Gfinity plc
Annual Report and
Financial Statements
30 June 2024
Company number 08232509
Gfinity plc
Contents
Strategic Report
Directors, Secretary and Advisors
1
Period Highlights
2
Gfinity’ Market
3
Chairman’s Report
4
Chief Executive Officer’s Report
5
Section 172 statement
8
Principal Risks and Uncertainties
9
Governance
Chairman’s Statement on Corporate Governance
13
Board of Directors
14
Board Composition and Performance
15
Directors’ Remuneration Report
17
Directors’ Report
21
Statement of Directors’ Responsibilities
24
Financial Statements
Independent Auditor’s Report
25
Group Statement of Profit or Loss
31
Group Statement of Comprehensive Income
32
Group Statement of Financial Position
33
Company Statement of Financial Position
35
Group Statement of Changes in Equity
37
Company Statement of Changes in Equity
38
Group Statement of Cash Flows
39
Company Statement of Cash Flows
40
Notes to the Financial Statements
41
Gfinity Plc
1
Strategic Report
Directors, Secretary and Advisors
The Board of Directors
Neville Upton (Non-Executive Chairman)
David Halley (Chief Executive Officer)
Hugo Drayton (Non-Executive Director)
Company Secretary
Richard Croft
Registered Office
128 City Road
London EC1V 2NX
Nominated Adviser and Broker
Beaumont Cornish
Limited
Building 3
566 Chiswick High
Road
London W4 5YA
Independent Auditor
Gravita Audit Limited
Aldgate Tower
2 Leman Street
London E1 8FA
Legal Advisers
Corporate
Fladgate LLP
16 Great Queen Street
London WC2B 5DG
Commercial
Onside Law
642A Kings Road
Fulham
London SW6 2DU
Registrars
Link Group
6th Floor
65 Gresham Street
London EC2 7NQ
Registered Number
08232509
Gfinity Plc
2
Strategic Report
Period highlights
The Company has completed the restructuring of Digital Media to significantly lower costs and completed the
divestiture of Athlos.
Financial results included:
• Gain on disposal of the Athlos business of £0.26m
•
Gfinity Digital Media (“GDM”) revenue of £1.90m
•
Impairment charges of £284k 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 £70k and stabilised the
monthly revenue. The business’ growth plans are already taking shape with a reduction in Sessions being compensated
by a large decrease in operational costs. The business has adopted a much leaner and adaptable business model under
new management.
•
Cash at year-end was £23k.
•
The company raised £150k in September 2024 through equity and a loan note.
Continuing operations of the business represents GDM, our website business focussed on gaming and technology.
Revenue and gross profit for this part of the business was as follows for the past two years
2024
2023
Revenue
£1.9m
£2.2m
Gross Profit
£1.05m
£1.2m
Impairment and reduction in net asset costs
The Group incurred costs of £284k in impairment and write down of assets. This included a re-evaluation of all the
media assets that have been acquired over the past 4 years.
Post-period highlights
•
Raised £150,000 through an equity and loan note placement
•
Signed a non-binding MOU to license ConnectedIQ AI technology
Gfinity Plc
3
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 group focusing on gamers, trading card Game enthusiasts and entertainment
news.
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.
A network of Gfinity owned and operated websites create monetisation opportunities through advertising, brand
partnerships and eCommerce activities, including related social platforms, these allow Gfinity to reach more than 2.5m
gamers per month.
Gfinity Plc
4
Strategic Report
Chairman’s Report
I have pleasure in presenting our annual accounts for the financial year ended 30 June 2024.
It has been a difficult year for the Company as we completed the transition from esports solutions and software
development to a pure play digital media company. By focussing on cost reduction and a quality product, we have been
able to navigate a very difficult period where many Digital Publishers struggled, and AI solutions complicated the search
market for websites.
The restructuring has led to a reduction in revenue to £1.9m, a decrease of 14% YOY, with a loss of £594k. 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.
In November 2023, we completed the exit the majority of Athlos Game Technologies Ltd (“Athlos”), providing valuable
funds to complete the restructuring of the Company.
The economics of the business has become much more flexible and thus lower risk, after we completed a full top-down
review of the Company and removed the majority of senior staff. Moving forward, Digital Media businesses need to
adapt to a new ecosystem with more competition to Google and a plethora if AI search products in the market negating
the use of some traditional features.
In addition, we were able to sign a non-binding MOU in November 2024, to license the technology of 0M Technology
Solutions Limited, with the option to buy it within the next period. This MOU highlights our management team’s ability
to adapt and utilise our commercial operations in ways which take advantage of new secular trends in the market.
Our operating cost base has been streamlined, with the combined operating costs of both continued and discontinued
operations for FY2024, down 70% year-on-year when compared to our current annualised cost base of £845k.
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.
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. 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
10 January 2025
Gfinity Plc
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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.
There would be an obvious transition period, where we could ascertain which team members and technologies to retain,
whilst also taking into account the cost of being a publicly traded company. This was made much more complicated in a
year that Google also decided to transition their search business to a newer model, ensuring that unlike previous years of
1 or 2 updates of their product, there are now monthly updates.
For the year, Gfinity Digital Media recorded 97,992,773 sessions across all websites, versus 180,833,842 which was
recorded in the prior year. This represented a 45% drop and was due to general market reductions, as users experienced
more choice through platforms such as Twitch, and also the algorithms at Google affecting smaller publishers.
