24/7 Gaming : 24/7 announcement results for the year ended 31 December 2013

19 May 2013
24/7 GAMING GROUP HOLDINGS PLC
(24/7 or "the Group")
FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2013
24/7, the holding company for a group which provides services to the fast growing mobile gaming industry for smart phones and tablets, is pleased to announce its final results for the year ended 31
December 2013.
Financial and operational highlights
• Successful admission to trading on AIM bringing new funds of €2.75m during 2013

STRATEGIC REPORT

I am pleased to present our Annual Report for the financial year ended 31 December 2013, our first since being successfully admitted to the Alternative Investment Market (AIM) on 31 July 2013.
Financial review
2013 was a year of changes for 24/7 Gaming Group. The Company raised € 4,032,774 from existing shareholders, of which € 2,100,000 was raised conditional on the admission being successful.
During 2013 the Group's Gross Gaming Revenues almost doubled each quarter and resulted in annual revenue of € 163,871 for the gaming business. The revenue of the publishing business slightly decreased as the Group did not publish any new titles during the year. Revenues totaled €27,494, a decrease of
12% compared to 2012.
The total loss for the year increased as the Company incurred almost €675,000 in expenses on the process of completing the AIM admission process. Furthermore, the Company spent more on marketing and player acquisition compared to 2012, an increase of approximately €300,000.

Key financials	2013		2012		%
	€		€
Casino Gross Gaming Revenue	163,871		17,278		+848%
Publishing revenue	27,494		31,533		-12%
Total Gross Revenue	191,365		48,811		+292%
EBITDA, before listing expenses	(2,372,602)		(1,871,079)		-27%
Loss before taxes	(3,261,836)		(2,275,918)		-43%
Other Key performance indicators
	2013		2012		2011
Registrations	20,914		7,837		178
Wagering players	7,002		375		33
Depositing players	698		129		32

Board appointment
During the year, the Company has appointed several directors:
On 24 April 2013 Erik van Emden, Willy Simon and David Mathewson were appointed as directors of the Company. On 10 July 2013, Rogier Smit was appointed CEO of the Company and Marcel Noordeloos CFO. Also on 10 July 2013 John Harley was appointed as director.
The Group announced the appointment of Mark Rosman as non-executive director on 18 March 2014. Following the year-end, the Group announced the resignation of John Harley (on 30 January 2014) and
Erik van Emden (on 1 February 2014) as non-executive directors and the resignation from the Board of
Marcel Noordeloos on 4 February 2014. Marcel remains to work at the Group as corporate controller.
On 19 February 2014 David Mathewson became Executive Chairman of the Group, having previously been a non-executive, replacing Willy Simon as Chairman. Willy Simon remains on the Board of Directors as a non-executive. Rogier Smit was appointed COO on this date.
Current trading and outlook
In January 2014, the Group announced that in the light of the Group's trading results, the Directors were seeking additional funding to strengthen working capital, which took place in February 2014 with the raising of approximately £500,000 and the conversion of certain outstanding debt.
As a result of this further investment, the Board has been able to increase the Group's investment in
HTML 5 platforms.
Whilst Gross Gaming Revenue almost doubled in each quarter in 2013, the Directors consider that the gaming return from the direct marketing spend was unsatisfactory and recent changes in the marketing department and the way of executing the marketing strategy indicate that a better return can and should be achieved. Enhancements are being made to the branding of the Group's products including the completed acquisition of the domain name 247casino.com.
Steps were taken to tighten the Group's financial control and marketing spend and additional finance was raised as described. The Board are also reviewing possible acquisition opportunities.
The Board considers that the changes mentioned above and changes to the management team will improve the revenue and efficiency of the Group and that it will allow the Group to take advantage of the continuing growth in online and mobile gaming.
For further information please contact:
24/7 Gaming Group + 31 (0)20 676 0304
David Mathewson, Executive Chairman
Rogier Smit, COO
Newgate Threadneedle [phone]
Graham Herring
Adam Lloyd
Robyn McConnachie
Westhouse Securities
Antonio Bossi [phone]

CONSOLIDATED INCOME STATEMENT

Year ended Year ended
31 December 31 December
Notes 2013 2012
€ €
Revenues 2 191,365 48,811
Cost of goods and services (278,843) (136,042)

Gross Loss (87,478) (87,231)

Listing expenses (671,147) (176,312) Salary expense (966,863) (965,704) Marketing and selling expense (542,929) (265,328) General administrative expense (775,333) (552,816) Depreciation & amortization (196,319) (194,778)
Total Administrative expenses (3,152,591) (2,154,938)

Operating loss (3,240,069) (2,242,169)

Interest expense (21,766) (33,749) Loss before tax (3,261,835) (2,275,918) Taxation 121,499 428,176

Loss for the financial year (3,140,336) (1,847,742)
Loss per share

Basic (0.02) (0.02) Diluted (0.02) (0.02)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
31 December 31 December
2013 2012
€ €

Loss for the financial year (3,140,336) (1,847,742)

