Gfinity plc
Annual Report and
Financial Statements
30 June 2023
Company number 08232509
Gfinity plc
Contents
Strategic Report
Directors, Secretary and Advisors
Period Highlights
Gfinity’ Market
Chairman’s Report
Chief Executive Officer’s Report
Section 172 statement
Principal Risks and Uncertainties
Governance
Chairman’s Statement on Corporate Governance
Board of Directors
Board Composition and Performance
Directors’ Remuneration Report
Directors’ Report
Statement of Directors’ Responsibilities
Financial Statements
Independent Auditor’s Report
Group Statement of Profit or Loss
Group Statement of Comprehensive Income
Group Statement of Financial Position
Company Statement of Financial Position
Group Statement of Changes in Equity
Company Statement of Changes in Equity
Group Statement of Cash Flows
Company Statement of Cash Flows
Notes to the Financial Statements
1
2
3
4
5
8
9
13
14
15
17
20
23
24
29
30
31
33
35
36
37
38
40
Gfinity Plc
Strategic Report
Directors, Secretary and Advisors
The Board of Directors
Company Secretary
Registered Office
Nominated Adviser and Broker
Independent Auditor
Legal Advisers
Registrars
Neville Upton (Non-Executive Chairman)
David Halley (Chief Executive Officer)
Hugo Drayton (Non-Executive Director)
Richard Croft
16 Great Queen Street
London WC2B 5AH
Beaumont Cornish
Limited
Building 3
566 Chiswick High
Road
London W4 5YA
Gravita Audit Limited
5-7 Cranwood Street
London EC1V 9EE
Corporate
Fladgate LLP
16 Great Queen Street
London WC2B 5DG
Commercial
Onside Law
642A Kings Road
Fulham
London SW6 2DU
Link Group
6th Floor
65 Gresham Street
London EC2 7NQ
Registered Number
08232509
1
Gfinity Plc
Strategic Report
Period Highlights
Strategic decision to focus on the media division resulted in closing down the esports solutions division and
disposing of the Athlos technology platform to Tourbillon with a retained interest.
Financial Results included:
• Loss on disposal of the Athlos business of £0.55m
• Restructuring costs of £0.24m for the closure of Esports Solutions and sale of Athlos
• Cost reduction programme from an annualised cost base of £7.2m to £2.5m
• The last year of F1 revenue of £1.7m
• Gfinity Digital Media (“GDM”) revenue of £2.2m
•
Impairment charges of £6m to reflect the lower the value of the media assets.
New financial and operational structure
The Board believes the business is in a stronger position having reduced monthly cost base to £205k and stabilised the
monthly revenue. The business’ growth plans are already taking shape and the last quarter saw an increase in Sessions.
The business has retained a talented team and added some monetisation expertise; creating a strong foundation for future
growth .
• Cash at year-end was £270k.
• The company raised £450k before expenses in August 2023.
Continuing operations of the business represents GDM and revenue and gross margin for this part of the business was
as follows for the past two years
Revenue
Gross Margin
2023
£2.2m
£1.2m
2022
£2.7m
£1.4m
The two discontinued divisions achieved revenue and gross margin over the past 2 years as follows:
Revenue
Gross Margin
2023
£3.2m
£1.4m
2022
£2.6m
£1.3m
Impairment and reduction in net asset costs
The Group incurred costs of £7.5m in impairment and write down of assets. This included a re-evaluation of all the
media assets that have been acquired over the past 3 years and the write down of the value of the Athlos platform where
costs of £0.7m had been capitalised.
1. Post-period highlights
• Sold our 27.5% stake in Athlos Game Technologies Ltd for £260k whilst retaining royalty-free access to the
Athlos IP for Gfinity’s own use
Sold Gfinity Esports Solutions for £15k with a retained interest of 15%
•
• Appointed David Halley as Chief Executive Officer
• Raised £450k before expenses through a share issue
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Gfinity Plc
Strategic Report
Gfinity’s Market
Based on Newzoo Global Games Market Report published October 2023. The global market is:
•
•
3.3bn gamers
$184bn game revenues projected to be $206bn by 2026
Gfinity is a leading digital media publishing company in this rapidly growing competitive gaming entertainment
industry sector.
Gfinity is a recognised brand in the gaming sector and our websites cover several niches in the genre. We have proven
our ability to connect directly with a global community of over 3.3 billion gamers, which have created a gaming market
worth an estimated $184 billion.
Within this market, Gfinity specialises in building highly engaged communities of gamers, that can be scaled and
monetised.
Gfinity is the digital home for gamer lifestyles. A network of Gfinity owned and operated websites, driving up to 9
million Sessions to create monetisation opportunities through advertising, brand partnerships and eCommerce activities.
Including related social platforms, these allow Gfinity to reach more than 20m gamers per month.
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Gfinity Plc
Strategic Report
Chairman’s Report
I have pleasure in presenting our annual accounts for the financial year ended 30 June 2023.
It has been a difficult year for the Company as we transitioned from esports solutions and software development, to a
pure play digital media company. The new focus is on cost reduction and a quality product, targeting profitability, with
the objective to create longevity in the Company and support and stabilise the share price for our investors.
The restructuring has led to a reduction in revenue to £2.2m, a decrease of 60% YOY, with a loss of £10.3m. Within
this loss, we were able to complete the full restructuring of the business so that we enter the new financial year in a
much stronger position.
FY 2023, we exited our esports arena in London and also decided to no longer offer physical events in the future, as
both the arena and esports events had shown no profitability, longevity or scalability for the business.
In June 2023, we exited the majority of Athlos Game Technologies Ltd (“Athlos”), as the capital required to build a
SaaS company from scratch proved too much for our balance sheet to sustain. Athlos continued to lose significant
capital on a monthly basis with no new contracts in the pipeline and we deemed it a prudent decision to exit the company
and focus our capital on business areas with more consistent and known opportunity.
The economics of the business has become more predictable, with the departure of previous senior management and
our old business model being stripped down. We now run a good business, with a sensible and much smaller cost base.
We expect our salary bill for the following financial year to be reduced by over 65% and headcount by 50%.
Our operating cost base has been streamlined, with the combined operating costs of both continued and discontinued
operations for FY2023 as shown in note 10, down 68% year-on-year when compared to our current annualised cost base
of £2.5m.
These changes by no means limit the opportunity of the Company, as we are now operated by a leaner team, with known
M&A experience in a market with many opportunities. Our customer base of hard-to-reach gamers, is one of the most
coveted by brands and advertisers, and gaming is a sector continuing to grow year-on-year. By focusing on one industry
vertical, we have already been able to improve our product offering including the launch of a new website in the summer.
In summary, I would like to say thank you to the Gfinity team, who have supported us through a challenging year of
transition - They are dedicated writers and developers, and have a clear passion for gaming. And I would also like to
thank all our clients and partners that choose to work with Gfinity together with our shareholders. Their continued
support is never taken for granted and we can now look forward to growing together.
Neville Upton
Chairman
20 December 2023
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Gfinity Plc
Strategic Report
Chief Executive Officer’s Report
When appointed CEO in August 2023, I set out to quickly bring the economics of our business under control after a
long period of loss-making business decisions trying to build long term value.
The decision to focus the Company as a pure play digital media company, was straightforward, as we not only had some
excellent sites, although they were in need of fresh management and some fixing, but we also had a solid core team of
writers, editors and developers who are the backbone of the new look Gfinity.
By having a singular focus and product vertical, the team can now really show their expertise in running digital assets
to rebuild our Ebitda and create a long term, reliably profitable company. The digital asset space offers great
opportunities, including potential acquisitions, and rewards companies who deliver great product and adapt to changes
in the industry.
A significant subject in tech is obviously Artificial Intelligence (“AI”) and the impact of Large Language Models on
businesses. At Gfinity, we are embracing this opportunity by utilising tools to improve our product and increase
efficiencies, while ensuring our own team can add their unique magical human intervention for us to be the go-to sites
for gamers and esports enthusiasts looking for compelling and engaging content .
We are also very excited about the opportunities of AI in video, and I believe video will increasingly become part of
the future product offering of the company, thus adapting to the needs of a new generation of gamers.
We are building our own engagement tools in our sites where our community will be entertained through playing games
and watching unique content.
We have emerged from a difficult year for GDM. At the end of the June monthly sessions across all sites were 9 million
and combined with our social media channels we reach more than 20 million gamers each month.
We have now built a stronger foundation for future growth and will work opportunistically through the next year to find
additive transactions to grow the network and company.
Financial Highlights:
The company operated in FY 2023 with 3 loss-making business divisions.
While all 3 presented opportunities to create shareholder value, Athlos and Gfinity Esports Solutions were more risky
ventures and required more capital.
Athlos is a ground breaking product but needed significant funding. Gfinity sold 72.5% of Athlos and removed liabilities
for 6 months to relieve the balance sheet. This division was significantly loss-making each month as it invested in further
feature development and started to invest heavily in the go-to-market plan. Up to the date of disposal of 5 June 2023,
the Group recorded revenue from Athlos of £323,873 and a loss of £715,616.
Gfinity esports solutions division was unpredictable with short term, often one-off contracts with a large fixed cost
base. The Formula 1 contract which had been the cornerstone of the division and which contributed 60% of revenue
and 83% of gross profit of the eSports division, was not renewed. Most of the other revenue was one-off consultancy
contracts and low margin content production. As announced in the year, The Board decided to close down the division:
• December 2022, closed down the Gfinity Arena to reduce exposure to Esports
•
• Since year end the division has been sold with Gfinity retaining a 15% stake
June 2023, announced the closure of the division
GDM witnessed significant headwinds with numerous changes to the google algorithms and a well-publicised decline
in the ad rates seen across all digital media. This required a new approach to running the business. A lower cost base,
leaner management team and bigger focus on quality content and improved User Experience was needed.
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Gfinity Plc
Chief Executive Officer’s Report (continued)
Implemented a significant cost reduction programme in June 2023.
•
• Moved advertising agency in April 2023 which saw an increase in ad rates which negated the general decline
in ad rates across the digital media sector
• We restructured the dense advertising structure in sites to make it more favourable for search engine
optimisation
• We improved site mechanics so that numbers would increase in the fourth quarter of calendar year 2023.
Changes in Organisation
The former Chief Executive Officer John Clarke, resigned in February 2023.
With the closure of the esports division and divestment of Athlos we did not need such a heavy central cost base and in
August 2023 our former CFO, Jon Hall, left the business and all central functions were reduced in size. I joined the
company as Chief Executive in August 2023 and have implemented a leaner operating model with the prior Head of
Operations now looking after day to day running of the business with myself and the board overseeing long term
strategy. This new operating model has also seen a reduced number of editors across the sites a new content production
process and more resource in direct revenue generation. Len Rinaldi left the Board in May 2023.
Growth
Having stabilised the business with a lower cost base and stronger operating foundations, we are now embarking on a
growth plan. In July 2023 we launched a new website, starfieldportal, it is now receiving over 35k sessions a day. We
aim to release more websites in 2024, as this incurs minimal capital and can leverage our scalable platform and extensive
social media presence.
GDM’s competitive advantage is technology; content and Search Engine Optimisation (SEO) expertise; and commercial
leverage.
We have;
•
•
•
•
•
a strong young team who understand the future of digital communications and media
a technology platform that allows us to scale the content suite
an ad tech capability to increase our revenues
a sales team to exploit the need for brands to reach the difficult to reach Gen Z community
a continuing relationship with Athlos and esports solutions team where we can provide some compelling
gaming solutions by amalgamating skill sets.
Our dedicated team
The progress we are making across the business is a direct consequence of the passion and spirit shown by the team.
Every day team members are stepping up, innovating, selling ideas, building networks, impressing partners with the
quality of their work, and making things happen in a challenging economic environment. Gfinity is benefiting from
having leaders across the business driven by their desire to build something special.
Outlook
The strategic focus on GDM gives us greater control over our destiny. It allows us to become a leader in one discipline
while also navigating the economic headwinds. We have seen a nervousness from publishers to commit investment and
advertising rates have been impacted across the whole of digital media. It is crucial that we continue to manage our
cost base zealously while being innovative and adopting to the new technological opportunities. The team will remain
agile, flexible, and entrepreneurial, continually adopting to new opportunities and providing compelling engagement to
the gaming community.
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Gfinity Plc
Chief Executive Officer’s Report (continued)
Conclusion
The transformation of Gfinity’ s business model is now well underway; we are developing expertise to be leading force
in digital media across the gaming community. I would like to thank the Gfinity team, our business partners and our
clients for their continued hard work and support.
David Halley
Chief Executive Officer
20 December 2023
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Gfinity Plc
Strategic Report
SECTION 172(1) STATEMENT
The directors are well aware of their duty under Section 172(1) of the Companies Act 2006 to act in the way which they
consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as
a whole, and in doing so have regard (amongst other matters) to:
• The likely consequences of any decision in the long term;
• The interests of the Company’s employees;
• The need to foster the Company’s business relationships with suppliers, customers and others;
• The impact of the Company’s operations on the community and the environment;
• The desirability of the Company maintaining a reputation for high standards of business conduct, and
• The need to act fairly as between members of the Company (the “Section 172(1) Matters”).
Induction materials provided on appointment include an explanation of directors’ duties, and the board is regularly
reminded of the Section 172(1) Matters, including as a rolling agenda item at every main board meeting.
Further information on how the directors have had regard to the Section 172(1) Matters is below.
Section 172(1) Companies Act 2006
The board takes decisions with the long term in mind, and collectively and individually aims to uphold the highest
standards of conduct. Similarly, the board understands that the Company can only prosper over the long term if it
understands and respects the views and needs of its customers, distributors, employees, suppliers and the wider
community in which it operates.
A firm understanding of investor needs is also vital to the Company’s success along with a sustainable and
environmentally responsible culture. The directors are fully aware of their responsibilities to promote the success of the
Company in accordance with Section 172(1) of the Companies Act 2006. The text of Section 172(1) of the Companies
Act 2006 has been sent out to each main board director.
Relations with Shareholders
The Company’s principal means of communication with shareholders is through the Annual Report and Financial
Statements, the full-year and half-year announcements and the AGM. The board recognises that the AGM is an
important opportunity to meet private shareholders. Each substantially separate issue is the subject of a separate
resolution at the AGM and all shareholders have the opportunity to put questions to the board. All board directors
endeavour to attend AGMs and answer questions put to them which may be relevant to their responsibilities. In addition,
the directors are available to listen informally to the views of shareholders immediately following the AGM. For each
vote, the number of proxy votes received for, against and withheld is announced at the meeting. The results of the AGM
are published on the Company’s corporate website.