The focus has been consistent, in that it was now time for Gfinity to become a profitable company. As such our operating
costs for the Digital Media group are now exceptionally low, as we embrace a flexible low-cost freelance model and have
cut out a huge layer of technology which is no longer required now that companies such as Google provide the services
for free.
When I came into the Company, it was with a view to embrace the new secular trend in Artificial Intelligence (“AI”),
with Large Language Models potentially changing the way businesses operate. But how many companies actually really
embrace AI? This is a focus of the Company moving forward, in that we are yet to see a large-scale deployment of these
tools and thus there is an enormous opportunity in the market.
In November 2024, I signed a non-binding MOU for the licensing of Connected IQ. As a strategy, this takes advantage
of our market position and commercial operations as it is focused on monetization and advertising. The AI models behind
the Connected IQ are market leading, and I believe that this is a huge opportunity to move into the growth market of
connected TV and online video.
We are also building new tools in our sites to engage with the Trading Card community, which is a very strong area for
Gfinity based on the success of www.mtgrocks.com.
This has been a difficult year for Gfinity. At the end of the June monthly sessions across all sites were circa 10 million
and combined with our social media channels we reached more than 2.5 million gamers in November.
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 2024 with 2 loss-making business divisions.
While both presented opportunities to create shareholder value, Athlos required more capital in order to achieve a
completed product.
Athlos is a groundbreaking product but needed significant funding. Gfinity sold the remaining 27.5% of Athlos in
November 2023. This division was significantly loss-making each month as it invested in further feature development
and needed to invest heavily in the go-to-market plan.
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.
•
Completed a significant cost reduction programme
•
Moved to a more freelance focused model for content creation
•
Improved site structure and completed the migration of all sites to one operating system
Gfinity Plc
6
Chief Executive Officer’s Report (continued)
Growth
Having stabilised the business with a lower cost base and stronger operating foundations, we are now embarking on a
growth plan. In November 2024, we signed an MOU with 0M Technology Solutions Limited to license their market
leading AI advertising business for Connected TV and video. In 2025, we expect this business to significantly add to
the Company’s revenue.
GDM’s competitive advantage is technology and our deep industry knowledge and connections.
We have;
•
a small young team who understands 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
Our dedicated team
The progress we are making across the business is a direct consequence of the passion and spirit shown by the team.
Our 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.
Gfinity Plc
7
Chief Executive Officer’s Report (continued)
Conclusion
The first stage of the transformation of Gfinity’ s business model is now completed, and we are now confidently moving
into the new year with a business plan designed to create profitability and share price growth. 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
10 January 2025
Gfinity Plc
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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 public on the Company’s
corporate website https://www.gfinityplc.com/investors/corporate-governance/
Gfinity Plc
9
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) and direct sales
pipeline
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:
Gfinity Plc
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Strategic Report
Strategic Risks
Risk
Description
Mitigating Actions
Economic Uncertainty
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 to control inflation and
borrowing.
This has created a danger of a
sustained
period
of
economic
downturn and increased difficulty
raising finance.
This could create pressure on both
Gfinity's cost base and potential
revenue growth.
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, primarily freelancers, further
enhancing cost effectiveness.
Gfinity has decided to focus on the digital
media division which has a proven business
model and which the board believes can
achieve
cashflow
break-even
if
not
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 had no debt funding at the end of the
reporting period, however we entered into a
convertible loan note in September at a low
fixed interest rate, and so we are not directly
exposed to variable interest rates.
Perception of video
gaming
Some people view video gaming
negatively,
as
something
that
promotes an unhealthy lifestyle and
lack of social interaction.
There is a risk that this perception
will provide a barrier to entry to
commercial
partners
and
broadcasters, presenting a risk to
Gfinity’s business model.
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.
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Strategic Report
Competition Risk
GDM operates in a competitive
field, with multiple outlets chasing
the audience looking for gaming
news and content.
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.
Operational Risks
Risk
Description
Mitigating Actions
Liquidity Risk
Gfinity was a loss-making company
in FY24 and as such, the Board must
ensure that it has sufficient working
capital available to deliver on its
strategy.
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 and is
focusing on the business that will reach
profitability most quickly.
In addition, the Company has Director
support, if required.
Access to Key Skills
Publishing is a competitive sector,
and
as
such,
there
is
strong
competition for skilled employees
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.
Senior individuals are also incentivised
through an employee share option scheme,
driving loyalty to the business.
Data Security Risk
Increasing levels of data protection
regulation,
including
GDPR
legislation,
and
ongoing
cyber
security risks, make it imperative that
any data gathered through these
platforms is collected, handled and
protected in accordance with all
relevant regulations. Any failure to
do so would significantly erode trust,
both among the esports community
and prospective commercial partners.
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.
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12
Technological Changes
The fast development of AI and
increasing
number
of
channels
creates a risk to Gfinity’s business
model.
Additionally, any changes to the
Google algorithm, may affect the
number of site sessions negatively.
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
disrupt
the
market
and
provide
our
communities with more exciting content and
engagement.
We also maintain site health in accordance
with Google data on Google Search Console,
to
ensure
maximum
compliance
with
Google’s algorithm.
Gfinity Plc
13
Strategic Report
This strategic report was approved by the board and signed on its behalf.
Neville Upton
Chairman
10 January 2025
Gfinity Plc
14
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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15
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,
Independent
Non-Executive
Director
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.
Gfinity Plc
16
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 quarterly, meaning a minimum of four 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
Number of Meetings Attended
Total Meetings in Period in
Office
Neville Upton
4
4
David Halley
4
4
Hugo Drayton
4
4
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
Gfinity Plc
17
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 four 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.
