Source - RNS
RNS Number : 6230J
Gaming Realms PLC
13 September 2016
 

Gaming Realms plc

 

(the "Company" or the "Group")

 

Interim results for the six months ended 30 June 2016

 

Growth Strategy Generates 109% Year on Year Revenue Growth

 

Gaming Realms plc, which creates, publishes and licenses next generation mobile games, today announces its interim results for the six months ended 30 June 2016.

 

Financial highlights:

 

 

H1 2016

£'000s

Movement

%

Revenue

16,632

7,954

109

Adjusted EBITDA

(2,999)

(2,428)

(24)

EPS from continuing operations (pence)

(2.22)

(1.80)

(23)

 

 

 

 

 

Depositing players

H1 2016

numbers

H1 2015

numbers

Movement

%

Average monthly*

55,387

15,493

257

New *

143,282

38,869

269

 

* excluding disposals (see note 3)

·      Significant revenue growth of 109% to £16.6m (H1/15: £8.0m) driven by continued success from the Group's proprietary mobile platform ("Grizzly") and the acquisition of the social gaming assets from Real Networks, which contributed £3.8m of social gaming and licensing revenues in H1/16 (H1/15: £nil)

·      Real money gambling revenue on the Grizzly platform up 143% to £10.2m (H1/15: £4.2m)

·      EBITDA loss of £3.0m (H1/15: £2.4m) which includes an H1/16 front loaded growth investment in marketing of £9.5m related to the Group's ongoing investment in slingo.com and launch of Britain's Got Talent games, as well as the continued scaling in our other real money gaming sites and mobile apps. This investment in marketing has been the key driver in the growth of our revenues and depositing players, and compares to £5.1m of marketing expenditures in H1/15

·      The Board believes that the Group is trading in line with market expectations, which implies that the Group will be EBITDA positive for 2016

 

Operational highlights:  

·      Mobile usage predominates on Grizzly platform, with 84% of depositing players using mobile up from 80% in H1/15

·      Player take-up increased 269% with 143,282 new depositing players during the period (H1/15: 38,869) excluding disposals in current and prior periods

·      Disposal of non-core assets including third party platform bingo sites and marketing agency to focus on core strategy

·      Licensing contracts with Zynga and Scientific Games into significant adjacent markets

·      Launch of Britain's Got Talent games site in the UK

·      Continued investment in product development, in line with the Group's strategy of highly focused investment in our games, platform and player acquisition

Post-period end:

 

The Group has signed and launched a number of key deals which will further help growth for H2 2016:

·      Launch of thexfactorgames.com and creation of a new game based on the television show

·      A B2B deal with Bauer Media for the co-promotion of SpinGenie.com across Bauer's radio, digital and magazine titles, including Heat and Closer magazines, and on Heat, Kiss, Magic and Absolute radio stations

·      The Group has launched its Remote Game Server which allows the licensing of its games to selected partners, which will have a direct positive impact on the EBITDA contribution in 2017 and beyond

Patrick Southon, Chief Executive, said:

 

"The Group has delivered an excellent first half as a result of focusing on our proprietary technology and games publishing and licensing.

 

"We have seen strong growth on our proprietary Grizzly platform, which has been achieved through the development of unique content, investment in player acquisition and improved use of CRM on mobile. We continue to see lower player costs per acquisition than the industry average. Our revenue per active real money player in H1/16 has increased by 56% to £110 v H1/15. At the same time, we have streamlined the business through the disposal of our third party platform bingo sites and marketing agency.

 

"The integration of the Social Games teams in Seattle and Vancouver Island has been successful and the Group is now producing content through a combined road map for both real money and free to play apps. In addition, we continue to sign strategic partnerships and licensing deals for our content, IP and platform with blue chip partners, which underlines the long term growth prospects of the Group."

 

 

Outlook

 

The Group will continue to implement its business strategy, which has proven to be very successful in H1 2016. At the same time, the disposal of the third-party platform bingo sites and the re-organisation of our non-core digital marketing activities have helped to increase the focus on the highest growth areas of the business.

 

The Board believes that the Group is trading in line with market expectations, which implies that the Group will be EBITDA positive for 2016.

 

 

 

- Ends -

 

For more information contact

 

Gaming Realms plc

Patrick Southon, CEO

Mark Segal, FD

 

0845 123 3773

Peel Hunt LLP, Nomad and Broker

Dan Webster, Adrian Trimmings, George Sellar

 

020 7418 8900

 

Yellow Jersey PR

Charles Goodwin, Aidan Stanley

07747 788221

 

 

About Gaming Realms

 

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.

