An Evolution in Gambling

Gaming plc Realms Annual ReportAnnual 2014 & Accounts An Evolution in Gambling Gaming Realms plc Annual Report & Accounts 2014 Strategic Report The Group hopes to 01 Highlights 02 Gaming Realms at a Glance 04 Chairman’s Statement become a market leader 06 Market Positioning 08 Our Strategy in the mobile-led casual 10 Chief Executive’s Review 12 Principal Risks and Uncertainties gambling market forecast Corporate Governance 14 Board and Executive to be worth $100bn Management 16 Directors’ Report 17 Statement of Directors’ worldwide in 2 years. Responsibilities 18 Corporate Governance Financial Statements 19 Independent Auditors’ Report 20 Consolidated Statement of Profit and Loss and Other Comprehensive Income 21 Consolidated Statement of Financial Position 22 Consolidated Statement of Cash Flows 23 Consolidated Statement of Changes in Equity 24 Notes to the Consolidated Financial Statements 47 Parent Company Balance Sheet 48 Notes to Parent Company Financial Statements 52 Company Information www.gamingrealms.com Highlights Strategic Report Strategic Operational highlights › Increase of 635% in new real money › Completion of new in-house scalable gambling depositors compared to the platform which includes a feature set previous financial period. to enhance conversion, retention and › Increase of 338% in average daily players monetisation of real money gambling compared to previous financial period. players. › Acquisition of QuickThink Media Limited › Obtained licences from the Alderney and Blueburra Holdings Limited. Gambling Control Commission and the UK Gambling Commission. Corporate Governance Corporate Financial highlights £11.2m 138,852 6,003 Statements Financial Revenue (2013: £0.9m) New depositing players December average daily players (2013: 18,881) (2013: 1,370) Revenue £’s First time depositors Average daily players Q1 15 3,757,269 Q1 15 35,857 Q1 15 7,233 Q4 14 3,086,617 Q4 14 23,731 Q4 14 6,003 Q3 14 2,608,330 Q3 14 14,564 Q3 14 5,205 Q2 14 1,980,334 Q2 14 24,092 Q2 14 3,852 Q1 14 2,195,110 Q1 14 47,174 Q1 14 4,576 Q4 13 1,356,815 Q4 13 29,291 Q4 13 3,503 Gaming Realms plc Annual Report & Accounts 2014 01 Gaming Realms at a Glance Operating Divisions Gaming Realms is exploiting two major industry trends. Firstly; the much talked about switch by consumers to mobile devices and secondly; the increasing use of features derived from social games designed to increase player lifetime AlchemyBet and revenues. AlchemyBet has now developed its social gaming platform acquired from Bejig into the real money The Group has built its own platform and is showing gaming platform which is now up to 68% of players using mobile and tablet operated by Bear Group Limited in Alderney. AlchemyBet has now devices. The existing gambling industry has been licensed its brand, PocketFruity, slow to adapt to this change, with research showing to Bear Group to operate. AlchemyBet’s strategy is to historic use of mobile at only 17%. With this continue the development of the strategy the business hopes to expand the current platform with new unique content as well as grow its user base in 1.73m online UK slot market into the relatively the UK via effective marketing untouched 12m adult UK social games market.* of the PocketFruity brand, along with establishing a number of * Source: Kadence sizing online bingo market Great Britain May 2014 B2B game licensing and/or distribution agreements. Revenue (by product) Revenue (by geography) At Significant Shareholders 31.03.2015 Michael Buckley 9.22% Patrick Southon 5.58% Simon Collins 5.30% Other Directors and management team 10.70% Rich Ricci 8.51% Helium Rising Stars Fund Limited 7.79% Artemis Alpha Trust plc 6.52% Others 46.38% 66% Marketing Services 88% UK, including 24% Desktop Channel Islands 10% Social Gaming 8% USA 4% Rest of the World 02 Gaming Realms plc Annual Report & Accounts 2014 Strategic Report Strategic QuickThink Media Blueburra Holdings Bear Group QuickThink Media Limited (“QTM”) Blueburra Holdings Limited (“BBH”) Bear Group is an Alderney is a specialist online gaming is a specialist E-Gaming affiliate registered real-money gambling marketing agency, with particular company with an award winning company which owns and expertise in online bingo and casino portal, bingoport.com. BBH was operates a number of gambling products. QTM was acquired in acquired in September 2014 in products powered by its December 2013 and supports order to further enhance the proprietary gambling platform. the Group’s strategy to establish Group’s marketing capabilities and It holds a category 1 and 2 licence Governance Corporate itself within the bingo and casino complement the acquisition and from the Alderney Gambling segments of the real money player data within QTM. Control Commission as well as and the social gaming markets. a licence with the UK Gambling QTM enhances Gaming Realms’ Commission and, as a result, it activities by capturing new