TIDMGFIN
RNS Number : 5557G
Gfinity PLC
30 March 2022
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014. Upon the publication of
this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.
30 March 2022
Gfinity plc
("Gfinity" or the "Company")
Half Year Results
Gfinity (AIM: GFIN), a world-leading esports solutions provider,
announces its unaudited results for the six-month period ended 31
December 2021.
Financial Highlights:
-- Continued improvement in financial performance through
sustained strategic focus on what the Company owns, with Gfinity
Digital Media ('GDM') driving growth in the business.
-- Revenue of GBP3.3m, an increase of 8% year on year (H1 21:
GBP3.0m) and 22% improvement on previous 6 months (H2 21:
GBP2.7m).
-- Adjusted operating loss([1]) of GBP0.4m, 53% improvement year
on year (H1 21: GBP0.9m loss) and 76% improvement on previous 6
months (H2 21: GBP1.8m loss) as the business continues on its path
towards profitability.
-- Reduction in Adjusted administrative expenses([2]) of 4% to GBP2.4m (H1 21: GBP2.5m).
-- Business well capitalised to continue to deliver on its
objectives following successful fundraising, underlining confidence
in the Company's long-term performance.
Operational Highlights:
Strategic focus on 'what we own' delivering improved financial
performance and growth
Gfinity Digital Media:
-- Continued growth of publishing platform, with revenues up 62%
year on year to GBP1.6m (H1 21: GBP1.0m) driven by increased
annualised revenue per user of 23.3p (up 31% year on year) and 23%
rise in Average Monthly Active Users to 13.9m.
-- 43% year on year improvement in Gross profit to GBP1.0m.
Clear profitable growth engine that is driving the continuation of
the Group's pathway to profitability.
-- Successful acquisitions of SiegeGG, including technology
behind leading statistical analysis of Rainbow Six Siege video
game, and Stock Informer which contributed GBP0.4m of revenue
between acquisition completion on 13 September 2021 and 31 December
2021.
-- Renewed agreement to extend Gfinity's partnership with global
advertising technology platform Venatus into its third year,
driving value per user growth.
-- Significant progress in optimising site infrastructure and
performance, utilising the Company's proprietary manifold content
management system (CMS), leading to strong user numbers in the
second half, with a record 16m monthly active users across GDM
platforms in February.
Technology and Esports Solutions:
-- Revenue from the delivery of esports solutions for third parties remained flat at GBP1.6m.
-- Gfinity continues to be selected by global brands to deliver
esports and gaming solutions, including Nintendo, Coca Cola
Hellenic Bottling Company.
-- Record F1 Esports 2021 Series breaking viewership and
engagement records with Gfinity retained as delivery partner of
choice for 2022 season.
-- In-person publisher esports events, however, have been slow
to return to pre-pandemic levels.
-- Within this segment, revenue directly relating to the
licensing of Gfinity's proprietary esports technology grew 75% to
GBP0.2m (H1 21: GBP0.1m).
o Platform deployed across in-app the competitive programmes for
three of the largest mobile game titles featuring more than 50,000
participants in multiple languages across a number of weekends
during the period
o Platform utilised for the ePremier League qualification for
fourth year running
-- The major strategic focus within this segment is the
productisation of this technology to allow it to be deployed at
scale, with clients benefitting from automated integration into
games and media owners' websites. This is expected to create a high
margin, recurring revenue stream through a SaaS licensing
model.
Co-Owned Esports Properties
-- Consolidation of the V10 R League, Gfinity's jointly owned
digital motorsport property in conjunction with Abu Dhabi
Motorsports Management, into a single season in the second half of
the year has impacted comparable revenue. H1 21 revenue included
GBP0.4m of revenue from this segment. Consolidation of the
programme in this way is intended to allow for the creation of a
live finals event, which will facilitate unlocking sponsorship
revenue from the region.
-- If revenues relating to this were eliminated from the
comparative period, the year on year revenue increase would be
24%.
Balance Sheet strengthened post-period end
As at 31 December 2021, Gfinity had cash reserves of GBP1.5m (30
June 2021: GBP1.4m). Post year end, the Directors took the decision
to secure additional funding, believing it to be in the best
interests of the Group.
On 14 March 2022, the Company successfully completed a fundraise
of GBP2.7 million, before expenses, via a placing and direct
subscription of new ordinary shares of 0.1p each in the Company at
a price of 1.25 pence per share. 50% of this fundraise was within
existing authorities and has completed, with the remaining 50%
subject to shareholder confirmation at the General Meeting to be
held on 1 April 2022. This provides the runway needed for the
Company to be profitable on a month by month basis in 2023.
Outlook
-- Continued delivery of strategy and focus on what we own, with
sustained GDM performance and good momentum heading into the second
half.
