Editing Gfinity plc

== What type of investment is Gfinity and is it a suitable investment for me? ==

* Gfinity plc, together with its subsidiaries, designs, develops, and delivers esports offerings to publishers, sports rights holders, and brands and media companies in the United Kingdom, North America, and internationally. The company delivers esports related technology and services for third parties, as well as provides broadcast and production services. It owns and operates gamer-centric websites, including gfinityesports.com, realsport101.com, stealthoptional.com, racinggames.gg, epicstream.com, mtgrocks.com, siege.gg, and stockinformer. In addition, the company offers IT development and tournament services, as well as event operator services; and engages in the online media activities. Gfinity plc was incorporated in 2012 and is based in London, the United Kingdom.

== What is Gfinity and what makes it unique? ==

=== How did the idea of the company come about? ===
The idea of Gfinity plc came to Neville Upton, the now founder of the company, when he developed a strong desire to have more fun. Researching into how to do that, he realised that one of the best ways is via gaming. He also realised that there are many people who feel the same way as him, with ccc. In his quest to have more fun for himself and others, Gfinity plc was born.

=== What's the mission of the company? ===
The mission of Gfinity plc is to help people have more fun.

=== What's the company's main offering(s)? ===

=== Who’s the target audience of the company’s flagship/first product? ===
The audience is people who are Analysts, as defined by the Myers-Briggs Type Indicator.

=== What's a major problem that the target audience experience? ===
The problem is a lack of fun.

=== What's a key solution to the problem? ===
The solution is  
 
electronic sports. What makes the sport unique is that it's live. Evidence suggests that a ccc platform will result in ccc financing their inventory much more efficiently, ultimately leading the people to improve their level of happiness. 
== Which are the main competitors of the product? ==
A key way to determine an offering’s closest competitors is by looking at other offerings that are targeting the same or similar target audience (i.e. ccc) and providing or aiming to provide the same core benefit (i.e. ccc), and then ranking the offerings in terms of the total amount of time spent using and/or money spent purchasing the offerings. With that said, we view that the closest competitors of the Gfinity plc's offerings are ccc, ccc and ccc. A detailed comparison between Gfinity plc and its main competitors are shown in the table below.
{| class="wikitable"
|+Competition analysis
!
!Gfinity
!Major League Gaming
!Electronic Sports League
!UMG Events LLC
!European Gaming League
!Multi-Play
!epic.LAN
!ESL UK
|-
|Is the product targeted toward Analyst?
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
|-
|Is the core benefit of the product entertainment?
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
|-
|ccc?
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
| style="background: green; color: white;" |Yes
|
|
|
|-
|ccc?
| style="background: green; color: white;" |Yes
| style="background: red; color: white;" |No
| style="background: red; color: white;" |No
| style="background: red; color: white;" |No
| style="background: red; color: white;" |No
|
|
|
|}

== What is the main way that the company expects to make money? ==
The main way is ccc.

Other ways include:

# Revenue recognised in line with the date at which work is performed (i.e. partner programme delivery fees);
# Revenue from entities sponsoring one of the company's events (i.e. sponsorship revenues);
# Fees are earned each time a user clicks on one of the ads that are displayed on the website (i.e. advertising revenues);
# Rights fees are received from linear broadcasters<ref>Linear broadcasting refers to the continuous streaming of predetermined programs on one channel. This is the broadcasting style that traditional television and radio stations have used for years.</ref> and online streaming platforms in return for rights to access broadcast content (i.e. broadcaster revenues);
# Fees charged for the licensing of Gfinity esports technology, outside of the scope of a broader managed esports service provision (i.e. licensing revenues)

== What’s the size of the company target market? ==

=== Total Addressable Market ===
Here, the total addressable market (TAM) is defined as the global media and entertainment market, and based on a number of assumptions, it is estimated that the size of the market as of today (3rd December 2022), in terms of revenue, is $2.1 trillion.

=== Serviceable Available Market ===
The serviceable available market (SAM) is defined as the global gaming market, and based on a number of assumptions, it is estimated that the size of the market as of today (3rd December 2022), in terms of revenue, is $190 billion.

=== Serviceable Obtainable Market ===
Here, the serviceable obtainable market (SOM) is defined as the United Kingdom gaming market, and based on a number of assumptions, it is estimated that the size of the market as of today (3rd December 2022), in terms of revenue, is $2 billion.