 

Business review

 

Overview

 

The Board is pleased to report that the Group has made great progress during the first half of the year during which it delivered revenues of £16.6m (H1/15: £8.0m), up 109% over the comparable period and 25% higher than the second half of 2015. At the same time the Group has continued to invest heavily in its marketing strategy. Total marketing spend for the first half was £9.5m (H1/15: £5.1m) which, combined with increased operating costs, resulted in a loss before taxation of £5.8m (H1/15: £3.5 million loss), in line with the Group's operational growth plan.

 

Operating costs, which correlated with revenue growth, increased in the period as a result of the continued success of the Group's proprietary platform, leading to higher third party royalties, transaction fees and UK point of consumption tax ("POC"). In line with the Group's plan, management has focused on growing real money gambling on the proprietary platform, which accounted for 61% of Group revenue in the period (H1/15: 53%).

 

143,282 new depositing players were acquired in the period (H1/15: 38,869) excluding disposed third party legacy site players from both periods, with a continued growth in our proprietary platform which accounted for 75,644 of the players (H1/15: 38,869). The number of daily active depositing players grew 101% to 6,116 (H1/15: 3,042) excluding disposed third party legacy site players.

 

Casino & Proprietary Platform

 

Our proprietary platform continues to be the focus of the Group's strategy with significant revenue growth of 143% to £10.2m (H1/15: £4.2m). The Group continues to invest heavily in platform and game development and player acquisition and engagement.

 

The increase in revenue is a direct result of the platform's scalability with the slingo.com and bgtgames.com (launched in Q4/15 and March 2016 respectively), together contributing 39% of the platform's revenue in the period. These sites have also contributed to the low CPA of £88 for the period.

 

Since the acquisition of the gaming assets from Real Networks, we have been distributing and developing Slingo games across all sites which have contributed to 21% of the overall real money gross gaming revenue.

 

Mobile content and delivery continues to drive game play on mobile devices with 84% of funded players using mobile devices (H1/15: 80%).

 

Social & Licensing

 

During the period the Group entered into two new licensing deals for our leading games format, Slingo.

 

The first deal is with social games developer Zynga to bring a new Slingo branded slot game to the social casino market. The deal includes a minimum guaranteed royalty stream to the Group with recoupable upfront royalty payments on net revenue over a three-year term.

 

The second licensing deal is with Scientific Games Corporation. The five-year agreement will provide Scientific Games with exclusive rights to produce and distribute Slingo branded land-based slot machines to casinos and related properties worldwide. Under the terms of the licence, Scientific Games will develop new land-based slot games for traditional gaming machines, video lottery terminals, and on-property handheld devices. The agreement includes a minimum guaranteed royalty stream to the Group payable in the first two years. The agreement also includes an extension of Scientific Games' licence to produce Slingo branded physical scratch lottery tickets in certain lottery markets. 

 

The Group experienced month on month revenue growth in its free to play mobile games publishing segment, led by Slingo Adventure and Slingo Shuffle. Growth for H1 2016 in social and licensing was 52% compared to H2 2015, reaching over US$1m for the month of June.

 

Following the success of its initial Slingo mobile apps, two new Slingo apps were developed during the period for H2 launch, including one leveraging the Group's Remote Game Server with a view to bringing successful RMG content into the social app environment on the Group's social publishing platform.

 

The Group also continued to invest in the Hidden Objects category following the success of Hidden Artifacts and, since the period has ended, entered into an agreement to acquire a majority stake in Hullabu Inc., its studio partner, with which the Group intends to further develop capacity and game content in this highly popular genre.

 

 

 

 

Consolidated statement of profit or loss and other comprehensive income

for the 6 months ended 30 June 2016

 

 

Note

6 months ended

30 Jun 16

 

6 months ended

30 Jun 15

 

12 months ended

31 Dec 15

 

 

£

 

£

 

£

 

 

Unaudited

 

Unaudited

 

Audited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

2

16,631,937

 

7,953,513

 

21,208,446

 

 

 

 

 

 

 

Marketing expenses

 

(9,524,423)

 

(5,051,713)

 

(11,510,755)

Operating expenses

 

(4,292,551)

 

(2,398,560)

 

(5,725,255)

Administrative expenses

 

(5,813,727)

 

(2,931,065)

 

(8,079,852)

 

 

 

 

 

 

 

Adjusted EBITDA

 

(2,998,764)

 

(2,427,825)

 

(4,107,416)

Acquisition costs

 

-

 

