Big picture - Why invest in PCG Entertainment Plc
PCG Entertainment Plc Snapshot
PCGE is a Gibraltar incorporated holding company which, through its subsidiaries, holds four licences relating to the operation of online games based in the PRC (the “Licences”). Initially, the Group intends to seek PRC governmental and local authority approval to utilise the Licences in partnership with Hainan Huan’ao Culture Media Co., Ltd. (“HPC”) and Hainan Huan’ao Sports Industry Co., Ltd. (“HLC”) to hold online poker games and tournaments and create national lottery products including lottery games. The Group also intends to exploit the Licences to expand the Group’s business into premium rate telephony, virtual currencies and the distribution of games and other media through the internet and other channels.
The PCGE Strategy
The Directors believe that there is considerable opportunity to leverage on the brands and businesses created by HPC and HLC such that a mutually beneficial working relationship could be created, allowing PCGE to operate the online distribution elements of the HPC and HLC businesses (subject to the relevant approvals being obtained from the PRC authorities). Accordingly, the Group has entered into the Cooperation Agreements whereby, subject to the exercise of the option rights under the Framework Agreement, it will work with the management of HPC and HLC to add value to their businesses through marketing, product enhancement and diversification into the online market. This can be achieved by utilising the Licences and obtaining relevant approvals from the PRC authorities.
The Cooperation Agreements set out the intention for PCGE and HPC/HLC to collaborate in a number of areas:
• Increasing the number of real world poker tournaments.
• Developing the China Poker Games brand internationally.
• Obtaining Chinese and international sponsors for the online and real world tournaments.
• Marketing the online and real world games nationally and internationally.
• Developing HLC’s sports lottery resale business by;
o increasing the number and quality of retail outlets;
o investigating more sophisticated and attractive virtual sports games;
o marketing the services of HLC more effectively; and
o moving sports lottery sales online/on mobile.
• Developing other online gaming initiatives.
Developing additional real world events introduced to the PRC by Sihai Geju.
With reference to the above, the Directors believe that PCGE’s contribution will be as follows:
• Its standing as a quoted entity on AIM along with the business contacts and experience of the team, particularly the PRC-based team, should help HPC/HLC to expand its operations into other cities/provinces.
• PCGE’s international marketing experience, PR skills and contact with media outlets should help to build the CPG brand nationally and internationally.
• Subject to obtaining any further licences required, the Licenses within Sihai Geju should enable PCGE to operate on-line poker tournaments.
• PCGE’s international reach and marketing expertise should enable it to attract sponsorship and other commercial collaboration in the on and offline poker tournaments.
• The CPG tournaments currently attract mostly Chinese nationals. The online qualification mechanism and the Group’s international marketing experience should enable the Group to extend CPG’s reach and attract increasing numbers of players from outside the PRC.
• PCGE has considerable experience of international lottery products and spin-offs, as well as hybrid lottery/promotional products and marketing techniques. The Directors believe that these, along with the Licenses in Sihai Geju which may enable online lottery sales, can add considerable value to HLC.
• The Board expects the PCGE portal, with its online-TV promotions, poker tournaments and, potentially, online lottery sales, to attract significant footfall and the Directors intend to develop other games initiatives to capitalise on this traffic.
• The management of HPC/HLC have a background in sports events and their management of Asia’s second largest poker tournament is testimony to their expertise in event management.
Starting with the Company’s online-TV project the Board intends to develop the events side of the business.
The Directors intend that the key revenue stream going forward will be based on the Group’s existing relationship with HPC, whereby the Group will run preliminary rounds of Texas Hold’em and other poker games online, the winners of which would be entered into HPC’s annual poker tournaments in Hainan.
The revenue generated from the online poker games would be split 10:90 (i.e. 10 per cent. allocated to Sihai Geju and 90 per cent. allocated to HPC). The Directors intend that the games will be conducted with players paying a fixed fee to enter a match and being assigned a limited number of virtual credits with which to play. Players cannot purchase additional credits in order to raise the stakes, as they can in UK and other international markets. The winner of a game is then assigned a prize in a virtual currency, details of which are set out below.
The Directors also believe that the Group can use its existing good relationship with HLC to launch a series of sports lottery games, which would operate in a similar manner to existing sports lotteries.
In addition, the Directors intend to exploit the Group’s Licences in media distribution, premium SMS and virtual currency to create access to online or internet operation of games and entertainment. It is the Directors’ intention to use the Group’s online media distribution licences to enable international media channels to become more conspicuous and available in the PRC.
The Company has identified a number of opportunities to exploit the Licences further in the PRC. These involve the distribution of games and other media as well as premium SMS activity, cross-channel promotions and the issuing of virtual currencies. Initiatives include:
1. Broadcast events – The Company is in negotiations to bring a major broadcast event to the PRC with participants entering through a series of online ‘heats’.