== Who are the key members of the team? ==

=== Board of directors ===

==== Neville Upton, Chairman ====
After graduating at the London school of Economics, Neville joined Coopers & Lybrand where he qualified as a Chartered Accountant. Neville’s formative years were at Euromoney where he gained experience in finance, M&A and various commercial projects. After a brief spell at The Decisions Group as Finance and Operations Director, 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. Neville co-founded Gfinity in 2012 and assumed the role of Chairman in March 2020. 

==== John Clarke, Chief Executive Officer ====
John is an experienced business executive having worked in and with leading global companies for the last 25 years. Prior to joining Gfinity, John worked for HEINEKEN N.V. where he was Head of Global Communications and, most recently, a senior commercial director within Lagunitas Brewing Company, a 100% owned subsidiary of HEINEKEN N.V. Previously he held senior leadership, corporate affairs and marketing positions within The American Express Company and Burson-Marsteller Public Relations. John was appointed to the board in September 2018, originally as a non-executive director. In May 2019 he was appointed as the Chief Commerical and Brand Officer, in which role he oversaw a rapid expansion of the Gfinity and RealSport communities. John was appointed Chief Executive in March 2020. 

==== Jonathan Hall, Chief Financial and Operations Officer ====
Jon qualified as a Chartered Accountant with Arthur Andersen followed by a period of six years specialising in organisation and business process design with PA Consulting, a leading London based management consultancy firm. He subsequently spent five years as a Finance Director of Saracens Ltd and the wider Premier Team Holdings Group, before joining Gfinity in August 2014 where he led the process of the Company’s admission to AIM. As Chief Financial and Operations Officer Jon has responsibility for all aspects of finance and accounting, including financial planning, reporting and accessing capital to fund growth. He also retains responsibility for all company operations including event delivery, technology, HR and legal matters.

==== Leonard Rinaldi, Independent Non-executive Director ====
Len Rinaldi retired in April 2019 after 12 years as the General Manager, Western Europe, Apple, Inc., where he led sales / general management across Western Europe. Previously, as Apple’s CFO EMEIA 2007 – 2012, he oversaw revenue hyper growth from $7bn to $40bn. Len also sat on the boards of Apple India (revenues $800m) as it entered the market, and Apple France (revenues $4bn). His early career was spent in finance and business development/sales roles at AT&T and Alcatel Lucent, and has lived in Saudi Arabia, Singapore, USA, Paris, and London. Len holds an MBA in Finance from FDU. In addition he has Executive Leadership Certifications from Wharton School of Business and the University of Notre Dame. 

==== Hugo Drayton, Independent Non-executive Director ====
Hugo has spent the past 30 years in publishing and media, as a pioneer in digital media, including planning and launching the UK’s first online newspaper – Electronic Telegraph, in 1994. He led Inskin Media, as CEO, for 10 years until 2020, growing it from start-up to a global, brand advertising business. Previously, he spent 10 years at The Telegraph Group, latterly as Group Managing Director. Hugo led Advertising.com, Europe, for 2 years, and was launch CEO of behavioural marketing company, Phorm. Hugo is a non-executive director on the board of FTSE250 Future plc, and is an investor/advisor to several media and ad-tech businesses. He serves as a Trustee of the Felix Byam Shaw (Felix Project) and British Skin Foundation charities. His early career was spent overseas, in Europe and South America, with Coats Viyella, and launching automated telephony services across Europe with Reed Telemedia.

== How much does the company expect to make over the next five years? ==

=== Most recent full-year results ===
For the fiscal (and calendar) year 2021, revenue decreased by 55% to £0.5 million (FY2020: £1.1 million) as the company focused on automating the inventory finance process, via the development of its platform. The net loss in the period increased by 4.3x to £12.5 million (FY2020: £2.9 million), mainly reflecting its most recent acquisition (of TradeFlow) and investment in the business.

==== Most recent half-year results ====
During the six months ended 30th June 2022, revenues decreased by 23% to £209k (H1 2021: £271k) as the company maintained its focus on the development of its inventory finance platform. The net loss in the period increased by 226% to £6.2 million (H1 2021: £1.9 million), reflecting costs related to the TradeFlow acquisition and further investment in the business. Net current liabilities and net liabilities stood at £6.3 million and £4.0 million, respectively. The company ended the period with cash of around £1 million.