The board receives updates on the views of shareholders through briefings and reports from the executive directors and
the Company’s brokers. The Chief Executive Officer, the Chairman and the other directors make presentations to
shareholders and participate in investor road shows during the year. Not every officer participates in every investor
presentation. The Chairman will participate in these presentations where appropriate and is always available to speak
with shareholders.
Dialogue with individual institutional shareholders also takes place in order to understand and work with these investors
to seek to comply with their investor principles where practicable.
Investor queries may be addressed to the Company Secretary at ir@gfinity.net. A range of corporate information
(including all Company announcements) is also available to shareholders, investors and the public on the Company’s
corporate website https://www.gfinityplc.com/investors/corporate-governance/
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Gfinity Plc
Section 172(1) Companies Act 2006 (continued)
The board ensures that the requirements are met, and the interests of stakeholders are considered as referred to elsewhere
in this report and through a combination of the following:
• A rolling agenda of matters to be considered by the board through the year, which includes an annual strategy
review meeting, where the strategic plan for the following year is developed;
• Standing agenda points and papers presented at each future board meeting, which will report on customers,
employees and other colleagues, health and safety matters and investors;
• A review of certain of these topics through the Audit Committee and the Remuneration Committee agenda
items referred to in this report;
• Detailed consideration is given to of any of these factors where they are relevant to any major decisions
taken by the board during the year;
• Monitoring Key Performance Indicators (“KPIs”) such as Sessions, Revenue per Mille (RPM), direct sales
pipeline and cash balances
Principal Risks and Uncertainties
Introduction:
Gfinity’s long-term success will depend in large part on its ability to manage the key risks affecting the Company.
Gfinity is an innovative business in a rapidly developing sector. In that context, the risks facing Gfinity can change
quickly, and the board recognises the importance of identifying key risks and ensuring that the right mitigation strategies
are in place for managing them.
Ultimate responsibility for managing risk lies with the board. Executive responsibility for retaining the register of risks
and reporting on these to the board lies with the Chief Executive Officer.
Gfinity distinguishes between strategic risks and operating risks. Strategic risks represent macro level matters, which
may impact on the strategy of the Company. Operating risks reflect the ongoing challenges that the business may face
in delivering on that strategy.
On a day-to-day basis, responsibility for managing strategic risks lies with the Chief Executive Officer. Mitigation
strategies and the emergence of new strategic risks are considered through the monthly senior leadership team meetings,
which is chaired by the Chief Executive Officer and the board meetings chaired by the Chairman.
Operational risks are the responsibility of the Chief Executive Officer and are considered both at the senior leadership
team meetings through weekly performance management update sessions.
KPIs of the business are measured weekly by the leadership team. These are circulated to the board weekly and discussed
at regular board meetings. The KPIs for the business are:
• Sessions
• Revenue Per Mille (RPM)*
• Direct sales pipeline
*Revenue per 1,000 sessions
In assessing its attitude to risk, the Board aims to strike a balance between ensuring comprehensive processes and
monitoring frameworks are in place, as would be expected of a publicly listed Company, while retaining the dynamism
and innovation required to grow quickly within a rapidly developing and changing sector.
The directors believe the principal risks currently affecting the business are as outlined below:
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Gfinity Plc
Strategic Report
Strategic Risks
Risk
Economic Uncertainty
Perception of video
gaming
Description
Inflationary pressure in the UK and
globally has resulted in a cost-of-
living challenge for many families.
This is likely to be coupled with a
continuing period of high interest
rates and higher taxation as the
government and Bank of England
attempt
inflation and
borrowing.
to control
This has created a danger of a
economic
of
sustained
downturn
increased
also
difficulty raising finance.
period
and
This could create pressure on both
Gfinity's cost base and potential
revenue growth.
Some people view video gaming
that
negatively,
promotes an unhealthy lifestyle and
lack of social interaction.
something
as
There is a risk that this perception
will provide a barrier to entry to
commercial
and
broadcasters, presenting a risk to
Gfinity’s business model.
partners
Competition Risk
GDM operates in a competitive
field, with multiple outlets chasing
the audience looking for gaming
news and content.
Mitigating Actions
Over the last year, Gfinity has reduced its
overhead cost base significantly, moving to a
variable cost model, with
lower fixed
infrastructure costs and a globally dispersed
workforce.
Gfinity has decided to focus on the digital
media division which has a proven business
model and which the board believes can
if not
cashflow break-even
achieve
encumbered by financing the platform and
solutions business
This gives Gfinity the flexibility to move the
cost base up or down more quickly in line
with peaks and troughs in demand across the
respective sectors of the business. It also
means that Gfinity is less exposed to
movements in UK labour market costs or
energy prices than would previously have
been the case.
Gfinity has no debt funding and so is not
directly exposed to variable interest rates.
Gfinity always promotes a balanced approach
to gaming, as part of a healthy lifestyle.
Video gaming continues to grow as the
biggest form of entertainment ahead of
movies and music. The are many genres of
video games and many of them are proven to
provide social and educational benefits.
Gfinity is aware of some of the pejorative
perceptions and will emphasise the role that
fitness and nutrition plays in the performance
of top esports performers within Gfinity
operated programmes and also the role that
gaming can help young people form social
relationships in the digital age.
Our loyal and established audience ensures
that Gfinity continues to retain a competitive
advantage over new entrants to the market.
Gfinity is now focusing on its digital media
business - the business that can deliver
profitability while retaining its ability to
leverage off the future prospects of the
industry by having a continued relationship
with the Athlos and the esports solutions
business in providing amalgamated skill sets.
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Gfinity Plc
Strategic Report
Operational Risks
Risk
Liquidity Risk
Access to Key Skills
Data Security Risk
Technological Changes
Description
Gfinity was a loss-making company
in FY23 and as such, the Board must
ensure that it has sufficient working
capital available to deliver on its
strategy.
Mitigating Actions
Gfinity maintains a core group of investors
and has also sought, over recent fundraises, to
broaden its shareholder base.
The business has cut its cost base to £185k
per month and is focusing on the business that
will reach profitability most quickly.
Publishing is a competitive sector,
strong
and as
competition for skilled employees
such,
there
is
including
and ongoing
Increasing levels of data protection
GDPR
regulation,
legislation,
cyber
security risks, make it imperative that
any data gathered through these
platforms is collected, handled and
protected in accordance with all
relevant regulations. Any failure to
do so would significantly erode trust,
both among the esports community
and prospective commercial partners.
The fast development of AI and
increasing number of
channels
creates a risk to Gfinity’s business
model
Gfinity places a high
importance on
succession planning within the business,
ensuring that skills are not vested in a single
individual. This is built through development
of existing staff, recruitment of certain key
personnel and where appropriate through
targeted acquisitions.
individuals are also
Senior
incentivised
through an employee share option scheme,
driving loyalty to the business.
Gfinity has undertaken an in-depth review of
its data policies and procedures,
in
conjunction with lawyers and data protection
experts in response to recent data protection
legislation.
All user data held is in a secure and encrypted
manner and is only used in compliance with
all relevant legislation.
Gfinity is abreast of all the changes and
believes that while it is a possible threat, it
also represents an opportunity. We believe
that we can harness these developments to
the market and provide our
disrupt
communities with more exciting content and
engagement
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Gfinity Plc
Strategic Report
This strategic report was approved by the board and signed on its behalf.
Neville Upton
Chairman
20 December 2023
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Gfinity Plc
Governance
Corporate Governance Report
Chairman’s Statement on Corporate Governance:
The Directors recognise the fundamental importance of good corporate governance in providing an efficient, effective and
dynamic management framework to ensure that the Company is managed in the right way for the benefit of all
shareholders over the medium to long-term. In view of this, the board of Gfinity plc has chosen to apply the QCA
Corporate Governance Code (the ‘QCA Code’) published by Quoted Companies Alliance. The QCA Code is a
pragmatic and practical tool, which adopts a principles-based approach to corporate governance, which the directors of
Gfinity believe is correct for Gfinity in its current stage of growth. Further information can also be found on our investor
website www.gfinityplc.com.
Neville Upton, Chairman
Board of directors:
The Board is responsible for:
• Setting the strategy across all Gfinity group companies;
• Defining the business model and the financial framework within which the business must operate;
• Setting and ensuring the implementation of the culture, to deliver success;
• Designing and implementing controls and the risk management framework;
• Ensuring communication with key stakeholders, including staff, shareholders, suppliers and customers;
• Appointing a senior Executive Team, capable of delivering on the defined strategy;
• Monitoring performance against the above areas and taking remedial actions as appropriate;
• Ensuring availability of capital to deliver on the chosen strategy.
The board retains overall responsibility for ensuring strong corporate governance and is supported by the Audit,
Nominations and Remuneration Committees. This section provides further detail on the composition and conduct of
business of the board and its respective committees, together with information on how they discharge their
responsibilities.
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Gfinity Plc
Governance
Board of Directors:
Neville Upton, Non-Executive Chairman
Appointed: 15 January 2014
After graduating at the London School of Economics, Neville joined Coopers & Lybrand where he qualified as a
Chartered Accountant. Neville’s formative years were at Euromoney where he gained experience in finance, M&A
and various commercial projects. After a brief spell at The Decisions Group as Finance and Operations Director, in
1998 he established a call centre business, The Listening Company, which specialised in multichannel
communication applications and high quality customer service solutions. The business was sold in 2011 to Serco for
a sum in excess of £60 million, at which time it had a turnover of £82 million and employed 4,000 people. Neville co-
founded Gfinity in 2012 and assumed the role of Chairman in March 2020.
David Halley, Chief Executive Officer
Appointed: 23 August 2023
David is an experienced entrepreneur and business executive having worked in the financial markets for 27 years.
Prior to joining Gfinity, David was Director and Founder of Capstone Insurance Brokers Limited, a Hong Kong
based company specialising in complex insurances, with a particular focus on cryptocurrency exchanges, which
was exited to a UK based insurance company.
Previously he had founded and exited Capstone Financial, a Hong Kong based asset manager, and prior to that had
experience in the City with Flemings, JP Morgan and Man-Vector, a Mayfair based hedge fund.
He joined Gfinity in August 2023 as CEO and Director.
Hugo Drayton,
Director
Independent
Non-Executive
Appointed: 21 May 2021
Hugo has spent the past 30 years in publishing and media, as a pioneer in digital media, including planning and
launching the UK’s first online newspaper – Electronic Telegraph, in 1994. He led Inskin Media, as CEO, for 10
years until 2020, growing it from start-up to a global, brand advertising business. Previously, he spent 10 years at
The Telegraph Group, latterly as Group Managing Director. Hugo led Advertising.com, Europe, for 2 years, and
was launch CEO of behavioural marketing company, Phorm.
Hugo is a non-executive director on the board of FTSE250 Future plc, and is an investor/advisor to several media
and ad-tech businesses. He serves as a Trustee of the Felix Byam Shaw (Felix Project) and British Skin Foundation
charities.
His early career was spent overseas, in Europe and South America, with Coats Viyella, and launching automated
telephony services across Europe with Reed Telemedia.
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Gfinity Plc
Governance
Board Composition and Performance
The composition of the Gfinity board is structured to contain the range of skills and personal qualities required to
effectively discharge its duties. The board recognises that as Gfinity develops, within a rapidly growing sector the precise
composition required shall change from time to time. Responsibility for reviewing the composition of the board and
making recommendations for appointment and removal of directors rests with the Nominations Committee. Further
details of this are provided below. Any such recommendations are subject to formal approval of the full board.
The board recognises the importance of diversity of skills and approach in effectively conducting its duties, and as such,
has sought to appoint high calibre individuals from a wide range of backgrounds and sectors.
Role of Chair
The primary responsibility of the Chair is to lead the board effectively and to oversee the adoption, delivery and
communication of the Company’s corporate governance model. As Chairman, Neville Upton also retains responsibility
for oversight of the development and delivery of the Company’s strategy, supported by the Executive Director.
The Chair ensures that the board considers the key issues affecting the Group, both operationally and financially, and
together with the Company Secretary ensures the correct information flows between the board, its respective committees
and between the Independent Directors and senior management.
Role of Company Secretary
The Company Secretary acts as an adviser to the Chair and the board and plays a vital role in relation to both legal and
regulatory compliance. The Company Secretary supports the work of the respective board committees and also acts as a
confidential sounding board to the chairs of those committees.
Board Conduct of Business
Full board meetings are held monthly, other than in August and December, meaning a minimum of ten meetings per
annum to conduct the regular business of the board. Further full board meetings shall be held as required to provide
approval on specific matters, including major corporate transactions and the allotment of new shares.
The quorum for a board meeting to be considered valid is two.
Attendance record:
Director
Neville Upton
John Clarke
Jonathan Hall
Leonard Rinaldi
Hugo Drayton
Number of Meetings Attended
13
6
13
11
13
Total Meetings in Period in
Office
13
6
13
11
13
Board Review and Performance
The board monitors its performance and composition on an ongoing basis and recognises that as the Company grows in
a rapidly developing sector, the mix of skills required to best discharge its duties may change from time to time. Now
that the business has decided to focus on its media division, it has reduced its board to a smaller team of Non-executive
Chairman, Chief Executive and an additional Non-Executive Director
15
Gfinity Plc
Governance
Performance of the board is assessed on an annual basis. This process is led by the Chair of the board, supported by the
Chief Executive Officer, and assesses the board’s performance against its stated terms of reference, both in terms of the
process by which business is conducted and the results achieved.
Audit Committee
The role of the Audit Committee is to provide confidence to shareholders on the integrity of the financial results of the
Company, expressed in this annual report and accounts, and other relevant public announcements made by the
Company. The Audit Committee also has a key role in the oversight of the effectiveness of the risk management and
internal control systems of the Company, and to make recommendations to the board for improvements in this regard.
The Audit Committee comprises:
Neville Upton (Chair)
Hugo Drayton
The committee met informally as required during the year.
Nominations Committee
The Nominations Committee ensures there is a robust process for the appointment of new board directors. The
committee works closely with the board and the Chair to identify the skills, experience, personal qualities and capabilities
required for the next stage in the Company’s development, linking the Company’s strategy to future changes on the
board. Only the Nominations Committee is able to formally submit a recommendation to the board for the appointment
of a new director. All such recommendations are still subject to the approval of the board.
