Gaming Realms Regulatory News (GMR)

GAMING REALMS PLC

(the "Company" or the "Group")

Interim results for the six months ending 31 March 2014

Strategy execution translates into strong player acquisition and revenue growth.

Gaming Realms, which creates, publishes and markets next generation online gaming products, today announces its interim results for the six months ending 31 March 2014.

Operational highlights

§ Revenue up 400% to £3.6 million for the six months to 31 March 2014 (FY13: £0.9m)

§ Acquisition of QuickThink Media for £2.3 million

§ Successful integration of QuickThink Media team into the Group resulting in a significant increase in player acquisitions and a reduction of 13% in average acquisition cost per new depositing player

§ Depositing players up 61% to 47,174 in Q2 (Q1/14: 29,291)

§ Daily active players increased 234% to 4,576 (Q4/13: 1,370)

§ Continuing strong player take-up with 76,465 new depositing players (FY13: 18,881)

§ Loss before taxation of £4.9 million which includes marketing spend of £5.2 million for the year to date as well as the cost of building internal gambling platform as per the company's stated strategy

§ The Company's year-end has been changed to 31 December and it will report on a 15 month period to 31 December 2014

Patrick Southon, Chief Executive, said:

"We are pleased with our growth in player acquisitions and revenue. In accordance with our business strategy and financial plan, we invested aggressively in marketing which has translated into a solid foundation for the future growth of our business. We remain focused on ensuring our product suite operates on an industry leading technology platform. In this regard, we are in the process of completing our next generation gaming platform to which we intend to migrate Pocket Fruity, our mobile casino, later this year. We expect the new gaming platform to deliver improved margins in addition to enabling us to introduce key aspects of our 'casual gaming' strategy.

Outlook

Gaming Realms is well positioned to continue its strong revenue growth and player acquisition, focusing on engaging customers on mobile devices while reducing CPA through the synergies in QuickThink Media and also the new platform features. Migration of the Group's products onto this new platform, with the initial launches during Q3 2014, is expected to improve overall profitability over the mid-term.

Accordingly the Board believes there are significant market opportunities ahead and remains confident of the Group's future prospects to achieve further progress in 2014 and beyond.

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About Gaming Realms

Gaming Realms is an online gaming business formed in 2012 to develop a new generation of social bingo and slot machine gaming concepts.

Gaming Realms was founded by the team behind Cashcade, which created the leading online bingo brand, Foxy Bingo, in addition to other online bingo and casino games. The success of Cashcade culminated in its sale to bwin.party digital entertainment plc for a total consideration of approximately £96 million in 2009.

Business review

Summary of financial and operational activity

The Board is pleased to report that the Group has made good progress during the first half of its financial year. During the six month period, the Group delivered revenue of £3.6 million, up 400% over the same period last year and 49% over the previous quarter. At the same time the Group has continued to invest heavily in its marketing strategy. Total spend for the first half was £5.2 million which combined with operating costs resulted in a loss before taxation of £4.9 million consistent with the Group's operating plan.

The number of new depositing players rose 61% to 47,174 during Q2 while the number of daily active depositing players rose 234% in the last quarter to 4,576, (Q4/13: 1,370). The Group has continued to achieve strong player take-up with 76,465 new depositing players signed up in the first half (FY13: 18,881).

In December 2013, the Group acquired QuickThink Media ("QTM") for £2.3 million to help facilitate its strategy of marketing across digital channels and in particular Facebook. The Board can report that this acquisition has been successfully integrated into the Group and has been a major contributor to building player acquisition. The team in QTM have added great benefit already lowering the cost per active player ("CPA") on Pocket Fruity by 52%.

Bingo

Since the acquisition of QTM, the Group has launched its latest bingo product, Bubble Bonus Bingo. While still in its early stages, the Board is pleased with its performance and the lower CPA achieved on the back of the QTM acquisition.

The acquisition of QTM brought with it a number of brands which Gaming Realms now markets. One of the most notable performers has been Iceland Bingo which has become one of the UK's most popular bingo sites. Iceland Bingo's average daily revenue has increased by 53% compared to the average daily revenue 30 days pre-acquisition.

Casino

Pocket Fruity, the Group's real money mobile casino with 17 proprietary games, has delivered a strong performance during the period, supported by the further development of the product and algorithmic CRM which has led to a 41% increase in active daily players funding their accounts. The Group is currently planning to migrate Pocket Fruity onto its new proprietary platform, which is due to be delivered in the fourth quarter. This move is expected to enable greater scaling of the product whilst simultaneously increasing profit margins.

Social

During the period, the Group's Social gaming development activities focused on adding features on to real money games. These developments include in-game notification, special game levels and a collection bonus mechanism to increase game engagement and customer dwell time. During the second half, the Group plans to launch two exciting new brands, 'Lucky Charm' and 'Total Gold,' which will include these new Social developments. The launch of our own platform will enable all of the Group's proprietary products to bridge the gap with Social gaming, creating a fully integrated and richer gaming experience for customers.

Outlook

The Board remains confident that the Group is well positioned to maintain its strong growth trajectory and continued player acquisition. The strategy to engage users on new mobile devices while reducing CPA remains the management team's focus.

Part of the Group's mid-term term strategy is to develop a number of brands on its proprietary platform. As stated above, work has recently completed on its new licensed proprietary gambling platform, which should improve overall profitability following its launch in Q3 2014.

The Board has also taken the decision to move the Group's financial year end to 31 December. The rationale for this is to simplify the Group's reporting processes.

