumptions regarding expected growth, results of operations, performance, and business prospects and opportunities. While the Group considers these assumptions to be reasonable, based on information currently available, they may prove to be incorrect. These risks, uncertainties and other factors include, but are not limited to: credit, market, currency, operational, liquidity and funding risks, including changes in economic conditions, and interest rates or tax rates.

Financial Review2

Gaming revenue (reported)

The Group's gaming revenue during the three months ended 30 September 2019 consisted of:

·; £52.2 million in revenue earned from Jackpotjoy's10 operational activities.

·; £40.2 million in revenue earned from Vera&John's operational activities.

The Group's gaming revenue during the three months ended 30 September 2018 consisted of:

·; £49.5 million in revenue earned from Jackpotjoy's10 operational activities.

·; £25.7 million in revenue earned from Vera&John's operational activities.

The increase in gaming revenue for the three months ended 30 September 2019 in comparison with the three months ended 30 September 2018 relates to organic growth6 of the Jackpotjoy10 and Vera&John segments, where gaming revenue increased by 1% and 57%, respectively.

The Group's gaming revenue during the nine months ended 30 September 2019 consisted of:

·; £150.0 million in revenue earned from Jackpotjoy's10 operational activities.

·; £112.0 million in revenue earned from Vera&John's operational activities.

The Group's gaming revenue during the nine months ended 30 September 2018 consisted of:

·; £153.1 million in revenue earned from Jackpotjoy's10 operational activities.

·; £71.0 million in revenue earned from Vera&John's operational activities.

The increase in gaming revenue for the nine months ended 30 September 2019 in comparison with the nine months ended 30 September 2018 relates to organic growth6 of the Vera&John segment, where gaming revenue increased by 58%.

Costs and expenses

Distribution costs

Selling and marketing expenses consist of payments made to affiliates and general marketing expenses related to each brand. Licensing fees consist of the fees for the Jackpotjoy10 segment to operate on its platforms and game suppliers' fees paid by both the Vera&John and Jackpotjoy10 segments. Gaming taxes largely consist of point of consumption taxes, payable in the regulated jurisdictions that the Group operates in. Variance in gaming taxes from prior periods relates to an increase in remote gaming duty from 15% to 21%, which came into effect in the UK in Q2 2019. Processing fees consist of costs associated with using payment providers and include payment service provider transaction and handling costs, as well as deposit and withdrawal fees. With the exception of selling and marketing expenses, distribution costs tend to be variable in relation to revenue.

The increase in distribution costs for the three and nine months ended 30 September 2019 compared to the same periods in 2018 is mainly due to increased revenue and marketing spend in the Jackpotjoy10 and Vera&John segments.

Administrative costs

Compensation and benefits costs consist of salaries, wages, bonuses, directors' fees, benefits and share-based compensation expense. The increase in these expenses for the three and nine months ended 30 September 2019 compared to the same periods in 2018 is primarily due to additional staff hired as well as higher bonus accruals as the business continues to grow.

Professional fees consist mainly of legal, accounting and audit fees. The increase in professional fees for the three and nine months ended 30 September 2019 compared to the same periods in 2018 can be attributed to services obtained in relation to some of the Group's operational and corporate initiatives.

General and administrative expenses consist of items, such as travel and accommodation, insurance, listing authority fees, technology and development costs, and other office overhead charges. The increase in these costs for the three and nine months ended 30 September 2019 compared to the same periods in 2018 can be attributed to higher office overhead costs.

Amortisation and depreciation expenses consist of amortisation of the Group's intangible assets and depreciation of the Group's tangible assets over their useful lives. The decrease in amortisation and depreciation in the three and nine months ended 30 September 2019 is due to the fact that amortisation expense related to purchase price intangibles recognised in prior periods decreases with each passing period of their useful lives as a result of the amortisation method used. It further relates to the fact that the Group's non-compete clauses were fully amortised during the three months ended 31 March 2019. The decrease is marginally offset by additional depreciation recognised as a result of adoption of IFRS 16.

Transaction related costs

Transaction related costs consist of legal, professional, due diligence, other direct costs/fees associated with transactions and acquisitions or disposals contemplated or completed by the Group. The increase in transaction related costs in the three and nine months ended 30 September 2019 compared to the same periods in 2018 relates to the Gamesys Acquisition.