-- Slower than anticipated return to live esports events will
impact short term revenue and profits, but do not change the
long-term prospects or future pathway to profitability in 2023.
-- Investment in Gfinity Engage platform expected to create a
further owned, recurring and high margin revenue stream.
John Clarke, CEO, Gfinity said:
"We have continued to improve on financial performance during
the period, despite a slower than anticipated return to live events
and delays in certain revenue streams. The business remains on the
right path to profitability, with increased revenues, lower
operating losses and reduced operating expenditure.
We have strong momentum in our owned revenue streams, in
particular our GDM business, with record engagement numbers and
revenue per user up 270% since its launch. This business continues
to act as the growth engine for the Group, and our focus remains
firmly on building our capabilities and expertise to ensure more
brands choose Gfinity as their trusted partner.
Although the sector is still recovering from the impacts of
Covid-19, macro trends remain in our favour and following a
successful fundraise post-period, we now have the operating
liquidity we need to deliver on our target of reaching
profitability by 2023."
S
Enquiries :
Gfinity plc www.gfinityplc.com
John Clarke, CEO Via Teneo
Teneo (Media) Tel: +44 7880 715975
Anthony Di Natale Gfinity@teneo.com
Canaccord Genuity Limited (AIM Nominated Tel: +44 (0)207
Adviser & Broker) 523 8150
Bobbie Hilliam / Patrick Dolaghan
About Gfinity
Gfinity (AIM: GFIN) is a market-leading digital media publisher
and technology company in the rapidly growing esports and
competitive gaming sector. Created by gamers for the world's three
billion gamers, Gfinity has a unique understanding of this
fast-growing global community. It uses this expertise both to
provide advisory services and to design, develop and deliver
unparalleled experiences and winning strategies for game
publishers, sports rights holders, commercial partners and media
companies.
Gfinity connects its partners with the esports community in
authentic and innovative ways. This consists of on--and-off-line
competitions and industry--leading content production.
Relationships include Activision Blizzard, EA SPORTS, F1 Esports
Series Red Bull, Abu Dhabi Motorsport Management and Coca Cola.
Gfinity connects directly with tens of millions of gamers each
month through its digital media group, Gfinity Digital Media.
Gfinity Digital Media includes websites such as: Gfinityesports,
RealSport101, Epicstream, Stock Informer, StealthOptional,
RacingGames.gg, MTGRocks.com and their respective social
channels.
All Gfinity services are underpinned by the Company's
proprietary technology platform, delivering a level playing field
for all competitors and supporting scalable multi-format leagues,
ladders and knockout competitions.
Operational Review
The six months to 31 December 2021 saw Gfinity continue to make
significant progress against the key strategic pillars of the
business. This focus enabled a significant improvement in financial
performance. The a djusted operating loss([3]) for the period of
GBP0.4m represented a 53% improvement year on year (H1 21: GBP0.9m
loss), which built on a 71% improvement on the performance in H1
20.
Directors believe that building the future of the business
around owned, scalable, higher margin revenue streams relating to
the Gfinity Digital Media segment and the ability to deploy
Gfinity's proprietary esports technology at scale, represents the
right strategy to deliver long term value to investors.
Gfinity Digital Media:
In the six-month period to 31 December 2021, Gfinity continued
to drive growth in both the number of users engaging with written
and video content on its owned digital media platforms, as well as
the revenue derived from each user. As a result, revenue in the
period rose 62% to GBP1.6m.
Monthly Active Users
Unique monthly active users during the period were 13.9m, which
represented a year on year increase of 31%, peaking at over 15m
users in December 2021. Encouragingly, growth continued into H2,
which is traditionally a quieter period for gaming news and by
extension user numbers. In January 2022 monthly active users were
again over 15m, with growth continuing throughout February with a
new monthly record of 16m monthly active users achieved. Growth is
expected to be maintained with users in March expected to exceed 17
million. Including related social platforms, Gfinity's content is
now reaching more than 100m users every month.
The Company continues to target 50m monthly active users on its
owned channels in the short to medium term and 100m monthly active
users in the longer term, through a combination of both organic
growth and targeted acquisitions.
Revenue Per User
The annualised revenue per unique user during H1 grew 31% year
on year to 23p, reflecting a continued growth in advertising rates,
through enhanced scale, prestige and site performance. This was
complimented by a diversification of revenue streams, with an
increased emphasis on affiliate revenues, particularly driven by
the acquisition of the Stock Informer business in September
2021.
During the period, Gfinity extended its partnership with Venatus
into its third year, as its chosen partner for delivery of
advertising revenue. The extended partnership continues to
contribute to the acceleration of Gfinity's value per user across
its fast-growing websites under the GDM.
