REG - Gfinity PLC - Half Year Results
30/03/2022 07:00
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RNS Number : 5557G Gfinity PLC 30 March 2022
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.
30 March 2022
Gfinity plc
("Gfinity" or the "Company")
Half Year Results
Gfinity (AIM: GFIN), a world-leading esports solutions provider, announces its
unaudited results for the six-month period ended 31 December 2021.
Financial Highlights:
· Continued improvement in financial performance through sustained
strategic focus on what the Company owns, with Gfinity Digital Media ('GDM')
driving growth in the business.
· Revenue of £3.3m, an increase of 8% year on year (H1 21: £3.0m)
and 22% improvement on previous 6 months (H2 21: £2.7m).
· Adjusted operating loss( 1 ) of £0.4m, 53% improvement year on
year (H1 21: £0.9m loss) and 76% improvement on previous 6 months (H2 21:
£1.8m loss) as the business continues on its path towards profitability.
· Reduction in Adjusted administrative expenses( 2 ) of 4% to
£2.4m (H1 21: £2.5m).
· Business well capitalised to continue to deliver on its
objectives following successful fundraising, underlining confidence in the
Company's long-term performance.
Operational Highlights:
Strategic focus on 'what we own' delivering improved financial performance and
growth
Gfinity Digital Media:
· Continued growth of publishing platform, with revenues up 62%
year on year to £1.6m (H1 21: £1.0m) driven by increased annualised revenue
per user of 23.3p (up 31% year on year) and 23% rise in Average Monthly Active
Users to 13.9m.
· 43% year on year improvement in Gross profit to £1.0m. Clear
profitable growth engine that is driving the continuation of the Group's
pathway to profitability.
· Successful acquisitions of SiegeGG, including technology behind
leading statistical analysis of Rainbow Six Siege video game, and Stock
Informer which contributed £0.4m of revenue between acquisition completion on
13 September 2021 and 31 December 2021.
· Renewed agreement to extend Gfinity's partnership with global
advertising technology platform Venatus into its third year, driving value per
user growth.
· Significant progress in optimising site infrastructure and
performance, utilising the Company's proprietary manifold content management
system (CMS), leading to strong user numbers in the second half, with a record
16m monthly active users across GDM platforms in February.
Technology and Esports Solutions:
· Revenue from the delivery of esports solutions for third parties
remained flat at £1.6m.
· Gfinity continues to be selected by global brands to deliver
esports and gaming solutions, including Nintendo, Coca Cola Hellenic Bottling
Company.
· Record F1 Esports 2021 Series breaking viewership and engagement
records with Gfinity retained as delivery partner of choice for 2022 season.
· In-person publisher esports events, however, have been slow to
return to pre-pandemic levels.
· Within this segment, revenue directly relating to the licensing
of Gfinity's proprietary esports technology grew 75% to £0.2m (H1 21:
£0.1m).
o Platform deployed across in-app the competitive programmes for three of
the largest mobile game titles featuring more than 50,000 participants in
multiple languages across a number of weekends during the period
o Platform utilised for the ePremier League qualification for fourth year
running
· The major strategic focus within this segment is the
productisation of this technology to allow it to be deployed at scale, with
clients benefitting from automated integration into games and media owners'
websites. This is expected to create a high margin, recurring revenue stream
through a SaaS licensing model.
Co-Owned Esports Properties
· Consolidation of the V10 R League, Gfinity's jointly owned
digital motorsport property in conjunction with Abu Dhabi Motorsports
Management, into a single season in the second half of the year has impacted
comparable revenue. H1 21 revenue included £0.4m of revenue from this
segment. Consolidation of the programme in this way is intended to allow for
the creation of a live finals event, which will facilitate unlocking
sponsorship revenue from the region.
· If revenues relating to this were eliminated from the comparative
period, the year on year revenue increase would be 24%.
Balance Sheet strengthened post-period end
As at 31 December 2021, Gfinity had cash reserves of £1.5m (30 June 2021:
£1.4m). Post year end, the Directors took the decision to secure additional
funding, believing it to be in the best interests of the Group.
On 14 March 2022, the Company successfully completed a fundraise of £2.7
million, before expenses, via a placing and direct subscription of new
ordinary shares of 0.1p each in the Company at a price of 1.25 pence per
share. 50% of this fundraise was within existing authorities and has
completed, with the remaining 50% subject to shareholder confirmation at the
General Meeting to be held on 1 April 2022. This provides the runway needed
for the Company to be profitable on a month by month basis in 2023.
