Gaming Realms Regulatory News (GMR)

23 March 2018

Gaming Realms plc

 ("Gaming Realms" or the "Company") 

Sale of Affiliate Business and Trading Update

EBITDA positive for 2017

Gaming Realms plc (GMR.L), the developer, publisher and licensor of mobile real money and social games, today announces that it has sold its affiliate portals, bingoport and freebingohunter, for a total consideration of £2.4 million to 1ST Leads Ltd ("1ST Leads").

The sale of the affiliate portals is consistent with the Company's strategy to focus its resources on its real money gaming and content development businesses. The Company has also seen the affiliate segment become more competitive, with revenue from the affiliate business declining by 25% in 2017. The affiliate business delivered £900,000 of net contribution (before central costs) in 2017 (2016: £1.14m).

1ST Leads has paid £2 million on closing, and a maximum of £400,000 will be payable on 31 December 2018, subject to the achievement of performance targets.

The Company intends to use the sale proceeds for the ongoing marketing of its real money gaming brands and further development of new gaming content.

Trading Update

Gaming Realms is also pleased to announce a trading update for the twelve months to 31 December 2017, during which it generated adjusted EBITDA of £0.7 million.

1Before share based payments and restructure costs and excludes unrealised foreign exchange losses

2017 Highlights:

Operating B2C gaming sites in the current UK market has become more difficult over the last two years as a result of increased point of consumption tax and additional legislation concerning responsible gambling, which has further increased pressures on margins. In spite of these headwinds, during 2017 the Company:

▪ Delivered a maiden full year EBITDA of £0.7 million.

▪ Grew real money gaming revenue by 5.5%, whilst reducing marketing spend by 17% and having an increased operational focus on responsible gambling.

▪ Readdressed its social gaming business with the launch of Slingo Arcade, a new app based on the Slingo Originals content. This helped to partially offset a 13% overall decline in social revenue. Social marketing spend was also reduced by 45%.

▪ Developed a Remote Gaming Server ("RGS") platform and 11 new games, enabling the Company to build the foundation of a successful B2B licensing division. This has facilitated the licensing of enhanced Slingo Originals content to operators in New Jersey and Europe as well as Slingo Arcade as described above.

▪ Secured a 10-year services agreement and £3.5 million convertible loan with Jackpotjoy Group.

▪ Completed the $4.5 million payment of final tranche relating to the Blastworks acquisition. 

Current Trading and Outlook

The Company has had a strong start to 2018, with licensing agreements signed with 888 Holdings and Golden Nugget Casino and Slingo launching on Ladbrokes Coral's gaming sites. The Company is also pleased to announce two further licensing deals with Gaming Innovation Group and Leander Games, both of which will broaden the distribution of Slingo content and make it available to their respective operators.

The operational focus on real money gaming has seen player value increase 24% during the first two months of 2018. In January 2018, the Company announced that it had signed a partnership agreement with the Health Lottery, which commenced in March and is already showing promising early results.

Following the restructuring of the social gaming business in 2017, the Company is pleased to report that this business is now EBITDA positive.

In addition to the above, management is examining other ways to maximize value from the assets within the business to enhance shareholder value.

The Company still expects overall EBITDA growth in 2018 but acknowledges that the sale of Bingoport will reduce EBITDA in the short term. However, it does expect to see the benefits of the recently signed licensing agreements and real money gaming partnerships come through later in the year, contributing to longer term growth and looks forward to updating the market in due course.

Patrick Southon, CEO, commented: "2017 was a year of significant developments, with the Company delivering maiden positive EBITDA and successfully focusing resources towards real money gaming and licensing our Slingo Originals content to improve margins. The disposal of the affiliate portals marks the completion of this transition, and with further licensing opportunities to follow, we believe that the Company is in line for improved bottom line growth in 2018."

The Company will announce its preliminary results for the period in early May 2018.

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Enquiries:

Notes to Editors

Gaming Realms creates and publishes innovative real money and social games for mobile, with operations in the UK, U.S. and Canada. Through its market leading mobile platform and unique IP and brands, Gaming Realms is bringing together media, entertainment and gaming assets in new game formats. The Gaming Realms management team includes accomplished entrepreneurs and experienced executives from a wide range of leading gaming and media companies.