==== Since its most recent half year results ====
Since its most recent results (i.e. the results for the six months ended 30th June 2022), the company raised £ccc million via equity. It also issued £ccc million in new debt and repaid £ccc million in existing debt. Accordingly, it's cash, net cash, net current liabilities and net liabilities positions are £ccc million, £ccc million, £ccc million and £ccc million, respectively. It's worth noting that Supply@ME Capital is in the 'introductory' stage of the business lifecycle (i.e. growth stage one), and in that stage, financing cash flows are positive (i.e. the business relies on external funding).

==== What are the financials? ====
{| class="wikitable"
|+Financials
!Year
!'''1'''
!'''2'''
!'''3'''
!'''4'''
!5
!6
!7
!8
!9
!10
!11
!12
!13
!14
!15
!16
!17
!18
!19
!20
!21
!22
!23
!24
!25
!26
!27
!28
!29
!30
!31
!32
!33
!34
!35
!36
!37
!38
!39
!40
!41
!42
!43
!44
!45
!46
!47
!48
!49
!50
|-
|'''Year end date'''
|'''30/06/2013'''
|'''30/06/2014'''
|'''30/06/2015'''
|'''30/06/2016'''
|'''30/06/2017'''
|'''30/06/2018'''
|'''30/06/2019'''
|'''30/06/2020'''
|'''30/06/2021'''
|'''30/06/2022'''
|'''30/06/2023'''
|'''30/06/2024'''
|'''30/06/2025'''
|'''30/06/2026'''
|'''30/06/2027'''
|'''30/06/2028'''
|'''30/06/2029'''
|'''30/06/2030'''
|'''30/06/2031'''
|'''30/06/2032'''
|'''30/06/2033'''
|'''30/06/2034'''
|'''30/06/2035'''
|'''30/06/2036'''
|'''30/06/2037'''
|'''30/06/2038'''
|'''30/06/2039'''
|'''30/06/2040'''
|'''30/06/2041'''
|'''30/06/2042'''
|'''30/06/2043'''
|'''30/06/2044'''
|'''30/06/2045'''
|'''30/06/2046'''
|'''30/06/2047'''
|'''30/06/2048'''
|'''30/06/2049'''
|'''30/06/2050'''
|'''30/06/2051'''
|'''30/06/2052'''
|'''30/06/2053'''
|'''30/06/2054'''
|'''30/06/2055'''
|'''30/06/2056'''
|'''30/06/2057'''
|'''30/06/2058'''
|'''30/06/2059'''
|'''30/06/2060'''
|'''30/06/2061'''
|'''30/06/2062'''
|-
|'''Type'''
|'''Historic'''
|'''Historic'''
|'''Historic'''
|'''Historic'''
|'''Historic'''
|'''Historic'''
|'''Historic'''
|'''Historic'''
|'''Historic'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|'''Forecast'''
|-
| colspan="45" |'''Income statement'''
|
|
|
|
|
|
|-
|Revenues (£'000)
|NA
|4
|1,147
|538
|1,801
|3,534
|6,711
|12,327
|21,906
|37,665
|62,654
|100,833
|157,000
|236,506
|344,688
|486,019
|663,015
|875,059
|1,117,362
|1,380,364
|1,649,821
|1,907,756
|2,134,284
|2,310,068
|2,419,025
|2,450,751
|2,402,156
|2,277,961
|2,089,943
|1,855,094
|1,593,091
|1,323,605
|1,063,945
|827,415
|622,545
|453,170
|319,150
|217,456
|143,348
|91,423
|56,411
|33,675
|19,449
|10,868
|5,875
|3,073
|1,555
|761
|361
|165
|-
|Gross profits (£'000)
|NA
|(763)
|408
|(266)
|1,351
|2,651
|5,033
|9,245
|16,430
|28,249
|46,990
|75,625
|117,750
|177,379
|224,047
|364,514
|497,262
|656,294
|726,285
|897,237
|907,401
|1,049,266
|1,173,856
|1,270,537
|1,330,464
|1,347,913
|1,321,186
|1,252,878
|1,149,469
|1,020,302
|716,891
|595,622
|478,775
|372,337
|280,145
|203,926
|143,617
|97,855
|64,506
|41,140
|25,385
|15,154
|8,752
|4,890
|2,644
|1,383
|700
|343
|162
|74
|-
|Operating profits (£'000)
|NA
|(687)
|(2,819)
|(10,814)
|1,081
|2,121
|4,026
|7,396
|13,144
|22,599
|37,592
|60,500
|94,200
|141,904
|172,344
|291,611
|397,809
|525,035
|558,681
|690,182
|659,928
|763,103
|853,714
|924,027
|967,610
|980,300
|960,862
|911,184
|835,977
|742,038
|477,927
|397,081
|319,184
|248,224
|186,763
|135,951
|95,745
|65,237
|43,004
|27,427
|16,923
|10,103
|5,835
|3,260
|1,763
|922
|466
|228
|108
|50
|-
|Net profits (£'000)
|NA
|(551)
|(2,964)
|(12,487)
|1,081
|2,121
|4,026
|7,396
|13,144
|22,599
|37,592
|60,500
|94,200
|141,904
|151,663
|256,618
|350,072
|462,031
|491,639
|607,360
|580,737
|671,530
|751,268
|813,144
|851,497
|862,664
|845,559
|801,842
|735,660
|652,993
|420,576
|349,432
|280,881
|218,437
|164,352
|119,637
|84,256
|57,408
|37,844
|24,136
|14,892
|8,890
|5,135
|2,869
|1,551
|811
|410
|201
|95
|44
|}