Gfinity Plc
18
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 Director.
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. The 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.
The Executive Directors waived their right to any cash entitlement for the year.
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.
No bonuses were offered for the year.
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 share options 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.
Gfinity Plc
19
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 2024 in the shares of the Company (including family members) were:
Number of
Ordinary
Shares
Percentage of
issued share
capital
Neville Upton
28,210,574
0.83%
David Halley
81,346,667
2.39%
Hugo Charles Drayton
8,266,666
0.24%
117,823,907
3.47%
Share Options
Directors’ interests in options over the ordinary shares in the company were as follows:
As at 30
June 2023
Options
Granted
Options
Lapsed
As at 30
June 2024
Neville Upton
5,000,000
91,773,808
-
96,773,808
David Halley
-
271,922,393
-
271,922,393
Hugo Charles Drayton
4,000,000
44,187,389
-
48,187,389
Jonathan Hall
9,000,000
-
9,000,000
-
18,000,000
407,883,590
9,000,000
416,883,590
The range of exercise prices for options held as directors are 0.06p to 1p for N Upton, 0.06p for D Halley and 0.06 to
5p for H Drayton.
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.
As at 30
June 2023
Warrants
acquired
Warrants
Lapsed
As at 30
June 2024
Neville Upton
13,333,329
-
-
13,333,329
David Halley
-
-
-
-
Hugo Charles Drayton
6,666,666
-
-
6,666,666
19,999,995
-
-
19,999,995
Gfinity Plc
20
Governance
Directors’ emoluments
Emoluments of the directors for the year ended 30 June 2024 are shown below.
Year to 30 June 2024
Year to 30 June
2023
Salary &
Fees
Bonus
Pension
Benefits
Total
Remuneration
Total
Remuneration
Neville Upton
-
-
-
3,445
3,445
91,669
David Halley
-
-
-
-
-
-
Hugo Drayton
-
-
-
-
-
84,000
Jonathan Hall
-
-
-
-
-
161,483
Leonard Rinaldi
-
-
-
-
-
35,000
John Clarke
-
-
-
-
-
223,627
-
-
-
3,445
3,445
595,779
Neville Upton and Hugo Drayton waived their contractual entitlement to director fees in the year.
Leonard Rinaldi and John Clarke retired as directors in the year to 30 June 2023.
The total share option vesting charges in the year in respect of directors was £57,635.
Benefits relate to medical insurance benefit.
Significant shareholders over 3% notified to the company as at 30th June 2024 were:
•
Robert Keith – 25.43%
Board changes
The following Board changes occurred:
•
Jon Hall resigned from the board on 09 August 2023
•
David Halley appointed to the board on 23 August 2023
This report was approved by the board and signed on its behalf.
Neville Upton
Chairman
10 January 2025
Gfinity Plc
21
Governance
Directors’ Report
The directors present their annual report on the affairs of the Group and Company, together with the financial statements
and auditor’s report, for the year ended 30 June 2024.
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 2024.
Results and dividends
The consolidated income statement is set out on page 31.
The Group’s loss after taxation amounted to £594k (2023: loss of £10.3m).
The directors do not recommend the payment of a dividend for the year ended 30 June 2024.
Events since the balance sheet date
The Company has signed a non-binding MOU to license Connected IQ.
The Company completed £150,000 raise through an equity and loan note placement.
Further information is provided in Note 26
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. (2023: nil)
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.
Gfinity Plc
22
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.
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 2024 and up to the date of signing
the consolidated financial statements except where otherwise shown.
Neville Upton – Chairman
David Halley – Chief Executive Officer (appointed on 23 August 2023)
Hugo Drayton – Independent Non-Executive Director
Jonathan Hall – Chief Finance and Operations Officer (resigned 9 August 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.
Gfinity Plc
23
Governance
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 year end the Group held cash balances of £23,155 (2023: £270,476) and reported net current assets of £53,610 (2023:
net current liabilities £384,065)
At the time of issuing these Financial Statements, 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. In support of this, no cash remuneration was paid to Directors in
the year since all cash entitlements were waived.
The Directors have prepared a base case cashflow forecast through to 31 January 2026, 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 January 2026.
The Group is exposed to any unexpected short term cash requirements or liquidity issues if trading revenues are lower
than forecast. The Group notes a letter of support issued by a Director, which, although there is no expectation in the
base case model for it to be called up, the Board considers it to be sufficient to address any plausible cash shortfall in
the review period.
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 and Connected IQ 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.
Gfinity Plc
24
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
10 January 2025
Gfinity Plc
25
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 2024 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 2024 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 (IFRS);
•
the Company financial statements have been properly prepared in accordance with UK-adopted International
Accounting Standards (IFRS) as applied in accordance with 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, which indicates that the Board have concluded that a material
uncertainty exists in respect of the going concern status of the business. Whilst the Board have prepared a base case cash
flow forecast under which the business requires no additional funding in the period to 31 January 2026, the Board
recognise that the attainment of the business plan is subject to factors outside their control and that in a severe but plausible
scenario the Group and Company will need to seek additional external funding to continue to meet liabilities as they fall
due. Whilst management are confident of securing such funding, there is inherent uncertainty until such time as such
funding is secured. As stated in Note 2, 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 January 2026 against our
understanding of the business, including considering the uncertainties associated with a projection of the Group’s
current and future trading prospects;
Gfinity Plc
26
•
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;
•
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;
•
reviewing a support letter issued by a director along with evidence of the ability to provide support if required;
•
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 targeted 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.