Outlook
· Continued delivery of strategy and focus on what we own, with
sustained GDM performance and good momentum heading into the second half.
· Slower than anticipated return to live esports events will impact
short term revenue and profits, but do not change the long-term prospects or
future pathway to profitability in 2023.
· Investment in Gfinity Engage platform expected to create a
further owned, recurring and high margin revenue stream.
John Clarke, CEO, Gfinity said:
"We have continued to improve on financial performance during the period,
despite a slower than anticipated return to live events and delays in certain
revenue streams. The business remains on the right path to profitability, with
increased revenues, lower operating losses and reduced operating expenditure.
We have strong momentum in our owned revenue streams, in particular our GDM
business, with record engagement numbers and revenue per user up 270% since
its launch. This business continues to act as the growth engine for the Group,
and our focus remains firmly on building our capabilities and expertise to
ensure more brands choose Gfinity as their trusted partner.
Although the sector is still recovering from the impacts of Covid-19, macro
trends remain in our favour and following a successful fundraise post-period,
we now have the operating liquidity we need to deliver on our target of
reaching profitability by 2023."
ENDS
Enquiries:
Gfinity plc www.gfinityplc.com (http://www.gfinityplc.com)
John Clarke, CEO Via Teneo
Teneo (Media) Tel: +44 7880 715975
Anthony Di Natale Gfinity@teneo.com
Canaccord Genuity Limited (AIM Nominated Adviser & Broker) Tel: +44 (0)207 523 8150
Bobbie Hilliam / Patrick Dolaghan
About Gfinity
Gfinity (AIM: GFIN) is a market-leading digital media publisher and technology
company in the rapidly growing esports and competitive gaming sector. Created
by gamers for the world's three billion gamers, Gfinity has a unique
understanding of this fast-growing global community. It uses this expertise
both to provide advisory services and to design, develop and deliver
unparalleled experiences and winning strategies for game publishers, sports
rights holders, commercial partners and media companies.
Gfinity connects its partners with the esports community in authentic and
innovative ways. This consists of on‑and-off-line competitions and
industry‑leading content production. Relationships include Activision
Blizzard, EA SPORTS, F1 Esports Series Red Bull, Abu Dhabi Motorsport
Management and Coca Cola.
Gfinity connects directly with tens of millions of gamers each month through
its digital media group, Gfinity Digital Media. Gfinity Digital Media includes
websites such as: Gfinityesports, RealSport101, Epicstream, Stock Informer,
StealthOptional, RacingGames.gg, MTGRocks.com and their respective social
channels.
All Gfinity services are underpinned by the Company's proprietary technology
platform, delivering a level playing field for all competitors and supporting
scalable multi-format leagues, ladders and knockout competitions.
Operational Review
The six months to 31 December 2021 saw Gfinity continue to make significant
progress against the key strategic pillars of the business. This focus enabled
a significant improvement in financial performance. The adjusted operating
loss( 3 ) for the period of £0.4m represented a 53% improvement year on year
(H1 21: £0.9m loss), which built on a 71% improvement on the performance in
H1 20.
Directors believe that building the future of the business around owned,
scalable, higher margin revenue streams relating to the Gfinity Digital Media
segment and the ability to deploy Gfinity's proprietary esports technology at
scale, represents the right strategy to deliver long term value to investors.
Gfinity Digital Media:
In the six-month period to 31 December 2021, Gfinity continued to drive growth
in both the number of users engaging with written and video content on its
owned digital media platforms, as well as the revenue derived from each user.
As a result, revenue in the period rose 62% to £1.6m.
Monthly Active Users
Unique monthly active users during the period were 13.9m, which represented a
year on year increase of 31%, peaking at over 15m users in December 2021.
Encouragingly, growth continued into H2, which is traditionally a quieter
period for gaming news and by extension user numbers. In January 2022 monthly
active users were again over 15m, with growth continuing throughout February
with a new monthly record of 16m monthly active users achieved. Growth is
expected to be maintained with users in March expected to exceed 17 million.
Including related social platforms, Gfinity's content is now reaching more
than 100m users every month.
The Company continues to target 50m monthly active users on its owned channels
in the short to medium term and 100m monthly active users in the longer term,
through a combination of both organic growth and targeted acquisitions.