==== What are the assumptions used to estimate the financial forecasts? ====
{| class="wikitable"
|+Key inputs
!Description
!Value
!Commentary
|-
| colspan="3" |'''Revenue'''
|-
|What's the estimated current size of the total addressable market?
|$119,000,000,000
|Here, the total addressable market (TAM) is defined as the global working capital finance arrangement market, and based on a number of assumptions, it is estimated that the size of the market as of today (28th November 2022), in terms of revenue, is $119 billion.
|-
|What is the estimated company lifespan?
|50 years
|Research shows that the average lifespan of a large corporation is around 50 years.
|-
|What's the estimated annual growth rate of the total addressable market over the lifecycle of the company?
|3%
|Research shows that the growth rate of the working capital finance arrangement market (i.e. the total addressable market) is similar to the growth rate of global gross domestic product, which has averaged (medium) around 3% per year in the last 20 years (2001 to 2022).
|-
|What's the estimated company peak market share?
|1%
|We estimate that especially given the leadership of the company, the peak market share of Supply@ME Capital is around 1%, and, therefore, suggests using the share amount here. As of 31st December 2021, Supply@ME Capital's current share of the market is negligible.
|-
|Which distribution function do you want to use to estimate company revenue?
|Gaussian
|Research suggests that the revenue pattern of companies is similar to the pattern produced by the Gaussian distribution function (i.e. the revenue distribution is bell shaped), so we suggest using that function here.
|-
|What's the estimated standard deviation of company revenue?
|5.5 years
|Another way of asking this question is this way: within how many years either side of the mean does 68% of revenue occur? Based on Supply@ME Capital's current revenue amount (i.e. $0.6 million) and Supply@ME Capital's estimated lifespan (i.e. 50 years) and Supply@ME Capital's estimated current stage of its lifecycle (i.e. introduction stage), the we suggest using five and a half years (i.e. 68% of all sales happen within five and a half years either side of the mean year), so that's what's used here.
|-
| colspan="3" |'''Growth stages'''
|-
|How many main stages of growth is the company expected to go through?
|4 stages
|Research suggests that a company typically goes through four distinct stages of cash flow growth. Research also shows that incorporating those stages into the discounted cash flow model improves the quality of the model and, ultimately, the quality of the value estimation.
In addition, research shows that a key way to determine the stage which a company is in is by examining the cash flow patterns of the company. A summary of the economic links to cash flow patterns can be found in the appendix of this report. We estimate that with Supply@ME Capital's operating cash flows positive (+), investing cash flows negative (-) and its financing cash flows positive (+), the company is in the first stage of growth (i.e. the 'introduction' stage), and, therefore, it has a total of four main stages of growth.
|-
|What proportion of the company lifecycle is represented by growth stage 1?
|30%
|Research suggests 30%.
|-
|What proportion of the company lifecycle is represented by growth stage 2?
|10%
|Research suggests 10%.
|-
|What proportion of the company lifecycle is represented by growth stage 3?
|20%
|Research suggests 20%.
|-
|What proportion of the company lifecycle is represented by growth stage 4?
|40%
|Research suggests 40%.
|-
| colspan="3" |'''Growth stage 1'''
|-
|Cost of goods sold as a proportion of revenue (%)
|25%
|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 1), and the margin for its peers is 25%.
|-
|Operating expenses as a proportion of revenue (%)
|15%
|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 1), and the margin for its peers is 15%.
|-
|Tax rate (%)
|0%
|Research suggests that it's best to use a similar rate as the one used by peers that are in the same growth stage (i.e. growth stage 1), and the rate for its peers is 0%.
|-
|Depreciation and amortisation as a proportion of fixed capital (%)
|10%
