Gfinity Plc Annual Report 2015

FY2015 Annual Report · Gfinity Plc

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GFINITY plc
GFINITY plc
GFINITY plc
Annual Report & Financial Statements
Annual Report & Financial Statements
Annual Report & Financial Statements
30 June 2015
30 June 2015
30 June 2015

Market leading
eSports broadcasts

GROWTH AREA

UK’s ﬁ rst
gaming arena

GROWTH AREA

Gaming community
created through
Gﬁ nity website

GROWTH AREA

Gﬁ nity’s
partnerships with
the world’s leading
games publishers

Gﬁ nity’s
dedicated
arena for
gamers is UK’s
ﬁ rst and only
eSports venue

Gﬁ nity.net
a popular
destination
for gamers
to compete,
socialise and
watch eSports

Contents

Overview
Directors, Secretary and Advisers

Period Highlights

Business Review & Strategic Report
Chairman’s Statement

Chief Executive’s Report

Finance Director’s Report

Gﬁ nity Growth & Monetisation Opportunity

Growth in eSports Market & Audiences

Governance
Directors’ Biographies

Directors’ Report

Corporate Governance Report

Directors’ Remuneration Report

Financial Statements
Independent Auditors Report

Statement of Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

GFINITY plc. | Annual Report & Financial Statements 2015
Overview

Directors, Secretary and Advisers

The Board of
Directors
Tony Collyer

(Non-Executive Chairman)

Neville Upton

(Chief Executive Ofﬁ cer)

Jonathan Hall

(Finance Director)

Ginette Jarman

(Operations Director)

Paul Kent

(Technology and eSports Director)

Philip Shuldham-Legh

(Marketing Director)

David Yarnton

(Non-Executive Director)

Jonathan Varney

(Non-Executive Director)

Company Secretary
Jonathan Hall

Registered Ofﬁ ce
35 New Bridge Street
London EC4V 6BW

Nominated Adviser
and Broker
Arden Partners plc

125 Old Broad Street
London EC2N 1AR

Independent
Auditors
Rees Pollock

35 New Bridge Street
London EC4V 6BW

Legal Advisers –
Corporate
Fladgates

16 Great Queen Street
London WC2B 5DG

Legal Advisers –
Commercial
Onside Law

23 Elysium Gate
126-128 New Kings Road
London SW6 4LZ

Registrars
Capita Registrars Ltd

The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU

Financial Public
Relations
Luther Pendragon Ltd

3 Priory Court
Pilgrim Street
London EC4V 6DE

Registered Number
08232509

GFINITY plc. | Annual Report & Financial Statements 2015

Period Highlights

Operational highlights

Corporate
■ Raised £3.5m, before expenses, from AIM ﬂ otation at 17p per share in December 2014
■ Entered into strategic collaboration with Vue Cinemas (“Vue”) and opened

the Gﬁ nity Arena in London, the UK’s ﬁ rst dedicated eSports arena

■ Registered user base on Gﬁ nity.net increased from 43,000 as

at 30 June 2014 to over 400,000 on 30 June 2015

■ Exceeded target of 50 million online views for the 2015 Gﬁ nity Championships

Events
■ In August 2014, staged third Gﬁ nity branded event (G3) at the Copperbox in London’s

Olympic Park. The largest eSports event ever staged in the UK – almost 4,000 spectators
attended and 8.7 million online views from 25 countries over a single weekend
■ In February 2015, staged European Call of Duty Championships on behalf of

game publisher Activision at iconic Royal Opera House in London

■ From March until September, launched the 2015 Gﬁ nity Championships (a set of 23 weekly

tournaments featuring the best players/teams in the world across 5 eSports titles)

■ In April 2015, launched Xbox sponsored FIFA tournament, with qualiﬁ ers

organised through Gﬁ nity.net and live ﬁ nals at the Gﬁ nity Arena

Partnerships/sponsorship
■ Signed a two-year major sponsorship agreement with News Corporation for The Sun

to become Gﬁ nity’s newspaper and online news partner in the UK and Ireland

■ Entered into a two-year sales and marketing contract with Pitch International (“Pitch”) for
Pitch to package and sell sponsorship and broadcasting rights on the Company’s behalf

Financial highlights
■ Revenues increased by 163% to £560,828 (2014: £213,450)*, resulting from a mix of
sponsorship, fees from game publishers, premium subscriptions and ticket sales

■ Loss increased to £3.6m (2014: Loss of £0.9m)*, reﬂ ecting the planned

investment made following listing in December 2014

■ Net cash as at 30 June 2015 amounted to £2.73m (31 December

2014: £4.68m; 30 June 2014: £591,275)

*Prior year P&L comparatives represent full year to 30 June 2014, rather than the 6 month period shown in the previous statutory accounts

GFINITY plc. | Annual Report & Financial Statements 2015
Business Review & Strategic Report

Chairman’s Statement

Tony Collyer
Non-Executive Chairman

I have great pleasure in presenting our
maiden Annual Report and Accounts
as a public company following our
listing on AIM in December 2014.

The year to 30 June 2015 has been a
very successful one for the Company,
during which we exceeded the
strategic goals we set ourselves at the
beginning of the year and established
ourselves as one of the leading online
and ofﬂ ine electronic sports - eSports
- providers in the world. Gﬁ nity has,
in a short space of time, become a
widely-recognised ‘‘destination’’ for
gamers in the UK and internationally.

Landmark achievements
The Company reached a key milestone in
the middle of the year with its admission
on AIM on 22 December 2014, raising
£3.5 million before expenses. In the
six months since the IPO, with the
monies raised, we have accelerated our
growth strategy building on the solid
foundations laid earlier in the year.

At the beginning of the year, in August
2014, we hosted G3, our third and largest
to date, Gﬁ nity branded event at the
Copperbox in London’s Olympic Park.
The ﬁ rst half of the year also saw rapid
growth in registrations for our website,
Gﬁ nity.net, which had been relaunched
just prior to the start of the period, with
a brand new platform designed to
create a seamless user experience with
enhanced features. In December 2014,
Gﬁ nity signed a two-year agreement with
Pitch International who played a leading
role in securing the partnership with
Vue Cinemas. Gﬁ nity opened the UK’s
ﬁ rst dedicated eSports arena, in Fulham
Broadway, London in March 2015 and
this arena has hosted the 2015 Gﬁ nity
Championship Series. In April 2015 we

were delighted to announce The Sun
newspaper as the ﬁ rst major sponsorship
partner, as part of a two year agreement.

term revenues. Nonetheless, the Directors
believe that having gained a large ﬁ rst
mover advantage within this sector, the
potential for monetisation is signiﬁ cant.

Continuing growth of
eSports phenomenon
The computer gaming industry and in
particular the eSports segment within that
are growing rapidly, as part of a long term
shift in the way in which people consume
their media. The gaming industry is
now bigger than both the music and
ﬁ lm industries and industry specialists
NewZoo report that it is expected to reach
a value of over $100 billion by 2017.

Within that, eSports goes from strength
to strength. In 2014, leading platform
Twitch.TV announced that during 2014
it had over 100 million unique visitors a
month, more than double the total for the
previous year. NewZoo estimated that at
the end of 2014 there were 205 million
eSports enthusiasts globally. By 2017 they
estimate that this will grow to 335 million.

The biggest events are already ﬁ lling
arenas and drawing viewership levels
that dwarf most traditional sports. The
League of Legends Finals (2014) held
at Sangam Arena, South Korea had
40,000 spectators and 27 million viewers
online. DotA “The International” in
2015 meanwhile saw competitors from
around the world compete in Seattle,
USA for a prize pot of over $18 million.

Signiﬁ cant opportunity
for monetisation
and growth
To date Gﬁ nity’s strategy has been to
build its reputation and following in the
eSports sector, rather than pursuing short

Gﬁ nity has already demonstrated a
proven ability to attract viewership and
registered users in a demographic that’s
attractive to sponsors. Competition for
content among broadcast platforms
will drive value for content providers
and there are multiple opportunities
for additional revenues including;
publisher partnerships, subscriptions,
ticket sales and merchandise.

Within three years Gﬁ nity expects to have
sold out events with online viewership
growing year on year. We also plan
to have a premium pay per view or
subscription service featuring enhanced
content. Additionally the increase in the
number of registered users of Gﬁ nity.
net will drive more paid subscribers.
The Company will also continue to
expand its network of sponsors and
broadcasting deals around the world.

In the short term additional resources are
needed to fulﬁ l this potential and a further
round of fund raising will start immediately
following the release of these results.

Gﬁ nity have a strong and capable
management team with breadth of
eSports and business experience that is
second to none and I have no doubt they
will be able to capture this opportunity
and deliver shareholder value.