-

 

(318,853)

Profit on disposal of digital marketing agency and third-party platform driven website properties

3

269,226

 

-

 

-

Share-based payments

 

(491,172)

 

(232,064)

 

(673,730)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

(3,220,710)

 

(2,659,889)

 

(5,099,999)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortisation of intangible assets

7

(1,772,822)

 

(778,766)

 

(2,230,940)

Depreciation of property, plant and equipment

 

(44,489)

 

(16,957)

 

(59,861)

Movement in deferred and contingent consideration

4

(753,101)

 

(72,583)

 

(372,170)

Finance expense

 

(19,943)

 

(8,861)

 

(21,409)

Finance income

 

2,954

 

6,495

 

7,579

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before tax on continuing operations

 

(5,808,111)

 

(3,530,561)

 

(7,776,800)

 

 

 

 

 

 

 

Tax credit

5

146,456

 

21,430

 

335,775

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the financial period attributable to owners of the parent

 

(5,661,655)

 

(3,509,131)

 

(7,441,025)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

Exchange gains arising on translation of foreign operations

 

 

1,076,941

 

 

-

 

 

605,546

 

Total other comprehensive income

 

 

1,076,941

 

 

-

 

 

605,546

 

 

 

 

 

 

 

 

Total comprehensive income

 

 

(4,584,714)

 

 

 

(3,509,131)

 

 

 

(6,835,479)

 

 

Earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share

 

 

 

 

 

 

Basic and diluted (pence)

6

(2.22)

 

(1.80)

 

(3.45)

 

 

 

 

 

 

 

 
 

Consolidated statement of financial position

as at 30 June 2016

 

 

Note

30 Jun 16

 

30 Jun 15

 

31 Dec 15

 

 

£

 

£

 

£

Assets

 

Unaudited

 

Unaudited

 

Audited

Non-current assets

 

 

 

 

 

 

Property, plant and equipment

 

208,144

 

147,030

 

189,652

Goodwill

7

16,074,077

 

13,543,905

 

18,092,116

Intangible assets

7

11,456,659

 

2,642,715

 

10,835,685

Available-for-sale investment

8

540,000

 

-

 

-

Other assets

9

152,000

 

158,500

 

152,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28,430,880

 

16,492,150

 

29,269,453

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Trade and other receivables

10

5,176,983

 

2,994,331

 

4,018,084

Cash and cash equivalents

11

2,999,358

 

1,286,977

 

2,536,388

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,176,341

 

4,281,308

 

6,554,472

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

36,607,221

 

20,773,458

 

35,823,925

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

12

8,119,071

 

3,265,293

 

4,327,965

Loans and borrowings

 

-

 

200,996

 

-

Contingent and deferred consideration

14

2,992,028

 

2,500,000

 

4,990,966

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,111,099

 

5,966,289

 

9,318,931

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

Deferred tax liability

5

1,240,228

 

17,858

 

1,232,597

Contingent and deferred consideration

14

2,826,572

 

2,460,231

 

2,474,533

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,066,800

 

2,478,089

 

3,707,130

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

15,177,899

 

8,444,378

 

13,026,061

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets

 

21,429,322

 

12,329,080

 

22,797,864

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Share capital

15

26,163,329

 

19,517,049

 

24,920,829

Share premium reserve

13

85,890,455

 

78,119,547

 

85,127,955

Merger reserve

 

(67,673,657)

 

(69,334,935)

 

(68,393,657)

Foreign exchange reserve

 

1,682,487

 

-

 

605,546

Retained earnings

 

(24,633,292)

 

(15,972,581)

 

(19,462,809)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total equity

 

21,429,322

 

12,329,080

 

22,797,864

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated statement of cash flows

for the 6 months ended 30 June 2016

 

 

Note

6 months ended

30 Jun 16

 

6 months ended

30 Jun 15

 

12 months ended

31 Dec 15

 

 

£

 

£

 

£

 

 

Unaudited

 

Unaudited

 

Audited

Cash flows from operating activities

 

 

 

 

 

 

Loss for the period

 

(5,661,655)

 

(3,509,131)

 

(7,441,025)

Adjustments for:

 

 

 

 

 

 

Depreciation of property, plant and equipment

 

44,489

 

16,957

 

59,861

Amortisation of intangible fixed assets

7

1,772,822

 

778,766

 

2,230,940

Finance income

 

(2,954)

 

(6,495)

 

(7,579)

Finance expense

 

19,943

 

8,861

 

21,409

Movement in deferred and contingent consideration

4

753,101

 

