ABOUT · Gambling.com Group PLC is a multi-award-winning provider of digital marketing services for...

ABOUT GAMBLING.COM GROUP PLC Gambling.com Group PLC is a multi-award-winning provider of digital marketing services for the global iGaming industry. Founded in 2006, the Group has a workforce of more than 80 and operates from offices in Dublin, Tampa, and Malta.

The Group publishes websites that offer comparisons and reviews of online gambling websites in 15 national markets in 9 languages. Players use these resources to select which online gambling operators they should trust to offer a safe and honest online gambling experience. The Group’s publishing assets include the leading iGaming industry portal, Gambling.com® as well as Bookies.com and the CasinoSource℠ series of portals, among many others.

TABLE OF CONTENTS

CEO Report ............................................................................................................. 1 - 2 Key Performances Indices ....................................................................................... 3 Directors’ Report ..................................................................................................... 4 - 14 Independent Auditor’s Report ................................................................................ 15 - 24 Consolidated and Separate Financial Statements .................................................... 25 - 33 Notes to the Consolidated & Separate Financial Statements .................................. 34 - 66

GAMBLING.COM GROUP PLC / Annual Report 2018 1

CEO REPORT

I look back with great pride at what Gambling.com Group has accomplished in 2018. Examining both qualitative and quantitative dimensions, there is no denying that the Group created substantial, long-term value.

OPERATIONAL RESULTS

The Group delivered total revenue of EUR 16.23 million in 2018, which represented an increase of 63% over 2017 and delivered with improved EBITDA margins. NDC growth was even higher with an increase of 106% and with a record-breaking 25 thousand during the fourth quarter alone. While this is an excellent performance, the even more important number is the organic growth of 37%. This is a truly stand-out performance, especially when considering that our largest market, the UK, is barely growing at a double-digit rate. This means we took market share from our competitors.

ORGANISATIONAL DEVELOPMENT

The Group has continued to rapidly scale its product and technology teams as planned. The Group grew its headcount from 31 to 83 full-time employees in addition to a number of full-time consultants. 10 of these employees are based in the US. The Group has leased additional office space in Dublin and Malta to facilitate future hires during the beginning of 2019. The Group also plans to open a second US office during 2019 and significantly increase its US-based headcount.

A key focus area for 2018 was product diversification and the Group has seen substantial growth in sports and non-casino games. For 2019 the key focus areas are geographic diversification and re-doubling efforts to maintain technology leadership by investing further into internal tools. Operationally we are making great progress on these initiatives and, as a fellow developer, the quality of our development team is a particular source of pride.

PRODUCT DEVELOPMENT AND NEW INITIATIVES

During 2018, the Group’s assets performed particularly well in terms of organic search on the back of the Google algorithm updates from the second half of 2018; a testament to the continuous long-term focus on quality over quantity focusing on strong brands and quality content. Gambling.com itself grew strongly during the year and was launched into additional product verticals and geographical markets whilst continuing to take market share in the UK. Many of the Group’s new internally developed initiatives, such as SlotSource, demonstrated strong growth, helping them mature into healthy business units on their own.

In March 2018, the Group acquired Bookies.com, a brand and domain which could not be more perfectly suited to our purposes in the US. Sports betting will be the dominant product vertical in the US for years to come and the Group plans to lead with bookies.com as its primary sports brand. Much of the team’s energy was spent in 2018 developing new US focused products and re-working internal systems to accommodate the two-tier federal and state structure of the US market. The Group now has a solid foundation for future regulation in any US state.

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2018 US MARKET DEVELOPMENT The regulated US market for online gambling took a giant leap forward in 2018 as a result of the Supreme Court’s invalidation of the Professional and Amateur Sports Protection Act (PASPA) in May, paving the way for US states to legalise and regulate sports betting. New Jersey was the plaintiff and promptly used their victory to launch online and retail sports betting with great success and handle is growing explosively. Pennsylvania and West Virginia will be first to follow suit in 2019.

In January 2019, however, the Department of Justice (DOJ) re-interpreted its own 2011 opinion on the 1961 Wire Act now arguing that the Act covers all forms of online gambling as opposed to just sports betting. Whilst this has no bearing on intra-state online gambling, a matter purely for individual states, it could cause issues for payment processors due to the inter-state nature of payment flows. The legal standing of the updated opinion is dubious, has been vigorously attacked by former DOJ officials, politicians, legislators, attorneys general, and the mainstream media and is being challenged in court.

The Group remains of the opinion that the US opportunity will eventually be the largest in the history of the regulated online gambling industry, but the DOJ re-interpretation has thrown cold water on many 2019 Bills. The US market is also still searching for solutions to basic problems like improving the reliability of payments, so the big US opportunity for the Group lies in 2020 and beyond. We monitor the legislative developments in all states and are prepared to file licensing applications in any state where we expect a viable online gambling market to develop.

CHANGES IN THE EUROPEAN REGULATORY LANDSCAPE On January 1st, 2019, the Swedish market became regulated and taxed locally. We have seen our assets in this market perform well in terms of NDC production, but player value has come off somewhat as the market absorbs new taxes and fees required to operate.

As previously announced, the UK’s 2019 budget included a provision to increase Remote Gaming Duty from 15% to 21%, effective April 1st. The increase represents a small headwind in terms of player values in the Group’s largest market.

FINANCING After considering a number of options, the Group decided to re-finance its existing convertible debentures with a longer-dated senior secured Bond of EUR 16.0 million (under a total framework of EUR 25.0 million) listed on Nasdaq Stockholm. The re-financing enables Group management to fully focus on operational developments in the mid-term.

OUTLOOK Despite the regulatory headwinds, we are confident in our ability to deliver substantial organic growth over the next 12 months and we remain determined to build long-term value for the Group by becoming a leader in performance marketing in the US, whilst further strengthening our position in Europe.

CHARLES HANSON GILLESPIE CHIEF EXECUTIVE OFFICER


KEY PERFORMANCE INDICES JAN – DEC 2018 COMPARED TO JAN – DEC 2017

63% 84% 69% 106% REVENUE GROWTH

ADJUSTED EBITDA GROWTH

EBITDA GROWTH

NDC GROWTH

Revenues totalled EUR 16.23 (EUR 9.97) million, an increase of 63% of which 37% was organic growth

Adjusted EBITDA excluding non-recurring costs totalled EUR 5.82 (EUR 3.20) million, an increase of 84%, corresponding to an adjusted EBITDA margin of 36 (32)%

EBITDA totalled EUR 4.98 (EUR 2.95) million, an increase of 69%, corresponding to an EBITDA margin of 31% (30%)

New Depositing Customers (NDCs) totalled 75 (36) thousand, an increase of 106%

CONSOLIDATED KEY RATIOS

Year ended 31 December 2018


Financial measures defined by IFRS Operating Revenue (EUR ‘000 ) 16,233 9,968 Adjusted operating profit (EUR ‘000) 5,197 2,827 Adjusted operating profit margin (%) 32% 28% Operating profit (EUR ‘000) 4,348 2,605 Operating profit margin (%) 27% 26% Alternative performance measures

Adjusted EBITDA (‘000) 5,824 3,169 Adjusted EBITDA margin (%) 36% 32% EBITDA (EUR ‘000) 4,975 2,947 EBITDA margin 31% 30% NDC (000’) 75 36 NIBD/ TTM Adjusted EBITDA 2.4 4.3 Total Assets (EUR ‘000) 34,510 31,068 Average number of employees 50 24


DIRECTORS’ REPORT The directors present their annual report and the consolidated and separate audited financial statements of Gambling.com Group PLC (the “Group” and the “Company”) for the year ended 31 December 2018.

PRINCIPAL ACTIVITY

The Group’s principal activity is to provide digital marketing services and develop software related to digital marketing.

In doing so, the Group owns and operates leading performance-marketing brands and websites within the online gambling industry including the industry-leading gambling.com and bookies.com, publishing informational content and directing prospective customers to regulated online gambling operators.

The Group does not itself conduct online gambling activities. As a performance marketer the Group’s revenue is success-based and thus strongly aligned with client interests, typically triggered as a result of a customer referred by the Group registering and depositing a minimum amount with a client and paid to the Group either as a fixed cost per acquisition, a revenue share, or a hybrid of the two.

BUSINESS OVERVIEW

The Group owns and operates some of the strongest brands within casino and sports betting marketing and maintains a strategy of quality over quantity focusing on strong brands and quality content. Automation and software are key to the Groups strategy and it owns its proprietary and purpose-built publishing and business intelligence platforms enabling both scalability through standardisation and optimisation of work-flows across products and brands, and revenue optimisation through data driven pricing and investment allocation.

The Group’s primary focus is on organic growth through leveraging its existing brands and technology stack across product verticals and geographical markets complemented by strategic acquisitions.

The primary focus is on regulated or near-regulated markets. The Group has strong market positions in the UK, Ireland and Sweden with a growing footprint in other European markets and is well positioned to grow into a significant player in the regulated US market as it evolves through state by state regulation.

ORGANISATIONAL OVERVIEW

As a technology-driven online marketing group, human resources are the Group’s most important assets and great care is taken to maintain a fun, rewarding, and supportive working environment and to foster a collaborative and inclusive culture.

The Group is committed to equal opportunities and employed 83 at the end of the reporting period in addition to a number of full-time consultants across offices in Malta, Dublin, and Tampa consisting of 19 nationalities of which 33% were female.

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The offices are equipped with multiple monitors, height adjustable desks, and ergonomic chairs and the Group provides health insurance, gym membership, bike to work scheme, and company paid volunteer days to its employees.

RESPONSIBLE GAMBLING AND COMPLIANCE

The Group recognises its responsibilities in relation to its site users and other stakeholders. Online gambling should be a fun form of entertainment, should never be confused with a source of income, and stakes should never exceed what players can afford to lose.

As a performance marketer the Group has limited data on users gambling behaviour, which is the responsibility of the gambling operators, but takes responsibility for the screening of its clients (operators) and for the content produced and published on the Group’s websites.

The Group operates with some of the most restrictive advertising and market policies in the industry and follows relevant regulations and guidelines, promotes responsible gambling, does not use misleading content, and never promotes “make money schemes” or “guaranteed winning schemes”.

A vast majority of the Group’s revenue derives from locally regulated markets and the Group takes great care to be compliant and continuously monitoring and implementing local regulations, guidelines, and best practice. The Group does not, and have never, targeted unregulated US states and do not work with clients (operators) that do.

MARKET DEVELOPMENT

Market data indicates attractive underlying growth in the wider iGaming market and the Group assesses that performance marketing will continue to play a vital role for operator’s customer acquisition. The iGaming affiliate market remains fragmented despite the consolidation of recent years with only a small number of businesses, of which the Group is one, capable of delivering substantial numbers of NDCs to operators.

The iGaming market has seen a trend of increasing local regulation and there has been an increasing pressure on marketing compliance affecting both operators and affiliates. The Group has a positive view on local regulation and views compliance as a competitive advantage as operators may be forced to re-evaluate relationships with smaller and non-compliant affiliates.

REVENUES

Revenue totalled EUR 16.23 (2017: EUR 9.97) million, an increase of 63% compared to the corresponding period in the previous year. The growth was driven by organic growth in combination with acquisitions. Organic growth amounted to 37% for the year. Organic growth excluding paid revenue amounted to 46% for the year. EUR 13.61 (2017: EUR 7.57) million was earned revenue and EUR 2.63 (2017: EUR 2.39) million was paid revenue. Approximately 74% derived from locally regulated markets.

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EXPENSES

Total operating expenses amounted to EUR 11.86 (2017: EUR 7.36) million. Direct costs related to paid revenue amounted to EUR 2.58 (2017: EUR 2.38 ) million resulting in gross margins of 84% (2017: 76%) for the year.

The Group has scaled up its operational resources in terms of management, personnel, full-time consultants, and board of directors and has continued to invest for the future through product, content, and technology development with a heavy focus on products for the regulated US markets and in particular within the sports vertical. During the year the Group incurred significant non-recurring costs related to exploratory financing activities no longer part of near-term strategy and costs associated with the Bond issuance and Note amendments.

Financial items included movements in fair value of the Bond and Notes of EUR 3.74 (2017: neg. EUR 5.44) million for the year based on the directors’ assessment of changes in the probability of conversion, maturity, and early redemption of the Bond and Notes as a result of the change in financial strategy and subsequent re-financing.

Financial items otherwise consisted primarily of interest expenses deriving from the 2019 Notes, the 2020 Notes, the 2021 Bond and deemed interest from earn-out obligations for acquired assets.

Tax charges amounted to EUR 0.11 (2017: tax credit of EUR 0.12) million for the year. Tax charges primarily related to movements in deferred tax that did not affect cash-flow.

EARNINGS

Adjusted EBITDA (excluding non-recurring costs) totalled EUR 5.82 (2017: EUR 3.20) million, an increase of 84% compared to the corresponding period in the previous year and resulting in an Adjusted EBITDA margin of 36 (2017: 32) %.

EBITDA totalled EUR 4.98 (2017: EUR 2.95) million, an increase of 69% compared to the corresponding period in the previous year and resulting in an EBITDA margin of 31 (2017: 30) %.

Operating profit totalled EUR 4.35 (2017: EUR 2.61) million, an increase of 67% compared to the corresponding period in the previous year and resulting in an operating margin of 27 (2017: 26) %.

