TIDMGFIN
RNS Number : 6725U
Gfinity PLC
27 November 2023
For immediate release
27 November 2023
Gfinity PLC
("Gfinity" or the "Company")
Disposal
The Board of Gfinity plc (AIM:GFIN) announces that the Company
has today disposed of its remaining 27.5 per cent. interest in
Athlos Game Technologies Limited ("Athlos"), its former proprietary
esports technology business, to Tourbillon Group UK Limited (the
"Disposal").
Background
Athlos was originally created by Gfinity as an extension to its
online platform and was used by the Esports Solutions Division, to
deliver online esports tournaments.
However, the Athlos division cost Gfinity approximately GBP2m
per year to operate which became unsustainable, given Gfinity's low
share price and poor market conditions. As previously announced in
June 2023, following a restructuring and refocus on digital media
and its significant position in the Gamer website industry, the
Company sold 72.5% of Athlos to Tourbillon Group UK Limited
("Tourbillon"). Liabilities associated with Athlos were assumed by
Tourbillon, with the buyer also providing initial working capital
to support the business. Gfinity retained a 27.5% shareholding in
Athlos and the consideration payable to Gfinity by Tourbillon was
GBP1.
Since the Disposal, Tourbillon has restructured Athlos, but the
Athlos business still remains substantially loss making and
requires ongoing funding from its shareholders, including Gfinity
from December. The Board of Gfinity estimate that its share of the
ongoing funding commitment is likely to amount to in excess of
GBP25,000 per month for the next year.
Following the restructuring earlier this year, Gfinity is
focusing its resources on its continuing digital media interests
and accordingly, Gfinity is unable fund any further investment into
a legacy business such as Athlos, even if the Board believed that
the potential long-term prospects for Athlos were positive.
Disposal
Accordingly, as Gfinity is both unwilling and unable to
recommence funding Athlos from December, the Board has agreed to
sell Gfinity's remaining 27.5 per cent. interest in Athlos to
Tourbillon for an immediate payment of GBP260,000 in cash. The cash
consideration, which will be used for investment in development of
Gfinity's digital media business and general working capital
purposes, significantly improves Gfinity's financial position and
establishes a stronger base to implement its new plans and reach a
turnaround position. Following the disposal, Gfinity will have no
further interest in or commitment to Athlos.
Related Party
As David Halley is the controlling shareholder and chief
executive of Tourbillon, the disposal is a related party
transaction pursuant to Rule 13 of the AIM Rules for Companies.
Accordingly, the Independent Directors (being the Board other than
David Halley) consider, having consulted with the Company's
Nominated Adviser, that the disposal is fair and reasonable insofar
as Gfinity's Shareholders are concerned. In particular, the
Independent Directors have taken into account that:
- In the current financial year ending 30 June 2024, Athlos is
estimated to require funding from Gfinity at the rate of in excess
of GBP25,000 per month.
- Gfinity is currently unable fund any such further investment
into a legacy business such as Athlos.
- In the absence of the sale, Gfinity would expect to be
significantly diluted in Athlos and would have no certainty that it
would be able to sell its remaining diluted interest for any
value.
- The proposed consideration values Athos at approximately
GBP0.95m, which represents a value multiple of approximately three
times revenue which the Independent Directors believe is in line
with market parameters for an early-stage tech company, with a
similar record and prospects.
Further AIM Disclosures
In the last published audited accounts for the year ended 30
June 2022, Athlos generated revenue of GBP0.3m, with a loss before
tax of GBP0.5m. If capitalised development expenditure were
expensed, the loss before tax would have been GBP1.2m. The assets
of Athlos as at December 2022 were GBP0.7 million.
As previously announced on 6 June 2023, in the year to December
2022, Athlos generated revenue of GBP0.4m, with a loss before tax
of GBP0.5m. If capitalised development expenditure were expensed,
the loss before tax would have been GBP1.2m. The assets of Athlos
as at December 2022 were GBP1.2m. In the 12 months to the end of
May 2023, Athlos absorbed GBP1.5m of Group cash. The financials as
at December 2022 were unaudited.
The sale to Tourbillon in June 2023 was completed before David
Halley either became a director of Gfinity or acquired an interest
in the Company.
Other Information
Further information on the Company including a copy of this
announcement is available from the Company's website:
www.gfinityplc.com
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as it forms part of
UK Domestic Law by virtue of the European Union (Withdrawal) Act
2018 ("UK MAR"). The person who arranged for the release of this
announcement on behalf of the Company was Neville Upton,
Chairman.
Enquiries:
Gfinity Plc Neville Upton ir@gfinity.net
Beaumont Cornish Limited Roland Cornish +44 (0)207 628 3369
Nominated Adviser and Michael Cornish www.beaumontcornish.co.uk
Broker
Beaumont Cornish Limited ("Beaumont Cornish") is the Company's
Nominated Adviser and is authorised and regulated by the FCA.
Beaumont Cornish's responsibilities as the Company's Nominated
Adviser, including a responsibility to advise and guide the Company
on its responsibilities under the AIM Rules for Companies and AIM
Rules for Nominated Advisers, are owed solely to the London Stock
Exchange. Beaumont Cornish is not acting for and will not be
responsible to any other persons for providing protections afforded
to customers of Beaumont Cornish nor for advising them in relation
to the proposed arrangements described in this announcement or any
matter referred to in it.
ENDS
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END
DISEANFKAFSDFFA
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