What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2022-03-31 compared with 2021-03-29 · 10 added, 1276 removed, 3 unchanged (100% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

common stock is listed and traded on the Nasdaq Capital Market under the symbol “INSE”.

Our public warrants trade

on the over-the-counter markets operated by OTC Markets Group under the symbol “INSEW”.

of March 22, 2021, there were 52 holders of record of our common stock and 11 holders of record of our warrants.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

common stock is listed and traded on the Nasdaq Capital Market under the symbol “INSE”.

of March 28, 2022, there were 44 holders of record of our common stock

Sales of Unregistered Securities

of Equity Securities by the Issuer and Affiliated Purchasers

We do not currently expect

to pay cash dividends on our common stock and have not paid cash dividends on our common stock to date.

Any future dividend payments

are within the absolute discretion of our board of directors and will depend upon, among other things, our results of operations, working

capital requirements, capital expenditure requirements, financial condition, level of indebtedness, contractual restrictions with respect

to payment of dividends, business opportunities, anticipated cash needs, provisions of applicable law and other factors that our board

of directors may deem relevant.

SELECTED FINANCIAL DATA.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

following discussion and analysis of our financial condition and results of operations should be read in conjunction with the

financial statements and related notes thereto included elsewhere in this report.

This discussion contains forward-looking statements

that involve risks and uncertainties.

Our actual future results could differ materially from the historical results discussed

Factors that could cause or contribute to such differences include, but are not limited to, those identified below and

those discussed in the section titled “Risk Factors”

included elsewhere in this report.

Forward-Looking

We make forward-looking

statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

For definitions

of the term Forward-Looking Statements, see the definitions provided in the Cautionary Note Regarding Forward-Looking Statements

at the start of the Annual Report on Form 10-K for the year ended December 31, 2020.

Segment Reporting Recharacterizations

For full information on this, see Part IV, Item 15, ‘Exhibits,

Financial Statement Schedules’

Note 26 ’Segment Reporting and Geographic Information’.

We generate revenue in four principal ways:

i) on a participation

basis, ii) on a fixed rental fee basis, iii) through product sales and iv) through software license fees.

Participation revenue

generally includes a right to receive a share of our customers’

gaming revenue, typically as a share of net win but sometimes

as a share of the handle or “coin in”.

Geographically, a majority of our revenue is derived from, and

majority of our non-current assets are attributable to our UK operations.

The remainder of our revenue is derived from, and non-current

assets attributable to, Italy, Greece and the rest of the world.

the twelve months ended December 31, 2020, we earned approximately 76.2% of our revenue in the UK, 8.5% in Greece, 4.3% in Italy

and the remaining 11.0% across the rest of the world.

During the twelve months ended December 31, 2019, we earned approximately

67.6%, 13.5%, 10.6% and 8.3% of our revenue in those regions, respectively.

As of December 31,

2020, approximately 77%, 14%, 2%, and 7% of our non-current assets (excluding goodwill) were in those regions, respectively.

results are affected by changes in foreign currency exchange rates as a result of the translation of foreign functional currencies

into our reporting currency and the re-measurement of foreign currency transactions and balances.

The impact of foreign currency

exchange rate fluctuations represents the difference between current rates and prior-period rates applied to current activity.

The largest geographic region in which we operate is the UK and the British pound (“GBP”) is considered to be our

functional currency.

Our reporting currency is the U.S.

dollar (“USD”).

Our results are translated from our functional

currency of GBP into the reporting currency of USD using average rates for profit and loss transactions and applicable spot rates

for period-end balances.

The effect of translating our functional currency into our reporting currency, as well as translating

the results of foreign subsidiaries that have a different functional currency into our functional currency, is reported separately

in Accumulated Other Comprehensive Income.

the twelve months ended December 31, 2020, we derived approximately 24% of our revenue from sales to customers outside the UK,

compared to 32% during the twelve months ended December 31, 2019.

the section “Results of Operations”

below, currency impacts shown have been calculated as the current-period average

GBP:USD rate less the equivalent average rate in the prior period, multiplied by the current period amount in our functional currency

The remaining difference, referred to as functional currency at constant rate, is calculated as the difference in our functional

currency, multiplied by the prior-period average GBP:USD rate.

This is not a U.S.

GAAP measure, but is one which management believes

gives a clearer indication of results.

In the tables below, variances in particular line items from period to period exclude currency

translation movements, and currency translation impacts are shown independently.

Financial Measures

use certain financial measures that are not compliant with U.S.

GAAP (“Non-GAAP financial measures”), including EBITDA

and Adjusted EBITDA, to analyze our operating performance.

In this discussion and analysis, we present certain non-GAAP financial

measures, define and explain these measures and provide reconciliations to the most comparable U.S.

GAAP measures.

See “Non-GAAP

Financial Measures”

of Operations

fiscal year begins on January 1 and ends on December 31 of each calendar year.

results are affected by changes in foreign currency exchange rates, primarily between our functional currency (GBP) and our reporting

currency (USD).

In the twelve-month periods ended December 31, 2020 and December 31, 2019, the average GBP:USD rates were 1.29

and 1.28, respectively.

the discussion and analysis below, any reference to organic variances and organic growth refers to variances in the results of

operations of the Company excluding results from the NTG Acquisition for the nine-month period ended September 30, 2020, on a

functional currency at constant rate basis.

As a result, in order to facilitate a like-for-like comparison between the twelve-month

periods ended December 31, 2020 and December 31, 2019, respectively, organic variances and organic growth refer to results of

operations that only include results from the NTG Acquisition for the three-month period ended December 31, 2020, and December

In addition, certain data may vary from the amounts presented in our consolidated financial statements due to rounding.

Months ended December 31, 2020 compared to Twelve Months ended December 31, 2019

For the Twelve-Month

Total Functional

(In millions)

Total revenue

Cost of sales, excluding depreciation and amortization:

Cost of service

Cost of product

Selling, general and administrative expenses

Stock-based compensation

Acquisition and integration related transaction expenses

Depreciation and amortization

Net operating Income (Loss)

Other income (expense)

Interest income

Interest expense

Change in fair value of earnout liability

Change in fair value of derivative liability

Other finance income (expense)

Loss from equity method investee

Total other income (expense), net

Net loss from continuing operations before income taxes

Income tax expense

Exchange Rate - $ to £

Total reported revenue

for the twelve months ended December 31, 2020 increased by $46.4 million, or 30.2%, to $199.8 million on a reported basis.

includes increases from Leisure of $19.8 million, Gaming of $19.0 million and Interactive of $8.6 million, partly offset by Virtual

Sports decline of $1.1 million.

This growth includes Gaming revenue of $42.2 million remitted to us by two of our major UK customers,

to which we were entitled because of a UK tax ruling, which created a rebate of value added tax that had otherwise been incorrectly

applied to certain gaming machines in their estate (the “VAT-related revenue”) in the past.

As our contracts with these

customers are based on a revenue share after appropriate taxes, we are entitled to a pro rata share of this tax rebate, which we

have recorded as revenue during the period in line with accounting standards.

Favorable currency movements accounted for a $1.9

million impact.

On a functional currency at constant rate basis, revenue increased by $44.4 million, or 29.0%, as detailed below:

revenue increased by $17.6 million, comprised of an increase in Service revenue of $17.0 million and an increase in Product Sales

of $0.6 million.

The increase in Service revenue was comprised of $9.4 million in organic growth, including the VAT-related revenue

of $40.9 million (using prior year exchange rate), and $7.6 million attributable to the addition of the NTG Acquisition for the

nine months of 2020 ended September 30 (not reflected in organic growth).

Excluding the VAT-related revenue, Service revenue would

have declined by $31.5 million primarily due to COVID-19, as many of our customers’

venues were closed during much of the

Customer gross win also declined from the comparative period, reflecting the impact of COVID-19, with shop closures occurring

throughout the year and restrictions in place during much of the time when venues were open (the “COVID-19 closures”).

Sports revenue decreased by $1.2 million, or 3.5%.

This decrease included a $8.5 million decrease in retail/land-based revenue

primarily as a result of the COVID-19 closures, partially offset by growth in Online Virtuals of $7.4 million.

● Interactive

revenue increased by $8.5 million, or 181%.