2. Stock market games – These involve players “buying in” to a virtual mirror image of the stock exchange to try and increase the value of their virtual investments. Players are charged for each virtual transaction they carry out, via either premium SMS or internet based messages. The Group would seek to obtain a sponsor (a regional bank/ investment firm), with whom they could collaborate to award prizes to the best players including job opportunities with the sponsor. These have been tried in other territories and with their low barriers to entry (low cost, access through internet, mobile and SMS) the Directors believe they may get significant traction, and may generate significant revenues in the PRC.
3. Chat channels – These have been successful in Europe, the USA and the Middle East and the
Directors believe they may play well in the PRC. The Group intends to roll out channels based on sport, music, culture and fashion, to which customers would send texts discussing and debating various topics. There would also exist the possibility to gain revenue streams from advertising.
4. Virtual currencies – Sihai Geju’s Network Cultural Business Permit authorises Sihai Geju to issue and manage virtual currencies for use on the internet. These currencies can then be used for entering competitions and can be spent or earned through the purchase or sale of virtual goods in online social games.
The Directors intend that the PCGE website becomes a portal enabling access to:
• the online entry for the major broadcast event described above. The Directors intend to seek extensive promotion on national television;
• enter the online qualifying rounds for the real world poker tournaments operated by HPC (subject to obtaining relevant approvals from the PRC authorities);
• enter the stock market game, which again the Directors expect to be widely promoted on national television; and
• online sports lottery sales operated by HLC (subject to obtaining relevant approvals from the PRC authorities).
Cumulatively the Directors expect these activities to drive considerable footfall to the website and it is the Directors’ intention to capitalise on this traffic by introducing further revenue-generating online games and advertising.
Kung Min Lin, aged 48, Non-Executive Chairman
Mr Lin holds an MA in International Business and Management from Westminster University. Mr Lin has extensive experience in currency and index trading through a decade of involvement in a number of Taiwan based banking and foreign exchange operations. In 2000 Mr. Lin was appointed Director and Chief Operating Officer of Ozmosa Limited, a sports betting operator in the East and South East Asia regions. Mr Lin is the Chairman of the Power Capital Group, based in Taiwan, which holds various foreign exchange trading and asset management businesses across Asia. Mr Lin is Chairman of Power Capital Global Limited, a commodities trading business, and Chairman of MoneySwap PLC, both of which are traded on AIM.
Richard O’Dell Poulden, aged 62, Non-Executive Deputy Chairman
Following a law degree from Oxford University, Mr. Poulden qualified as a Barrister, after which he moved into merchant banking where he worked for Samuel Montagu & Co Limited. Following an MBA at the London Business School and an exchange program with Harvard Business School, he joined the international management consultancy firm, Arthur D Little, where he worked in their European strategy practice. He was also co-founder of its Financial Industries Group. He served in the UK Leadership Team of Electronic Data Systems where he worked on developing new financial structures for the sale of Electronic Data Systems services. He has founded or co-founded successful companies in healthcare, retail and natural resources and in all these sectors he has executed successful strategies for growth by acquisition. Mr Poulden is Chairman of AIM traded Wishbone Gold PLC and Chairman of Black Swan plc.
Nicholas (Nick) Jonathan Michael Charles Bryant, aged 53, Chief Executive Officer
Mr Bryant has spent more than 30 years in the media industry working for major advertising agencies (Young and Rubicam, Boase Massimi Pollit), broadcasters (Showtime Arabia Ltd, Middle East Broadcasting Centre FC LLC (“MBC”)) and managing sponsorship and digital media companies (Media Dimensions Limited, Txt TV FZ LLC). In the 1980s, he established Media Dimensions Limited, a media sponsorship agency in the UK and was active in devising and managing promotional games on television and in the national press. In the 1990s, he was a director of commercial operations of BSkyB’s “Open…” service. Subsequently, he became a group director of MBC, where he was responsible for gaming, premium-rate services and mobile application development. He also started Txt TV FZ LLC which was a significant TV chat channel and premium-rate service provider in the Middle East. Most recently, he was managing director of Luup Limited, a mobile payments solution provider based in London, Oslo and Dubai. Mr Bryant has a BA from the University of Essex.
Clive Mark Hyman, aged 53, Chief Financial Officer
Mr Hyman, an Exhibitioner at Christ’s College, Cambridge, is also a Chartered Accountant with experience in quoted and unquoted companies. He was a partner with KPMG in their London office, where he was a founding partner of KPMG’s Transaction Services businesses. In addition, he was a founding partner of KPMG’s private equity group, developing relationships in the private equity community in New York and London for the firm. During his time at KPMG, he serviced many large clients in the corporate and private equity community. He also led and founded KPMG’s K-Ventures fund in 1999 and invested successfully in early stage propositions. He left the firm in 2005. He was group CFO of a healthcare business from July 2010 to August 2011 and in April 2012 became a non executive and independent board member of Petrol Ofisi AS, a Turkish listed group, majority owned by OMV AG. He became a consultant to Black Swan plc in April 2013 and in addition has been the CFO of Wishbone Gold PLC since September 2013.
