Annual Report 2016

2016 ANNUAL REPORT Gaming Innovation Group • 2016 ANNUAL REPORT 1 2 Gaming Innovation Group • 2016 ANNUAL REPORT CONTENTS 4 Letter to the Shareholders 23 Corporate governance 6 Description of business 28 Independent Auditors report Consolidated financial 30 statements 8 Board of Directors report 36 Note to consolidated financial 22 Responsibility report statements Gaming Innovation Group • 2016 ANNUAL REPORT 3 LETTER TO SHAREHOLDERS FROM THE CHAIRMAN OF GIG INC. In January 2014 we had our very first ‘all inception of what I am most proud of in our operational exellence. moments, and tremendous developement hands meeting’. We had just returned company today; Our culture. our industry is producing. home from the Christmas break and in 100 people had to welcome another 300 preparation of the year ahead of us, I There was three key takeways. people to the company. In spite of all the Innovation Labs referred in excess of wanted to infuse the team with inspiration. errors, failures and flaws we experienced, 40,000 paying customers to our clients The 30 man big crowd, whom constituted 1. You have to be controlled insane. I think we did it. People whom had never in 2016. During what was the first full year the staff back then, was all packed into a 2. We need to be comfortable, outside of managed people, acted up as leaders. of operations. We established Innovation small boardroom. Most of the guys and the comfortzone. Youngsters whom came straight out of Labs as one of the largest traffic sources girls were pretty new to the company. 3. Whatever amount you have in your head, university worked on core software. It led for iCasino. double it, or triple it. to our platform: iGamingCloud to possibly The goal was to prepare the team for be the fastest growing Software-As-A- In 2016 we recruited the core organisation what was to come. During the Christmas What might have seemed a bit Service, ever to be launched in iGaming. and built the proprietary platform which break I had been studying the underlying dramatic at the time, turned out to be would allow the company to bolt-on KPIs of the business: We were booming. an understatement. At the start of 2013 We had more then 99% uptime over new websites, people and tech. As A company that had been doing €1m in we were seven people running a poker the course of the year. That is albeit such the organic growth was heavily revenues in 2012, were on course to do forum, with an online casino in the making. scaling from 400m , to 1.9bn quarterly complemented by acquisitions. We did €12m in 2014. Today the company counts more than transactions. The IGC team did incredibly two of these which positioned us on top of 400 people . We are operating some of well in 2016, and are continuing to grow the search rankings in both Sweden and I have read my fair share of books on the fastest growing products and services into 2017. It is amazing to see it evolve. the Netherlands. The trend continued startups and tech companies. One of across the industry, and we are all-in on this year. We have made in excess of the things that fascinate me is the art the vision; ‘To make iGaming and open and In our online peformance marketing €20m worth of acquisition in 2017 to of scaling a company. How all those connected eco-system for the benefit of business; Innovation Labs, we are date, increasing referred customers to amazing companies managed to support all’. improving the touchpoints were people apx. 20,000 per quarter. Innovation Labs is insurmountable growth. A famous quote are finding iGaming online. That is in order aiming to be the largest lead generation reads ”culture eats strategy for breakfast”, When growing triple digit a year, then to make iGaming universally approachable company in iGaming and we are well I think it is all about the culture. every year needs to be transformational. and liked. underway So that Christmas I had been pondering In 2015 we had demonstrated our ability There is certainly, and sometimes In January 2016 we launched a new what culture I would want to inspire, and to innovative and scale. 