The Nominations Committee comprises:
Hugo Drayton (Chair)
Neville Upton
The committee met informally as required during the year.
Remuneration Committee
The Remuneration Committee is responsible for outlining the principles of remuneration strategy to be applied across
the Gfinity Group. It also directly approves the remuneration of all directors, together with the grant of any option over
shares in Gfinity plc.
Compensation is based on an expectation that the director will spend a minimum of 30 days a year on work for the
Company. This will include attendance at a minimum of six Board meetings per annum, each general meeting, plus other
activities as agreed with the Executive team from time to time, including membership of board committees.
Non-Executive Directors may support additional projects over and above their role as Non-Executive Directors and
may be remunerated at or below market rate for those services. The extent of such services must not, however,
compromise their status as Non-Executives, independent of the Executive team.
The Remuneration Committee comprises:
Hugo Drayton (Chair)
Neville Upton.
The committee met informally as required during the year.
16
Gfinity Plc
Governance
Directors’ Remuneration Report
As the Company 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 financial year of the Company and the following disclosures are not
intended to, and 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 Gfinity plc. In determining remuneration for the year, the committee has given consideration
to the requirements of the QCA Corporate Governance Code. Full details of the company's corporate governance review
are on https://www.gfinityplc.com/investors/corporate-governance/
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
The remuneration packages of Executive Directors comprise the following elements:
Basic salary and benefits
Basic salaries for Executive Directors are reviewed annually and take into account individual performance, market
practice and the financial 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 and relative to the experience of the individuals in
question. Executive Directors are eligible for pension contributions and participation in the Company’s health insurance
and life assurance schemes.
Annual bonuses
Bonuses awarded to Executive Directors are included in the Directors’ Emoluments table in the Direct Remuneration
Report below. Bonuses form part of the overall remuneration of Executive Directors and are aligned to the achievement
of financial and strategic milestones which are designed to promote long-term value for all shareholders.
Share options
The Company believes that share ownership by Executive Directors and employees strengthens the link between their
personal interests and those of the Company and the shareholders.
The Company has an executive share option scheme, which is designed to promote long-term improvement in the
performance of the Company, sustained increase in shareholder value, and clear linkage between executive reward and
the Company’s performance.
All directors hold either shares or share options in the company. The board of Gfinity believes offering Non- Executive
Directors shares in the Company at a price and level that aligns them with the interests of the wider shareholder base is
in interests of all shareholders. The Board also believes it is an essential part of attracting high calibre individuals to the
Board.
Service contracts
All Directors have Service Contracts.
All Executive directors’ appointments are subject to six months’ notice on either side.
17
Gfinity Plc
Governance
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 office 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.
Directors’ interests in shares
The interests of the Directors at 30 June 2023 in the shares of the Company (including family members) were:
Neville Upton
Jonathan Hall
Hugo Charles Drayton
Share Options
Number of
Ordinary
Shares
28,210,574
10,138,888
8,266,666
46,616,128
Percentage of
issued share
capital
1.1%
0.4%
0.3%
1.8%
Directors’ interests in options over the ordinary shares in the company were as follows:
Neville Upton
Jonathan Hall
Hugo Charles Drayton
As at 30
June 2022
5,000,000
9,000,000
4,000,000
18,000,000
Options
Granted
Options
Lapsed
-
-
-
-
-
-
-
-
As at 30
June 2023
5,000,000
9,000,000
4,000,000
18,000,000
The range of exercise prices for options held as directors are 1p for N Upton, 1p - 4.65p for J Hall and 5p for H Drayton.
J Hall's warrants lapsed upon his resignation as a director in August 2023.
Warrants
Directors’ warrants over the ordinary shares in the company were as follows. All warrants held by directors (including
close family members) were granted in respect of investments made into the business as part of the fundraise in March
and April 2022 and were granted on the same terms as those granted to other investors. All director warrants have an
exercise price of 0.225p.
Neville Upton
Jonathan Hall
Hugo Charles Drayton
As at 30
June 2022
-
2,000,000
1,600,000
-
Warrants
acquired
Warrants
Lapsed
As at 30
June 2023
13,333,329
6,666,666
6,666,666
-
(2,000,000)
(1,600,000)
-
13,333,329
6,666,666
6,666,666
3,600,000
26,666,661
(3,600,000)
26,666,661
18
Gfinity Plc
Governance
Directors’ emoluments
Emoluments of the directors for the year ended 30 June 2023 are shown below.
Year to 30 June 2023
Salary &
Fees
78,833
196,005
158,410
84,000
35,000
Bonus
-
23,910
-
-
-
Pension Benefits
1,836
1,877
873
-
-
11,000
1,835
2,201
-
-
Total
Remuneration
91,669
223,627
161,483
84,000
35,000
-
-
-
-
-
552,248
23,910
15,036
4,586
595,779
Year to 30 June
2022
Total
Remuneration
50,000
177,201
172,201
72,500
40,000
8,239
520,141
Neville Upton
John Clarke
Jonathon Hall
Hugo Drayton
Leonard Rinaldi
Andrew
MacLeod
The total share option vesting charges in the year in respect of directors was nil. Benefits relate to medical insurance benefit.
Significant shareholders over 3% notified to the company as at 30th June 2023 were:
• Robert Keith – 12.1%
•
John Story – 12.6%
Board changes
The following Board changes occurred:
•
John Clarke resigned from the board on 09 February 2023
• Len Rinaldi resigned from the board on 31 May 2023
•
Jon Hall resigned from the board on 09 August 2023
This report was approved by the board and signed on its behalf.
Neville Upton
Chairman
20 December 2023
19
Gfinity Plc
Governance
Directors’ Report
The directors present their annual report on the affairs of the Company, together with the financial statements and
auditor’s report, for the year ended 30 June 2023.
Principal activities
Gfinity is a leading media business operating in the digital media sector.
Gfinity Digital Media is a network of owned websites and related social platforms, delivering news and content relevant
to gamers and their lifestyles.
Future development
Our development objectives for 2023–24 and beyond are disclosed in the Strategic Report.
Capital structure
The capital structure is intended to ensure and maintain strong credit ratings and healthy capital ratios, to support the
Company’s business and maximise shareholder value. It includes the monitoring of cash balances, available bank
facilities and cash flows.
No changes were made to these objectives, policies or processes during the year ended 30 June 2023.
Results and dividends
The consolidated income statement is set out on page 29.
The Group’s loss after taxation amounted to £10.3m (2022: loss of £3.8m).
The directors do not recommend the payment of a dividend for the year ended 30 June 2023.
Events since the balance sheet date
Since 30 June 2023, Gfinity has fully divested ownership of Athlos Game Technology Limited and sold the esports
solution division. Further details are given in note 5.
Research and development
The Company undertakes development activities which involve a planned investment in the building and enhancement
of Gfinity products. Development expenditure is capitalised as an intangible asset if the development costs can be
measured reliably and it is anticipated that the product being built will be completed and will generate future economic
benefits in the form of cash flows to the Company. Further information on development activities are provided in the
Strategic Report.
Political Donations
The group did not make any political donations during the year.
Payment Practices
The group’s policy in relation to suppliers is to fix terms of payment when agreeing contracts and to abide by those
agreed terms . The group does not follow and code or statement on payment policy.
20
Gfinity Plc
Governance
Financial Instruments
Details of the group’s use of financial instruments and policies for managing risks arising from that use are given in
note 21.
Share issues and treasury shares
Details of shares issued in the year are in note 19. The company has not acquired any of its own shares in that period.
Greenhouse Gas emissions
The company has no physical operations or premises. Consequently, it consumed less than 40,000 kWh of energy
during the year and so a detailed reports on emissions is not presented.
21
Gfinity Plc
Governance
Risk Management
Information on Gfinity’s approach to risk management is provided within the Principal Risks and Uncertainties section of
this report.
Directors
The following directors held office as indicated below for the year ended 30 June 2023 and up to the date of signing
the consolidated financial statements except where otherwise shown.
Neville Upton – Chairman.
David Halley – Chief Executive Officer. Appointed 23 August 2023
Hugo Drayton – Independent Non-Executive Director.
Jonathan Hall – Chief Finance and Operations Officer - Resigned 9 August 2023
Len Rinaldi – Independent Non-Executive Director - Resigned 31 May 2023
John Clarke – Chief Executive Officer – Resigned 9 February 2023
Directors’ indemnities
The Company has made qualifying third party indemnity provisions for the benefit of its directors, which were made
during the year and remain in force at the date of this report.
Going Concern
As explained in the Chairman’s Report and the Chief Executive Officer’s Report, it has been a difficult year for the
Group and Company as it transitioned away from esports solutions and software development to a pure play Digital
Media company.
At the time of issuing these Financial Statement, this restructuring is largely complete and the Group and Company has
reduced its overhead base to support and develop its Digital Media assets and the Directors firmly believe that the steps
taken will lead to profitability in the short term.
The Directors have prepared a base case cashflow forecast through to 31 December 2024, which assumes certain growth
targets are met.
The Directors believe that the growth targets are reasonable and attainable, and in view of this, the Directors are
confident that the Group and Company have adequate resources to continue to operate for at least twelve months from
the date of approval of these Financial Statements and have, therefore, continued to adopt the going concern basis in
preparing the Directors’ Report and Financial Statements.
However, the Directors recognise that achievement of the growth targets are subject to external factors outside of their
control and so they have also prepared a severe but plausible cashflow projection to assess cashflows in such a scenario.
Should the forecast growth of the Group and Company be not forthcoming or be slower than anticipated, the Group and
Company will need to secure additional funding in the period to 31 December 2024.
The Group and Company continues to enjoy the support of its major shareholders, and should further funding be
necessary, the Directors believe that this support will continue. On this basis, the Directors consider that it is appropriate
that the going concern basis is applied in the preparation of these Financial Statements.
However, whilst the Directors are confident of continuing to raise additional funds as needed to finance the business in
accordance with its Digital Media strategy, they nevertheless recognise that a material uncertainty exists which might
cast doubt over the Group and Company’s ability to continue to realise its assets and discharge its liabilities as they fall
due in the normal course of the business and therefore its ability to continue to operate as a going concern.
22
Gfinity Plc
Governance
Statement of Directors’ Responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable
law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under
that law the directors have elected to prepare company financial statements in accordance with UK adopted International
Financial Reporting Standards (“IFRSs”).
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true
and fair view of the state of affairs of the Company and of the profit or loss of the Company for the period. The directors
are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for
companies trading securities on AIM. In preparing these financial statements, the directors are required to:
•
•
present fairly the financial position, financial performance and cashflows 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 financial statements; and
prepare the financial 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 sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial 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 are responsible for ensuring the annual report and the financial 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 financial statements, which may vary from legislation
in other jurisdictions. The directors are responsible for the maintenance and integrity of the corporate and financial
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 confirms that:
•
•
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 confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Companies
Act 2006.
Gravita Audit Limited has expressed its willingness to continue in office as auditors and a resolution to reappoint them
will be proposed at the forthcoming Annual General Meeting.
By order of the board:
Neville Upton
Chairman
20 December 2023
23
Gfinity Plc
Independent Auditor’s Report to the Members of Gfinity Plc
Opinion
We have audited the financial statements of Gfinity PLC (‘the Company’) and its subsidiaries (together ‘the Group’) for
the year ended 30 June 2023 which comprise the group statement of profit or loss, the group statement of comprehensive
income, the group statement of financial position, the company statement of financial position, the group statement of
changes in equity, the company statement of changes in equity, the group statement of cash flows, the company statement
of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial
reporting framework that has been applied in their preparation is applicable law and UK-adopted International Accounting
Standards.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the Company’s affairs as at
30 June 2023 and of the Group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with UK-adopted international
accounting standards;
the company financial statements have been properly prepared in accordance with UK-adopted international
accounting standards as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the
financial statements section of our report. We are independent of the Group in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to
listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to Note 2 of the financial statements. The group made a loss for the year of £10,254,837 and had net
current liabilities of £384,065 at the balance sheet date. The Board has prepared a base case cash flow forecast under
which the business requires no additional funding in the period to 31 December 2024, the Board recognises that the
attainment of the business plan is subject to factors outside its control and that in a severe but plausible scenario the
company will need to seek additional external funding. Whilst management are confident of securing such funding, there
is inherent uncertainty until such time as such funding is secured. These events or conditions, along with other matters
set out in Note 2, indicate that a material uncertainty exists that may cast significant doubt on the Group and Company’s
ability to continue as a going concern. Our opinion is not modified in respect of this matter.
We identified going concern as a key audit matter based on our assessment of the significance of the risk and effect on
our audit strategy.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the Group and the Company's ability to continue to adopt the following
going concern basis of accounting included:
•
•
•
obtaining and reviewing the directors’ base case cash flow forecasts to 31 December 2024 against our
understanding of the business, including considering the uncertainties associated with a projection of the Group’s
current and future trading prospects;
assessing of the reliability of forecasts by reference to historic budgeting and verifying the actual cash balance
as a starting point;
testing the clerical accuracy of management’s forecast;
24
Gfinity Plc
•
•
•
•
•
•
challenging management’s key forecast assumptions and inputs including reviewing the forecast website traffic
and key revenue metrics;
reviewing the latest management accounts to gauge recent financial performance;
performing sensitivity analysis on the cash flow forecasts prepared by the directors to assess potential cash
requirements in a range of scenarios;
comparing recent expenses in the management accounts to the forecast to assess the reasonableness of the
expected cash requirement;
considering the Group’s historic ability to raise funds and other sources of funding which might realistically be
available to the Group if required; and
considering the appropriateness of disclosures in relation to going concern in the financial statements.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant
sections of this report.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the Directors made subjective judgments, for example in respect of
significant accounting estimates that involved making assumptions and considering future events that are inherently
uncertain. As in all of our audits we also addressed the risk of management override of internal controls, including
evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement due to
fraud.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed sufficient audit work to be able to give an opinion on the
financial statements as a whole, taking into account the structure of the Group, its accounting processes, its internal
controls and the industry in which it operates. We performed a full scope audit of the Company and specific procedures
on certain subsidiaries.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether
or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context
of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
In addition to the matter described in the “Material uncertainty related to going concern” section above, we have
determined the matters below to be the key audit matters to be communicated in our report.
