GFINITY PLC — Earnings Release 2016

Nov 8, 2016

National Storage Mechanism | Additional information

You don't have Javascript enabled. For full functionality this page requires javascript to be enabled.

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 £1.45m (2015: £0.56m)

·     Operating loss decreased by 12.0% to £3.2m (2015: £3.6m)

·     Loss Per Share reduced 33.3% to 4p (2015: 6p)

·     Cash and cash equivalents, as at 30 June 2016, of £0.83m (2015: £2.73m)

·     Following year-end, £3.7m 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 £3.7 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 Officer	Via Walbrook PR
Allenby Capital Limited - Nominated Adviser and Broker	Tel. +44 20 3328 5656
Jeremy Porter / John Depasquale / James Thomas
Walbrook PR (Media & Investor Relations)	Tel: +44 (0)20 7933 8780
Paul McManus / Paul Whittington / Sam Allen	or gfinity@walbrookpr.com

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 £3.7m 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 £3.7m 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 £0.56m to £1.45m 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 £2.00m to £1.61m, 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 £0.85m during the period, from £2.14m to £2.99m, 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 £3.58m to £3.15m.

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 £3.14m (2015 £3.58m).

The Company received a Tax Credit for its Research and Development activities during the period of approximately £0.10m, which led to the final retained loss for the period reducing from £3.58m to £3.04m.

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 £3.43m to £2.50m due to the reduced Loss Before Tax and strong working capital control.

Investment in property, plant and equipment increased from £0.24m to £0.38m during the period which, post depreciation, resulted in the balance sheet reporting an increase in the value of the Company's fixed assets to £0.42m from £0.22m.  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 £2.73m to £0.83m. However, the successful post balance sheet placing announced on 4 July 2016 raised £3.70m, 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 Newzoo1 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.

1Newzoo, 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 2015 to 30 June 2016		1 July 2014 to 30 June 2015
			£		£)
			(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 2016		30 June 2015
			£		£
			(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 shares		Share premium		Share option reserve		Retained earnings		Total equity
	£		£		£		£		£
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 30 June 2016		Year ended 30 June 2015
			£		£
			(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 £830,403.  On 4th July 2016 the Company announced its intention to raise a further £3.7 million (prior to deduction of expenses) via a placing of shares on AIM.  This placing was approved by shareholders on 20th July 2016, with shares being admitted to AIM and funds received by the Company on 21st 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 30 June 2016		Year to 30 June 2015
		£		£
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
		£		£
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 £1 into 1,000 ordinary shares of £0.001 each.  Prior period comparative figures have been adjusted to reflect this subdivision.

3.         NOTES TO THE CASH FLOW STATEMENT

	30 June 2016		30 June 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

FR LFFLLLELDIIR

//<![CDATA[$.ajaxSetup({headers: {'__RequestVerificationToken':'Fo-prKOC7OThUc11XvYwwBLU5ih2CD-saYhSA263JAD0eGgN6ySusRLt9KhJiA3RFSgt8m_q00el-_Bm0YSzy5TGUGyM7AvmsCl0fua1x-o1:9Ye6B_4Zb8qrCmBjF_Rj8O3ft9ZTwnYWz5pgmeOUdkckjoB_btX9K0uVNegbto1iUH9i6_4sUZls64XbNHNxzbsZLCmH8t2LlB2281YMa9o1'}});//]]>