Total comprehensive loss for the financial year (3,140,336) (1,847,742)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Non-current assets
31 December 31 December
2013 2012
€ €
Property, plant and equipment 53,367 78,799
Intangible assets 169,748 307,502
Deferred tax asset 986,975 865,476

Total non-current assets 1,210,090 1,251,777

Current assets
Cash and cash equivalents 2,657 1,248
Trade and other receivables 205,925 111,920

Total current assets 208,582 113,168

Total assets 1,418,672 1,364,945

Equity and liabilities
Share capital - 86,013
Additional paid-in capital 4,032,774 2,913,940

Combination reserve 2,999,953 - Shares to be issued 1,226 - Retained earnings (6,606,768) (3,466,432)
Total shareholders' equity 427,185 (466,479)

Current liabilities
Trade and other payables 733,963 1,441,924
Borrowings 257,524 389,500

Total current liabilities 991,487 1,831,424

Total equity and liabilities 1,418,672 1,364,945

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Additional

Share capital €		paid in capital €		Combination reserve €		Shares to be issued €		Retained earnings €		Total €
Balance as at 31 December 2011	50,675		1,713,025		-		-		(1,618,690)		145,010
Issue of share capital	35,338		1,200,915		-		-		-		1,236,253
Loss for the financial period	-		-		-		-		(1,847,742)		(1,847,742)
Balance as at 31 December 2012	86,013		2,913,940		-		-		(3,466,432)		(466,479)
Issue of share capital	-		4,032,774		-		-		-		4,032,774
Acquisition of subsidiaries	(86,013)		(2,913,940)		2,999,953		-		-		-
Loss for the financial period	-		-		-		-		(3,140,336)		(3,140,336)
Share based payments							1,226		-		1,226
Balance as at 31 December 2013	-		4,032,774		2,999,953		1,226		(6,606,768)		427,185

CONSOLIDATED STATEMENT OF CASH FLOWS

31 December 31 December
2013 2012

€ €

Cash flows from operating activities Operating loss	(3,240,069)		(2,242,169)
Share based payment	1,226		-
Amortisation and depreciation charges	196,319		194,778
Loss before working capital change	(3,042,524)		(2,047,391)
(Increase) / Decrease in receivables	(94,005)		24,524
(Decrease) / Increase in payables	(359,324)		784,822
Cash flow from operations	(3,495,853)		(1,238,045)
Interest paid	(21,766)		-
Cash flow from operating activities	(3,517,619)		(1,238,045)
Cash flow from investing activities Purchases of property, plant and equipment	(16,163)		(27,150)
Purchases of intangible fixed assets	(16,970)		-
Net cash outflow from investing activities	(33,133)		(27,150)
Cash flow from financing activities Repayment of loans	(217,838)		-
Proceeds from issue of new shares	3,769,999		1,236,253
Net cash inflow from financing activities	3,552,161		1,236,253
Net increase/(decrease) in cash and cash equivalents	1,409		(28,942)
Cash and cash equivalents at start of period	1,248		30,190
Cash and cash equivalents at end of period	2,657		1,248

Notes

1: General Information

The financial information set out in this announcement does not comprise the Group's statutory accounts for the years ended 31 December 2013 or 31 December 2012.
The financial information has been extracted from the statutory accounts of the Group for the year ended 31 December 2013. The auditors reported on those accounts; their reports were unqualified but did include references to the going concern disclosure repeated in this note to which the auditor drew attention by way of emphasis.
The statutory accounts for the year ended 31 December 2013 will be delivered to the Registrar of
Companies following the Company's Annual General Meeting.
The accounting policies are consistent with those applied in the preparation of the interim results for the period ended 30 June 2013, which have been prepared in accordance with International Financial Reporting Standards ("IFRS").
The financial information is for the year ended 31 December 2013 and the comparatives are for the year ended 31 December 2012.
The consolidated financial statements incorporate the results of 24/7 Gaming Group Holdings plc (the
"Company") and entities controlled by the Company (its subsidiaries) (collectively the "Group").
Between 13 December 2012 and 3 July 2013 the Company, 24/7 Gaming Group NV and shareholders of
24/7 Gaming Group NV entered into share exchange agreements pursuant to which the Company acquired 99.77 per cent of the issued share capital of 24/7 Gaming Group NV and became the Group's parent company. This acquisition has been treated in these financial statements as a continuation of the businesses and is therefore considered by the directors as outside the scope of IFRS 3, since no business combination is occurring.
Going concern
The Group reported an operating loss of €3,240,069 for the year ended 31 December 2013 and an operating loss of € 2,242,169 for the year ended 31 December 2012. The Group reported a working capital deficit of €782,905 for the year ended 31 December 2013 and a working capital deficit of
€1,718,256 for the year ended 31 December 2012.
The Directors have reviewed fund raisings subsequent to year end and projected cash flows and consider that the Group will have adequate resources to meet its liabilities as they fall due for a period of at least twelve months from the date of approval of these financial statements and indicate that no additional funding is required.
In the fund raisings subsequent to year end, a total of €604,800 before costs was raised from institutional clients and other investors of Daniel Stewart & Company Plc. Furthermore, the directors converted unpaid fees amounting to €111,000 and other payables were converted into ordinary shares amounting to €28,915.
Of the loans payable the Group has recorded, a total amount of € 185,000 will be converted into ordinary shares pending shareholders approval.
Between 1 January 2014 and the date of this report, the Group has received €150,000 in convertible loans, as well as a commitment from an existing shareholder to invest a further €300,000. The directors propose to convert these loans totaling €450,000 into Ordinary Shares at a price of 5p per share subject to the approval of shareholders, which will be sought at the next Annual General Meeting.
The Group's existence is dependent upon its ability to generate sufficient cash flows from operations to support its daily operations as well as provide sufficient resources to pay existing liabilities and obligations on a timely basis and its ability to raise debt and/or equity financing when needed.
To increase working capital, the directors anticipate future sales of equity securities. However, there is no assurance that the Company will be able to obtain additional funding through the sales of additional equity securities or, that such funding, if available, will be obtained on terms favorable to or affordable by the Group.
While the directors are of the opinion that good faith estimates of the Groups' ability to execute the business plan and/or to secure additional capital in the future to reach the Group's goals have been made, there is no guarantee that the Group will receive sufficient operational cash flow and/or funding to sustain operations or implement any future business plan steps.
Accordingly, the directors consider it appropriate to prepare the Consolidated Financial Statements on a going concern basis.

2 Segmental analysis

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker to allocate resources to the segments and to assess their performance. In accordance with IFRS 8, the chief operating decision maker has been identified as the Group's COO. The COO considers that the business comprises two reportable segments, which are those of mobile gaming operations and publishing operations.
A split of the revenue generated by these segments is as follows:
Year ended
31 December
2013
Year ended
31 December
2012
€ € Mobile gaming operations 163,871 17,278

Publishing operations 27,494 31,533

Total revenue 191,365 48,811

A split of the cost of sales generated by these segments is as follows:
Year ended
31 December
2013
Year ended
31 December
2012
€ €
Mobile gaming operations 264,288 121,891

Publishing operations 14,555 14,151

Total Cost of sales 278,843 136,042

As a result the gross margin (loss) is as follows:
Year ended
31 December
2013
Year ended
31 December
2012
€ €

Mobile gaming operations (100,417) (104,613) Publishing operations 12,939 17,382
Total gross loss (87,478) (87,231)

Due to the size of the operations, the directors consider that it is not meaningful to distinguish aggregate marketing costs and administrative expenses between the business segments. Geographical segment information is not used by management for the measurement of operating performance.

3 Loss per share (basic and diluted)

Year ended
31 December
2013
Year ended
31 December
2012
€ €
Earnings
Earnings for the purposes of basic earnings per share being net loss after tax attributable to equity
shareholders (3,140,336) (1,847,742)

Number of shares
Weighted average number of ordinary shares for the
purposes of basic earnings per share 131,461,507 88,926,680

Basic earnings per share (0.02) (0.02) Diluted earnings per share (0.02) (0.02)
4 Post balance sheet events
On 19 February 2014, the Company raised approximately €604,800 before expenses by way of a subscription of 16,733,328 new ordinary shares of no par value at a price of 3p per Ordinary Share.
The funds have been raised from institutional clients and other investors of Daniel Stewart &
Company Plc and will be used to provide additional working capital for the Company enabling it to grow its business and to seek out acquisition opportunities.
In addition, the Company agreed to convert into equity certain outstanding fees and loans at a price of
5p per share and therefore the board has agreed to issue 859,700 new Ordinary Shares to former directors of the Company and 833,333 new Ordinary Shares in satisfaction of a loan owed to a former director.
In addition both, Willy Simon, a Non-Executive director and David Mathewson, Executive Chairman, have each proposed to the Company to subscribe for 491,500 new Ordinary Shares in lieu of all fees outstanding to them at a price of 5p per share.
In addition, service providers have agreed to convert certain other outstanding fees owed to them into
800,000 Ordinary Shares at a price of 3p per share.
Between 1 January 2014 and the date of this report, the Company has received €150,000 in convertible loans, as well as a commitment from an existing shareholder to invest a further €300,000. The Board proposes to convert these loans totaling €450,000 into Ordinary Shares at a price of 5p per share subject to the approval of shareholders, which will be sought at the next Annual General Meeting.
On 17 April 2014 the Company agreed with M.W. van Bree to convert € 135,000 of the outstanding loan to M.W. van Bree (see note 16 and note 23) into shares of the Company at a price of 5p per share. These shares will be issued after approval of the shareholders' meeting. The remaining balance, including accrued interest, is converted to a 2 year loan, bearing a 5% annual interest, payable on a quarterly basis. The principle amount will be repaid on 28 February 2016.
On 19 February 2014, the Board approved to issue options over 6 million ordinary shares to Mr. David Mathewson, exercisable at 3p per share as part of his remuneration as Executive Chairman. The options will vest in installments of 2 million options from the date of issuance over a three year period and will remain exercisable for a period of 12 months after vesting.