Revenue Per User
The annualised revenue per unique user during H1 grew 31% year on year to 23p,
reflecting a continued growth in advertising rates, through enhanced scale,
prestige and site performance. This was complimented by a diversification of
revenue streams, with an increased emphasis on affiliate revenues,
particularly driven by the acquisition of the Stock Informer business in
September 2021.
During the period, Gfinity extended its partnership with Venatus into its
third year, as its chosen partner for delivery of advertising revenue. The
extended partnership continues to contribute to the acceleration of Gfinity's
value per user across its fast-growing websites under the GDM.
The Company is targeting annual revenue per user of 30p in the short to medium
term and 50p in the longer term, providing a significant, recurring,
high-margin revenue stream for the business.
New Site Additions
Three new sites were added to the Gfinity Digital Media network during the
period. The largest of these was the Stock Informer business, acquired through
the acquisition of Megit Ltd, which completed on 13 September 2021. Stock
Informer has built up a market leading position as an authority on
hard-to-find items, with a particular focus of bringing products of relevance
to gamers. Its proprietary technology enables real-time updates on
availability and pricing of items, from which consumers can click through to
the relevant retailers to make purchases, allowing the business to drive
revenue through affiliate commissions.
In the three-and-a-half-month period following the acquisition, Stock Informer
delivered £0.4m of high-margin revenue to the business. Directors also
believe that there is significant potential for Stock Informer's technology to
post relevant price comparison offers to people viewing relevant content
across the whole GDM network, opening a new revenue stream for Gfinity from
FY23 onwards.
Also in September 2021, Gfinity completed the acquisition of Siege.gg, a
highly-engaged community for the Rainbow Six Siege game and owner of the
leading proprietary statistical dataset in respect of the competitive
following of the game.
The technology, team and methodology behind Siege.gg were utilised in the
period to launch the new site Forerunner.gg in December 2021. This site
focuses on the competitive community tied to the highly popular Halo game.
Technology:
Throughout the period, Gfinity has continued to deploy its proprietary esports
technology for leading clients. Gfinity's tournament management platform has
been integrated directly into 3 leading mobile game titles, powering the
competitive programme for over 50,000 participants at any one time, enabling
players to stay in the game, rather than going to a third-party tournament
play site. The significant benefit to the game publisher is that it now keeps
its players data.
Gfinity's technology has been used for a fourth consecutive year to deliver
the online qualifying rounds for the ePremier League programme. Gfinity's
community building tools also continued to be deployed on behalf of Nvidia.
Revenue from the direct deployment of Gfinity's technology, outside of broader
managed esports programmes, rose 75% year on year to £0.2m.
A key strategic initiative is the productisation of this technology suite,
such that it can be quickly and easily deployed directly into clients' games
and media platforms, licensed under a SaaS model, without the need for custom
development work from Gfinity's team. With those gamers who participate
competitively, spending longer in game and spending more money in-game, this
provides a valuable tool for clients to drive up both engagement and revenue.
The beta version of the "Engage" product that will facilitate this, will
launch during the second quarter of this calendar year.
Esports Solutions:
Gfinity continues to be selected by global brands to deliver esports and
gaming solutions. In H1 22 Gfinity delivered the live component of the fourth
season of the Formula 1 Pro Series. In 2021 this programme delivered record
levels of engagement, including viewership up 103% year on year.
Other clients in the period included Nintendo, Amazon and Coca Cola Hellenic
Bottling Company.
Co-Owned Esports Properties
During FY21, Gfinity staged the first two seasons of V10 R League, Gfinity's
jointly owned digital motorsport property in conjunction with Abu Dhabi
Motorsports Management. The series has created a strong basis for growth, with
participation from leading teams including Red Bull, Ford, BMW, Aston Martin
and McLaren among others, broadcast through distribution partners including
ESPN and BT Sport.
During FY22, the decision was taken to consolidate the V10 R League into a
single season in the second half of the year. This allows for a more
consolidated block of content, together with live finals to be staged from Abu
Dhabi, which it is believed will create a more compelling proposition for
sponsorship, particularly from partners in the Middle East.
H1 21 revenue included £0.4m of revenue from this segment. If revenues
relating to this were eliminated from the comparative period, the total year
on year revenue increase for the period would be 24%.