The Company is targeting annual revenue per user of 30p in the
short to medium term and 50p in the longer term, providing a
significant, recurring, high-margin revenue stream for the
business.
New Site Additions
Three new sites were added to the Gfinity Digital Media network
during the period. The largest of these was the Stock Informer
business, acquired through the acquisition of Megit Ltd, which
completed on 13 September 2021. Stock Informer has built up a
market leading position as an authority on hard-to-find items, with
a particular focus of bringing products of relevance to gamers. Its
proprietary technology enables real-time updates on availability
and pricing of items, from which consumers can click through to the
relevant retailers to make purchases, allowing the business to
drive revenue through affiliate commissions.
In the three-and-a-half-month period following the acquisition,
Stock Informer delivered GBP0.4m of high-margin revenue to the
business. Directors also believe that there is significant
potential for Stock Informer's technology to post relevant price
comparison offers to people viewing relevant content across the
whole GDM network, opening a new revenue stream for Gfinity from
FY23 onwards.
Also in September 2021, Gfinity completed the acquisition of
Siege.gg, a highly-engaged community for the Rainbow Six Siege game
and owner of the leading proprietary statistical dataset in respect
of the competitive following of the game.
The technology, team and methodology behind Siege.gg were
utilised in the period to launch the new site Forerunner.gg in
December 2021. This site focuses on the competitive community tied
to the highly popular Halo game.
Technology:
Throughout the period, Gfinity has continued to deploy its
proprietary esports technology for leading clients. Gfinity's
tournament management platform has been integrated directly into 3
leading mobile game titles, powering the competitive programme for
over 50,000 participants at any one time, enabling players to stay
in the game, rather than going to a third-party tournament play
site. The significant benefit to the game publisher is that it now
keeps its players data.
Gfinity's technology has been used for a fourth consecutive year
to deliver the online qualifying rounds for the ePremier League
programme. Gfinity's community building tools also continued to be
deployed on behalf of Nvidia.
Revenue from the direct deployment of Gfinity's technology,
outside of broader managed esports programmes, rose 75% year on
year to GBP0.2m.
A key strategic initiative is the productisation of this
technology suite, such that it can be quickly and easily deployed
directly into clients' games and media platforms, licensed under a
SaaS model, without the need for custom development work from
Gfinity's team. With those gamers who participate competitively,
spending longer in game and spending more money in-game, this
provides a valuable tool for clients to drive up both engagement
and revenue. The beta version of the "Engage" product that will
facilitate this, will launch during the second quarter of this
calendar year.
Esports Solutions:
Gfinity continues to be selected by global brands to deliver
esports and gaming solutions. In H1 22 Gfinity delivered the live
component of the fourth season of the Formula 1 Pro Series. In 2021
this programme delivered record levels of engagement, including
viewership up 103% year on year.
Other clients in the period included Nintendo, Amazon and Coca
Cola Hellenic Bottling Company.
Co-Owned Esports Properties
During FY21, Gfinity staged the first two seasons of V10 R
League, Gfinity's jointly owned digital motorsport property in
conjunction with Abu Dhabi Motorsports Management. The series has
created a strong basis for growth, with participation from leading
teams including Red Bull, Ford, BMW, Aston Martin and McLaren among
others, broadcast through distribution partners including ESPN and
BT Sport.
During FY22, the decision was taken to consolidate the V10 R
League into a single season in the second half of the year. This
allows for a more consolidated block of content, together with live
finals to be staged from Abu Dhabi, which it is believed will
create a more compelling proposition for sponsorship, particularly
from partners in the Middle East.
H1 21 revenue included GBP0.4m of revenue from this segment. If
revenues relating to this were eliminated from the comparative
period, the total year on year revenue increase for the period
would be 24%.
Outlook
Directors believe that Gfinity's focus on owned, high-margin,
scalable revenue streams is the right strategy to deliver
significant long-term value for shareholders. The 53% reduction in
operating loss, building on a 71% reduction in the prior year,
demonstrates this strategy is already delivering a significantly
improved financial performance. Directors expect both the audience
and monetisation of its owned Gfinity Digital Media business to
continue to grow, building on the 62% year on year uplift delivered
in the six-month period to 31 December 2021. It is also believed
that the productisation of Gfinity's esports platform will create a
further revenue stream of scale over future years.
Despite this, revenue growth is not always linear and the timing
of certain esports programmes cannot always be guaranteed. As a
result, in March 2022, Directors took the decision to raise a
further GBP2.7m before costs, accompanied by a one for one warrant
at the exercise price. This over-subscribed placing has secured the
business in a strong position from which to pursue its growth
objectives into the second half of FY22 and beyond, continuing its
path to delivering month on month profitability in 2023.