Finally, I would like to thank our clients
and partners for their continued support.
Above all, I would like to thank all of
our employees for their hard work and
enthusiasm, which have enabled the
great successes of 2014 and positioned
Gﬁ nity for a strong 2015 and beyond.

GFINITY plc. | Annual Report & Financial Statements 2015

Chief Executive’s Review

Neville Upton
Chief Executive Ofﬁ cer

This was a year in which Gﬁ nity
ﬁ rmly established itself as one of the
leading companies in the eSports
industry. We have quickly built a
reputation for delivering high quality
competitions; both on and off-line and
producing some of the leading eSports
broadcasts. Our knowledge of what
is required to deliver all aspects of a
successful eSports event, coupled with
the relationship built with publishers
and our following within the eSports
community mean we have established
a real ﬁ rst mover advantage, which
will be difﬁ cult for others to replicate.

The company’s listing on AIM
in December 2014 was a major
milestone for the business, but it
was only one part of what was a
remarkable year that saw Gﬁ nity:

■ Exponentially increase its global
following for both viewing and
participating in events
■ Create ﬁ rm relationships

with publishers, players and
YouTube ambassadors
■ Build a physical arena, in

conjunction with Vue Cinemas – ﬁ rst
venue of its kind in the world

■ Achieve a strong online
presence through its re-
launched website - Gﬁ nity.net
■ Become renowned within the
industry for quality of delivery

The Company generated revenues
totalling £560,828, up from £213,450 for
the equivalent 12 month period to 30 June
2014, reﬂ ecting the strong operational
progress made during the period and
marking a step-change in the Company’s
development. This increase indicates
the potential for monetisation within the
eSports sector. Nonetheless, the focus of
the Company over the period in question

has remained on building its brand and
delivering world-class online and ofﬂ ine
eSports events to a global audience.

accelerate its plans to create a large and
dedicated site in central London without
incurring major upfront capital costs.

Admission to AIM
Gﬁ nity successfully completed an IPO
on the London Stock Exchange’s AIM
market on 22 December 2015, raising
£3.5 million before expenses. The listing
on AIM certainly has enhanced the
Company’s credibility and proﬁle and
assisted the growth in its business. The
proceeds have provided the Company
with working capital to invest in the
Gﬁ nity brand, launch the ﬁ rst dedicated
eSports Arena and support the 2015
Gﬁ nity Championships extensive event
schedule. Coupled with earlier private
fund-raising rounds, a total of £5.8 million
(net of fees) was raised during the period.

UK’s ﬁ rst dedicated
eSports Arena
In February 2015, Gﬁ nity entered into a
strategic collaboration with Vue Cinemas
to create the UK’s only dedicated eSports
event arena at Fulham Broadway,
London. The new arena is a key part
of the Company’s long term growth
strategy to organise and host major
live eSports tournaments and also to
stream events to a global audience
of fans through its online platform.
Prior to the deal with Vue Cinemas we
had staged our third Gﬁ nity branded
event (G3) at the Copperbox in London’s
Olympic Park. It was the largest eSports
event ever staged in the UK. This
event attracted nearly 4,000 paying
spectators across two days and received
8.7 million online views from over 25
countries. By collaborating with Vue,
however, the Company has been able to

The deal was done just in time to host
the 2015 Gﬁ nity Championship series at
the new venue. Commencing in March
2015, by the time the series ended in
September 2015, 23 live events had
been held across a number of weekends
and on selected weekday evenings.
These matches were streamed live on
internet TV channels including Twitch,
Gﬁ nity.net and MLG.tv, broadcast in 10
languages and viewed across more than
25 countries.

Games featured in the tournaments
included some of the world’s most
popular electronic games such as Call
of Duty: Advanced Warfare; Counter
Strike: Global Offensive; FIFA 15 and
Starcraft II. The tournaments have drawn
some of the most popular professional
teams and players to the UK, including
OpTic, Denial, Ninjas in Pyjamas, Fnatic
and Team EnVyUs, competing for up to
$100,000 in total prize money per event.

Overall, the tournaments were viewed
by almost 60 million, which exceeded
management expectations set at the

time of Gﬁ nity’s admission to AIM.

Creating an Online
Community of Gamers
In June 2014, the Company’s website,
Gﬁ nity.net was re-launched with a brand
new platform designed to create a
seamless user experience with enhanced
features. The Company typically stages
over 4,000 matches per week online
and we are pleased to report that since
the launch of the new platform there

it believes will be of value to sponsors
and broadcasters as well as a greatly
enhanced capability to sell to such
groups. Additionally, Gﬁ nity expects to
launch its online retail offering in the ﬁ nal
quarter of 2015, while increasing the
focus on monetising the viewership of
the 2016 Gﬁ nity Championship series.

The Company is in dialogue with
several potential partners and expects
to sign other sponsorship deals next
year. As a result, the Board is conﬁ dent
of continuing to grow and deliver
shareholder value in the mid-to-long term.
Nonetheless, achieving this additional
value will require further investment.
As a result, immediately following
the publication of these results, the
company intends to announce a further
fundraise, to ensure it has sufﬁ cient
funds available to continue its growth.

GFINITY plc. | Annual Report & Financial Statements 2015
Business Review & Strategic Report

Chief Executive’s Review (continued)

has been a rapid increase in registered
users from 43,000 as at 30 June 2014
to over 400,000 as of 30 June 2015.

In addition, over the same period
the company’s Twitter and Facebook
following has increased from 84,000 to
134,000 and 5,000 to 91,000 respectively,
increasing the number of positive
advocates within the online community.

Throughout the year, Gﬁ nity has staged
a number of highly popular online
tournaments, in addition to the leagues,
ladders and cups that run throughout the
year. These have included the PewDiePie
Cup in September 2014, an event run
in conjunction with the world’s most
viewed YouTuber – a Swedish gaming
enthusiast – which saw 10,833 games
of Speed Runners played as well as the
KSI Cup in November 2014; an event
which saw over 4,000 games of FIFA
15 played across a single weekend.

In the longer term there is a large
opportunity through its eSports events
and widening audiences to draw in
sponsors, advertisers and broadcasters
who want access to a highly deﬁ ned
and targeted demographic of 18-
34 year olds, predominantly male,
that play and watch eSports.

Sponsorship and
Marketing
On 11 December 2014, Gﬁ nity entered
into a two-year sales and marketing
contract with Pitch International for Pitch
to package and sell sponsorship and

broadcasting rights on the Company’s
behalf. Pitch is a leading sports
marketing agency and distributor of
sports media rights worldwide.

In April 2015, through Pitch International
we had a major breakthrough when we
signed a major sponsorship agreement
for The Sun to become Gﬁ nity’s ofﬁ cial
newspaper and online news partner
in the UK and Ireland. The backing of
such a large organisation is not only
great news for us but also a huge boost
to the UK’s growing eSports sector.

The two-year commercial partnership is
the ﬁ rst such major agreement signed
by Gﬁ nity and will contribute signiﬁ cantly
towards the Company achieving its
revenue targets this year and in 2016.

Outlook
The Company has generated relatively
low sales to date and this is not expected
to change materially in the short-term
although the Company does expect to
see revenues increasing through 2016.
The Company’s focus is to continue
to maximise growth of its user base
and consolidate its reputation for
delivering the highest quality eSports
events and expanding the size of the
online community. The success of the
2015 Gﬁ nity eSports Championship
demonstrated Gﬁ nity’s ability to provide
sponsors and broadcasters with a level
of regular top level eSports content
that has not been available in the UK
before. The Company’s partnership
with Pitch international, means that
Gﬁ nity now has both a product which

GFINITY plc. | Annual Report & Financial Statements 2015

Finance Director’s Report

Jonathan Hall
Finance Director

month for the six months of the year
following admission to AIM and totalled
£2,142,745 for the full year. The primary
reasons for this were the launch of
the Gﬁ nity Arena, increases in stafﬁ ng
required to grow the business, taking on
Pitch International to lead commercial
sales, further investments in sales
and marketing and developments
to the Gﬁ nity.net web offering.

Furthermore, cost of sales, which
totalled, £2,001,820 for the full year,
increased to £1,210,817 in the latter
half of the year, primarily driven by
the costs of staging the ﬁ rst part of
the Gﬁ nity Championship series,
including prize money, talent, travel
accommodation and event production.

Across the full year, the loss of £3.6
million (2014: loss of £0.9 million)
reﬂ ects the signiﬁ cant investment that
the Company made following its listing
in building its proﬁ le and following
within the eSports community. The
Company has cash, cash equivalents
and deposits totalling £2.73 million as
of 30 June 2015 (2014: £0.59 million),
and immediately following the
announcement of these results
will commence a further round of
fundraising to ensure that it has
sufﬁ cient capital available to continue
its growth into 2016 and beyond.