Gfinity Plc
27
Key Audit Matter
How our audit addressed the Key Audit
Matter
Impairment of goodwill and intangible
assets
At 30 June 2024, the Group held goodwill
with a carrying value of £310,943 (2023:
£495,288) and other intangible assets of £nil
(2023: £415,155) arising from acquisitions
of businesses in earlier accounting periods.
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 to reflect the market
assessment of value in the digital media
sector.
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 £284,410 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 audit procedures included:
•
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 the associated disclosures for
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; and
•
reviewing the allocation of impairments
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.
Our application of materiality
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:
Group
Company
Overall materiality
£47,000
£36,000
How we determined it
Based on 2.5% of revenue.
Rationale
for
benchmark applied
We consider revenue to be the key metric reviewed by users of the
financial statements to understand and assess the performance of the
business.
Gfinity Plc
28
We set performance materiality at an amount less than materiality for the financial statements as a whole to reduce to an
appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality
for the financial statements as a whole. Performance materiality was set at £35,000 for the Group and £27,000 for the
Company.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit for the
Group and Company above £2,000 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:
•
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 24, 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 and the Company’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 the Company or to cease operations, or
have no realistic alternative but to do so.
Gfinity Plc
29
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 and Company, 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.
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.
Gfinity Plc
30
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 Group’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 Group and the Group'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)
Aldgate Tower
2 Leman Street
London
E1 8FA
10 January 2025
Gfinity Plc
31
Group Statement of Profit or Loss
For the ended 30 June 2024
Notes
Year to 30
June 2024
Year to 30
June 2023
Continuing Operations
£
£
Revenue
4
1,895,029
2,190,216
Cost of Sales
(844,951)
(953,905)
Gross profit
1,050,078
1,236,311
Administration expenses
6
(2,054,057)
(3,788,329)
Operating Loss from trading activities *
(1,003,979)
(2,552,018)
Impairment charge
(284,408)
(5,984,171)
Re-assessment of Deferred Consideration
24,541
931,311
Loss arising on loss of control of a subsidiary
5
-
(548,761)
Gain on disposal of Athlos and Esports division
5
275,011
-
Net finance costs
8
(438)
(25,976)
Loss on ordinary activities before taxation
(989,273)
(8,179,615)
Taxation
9
394,831
974,876
Loss from continuing operations
(594,442)
(7,204,739)
Loss on discontinued operations, net of tax
10
-
(3,050,097)
Loss for the year
(594,442)
(10,254,836)
Earnings per share – Continuing operations
11
(0.02)
(0.42)
(Pence – Basic and Diluted)
* 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
Gfinity Plc
32
Group Statement of Comprehensive Income
Year to 30
June 2024
Year to 30
June 2023
£
£
Loss for the Period
(594,442)
(10,254,836)
Items that may subsequently be reclassified to profit or loss
Foreign exchange profit / (loss) on retranslation of foreign
subsidiaries
8,916
-
Other Comprehensive Income for the period
8,916
-
Loss and total comprehensive income for the period
(585,526)
(10,254,836)
Gfinity Plc
33
Group Statement of Financial Position
As at June 2024
Notes
30-Jun-24
30-Jun-23
£
£
NON-CURRENT ASSETS
Property, plant and equipment
12
400
14,757
Goodwill
13
310,943
495,288
Intangible fixed assets
14
-
415,155
311,343
925,200
CURRENT ASSETS
Trade and other receivables
16
363,484
644,540
Cash and cash equivalents
17
23,155
270,476
386,640
915,016
TOTAL ASSETS
697,983
1,840,216
EQUITY AND LIABILITIES
Equity
Share capital
19
2,724,030
2,649,030
Share premium account
55,661,077
55,367,959
Other reserves
398,895
423,613
Retained earnings
(58,419,049)
(57,989,529)
Non-controlling interest
-
3
Total equity
364,953
451,076
NON-CURRENT LIABILITIES
Other Payables
20
-
17,669
Deferred Tax Liabilities
18
-
72,390
CURRENT LIABILITIES
Trade and other payables
20
240,390
1,060,794
Provisions
25
92,640
238,287
Total liabilities
333,030
1,389,140
TOTAL EQUITY AND LIABILITIES
697,983
1,840,216
Gfinity Plc
34
Group Statement of Financial Position
as at 30 June 2024
The notes on pages 41 to 66 form an integral part of these financial statements.
Registered number: 08232509
Signed on behalf of the board on 10 January 2025:
David Halley
Neville Upton
Chief Executive Officer
Non-Executive Chairman
Gfinity Plc
35
Company Statement of Financial Position
As at 30 June 2024
Notes
30-Jun-24
30-Jun-23
£
£
NON-CURRENT ASSETS
Property, plant and equipment
12
-
13,162
Goodwill
13
310,943
495,289
Intangible fixed assets
14
-
125,594
Investment in subsidiaries
15
-
139,146
Investment in associate
5
15
5
TOTAL NON-CURRENT ASSETS
310,958
773,196
CURRENT ASSETS
Trade and other receivables
16
346,841
531,365
Cash and cash equivalents
17
13,742
71,255
TOTAL CURRENT ASSETS
360,583
602,620
TOTAL ASSETS
671,541
1,375,816
EQUITY AND LIABILITIES
Equity
Share capital
19
2,724,030
2,649,030
Share premium account
55,661,077
55,367,959
Other reserves
411,937
423,613
Retained earnings
(59,028,996)
(58,779,718)
Total equity
(231,952)
(339,116)
NON-CURRENT LIABILITIES
Other payables
21
-
17,669
Deferred tax liabilities
19
-
-
CURRENT LIABILITIES
Trade and other payables
21
810,852
1,459,026
Provisions
26
92,640
238,237
Total liabilities
903,492
1,714,932
TOTAL EQUITY AND LIABILITIES
671,541
1,375,816
Gfinity plc
36
Company Statement of Financial Position (continued)
As at 30 June 2024
The notes on pages 41 to 66 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 £392,242 (2023: £11,569,812).