This increase was comprised of $5.5 million of organic growth and $3.1 million attributable

to the addition of the NTG Acquisition for the nine months of 2020 ended September 30 (not reflected in organic growth).

growth was driven primarily by recurring revenue growth due to the increase in online demand as a result of the COVID-19 closures,

the addition of new customers and territories and the consistent launch of new high-quality content, all of which, we believe,

has led to our enjoying an increase in market share.

revenue increased by $19.6 million, comprised of an increase in Service revenue of $18.1 million and an increase in Product Sales

of $1.5 million.

The Service revenue increase was comprised of $32.6 million attributable to the addition of the NTG Acquisition

for the nine months of 2020 ended September 30 (not reflected in organic growth), offset by a $14.5 million decline in revenue

due to the impact of the COVID-19 closures, as venues were closed during much of the period.

Cost of sales, excluding depreciation

and amortization

Cost of sales, excluding

depreciation and amortization, increased by $6.2 million, or 16.1%, on a reported basis, to $44.5 million, including the impact

of $0.4 million from unfavorable currency movements.

Of this increase, $4.7 million was attributable to cost of Service and

$1.5 million was attributable to cost of Product sales.

On a functional currency (at constant rate) basis, cost of sales increased

by $5.8 million, or 15.1%, as detailed below:

cost of sales decreased by $2.2 million, comprised of a decrease in Service costs of $2.6 million, partly offset by a $0.3 million

increase in Product costs.

The Service cost decrease was driven primarily by a $4.0 million decrease due to the decline in cost

of Service, offset by a $1.5 million increase attributable to the addition of the NTG Acquisition for the nine months of 2020

ended September 30 (not reflected in organic growth).

Virtual Sports cost of sales increased by $0.3 million, or 9.6%.

This increase was driven by the organic growth of Online Virtuals.

● Interactive

cost of sales increased by $1.2 million, or 166%.

This increase was driven by $1.1 million from organic growth.

cost of sales increased by $6.6 million, comprised of an increase in Service costs of $5.5 million and an increase in Product

sales of $1.1 million.

The Service cost increase was comprised of a $7.4 million increase attributable to the addition of the

NTG Acquisition for the nine months of 2020 ended September 30 (not reflected in organic growth), offset by a $1.9 million decrease

due to the organic revenue decline.

Selling, general and administrative

SG&A expenses

increased by $14.4 million, or 20.5%, on a reported basis, to $84.8 million.

This included $0.7 million of unfavorable currency

On a functional currency at constant rate basis, SG&A increased by $13.8 million, or 19.6%.

This increase was comprised

of incremental SG&A expenses of $31.7 million attributable to the addition of the NTG Acquisition for the nine months of 2020

ended September 30 (not reflected in organic growth), offset by a $17.9 million decrease driven primarily by temporary furlough

savings and permanent synergy savings realized during the period.

Stock-based compensation

During the year ended December 31, 2020, the Company recorded

an expense of $4.8 million with respect to outstanding awards.

Of this expense, $0.2 million related to costs from awards made

under a 2016 long term incentive plan, $4.5 million from awards made under the 2018 Plan and $0.1 million related to costs from

the vesting of awards in December 2020.

All costs related to recurring costs.

During the year ended December 31, 2019, the charge

for stock-based compensation was $9.0 million.

Of this expense, $6.0 million related to costs from awards made under a 2016 long

term incentive plan, $2.8 million from awards made under the 2018 Plan and $0.3 million related to costs from the vesting of awards

in December 2019.

and integration related transaction expenses

Acquisition related

transaction expenses increased by $0.3 million to $7.0 million, on a reported basis.

The entirety of the 2019 and the majority

of the 2020 expenses were related to the NTG Acquisition and the fees associated with the integration of this transaction.

2020, $0.6 million of costs incurred related to potential merger and acquisition activity (outside of the NTG Acquisition) which

did not come to fruition.

and amortization

Depreciation and amortization

increased by $10.4 million, or 24.7%, to $52.3 million on a reported basis.

This included the impact of unfavorable currency movements

of $0.1 million.

On a functional currency at constant rate basis, depreciation and amortization increased by $10.3 million, or

24.5%, driven primarily by the addition of $17.3 million in depreciation and amortization attributable to the addition of the NTG

Acquisition for the nine months of 2020 ended September 30 (not reflected in organic growth), offset by a reduction in depreciation

and amortization of $7.0 million due to machines in the UK estate and Italy, each within our Gaming segment, reaching fully depreciated

Our future growth initiatives are focused on expanding our digital and online

Accordingly, we expect that depreciation and amortization expense will be reduced in future periods as our investments

in digital and online gaming are less capital intensive than our investments in gaming terminals.

operating profit

During the period, net operating income was $6.4 million compared

to a net operating loss of $13.0 million in the prior period.

The increase of $19.4 million in operating profit was attributable

to an increase of $31.8 million in operating profit from organic growth, largely attributable to the VAT-related income as well

as growth in our Interactive segment, along with cost savings across our segments on an organic basis.

This was offset by

a decrease of $12.9 million in operating income in businesses acquired through the NTG Acquisition.

This increase also included

a $0.4 million favorable impact from foreign currency translation.

interest expense increased by $2.2 million in the year ended December 31, 2020 to $30.0 million, on a reported basis due to a

$8.7 million increase in debt interest offset by a $0.6 million decrease in bank interest paid and a $5.8 million decrease in

debt fee amortization following the write-off of $7.3 million of debt fees in the year ended December 31, 2019 following the refinancing

in October 2019.

in fair value of earnout liability

solely to changes in the share price ($6.51 at March 25, 2019 and $4.80 at December 31, 2018), the charge in the year ended December

31, 2019 from a change in the fair value of earnout liability was $2.3 million.

On March 25, 2019, the shares relating to the

earnout liability were issued.

In the year ended December 31, 2020, no gain or loss was recognized.

in fair value of derivative liability

the termination of the cross-currency swaps on October 1, 2019, there was no change in the fair values of derivative liabilities

in the year ended December 31, 2020.

The current swaps qualify for hedge accounting and accordingly are not shown as derivative

liability movements.

For the year ended December 31, 2019, the change in fair value of derivative liability was a $3.0 million

finance income

Other finance income

for the year ended December 31, 2020 resulted in a $4.7 million charge compared to a $3.2 million credit in the year ended December

This variance was driven by movements in the retranslation with respect to the principal balance of our senior debt facilities.

In addition, the year ended December 31, 2019 also included a $3.2 million benefit from the GBP:USD cross-currency swap which was

terminated on October 1, 2019.

effective tax rate for the period ended December 31, 2020 was 1.4% and our effective tax rate for the period ended December 31,

2019 was 0.2%.

During the period,

net loss was $29.2 million compared to a net loss of $37.0 million in the prior period.

On a functional currency at constant rate

basis, net loss improved by $7.1 million, primarily due to the VAT-related income and growth in Interactive revenue.

Months ended December 31, 2020 compared to Twelve Months ended December 31, 2019 –

Gaming Segment

We generate revenue

from our Gaming segment through the selling and rental of our gaming machines.

We receive rental fees for machines, typically on

a long-term contract basis, on both a participation and fixed fee basis.

Our participation contracts are typically structured to

pay us a percentage of net win (defined as net revenue to our operator customers, after deducting player winnings, free bets or

plays and any relevant regulatory levies) from gaming terminals placed in our customers’

Typically, we recognize

revenue from these arrangements on a daily basis over the term of the contract.

growth for our Gaming business is principally driven by the number of operator customers we have, the number of Gaming machines

in operation, the net win performance of the machines and the net win percentage that we receive pursuant to our contracts with

our customers.

Segment, Key Performance Indicators

For the Twelve-Month

End of period installed base (# of terminals)

Total Gaming - Average installed base (# of terminals)

Participation - Average installed base (# of terminals)

Fixed Rental - Average installed base (# of terminals)

Service Only - Average installed base (# of terminals)

Customer Gross Win per unit per day (1) (2)

Customer Net Win per unit per day (1) (2)

Inspired Blended Participation Rate

Inspired Fixed Rental Revenue per Gaming Machine per week

Inspired Service Rental Revenue per Gaming Machine per week

Gaming Long term license amortization £(‘m)

Number of Machine sales

Average selling price per terminal

Includes all Gaming

terminals in which the company takes a participation revenue share across all territories

Includes all days

of the year, including the days during which the Gaming terminals were not operating due to COVID-19 closures.

the table above:

“End of Period

Installed Base”

is equal to the number of deployed Gaming terminals at the end of each period that have been placed on a

participation or fixed rental basis.

