Trading Update

RNS Number : 6562A

Gfinity PLC

23 January 2020

 

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.

23 January 2020

Gfinity plc

("Gfinity" or the "Group")

Update on first half performance and full year outlook

Gfinity plc (AIM: GFIN), a world-leading esports provider, announces an update on half year performance and outlook for the full year, ahead of the publication of unaudited interim results for the six month period ended 31 December 2019, expected to be announced on 4 March 2020. 

H1 performance

Trading through the first half of the financial year has continued broadly in line with management's expectations. Gfinity expects to report H1 revenue of circa £3.5 million, which is lower than the same period last year (H1 2019: £4.4m) primarily due to the transition away from low margin Elite Series revenues, as explained below. Significant growth in higher margin revenue streams during H1 are expected to deliver a circa 300% increase in gross profit to £2.1 million (H1 2019: £0.5 million) whilst continued cost discipline is expected to further reduce adjusted operating loss* for the period to £2.4 million (H1 2019: £4.4 million).

Full year outlook

Over the past year, Gfinity's leadership team has refocused the business on a Strategic Client Management model, which has helped to establish a robust pipeline of new opportunities. The Group continues to improve its revenue mix and margin as it shifts the profile of its work towards own community revenues, strategic programme consulting and higher margin content creation, which supplement the end-to-end esports programmes the Group continues to deliver for its major partners. This has been complemented by changes to the Group's leadership team and wider commercial team to support the delivery of further growth.

The execution of this strategy has progressed well and the Group is committed to quickening the pace of its implementation. To facilitate this, the Board has taken the decision not to progress a material opportunity for a new contract with a customer for whom it has recently completed a major project. This decision will enable Gfinity to pursue the strong pipeline of new opportunities which the Board firmly believes will yield stronger company benefits for the financial year 2021 and beyond.

As a consequence, the Board now expects revenue for the year to 30 June 2020 to be broadly in line with the 2019 financial year, but with significantly improved margins compared with current market expectations. The implementation of additional cost saving measures combined with a reprofiled client business base focused on higher margin activities, means that the Group still expects to deliver on current market expectations for full year adjusted operating loss.

The Group is also in active discussions with several potential strategic investors in the US and Europe that would create new opportunities and the further scale required to exploit the rich opportunities in the esports sector.

There are 2.2 billion gamers globally. Esports and competitive gaming continues to grow with projected esports market revenues predicted to reach $1.8 billion by 2022**. The Group remains well positioned to benefit from existing and future opportunities in this growing marketplace.

Commercial leadership changes

To drive the Group's aggressive growth objectives, a number of changes have been made to the commercial team and they come into effect immediately. 

·    John Clarke, current Gfinity Global Brand and Marcomms Officer, has now been appointed as Global Commercial and Brand Officer. John joined Gfinity as a Non-Executive Director in September 2018 and was appointed Global Brand and Marcomms Officer in May 2019. His leadership skills combined with his communication, marketing and commercial experience derived from his time in leading international roles at The American Express Company and HEINEKEN N.V. has added significant value to the business.

·    Dave Lipp has been appointed as Head of Sports and Media Rights. An experienced leader with a proven track record in transformational commercial growth, Dave has extensive experience in the media, sports, gaming and entertainment sectors. He has held senior positions at NBC Universal (NBCU Comcast), Sky and Sony Pictures.

* Adjusted operating loss is earnings before interest, tax, depreciation, impairment, amortisation, share in loss in associates and the share-based payment expense, prepared on a consistent basis as in prior guidance prior to the reclassification of any expenditure under operating leases to depreciation in line with the requirements of IFRS 16

** Source: Newzoo Global Esports Market Report (2019)

ENDS

Enquiries:	www.gfinityplc.com
Graham Wallace, Chief Executive Officer	Via Teneo
Gfinity investor relations	[e-mail]
Allenby Capital Limited - AIM Nominated Adviser and Broker	Tel: [phone]
Jeremy Porter / Nicholas Chambers
Teneo - Media	Tel: [phone]
Camilla Cunningham	[e-mail]

About Gfinity

Gfinity (AIM: GFIN) is a world leading esports business. Created by gamers for the world's 2.2 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. Partnerships include EA SPORTS, Activision Blizzard, Premier League, F1 Esports Series and the Forza Racing Championship.

Gfinity connects directly with competitive gaming consumers through its growing community of gamers on its own platforms: Gfinity esports and RealSport101.

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.

 

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