72,583

 

372,170

Contingent consideration on prior period acquisitions

 

-

 

-

 

105,000

Net foreign exchange loss

 

(69,290)

 

-

 

-

Unwind of deferred tax recognised on business acquisitions

5

(118,595)

 

(21,430)

 

(122,692)

Loss on disposal of property, plant and equipment

 

-

 

27,684

 

42,372

Profit/(loss) on disposal of intangibles assets

7

-

 

(393,957)

 

106,043

Profit on disposal of digital marketing agency and third-party platform driven website properties

3

(269,226)

 

-

 

-

Share-based payment expense

 

491,172

 

232,064

 

673,730

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase in trade and other receivables

 

(1,173,661)

 

(523,531)

 

(1,177,150)

Increase in trade and other payables

 

3,899,165

 

515,157

 

1,458,801

Increase in other assets

 

-

 

-

 

6,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash from operating activities

 

(314,689)

 

(2,802,472)

 

(3,671,620)

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

Acquisition of subsidiary, net of cash acquired

 

-

 

-

 

(6,652,050)

Proceeds from disposal of intangibles

 

4,763

 

253,941

 

-

Proceeds from disposal of discontinued operation, net of cash disposed

3

1,200,000

 

-

 

-

Purchases of property, plant and equipment

 

(61,545)

 

(48,507)

 

(68,055)

Purchase of intangible assets

7

(1,878,994)

 

(314,005)

 

(1,805,913)

Interest received

 

2,954

 

6,495

 

7,579

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash from investing activities

 

(732,822)

 

(102,076)

 

(8,518,439)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Proceeds of Ordinary Share issue

13

1,525,000

 

-

 

12,500,000

Issuance cost of shares

 

-

 

-

 

(501,534)

Proceeds from other loans

 

-

 

198,492

 

-

Payment of contingent consideration

 

-

 

-

 

(1,250,000)

Repayment of other loans

 

-

 

(12,000)

 

(14,504)

Interest paid

 

(19,943)

 

(8,861)

 

(21,409)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash from financing activities

 

1,505,057

 

177,631

 

10,712,553

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

457,546

 

(2,726,917)

 

(1,477,506)

Cash and cash equivalents at beginning of period

 

2,516,820

 

3,994,326

 

3,994,326

Exchange gain on cash and cash equivalent

 

Cash and cash equivalents at end of period

 

 

10

5,424

 

2,979,790

 

-

 

1,267,409

 

-

 

2,516,820

 

 

 

 

 

 

 

 

 

Consolidated statement of changes in equity

for the 6 months ended 30 June 2016

 

 

Share capital

Share premium

Merger reserve

Foreign exchange reserve

Retained earnings

Total equity

 

 

 

£

£

£

£

£

£

 

 

 

 

 

 

 

 

 

1 January 2015

19,517,049

78,119,547

(69,334,935)

-

(12,695,514)

15,606,147

 

Loss for the period

-

-

-

-

(3,509,131)

(3,509,131)

 

Share-based payment on share options

-

-

-

-

232,064

232,064

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30 June 2015 (unaudited)

19,517,049

78,119,547

(69,334,935)

-

(15,972,581)

12,329,080

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the period

-

-

-

-

(3,931,894)

(3,931,894)

 

Other comprehensive income

-

-

-

605,546

-

605,546

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the period

 

-

 

-

 

-

 

605,546

 

(3,931,894)

 

(3,326,348)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued as part of the consideration in a business combination

413,722

-

941,278

-

-

1,355,000

 

Shares issued as part of capital raising

4,990,058

7,509,942

-

-

-

12,500,000

 

Cost of issue of ordinary share capital

-

(501,534)

-

-

-

(501,534)

 

Share-based payment on share options

-

-

-

-

441,666

441,666

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 December 2015

24,920,829

85,127,955

(68,393,657)

605,546

(19,462,809)

22,797,864

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the period

-

-

-

-

(5,661,655)

(5,661,655)

 

Other comprehensive income

 

-

-

-

1,076,941

-

1,076,941

 

 

Total comprehensive income for the year

 

 

-

 

-

 

-

 

1,076,941

 

(5,661,655)

 

(4,584,714)

 

 

 

 

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued as part of the capital raising

762,500

762,500

-

-

-

1,525,000

 

Shares issued as part of the consideration in a business combination

480,000

-

720,000

-

-

1,200,000

 

Share-based payment on share options

-

-

-

-

491,172

491,172

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30 June 2016 (unaudited)

26,163,329

85,890,455

(67,673,657)

1,682,487

(24,633,292)

21,429,322

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                         

 

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 2016 and 30 June 2015 are unaudited.