Gaming participation revenue, which comprises the majority of Gaming Service revenue, is directly

related to the participation terminal installed base.

This is the medium by which our customers generate revenue and distribute

a revenue share to the Company.

To the extent all other KPIs and certain other factors remain constant, the larger the installed

base, the higher the Company’s revenue would be for a given period.

Management gives careful consideration to this KPI in

terms of driving growth across the segment.

This does not include Service Only terminals.

Revenue is derived

from the performance of the installed base as described by the Gross and Net Win KPIs.

If the End of Period Installed Base is materially different

from the Average Installed Base (described below), we believe this gives an indication as to potential future performance.

the End of Period Installed Base is particularly useful for assessing new customers or markets, to indicate the progress being

made with respect to entering new territories or jurisdictions.

“Total Gaming - Average Installed Base”

is the average

number of deployed Gaming terminals during the period split by Participation terminals and Fixed Rental terminals.

Therefore, it

is more closely aligned to revenue in the period.

We believe this measure is particularly useful for assessing existing customers

or markets to provide comparisons of historical size and performance.

This does not include Service Only terminals.

“Participation - Average Installed Base”

average number of deployed Gaming terminals that generated revenue on a participation basis.

“Fixed Rental - Average Installed Base”

the average number of deployed Gaming terminals that generated revenue on a fixed rental basis.

“Service Only - Average Installed Base”

the average number of terminals that generated revenue on a Service only basis.

“Customer Gross Win per unit per day”

is a KPI used

by our management to (i) assess impact on the Company’s revenue, (ii) determine changes in the performance of the overall

market and (iii) evaluate the impacts of regulatory change and our new content releases on our customers.

Customer Gross Win per

unit per day is the average per unit cash generated across all Gaming terminals in which the Company takes a participation revenue

share across all territories in the period, defined as the difference between the amounts staked less winnings to players divided

by the Average Installed Base in the period, then divided by the number of days in the period.

Gaming revenue accrued in the period is derived from Customer

Gross Win accrued in the period after deducting gaming taxes (defined as a regulatory levy paid by the Customer to government bodies)

and applying the Company’s contractual revenue share percentage.

Our management believes Customer Gross Win measures are meaningful

because they represent a view of customer operating performance that is unaffected by our revenue share percentage and allow management

to (1) readily view operating trends, (2) perform analytical comparisons and benchmarking between customers and (3) identify strategies

to improve operating performance in the different markets in which we operate.

“Customer Net Win per unit per day”

Gross Win per unit per day after giving effect to the deduction of gaming taxes.

“Inspired Blended Participation Rate”

is the Company’s

average revenue share percentage across all participation terminals where revenue is earned on a participation basis, weighted

by Customer Net Win per unit per day.

“Inspired Fixed Rental Revenue per Gaming Machine per

is the Company’s average fixed rental amount across all fixed rental terminals where revenue is generated on

a fixed fee basis, per unit per week.

“Inspired Service Rental Revenue per Gaming Machine per

is the Company’s average service rental amount across all service only rental terminals where revenue is generated

on a service only fixed fee basis, per unit per week.

“Gaming

Long term license amortization”

is the upfront license fee per terminal which is typically spread over the life of the terminal.

Our overall Gaming revenue from terminals placed on a participation

basis can therefore be calculated as the product of the Participation - Average Installed Base, the Customer Net Win per unit per

day, the number of days in the period, and the Inspired Blended Participation Rate, which is equal to “Participation Revenue”.

“Number of Machine sales”

is the number of terminals

sold during the period.

“Average selling price per terminal”

revenue in GBP of the Gaming terminals sold divided by the “number of Machine sales”.

Segment, Recurring Revenue

forth below is a breakdown of our Gaming recurring revenue.

Gaming recurring revenue consists principally of Gaming participation

revenue and fixed rental revenue.

For the Twelve-Month Period ended

Gaming Recurring Revenue

Total Gaming Revenue

Gaming Participation Revenue

Gaming Other Fixed Fee Recurring Revenue

Gaming Long term License amortization

Total Gaming Recurring Revenue *

Gaming Recurring Revenue as a % of Total Gaming Revenue &dagger;

Does not reflect VAT-related revenue

Total Gaming Revenue for the twelve-month period ended December 31, 2020 includes the £32.0 million for one time VAT-related revenue, which is not reflected in Gaming Recurring Revenue for that period.

Excluding VAT-related revenue, Gaming Recurring Revenue was 71.2% of Total Gaming Revenue for such period.

the table above:

“Gaming

Participation Revenue”

includes our share of revenue generated from (i) our Gaming terminals placed in gaming and lottery

and (ii) licensing of our game content and intellectual property to third parties.

“Gaming

Other Fixed Fee Recurring Revenue”

includes service revenue in which the Company earns a periodic fixed fee on a contracted

“Gaming

Long term license amortization”

see the definition provided above

Gaming Recurring Revenue”

is equal to Gaming Participation Revenue plus Gaming Other Fixed Fee Recurring Revenue.

Segment, Service Revenue by Region

Set forth below

is a breakdown of our Gaming service revenue by geographic region.

Gaming service revenue consists principally of Gaming

participation revenue, Gaming other fixed fee revenue, Gaming long term license amortization and Gaming other non-recurring

See “—

Gaming Segment Revenue”

below for a discussion of gaming service revenue between the

periods under review.

Service Revenue by Region

For the Twelve-Month

Total Functional

(In millions)

Service Revenue:

UK Licensed Betting Offices

UK VAT - Related Revenue

Rest of the World

Total service revenue

Exchange Rate - $ to £

Exchange rate in the table is calculated by dividing the USD total service revenue by the GBP total service revenue, therefore

this could be slightly different from the average rate during the period depending on timing of transactions.

Segment, key events that affected results for the Twelve Months ended December 31, 2020

During the period,

Customer Gross Win per unit per day in the total UK market (including non- Licensed Betting Offices markets) declined by 32.9%.

This decline was primarily due to the shutdowns and tier restrictions of UK LBO retail venues related to the COVID-19 closures

during the period.

Additionally, during the first quarter of 2019, our customers experienced strong performance compared to the

first quarter of 2020 because the period pre-dated the reduction in maximum permitted bets on B2 gaming machines in the UK, effective

as of April 1, 2019 (“the Triennial Implementation”).

The recently acquired manufacturing business

which we purchased as part of the NTG Acquisition forms part of the new Gaming segment.

During the second quarter of 2020, the

Gaming group reduced its manufacturing facilities from three to one which has enabled us to achieve significant synergy savings

in terms of both staff and non-staff costs.

This change is expected to result in a lower cost base and in a more efficient business

moving forward.

Inspired received VAT-related revenue of

$9.7 million and $32.5 million in July 2020 and November 2020, respectively, from two major UK customers.

Both payments have been

recorded as revenue in our results.

During the period, a two-year contract extension

was agreed for the supply of product, platform, content and service with a major UK LBO customer.

The agreement includes no requirement

for additional machine capital expenditure and represents an improvement in our revenue share terms.

In the UK Electronic Table Games (ETG) market,

we sold 157 “Sabre Hydra”

terminals to a major casino customer.

These terminals were installed during the third and

fourth quarters of 2020.

In the Italian market, Inspired sold 774

existing installed VLTs to Sisal in the fourth quarter 2020 with a further 850 existing installed VLTs agreed to be sold in 2021

as part of our strategy to focus on technology and games in Italy rather than on hardware operations.

During the period, Inspired sold 313 “Valor™”

terminals to a number of customers in Illinois, increasing the total number of North American unit sales since launch in December

Retail venues in Illinois were shut down in the second quarter due to COVID-19, which negatively impacted sales during

this period as well as during the third and fourth quarters of 2020.

In August 2020, Inspired signed an agreement

with the Western Canada Lottery Corporation (“WCLC”) to enter its second jurisdiction in North America.

Inspired delivered

100 “Valor™”

terminals to WCLC.

We anticipate recognizing a product sale for these terminals during the second

quarter of 2021.

In Italy, Customer Net Win per unit per

day (in EUR) decreased by 72.8% vs the comparable period, primarily driven by the impact of COVID-19 closures, an increase in gaming

tax on value played of 0.6% and the impact of card readers implemented in January 2020.