In the year to 30 June 2015 Gﬁ nity
invested heavily in establishing its
reputation as one of the leading
eSports companies in the world. The
results presented in these ﬁ nancial
statements, which are wholly in line
with directors expectations for the
period, reﬂ ect that investment.

Revenue increased to £560,828 up
from £213,450 for the equivalent 12
month period to 30 June 2014. Of these
ﬁ gures, £415,427 of the revenue came
during the second half of the year,
following the Company’s admission to
AIM. While the focus of the Company to
date has not been on short term revenue
generation, this does indicate the long
term monetisation potential of eSports.

This increase in revenue resulted from a
mix of: sponsorship, including the signing
of an agreement with News Corp UK &
Ireland Limited in April 2015; fees from
game publishers for delivery of events
using their titles; premium subscriptions,
and ticket sales. The income from the
ﬁ rst half of the year primarily related to
ticket sales and sponsorship in respect
of the G3 event in August 2014.

Moving on into the year to 2015/16,
Gﬁ nity expects to launch its online
retail offering in the ﬁ nal quarter of
2015, while increasing the focus on
monetising the viewership of the
2016 Gﬁ nity Championship series.

As expected, administrative expenses,
including staff costs, marketing and
web development, increased to a run
rate of approximately £230,000 per

GFINITY plc. | Annual Report & Financial Statements 2015
Business Overview & Strategic Report

Gﬁ nity Growth & Monetisation Opportunity

400k

June 2015

x183k

per year

› Total prize money

£568K

› Relationships with
Game Publishers
& Games

› Registered users of Gﬁ nity.net
43k

June 2014

› Matches organised on Gﬁ nity.net:

› Social media growth:

134k

84k

91k

2014

2015

2014

2015

Twitter

Facebook

Gﬁ nity Growth & Monetisation Opportunity

GFINITY plc. | Annual Report & Financial Statements 2015

Others
› Venue Hire
› Merchandise
› Pay to play

Sponsorship
& Advertising
› Major partners
› Brand Activation
› Advertising

Ticketing
› Sales of tickets

to off-line events £

Subscription
› Monthly &
annual subs
› Access to premium
content and
competitions

Publisher
Events
› Promotional events
› White label
tournaments

Broadcast
› Pay per view
› CPM
› Rights fees

100

4
3
-
6
1
s
e
a
m
e
c
n
e
d
u
a

Audience
Target demographic is a key component
of any sponsorship property. When it
comes to targeting the golden bracket
of young males eSports is miles ahead.

3.6%

5.4%

5.9%

7.7%

9.9%

12.3%

Sports Properties

92%

25-34
males
22%

18-24
males
70%

GFINITY plc. | Annual Report & Financial Statements 2015
Business Overview & Strategic Report

Growth in eSports Market & Audiences

Global eSports audience (Newzoo* estimate)

* Newzoo is a global market research and predictive analytics ﬁ rm with a primary focus on games

2014

2017

205m

335m

Indirect and direct revenue generated from eSports enthusiasts, 2015E: NORTH AMERCIA

INDIRECT (81%)

Corporate Sponsorship

$111.1m

North America

$143m

DIRECT (19%)

Prize pool contributions

$11.8m

Merchandise

$11m

Ticket sales

$4.5m

twitch.tv (2014)

unique visitors100m

watching minutes per month16b

GFINITY plc. | Annual Report & Financial Statements 2015

eSports beneﬁ ts from highly engaged fans from a demographic that’s attractive to sponsors

› The average eSports viewer watches content:

› The average session lasts:

› Total viewing time per month:

eSports viewer

Fans of traditional sport*

*Newzoo, Global Sports Media Consumption Report

per
month

x19
2.2hrs

41.8hrs
10.8 hrs

31hrs

less per month

GFINITY plc. | Annual Report & Financial Statements 2015
Governance

Directors’ Biographies

Tony
Collyer
Non-Executive Chairman

Neville
Upton
Chief Executive Ofﬁ cer
Chief Executive Ofﬁ cer

Jonathan
Hall
Finance Director

Ginette
Jarman
Operations Director

Tony is a Chartered
Accountant with broad
commercial experience and
has been ﬁ nance director
of three public companies,
Allders plc and New Look
Group plc, both of which
listed on the main market
during his tenure, and The
Corporate Services Group
plc. He is also chairman of
Adeevo Limited, an internet
recruitment aggregator and
a director of the North Devon
Biosphere Foundation.
Tony has sat on the Finance
Committee of King’s College
London for the last ﬁ ve
years. Additionally he has
acted as transaction director
for a number of signiﬁ cant
corporate transactions
including the sale of The
Listening Company Limited
to Serco plc and the sale of
OB10 Limited to Tungsten
Corporation Plc. Tony joined
the Board in January 2014.
He also chairs the Audit and
Remuneration Committees.

After graduating at the
London school of Economics,
Neville joined Coopers &
Lybrand where he qualiﬁ ed
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 ﬁ nance
and operations director,
in 1998 he established a
call centre business, The
Listening Company, which
specialized 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 the Company in
2012 and is the largest
shareholder in the Company.

Jon qualiﬁ ed as a Chartered
Accountant with Arthur
Andersen followed by a
period of 6 years specialising
in organisation and business
process design with PA
Consulting, a leading
London based management
consultancy ﬁ rm. He
subsequently spent 5 years
as a ﬁ nance director of
Saracens Ltd and the wider
Premier Team Holdings
Group, before joining Gﬁ nity
in August 2014. As Finance
Director Jon has responsibility
for all aspects of ﬁ nance
and accounting, including
ﬁ nancial planning, reporting
and accessing capital in order
to fund growth. Jon is also
responsible for all matters of
corporate governance and for
maintaining an appropriate
internal controls environment
within the Company.

Ginette worked with Neville
Upton at the Listening
Company. She has strong
organisational and project
management skills and
became a key member of the
management team, managing
special projects on behalf of
the executive group, including
the sale of the business to
Serco. She has responsibility
for the operational delivery
of Gﬁ nity events and
management of special
projects. She was the founding
director of the Company and
thus has been closely involved
in the early development of
the business since inception.

GFINITY plc. | Annual Report & Financial Statements 2015

Paul
Kent
Technology & eSports Director

Philip
Shuldham-Legh
Marketing Director

David
Yarnton
Non-Executive Director

Jonathan
Varney
Non-Executive Director

Paul has been involved in
eSports since 1996, as both
a top level gamer and team
owner. He established the
Warped Gaming League in
2009, which grew within 3
years to be the UK’s largest
Xbox Live online league with
over 13 million page visits.
Prior to joining Gﬁ nity, Paul
spent 10 years as a software
engineer with Creative Labs,
focused primarily on chip
design and ARM architecture.
He has responsibility for web
and production technology
and also for setting the rules
and tournament structures
for all Gﬁ nity competitions.

Philip has held a number of
Sales & Marketing positions
for large BPO businesses and
Direct Marketing agencies
including SITEL (1993-1998)
and WWAV Rapp Collins
(1998-2004) until joining
Neville Upton at The Listening
Company as Managing
Director of Consulting in 2004.
Over the next few years, he
took over responsibility for
new business, marketing and
product development and was
Group Sales and Marketing
Director when Serco acquired
the business in March 2011.
He was retained by Serco
and moved to Business
Development Director until he
joined Gﬁ nity as Marketing
Director in January 2013.
Phillip divides his time between
this role and being Strategy
Director at Voice Marketing
Ltd, which has recently been
acquired by Capita plc (April
2015). In all his roles, Philip
has had responsibility for
brand, marketing comms
and revenue growth.

David has over 20 years
experience in the Games
industry ﬁ rst in Australia
followed by 9 years as
Managing Director of Nintendo
UK & Ireland. Currently he is
a Director of Equinox Talent
and Eyes on Athletes both
companies involved with sport
in the digital space and is Co-
Chairman of the eSports Sub
Group of the UK Interactive
Entertainment Association
an organisation on which he
was a Board Member and
Vice Chairman for 7 years.
In addition to that he has
been a Board Member of GfK
Charttrack, the Edinburgh
Interactive Festival of which he
was also Chairman for 2 years.
He is Founder and Chairman
of the British Inspiration
Awards which celebrates
diverse British Creative
Achievements today whilst
inspiring them for tomorrow.