Financial Review
Revenue for the six-month period to 31 December 2021 was
GBP3.3m. This represented an increase of 8% year on year (H1 21:
GBP3.0m) and 22% improvement on the previous 6 months (H2 21:
GBP2.7m).
The proportion of revenue attached to owned assets, including
Gfinity's Digital Media network, jointly owned esports programmes
and the licensing of Gfinity's proprietary esports technology, rose
to 55% of total income (GBP1.8m). This compared to a figure of 49%
in H1 21, despite the prior year comparative period including
GBP0.4m from the first season of the V10 R League programme, now
condensed into a single season in the second half of FY22.
The sharpened focus on owned, higher margin revenue streams
delivered gross profit for the six-month period of GBP1.9m at a
gross margin of 60% (H1 21: GBP1.5m at 50%).
This growth was achieved with a reduction of 4% in adjusted
administrative expenses([4]) to GBP2.4m (H1 21: GBP2.5m). This
resulted in an adjusted operating loss([5]) , reduced by 53% to
GBP0.4m (FY21 H1: GBP0.9m loss).
In the period, Gfinity completed two acquisitions, supporting
the strategy to grow both the audience and monetisation of the
Gfinity Digital Media network.
In September 2021, Gfinity acquired the entire issued share
capital of Megit Ltd, the owner of the Stock Informer brand, for
consideration consisting of GBP2.5m in cash, GBP2.5m of equity in
Gfinity plc and an earn out calculated at 30% of revenue in each of
the first 3 years post-acquisition. The fair value of this
consideration has been estimated at GBP6.6m.
Also in September, Gfinity acquired the trade and assets of
Siege.gg, a leading digital community and owner of statistical
information in respect of the competitive following of the Rainbow
Six Siege game. Consideration for this acquisition comprised 9
million ordinary shares and an earn out amounting to 30% of revenue
in the first two years post-acquisition. The fair value of this
consideration has been estimated at GBP6.6m.
Directors consider the development of an easily deployed,
licensable version of Gfinity's proprietary esport technology
product to be a major strategic initiative, with the potential to
drive significant future SaaS revenues for the business. On that
basis GBP0.3m of costs invested directly in the development of this
product have been capitalised in the period.
Gfinity had cash of GBP1.5m at 31 December 2021. In March 2022,
the Directors announced their intention to raise a minimum of a
further GBP1.0m, accompanied by a one for one warrant at the
exercise price. This placing was heavily over-subscribed from a
combination of both existing and new shareholders. In the light of
current macro-economic conditions the Directors elected to take a
total of GBP2.7m, plus potential future funds from any warrant
exercises.
Group Statement of Profit or Loss
6 months 6 months Year to
to 31 December to 31 December 30 June
2021 2020 2021
Unaudited Unaudited Audited
GBP GBP GBP
CONTINUING OPERATIONS
Revenue 3,261,361 3,013,309 5,693,385
Cost of sales (1,320,260) (1,492,205) (3,085,409)
Gross profit/(loss) 1,941,101 1,521,104 2,607,976
Other Income 697 50,280 54,354
Administrative expenses (3,511,533) (2,863,226) (7,179,327)
Operating loss (1,569,735) (1,291,842) (4,516,997)
Disposal of Associate Gain
/ (Loss) 45,090 459,706 459,706
Finance income 2 - 4
Finance Costs - (8,988) (10,236)
Loss on ordinary activities
before tax (1,524,643) (841,124) (4,067,524)
Taxation 117,685 - 221,929
---------------- ---------------- ---------------------
Retained loss for the year (1,406,958) (841,124) (3,845,595)
Earnings per Share -GBP0.00 -GBP0.00 -GBP0.00
Group statement of comprehensive income
6 months 6 months Year to
to 31 December to 31 December 30 June
2021 2020 2021
Unaudited Unaudited Audited
Items that will not be reclassified
to profit or loss
Foreign exchange profit / (loss)
on retranslation of foreign
Subsidiaries (5,510) (4,763) (12,887)
---------------- ---------------- ------------
Other Comprehensive Income
for the period (5,510) (4,763) (12,887)
Loss and total comprehensive
income for the period (1,412,468) (845,887) (3,858,482)
Group Statement of Financial Position
As at 31 December As at 30 June
2021 2021
Unaudited Audited
GBP GBP
NON CURRENT ASSETS
Property, plant and equipment 200,110 187,366