 

Basis of preparation

 

The financial information for the year ended 31 December 2015 does not constitute the full statutory accounts for that year. The Annual Report and Financial Statements for 2015 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statement for 2015 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 12 September 2016. 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 2015 and which will form the basis of the 2016 financial statements. A number of new and amended standards have become effective for periods beginning on 1 January 2016, 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 two reportable segments. The social gaming product provide freemium gaming services to the US and Europe. The real money gambling products and marketing services operates our brands and provides other digital marketing services to both gaming and non-gaming clients in the UK.

 

Revenue by product:

 

 

6M 30 Jun 2016

 

6M 30 Jun 2015

 

12M 31 Dec 2015

 

£

 

£

 

£

Social gaming and licensing

3,769,329

 

53,066

 

2,537,158

Real money gambling

10,171,925

 

4,180,831

 

10,801,303

Marketing services

2,690,683

 

3,719,616

 

7,839,299

Other

-

 

-

 

30,686

 

 

 

 

 

 

 

 

 

 

 

 

 

16,631,937

 

7,953,513

 

21,208,446

 

 

 

 

 

 

 

Geographical information

 

The Group considers that its primary geographic regions are the UK, including Channel Islands, USA and the rest of the 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.

 

 

External revenue

by location of customers

 

External revenue

by location of customers

 

External revenue

by location of customers

 

6M 30 Jun 16

 

6M 30 Jun 15

 

12M 31 Dec 15

 

£

 

£

 

£

 

 

 

 

 

 

UK, including Channel Islands

12,405,254

 

7,582,711

 

17,656,043

USA

3,769,329

 

40,606

 

1,752,753

Rest of the world

457,354

 

330,196

 

1,799,650

 

 

 

 

 

 

 

 

 

 

 

 

 

16,631,937

 

7,953,513

 

21,208,446

 

 

 

 

 

 

 

3. Profit on disposal

 

Disposal of third-party platform driven website properties

 

On 4 March 2016, the Group disposed of its third-party platform driven website properties, for a total consideration

of £2.4m. Black Spark Media Limited paid the Group an upfront cash payment of £1.2m with the remaining £1.2m payable by Silverspin Media Limited, was settled by way of waiving the final earn out payment to the previous shareholders of Blueburra Holding Limited. An additional £500,000 is payable under a transitional services agreement over a 5-month period.

 

 

2016

Consideration received

 

£

 

 

 

Cash consideration

 

1,200,000

Contingent consideration waived with respect to the Blueburra Holdings Limited acquisition

 

1,200,000

 

 

 

 

2,400,000

 

Net assets disposed:

Intangible

Goodwill

Trade and other receivables

Trade and other payables

 

 

246,081

2,266,241

14,763

(108,060)

 

 

 

 

2,419,025

 

 

Loss on disposal of third-party platform driven website properties

 

 

(19,025)

 

 

 

 

Disposal of digital marketing agency

 

On 6 June 2016, the Group entered into a strategic partnership with digital marketing company Ayima Limited. Under the terms of the partnership, the Group has agreed to contribute assets comprising its external digital marketing agency to Ayima Limited. As consideration for the disposal of the Assets, the Group were issued shares to 10% of the enlarged issued share capital of Ayima Limited. The 10% shares have been valued at approximately £540,000, based on a desktop valuation performed by an external advisor.

 

 

 

2016

Consideration received

 

 

£

 

 

 

 

Available-for-sale investment in Ayima Limited

 

 

540,000

 

 

 

 

 

 

 

 

540,000

 

Net assets disposed:

Property, plant and equipment

Goodwill

 

 

 

 

4,225

247,524

 

 

 

 

 

251,749

 

 

Profit on disposal of the digital marketing agency

 

 

 

288,251

 

 

 

 

4. Movement in deferred and contingent consideration

 

 

6M 30 Jun 2016

 

6M 30 Jun 2015

 

12M 31 Dec 2015

 

 

 

 

 

 

Deferred and contingent consideration unwinding

186,998

 

72,583

 

233,053

Foreign exchange movement on deferred consideration

566,103

 

-

 

273,134

Fair-value adjustment of contingent consideration

-

 

-

 

(134,017)

 

 

 

 

 

 

 

 

 

 

 

 

 

753,101

 

72,583

 

372,170

 

 

 

 

 

 

 

5. Tax expense

 

6M 30 Jun 2016

 