Business unit results

Jackpotjoy10

Gaming revenue for the Jackpotjoy10 segment for the three months ended 30 September 2019 was 5% higher than in the same period in 2018 primarily as a result of additional revenue of £2.3 million generated by the brands purchased as part of the Gamesys Acquisition as well as increases in the Jackpotjoy UK, Starspins and Botemania brands, offset by a decline in the Jackpotjoy Sweden brand. The growth in the Jackpotjoy UK brand, which accounted for 64% (three months ended 30 September 2018 - 67%) of the segment's revenue is due to the fact that the enhanced responsible gambling measures introduced in the UK have started to annualise. The increase is further driven by growth in the Botemania brand, which accounted for 17% (three months ended 30 September 2018 - 15%) of the segment's revenue. The decline in Jackpotjoy's Swedish brand, which accounted for 2% (three months ended 30 September 2018 - 5%) of the segment's revenue is due to recent regulatory changes in Sweden.

Gaming revenue for the Jackpotjoy10 segment for the nine months ended 30 September 2019 was 2% lower than in the same period in 2018 primarily due to a decline in the Jackpotjoy UK brand, which accounted for 65% (nine months ended 30 September 2018 - 67%) of the segment's revenue, as well as a decline in the Jackpotjoy Sweden brand, which accounted for 3% (nine months ended 30 September 2018 - 5%) of the segment's revenue. The decline in both Jackpotjoy UK and Jackpotjoy Sweden brands is due to enhanced responsible gambling measures introduced in the UK and recent regulatory changes in Sweden. The decrease was partially offset by an increase in the Botemania brand, which accounted for 17% (nine months ended 30 September 2018 - 15%) of this segment's revenue.

The increase in distribution costs for the three and nine months ended 30 September 2019 compared to the same periods in 2018 was primarily driven by an increase in marketing spend in the UK as well as an increase in gaming taxes as a result of an increase in the UK tax rates, which came into effect in Q2 2019 and the introduction of gaming taxes in Sweden.

The increase in administrative costs for the three and nine months ended 30 September 2019 compared to the same periods in 2018 was mainly driven by increases in compensation.

Vera&John

Gaming revenue for the Vera&John segment for the three and nine months ended 30 September 2019 increased by 57% and 58%, respectively, compared to the same periods in 2018 due to organic growth6. On a constant currency basis12, revenue increased by 55% and 58% for the three and nine months ended 30 September 2019 compared to the same periods in 2018.

Distribution costs increased by 66% and 45%, respectively, for the three and nine months ended 30 September 2019 compared to the same periods in 2018 as a result of higher marketing spend and higher revenues achieved.

The increase in administrative costs for the three and nine months ended 30 September 2019 compared to the same periods in 2018 was mainly driven by increases in personnel costs, professional fees and administrative overhead costs as the segment continues to grow.

Unallocated Corporate Costs

Adjusted EBITDA3 on Unallocated Corporate Costs decreased from (£2.5) million to (£2.9) million in the three months ended 30 September 2019 compared to the same period in 2018. The variance mainly relates to a £0.2 million increase in compensation and a £0.3 million increase in professional fees offset by a £0.1 million decrease in general administrative costs.

Adjusted EBITDA3 on Unallocated Corporate Costs decreased from (£7.8) million to (£8.8) million in the nine months ended 30 September 2019 compared to the same period in 2018. The variance mainly relates to a £1.1 million increase in compensation and a £0.3 million increase in professional fees, offset by a £0.4 million decrease in general administrative costs.

Net loss on Unallocated Corporate Costs increased from £8.4 million to £12.0 million for the three months ended 30 September 2019 compared to the same period in 2018. This increase is primarily driven by higher transaction related costs incurred as a result of the Gamesys Acquisition.

Net loss on Unallocated Corporate Costs increased from £38.6 million to £41.3 million for the nine months ended 30 September 2019 compared to the same period in 2018. This increase is driven by higher transaction related costs incurred as a result of the Gamesys Acquisition. This movement is partially offset by lower fair value adjustments on contingent consideration due to the fact that the final earn-out period ended in Q1 2018, leaving only the fair value adjustment on the remaining milestone payment to be recognised in the current period.

Key performance indicators

Average Active Customers is a key performance indicator used by management to assess real money customer acquisition and real money customer retention efforts of each of the Group's brands. The Group defines Average Active Customers ('Average Active Customers') as being real money customers who have placed at least one bet in a given month. 'Average Active Customers per Month' is the Average Active Customers per month, averaged over a twelve-month period. While this measure is not recognised by IFRS, management believes that it is a meaningful indicator of the Group's ability to acquire and retain customers.