INVESTMENTS

Net investments in intangible assets amounted to EUR 7.93 (2017: EUR 11.33) million based on the final total considerations including deferred payments. As per the period end there were no considerations outstanding contingent of future performance of the assets. These investments are attributed to the acquisition of a major mobile application performance marketing network in January and the acquisition of bookies.com and related assets in February.

The Group also made investments in fixed property and office equipment of EUR 0.41 (2017: EUR 0.05) million mostly related to the Dublin office.

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FUNDING

As per the reporting period end the Group was funded through equity, the 2021 Bond and part of the 2019 Notes with a combined nominal value of EUR 18.13 million, EUR 2.63 million of which matures in June 2019 and EUR 15.50 million of which matures in October 2021. The 2019 Notes and the 2021 Bond carry interest at 10% and 10.5% respectively.

The 2019 Notes would be converted to equity in the Company in the event of an IPO or change in control event prior to maturity at a discount to the price per share established in an IPO or change in control event and are convertible at the option of the Note holder at maturity at a valuation of 10x TTM EBITDA. The 2021 Bond has early redemption rights embedded from April 2020 until maturity (full terms set out in the 2021 Bond prospectus).

The Bond and Notes balances exceed the nominal value and accrued interest of the Bond and Notes by EUR 0.89 (2017: EUR 5.44) million included within Borrowings; this represents the fair value adjustments as of the period end including the embedded option of early redemption for the Bond and the expected cost of conversion of the Notes.

The 2021 Bond is listed on Nasdaq Stockholm and has a total framework of EUR 25.0 million of which EUR 16.0 million has been issued. The Company held EUR 0.5 million of 2021 Bond in treasury at the period end which has been netted within Borrowings.

LIQUIDITY AND CASHFLOW

Cash and cash equivalents amounted to EUR 3.88 (EUR 1.57) million at the end of the reporting period. Liquidity is primarily deposited in accounts with European banks.

The Group had positive cashflow and strong cash conversion. Cashflow from operating activities before changes in working capital totalled EUR 4.46 (2017: EUR 3.01) million and changes in working capital amounted to neg. EUR 0.16 (2017: neg. EUR 0.23) million.

Cash-flow used in investing activities totalled EUR 10.01 (2017: EUR 5.29) million and related to the cash payments for the acquisitions a mobile application performance marketing network, bookies.com and related assets, and contingent earn-out payments related to previous acquisitions along with investments in fixed assets.

Cash-flow from financing activities totalled EUR 8.01 (2017: EUR 3.97) million and related to the transfer of proceeds from 2020 Notes issued in 2017 from an investment bank to the Company which were held in a client account straddling the year-end, redemption and interest payments made to the 2019 and 2020 Note holders, and proceeds received from the 2021 Bond net of transaction costs incurred.

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SIGNIFICANT EVENTS DURING THE YEAR

FIRST QUARTER

• THE ACQUISITION OF BOOKIES.COM AND RELATED ASSETS

Big brands, big domains and a forceful move into the sports betting vertical in regulated markets.

• SUSAN BALL AND PÄR SUNDBERG APPOINTED TO THE BOARD

With the additions the Group has three independent, non-executive directors with vast experience in the industry.

• “BEST CASINO WEBSITE”

The Group was proud to be honoured with the award from iGaming Business (iGB) at the 2018 iGB Affiliate Awards in London for Gambling.com.

• ACQUISITION OF MOBILE PERFORMANCE MARKETING NETWORK

Positions the Group as one of the leading players for mobile applications performance marketing. The acquired assets target various markets, the largest of which is the regulated UK market.

• ENTERING THE REGULATED US MARKET FOR ONLINE GAMBLING

The release of a localized version of Gambling.com was the first step in the Group’s plan to take market share in the nascent but growing, regulated US online gambling market (www.gambling.com/us).

• CONVERSION TO PLC

The Company completed a bonus issue, share split, and subsequent conversion from a private limited company to a public limited company.

SECOND QUARTER

• THE US SUPREME COURT PASPA RULING

The invalidation of the 1992 Professional and Amateur Sports Protection Act (PASPA) removed the federal limits on sports betting, allowing individual states to regulate sports betting, something the Group expects a large number of states to do.

• ENTERING THE REGULATED DANISH MARKET FOR ONLINE GAMBLING

The release of a localised version of Gambling.com for Denmark is the Group’s first step to organically enter the regulated Danish market (www.gambling.com/dk)

• REGULATION OF THE SWEDISH ONLINE GAMBLING MARKET APPROVED

The Swedish parliament’s approval to locally regulate online gambling from January 1st, 2019 gave long term legal certainty for the Swedish market.

• INDEFINITE POSTPONEMENT OF PLANNED IPO

Due to changes in the nature of the overall online gambling market as a result of the repeal of PASPA, the main shareholders and board of directors decided to put the Group’s IPO plans on hold to prioritize organic growth in the increasingly regulated US market.

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THIRD QUARTER

• BIG WINS FROM GOOGLE CORE ALGORITHM UPDATE

As a result of changes rolled out to the way Google ranks websites in its organic search results, the Group’s websites saw substantially improved search rankings.

It is the Group’s view that the improvement in search rankings for its main sites is both sustainable and materially positive.

• AMENDMENT TO CONVERTIBLE NOTES ISSUE 2017/2020 (THE “2020 NOTES”)

The Group reached an agreement to amend the terms of the Note Purchase Agreement for the 2020 Notes allowing early redemption of all of the 2020 Notes.

• CANCELLATION OF DEFFERED CONSIDERATION

An agreement with the sellers of one of the Group’s acquired assets cancelled the deferred consideration following the closure of an acquired affiliate account that had, allegedly, not been operated in line with the account terms and conditions.

• ISSUANCE OF SHARE OPTIONS

The Company granted share options to senior management and independent directors under two separate programmes having exercise periods of 42-48 months and 27-30 months respectively.

FOURTH QUARTER

• EARLY REDEMPTION OF CONVERTIBLE NOTES ISSUE 2017/2019 ( THE “2019 NOTES” )

Through bilateral agreements with holders of the 2019 Notes early redemption of 63% of the outstanding principal was agreed. The remaining principal will mature on June 30th, 2019.

• EARLY REDEMPTION OF CONVERTIBLE NOTES ISSUE 2017/2020 (THE “2020 NOTES”)

The Group has exercised its rights under the amended terms of the Note Purchase Agreement and has redeemed all of the 2020 Notes.

• EUR 16 MILLION SENIOR SECURED FIXED-RATE BOND ISSUE 2018/2021 ( THE “2021 BOND”)

The Group issued a senior secured bond in the amount of EUR 16.00 million under a total framework of EUR 25.00 million. The bond was listed on Nasdaq Stockholm on 4th December 2018.

• AGREEMENT OF FINAL DEFERRED CONSIDERATION

The asset purchase agreement governing one of the assets acquired in February 2017 was amended, cancelling the remaining earn-out payments along with warrants issued to the seller in exchange for a final payment of GBP 0.30 million paid in November 2018.

• AMENDED PAYMENT TERMS FOR DEFERRED CONSIDERATION

The asset purchase agreement governing the acquisitions of a mobile performance marketing network acquired in January 2018 was amended so that 60% of the total expected earnout was paid in November 2018 and 40% was deferred from January and March 2019 to August 2019.

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• EGR AFFILIATE OF THE YEAR AWARD

The Group prevailed at the 2018 edition of the EGR Operator Awards taking home the top affiliate award in the online gambling industry: The Affiliate of the Year Award. This was the first time that the Group won the award.

• EGR CASINO AFFILIATE AWARD

Also at the 2018 EGR Operator Awards, the Group claimed the Casino Affiliate award for the first time, having previously won the Gaming Affiliate award in 2014.

EMPLOYEES

The average number of full-time employees in the Group was 50 (2017: 24). The number of full-time employees at the end of the fourth quarter was 83 (2017: 31).

OUTLOOK

The Group has a solid foundation of strong brands, leading proprietary technology, client relationships, and human capital and so is well positioned to continue to grow organically.

PARENT COMPANY

The ultimate parent company is Gambling.com Group PLC (“the Company”) incorporated in Malta for the purpose of managing investments in subsidiaries; obtaining financing from third parties on behalf of the Group, and coordinating financing amongst its subsidiaries. During the year the Company did not receive dividends from subsidiaries (2017: None).

SHARE CAPITAL

As of December 31, 2018, the share capital of the Group and the Company amounted to EUR 50 thousand divided into twenty-five million ordinary shares. The shares are not publicly traded.

SHARE OPTIONS

In the year the Company issued 1.75 million share options to management and non-executive directors paid for at fair market value. The Company also cancelled share options issued to the sellers of one of the assets acquired in February 2017 as part of an amendment to the terms of deferred consideration. Maximum dilution from issued share options is approximately 8% of share capital.

ESSENTIAL RISKS AND UNCERTAINTY FACTORS

The Group’s primary operational risks are its reliance on search engine rankings and pay per click advertising capabilities to maintain and improve its traffic acquisition abilities. It is possible that search engines including Google, Yahoo, and Bing could adopt strategies that could negatively impact the Group’s traffic acquisition. The Group has adopted a conservative and long-term approach to search engine optimisation based on best practice.

The Group is also subject to compliance risks in the form of changes to, or introduction of, new or updated regulatory frameworks for its clients (operators). Regulation of a market could present both risks

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and opportunities and the Group has a positive general view on regulation. The vast majority of the Group’s revenue is derived from locally regulated markets.

For the principal financial risks and exposures, refer to Note 2 ‘Financial Risk Management’ that details the key risk factors including market risk, credit risk, liquidity risk and the Group’s approach towards managing these risks.

CHANGES IN REGULATION AND LEGISLATION

RE - INTERPRETATION OF 1961 WIRE ACT

In January 2019, the Department of Justice (DOJ) released an opinion which re-interpreted the Department’s own 2011 opinion on what the 1961 Wire Act covers. The key change of the new opinion is that it claims the Wire Act applies to all forms of online gambling as opposed to just sports betting. As a federal law the Wire Act has no bearing on intra-state online gambling which remains a matter purely for each individual state to consider and regulate. The legal standing of the updated opinion is dubious, has been vigorously attacked by former DOJ officials, politicians, legislators, attorneys general and the mainstream media, and is being challenged in court.

The Group is not involved in inter-state commerce (being transactions involving customers in multiple US States) as its activities are limited to marketing activities in regulated states and the Group, therefore, sees no direct impact on its operations. To the extent the re-interpretation has ramifications for the larger US gaming market, however, the Group could be affected indirectly.

The Group’s assessment is that the re-interpretation could complicate payment solutions for the US gaming industry and have a chilling effect on the approval and roll-out of new state regulation in the short term. In the longer run, however, the Group retains a positive outlook on continuous state regulation of US sports betting.

THE SWEDISH GAMBLING ACT

On January 1st, 2019 the Swedish market became regulated and taxed locally. The Act introduced a mandatory licencing regime for operators in the Swedish market and a local gaming duty of 18%. The Act does not directly affect the Group as its operations are limited to marketing activities but it has indirect effects as it affects clients (operators) with whom the Group has contractual arrangements.

The Group assesses that the local regulation will have negative effects on average player value in the Swedish market but look favourably upon the potential for long-term market growth and the certainty the legal framework provides. The Swedish market constituted approximately 13% of Group revenue in the fourth quarter 2018.

CHANGES IN UK REMOTE GAMING DUTY

The UK government has announced an increase in Remote Gaming Duty on operators from 15% to 21% with effect from April 2019. The UK is the Group’s largest market and constituted approximately 69% of Group revenue in the fourth quarter 2018.

In addition, various proposals to curb online gambling has been put forward including the implementation of affordability checks and/or limits on stakes for online casino games. The Group expects the tax increase to have a limited negative effect on average player value.

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The UK Gambling Commission has also been very active in enforcing marketing regulations with hefty penalties having been levied on operators for non-compliance. Some of the non-compliant activities have been linked to affiliates and, as a result, many UK-facing operators have reviewed their affiliate relationships. The Group looks favourably on the increased compliance focus, has not been involved in such non-compliant activities, and retains strong long-term relationships with the major UK operators.

EVENTS AFTER THE BALANCE SHEET DATE

• REGULATION OF THE SWEDISH ONLINE GAMBLING MARKET APPROVED

On January 1st, 2019 the Swedish market became regulated and taxed locally. The Group has seen its Swedish assets perform well in terms of NDC production but a commensurate decrease in player value.

• INCREASE IN UNITED KINGDOM REMOTE GAMING DUTY

The UK government has announced an increase in Remote Gaming Duty on operators from 15% to 21% with effect from April 2019.

• DEPARTMENT OF JUSTICE WIRE ACT RE-INTERPRETATION

The US Department of Justice released an opinion which re-interpreted the Department’s own opinion on the Wire Act from 2011. The ramifications of the new opinion are not yet clear but could create headwinds for the roll-out of regulated online gambling in US states.

• APPROVAL TO EXPAND BUSINESS IN NEW JERSEY

The Group has been granted approval by the New Jersey Division of Gaming Enforcement to expand business deals with operators to include revenue sharing components.

Refer to Note 24 for other significant events material to these financial statements.

RESULTS

The consolidated statements of comprehensive income are set out on page 25. The directors do not propose a payment of a dividend (2017: EUR Nil). The directors propose that the Group’s balance of retained earnings amounting to EUR 2.19 (Company: EUR 1.23) million to be carried forward to the next financial year.

