Big Picture – A Deep Dive Examination of PCG Entertainment Plc
PCG Entertainment Plc Snapshot
PCGE is focused on the development of opportunities in the rapidly growing media and gaming industry across the Asia-Pacific region.
The Company’s strategy is success through acquisition and development, including that of introducing popular western media properties to the PRC. PCGE works closely in tandem with Chinese production companies to adapt them for the local market. Distribution will be through conventional broadcast channels, on-line, on mobile and the PCGE will increase the commercial value of such properties through events, associated spin-off activities, merchandising and licensing.
The Company recently acquired CPDC, a provider of games management software in Asia and has a number of other media distribution and gaming initiatives in the pipeline.
The Company continues a positive strategy of new approaches regarding such projects.
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.
Richard O’Dell Poulden, 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.
Professor Michael Raymond Mainelli, 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, 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.
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:
|Name of Shareholder||Number of Ordinary Shares||Percentage of Enlarged Share Capital|
|CAPITA IRG TRUSTEES (NOMINEES) LIMITED||1,850,433,431||87.08%|
|ASHTON NOMINEES INC||59,420,004||2.80%|
|NORCO INVESTMENTS LTD||14,874,479||0.70%|
16 Great Chapel Street
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T: +44 (0) 208 004 4699
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For press or investor relations, please contact:
128 Wigmore Street, London W1U 3SA
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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
Allenby Capital Limited
3 St Helen’s Place
London EC3A 6AB
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
Legal advisers to the Company
as to Gibraltar Law
Hassans International Law Firm
57/63 Line Wall Road
P.O. Box 199