In Greece, Customer Gross Win per unit per

day (in EUR) decreased by 39.6% primarily driven by the impact of COVID-19 closures.

These closures resulted in retail venues being

closed for an aggregate of over five months of the year during the second and fourth quarters of 2020.

Across our entire estate, Customer Gross

Win per unit per day (in our functional currency, GBP) decreased by £36.00, or 43.5%, primarily due to COVID-19 closures

during the second and fourth quarters, which resulted in the closure of retail venues, along with the introduction of card readers

and increased taxes in the Italian market.

The blended participation rate increased by 0.1% to 6.5%.

Segment, Twelve Months ended December 31, 2020 compared to Twelve Months ended December 31, 2019

For the Twelve-Month

(In millions)

Total revenue

Cost of sales, excluding depreciation and amortization:

Cost of service

Cost of product

Total cost of sales

Selling, general and administrative expenses

Stock-based compensation

Depreciation and amortization

Net operating Income (Loss)

Exchange Rate - $ to £

Exchange rate in the table is calculated by dividing the USD total revenue by the GBP total revenue, therefore this could be

slightly different from the average rate during the period depending on timing of transactions.

Segment Revenue

During the period, Gaming revenue increased

by $19.0 million, or 20.8%, to $110.5 million on a reported basis.

This increase was due, partially, to favorable currency movements

of $1.5 million.

On a functional currency at constant rate basis, Gaming revenue increased by $17.6 million, or 19.2%.

Service revenue increased by $18.4 million

on a reported basis.

Favorable currency movements accounted for $1.4 million.

On a functional currency (at constant rate) basis,

Gaming Service revenue increased by $17.0 million, or 23.1%, to $92.2 million.

This was driven by a $7.6 million increase attributable

to the addition of the NTG Acquisition for the nine months of 2020 ended September 30 (not reflected in organic growth) and $9.4

million in organic growth.

This organic growth was primarily due to the VAT-related revenue of $40.9 million.

This was partly offset

by a decline in UK LBO of $17.9 million primarily driven by COVID-19 closures throughout the period, and the fact that first quarter

2019 revenue was not impacted by triennial stakes and prizes changes.

Italy and Greece had revenue declines of $5.9 million and

$3.1 million, respectively, driven by tax and card reader changes in Italy, as well as COVID-19 closures.

revenue increased by $0.6 million to $18.3 million on a reported basis.

On a functional currency (at constant rate) basis, the

revenue increase was $0.6 million, or 3.1%.

This increase was driven by $6.9 million attributable to the addition of the NTG Acquisition

for the nine months of 2020 ended September 30 (not reflected in organic growth), partly offset by a decline in Product sales

of $6.4 million.

This decrease was due to a reduction of Product sales in the UK market of $3.9 million from SSBTs (Self Service

Betting Terminals), $1.0 million from “Prismatic”

machines, $0.9 million from “AWP”

machines and $0.7

million from “Flex Cabinets”

as well as the reduction of “Sabre Hydra”

sales of $1.1 million.

partly offset by an increase in North America “Valor™”

sales of $2.6 million.

Segment Operating Income

Cost of sales (excluding depreciation and

amortization) decreased by $2.0 million to $28.1 million on reported basis, which included adverse currency movements of $0.2 million.

On a functional currency (at constant rate) basis, Gaming cost of sales decreased by $2.2 million, or 7.4%.

Service cost of sales decreased by $2.4

million to $15.7 million on a reported basis, including adverse currency movements of $0.2 million.

On a functional currency at

constant rate basis, Service cost of sales decreased by $2.6 million, or 14.2%, driven by $4.0 million lower costs due to the decline

in Service revenue related to the COVID-19 closures, partly offset by an increase of $1.5 million in costs attributable to the

addition of the NTG Acquisition for the nine months of 2020 ended September 30 (not reflected in organic growth).

Product cost of sales increased by $0.4

million to $12.4 million on a reported basis, which included adverse currency movements of $0.1 million.

On a functional currency

basis this increase was $0.3 million, due to a $5.7 million increase attributable to the addition of the NTG Acquisition for the

nine months of 2020 ended September 30 (not reflected in organic growth), partially offset by a decline in Product cost of sales

of $5.4 million.

Gaming SG&A expense declined by $5.1

million on a reported basis.

This decrease includes the impact of unfavorable currency movements of $0.2 million.

On a functional

currency (at constant rate) basis, Gaming SG&A decreased by $5.4 million, or 18.1%.

This was driven by an $11.5 million decrease

attributable to reduced staffing costs related to both staff reductions and reduced salaries implemented due to the COVID-19 closures

as well as cost savings synergies.

This was partially offset by an increase of $6.1 million attributable to the addition of

the NTG Acquisition for the nine months of 2020 ended September 30 (not reflected in organic growth).

Depreciation and amortization declined by

$2.8 million on a reported basis, or 9.1%.

This included the impact of unfavorable currency movements of $0.1 million.

On a functional

currency at constant rate basis, Gaming depreciation and amortization decreased by $2.9 million, or 9.5%.

This was driven by a

$6.4 million decrease due to the machines in the UK estate and Italy reaching fully depreciated status, partially offset by additional

depreciation from new machines in the Greek estate as well as an increase of $3.6 million attributable to the addition of the NTG

Acquisition for the nine months of 2020 ended September 30 (not reflected in organic growth).

Operating income increased by $29.2 million

on a reported basis, from $0.3 million to $29.5 million.

This was primarily due to the VAT-related income and favorable currency

movements of $1.0 million.

Sports Segment , Twelve Months ended December 31, 2020 compared to Twelve Months ended December 31, 2019

We generate revenue

from our Virtual Sports segment through the licensing of our products.

We receive fees in exchange for the licensing of our products,

typically on a long-term contract basis, on a participation basis.

Our participation contracts are typically structured to pay

us a percentage of net win (defined as net revenue to our operator customers, after deducting player winnings, free bets or plays

and other promotional costs and any relevant regulatory levies) from Virtual Sports content placed on our customers’

or in our customers’

Typically, we recognize revenue from these arrangements on a daily basis over the term of

the contract.

Revenue growth for

our Virtual Sports segment is principally driven by the number of customers we have, the net win performance of the games and the

net win percentage that we receive pursuant to our contracts with our customers.

Sports Segment, Key Performance Indicators

the Twelve-Month

of Live Customers at the end of the period

of Live Customers

Total Revenue (£‘m)

Total Revenue £‘m - Retail

Total Revenue £‘m - Online Virtuals

the table above:

of Live Customers at the end of the period”

and “Average No.

of Live Customers”

represent the number of customers

from which there is Virtual Sports revenue at the end of the period and the average number of customers from which there is Virtual

Sports revenue during the period, respectively.

Revenue (£m)”

represents total revenue for the Virtual Sports segment, including recurring and upfront service revenue.

Total revenue is also divided between “Total Revenue (£m) –

Retail,”

which consists of revenue earned

through players wagering at Virtual Sports venues, “Total Revenue (£m) –

Online Virtuals,”

consists of revenue earned through players wagering on Virtual Sports online,

Sports Segment, Recurring Revenue

forth below is a breakdown of our Virtual Sports recurring revenue.

the Twelve-Month

Virtual Sports Recurring Revenue

Total Virtual Sports Revenue

Recurring Revenue - Retail Virtuals

Recurring Revenue - Online Virtuals

Total Virtual Sports Long term -license amortization

Total Virtual Sports Recurring Revenue

Virtual Sports Recurring Revenue as a Percentage of Total Virtual Sports Revenue

“Recurring

Revenue”

includes our share of revenue generated from (i) our Virtual Sports products placed with operators;

(ii) licensing

our game content and intellectual property to third parties;

and (iii) our games on third-party online gaming platforms that are

interoperable with our game servers.

“Virtual Sports Long term license amortization”

is the upfront license fee which is typically spread over the life of the contract

Sports Segment, key events that affected results for the Twelve Months ended December 31, 2020

Most retail territories, including the UK,

Italy, Greece and Belgium, were in either full or partial lockdown due to COVID-19 for a portion of the year, resulting in a $7.8

million recurring revenue decline year over year.

There was also a decline of $1.0 million from the unwind of historical license

fees terminating in 2019 which did not recur in 2020.

This decline was offset by an increase in online virtual recurring revenues

of $6.1 million and an increase in project revenue of $1.6 million.