Outlook
Directors believe that Gfinity's focus on owned, high-margin, scalable revenue
streams is the right strategy to deliver significant long-term value for
shareholders. The 53% reduction in operating loss, building on a 71% reduction
in the prior year, demonstrates this strategy is already delivering a
significantly improved financial performance. Directors expect both the
audience and monetisation of its owned Gfinity Digital Media business to
continue to grow, building on the 62% year on year uplift delivered in the
six-month period to 31 December 2021. It is also believed that the
productisation of Gfinity's esports platform will create a further revenue
stream of scale over future years.
Despite this, revenue growth is not always linear and the timing of certain
esports programmes cannot always be guaranteed. As a result, in March 2022,
Directors took the decision to raise a further £2.7m before costs,
accompanied by a one for one warrant at the exercise price. This
over-subscribed placing has secured the business in a strong position from
which to pursue its growth objectives into the second half of FY22 and beyond,
continuing its path to delivering month on month profitability in 2023.
Financial Review
Revenue for the six-month period to 31 December 2021 was £3.3m. This
represented an increase of 8% year on year (H1 21: £3.0m) and 22% improvement
on the previous 6 months (H2 21: £2.7m).
The proportion of revenue attached to owned assets, including Gfinity's
Digital Media network, jointly owned esports programmes and the licensing of
Gfinity's proprietary esports technology, rose to 55% of total income
(£1.8m). This compared to a figure of 49% in H1 21, despite the prior year
comparative period including £0.4m from the first season of the V10 R League
programme, now condensed into a single season in the second half of FY22.
The sharpened focus on owned, higher margin revenue streams delivered gross
profit for the six-month period of £1.9m at a gross margin of 60% (H1 21:
£1.5m at 50%).
This growth was achieved with a reduction of 4% in adjusted administrative
expenses( 4 ) to £2.4m (H1 21: £2.5m). This resulted in an adjusted
operating loss( 5 ), reduced by 53% to £0.4m (FY21 H1: £0.9m loss).
In the period, Gfinity completed two acquisitions, supporting the strategy to
grow both the audience and monetisation of the Gfinity Digital Media network.
In September 2021, Gfinity acquired the entire issued share capital of Megit
Ltd, the owner of the Stock Informer brand, for consideration consisting of
£2.5m in cash, £2.5m of equity in Gfinity plc and an earn out calculated at
30% of revenue in each of the first 3 years post-acquisition. The fair value
of this consideration has been estimated at £6.6m.
Also in September, Gfinity acquired the trade and assets of Siege.gg, a
leading digital community and owner of statistical information in respect of
the competitive following of the Rainbow Six Siege game. Consideration for
this acquisition comprised 9 million ordinary shares and an earn out amounting
to 30% of revenue in the first two years post-acquisition. The fair value of
this consideration has been estimated at £6.6m.
Directors consider the development of an easily deployed, licensable version
of Gfinity's proprietary esport technology product to be a major strategic
initiative, with the potential to drive significant future SaaS revenues for
the business. On that basis £0.3m of costs invested directly in the
development of this product have been capitalised in the period.
Gfinity had cash of £1.5m at 31 December 2021. In March 2022, the Directors
announced their intention to raise a minimum of a further £1.0m, accompanied
by a one for one warrant at the exercise price. This placing was heavily
over-subscribed from a combination of both existing and new shareholders. In
the light of current macro-economic conditions the Directors elected to take a
total of £2.7m, plus potential future funds from any warrant exercises.