Goodwill 5,259,307 1,903,790
Intangible fixed assets 5,240,418 704,481
10,699,835 2,795,637
CURRENT ASSETS
Trade and other receivables 2,096,066 1,586,850
Cash and cash equivalents 1,493,549 1,375,873
3,589,615 2,962,723
TOTAL ASSETS 14,289,450 5,758,360
EQUITY AND LIABILITIES
Equity
Ordinary shares 1,099,697 930,513
Share premium account 52,488,918 46,511,089
Other reserves 3,843,012 3,384,914
Retained earnings (48,709,655) (47,302,697)
Total equity 8,721,972 3,523,819
Non-current liabilities
Other Payables 1,316,801 254,986
Deferred Tax Liabilities 1,065,626 127,835
Current liabilities
Trade and other payables 3,185,051 1,851,720
Total liabilities 5,567,478 2,234,541
TOTAL EQUITY AND LIABILITIES 14,289,450 5,758,360
Group Cash Flow Statement
6 months 6 months Year to
to 31 December to 31 December 30 June
2021 2020 2021
Unaudited Unaudited Audited
GBP GBP GBP
Cash flow used in operating
activities
Net cash used in operating
activities (592,836) (439,160) (2,049,833)
Cash flow from/(used in)
investing activities
Interest received 2 - 4
Additions to property, plant
and equipment (68,850) (80,103) (106,642)
Additions to intangible
assets (351,103) - (16,030)
Payments to acquire trade (2,155,630) - -
& assets on business combination
Gain on disposal of associate 45,090 459,706 459,706
Net cash used in investing
activities (2,530,491) 379,603 337,038
Cash flow from/(used in)
financing activities
Issue of equity share capital 3,246,513 601,666 1,950,649
Repayment of leases - (306,486) (439,621)
Bank interest payable - (1,010) (10,236)
Net cash from financing
activities 3,246,513 294,170 1,500,792
Net increase in cash and
cash equivalents 123,186 234,613 (211,833)
Effect of currency translation
on cash (5,510) (4,763) (12,890)
Opening cash and cash equivalents 1,375,873 1,600,596 1,600,596
Closing cash and cash equivalents 1,493,549 1,830,446 1,375,873
Statement of Changes in Equity
Ordinary Share Share Retained Forex Total
shares premium option earnings equity
reserve
GBP GBP GBP GBP GBP GBP
At 30 June 2020 725,868 44,405,086 3,137,831 (43,457,102) (5,613) 4,806,070
Loss for the
period - - - (841,124) - (841,124)
Other Comprehensive
Income - - - - (4,763) (4,763)
Total comprehensive
income - - - (841,124) (4,763) (845,887)
---------- ----------- ---------- ------------- ---------- ------------
Proceeds of shares
issued 70,645 895,810 - - - 966,455
Share Issue Costs - (4,789) - - - (4,789)
Share options
expensed - - 81,744 - - 81,744
Total transactions
with owners,
recognised directly
in equity 70,645 891,021 81,744 - - 1,043,410
At 31 Dec 2020 796,513 45,296,106 3,219,575 (44,298,226) (10,376) 5,003,592
Loss for the
period - - - (3,004,471) - (3,004,471)
Other comprehensive
income - - - - (8,124) (8,124)
Total comprehensive
income - - - (3,004,471) (8,124) (3,012,595)
---------- ----------- ---------- ------------- ---------- ------------
Proceeds of shares
issued 134,000 1,214,983 - - - 1,348,983
Share Issue Costs - - - - - -
Share options
expensed - - 183,839 - - 183,839
Total transactions
with owners,
recognised directly
in equity 134,000 1,214,983 183,839 - - 1,532,822
At 30 June 2021 930,513 46,511,089 3,403,414 (47,302,697) (18,500) 3,523,819
Loss for the
period - - - (1,406,958) - (1,406,958)
Other comprehensive
income - - - - (5,510) (5,510)
Total comprehensive
income - - - (1,406,958) (5,510) (1,412,468)
---------- ----------- ---------- ------------- ---------- ------------
Proceeds of shares
issued 169,184 6,183,150 - - - 6,352,334
Share Issue Costs - (205,321) - - - (205,321)
Share options
expensed - - 463,608 - - 463,608
Total transactions
with owners,
recognised directly
in equity 169,184 5,977,829 463,608 - - 6,610,621
At 31 Dec 2021 1,099,697 52,488,918 3,867,022 (48,709,655) (24,010) 8,721,972
Notes to the interim financial statements
1. General Information
Gfinity plc is a company limited by shares, incorporated and
domiciled in the United Kingdom under the Companies Act 2006. Its
registered office is 16 Great Queen Street, London, England, WC2B
5AH. Its shares are quoted on the AIM market of London Stock
Exchange.
The functional and presentational currency is GBP sterling
because that is the currency of the primary economic environment in
which the group operates. Foreign operations are included in
accordance with the policies set out in note 2.