Virtual Events

The Virtual Grand National was broadcast

in April 2020 on prime-time UK television to replace the live race, which was not held due to the COVID-19 closures.

million viewers tuned in to watch the event.

The event was run as a charity event, ultimately generating over $3.0 million for

the National Health Service (“NHS”) COVID-19 charity from various operators.

The Virtual Kentucky Derby Triple Crown

Showdown race aired on May 2, 2020 on NBC.

The race featured 13 all-time great Triple Crown winners.

The event was held to raise

money for COVID-19 relief.

The Virtual “Greatest Ever Cox Plate”

commissioned by GVC Australia was streamed live online on October 23, 2020.

On November 3, 2020, The Lexus Melbourne

Cup Race of Dreams was broadcast live across Australia on Network 10.

In April 2020, Inspired launched Online

Virtual Soccer, Horses and Greyhounds products with Ladbrokes Belgium which was our first launch that utilized our own Cloud platform

via Amazon Web Services.

In June 2020, Retail Virtuals products were

deployed in Malta via Intralot with Maltco, the Maltese lottery.

During the third quarter of 2020, Online

Virtuals were deployed with several GVC websites including BWIN, Sportingbet and Partypoker.

In New Jersey, Online Virtuals products

were launched during the third quarter of 2020 with DraftKings, our first deployment in North America via our proprietary Virtuals

Plug and Play platform.

In September 2020, our Online Virtuals products

were launched via our new Virtuals Plug and Play platform in Turkey with Misli, a major online operator.

In December 2020, Online Virtuals were launched

with Fortuna’s brand Casa Pariurilor, a major online brand in the Romanian market.

During 2020, Virtual Plug and Play launched

with numerous RGS aggregators including Scientific Games, SBTech, iForium and Playtech and on social channels with Fendoff.

The overall number of live customers declined

from 60 to 58 during the period as we re-focused our business on our highest value customers.

In June 2020, OPAP launched our brand-new

proprietary V-Play Soccer 3.0 product in Greece with significantly improved graphics, betting markets and overall design.

OPAP subsequently launched our brand-new

proprietary V-Play Basketball product in October 2020.

Our Virtual Interactive division launched

V-Play Basketball and our NFL Alumni V-Play Football product with Bet365 in New Jersey.

Our new V-Play Basketball product and an

additional stream of V-Play Cricket were also launched with Bet365.com during the year.

In December 2020 we increased our language

capability by adding multiple new languages to our Virtual Sports products.

For the Twelve-Month

Total Functional

(In millions)

Service Revenue

Cost of service

Selling, general and administrative expenses

Stock-based compensation

Depreciation and amortization

Net operating Income (Loss)

Exchange Rate -

Exchange rate in the table is calculated by dividing the USD service revenue by the GBP service revenue, therefore this could

be slightly different from the average rate during the period depending on timing of transactions.

Sports Segment revenue.

During the period, revenue decreased by

$1.1 million, or 3.2%, on a reported basis.

This increase includes the impact of favorable currency movements of $0.1 million.

On a functional currency (at constant rate) basis, revenue decreased by $1.2 million, or 3.5%.

This decrease was driven by an $8.5

million decrease in retail revenue due to COVID-19 closures.

This decline was partially offset by growth in Online Virtuals of

$7.4 million.

Virtual Sports Segment operating income.

Cost of Service increased by $0.3 million

to $2.9 million on a reported basis, with no impact from currency movements.

This was driven by the growth of Online Virtuals,

in line with the revenue increase for the period.

SG&A expenses decreased by $1.7 million

on a reported basis, with no impact from currency movements.

This decrease was driven by staff-related cost savings from the Covid-19

closures related furlough scheme and reduction in staff salaries.

Depreciation and amortization increased

by $1.1 million on a reported basis, with no impact from currency movements.

This increase was due to new projects going live in

Operating profit decreased by $0.7 million on a reported basis

which included the impact of favorable currency movements of $0.1 million.

On a functional currency (at constant rate) basis operating

profit decreased by $0.7 million.

This was primarily due to the decrease in revenues resulting from COVID-19 closures and the increase

in depreciation and amortization, partly offset by the reduction in SG&A expenses.

Segment , Twelve Months ended December 31, 2020 compared to Twelve Months ended December 31, 2019

We generate revenue

from our Interactive segment through the licensing of our products.

We receive fees in exchange for the licensing of our products,

typically on a long-term contract basis, on a participation basis.

Our participation contracts are typically structured to pay

us a percentage of net win (defined as net revenue to our operator customers, after deducting player winnings, free bets or plays

and other promotional costs and any relevant regulatory levies) from Interactive content placed on our customers’

Typically, we recognize revenue from these arrangements on a daily basis over the term of the contract.

Revenue growth for

our Interactive segment is principally driven by the number of customers we have, the number of live games, the net win performance

of the games and the net win percentage that we receive pursuant to our contracts with our customers.

Segment, Key Performance Indicators

the Twelve-Month

of Live Customers at the end of the period

of Live Customers

of Live Games at the end of the period

of Live Games

Total Revenue (£‘m)

the table above:

of Live Customers at the end of the period”

and “Average No.

of Live Customers”

represent the number of customers

from which there is Interactive revenue at the end of the period and the average number of customers from which there is Interactive

revenue during the period, respectively.

of Live Games at the end of the period”

“Average No.

of Live Games”

represents the number of games from which there is Interactive revenue at the end of the

period and the average number of games from which there is Interactive revenue during the period, respectively.

Revenue (£m)”

represents total revenue for the Interactive segment, including recurring and upfront service revenue.

Segment, Recurring Revenue

Set forth below is

a breakdown of our Interactive recurring revenue which consists principally of Interactive participation revenue.

See "—

Interactive Segment Revenue"

below for a discussion of Interactive service revenue between the periods under review.

For the Twelve-Month

Interactive Recurring Revenue

Total Interactive Revenue

Total Recurring Revenue - Interactive

Interactive Recurring Revenue as a Percentage of Total Interactive Revenue

Segment, key events that affected results for the Twelve Months ended December 31, 2020

North America

In New Jersey, launches with Draftkings,

Resorts Casino and WSOP drove significant growth during the year.

In addition, our business experienced strong growth from our

existing customer base.

In Mexico we deployed Interactive content

with Caliente further enhancing our North American footprint.

The addition of the Sky Vegas brand and

new customers 888 and Kindred have performed exceptionally well during the year, with 888 launching in Casino, Bingo, Germany,

NJ, Spain and Sweden, with Italy following in 2021.

The three operators generated 9.6% of our gross Interactive Revenue for

the year, including 12.3% during the fourth quarter of 2020.

Launches with OPAP and Stoiximan in Greece

and Boylesports in Ireland enhanced our presence outside the core UK market.

During the second quarter, our Summer blockbuster

titles, Reel King Megaways and Centurion Megaways were launched, utilizing brands we obtained as part of the NTG Acquisition.

titles have seen strong performance and contributed significantly to growth in 2020.

During the year we had several seasonal

content launches that benefitted from priority positioning and promotional activity from our customers.

These launches include

Chocolate Cashpots, Book of Independence, Book of Halloween and three Christmas titles:

Santa King Megaways, Christmas Cashpots

and Santa Stacked Freespins.

For the Twelve-Month

Total Functional

(In millions)

Service Revenue

Cost of service

Selling, general and administrative expenses

Stock-based compensation

Depreciation and amortization

Net operating Income (Loss)

Exchange Rate - $ to £

Exchange rate in the table is calculated by dividing the USD service revenue by the GBP service revenue, therefore this could

be slightly different from the average rate during the period depending on timing of transactions.

Segment revenue.

During the period, revenue increased by

$8.6 million, or 182%, on a reported basis.

On a functional currency at constant rate basis, revenue increased by $8.5 million,

This increase included a $3.1 million increase attributable to the addition of the NTG Acquisition for the nine months

of 2020 ended September 30 (not reflected in organic growth) and $5.5 million from organic growth driven by recurring revenue growth

due to the increase in online demand driven by COVID-19 closures, the addition of new customers and territories and from the consistent

launch of quality content.

Interactive Segment operating income.

Cost of Service increased by $1.2 million

to $1.9 million on a reported basis, with no impact from currency movements.

$1.1 million of this increase was due to increased

third party platform provider costs, in line with the significant revenue increase for the period.