Key Audit Matter
Impairment of goodwill and intangible assets
How our audit addressed the Key Audit Matter
Our audit procedures included:
At 30 June 2023, the Group held goodwill with a
carrying value of £495,288 (2022: £4,714,399) and
(2022:
intangible assets of £415,155
other
£4,575,141) arising from acquisitions of businesses
in earlier periods and
the capitalisation of
development costs.
In line with IAS 36, management performed an
annual impairment test on goodwill to identify the
recoverable amount. The recoverable amount was
assessed by reference to a revenue multiple which
management believe
the market
to
assessment of value in the digital media sector.
reflect
•
•
•
•
•
•
assessing the appropriateness of the revenue
multiple used by management by reference to
external sources, recent transactions in the
industry and observable ratios of similar listed
companies;
reviewing the resulting net assets against the
market capitalisation of the company;
reviewing
accuracy and completeness;
considering the sensitivity of the revenue
multiple applied;
considering the appropriateness of the revenue
figures to which the multiple was applied;
evaluating the consistency appropriateness of
management’s identification of CGUs;
the associated disclosures
for
25
Gfinity Plc
Key Audit Matter
Management test goodwill at the Cash Generating
Unit (“CGU”) level which is considered to be at the
level of each acquired businesses, since these all
continue to create separately identifiable cash
flows.
As a result of the impairment tests, a total
impairment expense of £5,984,171 was recognised
in the year.
We identified the impairment of goodwill and
intangibles as a key audit matter because these
assets are material to the Group and the estimation
of the recoverable amount involves a significant
degree of management judgement and therefore is
subject to an inherent risk of material error.
Our application of materiality
How our audit addressed the Key Audit Matter
•
•
understanding the rationale for a change in
approach from the “value in use” method
applied in the previous year; and
reviewing
impairments
the allocation of
between goodwill and intangible assets within
a single CGU for compliance with IAS 36.
Based on the procedures performed, we noted no
material misstatement in the carrying value of goodwill
or intangible assets or material deficiency in the
disclosures provided.
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgment, we determined materiality for the financial statements as a whole as follows:
Overall materiality
How we determined it
Rationale for
benchmark applied
Group
£80,000
Company
£70,000
Based on 1.5% of revenue derived from both continuing and discontinued
operations.
We consider revenue to be the key metric reviewed by users of the financial
statements to understand and assess the performance of the business.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit for the Group
and Company above £4,000 and £3,500 respectively as well as misstatements below those amounts that, in our view,
warranted reporting for qualitative reasons.
Other information
The directors are responsible for the other information. The other information comprises the information included in the
annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to determine whether there is a material misstatement in the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
26
Gfinity Plc
•
•
the information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and Company and its environment obtained in the course
of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
•
•
•
•
adequate accounting records have not been kept by the Company, or returns adequate for our audit have
not been received from branches not visited by us; or
the Company 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.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on pages 23 the directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material
misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of detecting irregularities, including fraud
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud
and non-compliance with laws and regulations, was as follows:
•
the senior statutory auditor ensured the engagement team collectively had the appropriate competence,
capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
• we identified the laws and regulations applicable to the Group and Company through discussions with the
Directors and from our commercial knowledge and experience of the sector;
• we focused on specific laws and regulations which we considered may have a direct material effect on the
financial statements or the operations of the group, including Companies Act 2006 and taxation legislation;
• we assessed the extent of compliance with the laws and regulations identified above through making enquiries
•
of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert
to instances of non-compliance throughout the audit.
27
Gfinity Plc
We assessed the susceptibility of the group’s financial statements to material misstatement, including obtaining an
understanding of how fraud might occur, by:
• making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge
of actual, suspected and alleged fraud;
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
•
To address the risk of fraud through management bias and override of controls, we:
•
•
•
•
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates set out in Note 3
of the financial statements were indicative of potential bias;
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which
included, but were not limited to:
•
•
•
•
agreeing financial statement disclosures to underlying supporting documentation;
reading the minutes of meetings of those charged with governance;
enquiring of management as to actual and potential litigation and claims;
reviewing correspondence with HMRC and the group’s legal advisors.
There are inherent limitations in our audit procedures described above. The more removed the laws and regulations are
from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also
limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and
other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve
deliberate concealment or collusion.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
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 Auditor's 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.
Joseph Brewer
(Senior Statutory Auditor)
For and on behalf of
Gravita Audit Limited (Statutory Auditor)
Finsgate
5-7 Cranwood Street
London EC1V 9EE
21 December 2023
28
Gfinity Plc
Group Statement of Profit or Loss
For the ended 30 June 2023
Continuing Operations
Revenue
Cost of Sales
Gross profit
Administration expenses
Operating Loss from trading activities *
Impairment charge
Re-assessment of Deferred Consideration
Loss arising on loss of control of a subsidiary
Net finance costs
Loss on ordinary activities before taxation
Taxation
Loss from continuing operations
Notes
Year to 30 June
2023
£
Restated
Year to 30
June 2022
£
2,190,216
(953,905)
1,236,311
2,695,388
(1,247,317)
1,448,071
(3,788,329)
(2,552,018)
(2,870,623)
(1,422,552)
(5,984,171)
931,311
(548,761)
(25,976)
(76,989)
-
-
77
(8,179,615)
974,876
(7,204,739)
(1,499,464)
209,968
(1,289,496)
6
5
8
9
Loss on discontinued operations, net of tax
10
(3,050,097)
(2,521,464)
Loss for the year
(10,254,836)
(3,810,960)
Earnings per share – Continuing operations
(Pence – Basic and Diluted)
11
(0.42)
(0.13)
* Operating Loss from trading activities is the Operating Loss for the year before impairment, movements on deferred
consideration, and loss on the loss of control of a subsidiary
29
Gfinity Plc
Group Statement of Comprehensive Income
Loss for the Period
Items that may subsequently be reclassified to profit or loss
Foreign exchange profit / (loss) on retranslation of foreign
subsidiaries
Other Comprehensive Income for the period
Year to 30
June 2023
Restated
Year to 30
June 2022
£
£
(10,254,836)
(3,810,960)
-
-
(3,458)
(3,458)
Loss and total comprehensive income for the period
(10,254,836)
(3,814,418)
30
Gfinity Plc
Group Statement of Financial Position
As at June 2023
Notes
NON-CURRENT ASSETS
Property, plant and equipment
Goodwill
Intangible fixed assets
CURRENT ASSETS
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity
Ordinary share capital
Share premium account
Other reserves
Retained earnings
Non controlling interest
Total equity
NON-CURRENT LIABILITIES
Other Payables
Deferred Tax Liabilities
CURRENT LIABILITIES
Trade and other payables
Provisions
Total liabilities
12
13
14
16
17
19
20
18
20
27
30-Jun-23
£
14,757
495,288
415,155
925,200
644,540
270,476
915,016
Restated
30-Jun-22
£
148,510
4,714,399
4,575,141
9,438,050
1,968,893
2,141,361
4,110,254
1,840,216
13,548,304
2,649,030
55,367,959
423,613
(57,989,529)
3
451,076
17,669
72,390
1,060,794
238,287
1,389,140
1,315,697
54,858,008
3,706,664
(51,113,657)
3
8,766,715
840,742
897,575
3,043,272
-
4,718,589
TOTAL EQUITY AND LIABILITIES
1,840,216
13,548,304
31
Gfinity Plc
Group Statement of Financial Position
as at 30 June 2023
The notes on pages 40 to 68 form an integral part of these financial statements.
Registered number: 08232509
Signed on behalf of the board on 20 December 2023:
David Halley
Chief Executive Officer
Neville Upton
Non-Executive Chairman
32
Gfinity Plc
Company Statement of Financial Position
As at 30 June 2023
NON-CURRENT ASSETS
Property, plant and equipment
Goodwill
Intangible fixed assets
Investment in subsidiaries
Investment in associate
TOTAL NON-CURRENT ASSETS
CURRENT ASSETS
Trade and other receivables
Cash and cash equivalents
Notes
12
13
14
15
5
16
17
30-Jun-23
£
13,162
495,289
125,594
139,146
5
773,196
Restated
30-Jun-22
£
145,079
2,274,565
1,059,549
6,069,716
-
9,548,909
531,365
71,255
1,880,830
1,361,279
TOTAL CURRENT ASSETS
602,620
3,242,109
TOTAL ASSETS
1,375,816
12,791,018
EQUITY AND LIABILITIES
Equity
Ordinary share capital
19
Share premium account
Other reserves
Retained earnings
Total equity
NON-CURRENT LIABILITIES
Other payables
Deferred tax liabilities
CURRENT LIABILITIES
Trade and other payables
Provisions
Total liabilities
2,649,030
1,315,697
55,367,959
423,613
(58,779,718)
54,858,008
3,728,622
(50,588,868)
(339,116)
9,313,459
20
18
20
27
17,669
-
840,751
84,924
1,459,026
238,237
1,714,932
2,551,884
-
3,477,559
TOTAL EQUITY AND LIABILITIES
1,375,816
12,791,018
33
Gfinity plc
Company Statement of Financial Position (continued)
As at 30 June 2023
The notes on pages 40 to 70 form an integral part of these financial statements.
As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the Company is not presented as
part of these financial statements. The parent Company’s loss for the year amounts to £11,569,814 (2022: loss of
£4,248,407).
Registered number: 08232509
Signed on behalf of the board on 20 December 2023:
David Halley
Chief Executive Officer
Neville Upton
Non-Executive Chairman
34
Gfinity plc
Group Statement of Changes in Equity
As at 30 June 2023
Ordinary
shares
Share
premium
£
£
Share
option
reserve
£
Retained
earnings
£
At 30 June 2021
930,513
46,511,089
3,403,414
-
-
-
-
-
-
-
-
-
-
-
385,184
8,667,150
(320,231)
-
-
-
-
-
325,208
-
385,184
8,346,919
325,208
(47,302,697)
(3,810,960)
-
(3,810,960)
-
-
-
-
-
1,315,697
54,858,008
3,728,622
(51,113,657)
-
-
-
-
-
-
1,333,333
666,667
-
-
-
(156,716)
-
-
-
-
-
-
44,010
51,903
(10,254,836)
-
(10,254,836)
-
-
-
(3,400,992)
3,400,992
1,333,333
509,951
(3,305,079)
(6,853,914)
2,649,030
55,367,959
423,543
(57,967,501)
Loss for the period
Other
comprehensive
income
Total
comprehensive
income
Proceeds of shares
issued
Share Issue Costs
Share options
expensed
Addition of NCI
Total transactions
with owners,
recognised directly
in equity
At June 2022 –
Restated
Loss for the period
Other
comprehensive
income
Total
comprehensive
income
Proceeds of shares
issued
Share Issue Costs
Share options
expensed
Release to Retained
Earnings
Total transactions
with owners,
recognised directly
in equity
At 30 June 2023
NCI
Forex
Total
equity
£
£
£
-
-
-
-
-
-
-
3
3
3
-
-
-
-
-
-
-
-
3
(18,500)
3,523,819
-
(3,810,960)
(3,458)
(3,458)
(3,458)
(3,814,418)
-
-
-
-
-
9,052,334
(320,231)
495,220
3
9,227,326
(21,958)
8,766,715
-
-
-
-
-
-
-
-
(10,254,836)
-
(10,254,836)
2,000,000
(112,706)
51,903
-
1,939,197
(21,958)
451,076
"Ordinary shares" represents the nominal value of issued share capital.
"Share premium" represents the proceeds on issue of shares in excess of nominal value, less directly attributable issue
costs.
"Share option reserve" represents the fair value of share based payments that are in issue at the reporting date.
"Retained earnings" represents the cumulative profits and losses of the business.
"NCI" represents the cumulative profit and losses attributable to minority shareholders of subsidiaries
"Forex" represents the cumulative effect of retranslating the results of foreign operations into the presentation currency.
35
Gfinity plc
Company Statement of Changes in Equity
As at 30 June 2023
At 30 June 2021
Loss for the period
Other Comprehensive Income
Total comprehensive income
Shares Issued
Share issue costs
Share options issued
Shares as deferred consideration
Ordinary
shares
Share
premium
Share option
reserve
Accumulated
Deficit
Total equity
£
£
£
£
£
930,513
46,511,089
3,403,414
(46,340,461)
4,504,555
-
-
-
-
-
-
385,184
8,667,150
-
-
-
(320,231)
-
-
-
-
-
-
-
(4,248,407)
(4,248,407)
-
-
(4,248,407)
(4,248,407)
-
-
9,052,334
(320,231)
325,208
-
325,208
-
-
-
Total transactions with
owners, recognised directly in
equity
385,184
At 30 June 2022 - restated
1,315,697
8,346,919
54,858,008
325,208
-
9,227,323
3,728,622
(50,588,868)
9,313,459
Loss for the period
Other Comprehensive Income
-
-
Total comprehensive income
-
-
-
-
-
-
(11,569,814)
(11,569,814)
-
-
-
(11,569,814)
(11,569,814)
Proceeds of Shares Issued
1,333,333
666,667
(156,716)
-
44,010
-
-
2,000,000
(112,706)
Share issue costs
Share options expensed
Release to Retained Earnings
Total transactions with
owners, recognised directly in
equity
-
-
-
-
29,945
-
29,945
-
(3,378,964)
3,378,964
-
1,333,333
509,951
(3,305,009)
3,378,964
1,917,239
At 30 June 2023
2,649,030
55,367,959
423,613
(58,779,718)
(339,116)
36
Gfinity Plc
Group Statement of Cash Flows
As at 30 June 2023
Group
Operating
Loss for the year
Adjustments for:
Depreciation
Amortisation
Impairment of assets
Gain on disposal of fixed assets
Gain on disposal of associate
Finance income
Finance costs
Share based payments
Increase in credit loss provision
Re-evaluation of contingent consideration
Loss on loss of control of subsidiary
Increase in provisions
Current and deferred tax credit
Total
Decrease in receivables
Decrease in payables excluding contingent consideration
Tax credit recovered
Net operating outflow
Investing
Interest received
PPE additions
Intangible additions
Payment of deferred/contingent consideration
Proceeds on disposal of associate
Net proceeds on disposal of assets
Total
Financing
Net proceeds on issue of shares
Total
Net decrease in cash
Cash at the start of the year
Cash at the end of the year
Net decrease in cash
2023
£
Restated
2022
£
(10,254,837)
(3,810,960)
33,254
112,993
1,846,164
1,554,745
5,984,171
76,989
(112,808)
-
-
(45,090)
(885)
77
77,691
-
29,945
325,208
51,494
-
(931,311)
-
548,761
-
238,287
-
(974,876)
(298,177)
(3,464,950)
(2,084,215)
1,324,353
(907,062)
(524,205)
(110,916)
109,732
142,162
(2,937,927)
(2,577,174)
885
77
(3,498)
-
(74,137)
(685,951)
(1,031,307)
(1,774,020)
-
45,090
213,668
-
(820,252)
(2,488,941)
1,887,294
5,831,603
1,887,294
5,831,603
(1,870,885)
765,488
2,141,361
1,375,873
270,476
2,141,361
(1,870,885)
765,488
There were no investing or financing cash flows for discontinued operations.