These condensed interim financial statements were approved for
issue on 29 March 2022.
The financial statements have been reviewed by the Group's
auditors but not audited.
2. Accounting Policies and Basis of Preparation
Basis of Preparation
The interim financial statements for the six months ended 31
December 2021 have been prepared using accounting policies that are
consistent with those of the audited financial statements for the
period ended 30 June 2021 and in accordance with IAS 34, "Interim
Financial Reporting" as adopted by the European Union. The interim
financial information should be read in conjunction with the
Group's Annual Report and Accounts for the year ended 30 June 2021,
which has been prepared in accordance with IFRS as adopted by the
European Union.
The interim financial information contained in this report has
been reviewed but not audited and does not constitute statutory
accounts within the meaning of section 434 of the Companies Act
2006.
The Annual Report and Accounts for the year ended 30 June 2021
has been filed with the Registrar of Companies. The auditors'
report on those accounts was unqualified, did not include a
reference to any matters to which the auditors drew attention by
way of emphasis without qualifying the report and did not contain
statements under s498(2) or s498(3) of the Companies Act 2006.
Significant Accounting Policies
The critical accounting policies and presentation followed in
the preparation of this interim report have been
consistently applied to all periods in these financial
statements and are the same as those applied in the company's
annual accounts for the year ended 30 June 2020.
A copy of the accounts to 30 June 2021 can be obtained from the
company's website: www.gfinityplc.com .
Critical Accounting Judgements
The preparation of financial statements in conforming with
adopted IFRS requires management to make judgements, estimates and
assumptions that affect the application of policies and reported
amounts of assets, liabilities, income and expenses. The estimates
and assumptions are based on historical experience and other
factors considered reasonable at the time, but actual results may
differ from those estimates. Revisions to these estimates are made
in the period in which they are recognised.
The critical accounting judgements made in preparing this
interim report are the same as those in preparing the annual
accounts for the Company for the year ended 30 June 2021 which can
be obtained from the company's website: www.gfinityplc.com .
Going Concern
Despite the significant reduction in operating loss delivered in
H1, revenue growth in such a new and rapidly evolving industry is
not always linear and certain initiatives, which were originally
anticipated for H2 of FY22, are now likely to take slightly longer
to materialise.
As a result, in March 2022 directors announced their intention
to raise a minimum of GBP1m, coupled with a one for one warrant at
the exercise price to support working capital requirements and
continue to support growth initiatives. The fundraise was heavily
over-subscribed, confirming continued investor support for the
business. As a result, in the context of an uncertain global
macro-economic situation, the directors opted to raise GBP2.7m,
coupled by a one for one warrant at the exercise price, to be
exercised within a 12-month period.
Management have prepared forecasts to 30 June 2023, under a
number of scenarios. Under each of these scenarios, following this
fundraise, the Company has sufficient cash reserves to continue to
operate for a further 12 months. As a result, directors believe
that the going concern basis for the preparation of these accounts
is appropriate.
3. Loss 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.
During the 6 month period to 31 December 2021, Gfinity issued
13,750,000 shares as the result of warrant exercises, 82,500,000
shares as the result of the fund raise, 1,433,331 as the results of
employee option exercises and 62,500,000 of new shares in relation
to the acquisition of Megit Ltd and 9,000,000 of new shares in
relation to the acquisition of Siege.gg.
6 months 6 months Year ended
ended 31 ended 31 30 Jun 2021
Dec 2021 Dec 2020
GBP GBP GBP
Loss attributable to shareholders
from continuing operations (1,412,468) (845,887) (3,858,482)
Number Number Number
000's 000's 000's
Weighted average number of
ordinary shares 963,463 767,286 809,795
Loss per ordinary share for
continuing operations -0.00 -0.00 -0.00
4. Notes to the Cash Flow Statement
6 months 6 months Year to
to 31 December to 31 December 30 June
2021 2020 2021
Unaudited Unaudited Audited
GBP GBP GBP
Cash flows from
operating
activities
Loss for the
financial year (1,406,958) (841,124) (3,845,595)
Depreciation of
property, plant
and equipment 56,109 62,751 132,478
Depreciation on
right of use
assets - 293,515 428,305
Amortisation of
intangible fixed
assets 631,608 253,108 492,700
Goodwill
impairment - - 901,519
Interest Received (2) - (4)
Interest Payable - 8,988 10,236
Share based
payments 463,608 81,744 265,583
(Increase) in - - -
Inventories
(Increase)/
decrease in
trade
and other
receivables (509,217) 193,306 (280,359)
Increase/
(decrease) in
trade
and other
payables 334,791 (31,657) 300,020
Disposal of fixed
assets - (85) (85)
Gain on disposal
of Associate (45,090) (459,706) (459,706)
Corporation tax
charge - - 227,004
Corporation tax
(paid)/ R&D
credits
received (117,685) - (221,929)
------------------------------ ------------------------------ ------------------------------
Cash used by
operating
activities (592,836) (439,160) (2,049,833)
Net cash used by
operating
activities (592,836) (439,160) (2,049,833)
5. Segmental Information
The Group is managed on the basis of four segments:
- Gfinity Digital Media: monetisation of Gfinity's own network
of digital media sites, primarily through, advertising, sponsorship
and affiliate revenues
- Owned Content: The creation of esports programmes and content,
in which Gfinity owns or co-owns the output and hence shares in the
commercial revenue, including sponsorship and content rights that
come as a result
- Service Delivery: the delivery of esports solutions and
content for third parties, including high profile game publishers,
sports rights holders and brands, under a fee-based model
- Technology: Licensing and fees for the direct deployment of
Gfinity's proprietary esports technology, outside of a managed
esports programme.
