Trading Update, Strategic Review and Board Changes

RNS Number : 2337G

Gfinity PLC

16 March 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.

16 March 2020

Gfinity plc

("Gfinity" or the "Company")

Trading Update, Strategic Review and Board Changes

Gfinity plc (AIM: GFIN), a world-leading esports provider, announces an update on current trading and outlook for the full year.

Separately, the Company has undertaken a strategic review of the business and will begin a series of broader cost reduction initiatives with immediate effect.

Update on current trading and full year outlook

Results for the six months to 31 December 2019 ("H1") remain unchanged. As announced in the trading update on 23 January 2020, the Company expects to report H1 revenue of c. £3.5 million, a gross profit of £2.1 million and an adjusted operating loss of £2.4 million.

However, the start of the second half of this financial year has not seen commercial opportunities materialise as expected, and discussions around strategic partnerships have also not progressed as quickly as anticipated.

The challenging market conditions have now been exacerbated by the unprecedented impact of the COVID-19 virus which is forcing the postponement of all live sporting and esports events. Two major events that Gfinity designs and delivers for clients, and due to take place before July 2020, have now been postponed. The Company is closely monitoring developments regarding COVID-19 and its ongoing impact on the business and will continue to update the market as appropriate.

Consequently, the Board now expects that for the year to 30 June 2020 revenue will be lower and adjusted loss before tax will be higher than current market expectations.  In light of all this, the Company is pursuing other options for financing in the short term and continues its discussions with several potential strategic investors. 

Strategic review

Recently the Executive Team initiated a comprehensive strategic review to ensure the Company remains well positioned for future growth. The recommendation to the Board included a restructuring plan to reduce the cost base to reflect the change in expected revenue for the year and outlook. Part of this proposal included the Executive Chairman and Chief Executive Officer standing down from their positions.

Following the strategic review, the Company today announces that it is: 

• implementing a significant cost reduction programme, including implementing Board and management changes;
• adopting a flexible variable cost operating model; and
• sharpening focus on three core areas of existing success and competitive strength; own community; building community for others; and Motorsports, with F1 as the anchor client. All utilising on-line game play.

Cost reduction programme

As a result of the strategic review, Gfinity will appoint a new Chief Executive Officer and Chairman from within the business, reduce its fixed infrastructure cost base and move to a more agile variable cost operating model which will include a reduction on spend on future technology and other operating expenses. Following the restructuring programme the annual cost base is expected to reduce by more than 60 per cent. from the current level of £8.5m over the next few months.

Directorate changes

As part of the broader cost reduction, Garry Cook, Executive Chairman, and Graham Wallace, Chief Executive Officer, will stand down from their positions on the Board and Management team, effective immediately. 

• John Clarke, Global Commercial and Brand Officer, has been appointed Chief Executive Officer with immediate effect.
• Neville Upton, President and Co-Founder of Gfinity, will succeed Garry Cook as Chairman with immediate effect.
• Garry Cook and Graham Wallace will maintain a relationship with the Company as they continue to work on a number of significant investment and commercial opportunities for the business.

Sharpening strategic focus

To ensure Gfinity remains well positioned to drive profitable growth, the Company has taken the decision to exit areas that are having a negative impact on cash, such as low margin tournament operations, and to focus its strategy on fewer, core areas where Gfinity has strong competitive advantage such as its own community; building community for others; and Motorsports, with F1 as the anchor client.

The Company will update on its progress against these initiatives at its interim results for the six months to 31 December 2020, expected to be announced in the week commencing 23 March 2020.

Having taken steps to significantly reduce the cost base and realign the operating model, the Board is confident that Gfinity remains well positioned for growth when the trading environment rebounds.

ENDS

Enquiries:	www.gfinityplc.com
John Clarke, 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]

John Clarke, Chief Executive Officer

John was previously at HEINEKEN N.V. and before that The American Express Company. His leadership skills combined with his communication, marketing and commercial experience has added significant value to the business. He joined Gfinity as a Non-Executive Director in September 2018 and was appointed Global Brand and Marcomms Officer in May 2019, before being appointed Global Commercial and Brand Officer in January 2020.

Neville Upton, Executive Chairman

Neville founded Gfinity in 2012.  A qualified Chartered Accountant, Neville spent the formative years of his career at Euromoney and The Decisions Group.  In 1998 he established a call centre business, The Listening Company, which specialised in multichannel communication applications and high quality customer service solutions. The business was sold in 2011 to Serco for a sum in excess of £60 million at which time it had a turnover of £82 million and employed 4,000 people.

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. Relationships include EA SPORTS, Activision Blizzard, 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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