The net cash outflow on operating activities for discontinued operations was £(2,166,061) (2022: £(2,679,157).
37
Gfinity Plc
Company Statement of Cash Flows
As at 30 June 2023
Company
Operating
Loss for the year
Adjustments for:
Depreciation
Amortisation
Impairment of assets
Gain on disposal of fixed assets
Gain on disposal of associate
Finance income
Finance costs
Share based payments
Increase in credit loss provision
Re-evaluation of contingent consideration
Loss on disposal of intangible
Increase in provisions
Current and deferred tax credit
Total
Decrease in receivables
Decrease in payables excluding contingent consideration
Tax credit recovered
Net operating outflow
Investing
Interest received
PPE additions
Intangible additions
Payment of deferred/contingent consideration
Proceeds on disposal of associate
Net proceeds on disposal of assets
Net amounts advanced to subsidiaries
Total
Financing
2023
£
Restated
2022
£
(11,569,814)
(4,248,407)
34,657
378,515
7,716,918
(112,808)
-
(885)
77,691
29,945
187,815
(931,311)
548,761
238,287
234
(3,401,995)
1,349,466
(597,442)
108,787
235,738
41,616
-
(45,090)
(1)
-
495,220
-
-
-
-
(213,562)
(2,925,699)
28,603
(556,176)
109,732
142,162
(2,540,239)
(3,311,110)
885
(3,498)
0
(495,416)
1
(74,149)
(685,951)
(1,774,020)
0
45,090
213,668
(352,718)
(637,079)
0
0
(2,489,029)
Net proceeds on issue of shares
1,887,294
5,831,603
38
Gfinity Plc
Total
1,887,294
5,831,603
Net decrease in cash
(1,290,024)
31,464
Cash at the start of the year
Cash at the end of the year
Net decrease in cash
1,361,279
1,329,815
71,255
1,361,279
(1,290,024)
31,464
39
Gfinity Plc
Notes to the Financial Statements
1. GENERAL INFORMATION
Gfinity plc (“the Company”) is a public company limited by shares incorporated in the United Kingdom under the
Companies Act 2006, registered and domiciled in England and Wales and is AIM listed. The address of the registered
office is given on page 2. The registered number of the company is 08232509.
The functional and presentational currency is £ sterling because that is the currency of the primary economic environment
in which the group operates. Foreign operations are included in accordance with the policies set out in note 2. Principal
activities are discussed in the Strategic report.
2. ACCOUNTING POLICIES
Basis of preparation
The Company has prepared the accounts on the basis of all applicable UK-adopted 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 2022,
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, unless otherwise stated below. 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.
New and amended accounting standards effective during the year
The following amended standards and interpretations were effective during the year:
• Amendments to IAS 16: Property, Plant and Equipment: proceeds before intended use
• IAS 37: Onerous Contracts: costs of fulfilling a contract
• Annual Improvements to IFRS Standards 2018-2020
• Amendments to IFRS 3: Business Combinations: reference to conceptual framework
The adoption of the standards and interpretations has not led to any changes to the Group’s accounting policies or had
any other material impact on the financial position or performance of the Group.
New standards, interpretations and amendments issued but not yet effective
The following new accounting standards, amendments and interpretations to accounting standards have been issued but
these are not mandatory for 30 June 2023 and they have not been adopted early by the Group:
• Amendments to IAS 1: Classification of liabilities as current and non-current
• Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of accounting policies
• Amendments to IAS 8: Definition of accounting estimates
• Amendments to IAS 12: Deferred Tax related to assets and liabilities arising from a single transaction
The Directors anticipate that the adoption of planned standards and interpretations in future periods will not have a
material impact on the Group Financial Statements.
40
Gfinity Plc
Going Concern
As explained in the Chairman’s Report and the Chief Executive Officer’s Report, it has been a difficult year for the
Group and Company as it transitioned away from esports solutions and software development to a pure play Digital
Media company.
At the time of issuing these Financial Statement, this restructuring is largely complete and the Group and Company has
reduced its overhead base to support and develop its Digital Media assets and the Directors firmly believe that the steps
taken will lead to profitability in the short term.
The Directors have prepared a base case cashflow forecast through to 31 December 2024, which assumes certain growth
targets are met.
The Directors believe that the growth targets are reasonable and attainable, and in view of this, the Directors are
confident that the Group and Company has adequate resources to continue to operate for at least twelve months from
the date of approval of these Financial Statements and have, therefore, continued to adopt the going concern basis in
preparing the Directors’ Report and Financial Statements.
However, the Directors recognise that achievement of the growth targets are subject to external factors outside of their
control and so they have also prepared a severe but plausible cashflow projection to assess cashflows in such a scenario.
Should the forecast growth of the Group and Company be not forthcoming or be slower than anticipated, the Group and
Company will need to secure additional funding in the period to 31 December 2024.
The Group and Company continues to enjoy the support of its major shareholders, and should further funding be
necessary, the Directors believe that this support will continue. On this basis, the Directors consider that it is appropriate
that the going concern basis is applied in the preparation of these Financial Statements.
However, whilst the Directors are confident of continuing to raise additional funds as needed to finance the business in
accordance with its Digital Media strategy, they nevertheless recognise that a material uncertainty exists which might
impact the Group and Company’s ability to continue to realise its assets and discharge its liabilities as they fall due in
the normal course of the business and therefore its ability to continue to operate as a going concern.
Basis of consolidation
The Group accounts consolidate the results of the Company and all of its subsidiary undertakings drawn up to 30 June
each year. Subsidiary undertakings are those entities over which the Group has the control, which is where the Group
has power over the investee, is exposed to variable returns from its involvement with the investee and where the Group
has the ability to use its power over the investee to affect the amount of returns. The results of subsidiaries acquired or
sold are consolidated for the periods from or to the date on which control passed. Acquisitions are accounted for under
the acquisition method.
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of
the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent
liabilities recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets,
liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately
in profit or loss.
Where the Group assesses that it has significant influence over an investee, but not control, the investment is accounted
for as an associate. Associates are not consolidated but are equity accounted and the group records its share of the
associate's loss to the extent the cost less impairment of the investment in greater than nil.
All intra group balances, transactions, income and expenses and profit and losses on transactions between the Company
and its subsidiaries and between subsidiaries are eliminated.
Goodwill
Goodwill is initially recognised and measured as set out above.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing,
goodwill is allocated to each of the Group’s cash-generating units (‘CGUs’) expected to benefit from the synergies of
the combination. CGUs to which goodwill has been allocated are tested for impairment annually, or more frequently
41
Gfinity Plc
when there is an indication that the unit may be impaired. If the recoverable amount of the CGU is less than the carrying
amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the
unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An
impairment loss recognised for goodwill is not reversed in a subsequent period.
Investment in subsidiaries
Investments in subsidiaries are held in the Company balance sheet at cost and reviewed annually for impairment. Where
the Company acquires subsidiaries with contingent or deferred consideration, the initial estimate of the present value of
future payments is included in the cost of the investment and any subsequent changes recorded through profit or loss.
Revenue
Revenue comprises the fair value of the consideration received or receivable for the sale of services in the normal course
of the Group’s activities. Revenue is shown net of value added tax.
To determine whether to recognise revenue, the Group follows a 5-step process:
Identifying the contract with a customer.
Identifying the performance obligations
1.
2.
3. Determining the transaction price.
4. Allocating the transaction price to the performance obligations.
5. Recognising revenue when/as performance obligation(s) are satisfied.
Revenue is recognised either at a point in time or over time, when (or as) the Group satisfies performance obligations
by transferring the promised goods or services to its customers. The Group 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:
• Partner programme delivery fees: Revenue recognised in line with the date at which work is performed.
• 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 term of the contract,
except in instances where a significant proportion of the revenue relates to specific activation activities, in which
case the revenue is released in line with when that work is performed.
• Advertising revenues: Fees are earned based on the number of sessions where ads are displayed on the website.
Revenue is recognised on a cost per mille (CPM) basis.
• Broadcaster revenues: Rights fees are received from linear broadcasters and online streaming platforms in return
for rights to access broadcast content. Revenue is recognised once the relevant performance obligations are
completed which is typically at the point the broadcast occurs.
• Licensing revenues: Fees charged for the licensing of Gfinity esports technology, outside of the scope of a
broader managed esports service provision.
• Consultancy Fees: Revenue is recognised in line with the profile of resources dedicated to the programme across
the assignment duration. Such revenue is recognised over time based on an estimate of total costs incurred.
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.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign
operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated
at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period. Exchange
differences arising from the translation of the Group’s foreign operations are recognised in other comprehensive income.
42
Gfinity Plc
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.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that the
directors do not have a high degree of certainty that sufficient taxable profits will be available in the medium-term to
allow all or part of the asset to be recovered.
Credits in respect of Research and Development activities are recognised upon receipt of payment from HMRC.
Share based payments
The Company provides equity-settled share-based payments in the form of share options. Equity-settled share-based
payments are measured at fair value (excluding the effect of non-market-based vesting conditions) at the date of grant.
The fair value determined at the date of grant is expensed on a straight line basis over the vesting period, based on the
Company’s estimate of shares which will eventually vest and adjusted for the effect of non-market based vesting
conditions. The Company uses an appropriate valuation model utilising a Black-Scholes model in order to arrive at a
fair value at the date share options are granted.
In instances when shares are used as consideration for goods or services the shares are valued at the fair value of the
goods or services provided. The expense to the company is recognised at the point the goods or services are received.
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.
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
3 years straight line
3 years straight line
3 years straight line
Over the period of the lease or, where
management have reasonable grounds to
believe the property will be occupied beyond
the terms of the lease, 3 years straight line
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.
43
Gfinity Plc
Intangible fixed assets
Intangible assets other than goodwill are recognised where the purchase or internal development of such assets are
expected to directly contribute towards the company’s ability to generate revenues .
Intangible fixed assets are stated at historical cost less accumulated amortisation and impairment, if any. The cost of
intangible assets acquired in a business combination is their fair value as at the date of acquisition. Where the cost is not
clearly identifiable discounted cash flows are utilised to estimate either the cost to develop the resource or, where there
are already profits attributable the asset, to estimate future cash inflows. Historical cost includes expenditure that is
directly attributable to the acquisition or development 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.
Amortisation is charged on a straight-line basis over the estimated useful economic life of the asset as follows:
Web Platforms
Engage
Other Intangible assets
3-5 years
3-5 years
3-5 years
Amortisation expense is included within administrative expenses in the profit or loss account.
Research and development costs
Development expenditure is capitalised as an intangible asset, only if the development costs can be measured reliably
and it is anticipated that the product being built will be completed and will generate future economic benefits in the form
of cash flows to the Group or cost savings.
Research expenditure that does not meet this criteria is recognised as an expense as incurred. Development costs
previously recognised as an expense are not recognised as an asset in a subsequent period.
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.
Financial liabilities and equity
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.
An equity instrument is any contract that evidence a residual interest in the assets of the Company after deducting all of
its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Contingent consideration arising in a business combination is held at fair value at each reporting date. After the initial
accounting for the business combination, any changes in the estimated or actual consideration payable are taken to profit
or loss. Future expected payments are held at their present value where the effect of discounting is material. The
unwinding of contingent consideration is recognised as a finance cost in profit or loss.
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.
44
Gfinity Plc
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.
Warrants
Warrants are in respect of call options granted to investors by the group and are classified as equity only to the extent
that they do not meet the definition of a financial liability or financial asset.
The fair value of warrants is determined at the date of grant and is recognised in equity. When the warrants are exercised,
the group transfers the appropriate amount of shares to the investor, and the proceeds received net of any directly
attributable transaction costs are credited directly to equity.
The group uses an appropriate valuation model utilising a Black-Scholes model in order to arrive at a fair value at the
date warrants are granted.
3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
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.
Judgement: Revenue recognition:
The Group’s revenue recognition policy is based on separating contracts into discrete performance obligations with
revenue then recognised based on the percentage completion of each performance obligation unless recognised at
appoint in time. Where the value of each distinct performance obligation is not set out in a contract Management estimate
the value of each performance obligation based on the level of resource required to complete the performance obligation
in comparison to the overall level of resource required to fulfil the contract. For example, if a contract did not stipulate the
value by region of a broadcast agreement management would use appropriate weighting (e.g. audience size) to estimate
the value of each region, with each region viewed as a separate performance obligation. Revenue would then be
recognised based on the percentage completion of each performance obligation. In instances where there is no other
readily available proxy Management will estimate the value of each performance obligation based on the relative cost
to deliver.
Stock Informer Revenue that is recognised on a monthly is based on the transactional sales value of all transactions in
month for all associate affiliate partners. The transactional sales value represents the total commission value due to
Gfinity of all pending and approved payments coming in for a given month across the affiliate 3rd party providers that
are contracted and based on the specific affiliate commission % with Stock Informer. In month “Transactional Value”
will specifically exclude approved payments from prior months, as this has already been recognised as revenue in the
prior months. A credit note provision is raised monthly which is based on the value of all pending commission
transactions across all affiliates with a credit note % assumption applied to this which is based on the average return %
over the past 6 months. The credit note provision is assessed monthly in relation to the level of pending transactions
that have either been paid resulting in earnings, which results in a release of the provision, or declined, which results in
a credit and offset against the credit note provision, thus utilising the provision in place
There were no revenue contracts requiring judgement that impact on the reported revenue for the financial year, or
contract assets or liabilities at the balance sheet date for either the current or the prior year.
Judgements and estimates: Impairment of goodwill and intangible assets, and estimation of the fair value of contingent
consideration
The Group holds goodwill and intangible assets arising from business acquisitions or the internal generation of
development assets. Judgement is applied in determining the recoverable amount of assets.