Group Statement of Profit or Loss
6 months to 31 December 2021 6 months to 31 December 2020 Year to 30 June 2021
Unaudited
Unaudited
Audited
£ £ £
CONTINUING OPERATIONS
Revenue 3,261,361 3,013,309 5,693,385
Cost of sales (1,320,260) (1,492,205) (3,085,409)
Gross profit/(loss) 1,941,101 1,521,104 2,607,976
Other Income 697 50,280 54,354
Administrative expenses (3,511,533) (2,863,226) (7,179,327)
Operating loss (1,569,735) (1,291,842) (4,516,997)
Disposal of Associate Gain / (Loss) 45,090 459,706 459,706
Finance income 2 - 4
Finance Costs - (8,988) (10,236)
Loss on ordinary activities before tax (1,524,643) (841,124) (4,067,524)
Taxation 117,685 - 221,929
Retained loss for the year (1,406,958) (841,124) (3,845,595)
Earnings per Share -£0.00 -£0.00 -£0.00
Group statement of comprehensive income
6 months to 31 December 2021 6 months to 31 December 2020 Year to 30 June 2021
Unaudited
Unaudited
Audited
Items that will not be reclassified to profit or loss
Foreign exchange profit / (loss) on retranslation of foreign Subsidiaries (5,510) (4,763) (12,887)
Other Comprehensive Income for the period (5,510) (4,763) (12,887)
Loss and total comprehensive income for the period (1,412,468) (845,887) (3,858,482)
Group Statement of Financial Position
As at 31 December 2021 As at 30 June 2021
Unaudited
Audited
£ £
NON CURRENT ASSETS
Property, plant and equipment 200,110 187,366
Goodwill 5,259,307 1,903,790
Intangible fixed assets 5,240,418 704,481
10,699,835 2,795,637
CURRENT ASSETS
Trade and other receivables 2,096,066 1,586,850
Cash and cash equivalents 1,493,549 1,375,873
3,589,615 2,962,723
TOTAL ASSETS 14,289,450 5,758,360
EQUITY AND LIABILITIES
Equity
Ordinary shares 1,099,697 930,513
Share premium account 52,488,918 46,511,089
Other reserves 3,843,012 3,384,914
Retained earnings (48,709,655) (47,302,697)
Total equity 8,721,972 3,523,819
Non-current liabilities
Other Payables 1,316,801 254,986
Deferred Tax Liabilities 1,065,626 127,835
Current liabilities
Trade and other payables 3,185,051 1,851,720
Total liabilities 5,567,478 2,234,541
TOTAL EQUITY AND LIABILITIES 14,289,450 5,758,360
Group Cash Flow Statement
6 months to 31 December 2021 6 months to 31 December 2020 Year to 30 June 2021
Unaudited
Unaudited
Audited
£ £ £
Cash flow used in operating activities
Net cash used in operating activities (592,836) (439,160) (2,049,833)
Cash flow from/(used in) investing activities
Interest received 2 - 4
Additions to property, plant and equipment (68,850) (80,103) (106,642)
Additions to intangible assets (351,103) - (16,030)
Payments to acquire trade & assets on business combination (2,155,630) - -
Gain on disposal of associate 45,090 459,706 459,706
Net cash used in investing activities (2,530,491) 379,603 337,038
Cash flow from/(used in) financing activities
Issue of equity share capital 3,246,513 601,666 1,950,649
Repayment of leases - (306,486) (439,621)
Bank interest payable - (1,010) (10,236)
Net cash from financing activities 3,246,513 294,170 1,500,792
Net increase in cash and cash equivalents 123,186 234,613 (211,833)
Effect of currency translation on cash (5,510) (4,763) (12,890)
Opening cash and cash equivalents 1,375,873 1,600,596 1,600,596
Closing cash and cash equivalents 1,493,549 1,830,446 1,375,873
Statement of Changes in Equity
Ordinary shares Share premium Share option reserve Retained earnings Forex Total equity
£ £ £ £ £ £
At 30 June 2020 725,868 44,405,086 3,137,831 (43,457,102) (5,613) 4,806,070
Loss for the period - - - (841,124) - (841,124)
Other Comprehensive Income - - - - (4,763) (4,763)
Total comprehensive income - - - (841,124) (4,763) (845,887)
Proceeds of shares issued 70,645 895,810 - - - 966,455
Share Issue Costs - (4,789) - - - (4,789)
Share options expensed - - 81,744 - - 81,744
Total transactions with owners, recognised directly in equity 70,645 891,021 81,744 - - 1,043,410
At 31 Dec 2020 796,513 45,296,106 3,219,575 (44,298,226) (10,376) 5,003,592
Loss for the period - - - (3,004,471) - (3,004,471)
Other comprehensive income - - - - (8,124) (8,124)
Total comprehensive income - - - (3,004,471) (8,124) (3,012,595)
Proceeds of shares issued 134,000 1,214,983 - - - 1,348,983
Share Issue Costs - - - - - -
Share options expensed - - 183,839 - - 183,839
Total transactions with owners, recognised directly in equity 134,000 1,214,983 183,839 - - 1,532,822
At 30 June 2021 930,513 46,511,089 3,403,414 (47,302,697) (18,500) 3,523,819
Loss for the period - - - (1,406,958) - (1,406,958)
Other comprehensive income - - - - (5,510) (5,510)
Total comprehensive income - - - (1,406,958) (5,510) (1,412,468)
Proceeds of shares issued 169,184 6,183,150 - - - 6,352,334
Share Issue Costs - (205,321) - - - (205,321)
Share options expensed - - 463,608 - - 463,608
Total transactions with owners, recognised directly in equity 169,184 5,977,829 463,608 - - 6,610,621
At 31 Dec 2021 1,099,697 52,488,918 3,867,022 (48,709,655) (24,010) 8,721,972
Notes to the interim financial statements
1. General Information
Gfinity plc is a company limited by shares, incorporated and domiciled in the
United Kingdom under the Companies Act 2006. Its registered office is 16 Great
Queen Street, London, England, WC2B 5AH. Its shares are quoted on the AIM
market of 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 29
March 2022.
