Gaming Realms Regulatory News (GMR)

Gaming Realms plc

(the "Company" or the "Group")

Interim results for the six months ended 30 June 2015

Strategy implementation generates 89% revenue growth

Gaming Realms plc, which creates, publishes and markets next generation online gaming products, today announces its interim results for the six months ended 30 June 2015.

Financial highlights

Operational highlights 

Post period end

Patrick Southon, Chief Executive, said:

"Mobile play has driven a very strong start to the year for the Group. The recent North American acquisition of gaming assets from RealNetworks, Inc., including GameHouse's social/mobile studios and their Slingo, Mahjong and Sudoku properties, complements each area of the Group's activities; and makes possible exciting new global opportunities. Our proprietary platform is delivering excellent results, keeping more mobile players engaged and returning for longer periods of time. We will soon be rolling-out more unique and exciting mobile focused content to continue our growth trajectory, creating additional revenue diversification for the Group."

Outlook

Our investment programme and targeted acquisitions have performed as expected over the period. The acquisition in August 2015 completes the creation of a strong base from which to drive revenues, profitability and geographical diversification.

In the two month period post 30 June 2015 to 31 August 2015, the Group has seen an increase in the average daily revenue to over £61,500 (versus an average daily revenue of £44,082 for the six months in H1/15). Following the Acquisition on the 10 August 2015, the Group has seen the daily average increase to approximately £74,000. The Board expects to see continued growth throughout the remainder of the year as we acquire new players, and through the introduction of new slingo and bingo variants on our proprietary platform.

The Group is in its strongest position to date. The performance of the real money Slingo game combined with the delivery of further unique feature sets on its core gaming platform means Gaming Realms is well positioned to continue its strong revenue growth. The additional revenue of Social Games and the appointment of Atul Bali to the executive team puts the Group in a position to capitalise further on the growth of mobile gaming in the UK and internationally.

With the strong performance in H1, and the addition of the GameHouse studios and assets, the Board remains confident that the Group is well positioned to maintain its impressive growth trajectory. The key focus will be to continue to scale the proprietary platform through unique content and player acquisition as well as expand the free to play portfolio with new exciting product launches. 

- Ends -

For more information contact

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

Overview

The Board is pleased to report that the Group has made good progress during the first half of the year during which it delivered revenues of £8.0 million (H1/14: £4.2 million), up 89% over the comparable period and 40% higher than the second half of 2014. At the same time the Group has continued to invest heavily in its marketing strategy. Total marketing spend for the first half was £5.1 million (H1/14: £4.6 million) which, combined with operating costs, resulted in a loss before taxation of £3.5 million (H1/14: £4.2 million), in line with the Group's operational growth plan.

Operating costs increased in the period as a result of the successful launch of the Group's proprietary platform in September 2014, resulting in higher third party royalties, transaction fees and UK point of consumption tax ("POC"). Management has focused on growing real money gambling on the proprietary platform, which accounted for 53% of Group revenue in the period (H1/14: 19%).

New depositing players at 72,849 (H1/14: 71,266), continued to grow strongly with a shift in emphasis towards our proprietary platform which accounted for 51% of the players (H1/14: 6%) while the number of daily active depositing players grew 85% to 7,108 (H1/14: 3,852).

Casino & Proprietary Platform

Our proprietary platform continues to be the focus of the Groups' strategy. It is showing industry leading metrics, with 80% of players on mobile devices having over five times more sessions, driven by new features and functionality which have increased player engagement. The addition of Slingo Riches to SpinGenie has shown the success of deploying unique premium content and the game is now the platform's top performing game, accounting for 13% of total Gross Gaming Revenue.

SpinGenie continues to be the lead brand on the platform with growth of 266% between Q4/14 to Q2/15. It is a result of the social features on the site which have enabled increased player engagement, a strong marketing campaign in the six month period attracting new casual mobile players to the market.

In March 2015 we successfully migrated PocketFruity to the new proprietary platform and have been able to grow revenues by 72% post migration. As anticipated, adding brands to the proprietary platform increases its scale and accordingly reduces relative costs. Accordingly the Group will launch a further brand, slingo.com, on this in Q4 2015.

Social

After the period, the Group completed the acquisition, which included GameHouse US and Canadian studios; Slingo brands and patents; and a data science team from RealNetworks Inc. These attractive assets are expected to contribute strong revenues and players outside of the UK as well as a well-known popular social gaming format to monetise through mobile delivery.

The team will also bring social learnings and data science to the Group's proprietary gambling platform to enhance the features and monetisation of SpinGenie and PocketFruity.