6 months ended 6 months ended Year ended
31 Dec 2021 31 Dec 2020 30 June 2021
GBP GBP GBP
Gfinity digital media 1,647,899 1,006,309 1,623,497
Owned content - 382,235 728,065
Service delivery 1,479,697 1,530,333 3,118,975
Platform as a service 133,765 94,431 222,847
Total Revenue 3,261,361 3,013,309 5,693,385
=============== =============== ==============
Segmental information for the statement of financial position
has been presented as management do view this information on a
segmental basis. Intra-group recharges are not considered when
monitoring performance with central charges (such as senior
management costs) retained in Gfinity PLC rather than being
apportioned across segments.
6. Revenue
The Group's policy on revenue recognition is as outlined in note
2 of the financial statements for the year ending June 2021. The
period ending December 2021 included GBP153,643 in the contract
liability balance and at the beginning of the period (December
2020: GBP0.4m and year ending June 2021: GBP364,024).
The Group's revenue disaggregated by primary geographical
markets is as follows:
6 months ended 31 Dec 2021
Gfinity Cevo Megit Ltd Total
GBP GBP GBP GBP
United Kingdom 1,563,860 - 425,547 1,989,407
North America 699,011 166,797 - 865,808
ROW 512,668 - - 512,668
Total 2,775,538 166,797 425,547 3,367,882
========== ======== ========== ==========
6 months ended 31 Dec 2020
Gfinity Cevo Megit Ltd Total
GBP GBP GBP GBP
United Kingdom 2,079,447 - - 2,079,447
North America 530,306 58,465 - 588,771
ROW 345,090 - - 345,090
Total 2,954,843 58,465 - 3,013,309
========== ======= ========== ==========
Year ended 30 June 2021
Gfinity Cevo Megit Ltd Total
GBP GBP GBP GBP
United Kingdom 4,144,440 - - 4,144,440
North America 902,408 322,741 - 1,225,149
ROW 539,069 - - 539,069
Total 5,585,917 322,741 - 5,908,659
========== ======== ========== ==========
The Group's revenue disaggregated by pattern of revenue of
revenue recognition is as follows:
6 months ended 31 Dec 2021
Gfinity Cevo Megit Ltd Total
GBP GBP GBP GBP
Services transferred
at
a point in time 1,568,313 166,797 425,547 2,160,657
Services transferred
over time 1,207,226 - - 1,207,226
Total 2,775,538 166,797 425,547 3,367,882
========== ======== ========== ==========
6 months ended 31 Dec 2020
Gfinity Cevo Megit Ltd Total
GBP GBP GBP GBP
Services transferred
at
a point in time 1,922,827 58,465 - 1,981,292
Services transferred
over time 1,032,017 - - 1,032,017
Total 2,954,844 58,465 - 3,013,309
========== ======= ========== ==========
Year ended 30 June 2021
Gfinity Cevo Megit Ltd Total
GBP GBP GBP GBP
Services transferred
at
a point in time 3,432,959 322,741 - 3,755,700
Services transferred
over time 2,152,959 - - 2,152,959
Total 5,585,918 322,741 - 5,908,659
========== ======== ========== ==========
As at 31 December 2021 the Group had the amounts shown below
held on the consolidated statement of financial position in
relation to contracts either performed in full during the year or
ongoing as at the year end. All amounts were either due within one
year or, in the case of contract liabilities, the work was to be
performed within one year of the balance sheet date.
Dec-21 Jun-21
GBP GBP
Trade Receivables 1,363,845 1,024,696
Contract Assets 493,102 244,835
Contract Liabilities 153,643 364,024
Trade receivables are non-interest bearing and are generally on
30 day terms. Credit risk of customers is low with many being large
multinational corporations.