Registered number: 08232509
Signed on behalf of the board on 10 January 2025:
David Halley
Neville Upton
Chief Executive Officer
Non-Executive Chairman
Gfinity plc
37
Group Statement of Changes in Equity
As at 30 June 2024
Ordinary
shares
Share
premium
Share
option
reserve
Retained
earnings
NCI
Forex
Total equity
£
£
£
£
£
£
£
At 30 June 2022
1,315,697
54,858,008
3,728,622
(51,113,657)
3
(21,958)
8,766,715
Loss for the
period
-
-
-
(10,254,836)
-
-
(10,254,836)
Other
comprehensive
income
-
-
-
-
-
-
-
Total
comprehensive
income
-
-
-
(10,254,836)
-
-
(10,254,836)
Proceeds of
shares issued
1,333,333
666,667
-
-
-
-
2,000,000
Share Issue Costs
-
(156,716)
44,010
-
-
-
(112,706)
Share options
expensed
-
-
51,903
-
-
-
51,903
Release to
Retained
Earnings
-
-
(3,400,992)
3,400,992
-
-
-
Total
transactions
with owners,
recognised
directly in equity
1,333,333
509,951
(3,305,079)
(6,853,844)
-
-
8,315,639
At June 2023
2,649,030
55,367,959
423,543
(57,967,501)
3
(21,958)
451,076
Loss for the
period
-
-
-
(594,442)
-
-
(594,442)
Other
comprehensive
income
-
-
-
-
-
8,916
8,916
Total
comprehensive
income
-
-
-
(594,442)
-
8,916
(585,526)
Proceeds of
shares issued
75,000
375,000
-
-
-
-
450,000
Share Issue Costs
-
(81,882)
60,488
-
-
-
(21,394)
Share options
expensed
-
-
70,800
-
-
-
70,800
Disposal of NCI
-
-
-
-
(3)
-
(3)
Release to
Retained
Earnings
-
-
(142,894)
142,894
-
-
-
Total
transactions
with owners,
recognised
directly in equity
75,000
293,118
(11,606)
(451,548)
(3)
8,916
86,123
At 30 June 2024
2,724,030
55,661,077
411,937
(58,419,049)
-
(13,042)
364,953
"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.
Gfinity plc
38
Company Statement of Changes in Equity
As at 30 June 2024
Ordinary
shares
Share premium
Share option
reserve
Accumulated
Deficit
Total equity
£
£
£
£
£
At 30 June 2022 -
restated
1,315,697
54,858,008
3,728,622
(50,588,868)
9,313,459
Loss for the period
-
-
-
(11,569,814)
(11,569,814)
Other
Comprehensive
Income
-
-
-
-
-
Total
comprehensive
income
-
-
-
(11,569,814)
(11,569,814)
Proceeds of Shares
Issued
1,333,333
666,667
-
-
2,000,000
Share issue costs
-
(156,716)
44,010
-
(112,706)
Share options
expensed
-
-
29,945
-
29,945
Release to Retained
Earnings
-
-
(3,378,964)
3,378,964
-
Total transactions
with owners,
recognised directly
in equity
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)
Loss for the period
-
-
-
(392,242)
(392,242)
Other
Comprehensive
Income
-
-
-
-
-
Total
comprehensive
income
-
-
-
(392,242)
(392,242)
Proceeds of Shares
Issued
75,000
375,000
-
-
450,000
Share issue costs
-
(81,882)
60,488
-
(21,394)
Share options
expensed
-
-
70,800
-
70,800
Release to Retained
Earnings
-
-
(142,964)
142,964
-
Total transactions
with owners,
recognised directly
in equity
75,000
293,118
(11,676)
(249,278)
107,164
At 30 June 2024
2,724,030
55,661,077
411,937
(59,028,996)
(231,952)
Gfinity Plc
39
Group Statement of Cash Flows
As at 30 June 2024
2024
2023
Operating
£
£
Loss for the year
(585,525)
(10,254,837)
Adjustments for:
Depreciation
14,357
33,254
Amortisation
315,091
1,846,164
Impairment of assets
284,408
5,984,171
Gain on disposal of fixed assets
-
(112,808)
Gain on disposal of associate and eSports division
(275,000)
-
Finance income
(153)
(885)
Finance costs
591
77,691
Share based payments
70,800
29,945
Increase/(Decrease) in credit loss provision
(48,000)
51,494
Re-evaluation of contingent consideration
(24,541)
(931,311)
Loss on loss of control of subsidiary
-
548,761
Increase/(Decrease) in provisions
(145,647)
238,287
Current and deferred tax credit
(211,390)
(974,876)
Total
(605,008)
(3,464,950)
Decrease in receivables
233,055
1,324,353
Decrease in payables excluding contingent consideration
(813,518)
(907,062)
Tax credit recovered
139,000
109,732
Net operating outflow
(950,471)
(2,937,927)
Investing
Interest received
152
885
PPE additions
-
(3,498)
Intangible additions
(15)
-
Payment of deferred/contingent consideration
-
(1,031,307)
Proceeds on disposal of associate and eSports division
275,000
-
Net proceeds on disposal of assets
-
213,668
Cash generated by/(used in) investing activities
275,137
(820,252)
Financing
Interest paid
(591)
-
Net proceeds on issue of shares
428,604
1,887,294
Cash generated by financing activities
428,013
1,887,294
Net decrease in cash
(247,321)
(1,870,885)
Cash at the start of the year
270,476
2,141,361
Cash at the end of the year
23,155
270,476
Net decrease in cash
(247,321)
(1,870,885)
There were no investing or financing cash flows for discontinued operations. The net cash outflow on operating activities for discontinued
operations was £nil (2023: £2,166,061).
