REG - Gfinity PLC - Half-year Report
19/03/2024 07:00
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RNS Number : 3254H Gfinity PLC 19 March 2024
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.
19 March 2024
Gfinity plc
("Gfinity" or the "Company")
Half Year Results
Gfinity (AIM: GFIN), a leading Digital Media provider, announces its unaudited
results for the six-month period ended 31 December 2023 and which are also
available on the Company's website www.gfinityplc.com
(http://www.gfinityplc.com)
Operational Highlights:
The period ended 31 December 2023 was a transitional period for the Company.
During this period we made significant cost cuts through headcount reduction,
renegotiated contracts and exiting unprofitable business lines.
After divesting the majority of Athlos Gaming Technologies in June 2023, we
completed the full exit in this period. We thus reduced any ongoing exposure
to Athlos (Athlos requires significant further investment over the next 12
months, and a refocus on their product offering). The completed exit generated
proceeds of £260,000, and a profit on disposal of the same amount, which is
included in the Operating Loss, as shown in the Profit and Loss account*.
The Company was also able to divest our Esports Solutions division, while
retaining some potential upside stake, without the risk of any further
liabilities. The esports sector has been in a multi-year downturn, with the
industry's leaders all trying to find a profitable business model, based on
broadcasting and one off events, without control of game IP.
In the past 6 months, Gfinity has laid essential groundwork for new, future
revenue growth: in terms of traffic/audience, by launching new sites and
collaborating with national publishers on gaming content; and, in terms of
sales, by taking more control in-house - both commercially and technically -
of our advertising and sponsorship sales, we are now well placed to drive
improved yields, and volumes.
In addition, we have reduced the digital media and management headcount.
Restructuring our website editorial and writing teams to a more centralised
structure enabled over 50% reduction; and at a senior level, we have reduced
by two Directors, along with other senior roles. We now operate a much flatter
and responsive model, more in keeping with today's technology industry.
The actions above show significant progress in cost cutting, with monthly
costs reduced by over 70%, and headcount now appropriate for a modern digital
company. Gfinity has now moved to a period where we can focus on profitability
through a new more disciplined approach to our budget.
Gfinity is now focused as a pure play digital media network, operating 12
sites. The Gfinity Digital Media network performed well during the period,
with revenues increasing, and monthly session numbers rebounding to over
10,000,000 in December. The network added one new site in the period, with
plans to add at least one further site in H2 2024. We have also incorporated
AI into our processes, to streamline workflows and make considerable
savings.
As a gaming and entertainment network, we continue to be highly attractive to
advertisers, which is reflected in our healthy income per user.
The Company appointed David Halley as CEO in August, to oversee the overhaul
of the Company into an effective platform for future growth.
Outlook
The whole digital media sector experienced significant pressure in H2 2023,
with several Google algorithm changes creating uncertainty and headwinds.
However, the gaming vertical continues to generate interest, and remains an
exciting part of the sector into the future.
Now we have concluded our budget reduction process, we are confident we can
deliver further improvements in profitability in H2 FY2024, with cashflow
increasing as we improve and increase our sites and editorial.
Overall, Gfinity remains well positioned as a business, with a strong
reputation, an owned audience and proprietary technology in an industry that
continues to grow. The Directors believe that the actions taken over the six
months to December 2023 have positioned the business to fully capitalise on
that opportunity. In 2024, we believe there will be consolidation in our
market, with distressed players for sale; and big opportunities will arise in
the monetisation of publishers and the attached technology which Gfinity can
own and leverage to create large, scalable opportunities.
For further information please contact:
Enquiries:
Gfinity Plc Neville Upton ir@gfinity.net (mailto: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.