The financial statements have been reviewed by the Group's auditors but not
audited.
2. Accounting Policies and Basis of Preparation
Basis of Preparation
The interim financial statements for the six months ended 31 December 2021
have been prepared using accounting policies that are consistent with those of
the audited financial statements for the period ended 30 June 2021 and in
accordance with IAS 34, "Interim Financial Reporting" as adopted by the
European Union. The interim financial information should be read in
conjunction with the Group's Annual Report and Accounts for the year ended 30
June 2021, which has been prepared in accordance with IFRS as adopted by the
European Union.
The interim financial information contained in this report has been reviewed
but not audited and 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 2021 has been filed
with the Registrar of Companies. The auditors' report on those accounts was
unqualified, did not include a reference to any matters to which the auditors
drew attention by way of emphasis without qualifying the report and did not
contain statements under s498(2) or s498(3) of the Companies Act 2006.
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 accounts for the year ended 30
June 2020.
A copy of the accounts to 30 June 2021 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 accounts for the Company for the
year ended 30 June 2021 which can be obtained from the company's website:
www.gfinityplc.com (http://www.gfinityplc.com) .
Going Concern
Despite the significant reduction in operating loss delivered in H1, revenue
growth in such a new and rapidly evolving industry is not always linear and
certain initiatives, which were originally anticipated for H2 of FY22, are now
likely to take slightly longer to materialise.
As a result, in March 2022 directors announced their intention to raise a
minimum of £1m, coupled with a one for one warrant at the exercise price to
support working capital requirements and continue to support growth
initiatives. The fundraise was heavily over-subscribed, confirming continued
investor support for the business. As a result, in the context of an
uncertain global macro-economic situation, the directors opted to raise
£2.7m, coupled by a one for one warrant at the exercise price, to be
exercised within a 12-month period.
Management have prepared forecasts to 30 June 2023, under a number of
scenarios. Under each of these scenarios, following this fundraise, the
Company has sufficient cash reserves to continue to operate for a further 12
months. As a result, directors believe that the going concern basis for the
preparation of these accounts is appropriate.
3. Loss 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.
During the 6 month period to 31 December 2021, Gfinity issued 13,750,000
shares as the result of warrant exercises, 82,500,000 shares as the result of
the fund raise, 1,433,331 as the results of employee option exercises and
62,500,000 of new shares in relation to the acquisition of Megit Ltd and
9,000,000 of new shares in relation to the acquisition of Siege.gg.
6 months ended 31 Dec 2021 6 months ended 31 Dec 2020 Year ended 30 Jun 2021
£ £ £
Loss attributable to shareholders from continuing operations (1,412,468) (845,887) (3,858,482)
Number Number Number
000's 000's 000's
Weighted average number of ordinary shares 963,463 767,286 809,795
Loss per ordinary share for continuing operations -0.00 -0.00 -0.00
4. Notes to the Cash Flow Statement
6 months to 31 December 2021 6 months to 31 December 2020 Year to 30 June 2021
Unaudited
Unaudited
Audited
£ £ £
Cash flows from operating activities
Loss for the financial year (1,406,958) (841,124) (3,845,595)
Depreciation of property, plant and equipment 56,109 62,751 132,478
Depreciation on right of use assets - 293,515 428,305
Amortisation of intangible fixed assets 631,608 253,108 492,700
Goodwill impairment - - 901,519
Interest Received (2) - (4)
Interest Payable - 8,988 10,236
Share based payments 463,608 81,744 265,583
(Increase) in Inventories - - -
(Increase)/ decrease in trade and other receivables (509,217) 193,306 (280,359)
Increase/ (decrease) in trade and other payables 334,791 (31,657) 300,020
Disposal of fixed assets - (85) (85)
Gain on disposal of Associate (45,090) (459,706) (459,706)
Corporation tax charge - - 227,004
Corporation tax (paid)/ R&D credits received (117,685) - (221,929)
Cash used by operating activities (592,836) (439,160) (2,049,833)
Net cash used by operating activities (592,836) (439,160) (2,049,833)
5. Segmental Information
The Group is managed on the basis of four segments:
- Gfinity Digital Media: monetisation of Gfinity's own network of
digital media sites, primarily through, advertising, sponsorship and affiliate
revenues
- Owned Content: The creation of esports programmes and content, in
which Gfinity owns or co-owns the output and hence shares in the commercial
revenue, including sponsorship and content rights that come as a result
- Service Delivery: the delivery of esports solutions and content for
third parties, including high profile game publishers, sports rights holders
and brands, under a fee-based model
- Technology: Licensing and fees for the direct deployment of
Gfinity's proprietary esports technology, outside of a managed esports
programme.