|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 1), and the margin for its peers is 10%.
|-
|Fixed capital as a proportion of revenue (%)
|10%
|Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 1), and the amount for its peers is 10%.
|-
|Working capital as a proportion of revenue (%)
|15%
|Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 1), and the amount for its peers is 15%.
|-
|Net borrowing ($000)
|Zero
|We suggest that for simplicity, the net borrowing figure is zero.
|-
|Interest amount ($000)
|Zero
|We suggest that for simplicity, the interest amount figure is zero.
|-
| colspan="3" |'''Growth stage 2'''
|-
|Cost of goods sold as a proportion of revenue (%)
|35%
|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2), and the margin for its peers is 35%.
|-
|Operating expenses as a proportion of revenue (%)
|15%
|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2), and the margin for its peers is 15%.
|-
|Tax rate (%)
|12%
|Research suggests that it's best to use a similar rate as the one used by peers that are in the same growth stage (i.e. growth stage 2), and the rate for its peers is 12%.
|-
|Depreciation and amortisation as a proportion of fixed capital (%)
|10%
|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2), and the margin for its peers is 10%.
|-
|Fixed capital as a proportion of revenue (%)
|10%
|Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 2), and the amount for its peers is 10%.
|-
|Working capital as a proportion of revenue (%)
|15%
|Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 2), and the amount for its peers is 15%.
|-
|Net borrowing ($000)
|Zero
|We suggest that for simplicity, the net borrowing figure is zero.
|-
|Interest amount ($000)
|Zero
|We suggest that for simplicity, the interest amount figure is zero.
|-
| colspan="3" |'''Growth stage 3'''
|-
|Cost of goods sold as a proportion of revenue (%)
|45%
|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 3), and the margin for its peers is 45%.
|-
|Operating expenses as a proportion of revenue (%)
|15%
|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 3), and the margin for its peers is 15%.
|-
|Tax rate (%)
|12%
|Research suggests that it's best to use a similar rate as the one used by peers that are in the same growth stage (i.e. growth stage 3), and the rate for its peers is 12%.
|-
|Depreciation and amortisation as a proportion of fixed capital (%)
|10%
|Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 3), and the amount for its peers is 10%.
|-
|Fixed capital as a proportion of revenue (%)
|10%
|Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 3), and the amount for its peers is 10%.
|-
|Working capital as a proportion of revenue (%)
|15%
|Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4), and the amount for its peers is 15%.
|-
|Net borrowing ($000)
|Zero
|We suggest that for simplicity, the net borrowing figure is zero.
|-
|Interest amount ($000)
|Zero
|We suggest that for simplicity, the interest amount figure is zero.
|-
| colspan="3" |'''Growth stage 4'''
|-
|Cost of goods sold as a proportion of revenue (%)
|55%
|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 4), and the margin for its peers is 55%.
|-
|Operating expenses as a proportion of revenue (%)
|15%
|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 4), and the margin for its peers is 15%.
|-
|Tax rate (%)
|12%
|Research suggests that it's best to use a similar rate as the one used by peers that are in the same growth stage (i.e. growth stage 4), and the rate for its peers is 12%.
|-
|Depreciation and amortisation as a proportion of fixed capital (%)
|10%
|Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4), and the amount for its peers is 10%.
|-
|Fixed capital as a proportion of revenue (%)
|10%
|Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4), and the amount for its peers is 10%.
|-
|Working capital as a proportion of revenue (%)
|15%
|Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4), and the amount for its peers is 15%.
|-
|Net borrowing ($000)
|Zero
|We suggest that for simplicity, the net borrowing figure is zero.
|-
|Interest amount ($000)
|Zero
|We suggest that for simplicity, the interest amount figure is zero.
|}

