STR.L Regulatory News (STR)

31 July 2015

Stride Gaming plc

("Stride Gaming", or the "Company")

Acquisition of International Mobile Social Gaming Company

Entry into new social gaming vertical

Stride Gaming plc (AIM: STR), the multi-branded online bingo-led operator, which listed on AIM in May 2015, is pleased to announce the acquisition (the "Acquisition"), of the entire issued share capital of InfiApps Limited ("InfiApps"), a profitable internationally-focused mobile social gaming company. The total consideration payable for the Acquisition is up to $39.2 million. Of this, an initial consideration of US$21.2 million in cash (the "Initial Consideration") will be payable on completion, together with additional earn-out consideration of up to $18 million payable in cash, determined by the EBITDA generated by InfiApps in the two years following completion of the Acquisition (the "Earn-Out Consideration").

The Acquisition:

· Is immediately earnings enhancing;

· Offers a strong and profitable presence in the social gaming segment of online gaming across new and international geographies;

· With some 5.2 million player downloads of flagship game, Slot Bonanza, and over 500,000 users worldwide, adds material scale and reach to the Stride Gaming group's existing operations;

· InfiApps audited profit before tax for the five months ended 31 May 2015 was $2.3 million; and

· InfiApps audited profit before tax for the year ended 31 December 2014 was $3.4 million.

The Acquisition will provide the Stride Gaming group with an entry into the social gaming segment of online gaming, with users based internationally, in particular in the United States of America, Canada and Australia. The Acquisition will be immediately earnings enhancing and is in line with the Company's stated strategy to develop its business. By expanding into new verticals alongside the online bingo market the Acquisition will combine Stride Gaming group's bingo-led expertise with InfiApps' social gaming expertise, both of which are complementary offerings to each other, which provide potential for significant operational leverage on an international scale.

InfiApps brings with it an experienced management team with valuable knowledge of the social gaming space. InfiApps was founded in 2012 in Israel and provides players with entertaining applications and games combining the latest technology, graphics and sound, available on multiple mobile platforms. InfiApps has a number of games including its flagship game, Slot Bonanza, a social casino with a variety of slot machines, which, as at today, is played by over 500,000 users worldwide and available by free download from Apple Store, Google Store and Amazon Market Place. To date, there have been some 5.2 million player downloads of Slot Bonanza.

Financial Information on InfiApps and further details of the Acquisition

For the financial year ended 31 December 2014, InfiApps generated turnover of $13.7 million (2013: $4.6 million), EBIT of $3.6 million (2013: $1.0 million) and profit before tax of $3.4 million (2013: $1.0 million). Net assets were $0.6 million. In the financial year ended 31 December 2014, 69% of InfiApp's revenue was generated from North America.

For the five months to 31 May 2015, InfiApps generated turnover of $8.3m and profit before tax of $2.3 million. These audited numbers are presented under US GAAP.

Stride Gaming will fund the Initial Consideration on completion of the Acquisition, which is expected to occur within a week. This amount is subject to a post-Completion working capital adjustment (determined on a debt free/cash free basis). Of the Initial Consideration amount, approximately US$3.2 million will be retained in escrow to serve as security for certain claims of the purchaser under the agreement. Funding for the Initial Consideration is being satisfied from the Company's own cash balances and by way of a loan of £8 million from a significant shareholder of Stride Gaming, Poppy Investments Limited (the "Loan"). The Loan, which is unsecured and without arrangement fees, is repayable at any time prior to 30 July 2017 at the Company's election and will accrue interest at a rate of 7.5% per annum, payable monthly. The Directors anticipate that the Loan will be replaced by a credit facility from an alternative source of debt in the coming months.

The Earn-Out consideration is payable in cash and is determined by the EBITDA generated by InfiApps in the two years following completion of the Acquisition. Over the two year earn-out period, the total earn-out payments, assessed at the end of each financial year, will be calculated by reference to four times the current EBITDA of the business less any and all amounts already paid, including the Initial Consideration.

The total consideration for the Acquisition is capped at $39.2 million. Introduction and arrangement fees of up to $3.8 million may become payable in relation to the Acquisition.

Eitan Boyd, Chief Executive of Stride Gaming, commented:

"I am extremely pleased by the Acquisition of InfiApps. With revenue in the US social gaming industry alone forecast to exceed $12.3 billion in 2017, this deal provides us with an opportunity to enter into the rapidly growing mobile social gaming space and will further advance and bolster our growing position in the online gaming sector.

"The addition of InfiApps widens our current portfolio of products and brands and will significantly enhance and diversify our player offering internationally, as well as provide access to new users and new geographies generating significant operational leverage.

"The acquisition is in line with our strategic objective of expansion through acquisitions, complementing our strong organic growth, and also affords Stride Gaming a platform in which to take our online bingo product, over time, into the social gaming space.

"This Acquisition, coupled with our strong current trading, as previously reported, leaves the Board to view the prospects for the full year and the future with a high degree of confidence."

Ronen Kalmanson, Chief Executive of InfiApps, commented:

"I am delighted that InfiApps is joining the Stride Gaming family. The coupling of our social gaming platform with their gaming operational expertise will allow for an even better player experience and contribute to the continued growth of the Company."

Enquiries:

Notes:

Stride Gaming is a UK focused, real money, bingo-led online operator, using its proprietary and purchased software to provide online bingo and related gaming activities to players. Stride Gaming only operates in regulated markets, principally the UK.

The Group operates a multi-branded strategy which includes the online bingo brands Kitty Bingo, Lucky Pants Bingo, Bingo Extra, Jackpot Café, Jackpot Liner, King Jackpot, Big Top Casino together with the online casino brands Spin and Win and Magical Vegas.