6 months ended 31 Dec 2021 6 months ended 31 Dec 2020 Year ended 30 June 2021
£ £ £
Gfinity digital media 1,647,899 1,006,309 1,623,497
Owned content - 382,235 728,065
Service delivery 1,479,697 1,530,333 3,118,975
Platform as a service 133,765 94,431 222,847
Total Revenue 3,261,361 3,013,309 5,693,385
Segmental information for the statement of financial position has been
presented as management do view this information on a segmental basis.
Intra-group recharges are not considered when monitoring performance with
central charges (such as senior management costs) retained in Gfinity PLC
rather than being apportioned across segments.
6. Revenue
The Group's policy on revenue recognition is as outlined in note 2 of the
financial statements for the year ending June 2021. The period ending December
2021 included £153,643 in the contract liability balance and at the beginning
of the period (December 2020: £0.4m and year ending June 2021: £364,024).
The Group's revenue disaggregated by primary geographical markets is as
follows:
6 months ended 31 Dec 2021
Gfinity Cevo Megit Ltd Total
£ £ £ £
United Kingdom 1,563,860 - 425,547 1,989,407
North America 699,011 166,797 - 865,808
ROW 512,668 - - 512,668
Total 2,775,538 166,797 425,547 3,367,882
6 months ended 31 Dec 2020
Gfinity Cevo Megit Ltd Total
£ £ £ £
United Kingdom 2,079,447 - - 2,079,447
North America 530,306 58,465 - 588,771
ROW 345,090 - - 345,090
Total 2,954,843 58,465 - 3,013,309
Year ended 30 June 2021
Gfinity Cevo Megit Ltd Total
£ £ £ £
United Kingdom 4,144,440 - - 4,144,440
North America 902,408 322,741 - 1,225,149
ROW 539,069 - - 539,069
Total 5,585,917 322,741 - 5,908,659
The Group's revenue disaggregated by pattern of revenue of revenue recognition
is as follows:
6 months ended 31 Dec 2021
Gfinity Cevo Megit Ltd Total
£ £ £ £
Services transferred at 1,568,313 166,797 425,547 2,160,657
a point in time
Services transferred over time 1,207,226 - - 1,207,226
Total 2,775,538 166,797 425,547 3,367,882
6 months ended 31 Dec 2020
Gfinity Cevo Megit Ltd Total
£ £ £ £
Services transferred at 1,922,827 58,465 - 1,981,292
a point in time
Services transferred over time 1,032,017 - - 1,032,017
Total 2,954,844 58,465 - 3,013,309
Year ended 30 June 2021
Gfinity Cevo Megit Ltd Total
£ £ £ £
Services transferred at 3,432,959 322,741 - 3,755,700
a point in time
Services transferred over time 2,152,959 - - 2,152,959
Total 5,585,918 322,741 - 5,908,659
As at 31 December 2021 the Group had the amounts shown below held on the
consolidated statement of financial position in relation to contracts either
performed in full during the year or ongoing as at the year end. All amounts
were either due within one year or, in the case of contract liabilities, the
work was to be performed within one year of the balance sheet date.
Dec-21 Jun-21
£ £
Trade Receivables 1,363,845 1,024,696
Contract Assets 493,102 244,835
Contract Liabilities 153,643 364,024
Trade receivables are non-interest bearing and are generally on 30 day terms.
Credit risk of customers is low with many being large multinational
corporations.
Contract assets are initially recognised for revenue earned while the services
are delivered over time or when billing is subject to final agreement on
completion of the milestone. Once the amounts are billed the contract asset is
transferred to trade receivables.