SG&A expenses decreased by $0.1 million

on a reported basis.

This decrease includes the impact of adverse currency movements of $0.1 million.

On a functional currency

at constant rate basis, SG&A decreased by $0.2 million, driven by a $0.5 million increase attributable to the addition of the

NTG Acquisition for the nine months of 2020 ended September 30 (not reflected in organic growth) which was fully offset by a reduction

of $0.6 million from staff-related cost savings.

Depreciation and amortization decreased

by $0.5 million on a reported basis, with no impact of currency movements, from projects going live in the prior period.

Operating profit increased by $8.0 million

on a reported basis.

On a functional currency at constant rate basis operating profit increased by $8.0 million.

This was primarily

due to the increase in revenue.

Segment - Twelve Months ended December 31, 2020 compared to Twelve Months ended December 31, 2019

We generate revenue from our Leisure segment

through the rental of our gaming and amusement machines.

We receive rental fees for machines, typically on a long-term contract

basis, on both a participation and fixed fee basis, with our newer digital pub machines typically contracted on a fixed fee basis.

Our participation contracts are typically structured to pay us a percentage of net win (defined as net revenue to our operator

customers, after deducting player winnings, free bets or plays and any relevant regulatory levies) from gaming terminals placed

in our customers’

Typically, we recognize revenue from these arrangements on a daily basis over the term of the

Revenue growth for our Leisure segment

is principally driven by the number of customers we have, the number of gaming machines in operation, the net win performance of

the machines and the net win percentage that we receive pursuant to our contracts with our customers.

segment, Key Performance Indicators

For the Twelve-Month

End of period installed base Gaming

Machines (# of terminals)

Average installed base Gaming Machines (# of

End of period installed base Other (# of terminals)

Average installed base Other (# of terminals)

Pub Digital Gaming Machines - Average installed base (# of terminals)

Pub Analogue Gaming Machines - Average installed base (# of terminals)

MSA and Bingo Gaming Machines - Average installed base (# of terminals) (1)

Inspired Leisure Revenue per Gaming Machine per week

Inspired Pub Digital Revenue per Gaming Machine per week

Inspired Pub Analogue Revenue per Gaming Machine per week

Inspired MSA and Bingo Revenue per Gaming Machine per week

Inspired Other Revenue per Machine per week

Total Leisure Parks Revenue (Gaming and Non Gaming) (£‘m)

Service Area machines

In the table above:

“End of period

installed base Gaming”

and “Average installed base Gaming”

represent the number of gaming machines installed

(excluding Leisure park machines) that are Category B and Category C only, from which there is participation or rental revenue

at the end of the period or as an average over the period.

“End of period installed

base Other”

and “Average installed base Other”

represent the number of all other category machines installed (excluding

Leisure park machines) from which there is participation or rental revenue at the end of the period or as an average over the period.

“Revenue per

machine unit per week”

represents the average weekly participation or rental revenue recognized during the period.

Leisure Segment, Recurring Revenue

Set forth below is

a breakdown of our Leisure recurring revenue which consists principally of Leisure participation revenue and Leisure other fixed

See "—

Leisure Segment Revenue"

below for a discussion of leisure service revenue between the periods

under review.

forth below is a breakdown of our Leisure recurring revenue.

the Twelve-Month

Leisure Recurring Revenue

Total Leisure Revenue

Total Leisure Recurring Revenue

Leisure Recurring Revenue as a Percentage of Total Leisure Revenue

Segment, key events that affected results for the Twelve Months ended December 31, 2020

During the period, Revenue per Gaming Machine

per week declined by 51.4%.

This decline is almost entirely due to shutdowns and tier restrictions in place across all retail venues

due to the COVID-19 closures.

Other Revenue per Machine per week was impacted more severely, with revenue declining by 65.1% due

to social distancing measures affecting space availability.

Gaming machine performance was impacted

across all sectors and products within the Leisure segment with Pub Digital Revenue per Gaming Machine declining by 52.1%, Pub

Analogue Revenue per Gaming Machine declining by 56.3% and MSA and Bingo Revenue per Gaming Machine declining by 50.1%

During periods when venues were allowed

to re-open, Revenue per Gaming Machine per week performed at approximately 63.6% of prior year average, with reductions caused

by ongoing social distancing measures.

Revenue from Leisure Parks increased by

£4.6 million in the period, largely due to revenue representing a full year in 2020 compared to 3 months for 2019.

On a proforma

basis revenue declined by approximately £16.6 million, or 64.6%, almost entirely due to COVID-19 closures and restrictions

that severely limited the ability of Leisure Parks to open at all and, when they could, restricted the number of machines that

could be switched on and the number of people that could enter the premises.

During the year a limited reduction in installed

gaming machine base occurred, with a 5.8% decline to 11,667 terminals installed.

The reduction in machines largely related to lower

margin Category C machines in pubs and MSAs.

The percentage of installed gaming machine

base that were digital terminals increased to 72.2% of the total by the end of 2020, an increase from 66.2% at the end of 2019.

During the period, we signed five-year

supply deals with two of our main Motorway Service Area customers, including Moto, signed December 2020, and Welcome Break, signed

October 2020.

We also signed a contract extension with three of our key Leisure Park customers, including two of them by 18 months

and one by two years, as well as contract extensions with two significant Pub customers for 12 and 18 months, respectively.

Segment, Twelve Months ended December 31, 2020

For the Twelve-Month

Total Functional

(In millions)

Total revenue

Cost of sales, excluding depreciation and amortization:

Cost of service

Cost of product

Total cost of sales

Selling, general and administrative expenses

Stock-based compensation

Depreciation and amortization

Net operating Income (Loss)

Exchange Rate - $ to £

Exchange rate in the table is calculated by dividing the USD total revenue by the GBP total revenue, therefore this could be slightly

different from the average rate during the period depending on timing of transactions.

Segment Revenue

During the period, revenue increased by

$19.8 million, or 83.1%, to $43.6 million on a reported basis.

This increase was partly due to favorable currency movements of

$0.2 million.

On a functional currency at constant rate basis, Leisure revenue increased by $19.6 million, or 82.2%.

Service revenue increased by $18.3 million

on a reported basis.

Favorable currency movements accounted for $0.2 million.

On a functional currency at constant rate basis,

Leisure Service revenue increased by $18.1 million, or 80.1%, to $40.8 million.

This was driven by the addition of $32.6 million

attributable to the addition of the NTG Acquisition for the nine months of 2020 ended September 30 (not reflected in organic growth).

This is partly offset by a reduction of $14.5 million driven by COVID-19 closures in the fourth quarter.

Product revenue increased by $1.5 million

to $2.8 million on a reported basis.

On a functional currency at constant rate basis, the revenue increase was $1.5 million or

This increase was driven by $1.8 million attributable to the addition of the NTG Acquisition for the nine months of 2020

ended September 30 (not reflected in organic growth), partly offset by a decline in Product sales of $0.3 million.

Segment Operating Income

Cost of sales (excluding depreciation and

amortization) increased by $6.7 million to $11.6 million on reported basis.

On a functional currency at constant rate basis, Leisure

cost of sales increased by $6.6 million or 136%.

Service cost of sales increased by $5.6

million to $9.6 million on a reported basis.

On a functional currency at constant rate basis, Service cost of sales increased by

$5.5 million or 138%, driven by an increase of $7.4 million in Service costs attributable to the addition of the NTG Acquisition

for the nine months of 2020 ended September 30 (not reflected in organic growth), offset by $1.9 million of lower Service costs

driven by the reduction in Service revenue driven by the COVID-19 closures.

Product cost of sales increased by $1.1

million to $2.0 million on a reported basis and on a functional currency at constant rate basis.

This was primarily due to an increase

in Product cost of sales attributable to the addition of the NTG Acquisition for the nine months of 2020 ended September 30 (not

reflected in organic growth) of $1.2 million.

SG&A expenses increased by $18.0 million

on a reported basis to $30.8 million, which included the impact of unfavorable currency movements of $0.1 million.

On a functional

currency at constant rate basis SG&A expenses increased by $17.9 million or 141%.

This increase was driven by a $22.0 million

increase attributable to the addition of the NTG Acquisition for the nine months of 2020 ended September 30 (not reflected in organic

growth), partly offset by a reduction of $4.1 million from staff-related cost savings generated from synergies and use of the government

furlough scheme.