BOARD OF DIRECTORS

The directors of the Company who held office were:

• Mr Mark Blandford

• Mr Charles Hanson Gillespie

• Mr Karl Fredrik Henning Burvall

• Ms Susan Elisabeth Ball (appointed on 5 February 2018)

• Mr Pär Sundberg (appointed on 5 February 2018)

• Mr Kevin McCrystle (resigned on 2 February 2018)

• Mr Gerard Hall (resigned on 2 February 2018)

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STATEMENT OF DIRECTOR’S RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS

The directors are required by the Maltese Companies Act (Cap. 386) to prepare financial statements which give a true and fair view of the state of affairs of the Group and the Company as at the end of each reporting period and of the profit or loss for that period.

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

• Ensuring that the financial statements have been drawn up in accordance with International Financial Reporting Standards as adopted by the EU;

• Selecting and applying appropriate accounting policies;

• Making accounting estimates that are reasonable in the circumstances;

• Ensuring that the financial statements are prepared on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business as a going concern.

The directors are also responsible for designing, implementing and maintaining 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, and that comply with the Maltese Companies Act (Cap 386).

They are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The financial statements for Gambling.com Group PLC for the year ended 31 December 2018 are included in the Annual Report 2018 which is published in hard-copy printed form and may be available on the Group’s website. The directors are also responsible for the maintenance and integrity of the Annual Report on the website in view if their responsibility for the controls over and security of the website. Access to the information published on the Group’s website is available in other countries and jurisdictions where legislation governing the presentation and dissemination of financial statements may differ from requirements or practices in Malta.

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AUDITORS

PricewaterhouseCoopers have indicated their willingness to continue in office and a resolution for their re-appointment will be proposed at the Annual General Meeting.

ON BEHALF OF THE BOARD OF DIRECTORS:

CHARLES HANSON GILLESPIE CEO AND DIRECTOR

MARK BLANDFORD CHAIRMAN AND DIRECTOR

Registered Office; 85, St. John Street, Valletta VLT1165, Malta

24th April 2019

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Independent auditor’s reportTo the Shareholders of Gambling.com Group PLC

Report on the audit of the financial statements

Our opinion

In our opinion:

Gambling.com Group PLC ’s Group financial statements and Parent Company financial statements (the“financial statements”) give a true and fair view of the Group and the Parent Company’s financialposition as at 31 December 2018, and of the Group’s and the Parent Company’s financial performanceand cash flows for the year then ended in accordance with International Financial Reporting Standards(‘IFRSs’) as adopted by the EU; and

The financial statements have been prepared in accordance with the requirements of the MalteseCompanies Act (Cap. 386).

Our opinion is consistent with our additional report to the Audit Committee.

What we have audited

Gambling.com Group PLC’s financial statements, set out on pages 25 to 66, comprise:

the Statement of comprehensive income for the Group for the year ended 31 December 2018;

the Statement of financial position of the Group as at 31 December 2018;

the Statement of changes in equity for the Group for the year then ended;

the Statement of cash flows for the Group for the year then ended;

the Statement of comprehensive income for the Company for the year then ended;

the Statement of financial position of the Company as at 31 December 2018;

the Statement of changes in equity for the Company for the year then ended;

the Statement of cash flows for the Company for the year then ended; and

the notes to the financial statements, which include a summary of significant accounting policies.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Ourresponsibilities under those standards are further described in the Auditor’s Responsibilities for the Auditof the Financial Statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.

Independent auditor’s report - continued

To the Shareholders of Gambling.com Group PLC

Independence

We are independent of the Group and the Parent Company in accordance with the International EthicsStandards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together withthe ethical requirements of the Accountancy Profession (Code of Ethics for Warrant Holders) Directiveissued in terms of the Accountancy Profession Act (Cap. 281) that are relevant to our audit of the financialstatements in Malta. We have fulfilled our other ethical responsibilities in accordance with these Codes.

To the best of our knowledge and belief, we declare that non-audit services that we have provided to theparent company and its subsidiaries are in accordance with the applicable law and regulations in Malta andthat we have not provided non-audit services that are prohibited under Article 18A of the AccountancyProfession Act (Cap. 281).

The non-audit services that we have provided to the group and its subsidiaries, in the period from 1 January2018 to 31 December 2018, are disclosed in note 16 to the financial statements.

Our audit approach

Overview

Overall group materiality: €162,000, which represents 1% of revenues

We conducted a full scope audit on the most significant componentsbased in Malta, and performed risk based audit procedures on the othercomponents.

Assessment of impairment of intangible assets in the Groupfinancial statements

Valuation of financial liabilities at fair value in the Group andCompany financial statements

As part of designing our audit, we determined materiality and assessed the risks of material misstatementin the consolidated financial statements. In particular, we considered where the directors made subjectivejudgements; for example, in respect of significant accounting estimates that involved making assumptionsand considering future events that are inherently uncertain. As in all of our audits, we also addressed therisk of management override of internal controls, including among other matters consideration of whetherthere was evidence of bias that represented a risk of material misstatement due to fraud.

Materiality

Groupscoping

Key auditmatters



Materiality

The scope of our audit was influenced by our application of materiality. An audit is designed to obtainreasonable assurance whether the financial statements are free from material misstatement. Misstatementsmay arise due to fraud or error. They are considered material if individually or in aggregate, they couldreasonably be expected to influence the economic decisions of users taken on the basis of the consolidatedfinancial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality,including the overall group materiality for the consolidated financial statements as a whole as set out in thetable below. These, together with qualitative considerations, helped us to determine the scope of our auditand the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, bothindividually and in aggregate on the financial statements as a whole.

Overall group materiality €162,000

How we determined it 1% of revenues

Rationale for the

materiality benchmark

applied

We chose revenues as the benchmark because, in our view, it is a

key financial metric used in assessing the performance of the

Group. We chose 1% based on our professional judgement noting

that it is also within the range of commonly accepted revenue

related benchmarks.

We agreed with the Audit Committee that we would report to them misstatements identified during ouraudit above €8,000 as well as misstatements below that amount that, in our view, warranted reporting forqualitative reasons.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in ouraudit of the financial statements of the current period. These matters were addressed in the context of ouraudit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide aseparate opinion on these matters.



Key audit matter How our audit addressed the Key audit matter

Assessment of impairment of intangible assets in the Group financial statements

Intangible assets with a carrying amount of

€27.3 million as at 31 December 2018, has

arisen from a number of acquisitions made

during the current and preceding financial

years.

An assessment is required annually to establish

whether any impairment is required. The

assessment was performed at the lowest level at

which Gambling.com Group could allocate and

assess the attributed value, which is referred to

as a cash generating unit (“CGU”). Management

considers that the Group operates as one CGU.

The impairment assessment relied on value-in-

use calculations based on the estimated future

free cash flow to be generated by the

Gambling.com Group, discounted to present

value at an appropriate discount rate based on

Gambling Group’s estimated weighted average

cost of capital. The cash flow projections were

based on the Group’s budget for 2019, the

business plan for 2020 – 2023, and an annual

growth rate of 3% beyond that period. Further

information is disclosed in Notes 3 and 6 to the

financial statements.

The assumptions supporting the underlying

forecast free cash flows reflect significant

judgements as these are affected by unexpected

future market or economic conditions. The

estimation of future cash flows and the level to

which they are discounted is inherently

uncertain and requires judgement. The extent

of judgement and the size of the intangible

assets, resulted in this matter being identified

as an area of audit focus.

We evaluated the suitability and appropriateness of the

impairment methodology applied, including the

determination of the CGU, and the discounted cash

flow model prepared by management, by involving our

valuation experts. The calculations underlying the

impairment model were re-performed in order to

check the model’s accuracy. Furthermore,

management’s cash flow forecasts were critically

assessed, and agreed to the most recently approved

business plan provided by the Group.

Our independent valuation experts also critically

assessed the discount rate and long-term growth rate

assumptions by benchmarking the underlying inputs

in the calculation to market data and other estimates.

We concluded that the parameters applied by

Gambling.com Group are reasonable.

We also critically assessed whether or not a reasonable

possible change in key assumptions could result in an

impairment. In view of the extent of headroom

available in the impairment assessment, a significant

deterioration in performance, or variation to the

discount factor or long-term growth rate, would need

to occur for impairment to result. We concluded that a

movement in these key assumptions of this magnitude

is unlikely.

The appropriateness of disclosures made in

relation to the impairment assessment of goodwill

and intangible assets was also reviewed.




Valuation of financial liabilities at fair value in the Group and Company financial statements

a) Valuation of promissory note

The Group had issued promissory notes in

February and November 2017 that were

convertible to share capital upon the occurrence

of a number of possible events. The Group

measures the entire convertible loan notes at

fair value as the number of shares varies upon

conversion.

Convertible loan notes that are classified as

financial liabilities are recognised initially at

fair value; subsequent to initial recognition, the

financial liability is measured at fair value

through profit or loss.

During Q4 2018, the convertible loan holders

were provided an option to early redeem in cash

or in equity. The early redemption resulted in a

fair value gain of €3.7m (net) as a result of a

change in the underlying assumption in relation

to the conversion event occurring before 1

January 2019 (as explained in Note 12).

We focused on testing the conversion working

and the fair value of the remaining promissory

notes not redeemed in view of the change in

underlying assumptions and judgement

involved. Further disclosures are included in

Note 12.

We have reviewed the estimated value of the

promissory notes which were not fully redeemed

(February 2017 issue) under the redemption option

provided to convertible loan holders. We assessed the

reasonableness of the fair value of the promissory

notes as at 31 December 2018 amounting to €2.9m.

The parameters reviewed include the interest which

would be due up until maturity and discounting to the

present value the principal and interest payments.

We tested the conversion working and the

reasonableness of the promissory notes prior to the

redemption and as at redemption date. This was

assessed through the review of the parameters noted

above. The value that was redeemed amounted to

€14.2m.

Our work yielded satisfactory results.




Valuation of financial liabilities at fair value in the Group and Company financial statements

b) Valuation of bond

In Q4, the Group issued a new bond on the

Nasdaq Stock Exchange Stockholm which

includes an early redemption option for the

issuer. The early redemption feature allows the

Group to early redeem the Bond at a premium.

In terms of IFRS 9, the bond can be measured

at fair value or at amortised cost. The criteria

which identifies which measurement

methodology to apply depends on the exercise

price of the early redemption option and how

closely related this is to the host contract. This

depends on the following criteria:

- If the lender is reimbursed for an

amount which is equal to the present

value of the lost interest for the

remaining term of the host contract; or

- if the option’s exercise price is

approximately equal to the amortised

cost of the host contract.

On the basis of the above criteria, management

has valued the bond at fair value.

Fair value was determined using an event

probability basis. The significant inputs are the

values associated with each of the potential

early redemption and conversion scenarios and

the probability associated with each scenario.

Included in the valuation are significant

unobservable estimates that have been used to

derive the fair value. These include the

probability of an early redemption, the timing

of such events and the discount rate applied to

each scenario.

In light of the criteria set out in IFRS 9, we criticallyassessed whether the instrument should be accountedfor using either fair value or amortised cost (i.e. if theredemption option is deemed to be 'closely related' tothe host contract, i.e. the pure loan element, orotherwise).

We assessed whether the exercise price of the optionreimburses the lender for an amount up to theapproximate present value of lost interest for theremaining term of the host contract. This wasdetermined by reviewing the interest rate differentialarising between the calculated IRR for the wholeperiod (if no early redemption occurs) to the IRR postredemption period (after taking into consideration theprincipal amount and the interest that would be paid ifre-invested in a similar contract). Based on theseworkings, we concluded that the derivative was notclosely linked and, therefore, the application of the fairvalue method is deemed reasonable.

We have reviewed management’s fair value estimate ofthe bond as at 31 December 2018, which value wasbased on an event probability basis.

We assessed the present value of the Bond by takinginto account:

- the premium which would be due upon earlyredemption

- the interest which would be due over the Bondterm, whether early redeemed or held untilmaturity;

- discounting the principal and interestpayments to present value at an appropriatediscount rate.

We verified that the components are in line with theterms of the Bond.




We focused on this area in view of the

judgement involved in determining the

measurement methodology used (on the basis

of the above criteria) and the significant

unobservable estimates that have been used in

determining the fair value. Further disclosures

are given in Note 12.

We also tested the mathematical accuracy of theworkings.

We discussed the group plans with the Audit

Committee and management to assess whether the

assumptions used reflect these plans.

Based on the above, the fair value of the Bond of

€16.7m is not deemed to be unreasonable.

How we tailored our group audit scope

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion onthe consolidated financial statements as a whole, taking into account the structure of the Group, theaccounting processes and controls, and the industry in which the Group operates.

We assessed what audit work was necessary for each of thecomponents, based on their financial significanceto the financial statements and our assessment of risk and Group materiality. At the component level, weperformed a combination of full scope audits and specified audit procedures on certain account balances inorder to achieve the desired level of evidence.

The Group audit team performed all of this work by applying overall Group materiality, together withadditional procedures performed on the consolidation. This gave us sufficient appropriate audit evidencefor our opinion on the Group financial statements as a whole.



Other information

The directors are responsible for the other information. The other information comprises of the CEO report,Key Performance Indices and Directors’ report (but does not include the financial statements and ourauditor’s report thereon).

Our opinion on the financial statements does not cover the other information, including the directors’report.