Total Real Money Gaming Revenue and Average Real Money Gaming Revenue per Month are key performance indicators used by management to assess revenue earned from real money gaming operations of the business. The Group defines Total Real Money Gaming Revenue ('Total Real Money Gaming Revenue') as revenue less revenue earned from B2B websites and revenue earned from 27 September 2019 to 30 September 2019 from brands purchased as part of the Gamesys Acquisition. The Group defines Average Real Money Gaming Revenue per Month ('Average Real Money Gaming Revenue per Month') as Real Money Gaming Revenue per month, averaged over a twelve-month period. While these measures are not recognised by IFRS, management believes that they are meaningful indicators of the Group's real money gaming operational results.

Monthly Real Money Gaming Revenue per Average Active Customer is a key performance indicator used by management to assess the Group's ability to generate Real Money Gaming Revenue on a per customer basis. The Group defines Monthly Real Money Gaming Revenue per Average Active Customer ('Monthly Real Money Gaming Revenue per Average Active Customer') as being Average Real Money Gaming Revenue per Month divided by Average Active Customers per Month. While this measure is not recognised by IFRS, management believes that it is a meaningful indicator of the Group's ability to generate Total Real Money Gaming Revenue.

(1) Total Real Money Gaming Revenue for the twelve months ended 30 September 2019 consists of total revenue less revenue earned from B2B activity of £14.0 million (30 September 2018 - £7.1 million) and £2.3 million revenue earned from 27 September 2019 to 30 September 2019 from the brands purchased as part of the Gamesys Acquisition (30 September 2018 - £nil).

Monthly Real Money Gaming Revenue per Average Active Customer increased by 6% period-over-period which is in line with the Group's overall customer acquisition and retention strategy.

INDEPENDENT REVIEW REPORT TO GAMESYS GROUP PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the interim financial report for the three and nine months ended 30 September 2019 which comprises the Interim Condensed Consolidated Statements of Comprehensive Income, the Interim Condensed Consolidated Balance Sheets, the Interim Condensed Consolidated Statements of Changes in Equity, the Interim Condensed Consolidated Statements of Cash Flows and the related notes.

We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The interim financial report is the responsibility of and has been approved by the directors.

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board and IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim financial report has been prepared in accordance with International Accounting Standard 34, ''Interim Financial Reporting'', as issued by the International Accounting Standards Board and International Accounting Standard 34, ''Interim Financial Reporting'', as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim financial report for the three and nine months ended 30 September 2019 is not prepared, in all material respects, with International Accounting Standard 34 as issued by the International Accounting Standards Board and International Accounting Standard 34, as adopted by the European Union.

BDO LLP

Chartered Accountants

London

13 November 2019

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

See accompanying notes

UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

See accompanying notes

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

See accompanying notes

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

See accompanying notes

SUPPLEMENTARY NOTES FOR THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2019

1. Corporate information

Gamesys Group plc, formerly JPJ Group plc, is an online gaming holding company that was incorporated under the Companies Act 2006 (England and Wales) on 29 July 2016. On 26 September 2019, following the completion of the Gamesys Acquisition (as defined below), JPJ Group plc changed its name to Gamesys Group plc. Gamesys Group plc's registered office is located at 35 Great St. Helen's, London, United Kingdom. Unless the context requires otherwise, use of 'Group' in these accompanying notes means Gamesys Group plc and its subsidiaries, as applicable.

The Group currently offers bingo, casino and other games to its customers using the Jackpotjoy, Starspins, Botemania, Virgin Games, Heart Bingo, Virgin Casino, Monopoly Casino, Vera&John, InterCasino, Solid Gaming and other brands. All brands operate off proprietary software owned by the Group.

On 13 June 2019, the Group entered into a conditional agreement to acquire the business of Gamesys (Holdings) Limited, excluding sports brands and games, for a mixture of cash and new Group shares (the 'Gamesys Acquisition'). The Gamesys Acquisition was completed on 26 September 2019. The total consideration amounted to approximately £491.3 million, comprising of: (i) £237.3 million in cash (net of gains from hedging), of which £173.6 million was funded by an add-on to the Group's existing Term Facility, (ii) £10.0 million in deferred consideration and (iii) 33.7 million in newly issued shares, representing approximately £244.0 million.

These Unaudited Interim Condensed Consolidated Financial Statements were authorised for issue by the Board of Directors of Gamesys Group plc on 13 November 2019.