Depreciation and amortization increased

by $13.1 million on a reported basis to $16.9 million.

This included an impact of favorable currency movements of $0.1 million.

On a functional currency at constant rate basis, Leisure depreciation increased by $13.2 million or 346%.

This was driven by a

$13.3 million increase in depreciation and amortization attributable to the addition of the NTG Acquisition for the nine months

of 2020 ended September 30 (not reflected in organic growth).

Operating income decreased

by $18.1 million on a reported basis from an income of $2.3 million to a loss of $15.8 million, which included the impact of favorable

currency movements of $0.1 million.

On a functional currency at constant rate basis operating income decreased by $18.2 million.

This was primarily due to the COVID-19 closures.

Non-GAAP Financial Measures

We use certain non-GAAP

financial measures, including EBITDA and Adjusted EBITDA, to analyze our operating performance.

We use these financial measures

to manage our business on a day-to-day basis.

We believe that these measures are also commonly used in our industry to measure

For these reasons, we believe that these non-GAAP financial measures provide expanded insight into our business, in

addition to standard U.S.

GAAP financial measures.

There are no specific rules or regulations for defining and using non-GAAP financial

measures, and as a result the measures we use may not be comparable to measures used by other companies, even if they have similar

The presentation of non-GAAP financial information should not be considered in isolation from, or as a substitute for,

or superior to, financial information prepared and presented in accordance with U.S.

You should consider our non-GAAP financial

measures in conjunction with our U.S.

GAAP financial measures.

We define our non-GAAP

financial measures as follows:

defined as net loss excluding depreciation and amortization, interest expense, interest income and income tax expense.

Adjusted EBITDA

is defined as net loss excluding depreciation and amortization, interest expense, interest income and income tax expense, and other

additional exclusions and adjustments .

Such additional excluded amounts include stock-based compensation U.S.

where the associated liability is expected to be settled in stock, and changes in the value of earnout liabilities and income and

expenditure in relation to legacy portions of the business (being those portions where trading no longer occurs) including closed

defined benefit pension schemes.

Additional adjustments are made for items considered outside the normal course of business, including

(1) restructuring costs, which include charges attributable to employee severance, management changes, restructuring, dual running

costs, costs related to facility closures and integration costs, (2) merger and acquisition costs and (3) gains or losses not in

the ordinary course of business.

This does not include any adjustments related to COVID-19.

believe Adjusted EBITDA, when considered along with other performance measures, is a particularly useful performance measure,

because it focuses on certain operating drivers of the business, including sales growth, operating costs, selling and administrative

expense and other operating income and expense.

We believe Adjusted EBITDA can provide a more complete understanding of our operating

results and the trends to which we are subject, and an enhanced overall understanding of our financial performance and prospects

for the future.

Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations or a measure comparable

to net income or loss, because it does not take into account certain aspects of our operating performance (for example, it excludes

non-recurring gains and losses which are not deemed to be a normal part of underlying business activities) .

Adjusted EBITDA may not be comparable to the use by other companies of similarly termed measures.

Management compensates for these

limitations by using Adjusted EBITDA as only one of several measures for evaluating our operating performance.

In addition, capital

expenditures, which affect depreciation and amortization, interest expense, and income tax benefit (expense), are evaluated separately

by management.

Currency at Constant rate.

Currency impacts discussed have been calculated as the current-period average GBP:

less the equivalent average rate in the prior period, multiplied by the current period amount in our functional currency (GBP).

The remaining difference, referred to as functional currency at constant rate, is calculated as the difference in our functional

currency, multiplied by the prior-period average GBP:

USD rate, as a proxy for functional currency at constant rate movement.

Movement represents the difference between the results in our reporting currency (USD) and the results on a functional

currency at constant rate basis.

Reconciliations

from net loss, as shown in our Consolidated Statements of Operations and Comprehensive Loss, to Adjusted EBITDA are shown below.

Reconciliation

to Adjusted EBITDA

For the Twelve-Month

(In millions)

Items Relating to Legacy Activities:

Pension charges (1)

Items outside the normal course of business:

Costs of group restructure (2)

Acquisition and integration related transaction expenses (3)

Impairment on interest in equity method investee (4)

Italian tax related costs relating to prior years

Stock-based compensation expense

Depreciation and amortization

Interest Income

Interest Expense

Change in fair value of earnout liability

Change in fair value of derivative liability

Other finance expenses / (income)

Adjusted EBITDA

Exchange Rate - $ to £

Reconciliation

to Adjusted EBITDA by segment for the Twelve Months ended December 31, 2020

For the Twelve-Month Period ended

(In millions)

Net Income/(loss)

Items Relating to Legacy Activities:

Pension charges (1)

Items outside the normal course of business:

Costs of group restructure (2)

Acquisition and integration related transaction expenses (3)

Impairment on interest in equity method investee(4)

Italian tax related costs relating to prior years (5)

Stock-based compensation expense

Depreciation and amortization

Interest Income

Interest Expense

Change in fair value of earnout liability

Change in fair value of derivative liability

Other finance expenses / (income)

Adjusted EBITDA

Exchange Rate - $ to £

Certain unallocated corporate function costs have not

been allocated to the Company’s reportable operating segments because these costs are not allocable and to do so would not

be practical, these are shown in the Corporate category.

Reconciliation to Adjusted EBITDA by segment for the

Twelve Months ended December 31, 2019

For the Twelve-Month Period ended

(In millions)

Net Income/(loss)

Items Relating to Legacy Activities:

Pension charges (1)

Items outside the normal course of business:

Costs of group restructure (2)

Acquisition and integration related transaction expenses (3)

Impairment on interest in equity method investee(4)

Italian tax related costs relating to prior years (5)

Stock-based compensation expense

Depreciation and amortization

Interest Income

Interest Expense

Change in fair value of earnout liability

Change in fair value of derivative liability

Other finance expenses / (income)

Adjusted EBITDA

Exchange Rate - $ to £

to EBITDA tables above:

(1) “Pension

charges”

are profit and loss charges included within selling, general and administrative expenses, relating to a defined

benefit scheme which was closed to new entrants in 1999 and to future accrual in 2010.

As well as the amortization of net loss,

the figure also includes charges relating to the Pension Protection Fund (which were historically borne by the pension scheme)

and a small amount of associated professional services expenses.

These costs are included within Corporate Functions.

(2) “Costs

of group restructure”

include redundancy costs, Payments In Lieu of Notice costs, any associated employer taxes and costs

associated with onerous property leases.

To qualify as being an adjusting item, costs must be part of a large restructuring project,

which will net save ongoing future costs.

These costs were primarily incurred in connection with the property consolidation.

(3) Acquisition

and integration related transaction expenses, Stock-based compensation expense, Depreciation and amortization, Total other expense,

net and Income tax are as described above in the Results of Operations line item discussions.

Total expense, net includes interest

income, interest expense, change in fair value of earnout liability, change in fair value of derivative liability and other finance

In April 2020, the Company disposed of its 40% non-controlling equity interest in Innov8 Gaming Limited which resulted in the investment of $0.7 million being written off.

“Italian tax related costs relating to prior years invoicing”

relate to VAT charges and associated costs, relating to prior years, imposed on our Virtual Sports segment following changes in interpretation of legislation and an ongoing VAT audit in line with prior years disclosure.

Exchange rate in the table is calculated by dividing the USD Adjusted EBITDA by the GBP Adjusted EBITDA, therefore this could be slightly different from the average rate during the period depending on timing of transactions.

and Capital Resources

ended December 31, 2020 compared to Year ended December 31, 2019

12 Months ended

(in millions)

Amortization of debt fees

Change in fair value of derivative and earnout liabilities and stock-based compensation expense

Impairment expense

Foreign currency translation on senior bank debt and cross currency swaps

Depreciation and amortization (incl RoU assets)

Other net cash generated by operating activities

Net cash provided by operating activities

Net cash used in investing activities

Net cash (used)/generated by financing activities

Effect of exchange rates on cash

Net increase in cash and cash equivalents

cash provided by operating activities.

For the year ended December 31, 2020, net

cash inflow provided by operating activities was $52.9 million, compared to a $30.7 million inflow for the year ended December

31, 2019, representing a $22.2 million increase in cash generation.

Amortization of debt fees decreased by $5.6

million to $3.4 million.

