Gfinity plans fundraising after annual losses increase

The company, which floated on AIM in December 2014 with a £3.5m initial public offer at 17p a share to offer investors a route into the burgeoning market for competitive video gaming, also posted maiden annual results that showed sales swelled 163% to £0.56m in the year to end-June, with revenue derived from a mix of sponsorship, fees from game publishers, subscriptions and ticket sales.

Losses mushroomed to £3.6m, slightly higher than the £3.3m forecast by house broker Arden Partners, due to the planned investments in the launch of the 'Gfinity Arena' in Fulham - the UK’s first dedicated eSports arena - and the ramp up to a monthly run rate of roughly £230,000 from staff costs, marketing and web development.

At year end, the company had cash, cash equivalents and deposits totalling £2.73m.

The launch of the first part of the Gfinity Championship series was also the main driver behind a cost of sales increase to £1.21m in the latter half of the year, with costs including prize money, presenting talent, travel accommodation and event production.

Chief executive Neville Upton, co-founder of the company, said it had been a transformational year for Gfinity but stressed that current low revenues were not expected to explode in the short-term. For 2016, Arden forecasts £1.9m sales and £2.8m losses before tax.

"The sector continues to develop rapidly and offers exciting opportunities. Our ability to take advantage of these will depend on our funding and speed of revenue development through sponsorship and other forms of monetisation," Upton said.

"We remain confident in our prospects and have launched a further round of funding to ensure that we have the short term resources to take advantage of these opportunities."

The new investors will be buying into a rapidly growing global e-sports market currently valued at $621m with an audience of 134m, of which a large proportion views online via live streams.

In order to tap into the large proportion of live-stream viewers who watch e-sports via sites like YouTube and the fast-growing e-sports specialist Twitch Gfinity want to "enrich the features and functionality on Gfinity TV which the directors believe will improve the service provided [by these sites]".

With the new £1m fundraising priced at 19p a share, Gfinity stock, which has been as high as 28.75p in the 11 months since flotation, was down 17% to 20.38p by 1445 on Monday.