In connection with our audit of the financial statements, our responsibility is to read the other informationidentified above and, in doing so, consider whether the other information is materially inconsistent withthe financial statements or our knowledge obtained in the audit, or otherwise appears to be materiallymisstated.

With respect to the directors’ report, we also considered whether the directors’ report includes thedisclosures required by Article 177 of the Maltese Companies Act (Cap. 386).

Based on the work we have performed, in our opinion:

The information given in the directors’ report for the financial year for which the financial statementsare prepared is consistent with the financial statements; and

the directors’ report has been prepared in accordance with the Maltese Companies Act (Cap. 386).

In addition, in light of the knowledge and understanding of the company and its environment obtained inthe course of the audit, we are required to report if we have identified material misstatements in thedirectors’ report and other information that we obtained prior to the date of this auditor’s report. We havenothing to report in this regard.

Responsibilities of the directors and those charged with governance for the financialstatements

The directors are responsible for the preparation of financial statements that give a true and fair view inaccordance with IFRSs as adopted by the EU and the requirements of the Maltese Companies Act (Cap.386), and for such internal control as the directors determine is necessary to enable the preparation offinancial 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 Group’s and the ParentCompany’s ability to continue as a going concern, disclosing, as applicable, matters related to going concernand using the going concern basis of accounting unless the directors either intend to liquidate the Group orthe Parent Company or to cease operations, or have no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.



Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor’s report thatincludes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an auditconducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatementscan arise from fraud or error and are considered material if, individually or in the aggregate, they couldreasonably be expected to influence the economic decisions of users taken on the basis of these financialstatements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professionalscepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraudor error, design and perform audit procedures responsive to those risks, and obtain audit evidence thatis sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error, as fraud may involvecollusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Group’s and the Parent Company’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates 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 orconditions that may cast significant doubt on the Group’s or the Parent Company’s ability to continueas a going concern. If we conclude that a material uncertainty exists, we are required to draw attentionin our auditor’s report to the related disclosures in the financial statements or, if such disclosures areinadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor’s report. However, future events or conditions may cause the Group or the ParentCompany to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including thedisclosures, and whether the financial statements represent the underlying transactions and events ina manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the consolidated financial statements. Weare responsible for the direction, supervision and performance of the group audit. We remain solelyresponsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scopeand timing of the audit and significant audit findings, including any significant deficiencies in internalcontrol that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence, and to communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, relatedsafeguards.



From the matters communicated with those charged with governance, we determine those matters thatwere of most significance in the audit of the financial statements of the current period and are therefore thekey audit matters. We describe these matters in our auditor’s report unless law or regulation precludespublic disclosure about the matter or when, in extremely rare circumstances, we determine that a mattershould not be communicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirementsOther matters on which we are required to report by exception

We also have responsibilities under the Maltese Companies Act (Cap. 386) to report to you if, in our opinion: Adequate accounting records have not been kept, or that returns adequate for our audit have not

been received from branches not visited by us.

The financial statements are not in agreement with the accounting records and returns.

We have not received all the information and explanations we require for our audit.

Certain disclosures of directors’ remuneration specified by law are not made in the financialstatements, giving the required particulars in our report.

We have nothing to report to you in respect of these responsibilities.

Appointment

We were first appointed as auditors of the Company for the financial year ended 31 December 2016. Ourappointment has been renewed annually by shareholder resolution representing a total period ofuninterrupted engagement appointment of 3 years. The company’s bonds became listed on a regulatedmarket on 4 December 2018.

PricewaterhouseCoopers78, Mill StreetQormiMalta

Lucienne Pace RossPartner

24 April 2019

All amounts presented in EUR’000 unless stated otherwise


STATEMENT OF COMPREHENSIVE INCOME – GROUP

Year ended 31

December 2018 Year ended 31

December 2017 Notes Revenue 15 16,233 9,968 Direct costs related to paid revenue (2,584) (2,382) Personnel expenses 17 (3,851) (1,291) Depreciation and Amortisation 16 (627) (342) Non-recurring costs related to financing activities 16 (849) (222) Other operating expenses 16 (3,974) (3,126) Operating profit 4,348 2,605 Interest payable on borrowings 18 (1,655) (707) Other gains/(losses) on financial liability at fair value through profit or loss 12 3,743 (5,444) Finance income 18 166 — Finance costs 18 (1,057) (1,233) Profit/ (Loss) before tax 5,545 (4,779) Tax (charge)/ credit 20 (115) 118 Total comprehensive income / (loss) for the year 5,430 (4,661)

The notes on page 34 to 66 are an integral part of these financial statements.



STATEMENT OF FINANCIAL POSITION – GROUP As at

31 December 2018 As at 31 December 2017

ASSETS Notes Non-current assets Property and equipment 5 414 63 Intangible assets 6 27,314 19,951 Deferred tax 14 130 238 Total non-current assets 27,858 20,252 Current assets Trade and other receivables 7 2,771 9,247 Cash and cash equivalents 8 3,881 1,569 Total current assets 6,652 10,816 Total assets 34,510 31,068 EQUITY Capital and reserves Share capital 9 50 23 Capital reserve 10 8,574 8,601 Share option reserve 11 112 198 Retained earnings 2,191 (3,231) Total equity 10,927 5,591



STATEMENT OF FINANCIAL POSITION – GROUP (cont.)

As at

31 December 2018 As at

31 December 2017 Notes LIABILITIES Non-current liabilities Borrowings 12 16,399 22,151 Trade and other payables 13 — 169 Total non-current liabilities 16,399 22,320 Current liabilities Trade and other payables 13 1,330 669 Borrowings and accrued interest 12 3,191 — Amounts committed on acquisition 13 1,283 2,488 Other liabilities 13 1,380 — Total current liabilities 7,184 3,157 Total liabilities 23,583 25,477 Total equity and liabilities 34,510 31,068


The consolidated financial statements on pages 25 to 66 were authorised for issue by the board on 24 April 2019 and were signed on its behalf by:

Charles Hanson Gillespie CEO and Director

Mark Blandford Chairman and Director



STATEMENT OF CHANGES IN EQUITY – GROUP

Share

Capital

Other

Reserve

Share Option Reserve

Capital

Reserve

Retained Earnings

Total

Notes Balance at 1 January 2017 14 9 — 8,601 1,430 10,054 Transactions with owners Issuance of share capital 9 9 (9) — — — — Issuance of share options 11 — — 198 — — 198 9 (9) 198 — — 198 Comprehensive income Loss for the year – total comprehensive loss — — — — (4,661) (4,661) Balance at 31 December 2017 23 — 198 8,601 (3,231) 5,591 Balance at 1 January 2018 23 — 198 8,601 (3,231) 5,591 Transactions with owners Bonus issue 10 27 — — (27) — — Movements in share options’ reserve 11 — — (86) — — (86) Other movements — — — — (8) (8) 27 — (86) (27) (8) (94) Comprehensive income Income for the year – total comprehensive income — — — — 5,430 5,430 Balance at 31 December 2018 50 — 112 8,574 2,191 10,927




STATEMENT OF CASH FLOWS – GROUP

Year ended

31 December 2018 Year ended

31 December 2017 Cash flow from operating activities Notes Operating profit 4,348 2,605 Adjustments for non-cash items: Depreciation and amortisation 627 342 Movements in credit loss allowance 163 64 Tax paid (675) (3) Cash-flows from operating activities before changes in working capital 4,463 3,008 Changes in working capital Trade and other receivables (1,291) (607) Trade and other payables 1,129 376 Net cash generated from operating activities 4,301 2,777 Cash-flows from investing activities Acquisition of property, plant, and equipment 5 (413) (46) Acquisition of intangible assets 6 (9,591) (5,244) Cash flows used in investment activities (10,004) (5,290) Cash-flows from financing activities Proceeds from issuance of promissory note 12 23,204 4,766 Repayment of promissory notes 12 (12,786) — Interest paid 12 (1,818) — Transaction costs paid on promissory note (587) (793) Net cash generated from financing activities 8,013 3,973 Net movement in cash and cash equivalents 2,311 1,460 Cash and cash equivalents at beginning of year 1,569 109 Cash and cash equivalents at end of the year 8 3,881 1,569




STATEMENT OF COMPREHENSIVE INCOME – COMPANY

Year ended


31 December 2017 Notes Revenue 15 — — Direct costs related to paid revenue — — Personnel expenses 17 (118) — Depreciation and Amortisation 16 (12) (2) non-recurring costs related to financing activities 16 (244) (71) Other operating expenses 16 (71) (40) Operating loss (445) (113) Interest payable on borrowings 18 (1,655) (707) Other gains/(losses) on financial liability at fair value

through profit or loss 12 3,743 (5,444) Finance income 18 1,657 693 Finance costs 18 (450) (793) Profit/ (Loss) before tax 2,850 (6,364) Tax charge 20 — — Total comprehensive income / (loss) for the year 2,850 (6,364)




ANNUAL REPORT 2018 / GAMBLING.COM GROUP

STATEMENT OF FINANCIAL POSITION – COMPANY

As at


31 December 2017 ASSETS Notes Non-current assets Investment in subsidiaries 4 9,133 9,133 Property and equipment 5 2 14 Total non-current assets 9,135 9,147 Current assets Trade and other receivables 7 16,108 16,226 Cash and cash equivalents 8 2,084 282 Total current assets 18,192 16,508 Total assets 27,327 25,655 EQUITY AND LIABILITIES Capital and reserves Share capital 9 50 23 Capital reserve 10 4,726 4,762 Share option reserve 11 112 198 Retained earnings 1,228 (1,622) Total equity 6,116 3,361 Non-current liabilities Borrowings 12 16,399 22,151 Total non-current liabilities 16,399 22,151 Current liabilities Trade and other payables 13 241 143 Borrowings and accrued interest 12 3,191 — Other liabilities 13 1,380 — Total current liabilities 4,812 143 Total liabilities 21,211 22,294 Total equity and liabilities 27,327 25,655




STATEMENT OF CHANGES IN EQUITY – COMPANY

Share

Capital

Other

Reserve

Share Option Reserve

Capital

Reserve

Retained Earnings

Total

Notes Balance at 1 January 2017 14 9 — 4,762 4,742 9,527 Transactions with owners Issuance of share 9

capital 10 9 (9) — — — — Issue of share options 11 — — 198 — — 198 9 (9) 198 — — 198 Comprehensive income Loss for the year - total comprehensive loss

—

—

—

—

(6,364)

(6,364)

Balance at 31 December 2017 23 — 198 4,762 (1,622) 3,361 Balance at 1 January 2018 23 — 198 4,762 (1,622) 3,361 Transactions with owners Bonus issue 10 27 — — (27) — — Movements in share options’ reserve 11 — — (86) — — (86) Other movements — — — (9) — (9) 27 — (86) (36) — (95) Comprehensive income Income for the year-total comprehensive

income

—

—

—

—

2,850

2,850

Balance at 31 December 2018 50 — 112 4,726 1,228 6,116




STATEMENT OF CASH FLOWS – COMPANY

Year ended


31 December 2017

Cash flow from operating activities Notes Operating loss (455) (113) Adjustments for non-cash items: Depreciation 12 2 Cash-flows from operating activities before changes in working capital (443) (111)

Changes in working capital Trade and other receivables (6,018) (8,199) Trade and other payables 250 4,556 Net cash used in operating activities (6,211) (3,754) Cash-flows from financing activities Proceeds from issuance of promissory note 12 23,204 4,766 Repayment of promissory notes 12 (12,786) — Interest paid 12 (1,818) — Transaction costs paid on promissory note (587) (793) Net cash generated from financing activities 8,013 3,973 Net movement in cash and cash equivalents 1,802 219 Cash and cash equivalents at beginning of year 282 63 Cash and cash equivalents at end of year 8 2,084 282


GAMBLNG.COM GROUP PLC / Annual Report 2018 34

NOTES TO THE FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of the financial information are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

1.1 BASIS OF PREPARATION

These financial statements include the financial statements of Gambling.com Group PLC (the “Company”) and its subsidiaries (as disclosed in Note 4) (collectively, the “Group”). The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and with the requirements of the Maltese Companies Act (Cap. 386). The financial statements have been prepared under the historical cost convention, as modified by the fair valuation of financial liabilities at fair value through profit or loss.

These consolidated and standalone financial statements are presented in euros and all values are rounded to the nearest thousand (EUR’000) except when otherwise indicated. The preparation of financial statements in conformity with IFRS as adopted by the EU requires the use of certain critical accounting estimates. It also requires the director to exercise judgement in the process of applying the Group’s accounting policies (see Note 3 – Critical accounting estimates and judgements).

CHANGES IN PRIOR YEAR DISCLOSURES

Some comparative descriptive information in the notes to these financial statements was changed (as compared to the issued financial statements for the year ended 31 December 2017) in order to improve presentations to the readers.

STANDARDS, INTERPRETATIONS AND AMENDMENTS TO PUBLISHED STANDARDS EFFECTIVE IN 2018

In 2018, the Group adopted new standards, amendments and interpretations to existing standards that are mandatory for the Group’s accounting period beginning on 1 January 2018.

- IFRS 9 Financial Instruments

IFRS 9 “Financial instruments” addresses the classification, measurement and recognition of financial assets and financial liabilities. IFRS 9 retains but simplifies the mixed measurement model in IAS 39 and establishes three primary measurement categories for financial assets: amortised cost, fair value through OCI (FVOCI) and fair value through P&L (FVTPL). IFRS 9 also introduces a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39. This amendment impacts the Group only to the extent of trade and other receivables as disclosed in Note 2.