Group Statement of Profit or Loss
6 months to 31 December 2023 Unaudited 6 months to 31 December 2022 Unaudited Year to 30 June 2023 Audited
£ £ £
CONTINUING
OPERATIONS
Note
Revenue 805,741 1,360,345 2,190,216
4
Cost of sales (238,207) (636,704) (953,905)
Gross profit 567,534 723,641 1,236,311
Administrative expenses *(586,739) (1,661,552) (3,788,329)
Operating loss (19,205) (937,911) (2,552,018)
Impairment charge - - (5,984,171)
Re-assessment of Deferred Consideration - - 931,311
Loss arising on loss of control of a subsidiary - - (548,761)
Finance income 152 373 -
Finance Costs (590) - (25,976)
Loss on ordinary activities before tax (19,643) (937,538) (8,179,615)
Taxation 194,916 123,459 974,876
Retained profit/(loss) for the period 175,273 (814,079) (7,204,739)
Loss on discontinued operations, net of tax - (960,200) (3,050,097)
Profit/(loss) and total comprehensive profit/(loss) for the period 175,273 (1,774,279) (10,254,836)
Earnings per Share (Basic) 3 0.006 (0.001) (0.42)
Group statement of comprehensive income
6 months to 31 December 2023 Unaudited 6 months to 31 December 2022 Unaudited Year to 30 June 2023 Audited
£ £ £
Profit/(loss) for the Period 175,273 (1,774,279) (10,254,836)
Items which may subsequently be reclassified to profit or loss
Foreign exchange gain on retranslation of foreign operations 2,326 3,501 -
Other Comprehensive Income for the period 2,326 3,501 -
Loss and total comprehensive loss for the period 177,599 (1,770,778) (10,254,836)
Group Statement of Financial Position
As at 31 December 2023 Unaudited As at 30 June 2023 Audited
£ £
NON CURRENT ASSETS
Property, plant and equipment - 14,757
Goodwill 495,288 495,288
Intangible fixed assets 415,155 415,155
Other non-current assets 15 -
910,458 925,200
CURRENT ASSETS
Trade and other receivables 393,247 644,540
Cash and cash equivalents 215,525 270,476
608,772 915,016
TOTAL ASSETS 1,519,230 1,840,216
EQUITY AND LIABILITIES
Equity
Share capital 2,722,330 2,649,030
Share premium 55,710,586 55,367,959
Other reserves 423,613 423,613
Retained earnings (57,811,929) (57,989,529)
Non-controlling interest 3 3
Total equity 1,044,603 451,076
Non-current liabilities
Other Payables - 17,669
Deferred Tax Liabilities - 72,390
- 90,059
Current liabilities
Other creditors 54,013 -
Trade and other payables 255,584 1,060,794
Provisions 92,640 238,287
Deferred Tax Liabilities 72,390 -
Total liabilities 474,627 1,389,140
TOTAL EQUITY AND LIABILITIES 1,519,230 1,840,216
Group Cash Flow Statement
6 months to 31 December 2023 Unaudited 6 months to 31 December 2022 Unaudited Year to 30 June 2023 Audited
£ £ £
Cash flow used in operating activities
Profit/(loss) for the period 175,273 (1,774,279) (10,254,837)
Adjustments for
Depreciation 14,757 47,093 33,254
Amortisation - 860,758 1,846,164
Impairment of assets - - 5,984,171
Gain on disposal of fixed assets - (112,808)
Interest paid 591 - -
Interest received (152) (373) (885)
Share based payments - 150,458 77,691
Increase in credit loss provision - - 29,945
Re-evaluation of contingent consideration - - 51,494
Loss on loss of control of subsidiary - - (931,311)
Profit on disposal of associate (260,000) - -
(Decrease)/Increase in provisions (145,647) - 238,287
Current and deferred tax credit - (164,591) (974,876)
Total (215,178) (880,934) (3,464,950)
(increase)/decrease in receivables 251,293 377,272 1,324,353
(decrease)/Increase in payables excluding contingent consideration (852,498) 527,622 (907,062)
Tax credit recovered 202,276 - 109,732
Net operating (outflow)/inflow (614,107) 23,960 (2,937,927)
Cash flow from/(used in) investing activities
Interest 152 373 885
received
Additions to property, plant and equipment - (3,558) (3,498)
Additions to intangible assets - (477,140) -
Payment of deferred/contingent consideration (118,642) - (1,031,307)
Net proceeds on disposal of fixed assets - - 213,668
Proceeds on disposal of associate 260,000 - -
Investment in associate (15) - -
Net cash from/(used in) investing activities 141,495 (480,325) (820,252)
Group Cash Flow Statement (continued)
Cash flow from/(used in) financing activities
Issue of equity share capital (net of costs) 415,927 (2,000) 1,887,294
Interest paid (591)
Net cash from/(used in) financing activities 415,336 (2,000) 1,887,294
Net (decrease) /increase in cash and cash equivalents (57,276) (458,365) (1,870,885)