Gfinity Plc
40
Company Statement of Cash Flows
As at 30 June 2024
2024
2023
£
£
Operating
Loss for the year
(392,242)
(11,569,814)
Adjustments for:
Depreciation
13,162
34,657
Amortisation
125,594
378,515
Impairment of assets
323,484
7,716,918
Gain on disposal of fixed assets
-
(112,808)
Gain on disposal of associate and eSports division
(275,002)
-
Finance income
-
(885)
Finance costs
591
77,691
Share based payments
70,800
29,945
Increase in credit loss provision
(48,000)
187,815
Re-evaluation of contingent consideration
(24,541)
(931,311)
Loss on disposal of intangible asset
-
548,761
Increase in provisions
(145,597)
238,287
Current and deferred tax credit
(139,000)
234
Total
(490,751)
(3,401,995)
Decrease in receivables
232,524
1,349,466
Decrease in payables excluding contingent consideration
(517,842)
(597,442)
Tax credit recovered
139,000
109,732
Net operating outflow
(637,069)
(2,540,239)
Investing
Interest received
3
885
PPE additions
-
(3,498)
Payment of deferred/contingent consideration
-
(495,416)
Proceeds on disposal of associate and eSports division
275,000
-
Net proceeds on disposal of assets
-
213,668
Net amounts advanced to subsidiaries
(123,460)
(352,718)
Cash generated by/ (used in) investing activities
151,543
(637,079)
Financing
Interest paid
(591)
-
Net proceeds on issue of shares
428,604
1,887,294
Cash generated by financing activities
428,013
1,887,294
Net decrease in cash
(57,513)
(1,290,024)
Cash at the start of the year
71,255
1,361,279
Cash at the end of the year
13,742
71,255
Net decrease in cash
(57,513)
(1,290,024)
Gfinity Plc
41
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 1. 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), 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 newly effective during the year:
•
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 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 2024 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: Amendment to Non-current liabilities with covenants
•
IFRS 18: Presentation and Disclosure in Financial Statements
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.
Gfinity Plc
42
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 year end the Group held cash balances of £23,155 (2023: £270,476) and net current assets of £53,610 (2023:
net current liabilities £384,065).
At the time of issuing these Financial Statements, 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. In support of this, no cash remuneration
was paid to Directors in the year since all cash entitlements were waived.
The Directors have prepared a base case cashflow forecast through to 31 January 2026, 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 January
2026.
The Group is exposed to any unexpected short term cash requirements or liquidity issues if trading revenues
are lower than forecast. The Group notes a letter of support issued by a Director, which, although there is no
expectation in the base case model for it to be called up, the Board considers it to be sufficient to address any
plausible cash shortfall in the review period.
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 and Connected IQ 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.
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.
Gfinity Plc
43
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 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:
1. Identifying the contract with a customer.
2. Identifying the performance obligations
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.
•
Advertising revenues: Fees are earned based on the number of sessions where ads are displayed on the
website. Revenue is recognised on a Revenue per mille (RPM) basis.
•
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.
Gfinity Plc
44
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.
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 and warrants. 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.
Gfinity Plc
45
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
3 years straight line
Computer equipment
3 years straight line
Production equipment
3 years straight line
Leasehold improvements
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.
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:
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
Web Platforms
3-5 years
Other Intangible assets
3-5 years
Gfinity Plc
46
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.
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.
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 combinations. Judgement is applied in
determining the recoverable amount of acquired 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
Gfinity Plc
47
all intangible assets. Goodwill must be tested for impairment annually. Where goodwill arises in a business
combination, management determined that each acquired website brand is a separate cash generating unit with
separately identifiable cash flows, 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 2024, management have determined that the appropriate
method to apply is a fair value less costs to dispose approach. Management consider that a revenue based
multiple is an appropriate 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 2024.
Management undertook a careful assessment of the appropriate revenue multiple and determined that 1x
reported 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 owns and
operates the StockInformer website which enables gamers to locate and find the best pricing and availability
of tech and other products.
At 30 June 2024 the Group held goodwill of nil and intangible assets of £289,561 in respect of Megit prior to
the impairment test. Amortisation of intangible assets in the year was £189,497 and so the net book value tested
was £100,064.
The impairment test concluded that the recoverable amount was nil and therefore an impairment charge of
£100,064 was recorded against the intangible asset.
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 2024, management have also applied judgement in their assessment of any remaining contingent
consideration based on revenue-based earnouts in the acquisition agreement. Management’s estimate of the
undiscounted future payment is £59,270 based on projected cash flows of the business and this has been
reflected in current liabilities. The figure is not discounted as it is expected to be settled within a
year. 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 £17,398 of the contingent consideration liability
was released to profit or loss in the year 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 £139,146 was therefore recorded by the Company in profit or loss to bring
the carrying amount of the investment to nil.