NO

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- IFRS 15 Revenue from Contracts with Customers, including the Clarifications

IFRS 15, “Revenue from contracts with customers” deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash-flows arising from an entity’s contracts with customers.

The Group earns commission-based fees that are either revenue-share contracts, CPA contracts or a hybrid of these two models. In the Group’s revenue model, potential players are referred to iGaming operators, and commissions are earned when, and if, the referred players effect deposits or as the case may be, place wagers. The Group’s revenues are thus deemed to be variable, however determinable at each month end.

The standard requires that variable considerations be estimated, and that estimate is recognised in the statement of comprehensive income as the performance obligation is satisfied. However, the Group’s revenue model falls under an exception on variable consideration that is applicable to variable consideration generated from sales- or usage- based royalties on licences of intellectual property, the amount of which is dependent on the licensee’s sales or usage efforts and therefore unknown until the licensee uses the intellectual property.

As such the Group’s revenue is only recognised when there is no longer any variability. Under IFRS 15, the Group therefore recognises income from revenue share contracts and CPA contracts at the end of each month, when there is no longer any variability on the consideration. On the basis of the above, the introduction of IFRS 15 has resulted in changes of the Group’s accounting policy however has not affected revenue recognition model and have not had material effect on the Group’s financial statements. This standard will be applied retrospectively. However, since no impact has been identified no adjustments to comparative figures will be required.

STANDARDS, INTERPRETATIONS AND AMENDMENTS TO PUBLISHED STANDARDS THAT ARE NOT YET EFFECTIVE

- IFRS 16 Leases (issued in January 2016 and effective for the periods starting 1 January 2019)

The standard revises accounting of lease; in accordance with IFRS 16, except for some cases, a distinguish between operating and finance lease is removed resulting in almost all leases being recognised in the statement of financial position of a lessee as an asset (a right to use a leased asset) and a liability (payable rental). The exception in accordance with the standard is a short-terms and low-value lease. The Group will be affected by IFRS 16 in the cases when it acts as a lessee. The Group will apply the standard from its mandatory adoption date of 1 January 2019 and will apply the simplified transition approach. Under this approach, the Group will not restate comparative amounts for the year prior to first adoption, the lease liability is measured at the present value of the remaining lease payments as at 1 January 2019, and the right-of-use assets at that date will be measured at an amount equivalent to this lease liability plus prepaid lease expenses.

As at 31 December 2018 the Group has long-term non-cancellable operating lease commitments of EUR 2,853 accounted under IAS 17 for the purposes of these financial statements. Management estimated that this commitment will transform into an asset-in-use of EUR 1,970 and a lease liability of EUR 1,996 as at 1 January 2019. Accordingly, operating lease expenditure on this arrangement will be replaced by amortisation of the right-of-use asset, and by an interest cost on the lease liability. Management estimates that rental costs on this arrangement, amounting to EUR 303 for the year ending 31 December 2019, will be replaced by an annual amortisation charge of EUR 219 and a notional interest expense of EUR167.

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The adoption of IFRS 16 will therefore result in a decrease of EUR97 in profitability for the year ending 31 December 2019.

Rental payments under IFRS 16 are allocated between interest payments and a reduction in the lease liability, with a corresponding impact on the Group’s statement of cash flows from financing activities. The Group is assessing whether to present rental payments allocated to interest, as financing cash flows or as operating cash flows.

Certain new standards, amendments and interpretations to existing standards have been published Group’s financial year beginning after 1 January 2019. The Group has not early adopted these revisions to the requirements of IFRSs as adopted by the EU and the Group’s directors are of the opinion that, except for the effect from introduction of IFRS 16, there are no requirements that will have a possible significant impact on the Group’s financial statements in the period of initial application.

1.2 CONSOLIDATION

( A ) SUBSIDIARIES

Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group 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.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method of accounting to account for business combinations that fall within the scope of IFRS 3.

The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement.

Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed (identifiable net assets) in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of the acquiree’s identifiable net assets.

Upon consolidation, intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised loans are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

( B ) TRANSACTIONS WITH NON-CONTROLLING INTERESTS

The Group treats transactions with non-controlling interests, where the acquisition or disposal of partial interests in a subsidiary has no impact on the Group’s ability to control the subsidiary’s financial and operating policies, as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying

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value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

When the Group ceases to have control any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset.

In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

1.3 FOREIGN CURRENCY TRANSLATION

( A ) FUNCTIONAL AND PRESENTATION CURRENCY

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the ‘functional currency’). The financial statements are presented in Euro (EUR) which is the Group’s and the Company’s functional and presentation currency.

( B ) TRANSACTIONS AND BALANCES

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

( C ) GROUP COMPANIES

Income statements of foreign entities are translated into the Group’s presentation currency at the average exchange rates for the year and statements of financial position are translated at the exchange rates ruling at year-end. All resulting translation differences are recognised in other comprehensive income.

Exchange differences arising from the translation of the net investment in foreign operations are taken to other comprehensive income. On disposal or partial disposal of a foreign entity, translation differences that were previously recognised in other comprehensive income are recognised in profit or loss as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Translation differences are recognised in other comprehensive income.

1.4 INVESTMENT IN SUBSIDIARIES

In the Company’s separate financial statements, investments in subsidiaries are accounted at cost less impairment. Provisions are recorded where, in the opinion of the directors, there is a possible impairment in value; it is recognised as an expense in the period in which the diminution is identified. The results of subsidiaries are reflected in the Company’s separate financial statements only to the extent of dividends

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receivable. On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is recognised as a profit or a loss of the Company for the respective period.

1.5 PROPERTY AND EQUIPMENT

Property and equipment is stated at historical cost less accumulated depreciation and accumulated impairment. Historical cost includes expenditure that is directly attributable to the acquisition of items.

Subsequent costs are included in assets’ carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group/ the Company and the cost of the item can be measured reliably.

The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred.

Depreciation is calculated using the straight-line method to allocate the cost of the assets to their residual values over their estimated useful lives, as follows:

% Computer and other office equipment 20 Leasehold improvements 10

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals of property and equipment are determined by comparing the proceeds with carrying amount and are recognised, where applicable, within ‘other operating income’ in the statement of comprehensive income.

1.6 INTANGIBLE ASSETS

RECOGNITION AND MEASUREMENT

An intangible asset is recognised if it is probable that the expected future economic benefits that are attributable to the asset will flow to the Group and the cost of the asset can be measured reliably. Intangible assets are initially measured at cost. The cost of a separately acquired intangible asset comprises its purchase price and any directly attributable cost of preparing the asset for its intended use. The cost of acquisition of intangible assets for which the consideration comprises an issue of equity shares is calculated as being the fair value of the equity instruments issued in the transaction. Where the cost of acquisition includes contingent consideration, cost is determined to be the current fair value of the contingent consideration as determined on the date of acquisition.

Any subsequent changes in estimates of the likely outcome of the contingent event are reflected in the statement of financial position. Internally generated intangible assets, excluding capitalized development costs, are expensed in the period in which such expenditure is incurred. Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in profit or loss as incurred.

Acquired intangibles comprise of website, domains and customer databases. Management and the directors concluded that such website and domains have an indefinite useful life, whilst customer

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databases have a finite useful life of 12 – 24 months. Useful lives are reviewed on the annual basis, at the end of the reporting period.

Customer databases are amortised over their useful life as determined upon acquisition. Intangible assets are derecognised on disposal or when no future economic benefits are expected from their use or disposal. Gains or losses arising from derecognition represent the difference between the net disposal proceeds, if any, and the carrying amount of intangible assets, and are recognized in the statement of comprehensive income for the respective period.

IMPAIRMENT OF INTANGIBLE ASSETS

Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets that have an indefinite useful life (which are not subject to amortisation) are tested annually for impairment.

An impairment loss is recognised as a difference between an asset’s carrying amount and its recoverable amount; and is accounted in the statement of comprehensive income in the period being identified. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of impairment assessment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

1.7 FINANCIAL ASSETS

Financial assets are classified at initial recognition as subsequently measured at amortized cost, fair value through profit or loss of fair value through other comprehensive income. The classification of financial assets depends on the assets’ contractual cash flows characteristics and the Group’s model for managing such.

In accordance with IFRS 9 requirements, the Group reviewed classification of its financial assets as at the date of the standard’s application and concluded that the classification and measurement requirements of IFRS 9 did not have a significant impact on the Group’s financial instruments. The Group classified its financial assets as trade and other financial assets (previously loans and receivables) as at current period end.

The Group’s financial assets are presented as trade and other receivables, and cash and cash equivalents in the statement of financial position (Notes 1.8 and 1.9). Financial assets of the Group as at 31 December 2018 do not include any significant financial component thus accounted at amortised cost.

EXPECTED CREDIT LOSS ASSESSMENT AND WRITE-OFFS

The adoption of IFRS 9 has changed the Group’s accounting for impairment losses for financial assets by replacing IAS 39’s incurred loss approach with a forward-looking expected credit loss (ECL) approach. IFRS 9 requires the Group to recognise an allowance for ECLs for all debt instruments not held at fair value through profit or loss and contract assets. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive.

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The Group applies a simplified approach in calculating ECLs for trade receivables. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. The assessment is carried out at the end of each reporting period.

Movements in ECLs are presented within operating expenses of the Group for the respective period being incurred; any subsequent recoveries are credited against the same line item in the statement of comprehensive income.

Financial assets are written off when there is no reasonable expectation of recovery, such as:

• significant financial difficulty of the issuer or obligor;

• a breach of contract, such as a default or delinquency in interest or principal payments;

• it becomes probable that the borrower will enter bankruptcy or other financial reorganisation; and

• observable data indicating that there is a measurable decrease in the estimated future cash flow from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets.

Where trade or receivables have been written off, the Group continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or loss.

DERECOGNITION

A financial asset is primarily derecognised when:

• The rights to receive cash flows from the asset have expired; or

• The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

1.8 TRADE AND OTHER RECEIVABLES

Trade and other receivables are amounts due from customers for services performed in the ordinary course of business. Regularly such balances are classified as current.

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less expected credit loss allowance (Note 1.7). The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in profit or loss. When a receivable is uncollectible, it is written off against the allowance account for trade and other receivables. Subsequent recoveries of amounts previously written off are credited against profit or loss.

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1.9 CASH AND CASH EQUIVALENTS

Cash and cash equivalents balance comprises cash at bank, cash in transit and short-term deposits with a maturity up to three months which are subject of insignificant changes in value. In the statement of financial position, the balance is accounted at face value.

In the statement of cash flows, cash and cash equivalents includes cash in hand and deposits held at call with banks.

1.10 ISSUED CAPITAL AND RESERVES

SHARE CAPITAL

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares are shown in equity as a deduction, net of tax, from the proceeds. Any difference between the carrying amount and the consideration, if reissued, is recognised in the share premium.

CAPITAL RESERVE

Being other contributions made by the shareholders of the Company of a cash or non-cash nature, as excess to the nominal value of shares issued or without the issuance of shares.

SHARE OPTION RESERVE

The share option reserve is used to recognise the value of equity-settled share-based payments.

1.11 FINANCIAL LIABILITIES

The Group recognises a financial liability in its statement of financial position when it becomes a party to the contractual provisions of the instrument. The Group’s financial liabilities are classified as financial liabilities at fair value through profit or loss and trade and other payables.

Financial liabilities not at fair value through profit or loss are recognised initially at fair value net of transaction costs that are directly attributable to the financial liability. Subsequent measurement of the liabilities differs from the classification originally applied and described in the notes below.

The Group derecognises a financial liability from its statement of financial position when the obligation specified in the contract or arrangement is discharged, is cancelled or expires.

1.12 TRADE AND OTHER PAYABLES

Trade payables comprise obligations to pay for services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

1.13 PROMISSORY NOTES

The Company has issued convertible promissory notes that are converted to share capital on a number of different possible events. The Company treats these instruments as compound financial instruments

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only if the number of shares to be issued upon conversion does not vary with changes in their fair value, and their currency of denomination is equivalent to the issuer's functional currency. Where these criteria are not both met, the Company recognises the entire convertible loan notes as financial liabilities.

Convertible notes that are classified as financial liabilities are recognised initially at their fair value; subsequent to initial recognition, the financial liability is measured at fair value through profit or loss. Any directly attributable transaction costs incurred upon issuing such instruments are recognised in profit or loss. Notes are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.

1.14 SECURED SENIOR BONDS

The Company has issued secured senior bonds. Financial instruments classified as financial liabilities are recognised initially at their fair value; subsequent to initial recognition, the financial liability is measured at fair value through profit or loss. In accordance with IFRS 9, a financial liability should be classified at amortized cost unless it has an embedded derivative which is not closely related to the host instrument, and thus a significant change in the cash flows is required to settle a contract (which is the case for Senior secured bonds in issue in the current year); such instrument should be measured at fair value through profit or loss.

Any directly attributable transaction costs incurred upon issuing such instruments are recognised in profit or loss. Bonds are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.

1.15 REVENUE RECOGNITION

The Group’s revenue is derived from online and affiliate marketing. The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the Group’s activities as described below.