Effect of currency translation on cash 2,325 3,501 -
Net decrease in cash (54,951) (454,864) (1,870,885)
Opening cash and cash equivalents 270,476 2,141,361 2,141,361
Closing cash and cash equivalents 215,525 1,686,497 270,476
Net decrease in cash (54,951) (454,864) (1,870,885)
Statement of Changes in Equity
Share Capital Share premium Share option reserve Retained earnings NCI Foreign currency translation reserve Total equity
£ £ £ £ £ £ £
At 30 June 2022 (re-stated) 1,315,697 54,858,008 3,728,622 (51,113,657) 3 (21,958) 8,766,715
Loss for the period - - - (1,774,279) - - (1,774,279)
Other comprehensive income - - - - - 3,501 3,501
Total comprehensive income - - - (1,774,279) - 3,501 (1,770,778)
Shares issued - - - - - - -
Share Issue Costs - (2,000) - - - - (2,000)
Share options issued -, - 150,458 - - - 150,458
Total transactions with owners, recognised directly in equity - (2,000) 150,458 - - - 148,458
At 31 Dec 2022 1,315,697 54,856,008 3,879,080 (52,887,936) 3 (18,457) 7,144,395
Loss for the period - - - (8,480,557) - (8,480,557)
Other comprehensive income - - - - - (3,501) (3,501)
Total comprehensive income - - - (8,480,557) - (3,501) (8,484,058)
Shares issued 1,333,333 666,667 - - - - 2,000,000
Share Issue Costs - (154,716) 44,010 - - - (110,706)
Share options issued - - (98,555) - - - (98,555)
Release to retained earnings (3,400,922) 3,400,922 -
Total transactions with owners, recognised directly in equity 1,333,333 511,951 (3,455,467) 3,400,922 - - 1,790,739
At 30 June 2023 2,649,030 55,367,959 423,613 (57,967,571) 3 (21,958) 451,076
,
Statement of Changes in Equity (continued)
Share Capital Share premium Share option reserve Retained earnings NCI Foreign currency translation reserve Total equity
£ £ £ £ £ £ £
At 30 June 2023 2,649,030 55,367,959 423,613 (57,967,571) 3 (21,958) 451,076
,
Profit for the period - - - 175,273 - - 175,273
Other comprehensive income - - - - - 2,327 2,327
Total comprehensive income - - - 175,273 - 2,327 177,600
Shares issued 73,300 366,500 - - - - 439,800
Share Issue Costs - (23,873) - - - - (23,873)
Share options issued - - - - - - -
Total transactions with owners, recognised directly in equity 73,300 342,627 - - - - 415,927
At 31 December 2023 2,722,330 55,710,586 423,613 (57,792,298) 3 (19,631) 1,044,603
Notes to the interim financial statements
1. General Information
Gfinity plc is a Company limited by shares, incorporated and domiciled in
England and Wales under the Companies Act 2006. Its registered office is 128
City Road, London, England, EC1V 2NX. Its shares are quoted on the AIM market
of the London Stock Exchange.
The functional and presentational currency is £ 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 19
March 2024.
2. Accounting Policies and Basis of Preparation
Basis of Preparation
The interim financial statements for the six months ended 31 December 2023
have been prepared using accounting policies that are consistent with those of
the audited financial statements for the year ended 30 June 2023 and in
accordance with IAS 34, "Interim Financial Reporting" as adopted by the United
Kingdom. The interim financial information should be read in conjunction with
the Group's Annual Report and Accounts for the year ended 30 June 2023, which
has been prepared in accordance with IFRS as adopted by the United Kingdom.
The interim financial information contained in this report 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 2023 has been filed
with the Registrar of Companies. The auditors' report on those accounts was
unqualified, however, they did note a material uncertainty with regards to
going concern, relating to the fact that the going concern basis of
preparation was dependent on certain growth targets being met within 12 months
from the date of signature of the Annual Report.
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
Report and Accounts for the year ended 30 June 2023.
A copy of the Annual Report and Accounts to 30 June 2023 can be obtained from
the Company's website: www.gfinityplc.com (http://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 Report and Accounts of the Company
for the year ended 30 June 2023 which can be obtained from the Company's
website: www.gfinityplc.com (http://www.gfinityplc.com) .
Going Concern
At 31 December 2023 the group had cash of £215,525.