Consolidated statement of profit or loss and other comprehensive income

For the 6 months ended 31 March 2014

Consolidated statement of financial position

As at 31 March 2014

Consolidated statement of cash flows

For the 6 months ended 31 March 2014

Consolidated statement of changes in equity

For the 6 months ended 31 March 2014

Notes forming part of the consolidated financial statements

For the 6 months ended 31 March 2014

1. Accounting policies

General Information

Gaming Realms plc ("the Company") and its subsidiaries (together "the Group").

The Company is admitted to trading on AIM of the London Stock Exchange. It is incorporated and domiciled in the UK. The address of its registered office is One Valentine Place, London SE18QH.

The results are unaudited to 6 months ended 31 March 2014. The comparative period is from the audited annual financial statements.

Basis of preparation

The financial information for the period ended 31 March 2014 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for 2013 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statement for 2013 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

This interim report, which has neither been audited nor reviewed by independent auditors, was approved by the board of directors on 13 June 2014. The financial information in this interim report has been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards as adopted for use in the EU (IFRSs). The accounting policies applied by the Group in this financial information are the same as those applied by the Group in its financial statements for the period ended 30 September 2013 and which will form the basis of the 2014 financial statements. A number of new and amended standards have become effective for periods beginning on 1 October 2013, however none of these are expected to materially affect the Group.

The consolidated financial statements are presented in sterling.

The risks and uncertainties and significant estimates and judgements faced by the Group have not changed significantly since the 2013 Annual Report was published and are not expected to change significantly during the remaining six months of the financial year.

As detailed in note 15 the results for the period ended 30 September 2013 have been restated for adjustments arising from the reverse acquisition accounting.

2. Segment information

The Board is the Group's chief operating decision-maker. Management has determined the operating segments based on the information reviewed by the Board for the purposes of allocating resources and assessing performance. The Group has three reportable segments, being social gaming, real money gaming and marketing services. Each segment represent different brands, products and services provided. The social gaming segment operate the brands 5 Star Slot, AvaTingo and Sh*tHEAD and provide freemium gaming services to the US and Europe. The real money gaming segment operates the PocketFruity Segment in the UK. The marketing services segment represents the services provided to market the Bingo Godz, CastleJackpot, Iceland Bingo, Hippo Bingo and Bubble Bonus Bingo products. The marketing services segment also includes other online marketing services provided to other bingo and casino operators.

The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies.

The Board evaluates performance on the basis of segment loss. This measurement basis excludes head office costs not derived from operations of any segment and are only disclosed in total.

Reportable segment information

The Group has reportable segments as follows:

§ Real money gaming

§ Social gaming

§ Marketing services

* including the acquisition of QTM

Reconciliation of reportable segments to Group totals:

Geographical information

The Group considers that its primary geographic regions are UK, including Channel Islands and Gibraltar, USA and the Rest of World. No revenue is derived from real money gaming in the USA. Revenues from customers outside the UK(including Channel Islands and Gibraltar) and USA are not considered sufficiently significant to warrant separate reporting. QTM revenues primarily relates to end users located in the UK and have been included in UK on that basis. All non-current assets are based in the UK.

The Group's performance can be reviewed by considering the geographical locations within which all assets in the Group operates. This information is outlined below:

3. Finance income and expense

4. Tax expense

There are unused tax losses carried forward as at the balance sheet date of £7,852,751 (2013 as restated: £6,732,919) equating to an unrecognised deferred tax asset of £1,806,133 (2013 as restated: £1,548,571). No deferred tax asset has been recognised in respect of these losses, as the recoverability of any asset is dependent upon sufficient profits being achieved in future years to utilise this asset. The timings of such profits are uncertain.

5. Loss per share

6. Intangible assets

7. Other assets

Other asset represents the rental deposit on an operating lease.

8. Trade and other receivables

All amounts shown fall due for payment within one year

9. Cash and cash equivalents

Restricted cash of £19,568 (2013: £121,853) relates to funds held in Swiss subsidiaries which are currently undergoing liquidation. The funds are restricted and are not included in the consolidated statement of cash flows.

10. Trade and other payables

The carrying value of trade and other payables classified as financial liabilities measured at amortised cost approximates fair value.

11. Loans and borrowings

12. Share capital

Ordinary Shares

Movements in share capital

On 11 December 2013 11,476,190 shares were issued at £0.21 per share with costs of £37,000 associated with the share issue.

On 20 March 2014 3,000,000 shares were issued at £0.23 per share.

Ordinary B Shares and Deferred Shares

Ordinary B Shares have a nominal value of 0.01 pence each ("B Shares") and Deferred Shares have a nominal value of 0.01 pence each ("Deferred Shares"). The B Shares and the Deferred Shares shall not entitle the holders of them to receive notice of, to attend, to speak or to vote at any general meeting (including Annual General Meetings) of the Company. At 31 March 2014 there were no B Shares or Deferred Shares in issue.

13. Business combination during the period

On 10 December 2013, the Group acquired QTM, a company in which there are common shareholders and key management personnel, for an estimated total consideration of £2,274,421, comprising of £1,470,850 cash and a deferred payment of 3,571,428 ordinary shares being the equivalent of £803,571 at the time of acquisition to be allotted and admitted to trading 12 months from completion. The deferred payment has been recorded as shares to be issued at 31 March 2014. QTM is a specialist online gaming marketing agency which will enhance the Group's activities by cost-effectively capturing new users across emerging digital channels such as Facebook. Details of the fair value of identifiable assets and liabilities acquired and purchase consideration and goodwill are as follows:

Fair value of consideration paid