Contract liabilities arise when amounts are paid in advance of the delivery of
the service. These are then transferred to the statement of comprehensive
income as either milestones are completed or work is completed overtime.
7. Gain on Disposal of Associate
During the six month period to 31 December 2021, the process of winding up
Gfinity Esports Australia (PTY), in which Gfinity held a 30% shareholding, was
completed. On completion of this process, funds remaining in the business were
re-distributed to shareholders. With all amounts invested in this venture
having previously been expensed, his resulted in a one-off gain on cessation
of the business of £45,090.
8. BUSINESS COMBINATIONS
Megit Ltd
Acquisition of Megit Ltd
On 14 September 2021 Gfinity PLC acquired 100% shares of Megit Ltd, owner of
the Stock Informer brand. Stock Informer has built up a market leading
position as an authority on hard-to-find items, with a particular focus to
products of relevance to gamers. Its proprietary technology enables real-time
updates on availability and pricing of items, from which consumers can click
through to the relevant retailers to make purchases, allowing the business to
drive revenue through affiliate commissions.
Purchase consideration
Initial consideration £
Shares (62,500,000 Ordinary shares at £0.04) 2,500,000
Cash 2,500,000
Acquisition cost 51,250
Total initial consideration 5,051,250
Deferred consideration
Contingent consideration at fair value 1,551,677
Total deferred consideration 1,551,677
Total consideration payable 6,602,927
Contingent consideration
Contingent consideration is payable based on revenue generated from the
acquired entity. The amount payable is calculated at 30% of relevant revenues
received in the first, second and third 12 month periods after the acquisition
date, up to a maximum of £1,800,000 across the 3 year period. The fair value
of the contingent consideration is currently estimated to be £1,551,677 based
on forecast revenues at the date of the acquisition.
Net assets acquired
The fair values of the assets and liabilities of the acquired of Megit Ltd as
at the date of acquisition are as follows:
£
Intangible assets: domain authority 3,944,713
Intangible assets: technology 715,741
Deferred tax liability (1,021,342)
Net identifiable assets acquired 3,639,112
Add: Goodwill 2,963,814
Net assets acquired 6,602,927
The goodwill that arises from the business combination reflects the
profitability of the acquired trade and assets and the enhanced growth
prospects for the combined business. None of the goodwill is expected to be
deductible for tax purposes.
Siege.gg
Acquisition of Siege.gg
On 8 September 2021 Gfinity PLC acquired trade and assets of Siege.gg, a
highly-engaged community for the Rainbow Six Siege game and owner of the
leading proprietary statistical dataset in respect of the competitive scene
around that game.
Purchase consideration
Initial consideration £
Shares (9,000,000 Ordinary shares at £0.0445) 400,500
Acquisition cost 4,380
Total initial consideration 404,880
Deferred consideration
Contingent consideration at fair value 108,678
Total deferred consideration 108,678
Total consideration payable 513,558
Contingent consideration
Contingent consideration is payable based on revenue generated from the
acquired assets. The amount payable is calculated at 30% of relevant revenues
received in the first and second 12 month periods after the acquisition date,
up to a maximum of 1,500,000 across the two-year period. The fair value of the
contingent consideration is currently estimated to be £108,678 based on
forecast revenues at the date of the acquisition.
Net assets acquired
The fair values of the assets and liabilities of the acquired of Megit Ltd as
at the date of acquisition are as follows:
£
Intangible assets: statistical data and domain authority 155,989
Deferred tax liability (34,134)
Net identifiable assets acquired 121,855
Add: Goodwill 391,703
Net assets acquired 513,558
The goodwill that arises from the business combination reflects the
profitability of the acquired trade and assets and the enhanced growth
prospects for the combined business. None of the goodwill is expected to be
deductible for tax purposes.
( 1 ) Adjusted operating loss is before interest, tax, depreciation,
amortisation, impairment and the share-based payment expense.
( 2 ) Adjusted administrative expenses show the underlying operating
expenditure of the company, adjusting for the same items as with the adjusted
operating loss.
( 3 ) Adjusted operating loss is before interest, tax, depreciation,
amortisation, impairment and the share-based payment expense.
( 4 ) Adjusted administrative expenses show the underlying operating
expenditure of the company, adjusting for the same items as with the adjusted
operating loss
( 5 ) Adjusted operating loss is before interest, tax, depreciation,
amortisation, impairment and the share-based payment expense.
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