== What are the key risks of investing in the company? ==
As with any investment, investing in Gfinity plc carries a level of risk. The key risks can be found below. Overall, based on the Gfinity plc's adjusted beta (i.e. 0.94), the degree of risk associated with an investment in Gfinity plc is 'low'. For calculating the beta, we used the S&P 500 as the relative index, and five years of monthly data.

=== Strategic risks ===

==== COVID-19 risk ====
The COVID-19 pandemic drove an unparalleled level of uncertainty within the global economy. This has resulted in many organisations holding back from making long term spending commitments. It has also seen a movement away from spend on live, in- person events. The potential for further outbreaks and related lockdown measures also has implications for financial markets, which could have implications both for Gfinity’s share price and the availability of future capital.

==== Economic and political uncertainty ====
The United Kingdom’s exit from European Union has created a level of economic and political uncertainty, which provides risks at both a strategic and operational level for Gfinity. At a strategic level, the uncertainty could create challenges with regards to capital availability and the desire of global publishers, rights holders and brands to deliver programmes in the UK.

==== Intellectual property risk ====
Esports involves the use of intellectual property, typically owned by the publishers of the respective game titles. Gfinity must consider the risk of changes in strategy of the intellectual property owners, resulting in certain games not being available for use by Gfinity in its esports properties, or fees being required for the use of intellectual property, which may present a challenge to Gfinity’s business model.

==== Perception of video gaming ====
Some people view video gaming negatively, as something that promotes an unhealthy lifestyle and lack of social interaction. There is a risk that this perception will provide a barrier to entry to commercial partners and broadcasters, presenting a risk to Gfinity’s business model.

==== Competition risk ====
There are currently very few companies globally that can deliver full end to end esports solutions and Gfinity has established a first mover advantage. As the market develops, however, there is a risk of new entrants coming into the market, or game publishers looking to bring the capability in house.

==== Speed of revenue growth ====
Gfinity operates in a pioneering sector. Directors believe, supported by market research, that the value of that sector is significantly below the level it should reach, given the size and level of engagement of the audience and the attractiveness of that demographic to broadcasters and commercial partners. Nonetheless, that growth may not be linear and that may present a risk to the speed of revenue growth.

=== Operational risks ===

==== COVID-19 risk ====
Alongside the strategic risks, the COVID-19 outbreak has presented multiple operational risks to the business, including:

* Key staff availability; in the event that multiple people needed to be absent at a single point in time
* Facility availability; ensuring we remain able to generate competitive gaming content for our own programmes and for clients without breaching government regulations
* Maintaining efficient and effective ways of working, including ensuring that staff are able to do their jobs even if they can’t come to the office
* Maintaining appropriate communication, so the company’s activities remain focused and aligned.

==== Liquidity risk ====
Gfinity is currently a loss-making company and as such, must ensure that it has sufficient capital available to deliver on its strategy

==== Access to key skills ====
Esports is a new sector and as such, the number of people with deep experience in developing and delivering esports solutions is limited. Without access to this expertise, Gfinity would not be able to provide the depth of solutions to its client base or build its own Gfinity “tribe”.

==== Data security risk ====
Gfinity has built a large community of esports fans playing, watching and socialising through its own platform and those of CEVO and RealSport. Increasing levels of data protection regulation, including GDPR legislation, and ongoing cyber security risks, make it imperative that any data gathered through these platforms is collected, handled and protected in accordance with all relevant regulations. Any failure to do so would significantly erode trust, both among the esports community and prospective commercial partners.

== How much can I expect to make from an investment in the company? ==

=== What's the expected return of an investment in the company? ===
We estimate that the expected return of an investment in the company over the next five years is 411%. In other words, an £10,000 investment in the company is expected to return £51,100 in five years time. The assumptions used to estimate the return figure can be found in the table below.

Assuming that a suitable return level over five years is 10% per year and Supply@ME Capital achieves its expected return level (of 411%), then an investment in the company is considered to be a 'suitable' one.