2. Basis of preparation

Basis of presentation

These Unaudited Interim Condensed Consolidated Financial Statements have been prepared by management on a going concern basis, are presented in compliance with International Accounting Standard ('IAS') 34 - Interim Financial Reporting, and have been prepared on a basis consistent with the accounting policies and methods used and disclosed in Gamesys Group plc's consolidated financial statements for the year ended 31 December 2018 (the 'Annual Financial Statements'), except as described below. Certain information and disclosures normally included in the Annual Financial Statements prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union, and in accordance with IFRS as issued by the International Accounting Standards Board, have been omitted or condensed.

These Unaudited Interim Condensed Consolidated Financial Statements should be read in conjunction with the Annual Financial Statements. All defined terms used herein are consistent with those terms as defined in the Annual Financial Statements.

These Unaudited Interim Condensed Consolidated Financial Statements have been prepared under the historical cost convention, other than for the measurement at fair value of the Group's Interest Rate Swap, Currency Swap, FX Forward, contingent consideration, certain hedged loan instruments, and certain loans receivable.

The comparative financial information for the year ended 31 December 2018 in these Unaudited Interim Condensed Consolidated Financial Statements does not constitute statutory accounts for that year. The auditors' report on the statutory accounts for the year ended 31 December 2018 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under sections 498(2) or 498(3) of the Companies Act 2006.

3. Business combinations

On 26 September 2019, the Group completed the Gamesys Acquisition, which includes the Virgin Games, Heart Bingo, Virgin Casino and Monopoly Casino brands and related assets. The purchase was completed for £237.3 million in cash (net of gains from hedging), of which £173.6 million was funded by an add-on to the Group's existing Term Facility, £10.0 million in deferred consideration and 33,653,846 newly issued ordinary shares of the parent company, which at the prevailing share price of £7.25 on 26 September 2019 amounted to £244.0 million. The Gamesys Acquisition has been accounted for as a business combination. The purchase price allocation set forth below represents the preliminary allocation of the purchase price and the fair value of assets acquired and is subject to change.

Effect of acquisition on the financial position of the Group

\* This balance is net of gains from hedging the foreign exchange rate movements on the purchase price.

The excess purchase consideration over the net fair value of financial and other tangible and intangible assets and liabilities acquired will be allocated to goodwill. The goodwill recognised is primarily attributed to the expected synergies and other benefits from combining the assets and activities of Gamesys (Holdings) Limited with those of the Group.

None of the goodwill is expected to be deductible for income tax purposes. The fair value of the assets acquired and liabilities assumed will be subject to adjustments pending the completion of final purchase price allocations and post-closing adjustments, including recognition of deferred taxation balances.

Since the date of acquisition, this business combination has contributed £2.3 million in revenue and £0.2 million in net income to the Group. The results of this business combination are included in the Group's Jackpotjoy business segment. The Group has used a significant amount of judgement and simplifying assumptions in estimating the net income and operating profits before income taxes had the business combination occurred at the beginning of the year. Had the business combination occurred at the beginning of the year, it would have contributed £150.3 million in revenue and £40.1 million in operating profits before income taxes. Operating profits before income taxes takes into account income earned from the software licence fee and other income earned by the acquired business from the reporting entity during the period before the Gamesys Acquisition. As a result of the judgement and simplifying assumptions used to generate these estimates, the amounts should not be used as an indicator of past or future performance of the Group or its acquired subsidiaries.

4. Summary of significant accounting policies

For a description of the Group's significant accounting policies, critical accounting estimates and assumptions, and related information see notes 3 and 4 to the Annual Financial Statements. Other than what is described below, there have been no changes to the Group's significant accounting policies or critical accounting estimates and assumptions during the nine months ended 30 September 2019.

Leases

Effective from 1 January 2019, the Group adopted IFRS 16 - Leases ('IFRS 16'), which replaces IAS 17 - Leases and related interpretations.

The Group elected to apply the modified retrospective approach which does not require restatement of comparative periods. As a result, lease liabilities were recognised in the opening consolidated balance sheet as at 1 January 2019 at an amount equal to the Group's remaining lease payments discounted using the Group's incremental borrowing rate. Additionally, the Group elected to measure right-of-use assets by reference to the measurement of the lease liabilities on the same date. As a result, net assets were not impacted. There was also no impact on the Group's equity at 1 January 2019.

On 1 January 2019, the Group recognised right-of-use assets and lease liabilities of £3.2 million related to its existing leases. Furthermore, the Group assumed that leases obtained as part of the Gamesys Acquisition were also subject to IFRS 16 starting on 1 January 2019 and recognised additional right-of-use assets and lease liabilities of £9.9 million as a result.