Jonathan (“Jon”) Varney is
a Founder Partner of Pitch
International Commercial
LLP (“Pitch”) and has been
involved with the Company
since Pitch were appointed to
sell commercial rights on the
Company’s behalf in December
2014. As part of Pitch, Jon
is responsible for building
commercial partnerships
between brands and rights
holders. Pitch’s portfolio of
rights includes International
Football and Cricket
Federations and Broadcast
Sponsorship of all Pitch
programming. Prior to Pitch,
Jon Varney was commercial
director of Premiership
Rugby, the umbrella
organisation responsible
for the development of elite
professional club rugby in
England. Previous roles prior
to 2003 all revolved around
the sports media sector
including Octagon UK, Movie
and Media Sports, Coca-
Cola Football and the RFU.

GFINITY plc. | Annual Report & Financial Statements 2015
Governance

Directors’ Report

The Directors present their
annual report on the affairs of the
Company, together with the ﬁ nancial
statements and auditor’s report,
for the year ended 30 June 2015.

Principal activities
Gﬁ nity is the leading UK-based
eSports company serving the rapidly-
growing community of competitive
gamers worldwide. We were founded
in September 2012 and since then
have established a popular online
brand, Gﬁ nity.net, where gamers can
compete, socialise and enjoy a wide
range of content relating to electronic
games. Gﬁ nity is the operator of
the UK’s ﬁ rst and only dedicated
eSports arena in Fulham, London.

Business and
strategic review
The information that fulﬁ ls the
requirements of the business review,
including details of the results for the
year ended 30 June 2015, principal
risks and uncertainties and the
outlook for future years, are set out in
the Chairman’s and Chief Executive
Ofﬁ cer’s Statements and the Business
and Financial Review, on pages 6-13.

Admission to AIM
Gﬁ nity was admitted to trading on
the AIM market of the London Stock
Exchange on 22 December 2014, at
which time 21,635,150 new Ordinary
Shares (including fee shares) were
placed to raise gross proceeds of
approximately £3.5 million. Further
information relating to movements on

share capital is set out in Note 12 to
the ﬁ nancial statements on page 37.

Tony Collyer - Non-Executive Chairman
(22 December 2014 - present)

Future developments
Our development objectives for
2015–16 are disclosed in the
Overview on pages 6-13.

Capital structure
The capital structure is intended to
ensure and maintain strong credit ratings
and healthy capital ratios in order to
support the Company’s business and
maximise shareholder value. It includes
the monitoring of cash balances,
available bank facilities and cash
ﬂ ows. No changes were made to these
objectives, policies or processes during
the year ended 30 June 2015.

Results and dividends
The Comprehensive Income
Statement is set out on page 25.

The Company’s loss after taxation
amounted to £3.58m (2014: £0.35m).
The Directors do not recommend the
payment of a dividend for the year ended
30 June 2015.

During the year ended 30 June 2015,
the Company made political donations
of £nil (2014: £nil) and charitable
donations of £nil (2014: £nil).

Directors
The following Directors held ofﬁ ce as
indicated below for the year ended
30 June 2015 and up to the date
of signing the ﬁ nancial statements
except where otherwise shown.

Neville Upton - Chief Executive Ofﬁ cer

Jonathan Hall - Finance Director
(1 September 2014 – present)

Ginette Jarman - Operations Director

Paul Kent - Technology
and eSports Director

Philip Shuldham-Legh -
Marketing Director

David Yarnton - Non-Executive Director
(1 September 2014 – present)

Jonathan Varney - Non-Executive
Director (1 September 2014 – present)

Directors’ indemnities
The Company has made qualifying
third party indemnity provisions for
the beneﬁ t of its Directors, which were
made during the year and remain
in force at the date of this report.

Statement of Directors’ responsibilities
in respect of the Directors’ report
and the ﬁ nancial statements
The Directors are responsible for
preparing the annual report and the
ﬁ nancial statements in accordance
with applicable law and regulations.
Company law requires the Directors
to prepare ﬁ nancial statements for
each ﬁ nancial year. Under that law
the Directors have elected to prepare
Company ﬁ nancial statements in
accordance with International Financial
Reporting Standards (“IFRSs”) as
adopted by the European Union.

GFINITY plc. | Annual Report & Financial Statements 2015

Under Company law the Directors must
not approve the ﬁ nancial statements
unless they are satisﬁ ed that they
give a true and fair view of the state
of affairs of the Company and the
parent company and of the proﬁ t or
loss of the Company and the parent
company for the period. The Directors
are also required to prepare ﬁ nancial
statements in accordance with the
rules of the London Stock Exchange
for companies trading securities on
the AIM. In preparing these ﬁ nancial
statements, the Directors are required to:

■ present fairly the ﬁ nancial position,

ﬁ nancial performance and
cashﬂ ows of the Company;

■ select suitable accounting

policies in accordance with IAS 8
Accounting Policies, Changes in
Accounting Estimates and Errors
and then apply them consistently;

■ make judgements and estimates
that are reasonable and prudent;

■ state whether applicable IFRSs have

been followed, subject to any material
departures disclosed and explained
in the ﬁ nancial statements; and

■ prepare the ﬁ nancial statements on
the going concern basis unless it is
inappropriate to presume that the
Company will continue in business.

The Directors are responsible for
keeping adequate accounting records
that are sufﬁ cient to show and explain
the Company’s transactions and
disclose with reasonable accuracy at
any time the ﬁ nancial position of the

Company and enable them to ensure
that the ﬁ nancial statements comply
with the Companies Act 2006.
They are also responsible for
safeguarding the assets of the Company
and hence for taking reasonable
steps for the prevention and detection
of fraud and other irregularities.

The Directors conﬁ rm that:

■ so far as each Director is

aware, there is no relevant audit
information of which the Company’s
auditors are not aware; and

■ the Directors have taken all steps

that they ought to have taken to make
themselves aware of any relevant audit
information and to establish that the
auditors are aware of that information.

■ so far as the Director is aware,

there is no relevant audit
information of which the Company’s
auditors are unaware; and

■ the Director has taken all the steps
that he/she ought to have taken as
a Director in order to make himself/
herself aware of any relevant
audit information and to establish
that the Company’s auditors are
aware of that information.

This conﬁ rmation is given and
should be interpreted in accordance
with the provisions of Section 418
of the Companies Act 2006.

Rees Pollock have expressed their
willingness to continue in ofﬁ ce as
auditors and a resolution to reappoint
them will be proposed at the
forthcoming Annual General Meeting.

The Directors are responsible for
ensuring the annual report and
the ﬁ nancial statements are made
available on the corporate website.
Financial statements are published
on the Company’s website in
accordance with legislation in the
United Kingdom governing the
preparation and dissemination of
ﬁ nancial statements, which may vary
from legislation in other jurisdictions.
The Directors are responsible for
the maintenance and integrity of the
corporate and ﬁ nancial information
included on the Company’s website.

Auditors
Each of the persons who is a
Director at the date of approval of
this annual report conﬁ rms that:

GFINITY plc. | Annual Report & Financial Statements 2015
Governance

Corporate Governance Report

As an AIM listed company, Gﬁ nity plc
is not obliged to comply with the UK
Corporate Governance Code published
in September 2012 (the “Code”).
However, the Board follows, as far as
practicable, the recommendations on
corporate governance of the Quoted
Companies Alliance for companies
with shares traded on AIM.

The Board
The Board normally meets at least
12 times per year in person. Its
direct responsibilities include setting
annual budgets, reviewing trading
performance, approving signiﬁ cant
capital expenditure, ensuring adequate
funding, setting and monitoring
strategy and reporting to shareholders.
The Non-Executive Directors have
a particular responsibility to ensure
that the strategies proposed by the
Executive Directors are fully considered.

The Board has established an Audit
Committee and a Remuneration
Committee, with formally delegated
duties and responsibilities
as described below.

Audit Committee
The Company’s Audit Committee
currently comprises Tony Collyer
(Chairman) and David Yarnton (non-
executive director). The committee
meets at least twice a year.

The Audit Committee is responsible
for reviewing the half-year and
annual ﬁ nancial statements, interim
management statements, preliminary
results announcements and any other

formal announcement or presentation
relating to the Company’s ﬁ nancial
performance. The Audit Committee
also reviews signiﬁ cant ﬁ nancial
returns to regulators and any ﬁ nancial
information covered in certain other
documents such as announcements
of a price sensitive nature.
The Audit Committee advises the Board
on the appointment of external auditors
and on their remuneration (both for audit
and non-audit work) and discusses the
nature, scope and results of the audit
with the auditors. The Audit Committee
reviews the extent of the non-audit
services provided by the auditors and
reviews with them their independence
and objectivity. The Chairman of the Audit
Committee reports the outcome of Audit
Committee meetings to the Board and the
Board receives minutes of the meetings.