6M 30 Jun 2015

 

12M 31 Dec 2015

 

£

 

£

 

£

Current tax expense

 

 

 

 

 

Current tax credit on losses for the period

27,861

 

-

 

213,083

 

 

 

 

 

 

 

 

 

 

 

 

Total current tax

27,861

 

-

 

213,083

 

 

 

 

 

 

 

 

 

 

 

 

Deferred tax expense

 

 

 

 

 

Origination and reversal of temporary differences

118,595

 

21,430

 

122,692

 

 

 

 

 

 

 

 

 

 

 

 

Total deferred tax

118,595

 

21,430

 

122,692

 

 

 

 

 

 

 

 

 

 

 

 

Total tax credit

146,456

 

21,430

 

335,775

 

 

 

 

 

 

 

 

6M 30 Jun 2016

 

6M 30 Jun 2015

 

12M 31 Dec 2015

 

£

 

£

 

£

 

 

 

 

 

 

Loss for the period

(5,808,111)

 

(3,530,561)

 

(7,776,800)

Income tax credit

146,456

 

21,430

 

335,775

 

 

 

 

 

 

 

 

 

 

 

 

Loss after income taxes

(5,661,655)

 

(3,509,131)

 

(7,441,025)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the period

(5,808,111)

 

(3,530,561)

 

(7,776,800)

 

 

 

 

 

 

Expected tax at effective rate of corporation tax in the UK of 20% (31 Dec 15: 20.25% and 30 Jun 15: 20.30%)

(1,161,622)

 

(716,704)

 

(1,574,802)

Expenses not deductible for tax purposes

256,580

 

60,817

 

273,077

Depreciation in excess of capital allowances

8,898

 

3,443

 

18,501

Effects of overseas taxation

(195,089)

 

99,280

 

316,501

Adjustment in respect of loss carried back

169,879

 

-

 

-

Unwind of deferred tax recognised on business acquisition

(118,595)

 

(21,430)

 

(122,692)

Research and development tax credit

(27,861)

 

-

 

(213,083)

Tax losses carried forward

921,354

 

553,164

 

966,723

 

 

 

 

 

 

 

 

 

 

 

 

Total tax credit

(146,456)

 

21,430

 

(335,775)

 

 

 

 

 

 

 

There are unused tax losses carried forward as at the balance sheet date of £31,759,715 (30 Jun 15: £24,420,026, 31 Dec 15: £27,278,988) equating to an unrecognised deferred tax asset of £6,351,943 (30 Jun 15: £4,884,005, 31 Dec 15: £5,455,798). 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.

 

The deferred tax balance relates primarily to amounts recognised as part of the business combination. The credit in the period relates to the unwind of the provision recognised on acquisition.

 

6. Loss per share

 

 

6M 30 Jun 2016

 

6M 30 Jun 2015

 

12M 31 Dec 2015

 

£

 

£

 

£

 

 

 

 

 

 

Loss after tax

(5,661,655)

 

(3,509,131)

 

(7,441,025)

 

 

 

 

 

 

 

 

 

 

 

 

 

Number

 

Number

 

Number

 

 

 

 

 

 

Weighted average number of Ordinary Shares used in calculating basic loss per share

254,857,879

 

195,170,489

 


215,672,706

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of Ordinary Shares used in calculating dilutive loss per share

254,857,879

 

195,170,489

 


215,672,706

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted loss per share (pence)

(2.22)

 

(1.80)

 

(3.45)

 

 

 

 

 

 

 

7. Intangible assets

 

 

Goodwill

Customer database

Software

Development costs

Domain names

Intellectual property

Total

 

£

£

£

£

£

£

£

Cost

 

 

 

 

 

 

 

At 1 January 2015

13,543,905

3,189,553

361,684

1,082,811

26,514

-

18,204,467

Additions

-

-

-

314,005

-

-

314,005

Disposal#

-

-

(361,684)

-

-

-

(361,684)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 June 2015

13,543,905

3,189,553

-

1,396,816

26,514

-

18,156,788

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired through business combination

4,300,671

1,289,563

1,039,236

-

320,832

5,076,493

12,026,795

Additions

-

-

-

1,491,908

-

-

1,491,908

FX movement

247,540

64,532

52,005

-

16,055

277,886

658,018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2015

18,092,116

4,543,648

1,091,241

2,888,724

363,401

5,354,379

32,333,509

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions

-

-

-

1,873,868

5,126

-

1,878,994

Disposal*

(2,513,764)

(698,447)

-

-

-

-

(3,212,211)