COMMISSION INCOME

The Group’s revenue consists of revenue generated in the form of commission on players directed to gaming operators as well as advertising fees charged to gaming operators who want additional exposure on the Group’s websites. The commission takes the form of:

REVENUE SHARE

• For a revenue share deal the Group receives a share of the revenues that the gaming operator has generated as a result of a player playing on their iGaming site. Revenue is recognised in the month that it is earned by the respective gaming operator.

COST PER ACQUISITION

• For cost per acquisition deals, a client pays a one-time fee for each player who deposits money on the client’s site. Cost per acquisition contracts consist of a pre-agreed rate with the client. Revenue from such contracts is recognised in the month in which the deposits are made.

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FLAT FEES

• The Group also generates revenues by charging a fixed fee for advertising revenue whereby an advertising space is sold to gaming operators who wish to promote their brands more prominently on one of the many sites the Group has to offer. Such revenue is apportioned on an accrual’s basis over the whole term of the contract.

1.16 INVESTMENT INCOME

Investment income includes dividend income. Dividend income is recognised when the right to receive payment is established. Interest income is recognised as it accrues in profit or loss, using the effective interest method.

1.17 CURRENT AND DEFERRED TAX

The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

Deferred tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.

Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised, or the deferred tax liability is settled.

Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

1.18 DIVIDEND DISTRIBUTION

Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s financial statements in the period in which the dividends are approved by the Company’s shareholders.

1.19 SHARE BASED PAYMENTS

The Company operates equity-settled share-based compensation plans. Through these plans the companies of the Group receives services from consultants, executives and board members, or purchases intangible assets, as consideration for equity instruments (options) of the Company. The fair value of the services received, or assets acquired, in exchange for the grant of the options is recognised as an expense.

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EQUITY-SETTLED SHARE-BASED PAYMENTS

For equity-settled share-based payments, the total amount to be expensed is determined by reference to the fair value of the options granted:

• including any market performance conditions (for example, an entity’s share price);

• excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales growth targets and remaining an employee of the entity over a specified time period); and

• including the impact of any non-vesting conditions (for example, the requirement for employees to hold shares for a specific period of time).

At the end of each reporting period, the Company revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions and service conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

When the options are exercised, the Company, or another entity at the request of the Company, transfers shares to the option holder.

The grant by the Company of options over its equity instruments to the consultants/executives/sellers of assets of/to the Group is compensated to the Company by Group entities for the fair value of shares granted. The fair value of services received, measured by reference to the grant date fair value, is recognised over the vesting period as an expense, with a corresponding credit to amounts receivable from the Group entities.

1.20 OPERATING LEASES

The Group classifies lease as operating in case significant portion of risks and rewards are retained by an owner of an asset. Payments made under operating lease are charged in statement of comprehensive income on a straight-line basis over the period of the lease.

1.21 ACCOUNTING POLICY APPLIED UP TO 31 DECEMBER 2017

The Group has applied IFRS9 retrospectively but has elected not to restate comparative information as disclosed and continues to account for in accordance with the Group’s previous accounting policy.

FINANCIAL ASSETS

( A ) CLASSIFICATION

The Group classifies its financial assets as loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money or services directly to a debtor with no intention of trading the asset. They are included in current assets, except for maturities greater than twelve months, after the end of the reporting period. These are classified as non-current assets. The

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Group’s loans and receivables comprise trade and other receivables and cash and cash equivalents in the statement of financial position.

( B ) RECOGNITION AND MEASUREMENT

The Group recognises a financial instrument in its statement of financial position when it becomes a party to the contractual provisions of the instrument. Loans and receivables are initially recognised at fair value plus transaction costs. They are subsequently carried at amortised cost using the effective interest method. Amortised cost is the initial measurement amount adjusted for the amortisation of any difference between the initial and maturity amounts using the effective interest method.

Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the company has transferred substantially all risks and rewards of ownership or has not retained control of the financial asset.

( C ) IMPAIRMENT

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired.

A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The Group first assesses whether objective evidence of impairment exists.

The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:

• significant financial difficulty of the issuer or obligor;

• a breach of contract, such as a default or delinquency in interest or principal payments;

• it becomes probable that the borrower will enter bankruptcy or other financial reorganisation; and

• observable data indicating that there is a measurable decrease in the estimated future cash flow from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets.

For financial assets carried at amortised cost, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The asset’s carrying amount is reduced and the amount of the loss is recognised in profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss.

When a receivable is uncollectible, it is written off against the allowance account for trade and other receivables. Subsequent recoveries of amounts previously written off are credited against profit or loss.

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FINANCIAL LIABILITIES

The Group recognises a financial liability in its statement of financial position when it becomes a party to the contractual provisions of the instrument. The company’s financial liabilities are classified as financial liabilities which are not at fair value through profit or loss (classified as ‘Other liabilities’) under IAS 39.

Financial liabilities not at fair value through profit or loss are recognised initially at fair value, being the fair value of consideration received, net of transaction costs that are directly attributable to the acquisition or the issue of the financial liability. These liabilities are subsequently measured at amortised cost. The Group derecognises a financial liability from its statement of financial position when the obligation specified in the contract or arrangement is discharged, is cancelled or expires.

2. FINANCIAL RISK MANAGEMENT

2.1 FINANCIAL RISK FACTORS

The Group’s activities potentially expose it to a variety of financial risks: market risk (foreign exchange risk and cash flow and fair value interest rate risk), credit risk and liquidity risk. The management of the Group’s financial risk is based on a financial policy approved by the directors. The Group did not make use of derivative financial instruments to hedge risk exposures during the current and preceding period.

( A ) MARKET RISK

( I ) FOREIGN EXCHANGE RISK

Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities which are denominated in a currency that is not the entity’s functional currency. The Group’s financial assets and financial liabilities are mainly denominated in EUR however some operations of the Group are carried out in USD and GBP. The Group has significant earn-out liabilities which are denominated in GBP, however the revenue from the underlying acquired asset are primarily based on underlying GBP transactions. Management performs ongoing assessment of foreign currency fluctuations on the financial results of the Group. As at 31 December 2018 the Group is not significantly exposed to foreign exchange risk; thus, a sensitivity analysis for foreign exchange risk disclosing how profit or loss and equity would have been affected by changes in foreign exchange rates that were reasonably possible at the end of the reporting period is not deemed necessary (2017: not significant effect).

( II ) CASH FLOW AND FAIR VALUE INTEREST RATE RISK

The Group has minimal interest-bearing assets and its borrowings carry fixed interest rates. The risk associated with the effects of fluctuations in the prevailing levels of market interest rates on its financing position and cash flows is not deemed to be substantial by the directors.

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( B ) CREDIT RISK

Credit risk arises from cash and cash equivalents, and trade and other receivables. The exposure as at reporting date is analysed as following:

Group Company As at




31 December 2017 Loans and receivables: Trade and other receivables (Note 7) 2,771 9,247 16,108 16,226 Cash and cash equivalents (Note 8) 3,881 1,569 2,084 282 6,652 10,816 18,192 16,508 Less prepayments and accrued expenses (201) (107) (8) — Balances exposed to credit risk 6,451 10,709 18,184 16,508

The Group has the following financial assets that are subject to the expected credit loss model: trade receivables, and other financial assets carried at amortised cost. The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets. The expected loss rates are based on the payment profiles of sales over a period of 12 month before 31 December 2018 and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.

On that basis, the loss allowance as at 31st December 2018 was determined as follows for trade receivables:

Loss allowance balance as at 31 December 2018 includes a specific provision of EUR 93 for the balance due from a partner as concluded to be uncollectable.

The closing loss allowances for trade receivables as at 31 December 2018 reconcile to the opening loss allowances as follows:

The Group has assessed the effect of retrospective application of the expected credit loss (“ELC”) model as at 1 January 2018 and concluded that differences in provisions computed in accordance with IAS 39 and IFRS 9 were not materially different; thus no restatement of opening retained earnings were deemed necessary.

The Group manages credit limits and exposures actively in a practicable manner such that past due amounts receivable from partners are within controlled parameters. Management assesses the credit quality of the operators taking into account its financial position past experience and other factors. The

Current

Up to 30 days

30-60 days

60-90 days

90-120 days

120-150 days

150-180 days

More than 180 days

Expected credit loss rate 1% 5% 17% 27% 34% 45% 53% 100% Trade receivables, gross 2,241 152 132 11 — 12 5 56 Loss allowance 88 33 22 3 — 6 3 56

Year ended


31 December 2017 As at 1 January (calculated under IAS 39) 64 10 Credit losses allowance 163 101 Write offs — — Other (16 ) (47 ) As at 31 December 211 64

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Group’s receivables, which are not impaired financial assets, are principally in respect of transactions with partners for whom there is no recent history of default. Management does not expect any losses from non-performance by these partners. The directors consider that the Group was not exposed to significant credit risk as at the end of the current reporting period.

The Group monitors intra-group credit exposures at individual entity level on a regular basis and ensures timely performance of these assets in context of its overall liquidity management. The loss allowance for these financial assets are based on default risk assumption and expected loss rates. Management uses judgement in making these assumptions based in the counterparty’s past history, existing market condition as well as forward looking estimates at the end of reporting period. As a result of management’s assessment performed for these balances at 31 December 2018 appropriate recovery strategies were in place to conclude that credit loss allowance charge required is deemed immaterial.

Cash and cash equivalents are held with leading financial institutions, both local and outside Malta. Credit risk from cash and cash equivalents held with financial intermediaries are considered to be not significant. IFRS 9 assessment conducted for these balances did not identify material impairment loss as at 31 December 2018 (2017: no material impairment loss).

PREVIOUS ACCOUNTING POLICY FOR IMPAIRMENT OF TRADE RECEIVABLES

In the prior year, the impairment of trade receivables was assessed based on the incurred loss model. Individual receivables which were known to be uncollectible were written off by reducing the carrying amount directly. The other receivables were assessed collectively to determine whether there was objective evidence that an impairment had been incurred but not yet been identified. For these receivables the estimated impairment losses were recognised in a separate provision for impairment.

(C) LIQUIDITY RISK

The Group and the Company is exposed to liquidity risk in relation to meeting future obligations associated with its financial liabilities, which comprise predominantly of trade and other payables, bonds and promissory notes (Notes 12 and 13). Prudent liquidity risk management includes maintaining sufficient cash and committed credit lines to ensure the availability of an adequate amount of funding to meet the Group and Company’s obligations.

Management monitors liquidity risk by means of continuous observation of cash inflows and cash outflows. To improve the net cash inflows and to maintain cash balances at a certain level, management ensures that no additional financing facilities are expected to be required over the coming year. In this respect, management does not consider liquidity risk to the Group and the Company as significant taking into account the liquidity management process referred to above.

The following tables analyse the Group’s and the Company’s financial liabilities into relevant maturity groupings based on the remaining period at 31 December 2018 to the contractual maturity date. The amounts disclosed in the tables below are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

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Less than

1 year Between

1 and 2 years More than

2 years

Total 31 December 2018 Group Promissory note 4,624 1,638 17,238 23,500 Amounts committed on

acquisition of intangible acquisition 1,283 — — 1,283

Trade and other payables 2,710 — — 2,710 Company Promissory note 4,624 1,638 17,238 23,500 Trade and other payables 1,621 — — 1,621

Less than

1 year Between

1 and 2 years More than

2 years

Total 31 December 2017 Group Promissory note 1,600 8,345 9,345 19,290 Amounts committed on

acquisition of intangible acquisition 2,488 169 — 2,657

Trade and other payables 669 — — 669 Company Promissory note 1,600 8,345 9,345 19,290 Trade and other payables 143 — — 143

In relation to amounts committed on acquisition the value of future payments was contingent on earnings from the acquired assets as per 31 December 2017 but had been fixed as per 31 December 2018. Contingent considerations are measured at fair value and are included in level 3 of the fair value hierarchy.

With respect to the maturity of the Group’s and Company’s other financial liabilities as at 31 December 2018, which consist of trade and other payables, the directors disclose that these are entirely repayable within one year from the end of the respective period.

2.2 CAPITAL RISK MANAGEMENT

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

As at 31 December 2018 the net current liability position of the Group was EUR 532 (2017: net current assets EUR 7,659). The directors have prepared a forecast of the Group’s operations for the 12-months period from the reporting date and concluded that the Group will have sufficient funds to settle its liabilities in a timely manner in the foreseeable future.

The Group and Company’s equity, as disclosed in the statements of financial position, constitutes their capital. The Group and Company maintain the level of capital by reference to its financial obligations and

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commitments arising from operational requirements. In view of the nature of the Group and Company’s activities the capital level as at the end of the reporting year is deemed adequate by the directors.

2.3 FAIR VALUES OF FINANCIAL INSTRUMENTS

At 31 December 2018 and 31 December 2017, the carrying amounts of cash and cash equivalents, trade and other receivables, trade and other payables, notes and bonds reflected in the financial statements are reasonable estimates of fair value in view of the nature of these instruments or the relatively short period of time between the origination of the instruments and their expected realisation.

3.CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated and based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances.

( A ) IMPAIRMENT TEST OF DOMAINS

The Group has invested a considerable amount in the acquisition of domains throughout the year.

The Group’s assets arising from domains are presented within intangible assets in the statement of financial position and have a carrying amount of EUR 27,314 at year end (2017: EUR 19,951). These domains have been attributed an indefinite useful life, and therefore are tested for impairment in accordance with IAS 36 at each reporting date.