Remuneration
Committee
The Company’s Remuneration Committee
currently comprises Tony Collyer
(Chairman) and David Yarnton (non-
executive director). The committee is
responsible for making recommendations
to the Board, within agreed terms of
reference, on the Company’s framework
of executive remuneration and its
cost. The committee determines the
contract terms, remuneration and other
beneﬁ ts for each of the Executive
Directors, including performance
related bonus schemes and pension
rights. Further details of the Company’s
policies on remuneration and service
contracts are given in the Directors’
remuneration report on page 20.

Relations with
shareholders
Communication with shareholders is
given high priority. There is regular
dialogue with major and institutional
shareholders including presentations
after the Group’s announcements of
the half-year and full-year results.

The Board uses both the annual report
and ﬁ nancial statements and the Annual
General Meeting to communicate directly
with private and institutional investors
and welcomes their participation.
The Chairman aims to ensure that the
Chairs of the Audit and Remuneration
Committees are available at the Annual
General Meeting to answer questions.

Internal control
The Board is responsible for establishing
and maintaining the Company’s system
of internal control and for reviewing its
effectiveness. The system is designed
to manage rather than eliminate the
risk of failure to achieve the Company’s
strategic objectives and can only provide
reasonable and not absolute assurance
against material misstatement or loss.
As an AIM listed company, the Company
does not need to comply with Code
provision C2.1 regarding the Directors
giving a summary of the process
applied by the Board in reviewing the
effectiveness of the system of internal
control. Instead, the Directors have set
out below some of the key aspects of the
Company’s internal control procedures.

Going concern
As at 30 June 2015, the Group had cash
and cash equivalents of £2.73m (2014:
£0.59m) as set out in the Statement
of Financial Position. The Directors
have prepared detailed forecasts of
the Group’s ﬁ nancial performance
over the next 2 years. As a result
of this review, which incorporated
sensitivities and risk analysis, the
Directors believe that the Group has
sufﬁ cient resources and working capital
to meet their present obligations.
Accordingly, they continue to adopt
the going concern basis in preparing
the Company ﬁ nancial statements.

An ongoing process has been
established for identifying, evaluating
and managing the signiﬁ cant risks
faced by the Company. The process
has been in place for the full year under
review and up to the date of approval
of the annual report and ﬁ nancial
statements. The Board regularly reviews
this process as part of its review of
such risks within its meetings. Where
any weaknesses are identiﬁ ed, an
action plan is prepared to address
the issues and is then implemented.

Each year the Board approves the annual
budget. Key risk areas are identiﬁ ed,
reviewed and monitored. Performance is
monitored against budget, relevant action
is taken throughout the year and updated
forecasts are prepared as appropriate.

Capital and development expenditure is
regulated by a budgetary process and
authorisation levels. For expenditure
beyond speciﬁ ed levels, detailed written
proposals have to be submitted to the
Board for approval. Reviews are carried
out after the purchase is complete.
The Board requires management to
explain any major deviations from
authorised capital proposals and to
seek further sanction from the Board.

The Board has reviewed the need
for an internal audit function and
concluded that this is not currently
necessary in view of the small size of
the Company and the close supervision
by the senior leadership team of its
day-to-day operations. The Board will
continue to keep this under review.

GFINITY plc. | Annual Report & Financial Statements 2015

GFINITY plc. | Annual Report & Financial Statements 2015
Governance

Directors Remuneration Report

As the Group is AIM listed, the Directors
are not required, under Section 420(1)
of the Companies Act 2006, to prepare
a Directors’ remuneration report for each
ﬁ nancial year of the Group and so Gﬁ nity
plc makes the following disclosures
voluntarily, which are not intended to,
and indeed do not, comply with the
requirements of the Companies Act 2006.

The Remuneration Committee is
responsible for recommending the
remuneration and other terms of
employment for the Executive Directors of
Gﬁ nity plc. In determining remuneration
for the year, the committee has given
consideration to the requirements of
the UK Corporate Governance Code.

Remuneration policy
The remuneration of Executive Directors
is determined by the committee and the

remuneration of Non-Executive Directors
is approved by the full Board of Directors.
The remuneration of the Chairman is
determined by the Independent Non-
Executive Directors, in conjunction with
the Chief Executive and Finance Director.

The remuneration packages of Executive
Directors comprise the following elements:

Basic salary and beneﬁ ts
Basic salaries for Executive Directors
are reviewed annually having regard
to individual performance, market
practice and the ﬁ nancial position of the
company. In most cases salaries paid to
Executive Directors are currently towards
the low end of the market rate for their
respective roles. No Executive Directors
currently receive beneﬁ ts such as health
insurance or contributions to pension
schemes. The Company’s staging date
for auto-enrolment is 1st July 2017.

Annual bonus
No annual bonuses have been awarded to
Executive Directors, as the Board felt that
this would be inappropriate at the current
stage of Gﬁ nity’s development.

Share options
The Group believes that share
ownership by Executive Directors and
employees strengthens the link between
their personal interests and those of
the Group and the shareholders.

The Group has an executive share
option scheme, which is designed to
promote long-term improvement in the
performance of the Group, sustained
increase in shareholder value and clear
linkage between executive reward
and the Group’s performance.

All directors hold either shares or
share options in the company.

Directors’ emoluments
Emoluments of the Directors for the year ended 30 June 2015 are shown below.

Anthony Collyer
Neville Upton
Jonathan Hall (appointed 1 September 2014)1
Ginette Jarman
Paul Kent
Philip Shuldham-Legh
David Yarnton (appointed 1 September 2014)2

Salary and Fees

Beneﬁ ts

Total Remuneration

£12,000
£66,667
£88,500
£48,731
£51,462
£10,231
£20,734

£298,324

£0
£0
£0
£0
£0
£0
£0

£0

£12,000
£66,667
£88,500
£48,731
£51,462
£10,231
£20,734

£298,324

1 – In addition to the amounts stated above, Jonathan Hall also earned remuneration of £4,038 in the period prior to his appointment as a director
2 – Fees in respect of David Yarnton fees invoiced via Equinox Talent Ltd

GFINITY plc. | Annual Report & Financial Statements 2015

Directors’ interests in shares
The interests of the Directors at 30 June 2015 in the shares of the Company were:

Neville Upton
Ginette Jarman
Paul Kent
Tony Collyer
Philip Shuldham-Legh
Jonathan Hall
David Yarnton

Number of Ordinary Shares

Percentage of issued share capital

14,579,000
1,622,000
1,622,000
903,000
278,000
–
–

18.73
2.08
2.08
1.16
0.36
–
–

Share Options
Directors’ interests in options over the ordinary shares in the company were as follows:

Anthony Collyer
Neville Upton
Jonathan Hall
Ginette Jarman
Paul Kent
Philip Shuldham-Legh
David Yarnton2

As at 30
June
20141

0
0
0
0
0
323,000
0

323,000
0
995,000
0
0
200,000
199,000

Options
Granted1

Options
Lapsed

As at 30
June
2015

323,000
0
995,000
0
0
523,000
199,000

2,040,000

0
0
0
0
0
0
0

323,000

1,717,000

1 - Options held at the start of the year and those granted prior to 4th December 2014 have been restated to reﬂ ect the share split of 1,000 shares
per ordinary share, which took place on that date, as directors believe that this provides the most meaningful basis of comparison.
2 – Options held by Equinox Talent Ltd, a company wholly owned by David Yarnton.

All options held by directors, with the exception of those held by Mr Collyer and Mr Yarnton, are held under an HMRC approved EMI
scheme adopted by the Company on 27 March 2014.

Service contracts
All directors entered into new service contracts with the Company on 16 December 2014, prior to the Company’s admission to AIM.
All directors appointments are subject to three months’ notice on either side, with the exception of Mr Upton, whose appointment is
subject to 6 months’ notice on either side.

All directors are subject to pre and post termination restrictive covenants with the Company, including those relating to non-
competition and non-solicitation of customers and staff.

No compensation is payable for loss of ofﬁ ce and all appointments may be terminated immediately if, among other things, a director is
found to be in material breach of the terms of the appointment.

GFINITY plc. | Annual Report & Financial Statements 2015
Financial Statements

GFINITY plc. | Annual Report & Financial Statements 2015

Report & Financial Statements 30 June 2015

GFINITY plc. | Annual Report & Financial Statements 2015
Financial Statements

Independent Auditors’ Report to the shareholders of Gfinity plc

for the year ended 30 June 2015

We have audited the financial statements of Gfinity plc for the period ended 30 June 2014, set out on pages 25 to 42. The financial reporting
framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted
by the European Union.

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an
Auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

As explained more fully in the Directors’ responsibilities statement, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial
statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to
comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance
that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of:
whether the accounting policies are appropriate to the company’s circumstances and have been consistently applied and adequately
disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial
statements. In addition, we read all the financial and non-financial information in the Strategic report and the Directors’ report to identify
material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based
on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent
material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

• give a true and fair view of the state of the company’s affairs as at 30 June 2015 and of its loss for the period then ended;
• have been properly prepared in accordance with IFRSs as adopted by the European Union; and
• have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Strategic report and the Directors’ report for the financial period for which the financial
statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

•

adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not
visited by us; or

• the financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.