Contract assets are initially recognised for revenue earned
while the services are delivered over time or when billing is
subject to final agreement on completion of the milestone. Once the
amounts are billed the contract asset is transferred to trade
receivables.
Contract liabilities arise when amounts are paid in advance of
the delivery of the service. These are then transferred to the
statement of comprehensive income as either milestones are
completed or work is completed overtime.
7. Gain on Disposal of Associate
During the six month period to 31 December 2021, the process of
winding up Gfinity Esports Australia (PTY), in which Gfinity held a
30% shareholding, was completed. On completion of this process,
funds remaining in the business were re-distributed to
shareholders. With all amounts invested in this venture having
previously been expensed, his resulted in a one-off gain on
cessation of the business of GBP45,090.
8. BUSINESS COMBINATIONS
Megit Ltd
Acquisition of Megit Ltd
On 14 September 2021 Gfinity PLC acquired 100% shares of Megit
Ltd, owner of the Stock Informer brand. Stock Informer has built up
a market leading position as an authority on hard-to-find items,
with a particular focus to products of relevance to gamers. Its
proprietary technology enables real-time updates on availability
and pricing of items, from which consumers can click through to the
relevant retailers to make purchases, allowing the business to
drive revenue through affiliate commissions.
Purchase consideration
Initial consideration GBP
Shares (62,500,000 Ordinary shares at GBP0.04) 2,500,000
Cash 2,500,000
Acquisition cost 51,250
Total initial consideration 5,051,250
Deferred consideration
Contingent consideration at fair value 1,551,677
Total deferred consideration 1,551,677
Total consideration payable 6,602,927
==========
Contingent consideration
Contingent consideration is payable based on revenue generated
from the acquired entity. The amount payable is calculated at 30%
of relevant revenues received in the first, second and third 12
month periods after the acquisition date, up to a maximum of
GBP1,800,000 across the 3 year period. The fair value of the
contingent consideration is currently estimated to be GBP1,551,677
based on forecast revenues at the date of the acquisition.
Net assets acquired
The fair values of the assets and liabilities of the acquired of
Megit Ltd as at the date of acquisition are as follows:
GBP
Intangible assets: domain authority 3,944,713
Intangible assets: technology 715,741
Deferred tax liability (1,021,342)
Net identifiable assets acquired 3,639,112
Add: Goodwill 2,963,814
Net assets acquired 6,602,927
============
The goodwill that arises from the business combination reflects
the profitability of the acquired trade and assets and the enhanced
growth prospects for the combined business. None of the goodwill is
expected to be deductible for tax purposes.
Siege.gg
Acquisition of Siege.gg
On 8 September 2021 Gfinity PLC acquired trade and assets of
Siege.gg, a highly-engaged community for the Rainbow Six Siege game
and owner of the leading proprietary statistical dataset in respect
of the competitive scene around that game.
Purchase consideration
Initial consideration GBP
Shares (9,000,000 Ordinary shares at GBP0.0445) 400,500
Acquisition cost 4,380
Total initial consideration 404,880
Deferred consideration
Contingent consideration at fair value 108,678
Total deferred consideration 108,678
Total consideration payable 513,558
========
Contingent consideration
Contingent consideration is payable based on revenue generated
from the acquired assets. The amount payable is calculated at 30%
of relevant revenues received in the first and second 12 month
periods after the acquisition date, up to a maximum of 1,500,000
across the two-year period. The fair value of the contingent
consideration is currently estimated to be GBP108,678 based on
forecast revenues at the date of the acquisition.
Net assets acquired
The fair values of the assets and liabilities of the acquired of
Megit Ltd as at the date of acquisition are as follows:
GBP
Intangible assets: statistical data and domain
authority 155,989
Deferred tax liability (34,134)
Net identifiable assets acquired 121,855
Add: Goodwill 391,703
Net assets acquired 513,558
=========
The goodwill that arises from the business combination reflects
the profitability of the acquired trade and assets and the enhanced
growth prospects for the combined business. None of the goodwill is
expected to be deductible for tax purposes.
([1]) Adjusted operating loss is before interest, tax,
depreciation, amortisation, impairment and the share-based payment
expense.
([2]) Adjusted administrative expenses show the underlying
operating expenditure of the company, adjusting for the same items
as with the adjusted operating loss.
([3]) Adjusted operating loss is before interest, tax,
depreciation, amortisation, impairment and the share-based payment
expense.
([4]) Adjusted administrative expenses show the underlying
operating expenditure of the company, adjusting for the same items
as with the adjusted operating loss
([5]) Adjusted operating loss is before interest, tax,
depreciation, amortisation, impairment and the share-based payment
expense.
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END
IR WPUWAWUPPUCU
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