GMD.L Regulatory News (GMD)

4 May 2016

GAME Digital PLC

Acquisition of innovative Augmented Reality software business

GAME Digital plc ("GAME" or the "Group"), the holding company that combines specialist retail with gaming events, eSports and digital solutions, announces that it has acquired the trade and assets of Ads Reality Limited ("Ads Reality"), an innovative Augmented Reality ("AR") software business for an initial consideration of £2 million, with additional potential payments to the founding directors Richard Corps and Prajay Kamat ("the Founders") of up to £18 million, subject to performance conditions ("the Acquisition").

GAME has maintained a close relationship with Ads Reality since the company developed the Group's AR capabilities for the 'Scan it!' application within the GAME App in 2014. Having acquired a minority stake of the company in 2015, the Group has today taken full control of the business and agreed to acquire the trade and assets of Ads Reality.

Ads Reality specialises in the development of innovative and impactful uses of Augmented Reality across a wide range of industries including the video game, retail and entertainment sectors. The business helps its clients drive increased mobile traffic volumes, store footfall and ultimately product sales through AR-led product engagement. The original business that started five years ago and has been built up with a highly skilled team of engineers and developers, who will remain in the business and continue to develop its range of advanced technology.

The Acquisition represents a complementary strategic addition to the Group's digital capabilities which, when combined with GAME's multi-channel marketing assets across its store estate, websites, Apps and events business, will support the development of the Group's strategic priority to be an effective provider of integrated digital marketing solutions to its publisher partners, whilst at the same time driving its own customer engagement initiatives.

Martyn Gibbs, GAME Digital Chief Executive Officer, said:

"This is an exciting acquisition for GAME. Ads Reality's Augmented Reality technology will form an important pillar of our future digital engagement strategies, both with our customers and our supplier partners. Their innovative technology provides us with the ability to launch immersive and fully integrated offline-online campaigns, merging the virtual and real worlds for our customers in exciting and engaging ways and providing a truly connected customer experience."

Richard Corps, Co-Founder and Managing Director of Ads Reality, added:

"Our partnership with GAME is validation of many years work within Augmented Reality technology, particularly the application across the video game and retail sectors. We have built unique, engaging solutions and have created an exciting development roadmap. By combining AR animation and through screen technology, we will help drive mobile engagement in and out of store, allowing GAME, its supplier partners, and other consumer facing companies to better connect and engage with consumers and build their brand recognition."

DETAILS OF THE CONSIDERATION AND FINANCIAL INFORMATION

Of the £20 million potential maximum payments, the initial consideration of £2 million, to the owners of Ads Reality, is to be satisfied by a £1 million cash payment and £1 million in ordinary shares in the capital of GAME ("Ordinary Shares"), equating to 859,106 Ordinary Shares, (representing approximately 0.5% of the existing issued share capital of the Company, based on the average of the mid-market quotations of GAME shares on the London Stock Exchange for the 5 day period prior to 3rd May 2016 (the "Relevant Share Price"). The additional amounts of up to £18 million, are payable subject to continued involvement of the Founders in the business together with the achievement of key commercial and financial targets within specified timeframes. The Group has the ability to settle the deferred payments in cash or GAME shares. Such sums, if they become due, are expected to be satisfied through the issue of new Ordinary Shares, which are expected to be issued in instalments between the second and sixth anniversaries of closing of the Acquisition. Calculated using the Relevant Share Price, the total number of Ordinary Shares capable of being issued in connection with the deferred payments, would be 15,463,917 (representing approximately 9.1% of the existing issued share capital of the Company).

In the year ended 30th September 2015, Ads Reality delivered a profit before tax of £66,000 (unaudited). Gross assets at 30th September 2015 were £122,500 (unaudited).

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About GAME Digital plc

GAME Digital plc is dedicated to delivering an authoritative range of specialist gaming products and services to the gaming communities of the UK, Spain and beyond. GAME's UK and Spanish retail businesses are the market leaders in each country, operating a total of nearly 600 stores across the two countries, an omni-channel offer including the multi-award winning GAME App, and a reach of more than 18 million customers across its Reward programmes. Through GAME's Digital Solutions, GAME is pioneering the use of new technologies to deliver gaming content and reach gamers and business partners outside its main markets. GAME's eSports & Events activities, incorporating the Multiplay and SocialNAT businesses, delivers unique and memorable gaming events and experiences directly and on behalf of third parties, including its flagship consumer event, Insomnia, the UK's largest gaming festival. For more information visit www.gamedigitalplc.com.

About Ads Reality

Ads Reality is a specialist in the field of recognition technology and Augmented Reality (AR) with multiple unique industry applications. Ads Reality allows video gaming companies, retailers and other brands to easily connect and engage consumers through their mobile devices, augmenting digital information, videos and animation across products whether at home, in store or on the move.

For more information, visit: www.adsreality.com