Following the restructuring, as explained in the Annual Report and Accounts to
30 June 2023, the Company's sole focus is investing in and developing the
Gfinity Digital Media business.
As also fully set out in the 2023 Annual Report:
· The Directors have prepared a base case cashflow forecast, which
assumes certain growth targets are met; and
· The Directors consider that the growth targets are reasonable and
attainable, and in view of this, believe that the going concern basis of
preparation continues to be appropriate.
3. Profit per share
Basic earnings per share is calculated by dividing the profit (previous
periods - loss) attributable to shareholders by the weighted average number of
ordinary shares in issue during the period.
For the 6 months to 31 December 2023, diluted EPS is shown below. For previous
periods, 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 for
those previous periods.
6 months to 31 December 2023 6 months to 31 December 2022 Year to 30 June 2023
All operations £ £ £
Earnings 175,274 (1,774,279) (10,254,836)
Number Number Number
000's 000's 000's
Weighted average number of ordinary shares 3,139,024 1,315,697 1,735,789
Profit/(loss) per ordinary share 0.006 (0.001) (0.006)
Continuing operations
Earnings 175,273 (937,538) (7,204,739)
Weighted average number of ordinary shares 3,139,024 1,315,697 1,735,789
Profit/(loss) per ordinary share for continuing operations 0.006 (0.0005) (0.004)
Discontinued operations
Earnings - (960,200) (3,050,097)
Weighted average number of ordinary shares - 1,315,697 1,735,789
Loss per ordinary share for continuing operations - (0.0005) (0.002)
Diluted earnings per share
Earnings 175,273
Weighted average number of ordinary shares 3,556,412
Loss per ordinary share for continuing operations 0.005
4. Revenue
The Group's policy on revenue recognition is as outlined in note 2 of the
financial statements for the year ending June 2023. The period ending December
2023 included £Nil in the contract liability balance and at the beginning of
the period (December 2022: £58,359 and year ending June 2023: £Nil).
The Group's revenue disaggregated by primary geographical markets is as
follows:
6 months to 31 December 2023
Total
£
United Kingdom 26,009
North America 679,559
ROW 100,713
Total 805,741
6 months to 31 December 2022
Total
£
United Kingdom 2,835,485
North America 828,298
ROW 444,155
Total 4,107,938
Year to 30 June 2023
Total
£
United Kingdom 2,830,620
North America 1,563,982
ROW 865,904
Total 5,260,506
The Group's revenue disaggregated by pattern of revenue of revenue recognition
is as follows:
6 months to 31 December 2023
Total
£
Services transferred at 805,741
a point in time
Services transferred over time -
Total 805,741
4. Revenue (continued)
6 months to 31 December 2022
Total
£
Services transferred at 2,316,694
a point in time
Services transferred over time 1,791,244
Total 4,107,938
Year to 30 June 2023
Total
£
Services transferred at 2,190,216
a point in time
Services transferred over time 3,233,355
Total 5,423,571
5. Goodwill and Intangible Fixed Assets
The Group holds goodwill in respect of the acquisitions of the trade and
assets of Siege.gg
(https://url.uk.m.mimecastprotect.com/s/nS0xCzK9xtGYjXls4Wl9B?domain=siege.gg)
, EpicStream and RealSport in earlier periods. Additionally, the Group carries
goodwill in respect of the acquisition of Megit Limited, also in an earlier
period.
Further, the Group holds intangible fixed assets in the form of Web platforms,
which includes web domains and platform technology acquired through the
acquisitions of Megit Limited, and the acquisitions of the trade and assets
of Siege.gg
(https://url.uk.m.mimecastprotect.com/s/nS0xCzK9xtGYjXls4Wl9B?domain=siege.gg)
and EpicStream.
A comprehensive impairment review was performed for the purposes of assessing
the carrying value of goodwill and intangible fixed assets as at 30 June 2023,
using a fair value method, on the basis of a multiple of revenue achieved for
the respective brands in the year ended 30 June 2023.
As a result of the close proximity of the assessment of the carrying values
undertaken as at 30 June 2023, and now, the Directors do not consider any
further impairment provisions are required, and it could be that some of the
previously made provisions for impairment could be released.
A full review of the carrying values for goodwill and intangible fixed assets
will be undertaken at the time of reporting on the full year results to 30
June 2024.
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