Under IFRS 16, the Group amortises its right-of-use assets and accretes interest on its lease liabilities. As at 30 September 2019, the carrying value of the right-of-use assets amounted to £17.1 million and the carrying value of lease liabilities amounted to £17.3 million, with £4.6 million of this balance shown as short-term lease liabilities and the remaining portion of £12.7 million reflected under non-current liabilities.

Hedge accounting

The Group elected to use hedge accounting for the purposes of recognising realised and unrealised gains and losses associated with the Interest Rate Swap and the Currency Swap (as defined in note 13).

IFRS 9 - Financial Instruments ('IFRS 9') permits hedge accounting under certain circumstances provided that the hedging relationship is:

·; formally designated and documented, including the entity's risk management objective and strategy for undertaking the hedge, identification of the hedging instrument, the hedged item, the nature of the risk being hedged, and how the entity will assess the hedging instrument's effectiveness;

·; expected to be highly effective in achieving offsetting changes in fair value or cash flows attributable to the hedged risk as designated and documented, and effectiveness can be reliably measured; and

·; assessed on an ongoing basis and determined to be highly effective.

Based on the Group's analysis of the requirements outlined above, it was concluded that the Interest Rate Swap and the Currency Swap meet all the necessary criteria and qualify for use of hedge accounting. Both were designated as cash flow hedges.

5. Segment information

As discussed in note 7, the Group sold its Mandalay business in the period ended 31 March 2019 and it sold its social gaming business in the period ended 30 September 2018. All current period and 2018 comparative segment figures have been restated accordingly. The Mandalay and social gaming businesses were previously reported as part of the Jackpotjoy segment. The results of the Gamesys Acquisition for the period from 27 September 2019 to 30 September 2019 are included in the Jackpotjoy segment.

The following tables present selected financial results for each segment and the Unallocated Corporate Costs:

Three months ended 30 September 2019:

*Includes Gamesys Acquisition results from 27 September 2019 to 30 September 2019.

Nine months ended 30 September 2019:

*Includes Gamesys Acquisition results from 27 September 2019 to 30 September 2019.

Three months ended 30 September 2018:

Nine months ended 30 September 2018:

The following table presents net assets per segment and Unallocated Corporate Costs as at30 September 2019:

*Includes Gamesys Acquisition balance sheet items.

The following table presents net assets per segment and Unallocated Corporate Costs as at 31 December 2018:

During the nine months ended 30 September 2019 and 2018, revenue was earned from customers situated in the following locations: United Kingdom - 47% (nine months ended 30 September 2018 - 57%), Japan - 28% (nine months ended 30 September 2018 - 12%), Spain - 10% (nine months ended 30 September 2018 - 10%), Sweden - 4% (nine months ended 30 September 2018 - 9%), rest of Europe - 6% (nine months ended 30 September 2018 - 8%), rest of world - 5% (nine months ended 30 September 2018 - 4%).

During the nine months ended 30 September 2019, the Group's B2B Revenue, Affiliate Revenue and Game Aggregation Revenue comprised 4% (nine months ended 30 September 2018 - 3%) of total Group revenues, with the remaining portion being revenues earned from Net Gaming Revenue operations.

Non-current assets by geographical location as at 30 September 2019 were as follows: Europe £94.8 million (31 December 2018 - £85.2 million), Americas £392.2 million (31 December 2018 - £436.8 million) and United Kingdom £513.7 million (31 December 2018 - £nil).

6. Costs and expenses

As discussed in note 7, the Group sold its Mandalay business in the period ended 31 March 2019 and its social gaming business in the period ended 30 September 2018. All current period and 2018 comparative figures have been restated accordingly. The results of the Gamesys Acquisition for the period from 27 September 2019 to 30 September 2019 are included in the tables below.

7. Discontinued operations

On 12 March 2019, the Group completed the sale of its Mandalay business for cash consideration of £18.0 million. The Mandalay business was not previously classified as held-for-sale. As discussed in note 7 of the Annual Financial Statements, the Group disposed of its social gaming business in the period ended 30 September 2018. The comparative unaudited interim condensed consolidated statements of comprehensive income are presented below to show the Mandalay and social gaming business discontinued operations separately from continuing operations. The results of the Mandalay and social gaming businesses have been excluded from notes 5 and 6 above.

Results of discontinued operations

Cash flows from discontinued operations

Effect of disposal on the financial position of the Group

Goodwill disposed of was allocated to the Mandalay business on the basis of earnings before interest, taxes, depreciation and amortisation, relative to that of the overall segment.

8. Interest income/expense