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 2024 was £234,505, prior to the impairment
test.
Gfinity Plc
48
The result of the impairment test was a recoverable amount of £185,833 and therefore an impairment of £48,672
was recorded in profit or loss.
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 2024 prior to the impairment
test, and intangibles were £0 at that date.
The result of the impairment test was a recoverable amount of £125,110 and therefore an impairment of
£135,673 was recorded in profit or loss.
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 2024
Year to 30 June 2023
£
£
United Kingdom
410,561
4,343,202
North America
1,284,392
265,605
ROW
200,076
814,764
Total
1,895,029
5,423,571
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 2024
Digital Media
eSports
Athlos
Total
£
£
£
£
Services transferred at
1,817,731
-
-
1,817,731
a point in time
77,298
-
-
77,298
Services transferred
over time
Total
1,895,029
-
-
1,895,029
Gfinity Plc
49
Year to 30 June 2023
Digital Media
eSports
Athlos
Total
£
£
£
£
Services transferred at
2,190,216
-
-
2,190,216
a point in time
Services transferred
over time
-
2,909,482
323,873
3,233,355
Total
2,190,216
2,909,482
323,873
5,423,571
As at 30 June 2024 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
Year to 30 June 2024
Year to 30 June 2023
£
£
Contract Assets
Nil
Nil
Contract Liabilities
Nil
Nil
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 2024. 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.
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50
5.
DISCONTINUED OPERATIONS AND INTEREST IN ASSOCIATE
The group's activities in the year comprised one operating segments Gfinity Digital Media.
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").
During the year, as part of the restructuring, RealSM Ltd and AFG-Games Ltd were dissolved. Both companies
were dormant and provided no services.
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 plus 15% equity
interest in that company.
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.
On 27 November 2023, the Company announced the disposal of its remaining interest in Athlos for
consideration of £260,000. See note 24 for details.
As the Group’s interest in Ingenuity Loop is held as an associate at nil carrying value, no share of loss has been
reported.
6.
OPERATING EXPENSES
Expenses analysed by nature include:
Group
Year to 30 June
2024
Year to 30 June
2023
£
£
Depreciation of property, plant and equipment
14,357
33,254
Amortisation & impairment of intangible fixed assets
415,155
3,611,225
Goodwill impairment
184,345
4,219,110
Staff costs (see note 7)
1,005,260
3,148,791
Auditors’ remuneration for auditing the accounts of the Group and
Company
36,000
55,000
Auditors’ remuneration for other non-audit services:
- Other services related to taxation
4,884
3,240
- All other services
-
4,025
Net foreign exchange (gains)/ losses
(4,904)
21,824
Gfinity Plc
51
7.
PARTICULARS OF EMPLOYEES
Number of employees
The average number of people (including directors) employed by the Group and Company during the financial period
was:
Group
Company
Year to
30 June 2024
Year to
30 June 2023
Year to
30 June 2024
Year to
30 June 2023
Board
3
6
3
6
Operations
15
38
13
38
18
44
16
44
The aggregate payroll costs of staff (including directors) were:
Group
Year to 30 June 2024
Year to 30 June 2023
£
£
Wages and salaries
826,808
2,726,670
Social security costs
81,799
323,812
Pensions
25,853
49,714
Share based payments (Note 22)
70,800
48,595
1,005,260
3,148,791
Total remuneration for Directors during the year was £0 (2023: £595,780).
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 0 (2023: 3).
8.
FINANCE INCOME/COSTS
Group
Year to 30 June
2024
Year to 30 June
2023
£
£
Interest income on bank deposits
153
885
Interest Paid
(591)
-
Notional interest on contingent consideration
-
(77,691)
(438)
(76,806)
Gfinity Plc
52
9.
TAXATION
Major components of taxation expense for the period ended 30 June 2024 are:
Group
Year to 30 June
2024
Year to 30 June
2023
£
£
Current tax charge
8,370
-
Corporation tax credit
(330,812)
(149,691)
Total current tax
(322,442)
(149,691)
Deferred tax credit (note 18)
(72,390)
-
Relating to origination and reversal of temporary differences
-
(825,185)
Taxation (credit) reported in the income statement
(394,831)
(974,876)
A reconciliation of taxation expense applicable to accounting profit before taxation at the statutory tax rate of 25%
(2023: 19%), to taxation expense at the Groups effective tax rate for the period is as follows:
Year to 30 June
2024
Year to 30 June
2023
£
£
Loss on ordinary activities before taxation
(989,274)
(10,254,836)
At applicable rate of 25% (2023: 19%)
(247,318)
(1,948,419)
Income not taxable
(65,000)
-
Expenses not deductible for tax purposes
159,435
349,574
Movement in unrecognised deferred tax asset
152,883
1,598,845
Movement in deferred tax liability on temporary differences
(72,390)
(825,184)
R&D Credit received
(330,824)
(109,732)
Overseas tax paid
8,383
-
Over Provision in prior years
-
(39,960)
Tax Credit
(394,831)
(974,876)
Split as
Current tax credit
(322,441)
(149,691)
Deferred tax credit
(72,390)
(825,185)
Taxation (credit) reported in the income statement
(394,831)
(974,876)
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 £47.7m (2023: £47.1m) available for offset against future taxable profits.
A potential deferred tax asset of £11.9m 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 rate of 25%.