=== What are the assumptions used to estimate the return? ===
{| class="wikitable"
|+Key inputs
!Description
!Value
!Commentary
|-
|Which valuation model do you want to use?
|Discounted cash flow
|Research suggests that in terms of estimating the expected return of an investment over a period of 12-months or more, the approach that is more accurate is the discounted cash flow approach, so that's the approach that we suggest to use here; nevertheless, for completeness purposes, separately, the valuation of the company is also estimated using the using the relative valuation approach (the valuation based on the relative approach can be found in the appendix of this report).
Supply@ME Capital has never paid cash dividends, and it said that it currently does not anticipate paying any cash dividends in the foreseeable future. Accordingly, we suggest using the free cash flow valuation method (rather than the dividend discount model).
|-
|Which financial forecasts to use?
|Proactive Investors
|The only available long-term forecasts (i.e. >15 years) are the ones that are supplied by us (the forecasts can be found in the financials section of this report), so we suggests using those.
|-
| colspan="3" |'''Growth stage 1'''
|-
|Discount rate (%)
|25%
|There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital.
|-
|Probability of success (%)
|60%
|Research suggests that a suitable rate for a company in this growth stage (i.e. stage 1) is 60%.
|-
| colspan="3" |'''Growth stage 2'''
|-
|Discount rate (%)
|15%
|There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital.
|-
|Probability of success (%)
|90%
|Research suggests that a suitable rate for a company in this growth stage (i.e. stage 2) is 90%.
|-
| colspan="3" |'''Growth stage 3'''
|-
|Discount rate (%)
|10%
|There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital.
|-
|Probability of success (%)
|100%
|Research suggests that a suitable rate for a company in this growth stage (i.e. stage 3) is 100%.
|-
| colspan="3" |'''Growth stage 4'''
|-
|Discount rate (%)
|10%
|There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital.
|-
|Probability of success (%)
|100%
|Research suggests that a suitable rate for a company in this growth stage (i.e. stage 4) is 100%.
|-
| colspan="3" |'''Other key inputs'''
|-
|What's the current value of the company?
|$54.80 million
|As at 28th November 2022, the current value of the Supply@Me Capital company is $54.80 million (or £45.30 million).
|-
|Which time period do you want to use to estimate the expected return?
|Between now and five years time
|Research suggests that following a market crash, the average amount of time it takes for the price of a stock market to return to its pre-crash level (i.e. the recovery period) is at least three years. Accordingly, we suggest that to account for general market cyclicity, it's best to estimate the expected return of the company between now and five years time.
|}

=== Sensitive analysis ===
The main inputs that result in the greatest change in the expected return of the Supply@Me Capital investment are, in order of importance (from highest to lowest):

# The size of the total addressable market (the default size is $119 billion);
# Supply@Me Capital peak market share (the default share is 1%); and
# The discount rate (the default time-weighted average rate is 16%).

The impact of a 10% change in those main inputs to the expected return of the Supply@ME Capital investment is shown in the table below.
{| class="wikitable sortable"
|+Supply@ME Capital investment expected return sensitive analysis
!Main input
!10% worse
!Unchanged
!10% better
|-
|The size of the total addressable market
|To be added
|411%
|To be added
|-
|Supply@ME Capital peak market share
|To be added
|411%
|To be added
|-
|The discount rate
|To be added
|411%
|To be added
|}

== Appendix ==

=== Relative valuation approach ===
As noted earlier in this report, research suggests that in terms of estimating the expected return of an investment over a period of 12-months or more, the approach that is more accurate is the discounted cash flow approach, so that's the approach that we suggest using to determine the estimated value of the company (the valuation based on the discounted cash flow approach can be found in the valuation section of this report); nevertheless, for completeness purposes, separately, the valuation of the company is also estimated using the relative valuation approach.

==== What's the expected return of an investment in the company using the relative valuation approach? ====
Accordingly, we estimate that the expected return of an investment in Supply@ME Capital over the next 12 months is 141%. In other words, an £10,000 investment in the company is expected to return £24,100 in 12-months time. The assumptions used to estimate the return figure can be found in the table below.

Assuming that a suitable return level over five years is 10% per year and Supply@ME Capital achieves its expected return level (of 141%), then an investment in the company is considered to be a 'suitable' one.

==== What are the assumptions used to estimate the return figure? ====
{| class="wikitable"
|+Key inputs
!Description
!Value
!Commentary
|-
|Which type of multiple do you want to use?
|Growth-adjusted EV/sales
|For the numerator, we believe that to account for the different financial leverage levels of its peers, it's best to use enterprise value (EV), rather than price. For the denominator, we believe that because it expects Supply@ME Capital to reinvest almost all of its revenue back into the business over the five year forecast period and therefore its earnings are expected to be abnormally low over the period, it's best to use sales. Accordingly, we suggest valuing its company using the EV/sales ratio. However, we feel that to take into account the different business lifecycle stages of its peers, the most suitable valuation multiple to use is the growth-adjusted EV/sales multiple, rather than the EV/sales multiple.
|-
|In regards to the growth-adjusted EV/sales multiple, for the sales figure, which year to you want to use?
|Year 1
|Research suggests that when using the relative valuation approach, it's best to use a time period of 12 months or less. Accordingly, for the sales figure, we suggest using Year 1.
|-
|In regards to the growth-adjusted EV/sales multiple, for the sales growth figure, which year(s) do you want to use?
|Year 2 to 4, from now
|We suggest that for the sales growth figure, it's best to use Year 2 to 4.
|-
|In regards to the growth-adjusted EV/sales multiple, what multiple figure do you want to use?
|43x
|Here, we suggest using a multiple of 43x.
|-
|Which financial forecasts to use?
|Proactive Investors
|The only available forecasts are the ones that are supplied by us (the forecasts can be found in the financials section of this report), so we suggest using those.
|-
|What's the current value of the company?
|$54.80 million
|As at 28th November 2022, the current value of the Supply@Me Capital company is $54.80 million (or £45.30 million).
|-
|Which time period do you want to use to estimate the expected return?
|Between now and one year time
|Research suggests that when using the relative valuation approach, it's best to estimate the expected return of the company between now and one year time.
|}