2016 was the rightfully, negative perceptions of our iCasino. It was named Rizk.Com. We this ‘all hands meeting’ would be the year we would embark on the pursuit of industry. We want to show the positives wanted to make the most liked casino in by spreading all the great products, good iGaming. A year later we are looking at Net 4 Gaming Innovation Group • 2016 ANNUAL REPORT Promoter Scores in excess of 30 which is same product vision and culture. and real-time data feeds, to predict affected margins, however ensured our to be pretty good for what we do. probabilities in sporting events. In term continued long-term growth. Rizk has been a showcase of what you can The organisations believed that by they were using that information to As we are growing, it will be increasingly achieve using our iGamingCloud platform. teaming up we could create the largest program robots whom was betting against tempting to reduce long-term growth, in iGaming operator from our region, and the bookmakers. order to produce even better short-term For myself Rizk was also one of the most thus one of the largest in the world. results. We should resist the temptation. risky decisions I have done whilst leading We saw a great potential in the technology the company. We had decided to contract The acqusition was completed in In GIG we have hurried patiently and never an expensive Hollywood actor, to front a September. At the of 2016, there was 1.5m and are today working patiently together been afraid of making the right long-term high-end media production, which would customers registered with GIG Gaming towards the launch of a B2B services later investments. We are at a very early stage be the basis of the very high extensive TV brands, and more then 180,000 of these in 2017. in the company life cycle. There is now and online media campaign. were active in Q4, up from 50,000 the year in excess of 400 people across all trades before. BettingCloud will deliver proprietary and professions, whom can act controlled The decision was vested in the confidence odds, risk management and trading insane. Lets continue to serve an we had in the product. An immersive As we headed into 2017, public figures tools, as well as a range of data services increasing amount of markets, clients and and gamified experience, which saw the have suggested Gaming Innovation and BI functions. With BettingCloud we customers, with more and better products. company, produce it first proprietary Group to be the fastest growing iGaming are seeking to disrupt the sportsbetting Profits will follow. game: The Wheel of Rizk, and our first company, listed on any stock exchange industry. It is a long-term play with the play with personalisation, big data and in the world, in terms of organic revenue potential to make our company on of the algorithms. The bet paid off and Rizk was growth. It was accomplished in a year leaders in the very large sportsbetting the fastest growing newcomer in iCasino in where the company underwent a vertical. 2016 due to more then 25% of the acquried recruitment surge, acqusitions and customers remaining active mid and long- product launches. We should be really Which leads me on to the final words of term. An unusual high amount for iCasino. proud of this growth, but our focus is the letter. ahead. In June we signed the MoU for the €54m Gaming Innovation Group is an amazing acquistion of BetIt Group, adding nearly Our passion and ability to drive innovation growth story. It is enabled by a band of 100 staff to the organisation. BetIt had is not, and never should be, satisfied. In value driven people. When needed we been founded only three years earlier and the spring of 2016 we acquired a small have empowered these people to act bold had achieved the same growth rate as GIG company called Oddsmodel. They were and brave. When needed we have made Gaming. More importantly they shared the using proprietary quantitative models large investments, whom has periodically Gaming Innovation Group • 2016 ANNUAL REPORT 5 DESCRIPTION OF BUSINESS THIS IS GAMING INNOVATION GROUP 6 Gaming Innovation Group • 2016 ANNUAL REPORT VISION available and GIG sees our operators The performance of the platform has as creative studios that seek to make proven to increase gross gaming. The Making iGaming an open and digital connections with people iGC platform itself is fully scalable connected Eco-System, for the through real money games. both horizontal and vertical with benefit of all. individual modules being scalable in Cloud based services anticipation of increased load. OPERATIONS (B2B) Gaming Innovation Group Inc. Digital marketing operates its iGaming business out iGamingCloud (iGC) is an open cloud services (B2B) of Malta divided into the Business based platform, offering the full range to Consumer (B2C) and Business to of services needed for an iGaming GIG’s digital marketing services Business (B2B) segments. operator. (Innovation Labs) refer traffic across casino, poker and sports betting by Operators (B2C) iGC’s vision is to make the iGaming operating websites who rank high in industry lean. The iGC-platform is search results for specific keywords. GIG is offering Business-to-Consumer integrating application developers (B2C) casino and sports betting that can access an eco-system The vision of Innovation Labs is to GAMING services through its six brands, guts.

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