FX movement

495,725

110,102

88,733

-

27,393

528,262

1,250,215

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 June 2016

16,074,077

3,955,303

1,179,974

4,762,592

395,920

5,882,641

32,250,507

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortisation

 

 

 

 

 

 

 

At 1 January 2015

-

857,986

222,834

365,795

428

-

1,447,043

Amortisation charge

-

537,981

32,807

206,364

1,614

-

778,766

Disposal#

-

-

(255,641)

-

-

-

(255,641)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 June 2015

-

1,395,967

-

572,159

2,042

-

1,970,168

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortisation charge

-

664,689

139,514

347,697

44,711

255,563

1,452,174

FX movement

-

(4,711)

(3,797)

-

(1,172)

(6,954)

(16,634)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2015

-

2,055,945

135,717

919,856

45,581

248,609

3,405,708

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortisation charge

-

584,349

189,187

588,541

64,190

346,555

1,772,822

Disposal*

-

(452,365)

-

-

-

-

(452,365)

FX movement

-

(1,811)

(1,459)

-

(451)

(2,673)

(6,394)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 June 2016

-

2,186,118

323,445

1,508,397

109,320

592,491

4,719,771

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

 

At 31 December 2015

18,092,116

2,487,703

955,524

1,968,868

317,820

5,105,770

28,927,801

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 June 2015

13,543,905

1,793,586

992,246

824,657

24,472

-

16,186,620

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 June 2016

16,074,077

1,769,185

856,529

3,254,195

286,600

5,290,150

27,530,736

 

 

 

 

 

 

 

 

 

*On 4 March 2016, the Group disposed of the third-party platform driven website properties, for a total consideration

of £2.4m to Silverspin Media Limited and Black Spark Media Limited. On 6 June 2016, the Group entered into a strategic partnership with digital marketing company Ayima Limited to contribute assets comprising its external digital marketing agency to Ayima Limited (note 3).

 

#On 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.

 

8. Available-for-sale investments

 

 

 

 

2016

 

 

 

£

 

 

 

 

At 1 January 2016

 

 

-

Additions

 

 

540,000

 

 

 

 

 

 

 

 

At 30 June 2016

 

 

540,000

 

 

 

 

 

The Group's strategic investments is a 10% interest in Ayima Limited. This company is not accounted for on an equity basis as the Group does not have the power to participate in the company's operating and financial policies, evidenced by the lack of any direct or indirect involvement at board level and a contractual arrangement which enables the board to take all operational and strategic decisions without consultation with shareholders owning less than 30% of the share capital of Ayima Limited (note 3).

 

9. Other assets

 

 

30 Jun 2016

 

30 Jun 2015

 

31 Dec 2015

 

£

 

£

 

£

Other assets

 

 

 

 

 

 

152,000

 

158,500

 

152,000

 

 

 

 

 

 

 

Other assets represent the rental deposits on operating leases.

 

10. Trade and other receivables

 

 

30 Jun 2016

 

30 Jun 2015

 

31 Dec 2015

 

£

 

£

 

£

 

 

 

 

 

 

Trade and other receivables

3,841,642

 

1,678,240

 

2,473,844

Allowance for doubtful debts

(8,938)

 

(9,548)

 

(8,938)

 

 

 

 

 

 

 

 

 

 

 

 

 

3,832,704

 

1,668,692

 

2,464,906

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prepayments and accrued income

1,344,279

 

1,325,639

 

1,553,178

 

 

 

 

 

 

 

 

 

 

 

 

 

5,176,983

 

2,994,331

 

4,018,084

 

 

 

 

 

 

 

All amounts shown fall due for payment within one year

 

11. Cash and cash equivalents

 

 

30 Jun 2016

 

30 Jun 2015

 

31 Dec 2015

 

£

 

£

 

£

 

 

 

 

 

 

Cash and cash equivalents

2,979,790

 

1,267,409

 

2,516,820

Restricted cash

19,568

 

19,568

 

19,568

 

 

 

 

 

 

 

 

 

 

 

 

 

2,999,358

 

1,286,977

 

2,536,388

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted cash of £19,568 (30 Jun 2015 and 31 December 2015: £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.