On an annual basis the Group reviews relevant classes of assets, including investments, intangible assets and goodwill
for indications of impairment. Where such indications exist, a full impairment test is performed. In light of the loss
reported in the year, the Board determined that a full impairment test should be performed on all intangible
45
Gfinity Plc
assets. Goodwill must be tested for impairment annually. Where goodwill arises in a business combination,
management determined that each website brand is a separate cash generating unit and so any the goodwill arising from
that acquisition is associated with the acquired brand. No goodwill is allocated across multiple Cash Generating Units.
For the purpose of impairment testing at 30 June 2023, management have determined that the appropriate method to
apply is a fair value less costs to dispose approach. In previous years, management have used a value in use model and
therefore this represents a change in methodology. The reason for the change in methodology is due to the uncertainty
experienced in the year and therefore which had led to earlier forecasts not having been achieved. Management consider
that a revenue based multiple is a more accurate estimation tool for the recoverable amount of its intangible assets.
Therefore all impairment tests have been performed using a fair value method on the basis of a multiple of revenue
achieved for the respective brand in the year ended 30 June 2023.
Management undertook a careful assessment of the appropriate revenue multiple and determined that 1x revenue
represents their best estimate of the recoverable amount of each brand. This fair value estimation technique is a Level
2 valuation technique in the Fair Value Hierarchy as there is no directly observable market valuation of each brand, but
management have identified the valuation of similar assets through the relevant trading multiples of similar businesses
in similar sectors, through the observed implied multiples in recent transactions involving similar assets and through
industry and other benchmarks.
Further detail of the results of impairment tests of each material Cash Generating Unit are summarised below. All of
Megit, Siege.gg, RealSport and EpicStream are within the Gfinity Digital Media operating segment. In each case, ‘costs
to sell’ are considered to be immaterial as there are no physical assets in any case. Impairment expenses have been
separately identified in the statement of profit or loss. No previous impairments were reversed during the year.
Megit
The group acquired the entire issued share capital of Megit Limited in September 2021. Megit operates the
StockInformer website which enables gamers to locate and find the best pricing and availability of tech and other
products.
At 30 June 2022 the group held goodwill of £2,439,834 and intangible assets of £3,505,996 in respect of Megit. These
assets were tested for impairment collectively as they form a single Cash Generating Unit.
The result of the impairment test was as a recoverable amount of £289,561 and therefore an impairment charge of
£4,198,217 was recorded. This was allocated first to goodwill and then to intangible assets as required by IAS 36.
The factors giving rise to the impairment were the well-publicised challenges arising from changes to the algorithms
applied by Google and other traffic sources in the period.
At 30 June 2023, management have also applied judgement in their assessment of any remaining contingent
consideration based on revenue-based earnouts in the acquisition agreement. The range of potential payable amounts
is between nil and £1.8m. Management’s estimate of the undiscounted future payment is £223,645 based on projected
cash flows of the business and this has been reflected in liabilities on a discounted basis. Management have discounted
future cash flows using a discount rate of 20% which is based on a review of the discount rates used by listed business
with a similar risk profile. Contingent consideration is therefore based on a Level 3 basis of the Fair Value Hierarchy
as the inputs are not directly or indirectly observable.
Due to the challenging trading environment, amounts payable under the contingent consideration arrangements were
significantly lower than initially forecast and therefore certain contingent consideration liabilities were released to profit
or loss in the year, of a total of £855,482 in respect of Megit.
In respect of the Company’s investment in Megit Limited as a subsidiary, an impairment was recorded to bring the
investment to the directors’ best estimate of the recoverable amount by reference to the recoverable net assets of
Megit. An impairment of £5,930,565 was therefore recorded by the Company in profit or loss.
Siege.gg
Siege.gg is the leading digital property in the competitive Rainbow 6 Siege space. It has a strong audience and domain
authority, together with proprietary statistical database.
At 30 June 2022 the group held goodwill of £370,775 and intangible assets of £100,215 in respect of Siege.gg. These
were tested within a single Cash Generating Unit.
46
Gfinity Plc
The result of the impairment test was a recoverable amount of £41,541 and so an impairment expense of £560,104 was
recorded. This was allocated first to goodwill and then to intangible assets as required by IAS 36.
The factors giving rise to the impairment were changes to Google algorithms and changes in the underlying user base
of the website.
RealSport
Realsport101.com is a leading source of news and information about competitive sport gaming.
The carrying value of goodwill in respect of RealSport at 30 June 2022 was £1,643,006.
The result of the impairment test was a recoverable amount of £234,505 and therefore an impairment of £1,408,501 was
recorded.
The factors giving rise to the impairment were changes to Google algorithms and changes in the underlying user base
of the website.
EpicStream
EpicStream.com is a leading online source of geek and pop culture news.
The carrying value of goodwill in respect of EpicStream was £260,783 at 30 June 2022 and intangibles were £273,382
at that date. These assts were tested jointly as a single Cash Generating Unit.
The result of the impairment test was that no impairment was required, because the brand generated revenue in excess
of the value of assets tested. If management had applied a revenue multiple of 0.93x or below, an impairment would
have been recorded.
Engage / Athlos
Engage is the company’s proprietary gaming technology, developed in-house, and marketed under the Athlos brand.
During the year, the associated IP was assigned to Athlos Game Technologies Ltd and as the Group lost control of this
entity in the period, the asset was derecognised from the group balance sheet. No amounts were capitalised in the
period.
Therefore the asset was not tested for impairment. Further details are given in Note 5, including in respect of judgements
applied by management in assessing the nature of the relationship between the Company and Athlos at year end.
Athlos is recorded as a separate operating segment.
4. REVENUE
The Group’s policy on revenue recognition is as outlined in note 2. The Group’s revenue disaggregated by primary
geographical market is as follows:
Year to 30 June 2023
United Kingdom
North America
ROW
Total
Total
£
4,343,202
265,605
814,764
5,423,571
47
Gfinity Plc
Year to 30 June 2022
United Kingdom
North America
ROW
Total
Total
£
2,830,620
1,563,982
865,904
5,260,506
Profit and loss information for each operating segment is given in note 10.
The Group’s revenue disaggregated by pattern of revenue recognition and business unit is as follows:
Year to 30 June 2023
Digital Media
eSports
Athlos
£
2,190,216
£
-
£
-
Total
£
2,190,216
-
2,909,482
323,873
3,233,355
Services transferred at
a point in time
Services transferred
over time
Total
2,190,216
2,909,482
323,873
5,423,571
Year to 30 June 2022
Digital Media
eSports
Athlos
£
2,695,388
£
-
£
-
-
2,248,233
316,885
Total
£
2,695,388
2,565,118
Services transferred at
a point in time
Services transferred
over time
Total
2,695,388
2,248,233
316,885
5,260,506
As at 30 June 2023 the Group had the amounts shown below held on the consolidated statement of financial position in
relation to contracts either performed in full during the year or ongoing as at the year end. All amounts were either due
within one year or, in the case of contract liabilities, the work was to be performed within one year of the balance sheet
date
Contract Assets
Contract Liabilities
Year to 30 June 2023
£
Nil
Nil
Year to 30 June 2022
£
246,428
208,715
48
Gfinity Plc
The Group agrees payment terms with each customer at the outset of the contract and typically agrees 30 day payment
terms. All revenue streams which are recognised over time were completed and invoiced in the year resulting in no
contract assets or liabilities at 30 June 2023. All brought forward contract assets and liabilities were realised in the year.
Contract assets are initially recognised for revenue earned while the services are delivered over time or when billing is
subject to final agreement on completion of the milestone. Once the amounts are billed the contract asset is transferred
to trade receivables.
5. DISCONTINUED OPERATIONS AND INTEREST IN ASSOCIATE
As disclosed in Note 10, management consider that the group's activities in the year comprise three operating segments
being Gfinity Digital Media, Athlos and eSports.
The company announced on 6 June 2023 that it had decided to close the eSports operating segment and to dispose of
72.5% of its interest in Athlos Game Technologies Ltd ("Athlos").
Therefore the results of the eSports and Athlos segments are reflected as discontinued operations in the group statement
of profit or loss. The results for the year to 30 June 2022 have been represented as required by IFRS 5.
In respect of the eSports division, it was announced on 5 December 2023 that the remaining trade and assets of the
eSports segment had been sold to Ingenuity Loop Limited for consideration of £15,000.
In respect of Athlos, on 5 June 2023 the group concluded a share purchase agreement with Tourbillon Group UK
Limited, under which Tourbillon subscribed for new shares in Athlos resulting in Tourbillon gaining a controlling
interest. The SPA also provided for the Athlos IP, previously referred to by Gfinity as the Engage development asset,
would be assigned to Athlos at the date of completion of the SPA. Tourbillon undertook certain funding commitments
with effect from the effective date of the transaction, significantly reducing Gfinity's funding obligations whilst retaining
a minority interest. The SPA also provided for Gfinity to retain access to the Engage platform IP.
In light of the SPA, the Board considered the nature of the resulting relationship with Athlos and considered that the
facts and circumstances indicated that Athlos was, from the date of the transaction and as at 30 June 2023, an associate.
This is because of the group's continuing 27.5% equity and voting interest and the entitlement to appoint a director to
the board of Athlos. Therefore the Group was deemed to have lost control and no longer consolidated the results of
Athlos from that date. Accordingly, the group recorded a loss on loss of control of subsidiary in the group profit and
loss account of £548,761, representing the carrying value of the Engage IP at the date of loss of control. Management
further considered the fair value of the resulting interest in Athlos and concluded that whilst the business has significant
prospects, a value of nil was appropriate in light of the record of losses of the Athlos business, its status as an early stage
project and the funding requirements to bring the product to profitability.
Therefore the deemed cost of the equity-accounted associate is nil and under equity accounting, no share of associate's
losses are reflected in the group profit and loss statement.
After the balance sheet date, on 27 November 2023, the company announced the disposal of its remaining interest in
Athlos for consideration of £260,000. See note 25 for more details.
The registered office address of Athlos is 16 Great Queen Street, London, WC2B 5AH.
At 30 June 2023, the Company's historic cost of investment in Athlos was £5.
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Gfinity Plc
6. OPERATING EXPENSES
Operating loss is stated after charging:
Depreciation of property, plant and equipment
Amortisation & impairment of intangible fixed assets
Goodwill impairment
Staff costs (see note 7)
Auditors’ remuneration for auditing the accounts of the Company
Auditors’ remuneration for other non-audit services:
- Other services related to taxation
- All other services
Net foreign exchange (gains)/ losses
7. PARTICULARS OF EMPLOYEES
Number of employees
Group
Year to 30 June
2023
Year to 30 June
2022
£
33,254
3,611,225
4,219,110
3,148,791
55,000
£
112,993
1,631,734
-
3,406,569
72,000
3,240
4,025
21,824
7,229
16,101
(54,405)
The average number of people (including directors) employed by the Group and Company during the financial period
was:
Group
Year to
30 June
2023
6
38
44
Year to
30 June
2022
6
38
44
Board
Operations
The aggregate payroll costs of staff (including directors) were:
Wages and salaries
Social security costs
Pensions
Share based payments (Note 22)
Group
Year to 30 June 2023
£
2,726,670
323,812
49,714
48,595
3,148,791
Year to 30 June 2022
£
2,514,773
340,929
55,648
495,220
3,406,570
Total remuneration for Directors during the year was £595,780 (2022: £520,141).
The board of directors comprise the only persons having authority and responsibility for planning, directing and controlling
the activities of the Group.
The Board consider there are no key management personnel other than the Board.
The number of directors to whom retirement benefits accrued during the period was 3 (2022: 3).
50
Gfinity Plc
8. FINANCE INCOME/COSTS
Interest income on bank deposits
Notional interest on contingent consideration
Group
Year to 30 June
2023
£
885
(77,691)
(76,806)
Year to 30 June
2022
£
77
0
77
The net finance cost relating to continuing operations was £25,976.
9. TAXATION
Major components of taxation expense for the period ended 30 June 2023 are:
Current tax
Corporation tax charge/ (credit)
Total current tax
Deferred tax
Relating to origination and reversal of temporary differences
Taxation (credit) reported in the income statement
Factors affecting tax charge for the period
Group
Year to 30 June
2023
£
Year to 30 June
2022
£
(146,691)
(149,691)
84,600
84,600
(825,185)
(974,876)
(294,568)
(209,968)
A reconciliation of taxation expense applicable to accounting profit before taxation at the statutory tax rate of 19% (2021:
19%), to taxation expense at the Groups effective tax rate for the period is as follows:
Loss on ordinary activities before taxation
Profit/ (Loss) multiplied by effective rate of 19%
Effect of:
Year to 30 June
2023
Year to 30 June
2022
£
(10,254,836)
(1,948,419)
£
(3,810,960)
(724,082)
Expenses not deductible for tax purposes
Movement in unrecognised deferred tax asset arising from tax
losses
349,574
102,803
1,598,845
536,679
Movement in deferred tax arising from other temporary timing
differences
R&D Credit received
Over Provision in prior years
Tax Credit
Split as
Current tax
Deferred tax
Taxation (credit)/charge reported in the income statement
825,184
294,568
109,732
39,960
974,876
-
-
209,968
149,691
825,185
84,600
379,168
974,876
209,968
51
Gfinity Plc
The whole current and deferred tax credit in the consolidated profit and loss account relates to continued operations.
The Group has estimated tax losses of £52.2m (2022: £43.75m) available for offset against future taxable profits. A
potential deferred tax asset of £13.0m has not been recognised due to the uncertainty of future profits. The tax losses
have no expiry date.
With effect from 1 April 2023, HMRC introduced a headline UK corporation tax of 25%.