Jonathan Munday (Senior statutory auditor)
for and on behalf of
Rees Pollock, Statutory Auditor
30 October 2015

GFINITY plc. | Annual Report & Financial Statements 2015

Statement of Comprehensive Income

for the year ended 30 June 2015

Notes

1 July 2014 to
30 June 2015
£

1 January to
30 June 2014
£

560,828
(2,001,820)

(1,440,992)
(2,142,745)

(3,583,737)
2,568

(3,581,169)
−

197,147
(193,302)

3,845
(349,032)

(345,187)
148

(345,039)
−

CONTINUING OPERATIONS
Revenue
Cost of sales

Gross profit/(loss)
Administrative expenses

Operating loss
Finance income

Loss on ordinary activities before tax
Taxation

Retained loss for the year

(3,581,169)

(345,039)

Loss and total comprehensive income for the period

(3,581,169)

(345,039)

Earnings per share

(0.06)

(0.01)

GFINITY plc. | Annual Report & Financial Statements 2015
Financial Statements

Statement of Financial Position

for the year ended 30 June 2015

NON CURRENT ASSETS
Property, plant and equipment

CURRENT ASSETS
Inventories
Trade and other receivables
Cash and cash equivalents

TOTAL ASSETS

EQUITY AND LIABILITIES
Equity
Ordinary shares
Share premium account
Other reserves
Retained earnings

Total equity

Non-current liabilities
Borrowings

Current liabilities
Trade and other payables

Total liabilities

Notes

30 June 2015
£

30 June 2014
£

8
9

219,848

14,730

3,218
570,350
2,732,561

–

–
140,802
591,275

3,306,129

732,077

3,525,977

746,807

77,845
4,679,536
62,447
(1,896,101)

602,250

32,367
1,330,263
8,014
(1,064,932)

2,923,727

305,712

329,978

111,117

441,095

602,250

TOTAL EQUITY AND LIABILITIES

3,525,977

746,807

These financial statements were approved and authorised for issue by the Board of Directors on 30th October 2015 and were signed on
its behalf by:

Neville Upton
Chief Executive

Jonathan Hall
Finance Director

The notes on pages 29 to 41 form an integral part of these financial statements.

GFINITY plc. | Annual Report & Financial Statements 2015

Statement of Changes in Equity

for the year ended 30 June 2015

Ordinary
shares
£

Share
premium
£

Share
option reserve
£

Retained
earnings
£

Total
equity
£

–
0

7,506
-

7,506

32,367
–
0

–
45,478
–
–

–
0

668,014
–

668,014

1,330,263
–
0

(2,750,000)
6,845,086
(745,813)
–

–

–
0

–
8,014

8,014

8,014
–
0

–
–
–
54,433

(719,893)

(32,783)

(345,039)
(3,581,169)

–
–

(1,064,932)
(3,581,169)
(3,581,169)

2,750,000
–
–
–

675,520
8,014

683,534

305,712
(3,581,169)
(3,581,169)

–
6,656,433
(511,682)
54,433

At 31 December 2013

24,861

662,249

Loss for the period
Total comprehensive income

New shares issued
Share options expensed
Total transactions with owners,
recognised directly in equity

At 30 June 2014
Loss for the period
Total comprehensive income

Reduction in Capital
Proceeds of Shares Issued
Share issue costs
Share options expensed
Total transactions with owners,
recognised directly in equity

45,478

3,349,273

54,433

2,750,000

6,199,184

At 30 June 2015

77,845

4,679,536

62,447

(1,896,101)

2,923,727

27
27

Notes to the Financial Statements (continued) for the year ended 30 June 2015GFINITY plc. | Annual Report & Financial Statements 2015The notes on pages 29 to 41 form an integral part of these financial statements.

GFINITY plc. | Annual Report & Financial Statements 2015
Financial Statements

Statement of Cash Flows

for the year ended 30 June 2015

Notes

Year ended
30 June 2015
£

6 months ended
30 June 2014
£

Cash flow used in operating activities
Net cash used in operating activities

Cash flow from/(used in) investing activities
Interest received
Additions to property, plant and equipment

5
7

2,568
(244,845)

(3,431,210)

(371,602)

Net cash used in investing activities

(242,277)

Cash flow from/(used in) financing activities
Issue of equity share capital
Cash inflow from director’s loan

Net cash from financing activities

Net increase in cash and cash equivalents
Opening cash and cash equivalents

5,814,773
–

5,814,773

2,141,286
591,275

148
(12,402)

(12,254)

675,520
–

675,520

291,664
299,611

Closing cash and cash equivalents

2,732,561

591,275

The notes on pages 29 to 41 form an integral part of these financial statements.

28
28

GFINITY plc. | Annual Report & Financial Statements 2015

Notes to the Financial Statements

for the year ended 30 June 2015

GENERAL INFORMATION
Gfinity plc (“the Company”) is a company incorporated in the United Kingdom under the Companies Act 2006. The address of the
registered office is given on page 4. The nature of the Company’s operations and its principal activities are set out in the Directors
Report on page 16. The registered number of the company is 08232509. The functional and presentational currency is £ sterling.

The Company was admitted to trading on AIM of London Stock Exchange on 22nd December 2015.

Due to a change in accounting reference date, the prior period shown within these accounts relate to the 6 months to 30 June 2014.
Therefore amounts presented in the financial statements are not entirely comparable.

ACCOUNTING POLICIES
Basis of preparation
The Company has prepared the accounts on the basis of all applicable International Financial Reporting Standards (IFRS), including
all International Accounting Standards (IAS), Standing Interpretations Committee (SIC) and the International Financial Reporting
Interpretations Committee (IFRIC) interpretations issued by the International Accounting Standards Board (IASB) with effective
dates for accounting periods beginning on or after 1 July 2013, together with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS.

The accounts have been prepared on the historical cost basis. The principal accounting policies, which have been consistently
applied throughout the period presented, are set out below.

The preparation of financial statements in conformity with IFRS requires the use of certain estimates. It also requires management
to exercise its judgement in the process of applying the company’s accounting policies. Estimates and judgements are continually
reviewed and are based on historical experience and other factors including expectations of future events that are believed to be
reasonable under the circumstances. These financial statements are not subject to any matters involving critical judgements or
estimates.

Going concern
At the end of the period the Company had cash and cash equivalents amounting to £2,732,561. Immediately following the publication
of these results the Company will announce its intention to undertake a further fundraising of £1 million via a placing of shares on
AIM. Directors are confident, in view of the growth of the eSports sector and the success of the Company to date in establishing a
strong position within it, this fund raise will be successful.

Nonetheless, the directors have also given consideration to alternative scenarios including how the company would continue to
trade were no new funds to be raised. In this unlikely scenario, given available cash reserves and the flexibility in the company’s cost
base, the directors consider that, while a re-focusing of activities may be required, the company would be able to continue trading
for more than 12 months from the date of signature of these accounts.

Accordingly, these accounts have been prepared on a going concern basis.

Operating leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement
on a straight line basis over the period of the lease.

Revenue
Revenue comprises the fair value of the consideration received or receivable for the sale of services in the normal course of the
Company’s activities. Revenue is shown net of value added tax.

The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic
benefits will flow to the entity, the stage of completion of the transaction at the balance sheet date can be measured reliably and the

The notes on pages 29 to 41 form an integral part of these financial statements.

Notes to the Financial Statements (continued) for the year ended 30 June 2015GFINITY plc. | Annual Report & Financial Statements 2015

ACCOUNTING POLICIES (continued)
costs incurred and the costs required to complete the services in respect of the revenue can be measured reliably. If the amounts
have been invoiced in advanced for services, these amounts are deferred until the service is delivered to the client at which point
the income is recognised. The Company bases its estimates on historical results, taking into consideration the type of customer,
the type of transaction and the specifics of each arrangement.
Revenue comprises of:

• Sponsorship revenues: Revenue is recognised on the date the relevant sponsored event takes place. In the event of long term

sponsorship contracts, the revenue is released on a straight line basis across the contract.

• Advertising revenues: Fees are earned each time a user clicks on one of the ads that are displayed on the website. Revenue is

recognised on a pay-per-click basis.

• Ticket sales: Revenue is recognised on the date the relevant event is delivered.
• Event hosting: Revenue is recognised on the date the relevant event is delivered.
• Website subscriptions: Revenue is invoiced in advance and deferred over the subscription period.