 

12. Trade and other payables

 

 

30 Jun 2016

 

30 Jun 2015

 

31 Dec 2015

 

£

 

£

 

£

 

 

 

 

 

 

Trade and other payables

2,914,578

 

2,028,020

 

2,079,035

Accruals

4,317,263

 

849,761

 

1,883,805

Deferred income

474,026

 

-

 

26,300

Player liabilities

413,204

 

387,512

 

338,825

 

 

 

 

 

 

 

 

 

 

 

 

 

8,119,071

 

3,265,293

 

4,327,965

 

 

 

 

 

 


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

 

 

13. Share capital

 

Ordinary Shares

 

 

30 Jun 2016

 

30 Jun 2015

 

31 Dec 2015

 

 

£

 

£

 

£

 

 

 

 

 

 

 

261,633,292 (30 Jun 2015: 195,170,488 and 31 Dec 15: 249,208,292) Ordinary Shares of 10 pence each

 

26,163,329

 

19,517,049

 

24,920,829

 

 

 

 

 

 

 

 

Movements in share capital

 

 

Number

 

£

 

 

 

 

At 1 January 2015 and 30 June 2015

195,170,489

 

19,517,049

 

 

 

 

 

 

 

 

Ordinary shares issued for cash consideration

49,900,578

 

4,990,058

Ordinary shares issued in settling the Blueburra Holdings Limited contingent consideration

4,137,225

 

413,722

 

 

 

 

 

 

 

 

At 31 December 2015

249,208,292

 

24,920,829

 

Ordinary shares issued for cash consideration

Ordinary shares issued in settling the Blueburra Holdings Limited contingent consideration

 

7,625,000

4,800,000

 

 

762,500

480,000

 

 

At 30 June 2016

 

261,633,292

 

 

 

26,163,329

 

 

On 2 March 2016, 7,625,000 shares were issued at £0.20 per share for a total consideration of £1,525,000.

 

On 9 June 2016, 4,800,000 shares were issued at £0.25 per share to the previous shareholders of Blueburra    Holdings Limited to satisfy the final £1,200,000 share element of vendor consideration.

 

14. Contingent and deferred consideration

 

Acquisition of Gaming Assets and Backstage Technologies Inc

 

 

£

 

 

 

 

Deferred consideration at 10 August 2015

 

 

4,705,682

 

 

 

 

Unwinding of discount on deferred consideration

 

 

86,683

Foreign exchange movement on deferred consideration

 

 

273,134

 

 

 

 

 

Deferred consideration at 31 December 2015

 

 

 

5,065,499

 

 

 

 

 

 

 

 

Unwinding of discount on deferred consideration (note 4)

 

 

186,998

Foreign exchange movement on deferred consideration (note 4)

 

 

566,103

 

 

 

 

 

 

 

 

Deferred consideration at 30 June 2016

 

 

5,818,600

 

 

 

 

 

Acquisition of Blueburra Holdings Limited

 

 

£

 

 

 

 

Contingent consideration at 1 January 2015

 

 

4,887,648

Unwinding of discount on contingent consideration

 

 

72,583

 

 

 

 

 

Deferred consideration at 30 June 2015

 

 

 

4,960,231

 

 

 

 

 

Unwinding of discount on contingent consideration

 

 

 

73,786

Fair value adjustment on contingent consideration

 

 

(134,017)

Payment of contingent consideration

 

 

(1,250,000)

Contingent consideration on prior period acquisition

 

 

105,000

Shares issued as part of the consideration in a business combination

 

 

(1,355,000)

 

 

 

 

 

 

 

 

Deferred consideration at 31 December 2015

 

 

2,400,000

 

 

 

 

 

 

 

 

Shares issued as part of the consideration in a business combination

 

 

(1,200,000)

Contingent consideration waived with respect to the disposal of third-party platform driven website properties

 

 

(1,200,000)

 

 

 

 

Deferred consideration at 30 June 2016

 

 

-

 

 

 

 

 

 

15. Events after reporting date

 

On the 22 July 2016, the Group entered into sale and purchase agreement with Hullabu, Inc to acquire 62.5% of the share capital in Hullabu, Inc for a total cash consideration of USD 500,000. Hullabu are a Nevada corporation that develops social games including Hidden Artifacts, which is published by the Group. The acquisition will allow improved development and monetisation of the game. As of the approval date of the financial statements by the board, the Group had not completed the valuation of the fair value of the intangible assets and liabilities acquired and accordingly these disclosures are not provided in the financial statement.

 

On the 27 July 2016, the Group announced the subscription of 12,500,000 shares at £0.20 per share to raise £2,500,000. The subscription was completed by 2 September 2016. The net proceeds from this subscription were used in part repayment of the first deferred consideration payment of the $4m to Real Networks (£3.1m) included in the statement of financial position (note 14).


This information is provided by RNS
The company news service from the London Stock Exchange
 
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