=== Sensitive analysis ===
The two main inputs that result in the greatest change in the expected return of the Supply@ME Capital investment are, in order of importance (from highest to lowest):

# The growth-adjusted EV/sales multiple (the default multiple is 42x);
# The Year-one sales forecast (the default forecast is $3.5 million); and
# The Year 2 to 4 sales growth forecast (the default forecast is 87%)

The impact of a 10% change in those main inputs to the expected return of the Supply@ME Capital investment is shown in the table below.
{| class="wikitable sortable"
|+Sirius investment expected return sensitive analysis
!Main input
!10% worse
!Unchanged
!10% better
|-
|The growth-adjusted EV/sales multiple
|To be added
|141%
|To be added
|-
|The Year-one sales forecast
|To be added
|141%
|To be added
|-
|The Year 2 to Year 4 sales growth forecast
|To be added
|141%
|To be added
|}

=== Major shareholders ===
The table below shows those who hold 3% or more of the company's share capital, as of 14th October 2022.
{| class="wikitable"
|+Holdings of shareholders
!Shareholder
!Number of Ordinary Shares
!Percentage of the issued share capital
|-
|The AvantGarde Group S.p.A.
|12,742,513,009
|22.51%
|-
|Venus Capital S.A.
|7,900,000,000
|13,95%
|}
Note, the total number of issued share capital is as follows: 56,617,688,143 ordinary shares. What's the total number of outstanding warrants and options?

=== Peers ===
{| class="wikitable"
|+Global Bloomberg-determined peers
!Bloomberg Ticker
!Company name
!Currency
!Market capitalisation ($m)
!Enterprise value ($m)
!EV/sales (x)
!EV/next year sales (x)
!Next year sales (Local, m)
!Sales 3-year average growth (%)
!Growth-adjusted EV/next year sales
|-
|GFIN LN Equity
|Gfinity Plc
|GBp
|20
|14.95
|1.9x
|
|
|22.07%
|8.6
|-
|WB US Equity
|Weibo Corp
|USD
|3,880
|3454.26
|1.8x
|1.8
|1,910
|10.67%
|16.9
|-
|RENN US Equity
|Renren Inc
|USD
|809
|733.83
| -
|
|366959
|0.33%
|
|-
|067160 KS Equity
|AfreecaTV Co Ltd
|KRW
|779
|760998.61
|2.1x
|2.1
|8849287
|29.36%
|7.2
|-
|035720 KS Equity
|Kakao Corp
|KRW
|19,470
|25925226.20
|3.0x
|3.0
|1292
|36.68%
|8.2
|-
|YELP US Equity
|Yelp Inc
|USD
|2,110
|1820.58
|1.4x
|1.4
|122232
|3.95%
|35.4
|-
|META US Equity
|Meta Platforms Inc
|USD
|327,440
|312144.75
|2.6x
|2.6
|108386
|28.46%
|9.1
|-
|1024 HK Equity
|Kuaishou Technology
|HKD
|33,160
|209279.15
|2.0x
|1.9
|229
|60.30%
|3.2
|-
|KIND US Equity
|Nextdoor Holdings Inc
|USD
|813
|272.01
|1.2x
|1.2
|5028
|
|
|-
|SNAP US Equity
|Snap Inc
|USD
|16,940
|16691.82
|3.3x
|3.3
|3242
|51.90%
|6.4
|-
|PINS US Equity
|Pinterest Inc
|USD
|16,860
|14378.59
|4.5x
|4.4
|
|50.53%
|8.7
|}

=== Economic links to cash flow patterns ===
{| class="wikitable"
|+Economic links to cash flow patterns
!Cash flow type
!Introduction
!Growth
!Shake out
!Mature
!Decline
|-
|Operating
| -
| +
| +/-
| +
| -
|-
|Investing
| -
| -
| +/-
| -
| +
|-
|Financing
| +
| +
| +/-
| -
| +/-
|}

== References and notes == 
[[Category:Thesis]]
__INDEX__