Foreign currencies
Transactions in foreign currencies are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance
sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on
the balance sheet date.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the
income statement for the year.

Taxation
The taxation expense represents the sum of the tax currently payable and deferred tax.

The charge for current tax is based on the results for the period as adjusted for items that are non-assessable or disallowed. It is
calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in the computations of taxable profit, and is accounted for using
the balance sheet liability method.

Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such
assets and liabilities are not recognised if the temporary difference arises from goodwill (or any discount on acquisition) or from
the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the
tax profit nor the accounting profit.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current
tax assets and liabilities on a net basis.

Deferred tax assets and liabilities are not discounted.

Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment, if any. Historical cost
includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the carrying
amount of the asset or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits
associated with the item will flow to the company and that the cost of the item can be measured reliably. The carrying amount of
parts that are replaced is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in
profit or loss as incurred. Cost also comprises the initial estimate of dismantling and removing the asset and restoring the site on
which it is located for which the Company are obligated to incur when the asset is acquired, if applicable.

Notes to the Financial Statements (continued) for the year ended 30 June 2015GFINITY plc. | Annual Report & Financial Statements 2015Financial StatementsThe notes on pages 29 to 41 form an integral part of these financial statements.2.

ACCOUNTING POLICIES (continued)
Depreciation is calculated using the straight-line method to allocate the cost or revalued amounts of tangible fixed assets to their
residual values over their useful economic lives, as follows:

Office equipment
Computer equipment
Production equipment
Leasehold improvements

– 1 year straight line
– 3 years straight line
– 3 years straight line
– over the period of the lease

The residual values and useful economic lives of the assets are reviewed, and adjusted if appropriate, at each balance sheet date.
The carrying amount of an asset is written down immediately to its recoverable amount if the carrying amount is greater than its
estimated recoverable value. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount,
and are recognised within other gains or losses in the income statement.

Share-based payments
The Company issues share options to its employees. The Company has applied the requirements of IFRS 2 Share-based Payments.

The Company issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are
measured at fair value at the date of grant.

The fair value determined at the grant date of the equity-settled, share-based payments is expensed on a straight-line basis over
the vesting period, based on the Company’s estimate of shares that will eventually vest.

Fair value of the equity-settled share-based payments is measured by use of a Black-Scholes model.

Financial liabilities
Financial liabilities are obligations to pay cash or other financial instruments and are recognised when the company becomes a
party to the contractual provisions of the instrument. Financial liabilities are classified according to the substance of the contractual
arrangements entered into. All interest-related charges are recognised as an expense in the income statement.

Trade and other payables are not interest bearing and are recorded initially at fair value net of transactions costs and thereafter at
amortised cost using the effective interest rate method.

Financial assets
Financial assets are recognised in the balance sheet when the Company becomes a party to the contractual provisions of the
instrument and are recognised in the balance sheet at the lower of cost and net realisable value.

Provision is made for diminution in value where appropriate.

Income and expenditure arising on financial instruments is recognised on the accruals basis, and credited or charged to the
statement of comprehensive income in the financial period to which it relates.

Trade receivables do not carry any interest and are initially recognised at fair value, subsequently reduced by appropriate allowances
for estimated irrecoverable amounts.

Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, and other short-term highly liquid investments
with original maturities of three months or less. These are readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.

Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in
equity as a deduction, net of value-added tax, from the proceeds.

Notes to the Financial Statements (continued)

for the year ended 30 June 2015

ACCOUNTING POLICIES (continued)
Critical accounting judgments and estimates
Revenue Recognition:
Revenue is recognised when the work to which it relates is delivered. On long term sponsorship contracts, covering a range of
activities, revenue is recognised evenly over the contract period.

Software development:
Expenditure of development of the company’s website and device applications is expensed as incurred.

Deferred tax:
The Company has not recognised a deferred tax asset in respect of their losses given that there is no track record of taxable profits
at this time. Deferred tax assets will be recognised when the Company has established a track record of expected future taxable
profit.

Provisions
Provisions are recognised when the Group has a present or constructive obligation as a result of a past event from which it is
probable that it will result in an outflow of economic benefit that can be reasonably estimated. Directors consider that no such
provisions have been required in the calculation of the figures in these financial statements.

OPERATING EXPENSES
Operating loss is stated after charging:

Depreciation of property, plant and equipment
Rentals under operating leases
Staff costs (see note 4)
Auditors’ remuneration for auditing the accounts of the company
Auditors’ remuneration for other non-audit services:

- Other services supplied pursuant to such legislation
- Other services related to taxation
- All other services

Net foreign exchange (gains)/ losses

Year ended
30 June 2015
£

6 months ended
30 June 2014
£

39,727
231,849
769,227
15,000

2,500
750
12,750
10,037

2,436
66,580
130,592
5,000

–
750
5,500
201

In addition to amounts stated above the Auditors also received remuneration of £87,500 in respect of services provided in connection with
the Company’s Initial Placement Offering and listing on AIM. In accordance with IAS 32 (paragraph 37), this amount has been written off
against the share premium account and hence does not form part of the operating expenses figure within these financial statements.

The notes on pages 29 to 41 form an integral part of these financial statements.

GFINITY plc. | Annual Report & Financial Statements 2015

Notes to the Financial Statements (continued)

for the year ended 30 June 2015

4. PARTICULARS OF EMPLOYEES

Number of employees
The average number of people (including directors) employed by the company during the financial period was:

The aggregate payroll costs of staff (including directors) were:

Wages and salaries
Social security costs
Equity settled transactions

Year ended
30 June 2015
£

6 months ended
30 June 2014
£

Year ended
30 June 2015
£

6 months ended
30 June 2014
£

646,043
68,751
54,433

769,227

114,580
7,998
8,014

130,592

Full detail on Directors earnings can be found within the Directors’ Remuneration note, within the Governance section of this
report, on pages 20 to 21.

5. FINANCE INCOME

Year ended
30 June 2015
£

6 months ended
30 June 2014
£

Interest income on bank deposits

2,568

148

The notes on pages 29 to 41 form an integral part of these financial statements.

Notes to the Financial Statements (continued) for the year ended 30 June 2015GFINITY plc. | Annual Report & Financial Statements 2015

GFINITY plc. | Annual Report & Financial Statements 2015
Financial Statements

Notes to the Financial Statements (continued)

for the year ended 30 June 2015

TAXATION
(a) Major components of taxation expense for the period ended 30 June 2015 are:

Income statement
Current tax
Corporation tax

Total current tax
Deferred tax
Relating to origination and reversal of temporary differences

Taxation charge reported in the income statement

Year ended
30 June 2015
£

6 months ended
30 June 2014
£

–

(b) Factors affecting tax charge for the period

A reconciliation of taxation expense applicable to accounting profit before taxation at the statutory tax rate of 20% (2014: 20%), to
taxation expense at the Company’s effective tax rate for the period is as follows:

Year ended
30 June 2015
£

6 months ended
30 June 2014
£

Loss on ordinary activities before taxation

(3,581,169)

(345,039)

At UK corporation tax rate of 20% (2013: 20%)
Expenses not deductible for tax purposes
Capital allowances for period in excess of depreciation
Unrelieved tax losses carried forward

Current tax charge for the period

(716,234)
15,728
(41,024)
741,529

–

(69,008)
3,369
(1,993)
67,632

–

The Company has deferred tax asset arising from trading losses carried forward of £953,371 (2014: £207,000) calculated at the
substantively enacted Corporation tax rate at the balance sheet date of 20% (2014: 20%). These trading losses will reverse against
future taxable trading profits and no asset has been recognised due to uncertainties over the timing and nature of such gains in
accordance with IAS 12.

The notes on pages 29 to 41 form an integral part of these financial statements.

GFINITY plc. | Annual Report & Financial Statements 2015

Notes to the Financial Statements (continued)

for the year ended 30 June 2015

7. PROPERTY PLANT AND EQUIPMENT

Office
equipment
£

Computer &
production
equipment
£

Leasehold
Improvement
£

Cost
At 1 January 2014
Additions

At 30 June 2014

Depreciation
At 1 January 2014
Charge for the period

At 30 June 2014

Net book value
At 30 June 2014

–
3,603

3,603

–
1,046

1,046

5,863
8,799

14,662

1,099
1,390

2,489

2,557

12,173

At 31 December 2013

–

4,764

–
–

–

–
–

–

Office
equipment
£

Computer &
production
equipment
£

Leasehold
Improvement
£

Total
£

5,863
12,402

18,265

1,099
2,436

3,535

14,730

4,764

Total
£

Cost
At 1 July 2014
Additions

At 30 June 2015

Depreciation
At 1 July 2014
Charge for the period

At 30 June 2015

Net book value
At 30 June 2015

At 30 June 2014

3,603
876

4,479

1,046
3,272

4,318

14,662
133,479

–
110,490

18,265
244,845

148,141

110,490

263,110

2,489
21,534

–
14,921

24,023

14,921

3,535
39,727

43,262

161

124,118

95,569

219,848

2,557

12,173

–

14,730

35
35

TRADE AND OTHER RECEIVABLES

Trade receivables
Other receivables
Prepayments and accrued income

30 June 2015
£

30 June 2014
£

79,258
154,558
336,534

570,350

5,260
51,847
83,695

140,802

No allowance has been necessary for irrecoverable amounts. The directors consider that the carrying value of trade and other
receivables equates to their fair value.

