Full Year Results for the period ended 30 June 2016
Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR)
Gfinity plc (AIM: GFIN), a leading eSports business, announces its full year results for the period ended 30 June 2016.
- 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.
- Launched a number of digital assets to underpin Gfinity's position as a leading provider of complete end-to-end eSports solutions, including:
- The bespoke Tournament Builder App, exclusively for Xbox One users, allowing eSports enthusiasts to create and manage their own eSports competitions;
- Gfinity TV; the Company's own online TV Player, giving the viewer greater control over their viewing experience than ever before;
- 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:
- Selected by Microsoft to host the "Xbox Play Like a Legend" Championship using FIFA 16 for a second successive year;
- Selected by EA Sports to launch the Battlefield 1 video game from the Gfinity Arena;
- Selected by Super Evil Megacorp to stage VainGlory European Winter Championships
- 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
- 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.
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.
7 November 2016
Chief Executive's Review
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.
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.
Chief Executive Officer
7 November 2016
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.
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.
1 Newzoo, Global Esports Market Report, https://newzoo.com/solutions/revenues-projections/global-esports-market-report/
7 November 2016
|1 July 2015 to
30 June 2016
|1 July 2014 to
30 June 2015
|Cost of sales||(1,606,036)||(2,001,820)|
|Loss on ordinary activities before tax||(3,136,751)||(3,581,169)|
|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)|
|30 June 2016||30 June 2015|
|NON CURRENT ASSETS|
|Property, plant and equipment||417,193||219,848|
|Trade and other receivables||439,270||570,350|
|Cash and cash equivalents||830,403||2,732,561|
|EQUITY AND LIABILITIES|
|Share premium account||5,640,233||4,679,536|
|Trade and other payables||853,140||602,250|
|TOTAL EQUITY AND LIABILITIES||1,696,573||3,525,977|
|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|
30 June 2016
30 June 2015
|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|
|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|
The notes are available in the PDF download.
Page last up-dated: 8 November 2016