10. OPERATING SEGMENTS
Year to 30 June 2023
Revenue
Cost of sales
Impairment Charge
Admin expenses
Esports
Athlos
Digital Media
Total
£
£
£
£
2,909,482
323,873
2,190,216
5,423,571
(1,665,890)
(172,205)
-
-
(3,300,378)
(855,862)
(953,904)
(5,984,171)
(3,788,329)
Loss on disposal of Associate
Restructuring Cost
-
-
(548,761)
(238,287)
-
-
Re-assessment of Deferred Consideration
-
-
Net Finance Expenses
(39,369)
(11,461)
931,311
(25,976)
(2,791,999)
(5,987,171)
(7,944,570)
(548,761)
(238,287)
931,311
(76,806)
Tax
Loss
-
-
974,876
974,876
(2,334,442)
(715,656)
(7,204,739)
(10,254,837)
Year to 30 June 2022
Esports
Athlos
Digital Media
Total
£
£
£
£
5,260,506
2,248,233
(1,146,974)
-
(3,302,189)
45,090
-
316,885
(152,217)
-
2,695,388
(1,247,317)
(76,989)
(2,546,507)
(76,989)
(530,293)
(2,870,623)
(6,703,105)
-
-
45,090
-
-
-
-
-
-
-
-
-
(2,155,839)
(365,625)
0
77
0
77
209,968
(1,289,496)
209,968
(3,810,960)
Revenue
Cost of sales
Impairment Charge
Admin expenses
Loss on disposal of Associate
Restructuring Cost
Re-assessment of Deferred Consideration
Net Finance Expenses
Tax
Loss
Management identify operating segments through consideration of the aggregated data reviewed by the Board in
monitoring the performance of the business.
As disclosed in Note 5, during the year both the Esports and Athlos segments were discontinued. Therefore the loss after
tax from discontinued operations was £3,050,097.
In line with IFRS 8 para 23, assets and liabilities split by segment are not disclosed as these are not regularly reviewed
by the Board in this way. All material assets at year end relate only to Gfinity Digital Media, being the only segment
52
Gfinity Plc
which is a continuing operation. Within continuing operations, being only the Digital Media division, two key customers
accounted for 46% and 12% of revenue. Within discontinued operations, three key customers accounted for 67%, 14%,
13% respectively, all within the Esports segment.
11. 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.
All EPS and DEPS figures stated below are presented in pence.
All Operations
Earnings
2023
2022
(10,254,836)
(3,980,972)
Weighted Average Shares
1,735,787,903
1,122,821,000
EPS
DEPS
Continuing Operations
(0.59)
(0.59)
(0.35)
(0.35)
2023
2022
Earnings
(7,204,739)
(1,459,508)
Weighted Average Shares
1,735,787,903
1,122,821,000
EPS
DEPS
Discontinued Operations
(0.42)
(0.42)
(0.13)
(0.13)
2023
2022
Earnings
(3,050,097)
(2,251,464)
Weighted Average Shares
1,735,788,903
1,122,821,000
EPS
DEPS
(0.18)
(0.18)
(0.22)
(0.22)
53
Gfinity Plc
12. PROPERTY, PLANT AND EQUIPMENT
Group
Cost
At 1 July 2021
Addition
At 30 June 2022
Amortisation
At 1 July 2021
Charge for the period
At 30 June 2022
Net Book Value
30 June 2022
30 June 2021
Cost
At 1 July 2022
Addition
Disposals
Computer
&
Production
Equipment
Office
equipment
Leasehold
Improvements
£
£
£
Total
£
63,143
1,096,133
1,633,942
2,793,218
-
74,137
-
74,137
63,143
1,170,270
1,633,942
2,867,355
62,346
1,006,802
1,536,704
2,605,852
797
106,510
5,686
112,993
63,143
1,113,312
1,542,390
2,718,845
-
56,958
91,552
148,510
797
89,331
97,238
187,366
Computer
&
Production
Equipment
Office
equipment
Leasehold
Improvements
£
£
£
Total
£
63,143
1,170,270
1,633,942
2,867,355
-
3,498
-
3,498
(63,143)
(1,145,455)
(1,633,942)
(2,842,540)
At 30 June 2023
-
28,313
-
28,313
Amortisation
At 1 July 2022
63,143
1,113,312
1,542,390
2,718,845
Charge for the period
-
32,457
-
32,457
Disposals
At 30 June 2023
Net Book Value
30 June 2023
30 June 2022
(63,143)
(1,132,213)
(1,542,390)
(2,737,746)
-
13,556
-
13,556
-
14,757
-
14,757
-
56,958
91,552
148,510
54
Gfinity Plc
Company
Cost
At 1 July 2021
Addition
At 30 June 2022
Amortisation
At 1 July 2021
Computer
&
Production
Equipment
Office
equipment
Leasehold
Improvements
£
£
£
Total
£
51,743
1,068,236
1,633,941
2,753,920
-
74,138
-
74,138
51,743
1,142,374
1,633,941
2,828,058
39,997
997,491
1,536,704
2,574,192
Charge for the period
9,546
93,555
5,686
108,787
At 30 June 2022
49,543
1,091,046
1,542,390
2,682,979
Net Book Value
30 June 2022
30 June 2021
Cost
At 1 July 2022
Addition
Disposals
2,200
51,328
91,551
145,079
11,746
70,745
97,237
179,728
Computer
&
Production
Equipment
Office
equipment
Leasehold
Improvements
£
£
£
Total
£
51,743
1,142,374
1,633,941
2,828,058
-
3,498
-
3,498
(51,743)
(1,117,559)
(1,633,941)
(2,803,243)
At 30 June 2023
-
28,313
-
28,313
Amortisation
At 1 July 2022
49,543
1,091,046
1,542,390
2,682,979
Charge for the period
2,200
32,457
-
34,657
Disposals
At 30 June 2023
Net Book Value
30 June 2023
30 June 2022
(51,743)
(1,108,352)
(1,542,390)
(2,702,485)
-
15,151
-
15,151
-
13,162
-
13,162
2,200
51,328
91,551
145,079
55
Gfinity Plc
13. GOODWILL
Group
Cost
At 1 July 2021
Additions arising from business combinations
At 30 June 2022
Impairment
At 1 July 2021
Charge for the period
At 30 June 2022
Net Book Value
30 June 2022
30 June 2021
Cost
At 1 July 2022 and 30 June 2023
Impairment
At 1 July 2022
Charge for the period
At 30 June 2023
Net Book Value
30 June 2023
30 June 2022
Company
Cost
At 1 July 2021
Additions arising from business combinations
At 30 June 2022
Impairment
At 1 July 2021
Charge for the period
At 30 June 2022
1,903,790
2,810,609
4,714,399
-
-
-
4,714,399
1,903,790
£
4,714,399
-
4,219,111
4,219,111
495,288
4,714,399
2,568,417
370,775
2,939,192
-
664,627
664,627
56
Gfinity Plc
Net Book Value
30 June 2022
30 June 2021
Cost
At 1 July 2022 and 30 June 2023
Impairment
At 1 July 2022
Charge for the period
At 30 June 2023
Net Book Value
30 June 2023
30 June 2022
2,274,565
2,568,417
£
2,939,192
664,627
1,779,276
2,443,903
495,289
2,274,565
The Group and Company hold goodwill in respect of the acquisitions of the trade and assets of Siege.gg, EpicStream and
RealSport in earlier periods. An impairment charge of £370,775 and £1,408,501 was recorded in respect of Siege.gg and
RealSport respectively, in both the Group and Company profit and loss accounts.
Additionally, the Group carries goodwill in respect of the acquisition of Megit Limited in the prior year. An impairment
charge of £2,439,834 was recorded in the group profit and loss account.
In all cases, management assigned goodwill to cash generating units, being the group of assets associated with the acquired
website and associated infrastructure, since each online brand has separately identifiable cash flows.
Refer to Note 3 for details of impairment tests.
57
Gfinity Plc
14. INTANGIBLE FIXED ASSETS
Group
Cost
At 1 July 2021
Addition
Web
Platforms
£
Engage
£
Other
Intangibles
£
Total
£
576,822
-
2,480,481
3,057,303
-
685,951
-
685,951
Acquired through business combination
At 30 June 2022
4,816,443
5,393,265
-
685,951
-
2,480,481
4,816,443
8,559,697
Amortisation and impairment
At 1 July 2021
104,211
-
2,248,611
2,352,822
Charge for the period
Impairment
At 30 June 2022
Net Book Value
30 June 2022
30 June 2021
Cost
At 1 July 2022
Disposals
At 30 June 2023
1,390,196
19,265
1,513,672
-
-
164,549
1,554,745
57,724
76,989
-
2,470,724
3,984,556
3,879,593
685,951
9,597
4,575,141
472,611
-
231,870
704,481
Web
Platforms
Engage
Other
Intangibles
Total
5,393,265
685,951
2,480,481
8,559,697
-
(685,951)
(64,919)
(750,870)
5,393,265
-
2,415,562
7,808,827
Amortisation and impairment
At 1 July 2022
1,513,672
-
2,470,884
3,984,556
Charge for the period
1,699,377
137,190
9,597
1,846,164
Disposals
Impairment
At 30 June 2023
Net Book Value
30 June 2023
30 June 2022
-
(137,190)
(64,919)
(202,109)
1,765,061
-
-
1,765,061
4,978,110
-
2,415,562
7,393,672
415,155
-
-
415,155
3,879,593
685,951
9,597
4,575,141
Web platforms includes web domains and platform technology acquired in the acquisitions of Megit Limited, Siege.gg
and EpicStream.
Engage is the group's proprietary software which was assigned to Athlos Game Technologies Ltd in the year and
therefore disposed, since the group lost control of Athlos during the period (see Note 5).
Other intangibles includes technology platforms and customer lists arising in earlier acquisitions.
58
Gfinity Plc
INTANGIBLE FIXED ASSETS (continued)
Company
Cost
At 1 July 2021
Addition
Web
Platforms
£
Engage
£
Other
Intangibles
£
Total
£
576,822
-
64,919
641,741
-
685,951
-
-
685,951
155,989
Acquired through business combination
155,989
-
At 30 June 2022
732,811
685,951
64,919
1,483,681
Amortisation and impairment
At 1 July 2021
Charge for the period
Impairment
At 30 June 2022
Net Book Value
30 June 2022
30 June 2021
Cost
At 1 July 2022
Addition
Disposals
At 30 June 2023
104,211
235,738
19,265
359,214
-
-
7,195
111,406
-
235,738
-
57,724
76,989
-
64,919
424,133
373,597
685,951
-
1,059,548
472,611
-
57,724
530,335
Web
Platforms
Engage
Other
Intangibles
Total
713,546
685,951
7,195
1,406,692
-
-
-
-
-
(685,951)
-
(685,951)
713,546
-
7,195
720,741
Amortisation and impairment
At 1 July 2022
339,949
-
7,195
347,144
Charge for the period
241,325
137,190
-
(137,190)
6678
-
-
378,515
(137,190)
6,678
Disposals
Impairment
At 30 June 2023
Net Book Value
30 June 2023
30 June 2022
587,952
-
7,195
595,147
125,594
-
-
125,594
373,597
685,951
-
1,059,548
59
Gfinity Plc
15. INVESTMENT IN SUBSIDIARIES
At 1 July
Additions
Impairment
Loss of control of subsidiary
Company
Year to 30 June
2023
£
6,069,716
-
(5,930,565)
(5)
139,146
Restated (Note 27)
Year to 30 June
2022
£
-
6,069,716
-
-
6,069,716
Subsidiary
undertaking
Country of
incorporation
CEVO Inc.
USA
RealSM Limited
England
Megit Limited
England
AFG-Games Ltd
England
Holding
Ordinary
shares
Ordinary
Shares
Ordinary
Shares
Ordinary
Shares
Proportion of
voting rights
and capital held
Nature of business
100%
100%
100%
72%
IT Development and Tournament and
event operator
Online media
eCommerce and affiliate revenues
Dormant
RealSM Ltd’s registered office address is The Foundry, 77 Fulham Palace Road, London, United Kingdom, W6 8JB.
CEVO’s registered address is 128 Maringo Rd, Ephrata, WA 98823. AFG-Games Limited’s registered office address
is 77 Fulham Palace Road, Foundry Building, Smiths Square, London, England, W6 8AF. Megit Limited’s registered
office address is 16 Great Queen Street, London, England, WC2B 5AH
RealSM Limited, AFG-Games Limited and Megit Limited are exempt from the requirements of the Act relating to the
audit of individual accounts in accordance with 479A of the C.A. 2006. Gfinity Plc guarantees all outstanding liabilities
to which these subsidiaries are subject at year-end, until they are satisfied in full and the guarantee is enforceable against
the parent undertaking by any person to whom the subsidiary company is liable in respect of those liabilities.
During the year, additional ordinary shares were issued in Athlos Game Technologies Ltd such that the company
considered the relationship with Athlos to be an associate rather than a subsidiary at the year end. Further details are
given in Note 5.
60
Gfinity Plc
16. TRADE AND OTHER RECEIVABLES
Trade receivables
Provision for expected credit loss
Prepayments and accrued income
Amounts due in less than one year
Amounts due from group undertakings
Other receivables
Total
Group
Company
Year to 30
June 2023
£
Year to 30
June 2022
£
Year to 30
June 2023
£
Year to 30
June 2022
£
524,690
(58,864)
465,826
178,714
644,540
-
-
644,540
1,495,773
(7,370)
1,488,403
478,372
1,966,775
-
2,118
1,968,893
487,490
(58,864)
428,626
102,739
531,365
-
-
531,365
1,445,075
(243)
1,444,832
351,028
1,795,860
82,856
2,114
1,880,830
Amounts due from group undertakings of £nil are considered to be due in more than one year (2022: £82,856).
The directors consider that the carrying amount of trade and other receivables approximates to their fair value due to the
short-term nature of these financial assets.
17. CASH AND CASH EQUIVALENTS
Group
Company
Cash at bank and in hand
Total
Year to 30
June 2023
£
270,476
270,476
Year to 30
June 2022
£
2,141,361
2,141,361
Year to 30
June 2023
£
71,255
71,255
Year to 30
June 2022
£
1,361,279
1,361,279
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.
61
Gfinity Plc
18. DEFERRED TAX LIABILITIES
Group
Company
At 1 July
Arising on business combination
Credited to profit or loss
At 30 June
Year to 30 June
2023
£
897.575
-
(825,185)
72,390
Year to 30 June
2022
£
127,835
1,064,308
(294,568)
897,574
At 1 July
Credited to profit or loss
At 30 June
Year to 30 June 2023
£
94,748
(94,748)
0
Year to 30 June 2022
£
94,748
-
94,748
The deferred tax liability relates entirely to temporary differences on intangible assets arising on business combinations.