The current year’s non-cash interest expense was related to amortization of debt fees incurred in

relation to the business refinancing in October 2019.

The prior year’s expense was related to the amortization of debt fees

incurred in relation to the business refinancing in October 2019 and in August 2018.

The remainder of debt fees relating to the

August 2018 refinancing were amortized in October 2019 resulting in a one-off amortization charge of $7.3 million.

in fair value of derivative and earnout liabilities and stock-based compensation expense reduced by $2.6 million, from an inflow

of $8.3 million to an inflow of $5.7 million.

Movements in the market value of the stock price in the year ended December 31, 2019

resulted in a $2.3 million higher earnout inflow.

There was also a $4.3 million higher inflow relating to stock-based compensation

expense in the year ended December 31, 2019.

These were offset by a $3.9 million movement relating to cross-currency swaps.

March 25, 2019, the shares relating to the earnout liability were issued resulting in no further inflows or outflows after this

Foreign currency translation on senior bank

debt and cross currency swaps following the refinancing on October 1, 2019 resulted in a gain in the year ended December 31, 2020

of $5.6 million as a result of the movement in exchange rates during the period, compared to a $1.3 million loss in the year ended

December 31, 2019.

Depreciation and amortization increased

by $12.9 million to $55.9 million with increases of $8.0 million in depreciation and $3.3 million in development costs and licenses

following the NTG Acquisition.

In addition, a full year expense of $3.6 million was incurred in the year ended December 31, 2020,

relating to the amortization of Right of Use assets under ASC842, an increase of $2.6 million over the year ended December 31,

2019 when the expense only incurred in the final quarter of that year.

Other net cash generated by operating activities

increased by $2.1 million, to a $10.8 million inflow despite the significant impact in the current year of the COVID-19 closures.

Movements in trading levels generated a $10.2 million benefit in current taxes with further favorable movements in deferred revenue

and accruals of $2.0 million and $3.7 million, respectively.

These were partly offset by adverse movements in accounts receivable

of $1.4 million, accounts payable $11.7 million and inventory $0.7 million.

Throughout the year ended December 31, 2020, and especially

upon the outbreak of the COVID-19 closures, management actively managed our cash levels to seek to optimize our liquidity position.

Included within net cash provided by operating activities were

$41.0 million of receipts relating to VAT reclaims and $7.9 million of payments relating to transaction and integration expenses

and $1.0 million of payments relating to restructuring costs.

This compares to $6.1 million relating to transaction expenses and

$3.3 million relating to restructuring costs in the prior year.

There were no receipts related to VAT reclaims in the prior year.

Net cash used in investing activities.

Net cash used in

investing activities decreased by $103.5 million to $29.9 million in the year ended December 31, 2020.

The year ended December

31, 2019 included a payment of $105.9 million in respect of the NTG Acquisition.

During the year ended December 31, 2020, we increased

capital spending by $1.8 million, largely as a result of the addition of the NTG Acquisition for the full year, compared with

only 3 months during the prior year.

Capital spending during 2020 was reduced significantly from planned levels as a direct consequence

of the COVID-19 closures.

Net cash used

by financing activities.

During the year ended December 31, 2020, net cash used by financing activities was $8.2 million,

compared to a $113.5 million inflow in the year ended December 31, 2019.

Repayment of all amounts drawn on our revolver during

the year ended December 31, 2020 resulted in an outflow of $4.2 million.

Further outflows in the year related to finance lease

payments of $0.9 million and a $3.1 million payment of lender fees associated with the changes made to the debt terms and covenant

levels as a result of the COVID-19 closures.

The year ended December 31, 2019 included a net debt inflow of $111.1 million plus

a $2.8 million increase in the level of revolver drawn offset by $0.4 million of finance lease payments, the result of the NTG

Acquisition and subsequent refinancing.

Needs and Sources

To fund our obligations we have relied

historically on a combination of cash flows provided by operations and the incurrence of additional debt or the refinancing of

existing debt.

As of December 31, 2020, we had liquidity of $47.1 million in cash and cash equivalents and a further $27.3 million

of an undrawn revolver facility.

This compares to $29.1 million of cash and cash equivalents as at December 31, 2019 and a further

$23.4 million of an undrawn revolver facility.

We had a working capital inflow of $10.9 million for the year ended December 31,

2020, compared to an $8.7 million inflow for the year ended December 31, 2019.

The level of our working capital surplus or deficit

varies with the level of machine production we are undertaking and our capitalization as well as the seasonality evident in some

of the businesses purchased as part of the NTG Acquisition.

In periods with minimal machine volumes and capital spend, our working

capital is more stable.

In periods where significant numbers of machines are being produced, the levels of inventory and creditors

are higher than typical and there is a natural timing difference between converting the stock into sellable or capitalized plant

and settling payments to suppliers.

These factors, along with movements in trading activity levels which have been seen during

2020 following the COVID-19 closures, can result in significant working capital volatility.

In periods of low activity, our working

capital volatility is reduced.

Working capital is reviewed and managed with the aim of ensuring that current liabilities are covered

by the level of cash held and the expected level of short-term receipts.

Some of our business

operations require cash to be held within the machines.

As of December 31, 2020, $1.5 million of our $47.1 million of cash and

cash equivalents were held as operational floats within the machines.

In addition, we held a further $7.2 million of ring-fenced

Management currently

believes that despite the reduced trading levels caused by the COVID-19 closures, the Company’s cash balances on hand, cash

flows expected to be generated from operations, the refinancing of the business following the NTG Acquisition in October 2019

and the ability to control and defer capital projects will be sufficient to fund the Company’s net cash requirements through

Term and Other Debt

(In millions)

Revolver drawn

Original principal senior debt

Cash interest accrued

Finance lease creditors

Note 13 Long Term and Other Debt of the Financial Statements for detail of the debts held during 2019 and 2020.

our debt facilities in place as of December 31, 2020 and December 31, 2019 we are subject to covenant testing at quarterly intervals.

The covenant testing is set at the level of Inspired Entertainment Inc., the ultimate holding company, and consists of a test

on Leverage (Consolidated Total Net Debt/Consolidated Pro Forma EBITDA) and a test on the level of capital expenditure.

are measured under U.S.

Leverage is to be tested at quarterly intervals commencing for the period ending June 30, 2020 and

capital expenditure is tested annually commencing on December 31, 2019.

to reaching our first leverage covenant test on June 30, 2020, the covenants were reset as a direct result of the COVID-19 closures

and subsequent loss of trading as a result of government lockdowns in many key trading countries around the world.

Formal agreement

of the revised covenants was achieved on June 25, 2020.

were no breaches of the debt covenants in the periods ended December 31, 2020 and December 31, 2019.

and Encumbrances

of December 31, 2020, our senior bank debt was secured by the imposition of a fixed and floating charge in favor of the lender

over all the assets of the Company and certain of the Company’s subsidiaries.

of December 31, 2020, our contractual obligations were as follows:

Contractual Obligations (in millions)

Operating activities

Interest on long term debt

Financing activities

Senior bank debt - principal repayment

Finance lease payments

Operating lease payments

Interest on non-utilisation fees

Sheet Arrangements

of December 31, 2020, there were no off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, promulgated

Securities and Exchange Commission.

Accounting Policies

preparation of our unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted

in the United States (“U.S.

GAAP”) requires management to make estimates and assumptions.

We exercise considerable

judgment with respect to establishing sound accounting policies and in making estimates and assumptions that affect the reported

amounts of our assets and liabilities, our recognition of revenue and expenses, and our disclosure of commitments and contingencies

at the date of the consolidated financial statements.

On an on-going basis, we evaluate our estimates and judgments.

estimates and judgments on a variety of factors, including our historical experience, knowledge of our business and industry and

current and expected economic conditions, that are believed to be reasonable under the circumstances, the results of which form

the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

We periodically re-evaluate our estimates and assumptions with respect to these judgments and modify our approach when circumstances

indicate that modifications are necessary.

While we believe that the factors we evaluate provide us with a meaningful basis for

establishing and applying sound accounting policies, we cannot guarantee that the results will always be accurate.

Since the determination

of these estimates requires the exercise of judgment, actual results could differ from such estimates.

a discussion of other recently issued accounting standards, and assessments as to their impacts on the Company, see Nature of

Operations, Management’s Plans and Summary of Significant Accounting Policies, Note 1 to the consolidated financial statements

included elsewhere in this report.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity