TIDMGFIN
RNS Number : 5528O
Gfinity PLC
08 November 2016
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR)
Gfinity plc
("Gfinity" or the "Company")
Full Year Results for the period ended 30 June 2016
Gfinity plc (AIM: GFIN), a leading eSports business, announces
its full year results for the period ended 30 June 2016.
Financial highlights
-- Revenue increased by 158% to GBP1.45m (2015: GBP0.56m)
-- Operating loss decreased by 12.0% to GBP3.2m (2015: GBP3.6m)
-- Loss Per Share reduced 33.3% to 4p (2015: 6p)
-- Cash and cash equivalents, as at 30 June 2016, of GBP0.83m (2015: GBP2.73m)
-- Following year-end, GBP3.7m raised from share placing, before expenses.
Operational highlights
-- Launched a number of digital assets to underpin Gfinity's
position as a leading provider of complete end-to-end eSports
solutions, including:
o The bespoke Tournament Builder App, exclusively for Xbox One
users, allowing eSports enthusiasts to create and manage their own
eSports competitions;
o Gfinity TV; the Company's own online TV Player, giving the
viewer greater control over their viewing experience than ever
before;
o Gfinity Tournament Client for PC; Providing leading anti-cheat
technology and providing easy matchmaking and tournament entry for
users.
-- Further strengthened our reputation as a partner of choice
for game publishers and platform providers:
o Selected by Microsoft to host the "Xbox Play Like a Legend"
Championship using FIFA 16 for a second successive year;
o Selected by EA Sports to launch the Battlefield 1 video game
from the Gfinity Arena;
o Selected by Super Evil Megacorp to stage VainGlory European
Winter Championships
o Selected by Microsoft to stage UK leg of Halo World Series
-- Signed an exclusive partnership agreement with Gillette to
create a football based eSport competition "The Gillette
Championship" in June 2016
-- Signed a partnership agreement with Futhead.com, the largest
FIFA Ultimate Team community in the world, to operate a series of
FIFA 16 Ultimate Team competitions on Gfinity's proprietary eSports
online tournament platform
Post-period highlights
-- Selected to host the London, Paris and Mexico City events as
part of the Xbox Gears of War 4 Pro-Circuit
-- Signed a strategic sponsorship agreement with HP Inc ("HP").
for an eSports tournament which took place in September featuring
the Counter Strike: Global Offensive ('CS:GO') video game
-- Raised GBP3.7 million, by way of a conditional equity
placing, to fund the Company's strategy to become a leading eSports
business
Neville Upton, Co-founder and Chief Executive of Gfinity plc,
said:
"The year to 30 June was a highly successful one for the
Company, during which we continued to deliver on our strategy to
become one of the world's leading promoters of eSports competitions
and content. The launch of new products, such as our Tournament
Builder application strengthened our unique position of providing a
complete end to end eSports solution, while partnerships with
publishers including EA, Microsoft and Super Evil Megacorp
demonstrate Gfinity's growing reputation within the eSports
sector.
Following the year-end, we were also delighted to complete a
further round of funding, which gave us the opportunity to bring in
a major new shareholder, Charles Street International, a well-known
and successful technology investor, with considerable experience
and contacts in related areas. This investment leaves Gfinity well
positioned to accelerate its growth strategy into 2017."
A copy of the full, audited annual report and accounts will be
made available at http://www.gfinityplc.com/ and will be posted to
shareholders shortly.
Enquiries:
Gfinity plc www.gfinityplc.com
Neville Upton, Chief Executive Via Walbrook PR
Officer
Allenby Capital Limited - Nominated Tel. +44 20 3328
Adviser and Broker 5656
Jeremy Porter / John Depasquale
/ James Thomas
Walbrook PR (Media & Investor Tel: +44 (0)20
Relations) 7933 8780
Paul McManus / Paul Whittington or gfinity@walbrookpr.com
/ Sam Allen
Chairman's Statement
I am delighted to present the Gfinity plc annual report for the
year to 30 June 2016; a period of excellent operational progress
and also strong revenue growth for the Company.
In the year to 30 June 2016 Gfinity continued to invest in the
business in line with its stated strategy to build its reputation
with game publishers, prospective sponsors and the wider eSports
community to cement its position as a leader within the eSports
industry. This has been achieved through the development of both
physical assets, such as the eSports Arena in the UK, and digital
assets to host and stream eSports competitions online.
Collectively these assets, together with the expertise of the
Gfinity team, mean that the Company is uniquely positioned to
provide an end-to-end eSports solution both to game publishers and
other partners looking to access the growing audience of eSports
enthusiasts.
Our growth reflects widening acknowledgement of Gfinity's
capability, across a broad range of games and platforms. Events
during the year have been staged across PC, console and mobile
devices. Clients, meanwhile, have included game publishers,
platform providers, brands from within the industry and also
increasingly consumer brands looking for a way to reach the core
eSports audience of young affluent males, who they find it
increasingly difficult to reach via other channels.
As a sector, eSports continues to go from strength to strength.
Leading industry analysts NewZoo report that the eSports audience
has now risen to over 250 million globally. Major events are
already filling arenas and attracting audiences that dwarf many
conventional sports. Most excitingly, however, while the overall
size of the market is expected to exceed $1 billion by 2019, this
still remains small on a per fan basis in comparison with
conventional sport.
This gives me further confidence that the Company's strategy of
establishing itself as one of the leading eSports players is the
correct one. In July, shortly following the year-end, the Company
completed a successful placing, raising GBP3.7m prior to expenses
to provide the funding to accelerate our growth strategy. I would
like to thank both the new and existing investors for supporting
the Board in this endeavour as we look to leverage our strong
position within the eSports industry to create significant
shareholder value.
Finally, I would like to take this opportunity once again to
thank all of our staff, customers and partners for their ongoing
support.
Tony Collyer
Non-Executive Chairman
7 November 2016
Chief Executive's Review
Summary
The year to 30 June 2016 was one in which Gfinity continued to
deliver on its strategic objective to develop its operational
capability and to build its reputation with the eSports audience
and key partners within the industry.
The launch of our Tournament Builder application on Xbox One,
GTV Player and Tournament Client for PC, together with the ongoing
investment in the Gfinity Arena and online tournament management
system leave us uniquely positioned to provide an end to end
eSports solution; both in the delivery of our own events and on
behalf of our partners.
Partnerships during the year with blue chip companies including
EA, Microsoft, Formula E and Super Evil Megacorp demonstrate
Gfinity's growing reputation within the industry.
This combination of operational excellence and strength of
reputation leave Gfinity strongly positioned to take advantage of
expected revenue growth in the sector in years to come. While short
term revenue hasn't been the principal focus, it is nonetheless
pleasing to be able to report growth in this area of 158% year on
year, which I believe is just a small indication of the potential
to come.
Following the year-end, I was also delighted to be able to
announce the successful completion of a placing to raise a further
GBP3.7m prior to deduction of expenses. This placing leaves the
business in a strong cash position to accelerate its drive towards
its strategic goals as we move into 2017 and brings in a major new
strategic investor, with excellent industry knowledge and contacts,
into the Company.
Operational Review - Offline
The first half of the year to 30 June 2016 saw the culmination
of the Gfinity Championship Series, a series of 23 events, across
five of the world's leading eSports titles, broadcast in 10
languages, which attracted 58.5 million views.
This series demonstrated Gfinity's ability to stage industry
leading eSports events, attracting the top teams and players and
producing high quality broadcast content. It enabled Gfinity to
quickly build its brand among both eSports fans and game
publishers.
During the second half of the year the Company focused on
delivering events with partners; strengthening relations with a
network of game publishers, platform providers and sponsors. These
events have included:
-- UK leg of Halo Championship Series in conjunction with Microsoft (January 2016)
-- Xbox 'Play Like a Legend' FIFA Ultimate Team series - (January to May 2016)
-- Vainglory European Winter Championships in partnership with Super Evil Megacorp (March 2016)
-- Launch of Battlefield 1 game from Gfinity arena on behalf of EA Sports (April 2016)
-- Creation of "The Gillette Championship" a football based
competition, using Pro-Evolution Soccer game (June 2016).
Following the year-end, the position of Gfinity as a partner of
choice for publishers and sponsors has been further embedded with
the announcement of a number of further events including:
-- Appointment by Microsoft as one of two global partners for
Gears of War Pro-Series, including events in London, Paris and
Mexico City;
-- Delivery of Call of Duty European Challenger event on behalf of game publisher Activision
-- Staging of HP sponsored Counter Strike event at EGX, the UK's largest gaming festival
Operational Review - Online
In April 2016, the Company launched its bespoke online
Tournament Builder Applications ("App") exclusively for Xbox One
users, which allows gamers to create their own competitions and
gives players a new level of access to the Gfinity platform for an
all-round improved gaming experience.
The launch of the App is in line with the Company's stated
strategy to invest in digital assets to build the reputation of the
Company with video game publishers, prospective eSports sponsors
and the wider gaming community.
It is expected these digital assets will provide the Company a
unique value proposition within the eSports industry from which it
can effectively monetise its relationships with video game
publishers, sponsors and gamers.
In June 2016, the Company signed a partnership agreement with
Futhead.com, the largest FIFA Ultimate Team community in the world,
to operate a series of six online FIFA 16 Ultimate Team
competitions on this market leading eSports tournament
platform.
Outlook
The eSports sector continues to be a very exciting sector in
which to operate. With a large, growing and engaged audience of
young millennials that broadcasters and sponsors find difficult to
reach via other channels, commercial opportunities for leading
players in this sector appear strong.
The investments that Gfinity has made to date in building its
capability and reputation, together with the financial investment
received following the year-end, leave it in a strong place to take
advantage of these opportunities.
Neville Upton
Chief Executive Officer
7 November 2016
Financial Review
Summary
The 12-month financial period to 30 June 2016 represented one of
significant revenue growth as the Company's early leadership
position within the eSports market started to become recognised.
The financial year also represented a period of continued
investment in strategic physical and digital assets to ensure the
Company remains at the forefront of innovation across the eSports
industry and remains well placed to monetise its leading market
position in the UK and overseas in the coming period.
Whilst the Company remained loss-making during the period, the
eSports arena has gained significant traction with video games
publishers and event sponsors alike and the digital assets, such as
the bespoke tournament builder application, have been successfully
launched and well received by end users.
The post period equity financing significantly strengthened the
balance sheet, which will support the Company as it seeks to
execute its strategy to generate significant shareholder value by
virtue of being a leading global eSports Company.
Income Statement Review
Revenue for the financial year increased significantly from
GBP0.56m to GBP1.45m as activity at the Company's eSports arena
increased and the Company signed contracts with a number of leading
video game publishers and eSports sponsors such as Microsoft,
Gillette and FutHead.com.
Cost of sales decreased from GBP2.00m to GBP1.61m, primarily due
to a change in the mix of events delivered during the first half of
2016.
Administrative expenses, although showing an overall increase of
GBP0.85m during the period, from GBP2.14m to GBP2.99m, were
consistent with the closing run rate from the prior year. This
included the continued commitment to business development
activities and further investment in the physical and digital
infrastructure of the Company, most notably the Company's bespoke
tournament builder application.
As a direct result of the significant revenue growth and cost
management, the Company's operating loss was reduced from GBP3.58m
to GBP3.15m.
Finance income increased as a result of the strengthened balance
sheet over the previous period, but still remained largely a
non-material item, which resulted in a Loss Before Tax of GBP3.14m
(2015 GBP3.58m).
The Company received a Tax Credit for its Research and
Development activities during the period of approximately GBP0.10m,
which led to the final retained loss for the period reducing from
GBP3.58m to GBP3.04m.
Loss Per Share decreased from 0.06 pence per ordinary share to
0.04 pence per ordinary share due to both the reduced loss during
the period and the weighted average number of ordinary shares
increasing from 59,895,476 to 81,504,270.
Cashflow and Financial Position Review
From a cashflow perspective, cash consumed by operating
activities reduced from GBP3.43m to GBP2.50m due to the reduced
Loss Before Tax and strong working capital control.
Investment in property, plant and equipment increased from
GBP0.24m to GBP0.38m during the period which, post depreciation,
resulted in the balance sheet reporting an increase in the value of
the Company's fixed assets to GBP0.42m from GBP0.22m. This increase
reflected further investment both in the Gfinity Arena itself and
in the production technology within it, together with Gfinity's
investment in the GTV Player.
Cash and short term deposits, as at 30 June 2016, were reduced
from GBP2.73m to GBP0.83m. However, the successful post balance
sheet placing announced on 4 July 2016 raised GBP3.70m, which was
support by existing investors such as Euroblue Investments and
Hargreave Hale in addition to new investors such as Hong Kong based
Charles Street International Holdings.
Outlook
In line with Gfinity's stated strategy, the Company used the
period to make significant progress to invest for future growth.
The Company remains focused on building the Gfinity brand and
strengthening its reputation as one of the leading providers of
eSports tournaments in the world.
A recent report by Newzoo(1) forecasts that the eSports market
will grow at a compound annual growth rate of 42% to over US$1.1bn
by 2019. Management therefore continues to believe it has
significant potential to grow rapidly over this time frame and
believes that its strategy of continued investment in the
capability and reputation of the business are the correct route to
deliver long-term value to the shareholders.
(1) Newzoo, Global Esports Market Report,
https://newzoo.com/solutions/revenues-projections/global-esports-market-report/
Jonathan Hall
Finance Director
7 November 2016
Statement of Comprehensive Income
1 July 1 July
2015 to 2014 to
30 June 30 June
2016 2015
GBP GBP)
(audited) (audited)
CONTINUING OPERATIONS
Revenue 1,446,519 560,828
Cost of sales (1,606,036) (2,001,820)
Gross profit/(loss) (159,517) (1,440,992)
Administrative expenses (2,992,427) (2,142,745)
Operating loss (3,151,944) (3,583,737)
Finance income 15,193 2,568
Loss on ordinary activities
before tax (3,136,751) (3,581,169)
Taxation 97,180 0
------------ ------------
Retained loss for the year (3,039,571) (3,581,169)
Loss and total comprehensive
income for the period (3,039,571) (3,581,169)
Earnings per share (0.04) (0.06)
Statement of Financial Position
30 June 30 June
2016 2015
GBP GBP
(audited) (audited)
NON CURRENT ASSETS
Property, plant
and equipment 417,193 219,848
CURRENT ASSETS
Inventories 9,707 3,218
Trade and other
receivables 439,270 570,350
Cash and cash equivalents 830,403 2,732,561
1,279,380 3,306,129
TOTAL ASSETS 1,696,573 3,525,977
EQUITY AND LIABILITIES
Equity
Ordinary shares 83,414 77,845
Share premium account 5,640,233 4,679,536
Other reserves 55,458 62,447
Retained earnings (4,935,672) (1,896,101)
Total equity 843,433 2,923,727
Non-current liabilities
Borrowings 0 0
Current liabilities
Trade and other
payables 853,140 602,250
Total liabilities 853,140 602,250
TOTAL EQUITY AND
LIABILITIES 1,696,573 3,525,977
Statement of Changes in Equity
Ordinary Share Share Retained Total
shares premium option earnings equity
reserve
GBP GBP GBP GBP GBP
At 30 June 2014 32,367 1,330,263 8,014 (1,064,932) 305,712
Loss for the
period - - - (3,581,169) (3,581,169)
Total comprehensive
income - - - (3,581,169) (3,581,169)
Reduction in
Capital (2,750,000) 2,750,000 0
Proceeds of
Shares Issued 45,478 6,845,086 6,890,564
Share issue
costs - (745,813) - - (745,813)
Share options
expensed - - 54,433 - 54,433
Total transactions
with owners,
recognised directly
in equity 45,478 3,349,273 54,433 2,750,000 6,199,184
At 30 June 2015 77,845 4,679,536 62,447 (1,896,101) 2,923,727
Loss for the
period - - - (3,039,571) (3,039,571)
Total comprehensive
income 0 0 0 (3,039,571) (3,039,571)
Proceeds of
Shares Issued 5,569 960,697 - - 966,266
Share issue
costs - - - - 0
Share options
expensed - - (6,989) - (6,989)
Total transactions
with owners,
recognised directly
in equity 5,569 960,697 (6,989) 0 959,277
At 30 June 2016 83,414 5,640,233 55,458 (4,935,672) 843,433
Statement of Cash Flows
Year ended Year
30 June ended
2016 30 June
2015
GBP GBP
(audited) (audited)
Cash flow used in operating
activities
Net cash used in operating
activities (2,501,250) (3,431,210)
Cash flow from/(used
in) investing activities
Interest received 15,193 2,568
Additions to property,
plant and equipment (233,617) (244,845)
Additions to intangible
fixed assets (148,750) 0
Net cash used in investing
activities (367,174) (242,277)
Cash flow from/(used
in) financing activities
Issue of equity share
capital 966,266 5,814,773
Net cash from financing
activities 966,266 5,814,773
Net increase in cash
and cash equivalents (1,902,158) 2,141,286
Opening cash and cash
equivalents 2,732,561 591,275
Closing cash and cash
equivalents 830,403 2,732,561
Notes to the Financial Statements
1. ACCOUNTING POLICIES
Basis of preparation
The Company has prepared the accounts on the basis of all
applicable International Financial Reporting Standards (IFRS),
including all International Accounting Standards (IAS), Standing
Interpretations Committee (SIC) and the International Financial
Reporting Interpretations Committee (IFRIC) interpretations issued
by the International Accounting Standards Board (IASB) with
effective dates for accounting periods beginning on or after 1 July
2015, together with those parts of the Companies Act 2006
applicable to companies reporting under IFRS.
The accounts have been prepared on the historical cost basis.
The principal accounting policies, which have been consistently
applied throughout the period presented, are set out below.
The preparation of financial statements in conformity with IFRS
requires the use of certain estimates. It also requires management
to exercise its judgement in the process of applying the company's
accounting policies. Estimates and judgements are continually
reviewed and are based on historical experience and other factors
including expectations of future events that are believed to be
reasonable under the circumstances.
Going concern
At the end of the period the Company had cash and cash
equivalents amounting to GBP830,403. On 4(th) July 2016 the Company
announced its intention to raise a further GBP3.7 million (prior to
deduction of expenses) via a placing of shares on AIM. This placing
was approved by shareholders on 20(th) July 2016, with shares being
admitted to AIM and funds received by the Company on 21(st) July
2016.
The placing leaves the Company with a strong cash position from
which to pursue its growth objectives, it also saw the introduction
of a new investor, Charles Street International Holdings Ltd,
further strengthening the shareholder base intent on supporting
Gfinity achieve its long term objective of being one of the world's
leading eSports organisations.
Accordingly, these accounts have been prepared on a going
concern basis.
2. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the loss
attributable to shareholders by the weighted average number of
ordinary shares in issue during the period.
IAS 33 requires presentation of diluted EPS when a company could
be called upon to issue shares that would decrease earnings per
share, or increase the loss per share. For a loss making company
with outstanding share options, net loss per share would be
decreased by the exercise of options and therefore the effect of
options has been disregarded in the calculation of diluted EPS.
Year to Year to
30 June 30 June
2016 2015
GBP GBP
Loss attributable to shareholders (3,039,571) (3,581,169)
Number Number
000's 000's
Weighted average number
of ordinary shares 81,504 59,895
GBP GBP
Loss per ordinary share (0.04) (0.06)
On 4 December 2014, the Company's shareholders passed a special
resolution to subdivide each ordinary share of GBP1 into 1,000
ordinary shares of GBP0.001 each. Prior period comparative figures
have been adjusted to reflect this subdivision.
3. NOTES TO THE CASH FLOW STATEMENT
30 June 30 June
2016 2015
Cash flows from operating
activities
Loss before taxation (3,136,751) (3,581,169)
Depreciation of property,
plant and equipment 150,191 39,727
Amortisation of intangible
fixed assets 25,776 0
Interest Received (15,193) (2,568)
Share based payments (6,989) 54,433
(Increase) in Inventories (6,489) (3,218)
(Increase)/ decrease in
trade and other receivables 131,080 (429,548)
Increase in trade and
other payables 250,890 491,133
Disposal of fixed assets 9,055 0
Corporation tax (paid)/
received 97,180 0
------------ ------------
Cash used by operating
activities (2,501,250) (3,431,210)
Interest paid - -
------------ ------------
Net cash used by operating
activities (2,501,250) (3,431,210)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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