White Label

Since the acquisition of Blueburra Holdings, the Group's focus has been on multiple brands to increase the playing time on our white label sites with Dragonfish as the operator. In June 2015 our white label sites had daily average active players of 4,066 (June 2014: 3,098) which is an increase of 31% period on period.

Iceland Bingo continues to be the leading brand and with 38% of the daily active players. We have launched three new sites in the six months to 30 June 2015, Lucky Charm Bingo, Cupcake Bingo and Candyshop Bingo and have been pleased with their initial launches. The new sites add scale to the white label business and allow cross promotion to maintain player engagement through the portfolio of sites.

QuickThink Media has been used for all player acquisition on the Group's proprietary platform as well as the white label sites. On top of this the agency business has been growing, through the execution of large campaigns for clients such as Iceland Foods and Macmillan Cancer Support.

Consolidated statement of profit or loss and other comprehensive income

for the 6 months ended 30 June 2015

Consolidated statement of financial position

as at 30 June 2015

Consolidated statement of cash flows

for the 6 months ended 30 June 2015

Consolidated statement of changes in equity

for the 6 months ended 30 June 2015

Notes forming part of the consolidated financial statements

For the 6 months ended 30 June 2015

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 for the six months ended 30 June 2015 and 30 June 2014 are unaudited.

Basis of preparation

The financial information for the year ended 31 December 2014 does not constitute the full statutory accounts for that year. The Annual Report and Financial Statements for 2014 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statement for 2014 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 23 September 2015. 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 31 December 2014 and which will form the basis of the 2015 financial statements. A number of new and amended standards have become effective for periods beginning on 1 January 2015, however none of these are expected to materially affect the Group.

The consolidated financial statements are presented in sterling.

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 one reportable segment with three product lines, being social gaming, real money gaming and marketing services. Each product line represent different brands, products and services provided. The social gaming product provide freemium gaming services to the US and Europe. The real money gaming product operates the PocketFruity and SpinGenie brands in the UK. The marketing services product represents the marketing services provided to its white label brands. The marketing services segment also includes other digital marketing services provided to both gaming and non-gaming clients.

Revenue by product:

Geographical information

The Group considers that its primary geographic regions are the UK, including Channel Islands, USA and the Rest of World. No revenue is derived from real money gaming in the US. Revenues from customers outside the UK (including Channel Islands) and USA are not considered sufficiently significant to warrant separate reporting. All non-current assets are based in the UK.

Revenues from one customer total £1,338,882 (2013: nil). This major customer receives marketing services from the Group.

3. Finance income and expense

4. Tax expense

5. Loss per share

6. Intangible assets

*On the 9 April 2015, Bingo Realms Limited entered into an Asset Sale and Purchase Agreement with European Domain Management Ltd, to sell all associated assets in its Bingo Godz and CastleJackpot brands which were operated by Intellectual Property & Software Limited. The total consideration for the sales was £500,000 in cash, with £200,000 payable on completion and the remainder payable over the next 17 months.

7. Other assets

Other assets represent the rental deposits on operating leases.

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 (30 Jun 2014 and 31 December 2014: £19,568) 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.

On 5 September 2014, 18,148,487 shares were issued at £0.33 per share with a cost of £93,702 associated with the share issue. In addition 7,575,757 shares were issued at £0.33 per share as part of the acquisition of Blueburra Holdings Limited.

On 9 September 2014, 757,576 shares were issued at £0.33 per share.

On 5 December 2014, 6,666,667 shares were issued at £0.33 per share.

On 12 December 2014, 1,212,121 shares were issued at £0.33 per share.

13. Events after reporting date

On the 10 August 2015, the Group acquired from RealNetworks, Inc., gaming assets associated with GameHouse U.S. and Canadian Game studios including the social and mobile freemium portfolio games and publishing network, Slingo brand & patents, certain game domains, an intellectual property licence relating to the GameHouse Promotion Network and the entire issued share capital of Backstage Technologies Inc, a Canadian entity. The total consideration of USD 18 million, was satisfied by a payment of USD 10 million in cash paid upfront and USD 4 million in deferred consideration payable on the First Anniversary and USD 4 million in deferred consideration payable on the Second Anniversary. Up to 50 per cent. of each tranche of the deferred consideration can be satisfied by the issue of new Ordinary Shares in Gaming Realms plc. With the proximity of the date of the acquisition to the date of the authorisation of these interim results, a detailed assessment of the fair value of the consideration and identifiable net assets has not yet been completed.

On the 10 August 2015, the Group also raised £12,500,000 through the placing of 49,900,578 new Ordinary Shares with 47,415,000 shares at 25 pence per share and 2,485,578 shares at 26 pence per share.