REG - Gfinity PLC - Disposal

GfinityAnnouncement

27/11/2023 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20231127:nRSa6725Ua&default-theme=true

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 £2m 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 £1.

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 £25,000 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
£260,000 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 £25,000
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 £0.95m,
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 £0.3m, with a loss before tax of £0.5m. If capitalised
development expenditure were expensed, the loss before tax would have been
£1.2m. The assets of Athlos as at December 2022 were £0.7 million.

 

As previously announced on 6 June 2023, in the year to December 2022, Athlos
generated revenue of £0.4m, with a loss before tax of £0.5m. If capitalised
development expenditure were expensed, the loss before tax would have been
£1.2m. The assets of Athlos as at December 2022 were £1.2m. In the 12 months
to the end of May 2023, Athlos absorbed £1.5m 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
(http://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 Broker   Michael Cornish   www.beaumontcornish.co.uk (http://www.beaumontcornish.co.uk/)

 

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

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  DISEANFKAFSDFFA