users is ideally positioned to take the across emerging digital channels Group’s innovative gambling including Facebook, as well as products both to the UK and other cross promoting players to its own regulated markets. Its first brand databases and vice versa. QTM also SpinGenie, has already gained a provides marketing for other clients lot of traction with a large TV and such as Iceland and Macmillan online marketing campaign. Cancer Support. Financial Statements Financial Our Brands 5 0 Real money Gambling White label Bingo This is operated by Bear Group QTM and BBH market ten white on our new in-house platform. label bingo sites, most notably The leading brands are SpinGenie Iceland Bingo, Diva Bingo and and PocketFruity, which are both LuckyCharm Bingo. We use the casinos targeted at the UK casual multiple sites in order to increase gambling market. The platform player acquisition and increase has been built for mobile and web retention among the portfolio and we are seeing over three of brands. times more sessions on mobile than desktop. SpinGenie also has social levels which are used to appeal to a more female, casual audience. The levels create enhanced engagement for the players on the site. Gaming Realms plc Annual Report & Accounts 2014 03 Chairman’s Statement I am pleased to announce strong growth in the 15 month period ended 31 December 2014. Gaming Realms has delivered solid growth in 2014 with revenue rising to £11.2m (2013: £0.9m) with an adjusted EBITDA loss to £7.8m (2013: £2.3m) reflecting the Group’s investment in player acquisition and platform development. Acquisitions In December 2013 Gaming Realms acquired QTM, an award winning specialist online gambling marketing agency for £2.3m. The addition of the QTM team has enhanced the Group’s strategy of acquiring players across its brands. On 5 September 2014 Gaming Realms acquired BBH for up to £10.5m. Voted best Bingo Affiliate (bingoport.com) this has enhanced the marketing capabilities of the Group even further. These two businesses are important building blocks in both marketing and Our objective is to offer a more fun data acquisition support of the Group’s entertainment based approach to overall strategy. gambling, which we will offer to a wider Strategy Gaming Realms strategy has remained audience using modern methods of focussed on delivering real money delivery and analysis. We are quite gambling to the casual gaming market literally... playing a new game. through new content and social elements across multi-platforms. We have built our new proprietary platform on which we launched SpinGenie and to which we migrated PocketFruity. We have been very successful in acquiring new players with 138,852 new depositing players acquired across the Group’s brands in the period (2013: 18,881). The new platform is delivering very strong growth on mobile. We are seeing 68% of our players using a mobile device with over 60% of new users registering and depositing on mobile. 04 Gaming Realms plc Annual Report & Accounts 2014 Our history We are looking to add new unique Report Strategic content onto the platform and August 2013 September 2014 announced in December 2014 the AIM admission Completion of acquisition exclusive licence for a real money Admission onto AIM by a reverse of Blueburra Holdings gambling version of Slingo from takeover Buys Blueberra Holdings for £10.5m RealNetworks which is an exciting format for the platform. At its peak, Slingo Proprietary platform launched achieved 52 million unique monthly December 2013 active players worldwide and it lends Acquisition of QuickThink Media itself very well to the mobile gaming Buys marketing firm QuickThink Media November 2014 market. We have added social gaming for £2.3m Slingo features into the player experience which Signs exclusive deal for Slingo have increased player retention and July 2014 ultimately player lifetime values. Awarded Alderney licence March 2015 Governance Corporate Source: RealNetworks October 2014. Alderney licence granted to Bear PocketFruity migrates onto Group SpinGenie platform Financial review In line with the trading update issued April 2015 on the 23 March 2015, Gaming Realms Launch of Slingo is pleased to announce solid growth throughout 2014 with revenue rising to £11.2m (2013: £0.9m) and a corresponding increase of adjusted EBITDA loss to £7.8m (2013: £2.3m) as the Group has invested heavily in player acquisition and platform development. Investment in player acquisition has led to an increase in Statements Financial average daily active depositing players to 4,198 (2013: 1,012). As at 31 December 2014 the Group had no debt and held £4.0m (2013: £5.2m) in cash. Details of the risks facing the Group and its policies to manage these risks can be found on page 12. The Group’s KPI’s of net revenue, EBITDA, cash at year end, new depositing players and active depositing players can be found below.

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