Professor Michael Raymond Mainelli, aged 55, Non-Executive Director
Professor Mainelli co-founded Z/Yen Group Limited (“Z/Yen”), a commercial think-tank, in 1994 to promote societal advance through better finance and technology. In his career he has worked in rocket science, finance, and technology. Professor Mainelli has worked on the internet since 1976 with numerous early stage technologies, such as developing games for clients, e.g. Sony, as well as for Z/Yen. Professor Mainelli won a 1996 Foresight Challenge award for creating the Financial Laboratory, melding military gaming with trading to visualise financial risk, and a 2003 UK Smart Award for PropheZy, Z/Yen’s prediction software. Professor Mainelli has been a commentator on the fusion of betting, gaming and finance over the years, including work on weather bets and sports contingency risk. After a post at Arthur Andersen, Professor Mainelli spent seven years as a partner and board member of the leading accountancy firm, BDO Binder Hamlyn, directing global consulting projects. While cofounding Z/Yen, Professor Mainelli served as a Director of Europe’s largest R&D organisation (the Defence Evaluation & Research Agency) leading to two privatisations. Educated at Harvard, Trinity College Dublin and the London School of Economics, Professor Mainelli is a qualified accountant, securities professional, computer specialist and management consultant, he was 2004/2005 British Computer Society “Director of the Year”. In 2005, he was the Mercers’ School Memorial Professor of Commerce at Gresham College. Professor Mainelli is a non-executive director of the United Kingdom Accreditation Service (UK’s national body for standards and laboratories) and AIM traded Wishbone Gold plc and has held numerous advisory posts, including Hitachi UK and HM Treasury.
Alan David Gravett, aged 66, Non-Executive Director
Mr Gravett commenced employment with Barclays Bank Trust Company Limited, (then Barclays Bank Executor and Trustee Department), in 1965 achieving the Trustee Diploma of the Institute of Bankers in 1973. By 1986 he had become manager of their Gibraltar operation, dealing with the administration of companies and trusts, leaving in 1988 and remaining in Gibraltar to join a large local trust corporation. In 1993 he became an executive director of a smaller local trust corporation and remained there for 18 years leaving when the trust corporation was sold. He is now a freelance consultant based in Gibraltar but continues to be closely involved with company and trust structures for a wide range of international clients.international clients.
Xu Lei (Alex) Xuleai, aged 34, Vice President
After graduating from the South-Central University for Nationalities in Wuhan with a degree in computer science in 2003, in 2004 Mr Xuleai set up Beijing Hiland Kaiyo Technologies, where he designed and developed gold margin trading systems. In 2010 he was employed as a product research director in charge of the design and implementation of precious metals and related-derivatives trading for the Beijing Gold Exchange, following which he became the Vice President of Pan Asia Gold Exchange. At PCGE he will be responsible for the business operations of the Group in China.
The information contained within this shareholder information section was last updated on 30.09.2015
Financial Summary: Index AIM ALL
Financial Year: 31 December
Total issued share capital: 1,180,438,344 Ordinary Shares of 0.1p each (no Ordinary Shares are held in treasury by the Company)
Total voting capital: 1,180,438,344 Ordinary Shares
Percentage of issued share capital not in public hands – 28.16%
Significant shareholders as of 28 August 2015 which hold more than 3% of the Company’s Ordinary Shares
Directors’ and other interests
The interests (including related financial products as defined in the AIM Rules for Companies) of the Directors (including persons connected with the Directors within the meaning of section 252 of the Act) in the issued share capital of the Company are as follows:
Other than the Directors and their connected persons, the persons set out below are interested (as defined in Part 6 of FSMA and the Disclosure Rules and Transparency Rules issued by the FCA), directly or indirectly, jointly or severally in three per cent. or more of the issued share capital of the Company:
For more information please click here
90 Basinghall Street
Phone: 020 7562 7653
+44 20 7562 7653
Email: [email protected]
Legal advisers to the Company
as to English and Chinese Law
Pinsent Masons LLP
30 Crown Place
Nexia Smith & Williamson
Beaufort Securities Limited
131 Finsbury Pavement
Sanlam Securities UK Limited
10 King William Street
Nexia Smith & Williamson
DMH Stallard LLP
6 New Street Square
New Fetter Lane
Capita IRG Trustees Limited
34 Beckenham Road
Hawk Management Ltd
5 Library Ramp
Registrars Capita Registrars
Longue Hougue House
Longue Hougue Lane
Legal advisers to the Company
as to Gibraltar Law
Hassans International Law Firm
57/63 Line Wall Road
P.O. Box 199