19. ISSUED SHARE CAPITAL
The Company has a single class of ordinary share with nominal value of £0.001 each. Movements in the issued share
capital of the Company can be summarised as follows:
Ordinary Shares
Number
Share Capital
£
As at 30 June 2021
930,513,248
930,513
Issued during the financial year
September to April 2022 at between £0.001 and £0.004 per share
As at 30 June 2022
385,183,331
385,184
1,315,696,579
1,315,697
Issued during the financial year
March 2023 at £0.0015 per share
1,333,333,334
1,333,333
As at 30 June 2023
2,649,029,913
2,649,030
Ordinary shares entitle the holder to full voting, dividend and rights on winding up.
Subsequent to the year end, 750,000,000 shares were issued at £0.0006 per share, generating proceeds
of £450,000 before expenses.
In respect of the issue of 1,333,333,334 shares in the period, the company issued 39,720,000 warrants exercisable
between 6 and 18 months from the issue date at 0.1325p. A fair value of £44,010, derived using the Black Scholes
model, was credited to share premium as a directly attributed cost of issue.
62
Gfinity Plc
20. TRADE AND OTHER PAYABLES
Non-current liabilities
Other payables (deferred consideration)
Deferred tax liabilities
Current liabilities
Trade payables
Other taxation and social security
Accrued expenditure and deferred revenue
Other payables
Amounts owed to group undertakings
Year to
30 June
2023
£
17,669
72,390
90,059
412,395
201,745
226,181
220,473
1,060,794
Group
Company
Year to 30
June 2022
£
840,751
897,575
1,738,326
571,389
145,021
1,033,303
1,293,550
-
3,043,263
Year to 30
June 2023
£
17,669
-
17,669
383,737
201,745
226,188
220,473
426,883
1,459,026
Year to 30
June 2022
£
840,751
895,751
1,736,502
533,395
144,300
896,299
977,890
-
2,551,884
Total
1,150,853
4,781,589
1,476,695
4,288,386
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 due to their short-term nature.
Contingent consideration arising from business combinations is held at fair value at each reporting date. During the
year, payments of £1,075,416 were paid and the fair value of remaining contingent consideration at 30 June 2023 was
assessed as £202,455, of which £17,669 is expected to be payable in more than 1 year.
21. 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. All of the Company’s financial instruments are measured at amortised cost other than contingent
consideration arising on business combinations which is held at fair value at each reporting date.
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 Group does not hold security against trade and other receivables, its credit risk exposure is as follows:
63
Gfinity Plc
Group
Company
Year to 30 June
2023
£
465,826
Year to 30 June
2022
£
1,968,893
Year to 30 June
2023
£
428,626
Year to 30 June
2022
£
1,880,830
The Group trade receivables balance represents amounts due from third parties. At the balance sheet date, the Group’s trade receivables
totalled £524,690 against which an expected credit loss provision of £58,864 had been raised (2022: £1,495,773 less a provision of
£7,370).
The Company’s receivables include £575,177 of inter-company funding (2022: £652,054) and this receivable is provided against in full
due to uncertainty of the timing over which the respective subsidiaries will be in a position to reimburse these amounts.
The Company’s trade receivables totalled £487,490 less a provision for doubtful debt of £58,864 (2022: £1,445,075 less a provision for
expected credit losses of £243).
The Group’s policy is to raise expected credit loss provisions where payments have been not received within the contractual due date.
The Group continues to seek to collect all debts until such time as a debt it written off. The Group writes off debt when it considers that
there is no prospect of recovery, for example when a debtor enters into administration or the Group is aware of other factors indicative
of this outcome.
At the balance sheet date, one customer represented 59% of gross Group trade receivables. This amount was collected in full after the
balance sheet date.
There were no contract assets at 30 June 2023.
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, owns an overseas subsidiary and reports
in GBP. It is therefore subject to currency exposures on transactions while the Group is subject to currency exposures
on consolidation of the overseas subsidiary.
Financial instruments held by the Company and their carrying values were as follows:
Trade and other receivables
Group
USD ($)
Year to 30 June 2023
EUR
(€)
GBP (£)
622,988
3,000
150,148
Accrued income
-
-
-
Cash
Trade and other payables
Net current assets/ liabilities
74,259
211,779
125,643
8,413
971,990
822,890
11,413
1,333,917
USD ($)
53,048
41,018
98,695
70,212
Year to 30 June 2022
EUR
(€)
GBP (£)
1,446,932
444,668
2,060,264
4,723,896
-
-
-
-
262,973
0
8,675,760
64
Gfinity Plc
Company
Year to 30 June 2023
Year to 30 June 2022
USD
($)
EUR
(€)
GBP (£)
USD ($)
EUR
(€)
Trade and other receivables
Amounts due from Group Undertakings
Accrued income
Cash
Trade and other payables
Amounts due to Group Undertakings
Net current assets/ liabilities
506,015
3,000
129,740
896,172
-
-
-
-
-
-
42,520
37,728
89,505
8,413
971,990
-
-
426,883
638,040
11,413
1,566,341
-
-
71,416
99,960
-
1,067,548
-
-
-
-
-
-
-
GBP (£)
708,454
82,856
351,028
1,302,597
4,206,250
-
6,651,185
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.
Capital management
The Company 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 Company is not subject to any externally imposed capital requirements.
22.
SHARE BASED PAYMENTS
Equity-settled share option plans
The Company has a share option scheme for employees of the Group. All share options are equity-settled.
The table below summarises movements in the number of share options in issue in the year:
65
Gfinity Plc
Share options
Shares options as at 30 June 2021
Shares options granted
Share options forfeited
Share options exercised
LTIP share options as at 30 June 2022
Shares options as at 30 June 2022
Shares options granted
Share options forfeited
Share options exercised
LTIP share options as at 30 June 2023
Number
Weighted
average exercise
price (£)
96,176,363
13,300,000
(14,870,408)
(1,433,331)
93,172,624
93,172,624
-
(62,322,624)
-
34,850,000
0.0556
0.0125
0.0257
0.0100
0.0483
0.0483
-
0.0578
-
0.0257
Options vest over periods defined in the respective option agreements and at the discretion of the board of directors.
The exercise prices of options outstanding at 30 June 2023 range from 1p to 6.25p.
All share options outstanding at 30 June 2023 were exercisable.
The weighted average remaining exercise period of options at 30 June 2023 was 7.5 years.
Of the options outstanding at the year end, 18,000,000 (2022: 36,000,000) were held by directors. Details of all options
and warrants held by directors are contained within the Directors’ Remuneration Report.
No share options were granted in the period. The inputs into option pricing models are available in earlier annual
reports. All share options were valued using Black Scholes models.
All share options were granted at an exercise price equivalent to the market price at the date of grant.
All options are held in Gfinity plc with no options held over any of the group’s subsidiaries.
Subsequent to the year end, the CEO David Halley was granted 271,922,393 share options; see Note 25 for more details.
23. WARRANTS
The Company has granted warrants over Ordinary Shares as outlined in the table below.
Warrants
Warrants as at 30 June 2021
Warrants granted
Warrants exercised
Warrants lapsed/forfeited
Warrants as at 30 June 2022
Warrants as at 30 June 2022
Warrants granted
Warrants exercised
Warrants lapsed/forfeited
Warrants as at 30 June 2023
Number
Weighted average
exercise price (£)
20,050,500
216,000,000
(13,750,000)
(6,300,500)
216,000,000
216,000,000
1,373,053,333
-
(216,000,000)
1,373,053,333
0.010
0.013
0.010
0.010
0.0125
0.0125
0.0022
-
0.0125
0.0022
66
Gfinity Plc
1,373,053,333 warrants were granted in the period. The warrants exercised were granted prior to the year ended June 2021 and
this figure represented one warrant per ordinary share acquired as part of the fundraise at an exercise price equal to that at
which shares were acquired in the fundraise. All warrants are non-transferrable and have an exercise period of 18 months from
the date of issue.
The fair value of warrants was calculated according to the Black Scholes model, however, no adjustment has been
recognised in respect of the warrants, as directors consider this amount to be immaterial.
24. RELATED PARTY TRANSACTIONS
The Directors’ Report provides details of director remuneration and share options and warrants held by the directors at
the end of the period. No directors were issued options during the year and no directors exercised share options in the
year. Certain directors received warrants by virtue of participating in the fundraising in the year on the same terms as
other investors.
Transactions and balances with Group subsidiaries and associates in the year:
CEVO:
During the year, the Company advanced cash of £502,718 (2022: nil) to Cevo and Cevo incurred costs of £477,092
(2022: £234,959) on the Company’s behalf. The year end amount repayable to the Company was £594,824 (2022:
£569,198).
RealSM:
During the year, the Company costs on RealSM’s behalf of £6,595 (2022: £5,979). The year end amount payable to the
Company was £12,574 (2022: £5,979).
Megit:
During the year, the company incurred costs of £250,355 (2022: £109,718) on behalf of Megit. Megit advanced cash
of £150,000 to the Company and incurred costs on behalf of the Company of £604,115 (2022: £32,842). The year end
position is that the Company owed £426,883 to Megit (2022: £76,877 due from Megit).
Athlos:
Whilst Athlos was a subsidiary of the Group, the Company incurred net costs on behalf of Athlos of £87,417 (2022: nil)
which was released under the terms of the sale agreement. Subsequent to the disposal, the Company incurred costs of
£63,717 on behalf of Athlos and the amount receivable at the year end was £63,717 (2022: nil).
Subsequent to the year end, the Company disposed of its remaining interest in Athlos to Tourbillon Group UK Limited
of which David Halley is a Director and shareholder.
25. EVENTS AFTER THE REPORTING PERIOD
In August 2023 the company raised £450,000 before expenses through the issue of 750,000,000 shares at 0.06p each. At
the same time, the company’s ordinary shares were reorganised such that each ordinary share of 0.1p nominal value
was split into one share of 0.01p nominal value and one deferred share of 0.09p. Ordinary shares retain the same rights
and deferred shares have no substantive rights.
Also in August 2023, David Halley joined the Board as CEO and Jonathan Hall resigned as a director. David Halley
will receive no cash remuneration and instead will be issued 271,922,393 share options exercisable at 0.06p for 7 years
from issue, vesting 50% on grant and 50% after one year.
In September 2023, Neville Upton and Hugo Drayton, Directors, were issued 91,773,808 and 44,187,389 share options
respectively. The options vest 50% immediately and 50% after one year, at an exercise price of 0.06p. The exercise
period is 7 years from grant. A further 33,990,300 new share options were issued to certain employees on the same
terms. In addition, 75,990,299 new warrants were issued to certain advisers on the same terms.
In November 2023, the Group disposed of its remaining interest in Athlos for cash proceeds of £260,000.
67
Gfinity Plc
In December 2023, the Group sold the remaining trade and assets of its Esports division for cash proceeds of
£15,000. The eSports division was closed in June 2023. Gfinity also received a 15% equity interest in Ingenuity Loop
Limited which the majority shareholder has the option to buy out for £200,000 in cash at any time for the first 12 months
post transaction. Neville Upton, director of Gfinity, joined the board of Ingenuity Loop as CEO and indirectly holds
approximately 41% equity interest in Ingenuity Loop.
26. RESTATEMENT
The Directors noted that certain adjustments had been incorrectly reflected in the prior year annual report and financial
statements. These related to the following areas:
1) In the Company financial statements only, deferred tax arising on the business combination with Megit had
incorrectly been reflected as part of the cost of investment in subsidiary in Megit. Therefore the cost of investment has
been reduced by £1,030,581 with a corresponding reduction in deferred tax liability within the Company balance sheet.
2) In the Company financial statements only, movement on deferred tax liabilities in respect of Megit, arising from the
above error, had been posted to profit or loss. As the initial recognition of a deferred tax liability as incorrect, the
movements were incorrect. Therefore £219,347 has been reversed in profit or loss and has been removed from deferred
tax liabilities.
3) In the Group and Company financial statements, the directors noted that the vesting period of certain share options
used for accounting purposes did not align with the contractual vesting conditions of option issues. The result was
excess of share option charges in the prior year of £170,012, with a corresponding adjustment to the share based payment
reserve.
The summarised impact of the restatements is presented below:
Group
Revenue
Cost of sales
Gross profit
Admin expenses
Other profit and loss items
Loss for the year
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Other reserves
Retained earnings
Other equity items
Total equity
As previously reported
at 30 June 2022
£
Restatement
£
Corrected position
at 30 June 2022
£
5,693,385
(2,546,508)
3,146,877
(6,950,105)
(177,744)
(3,980,972)
- 5,693,385
- (2,546,508)
- 3,146,877
(6,780,093)
- (177,744)
(3,810,960)
170,012
170,012
9,438,050
4,110,254
(3,043,272)
(1,738,317)
8,766,715
- 9,438,050
- 4,110,254
- (3,043,272)
- (1,738,317)
8,766,715
-
3,876,676
(170,012)
3,706,664
(51,283,669)
56,173,708
8,766,715
170,012
(51,113,657)
- 56,173,708
8,766,715
-
The impact of the above adjustment to profit or loss was to reduce the reported loss per share from 0.35p to 0.34p.
Note that as a result of the decision to discontinue Athlos and Esports in the year, the group profit and loss account has
otherwise been represented to separate the results from discontinued operations and so the above analysis is not directly
comparable to the comparatives as they are presented this year. The represented Operating Segments note provides a
profit and loss analysis by segment in the current and comparative year.
68
Gfinity Plc
Company
As previously reported
at 30 June 2022
£
Restatement
£
Corrected position
at 30 June 2022
£
Loss for the year
(4,198,665)
(49,742)
(4,248,407)
7,100,297
3,479,193
3,242,109
(2,551,884)
(895,751)
(840,751)
9,533,213
(1,030,581)
-
-
-
810,827
-
(219,754)
6,069,716
3,479,193
3,242,109
(2,551,884)
(84,924)
(840,751)
9,313,459
3,898,634
(50,539,126)
56,173,705
9,533,213
(170,012)
(49,742)
-
(219,754)
3,728,622
(50,588,868)
56,173,705
9,313,459
Investment in subsidiary
Other non-current assets
Current assets
Current liabilities
Deferred tax liability
Other non-current liabilities
Net assets
Other reserves
Retained earnings
Other equity items
Total equity
27.
PROVISIONS
As announced during the year under review, the company closed its eSports division. Some of the costs of closure were
incurred and expensed during the year. However, some costs remained unsettled as at 30 June 2023, and the company
has a provision of £238,287 to meet these costs, post year end.
There were no provisions at 30 June 2022; the provision of £238,237 was created during the year and there was no
release or utilisation of the provision, therefore the closing provision was £238,237. The provision is not discounted as
amounts are expected to be utilised within a year.
69