Gaming Realms Plc
("Gaming Realms", the "Company" or the "Group")
Disposal of Legacy Third Party Platform Driven Websites
Gaming Realms, the creator and publisher of mobile real money and social games, today announces that it has conditionally sold its third party platform driven website properties, for a total consideration of £2.9 million to Silverspin Media Ltd ("Silverspin") and Blackspark Limited ("Black Spark") ("the Buyers").
Black Spark will pay the Company, upon completion, an up-front cash payment of £1.2 million and an additional £500,000 payable under a transitional services agreement over the next 5 months.
The remaining £1.2 million of the total consideration, payable by Silverspin, will be netted off against the final earn out payments to the selling shareholders ("Blueburra Vendors") of Blueburra Holdings Limited ("Blueburra"). This is due as part of the three year earn out and is being settled at a reduced rate by the Company.
Completion is expected to occur around the end of February 2016 and is subject to the novation of contracts and approval from the necessary regulators. The Group is retaining the profitable Bingoport affiliate marketing business which was part of the Blueburra acquisition.
During 2015, Gaming Realms realigned its strategy to focus on its sites operating on the "Grizzly" proprietary platform, as well as creating and publishing innovative mobile content for real money and social gaming. The Group's differentiated mobile offering on Grizzly which includes Slingo games, has led to significant revenue growth, as reflected in the Company's updated trading statement announced on 27th January 2016. The Company has decided to continue to build on this success, and focus investment in new games given the significantly superior marketing returns generated on the Grizzly platform. As a result, the Group has agreed to divest of the third party platform driven website properties.
The Group intends to use the proceeds from the disposals for the development of new gaming content and marketing campaigns.
Summary of the disposals
The Company has entered into an agreement to sell the Iceland Bingo IP and associated assets to Black Spark for a cash consideration of £1.2 million and an additional £500,000 payable under a transitional services agreement over the next 5 months. The profits associated with these assets totalled approximately £184,000 for the 15 month period ended 31 December 2014. As at 31 December 2014, Iceland Bingo had net assets of approximately £125,000.
The Company has also entered into an agreement to dispose of a number of other white label assets, including Lucky Charm Bingo, Cupcake Bingo and Diva Bingo to Silverspin for a consideration of £1.2 million, to be netted off against cash payments of equal amount due to the Blueburra Vendors in June 2016 and June 2017. The Company has agreed with the Blueburra Vendors that it will pay a final consideration payment due to be settled by the issue of ordinary shares of £1.2 million through the issue of 4.8 million new ordinary shares of 10p each at a price of 25p per share upon completion. Losses associated with the assets to be acquired by Silverspin totalled approximately £430,000 for the 15 month period ended 31 December 2014. As at 31 December 2014, the assets in relation to these disposals were approximately £2.8 million, of which approximately £2.7 million was goodwill and intangibles.
The Bingoport assets to be retained by the Group from the Blueburra acquisition (excluded from the Silverspin disposal) contributed approximately £440,000 in unaudited profit after tax in the 4 months from acquisition date to 31 December 2014.
Related party transaction
Other than Iceland Bingo, the legacy third party platform driven websites above have been purchased by Silverspin. Chris Phillips and Scott Logan are shareholders of Silverspin, and also directors of the Company's subsidiaries Blueburra Holdings Limited and Digital Blue Limited and are therefore classified as related parties as defined by the AIM Rules for Companies. The disposal of the legacy third party platform driven websites to Silverspin is classified as a related party transaction under the AIM Rules for Companies. Gaming Realms' directors consider, having consulted with the Company's nominated adviser, that the terms of the related party transaction is fair and reasonable insofar as the Company's shareholders are concerned.
Commenting on the disposals, Patrick Southon, CEO, said:
"Focusing on higher margin investment in our new mobile platform and achieving significant success within our own mobile content development is delivering stronger returns for Gaming Realms. Having end-to-end control of our offering has created a set of exciting opportunities in the UK, and more recently in the US, and these have become our strategic priority."
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Contacts:
Gaming Realms Patrick Southon, CEO Mark Segal, FD |
+44 (0) 845 123 3773 |
Cenkos Securities (Nomad and Broker) Max Hartley (Nomad) Julian Morse (Broker) |
+44 (0) 20 7397 8900 |
Yellow Jersey PR Charles Goodwin Aidan Stanley |
+44 (0) 7747 788 221 +44 (0) 7584 085 670 |
About Gaming Realms
Gaming Realms creates and publishes innovative real money and social games for mobile, with operations in the UK and U.S. 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 growth executives from a wide range of leading gaming and media companies.