Included in other receivables is £33,800 (2013: £33,800) which is due in more than one year.

CASH AND CASH EQUIVALENTS

Cash at bank and in hand
Short term deposits
Restricted cash

30 June 2015
£

30 June 2014
£

732,561
1,250,000
750,000

2,732,561

591,275
–
–

591,275

Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates. The fair value of cash and cash
equivalents does not differ from the carrying value.

Amount on short term deposit include £500,000 maturing on 10th August 2015 and £750,000 maturing on 12th August 2015.
Restricted cash relates to a balance placed on a 12 month deposit, maturing on 12th February 2016.

10. TRADE AND OTHER PAYABLES
Amounts falling due within one period

The carrying amount of these payables approximates their fair value

Trade payables
Other taxation and social security
Accrued expenditure and deferred revenue

30 June 2015
£

30 June 2014
£

249,084
27,527
325,639

602,250

58,206
6,374
46,537

111,117

Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs. The directors consider
that the carrying amount of trade payables approximates to their fair value.

11. BORROWINGS

Director’s loan

30 June 2015
£

30 June 2014
£

329,978

On 28 November 2014, Neville Upton, a director and shareholder, converted a loan of £329,978 due to him from the company into
ordinary share capital. This conversion took place at the prevailing market rate at the date of conversion of £153.53 per share, prior
to the share split of 1,000 ordinary shares for 1 ordinary share on 4 December 2014.

12.

ISSUED CAPITAL
The issued share capital of the Company, including all changes during the year, can be summarised as followed:

Issued and fully paid

As at 1 January 2014
Issued on 14 January 2014 at £90 per share

As at 1 July 2014
Issued on 11th August 2014 at £92.69 per share
Issued on 24th November 2014 at £153.53 per share

Sub-division of each ordinary share of £1 into 1,000 ordinary shares of £0.001

Issued on 7th December 2014 at £0.15353
Issued on 11th December 2014 at £0.15353
Issued on 22nd December 2014 at £0.17

As at 30 June 2015

Number

24,861
7,506

32,367
7,364
12,246

51,977
51,977,000

325,000
3,908,000
21,635,150

77,845,150

24,861
7,506

32,367
7,364
12,246

51,977
51,977

325
3,908
21,635

77,845

13. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the loss attributable to shareholders by the weighted average number of ordinary
shares in issue during the period.

IAS 33 requires presentation of diluted EPS when a company could be called upon to issue shares that would decrease earnings
per share, or increase the loss per share. For a loss making company with outstanding share options, net loss per share would
be decreased by the exercise of options and therefore the effect of options has been disregarded in the calculation of diluted EPS.

Year ended
30 June 2015
£

6 months ended
30 June 2014
£

Profit/ (Loss) attributable to shareholders

(3,581,169)

(345,039)

Weighted average number of ordinary shares

Loss per ordinary share

Number
000’s

59,895

(0.06)

Number
000’s

31,786

(0.01)

On 4 December 2014, the Company’s shareholders passed a special resolution to subdivide each ordinary share of £1 into 1,000
ordinary shares of £0.001 each. Prior period comparative figures have been adjusted to reflect this subdivision.

14. SHARE BASED PAYMENTS

Equity-settled share option plans

Options and warrants

The Board has authority to grant share options over up to 10% of the number of shares in issue.

The table below summarises the exercise terms of the various options over Ordinary shares of 0.001p each which had been granted,
and were still outstanding, as at 30 June 2015. 3,911,000 new options were granted in the year. No options were exercised during
the year, while 48,000 options lapsed due to a member of staff leaving. The total number of outstanding options in issue at 30 June
2015 is 4,539,000 (2014: 676,000).

Of the options outstanding 2,040,000 are held by directors. Full details of all options held by directors are contained within the
directors remuneration report.

The principal assumptions input into the Black Scholes model to calculate the value of options issued for compliance with IFRS 2
“Share Based Payments” are included below, where applicable.

Year ended
30 June 2015

6 months ended
30 June 2014

£0.1351
1.5 years
56.4%
2.43%
0%

£0.09
1 year
30%
2.76%
0%

Weighted average exercise price
Average expected life
Expected volatility
Risk free rate
Expected dividend yield

14. SHARE BASED PAYMENTS (continued)

All options were granted at an exercise price equivalent to the market price at the date of grant. The weighted average exercise price
of options outstanding at 30 June 2015 was £0.1351. The weighted average fair value of options issued during the period was £0.1423.

The average expected life is based on directors’ best estimate taking into account the vesting conditions of the options.

Expected volatility has been calculated with reference to the actual volatility of the share price since the company’s admission to
AIM in December 2014.

Options may only vest at the discretion of the board of directors. No options have vested during the year.

15. RELATED PARTY TRANSACTIONS

On 5th March, the company purchased IT and production equipment amounting to £5,000 from Paul Kent, a director and shareholder
in the company. This reflected the market value of equipment at the time.

The Directors Remuneration Report provides details of share options issued to certain directors in the period.

16. COMMITMENTS UNDER NON-CANCELLABLE OPERATING LEASES

The company has the following total commitments under non-cancellable operating leases expiring as follows:

Less than one year
1-2 years
2-5 years

17. NOTES TO THE CASH FLOW STATEMENT

Cash flows from operating activities
Loss before taxation

Depreciation
Interest received
Share based payments
(Increase) in Inventories
(Increase) in trade and other receivables
Increase in trade and other payables

Cash used by operating activities
Interest paid

Net cash used by operating activities

Land and buildings

30 June 2015
£

30 June 2014
£

188,667
38,333
–

46,000
–
–

30 June 2015
£

30 June 2014
£

(3,581,169)

(345,187)

39,727
(2,568)
54,433
(3,218)
(429,548)
491,133

(3,431,210)
–

(3,431,210)

2,436
–
8,014

(84,542)
47,677

(371,602)
–

(371,602)

18. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The company uses a limited number of financial instruments, comprising cash, short-term deposits, and various items such as
trade receivables and payables, which arise directly from operations. The Company does not trade in financial instruments.

The Company’s activities expose it to a variety of financial risks: market risk (including currency risk and interest rate risk), credit
risk and liquidity risk.

Credit risk
The Company’s principal financial assets are bank balances and cash, trade and other receivables.

Bank balances and cash are held by banks with high credit ratings assigned by independent credit rating agencies. Management is
of the opinion that cash balances do not represent a significant credit risk.

As the Company does not hold security against trade and other receivables, its credit risk exposure is as follows:

30 June 2015
£

30 June 2014
£

570,350

140,802

The trade receivables balance represents amounts due from third parties. At the balance sheet date, the Company’s trade
receivables totalled £79,258 (2013: £5,260).

There are no significant overdue but not impaired trade receivables at the balance sheet date.

Liquidity risk
All trade and other payables are due for settlement within one year of the balance sheet date.

The use of instant access deposits ensures sufficient working capital is available at all times.

Foreign exchange risk
The Company operates in overseas markets by selling directly from the UK. It is therefore subject to currency exposures on
transactions.

Financial instruments held by the Company and their carrying values were as follows:

At 30 June
2015

At 31 December
2013

Trade and other receivables
Cash
Trade and other payables

USD
$

22,500
78,872
62,250

EUR
€

11,700
–
10,836

Net current assets/(liabilities)

163,622

22,536

USD
$

9,000
820
–

9,820

Financial liabilities included in the balance sheet relate to the IAS 39 category of other financial liabilities held at amortised cost.

Assets relate to loans and receivables with the exception of other receivables and prepayments which are classified as non-financial
assets.

18. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

Fair value estimation
The aggregate fair values of all financial assets and liabilities are consistent with their carrying values due to the relatively short
term maturity of these financial instruments.

As cash is held at floating interest rates, its carrying value approximates to fair value.

Although non-interest bearing, there was not deemed to be a significant difference between the fair value and carrying amount of
the director’s loan at 30 June 2014.

Capital management
The Group is funded entirely through shareholders’ funds.
If financing is required the Board will consider whether debt or equity financing is more appropriate and proceed accordingly. The
Group is not subject to any externally imposed capital requirements.