The Group has assessed the revenue-generating capabilities of the acquired assets and has determined that assets are generating sufficient cash flows to motivate the carrying amount. Accordingly, the directors determined that no impairment was necessary during the year. Information on assumptions and other inputs used in the impairment test are disclosed in Note 6.

( B ) DETERMINATION OF CONTINGENT CONSIDERATION ON ACQUISITION OF INTANGIBLE ASSETS

The Group has entered into contractual obligations to purchase intangible assets from third parties. The contractual terms differ between contracts; some have a pre-determined value, whilst others further include future payments the value of which can only be determined with the passage of time with reference to contractual targets.

The Group exercises judgement in measuring and recognising liabilities where the consideration is contingent on target earnings. Refer to Note 6 and 13 for further information on contingent amounts. Due to the inherent uncertainty in the evaluation of related future earnings, actual amounts payable may differ from the liability estimated at the point of acquisition.

Any changes in the estimates will impact the carrying amount of the recognised contingent consideration and the effect of any changes are offset against the related asset recognised. As per 31 December 2018 all liabilities with contingent considerations were known amounts.

( C ) VALUATION OF SHARE BASED PAYMENTS

As set out in Note 11, the Company operates equity-settled share-based compensation schemes under which the companies of the Group receive services or assets from consultants, executives, or asset sellers

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as consideration for equity instruments of Gambling.com Group PLC. In order to determine the fair value of services provided, the Group has estimated the fair value of the ordinary shares as of each grant date using the Black-Scholes and Binominal valuation models. Refer to Note 11 for a summary of the inputs used and other assumptions made on calculating the fair value of share options and share warrants granted as part of the share-based payment schemes.

( D ) VALUATION OF BONDS AND PROMISSORY NOTES

The Company entered into a new senior secured bond arrangement during 2018 with third parties. The bond has an embedded derivative being an early redemption call and is therefore measured at fair value through profit and loss. The fair value of the financial instrument was determined based on an event probability basis.

In 2017 the Company issued convertible promissory notes; as at 31 December 2018 the financial instruments have been measured at fair value through profit and loss. The fair value of the financial instruments were determined based on an event probability basis.

The Company exercises judgement in assigning probability to the events and to the discount rate applied. Refer to Note 12 for further information on the estimates used and the sensitivity of these estimates to the fair value of the bonds.

In the opinion of the directors, the accounting estimates and judgements made in the course of preparing these financial statements are not difficult, subjective or complex to a degree which would warrant their description as critical in terms of the requirements of IAS 1.

4. INVESTMENT IN SUBSIDIARIES

Company

2018 2017

Opening net book amount 9,133 9,133

Additions — —

Closing net book amount 9,133 9,133

Ownership % Name Country of incorporation 2018 2017 Kax Media Limited Ireland 100 100 GDC Trading Limited Malta 100 100 Kax Media America Inc. United States 100 100 Bell Internet Limited United Kingdom 100 —

Bell Internet Limited was acquired by GDC Trading Limited as a part of the acquisition of domains, websites and players’ databases. As per assessment made by the management the transaction falls outside the scope IFRS 3 Business combinations and is thus accounted as an acquisition of assets rather than a business combination due to integration of the assets into the Group’s portfolio. Bell Internet Limited is non-trading with the intention of being liquidated subsequent to year-end.

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5.PROPERTY AND EQUIPMENT

Group

Computer, office equipment and

leasehold improvements

As at 1 January 2017 Cost 64 Accumulated depreciation (34 ) Net book amount 30 Year ended 31 December 2017 Opening net book amount 30 Additions 46 Depreciation charge (13 ) Closing net book amount 63 At 31 December 2017 Cost 110 Accumulated depreciation (47 ) Net book amount 63 Year ended 31 December 2018 Opening net book amount 63 Additions 413 Depreciation charge (62 ) Closing net book amount 414 At 31 December 2018 Cost 523 Accumulated depreciation (109 ) Net book amount 414

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5. PROPERTY AND EQUIPMENT - CONTINUED

Company

Computer, and office

equipment As at 1 January 2017 Cost 46 Accumulated depreciation (30 ) Net book amount 16 Year ended 31 December 2017 Opening net book amount 16 Additions — Depreciation charge (2 ) Closing net book amount 14 At 31 December 2017 Cost 46 Accumulated depreciation (32 ) Net book amount 14 Year ended 31 December 2018 Opening net book amount 14 Additions — Depreciation charge (12 ) Closing net book amount 2 At 31 December 2018 Cost 46 Accumulated depreciation (44 ) Net book amount 2

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6. INTANGIBLE ASSETS

Group

Website, Domains and

Customer databases

As at 1 January 2017 Cost 8,954 Accumulated amortisation — Net book amount 8,954 Year ended 31 December 2017 Opening net book amount 8,954 Additions 11,326 Amortisation charge (329 ) Closing net book amount 19,951 At 31 December 2017 Cost 20,280 Accumulated amortisation (329 ) Net book amount 19,951 Year ended 31 December 2018 Opening net book amount 19,951 Additions 7,928 Amortisation charge (565 ) Closing net book amount 27,314 At 31 December 2018 Cost 28,208 Accumulated amortisation (894 ) Net book amount 27,314

In January 2018 the Group acquired the rights to mobile applications and players’ database targeting casino and sports affiliation.

In February 2018 the Group acquired the rights to domains and players’ databases of bookies.com and related assets targeting sports affiliation.

In September 2018 the Group entered into an amendment with the sellers of one of the acquired assets cancelling deferred consideration due to the closure of an affiliate account that had allegedly not been operated in line with the account terms and conditions.

In November 2018 the Group entered into an amendment with the sellers of one of the acquired assets agreeing to pay approximately 60% of deferred consideration in November 2018 and to extend the payment terms for the remaining 40% from January and March 2019 to August 2019.

Total consideration for assets acquired in 2018 amounted to EUR 7,928 of which EUR 1,283 was outstanding as per 31 December 2018. The outstanding amount is not contingent on future performance and carried at nominal value. There were no other outstanding commitments in relation to the 2018 acquisitions.

In February 2017 the Group acquired the rights to svenskacasino.se and related assets targeting primarily casino affiliation.

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In February 2017 the Group acquired the rights to androidslots.co.uk and related assets targeting primarily casino affiliation.

Total consideration for assets acquired in 2017 amounted to EUR 11,326. As per 31 December 2018 the consideration had been settled in full and there were no outstanding commitments related to the 2017 acquisitions.

IMPAIRMENT TEST

The recoverable amount of the acquired domains was assessed on the basis of value-in-use calculations. A detailed assessment was performed at the end of the reporting period. Management and the directors believe that the recoverable amount is well in excess of the carrying amount.

The recoverable amount was based on the cash flow projections reflecting actual income from operations in 2018, the budget for 2019 as confirmed by the Directors, and an estimate for year 2020 – 2023 in which an average annual rate of growth between 10% and 20% (2017: 10% and 40%) was assumed and a long-term sustainable growth rate of 3% (2017: 3%) was applied. The projected cash flows were discounted by 15% before tax (2017: 15%). The effective tax rate was estimated at 35% (2017: 35%). Management’s method for determining the values inherent to each significant assumption is based on experience and expectations regarding the performance of the market.

The management of the Group concluded that the recoverable amount is well in excess of the assets’ carrying amount, and accordingly a sensitivity analysis in this regard is not disclosed. Consequently, the directors have assessed that there is no need to impair the acquired domains (2017: No impairment).

7. TRADE AND OTHER RECEIVABLES

Group Company

As at




31 December 2017 Trade receivables, net (i) 2,398 1,413 — — Amounts owed by Investors — 282 — 282 Amounts owed by Investment bank (ii) — 7,422 — 7,422 Amounts owed by subsidiary undertakings (iii) — — 16,088 8,514 Other receivables 64 — 12 7 Deposits 108 23 — — Prepayments and accrued expenses 201 107 8 — 2,771 9,247 16,108 16,226

( I ) Trade receivables ( net ), the Group:

As at


31 December 2017 Trade receivables 2,609 1,477 Credit loss allowance (211 ) (64) )

Trade receivables are unsecured and subject to normal settlement typically within 30 days. Details on movements in the allowance are disclosed in the Note 2.1

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( II ) ‘Amounts owed by Investment bank’ includes funds received from the issuance of promissory notes in November 2017 (Note 12) which were held in the Investment bank account as at 31 December 2017. The monies were transferred into the Company’s bank account in January 2018.

( III ) In 2017 the Company advanced the majority of the proceeds from promissory convertible notes issued (being EUR 15,850) to GDC Trading Limited (its subsidiary); the funds were used to finance acquisitions of the intangible assets during 2017 and 2018 as disclosed in Note 6. The financing was given in two tranches and is subject to 10% and 11% interest rate per annum. Amounts owed by the subsidiary undertakings are unsecured and repayable on demand. Such balances arise in the normal course of business. Other amounts due from a subsidiary are interest free, unsecured and repayable on demand.

8. CASH AND EQUIVALENTS

For the purposes of the statement of cash flows, the year-end cash and cash equivalents comprise the following:

Group Company

As at




31 December 2017 Cash at bank 3,881 1,568 2,084 282

9. SHARE CAPITAL

GROUP AND COMPANY

During 2018 the shareholders resolved on a bonus issue increasing the share capital from EUR 23,296 to EUR 50,000, at conversion to a public limited company (PLC), and a subsequent share split decreasing the nominal value per share from EUR 1 to EUR 0.002 thus resulting in 25,000,000 issued shares. There were no changes in the % of the ownership between existing shareholders as a result of changes in the share capital of the Company.

As at 31 December 2018 total authorized share capital of the company was 75,000,000 shares with nominal value EUR 0.002 (2017: 23,296 shares with nominal value EUR 1.00).

Year ended


31 December 2017 Shares EUR Shares EUR Issued and fully paid Ordinary shares of EUR0.002 (2017: EUR1.00) each 25,000,000 50,000 23,296 23,296

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10. CAPITAL RESERVE

Group Company 2018 2017 2018 2017 Opening carrying amount 8,601 8,601 4,762 4,762 Bonus issue (Note 9) (27 ) — (27 ) — Other movements — — (9 ) — Closing carrying amount 8,574 8,601 4,726 4,762

The above is considered to be a non-distributable reserve.

11. SHARE OPTION RESERVE

Movements in share option reserve for the year ended 31 December were as follows (Company and Group):

In July 2018 1,750,000 share warrants were purchased by the Company’s directors and executives. Under the terms, after being paid for at fair market value, eligible directors and executives are immediately entitled to the rights granted under the agreement. Share warrants issued to directors are exercisable between April 1 2020 and July 1 2020 and share warrants issued to executives are exercisable between January 1, 2022 and July 1, 2022. The warrants were valued using the Binominal model with the main input data being exercise price of EUR 0.95; volatility of 35%; an expected warrants’ life between 2 and 4 years, and an annual risk-free interest rate between neg. 0.20% and neg. 0.50%.

In November 2018 the Group entered into an agreement with one of the sellers of intangible assets to cancel share options granted in February 2017 with a fair value accounted for at grant of EUR 138 together with the remaining deferred contingent consideration for a total cash payment of GBP 300.

During 2017 a consultant of the subsidiary was granted 475 share options with a fair value at grant of EUR60. The options exercise upon the occurrence of an IPO and the costs were accounted for in full at grant. As a result of the bonus issue and subsequent share split during the year the share options were proportionally increased to 509,744 share options.

The options were valued using the Black Scholes model with the main input data being, the option exercise price of EUR 803.56, volatility of 60%, an expected option life of 1.5 years, and an annual risk-free interest rate of 0.309%. The directors believe that the models and inputs used are appropriate and reflective of the plans of the Group.

Group and Company 2018 2017 Opening balance 198 — Share options (cancelled)/granted (138 ) 198 Share warrants granted 52 — Closing balance 112 198

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12. BORROWINGS, CURRENT AND NON-CURRENT

Group and Company

As at


31 December 2017 Senior secured bonds 16,735 — Convertible promissory notes 2,855 22,151 Total 19,590 22,151

On 22 October 2018 the Company issued a senior secured bond in the amount of EUR 16,000 (under a total facility of EUR 25,000) out of which EUR 500 were held by the Group as treasury bonds as at 31 December 2018. The bond bears annual interest rate of 10,5% due for payment semi-annually. The bonds mature on 22 October 2021 with an option to be early redeemed after 18 months from the date of the issue. The bonds were listed on Nasdaq Stockholm on 4th December 2018. The Bond is secured by shares in material subsidiaries and intra-group loans.

On 24 November 2017, the Company entered into a convertible promissory note arrangement with 46 investors. The Company received an aggregate amount of EUR 8,900 with interest accruing at a rate of 10% per annum payable quarterly. The amount was due for repayments at the earlier of either 30 June 2020, a default event or an IPO of the Group. During 2018 the Company entered into amendment with bondholders facilitating an early redemption of the Notes. The Notes were fully redeemed in October 2018 for a total consideration of EUR 9,669 including interest accrued up to the settlement date and early redemption premium.

On 17 February 2017, the Company entered into a convertible promissory note arrangement with 26 investors. The Company received an aggregate amount of EUR 7,100 with interest accruing at a rate of 10% per annum payable annually. The amount was due for repayments at the earlier of either 30 June 2019, a default event or an IPO of the Group. During 2018 the Company entered into early redemption agreements with some of the bondholders (holding Notes with a combined nominal value of 63% or EUR 4,475). In October 2018 63% of the Notes were redeemed for a total consideration of EUR 4,937 including interest accrued up to date early redemption premium.

