Interim Results

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	H1 2015 £'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).

 

END

 

 

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