The outstanding balance is due on June 30, 2019 being the bonds’ original maturity. The remaining Notes are convertible at maturity at the option of the Note holders at a conversion valuation of 10x annualised adjusted EBITDA for the second quarter of 2019.

Group and Company 2018 2017 Opening Balance 22,151 — Bonds/ Notes issued at nominal amount 15,500 16,000 Redemption of Notes (14,155) — Interest paid (1,818) — Interest accrued 1,655 711 Fair value movements (3,743) 5,444 Closing Balance 19,590 22,151 Group and Company

As at


31 December 2017 Non-current 16,399 22,151 Current 3,191 — Total 19,590 22,151

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As at 31 December 2018 the Bond and Notes have been valued based on an event probability basis. The significant inputs are the values associated with each of the potential early redemption and conversion scenarios and the probability associated with each scenario. Included in the valuation are significant unobservable estimates that have been used to derive the fair value. This include the probability of an early redemption (2017: an IPO, private transaction, or corporate transaction), the timing of such events and the discount rate applied to each scenario.

For the Bond, a change in the discount rate by 1% would increase/decrease by EUR 222 / EUR 223, respectively, and a 10% shift of event probability would not result in a significant increase in Bonds’ value as at 31 December 2018.

For the February 2017 Notes sensitivity analysis is disclosed as per tables below:

As at Fair value

31 Dec 2018 Un-observable

inputs Range of

inputs 2018 Relationship of unobservable

inputs to fair value Fair value EUR 2,855 Discount rate 10%

A change in the discount rate by 1% would

have no material effect Probability of

the Event * 0%

See shift explained below.

As at 31 Dec 2017 2017 Fair value EUR10,879 Discount rate 10%

A change in the discount rate by 1% would increase/ decrease by EUR82/ EUR84

respectively. Event*

occurring after 1 July 2018

98.5%


Valuation of most probable

event

EUR10,500

A shift of 5% from one event to another would result in a decrease between EUR33

and EUR303.

The November 2017 Notes had been redeemed in full during the current reporting period. The sensitivity analysis as at 31 December 2017 is disclosed as per table below:

Fair value

Un-observable inputs

Range of inputs 2017

Relationship of unobservable inputs to fair value

Fair value EUR10,565 Discount rate 10%

A change in the discount rate by 1% would increase/ decrease by EUR60/ EUR61

respectively. Event*

occurring before 1

January 2019

98.5%


Valuation of most probable

event

EUR10,400

A shift of 5% from one event to another would result in an increase/ decrease of

EUR58 and EUR270 respectively.

*The event is defined as an IPO, private transaction or corporate transaction. Probability assumptions have been revised in 2018 due to changes in the Group’s strategy.

The Bond and Notes are included within Level 3 in the fair value hierarchy (2017: Level 3).

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Net interest-bearing debt reconciliation Group Company

As at




31 December 2017 Cash and cash equivalents 3,881 1,569 2,084 282 Net interesting-bearing borrowings (*)

(18,125) (16,000) (18,125) (16,000)

Net interest-bearing debt (14,244) (14,431) (16,041) (15,718)

*Amounts are stated at nominal values.

13. TRADE AND OTHER PAYABLES

Group Company

As at




31 December 2017 Current Trade payables (i) 679 355 — — Amounts owed to subsidiary — — 8 — Accruals 422 291 175 143 Amounts committed on acquisition of

intangible assets(ii) 1,283 2,488 58 —

Other payables (iii) 1,397 — 1,380 — Indirect tax (iv) 212 23 — — 3,993 3,157 1,621 143 Non-Current Amount committed on acquisitions of

intangible assets (ii) — 169 — — — 169 — —

( I ) Trade payables balance is unsecured, interest-free and settled within 60 days from incurrence.

( II ) The balance represents outstanding consideration on intangible acquisitions which occurred during the year. the current balance is fixed (2017: contingent and carried at fair value) (Note 6).

( III ) The balance includes an amount of EUR 1,380 due to the bondholders as a result of an early redemption of the convertible notes in October 2018 (Note 12). As a part of the redemption agreement, bondholders have agreed to purchase shares from existing shareholders in exchange of the proceeds. The balance will become payable to existing shareholders once transfer of shares is complete. The balance was 65% settled subsequently to the year end.

(IV) The balance of indirect taxes as at 31 December 2018 includes a tax provision of EUR 50 related to the acquisition of Bell Internet Limited (Note 4).

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14. DEFERRED TAX

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority.

The following amounts determined after appropriate offsetting are shown in the statement of financial position:

The movement on the deferred income tax account is as follows:

Deferred taxation is calculated on temporary differences under the liability method using the principal tax rate within the relevant jurisdiction. The year-end balance comprises:

2018 2017 Temporary differences arising on differences between the tax base and carrying

amounts of intangible assets (606) 44

Temporary differences arising on trading losses and other allowances 736 282 Net deferred tax asset 130 238

As at 31 December 2018, the Group had unutilised trading losses and other allowances amounting to EUR14,627 (2017: EUR 5,637) and net taxable temporary differences arising from intangible assets amounting to EUR12,155 (2017: EUR874). These give rise to a net deferred tax asset for the Group amounting to EUR130 (2017: EUR238). Such deferred tax is a result of the deductions as allowed by Article 14(1)(m) of the Income Tax Act.

15. REVENUE

The Group generates revenue by referring prospective customers from the Groups websites or mobile apps to the Group’s clients. The Group attracts visitors primarily through earned traffic (through search engines, or direct navigation) complemented by paid traffic (through pay per click advertising).

The Group earns commission-based fees that are either revenue-share contracts, CPA (cost per acquisition) contracts or a hybrid of these two models.

2018 2017

Deferred tax asset to be recovered after more than 12 months 736 282 Deferred tax liability to be recovered after more than 12 months (606) (44)

130 238

2018 2017 At beginning of year 238 117 (Charged)/ Credited to the statement of comprehensive income (108) 121 Deferred tax asset at end of year 130 238

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16. OTHER OPERATING EXPENSES

Group Company





Legal and consultancy fees 837 1,068 59 37 Non-recurring professional costs (i) 849 222

244 71

Depreciation and amortization 627 342

12 2

Property costs 501 206 — — Loss allowance 163 101 — — Other expenses 2,476 1,751 12 3 Total other operating expenses 5,450 3,690 327 113

(i) Non-recurring professional costs are related to the external financing activities and the Group’s acquisitions carried out during the years ended 31 December 2018 and 2017.

AUDITOR’S FEES

Fees charged by the statutory auditor (exclusive of VAT) for services rendered during the year relate to the following:

Group Company



Year ended 31 December2018


Annual statutory audit 55 44 14 15 Tax compliance services 18 10 1 1 Other services 209 17 --- 4 282 71 15 20

Other fees charged to the Group by other member firms of the same network amounted to EUR 86 during the year ended 31 December 2018 (2017: None).

17. PERSONNEL EXPENSES

Group Company

Year ended




31 December 2017 Wages and salaries 3,245 1,173 118 — Social security costs 282 107 — — Other employee benefits 103 11 — — Other employee costs 221 — — —

3,851 1,291 118 —

The average number of persons employed by the Group during the year were as follows:

Group

Year ended


31 December 2017 Administration 50 24

At the end of the year the number employed by the Group was 83 (2017: 31).

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18. FINANCE INCOME AND FINANCE COSTS

Group Company

Year ended




31 December 2017 Finance income 166 235 1,657 693 Finance costs (2,712) (1,940) (1,940) (1,500) Net finance costs (2,546) (1,705) (283) (807)

Included within finance costs for Group and Company is an amount of EUR450 of transaction costs which were incurred in relation to the issuance of bonds (2017: EUR793). The interest payable on the bonds amounting to EUR1,654 is also included within this line item (2017: EUR707). The unwinding to present value of the earn out portions of acquired intangible assets amounted to EUR537 (2017: EUR353) and is included above.

The finance income of the Group comprises mainly of gains on revaluation of balances denominated in currencies other than EUR while the financial income of the Company derives from the borrowings advanced to its subsidiary.

19. DIRECTORS’ AND KEY MANAGEMENT EMOLUMENTS

Group Year ended


31 December 2017

Salaries and other emoluments to key management 1,033

664

The emoluments paid to the directors by the Company and the Group during year ended 31 December 2018 amounted to EUR 118 and EUR 492 (2017: Nil and EUR 218), respectively.

20. TAX EXPENSES

Group Company Year ended




31 December 2017 Current tax expense 7 3 — — Deferred tax charge / (credit) (Note 14) 108 (121) — — 115 (118) — —

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The tax on the Group and Company’s profit/ (loss) before tax differs from the theoretical amount that would arise using the basic tax rate of 5%/35% applicable as follows:

Group Company Year ended




31 December 2017 Profit/(Loss) before tax 5,545 (4,779) 2,850 (6,363) Tax (income)/expense at 5%/35% 277 (239) 997 (2,227) Tax effect of: Disallowed expenses 102 85 314 2,227 Income not subject to tax (187) — (1,311) — Unrecognised deferred tax in prior years — (234) — — Temporary differences not recognised (72) 272 — — Other (5) (3) — — Tax charge/(credit) 115 (118) — —

21. CASH FLOWS FROM OPERATIONS

( A ) NON-CASH TRANSACTIONS

GROUP – 2018

• Intangibles acquired during the year ended 31 December 2018 amounting to EUR1,283 were not paid in cash during the year; the final consideration being due in August 2019 as disclosed in Note 6.

• During 2018 part of the promissory notes being early redeemed in October 2018 and amounting to EUR2,035 were agreed to be settled in share capital of Gambling.com Group PLC (Note 12) by way of private transfers of shares from existing shareholders. As at year end a balance of EUR1,380 remained due; subsequent to year end 65% of the liability has been settled.

COMPANY – 2018

• During 2018 part of the promissory notes being redeemed in October 2018 and amounting to EUR2,035 were agreed to be settled in share capital of the company (Note 12) by way of private transfers of shares from existing shareholders. As at year-end balance a of EUR 1,380 remained due, subsequent to year end 65% of the liability has been settled.

GROUP - 2017

• During the year, part of the nominal value of the promissory notes were not paid in cash as at year end amounting to EUR 11,234 (Note 12).

• Intangibles acquired during the year ended 31 December 2017 amounting to EUR 6,081 were not paid in cash during the year and were partly contingent on future results as disclosed in Note 6.

COMPANY – 2017

• During the year, part of the nominal value of the promissory notes were not paid in cash as at year end amounted to EUR11,234 (Note 12).

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( B ) RECONCILIATION OF FINANCIAL LIABILITIES

Year ended


31 December 2017 Balance at 1 January 22,151 — Cash flow, net 8,601 4,766 Accrued interest 1,655 707 Monies received from investment bank and other investors (7,704 ) — Other non-cash movements (1,380 ) 11,234 Fair value movements (3,743 ) 5,440 Balance at 31 December 19,580 22,151

22. RELATED PARTY TRANSACTIONS

All companies forming part of Gambling.com Group PLC, the shareholders and other companies controlled or significantly influenced by the shareholders are considered by the directors to be related parties as these companies are also ultimately owned by Gambling.com Group PLC.

The following transactions were carried out with related parties by the Group during the respective years:



Expenses Consultancy fees 374 218 Salaries and wages 250 260

Compensation to other key management personnel for the year to 31 December 2018 (including comparatives) is disclosed in Note 19.

During the year ended 31 December 2018 the Company has granted share warrants to its directors; terms of the warrants are disclosed in Note 11.

During the year ended 31 December 2017, a domain was acquired from a related party amounting to EUR65. This is included as part of Intangible assets.

As at 31 December 2018 the Company had a balance due to the bondholders of EUR 1,380 payable as a result of bonds’ redemption in October 2018. Subsequently to the year end the balance was partly settled in favour to the existing shareholders for the shares sold to the investors. Other balances with subsidiaries and related parties are disclosed in Note 7 and 13.

23. FUTURE COMMITMENTS

Minimum operating future commitments related to office lease of the Group were as following:

As at 31 December 2018

As at 31 December 2017

Within a year 603 317 Within two to five years 1,268 1,268 After five years 1,268 1,585 3,139 3,170

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24. EVENTS AFTER THE REPORTING PERIOD

Subsequently to the year end the transfer of shares from existing shareholders to noteholders has been concluded being a part of early redemption agreement. As a result, the balance due to noteholders as at 31 December 2018 of EUR 1,380 (Note 13) became payable to existing shareholders and has been 65% settled as at date of these financial statements being authorized.

In January 2019 the Company sold treasury bonds with a nominal value of EUR 100 and thus increasing net borrowing from the senior bonds issued at 22 October 2018 to EUR 15,600.

In February 2019 the Company early redeemed convertible bonds held by one of the investors with nominal value EUR 100.

25. STATUTORY INFORMATION

Gambling.com Group PLC is a public limited liability company incorporated in Malta in accordance with the provisions of the Maltese Companies Act (Cap.386). Its registered address in Malta is 85, St. John Street, Valletta VLT1165, Malta. The ultimate controlling party of the Company is Mr. Mark Blandford.

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ABOUT · Gambling.com Group PLC is a multi-award-winning provider of digital marketing services for...

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