Gfinity Plc
53
10. OPERATING SEGMENTS
Year to 30 June 2024
Digital Media
Total
£
£
Revenue
1,895,029
1,895,029
Cost of sales
(844,951)
(844,951)
Impairment Charge
(284,408)
(284,408)
Admin expenses
(2,054,057)
(2,054,057)
Gain on disposal of Associate
275,011
275,011
Re-assessment of Deferred Consideration
24,541
24,541
Net Finance Expenses
(438)
(438)
Tax
394,831
394,831
Loss
(594,442)
(594,442)
Year to 30 June 2023
Esports
Athlos
Digital Media
Total
£
£
£
£
Revenue
2,909,482
323,873
2,190,216
5,423,571
Cost of sales
(1,665,890)
(172,205)
(953,904)
(2,791,999)
Impairment Charge
-
-
(5,984,171)
(5,984,171)
Admin expenses
(3,300,378)
(855,863)
(3,788,329)
(7,944,570)
Loss on disposal of Associate
-
-
(548,761)
(548,761)
Restructuring Cost
(238,287)
-
-
(238,287)
Re-assessment of Deferred Consideration
-
-
931,311
931,311
Net Finance Expenses
(39,369)
(11,461)
(25,976)
(76,806)
Tax
-
-
974,876
974,876
Loss
(2,334,442)
(715,656)
(7,204,738)
(10,254,836)
Management identify operating segments through consideration of the aggregated data reviewed by the Board
in monitoring the performance of the business.
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. Within continuing operations, being only the Digital Media division, two
key customers accounted for 62% and 18% of revenue.
Gfinity Plc
54
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.
2024
2023
All Operations
Earnings
(594,442)
(10,254,836)
Weighted Average Shares
3,280,945,063
1,735,787,903
EPS
(0.02)
(0.59)
DEPS
(0.02)
(0.59)
Continuing Operations
Earnings
(594,442)
(7,204,739)
Weighted Average Shares
3,280,945,063
1,735,787,903
EPS
(0.02)
(0.42)
DEPS
(0.02)
(0.42)
Discontinued Operations
Earnings
-
(3,050,097)
Weighted Average Shares
-
1,735,788,903
EPS
-
(0.18)
DEPS
-
(0.18)
Gfinity Plc
55
12. PROPERTY, PLANT AND EQUIPMENT
Group
Office
equipment
Computer &
Production
Equipment
Leasehold
Improvements
Total
Cost
£
£
£
£
At 1 July 2022
63,143
1,170,270
1,633,942
2,867,355
Addition
-
3,498
-
3,498
Disposals
(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
(63,143)
(1,132,213)
(1,542,390)
(2,737,746)
At 30 June 2023
-
13,556
-
13,556
Net Book Value
30 June 2023
-
14,757
- 14,757
30 June 2022
-
56,958
91,552
148,510
Office
equipment
Computer &
Production
Equipment
Leasehold
Improvements
Total
Cost
£
£
£
£
At 1 July 2023
-
28,313
-
28,313
At 30 June 2024
-
28,313
-
28,313
Amortisation
At 1 July 2023
-
13,556
-
13,556
Charge for the period
-
14,357
-
14,357
At 30 June 2024
-
27,913
-
27,913
Net Book Value
30 June 2024
-
400
-
400
30 June 2023
-
14,757
- 14,757
Company
Gfinity Plc
56
Office
equipment
Computer &
Production
Equipment
Leasehold
Improvements
Total
Cost
£
£
£
£
At 1 July 2022
51,743
1,142,374
1,633,941
2,828,058
Addition
-
3,498
-
3,498
Disposals
(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
(51,743)
(1,108,352)
(1,542,390)
(2,702,485)
At 30 June 2023
-
15,151
- 15,151
Net Book Value
30 June 2023
-
13,162
- 13,162
30 June 2022
2,200
51,328
91,551
145,079
Office
equipment
Computer &
Production
Equipment
Leasehold
Improvements
Total
Cost
£
£
£
£
At 1 July 2023
-
28,313
-
28,313
At 30 June 2024
-
28,313
-
28,313
Amortisation
At 1 July 2023
-
15,151
-
15,151
Charge for the period
-
13,162
-
13,162
At 30 June 2024
-
28,313
-
28,313
Net Book Value
30 June 2024
-
-
-
-
30 June 2023
-
13,162
- 13,162
Gfinity Plc
57
13. GOODWILL
Group
£
Cost
At 1 July 2022
4,714,399
Impairment
At 1 July 2022
-
Charge for the period
4,219,111
At 30 June 2023
4,219,111
Net Book Value
30 June 2023
495,288
30 June 2022
4,714,399
Cost
£
At 1 July 2023
4,714,399
Impairment
At 1 July 2023
4,219,111
Charge for the period
184,345
At 30 June 2024
4,403,456
Net Book Value
30 June 2024
310,943
30 June 2023
495,288
Company
£
Cost
At 1 July 2022
2,939,192
Impairment
At 1 July 2022
664,627
Charge for the period
1,779,276
At 30 June 2023
2,443,903
Net Book Value
30 June 2023
495,289
30 June 2022
2,274,565
Cost
£
At 1 July 2023
2,939,192
Impairment
At 1 July 2023
2,443,903
Charge for the period
184,345
At 30 June 2024
2,628,248
Net Book Value
30 June 2024
310,944
30 June 2023
495,289
The Group and Company hold goodwill in respect of the acquisitions of the trade and assets of EpicStream and
RealSport in earlier accounting periods. An impairment charge of £135,673 and £48,672 was recorded in respect
of EpicStream and RealSport respectively, in both the Group and Company profit and loss accounts.
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.
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58
14. INTANGIBLE FIXED ASSETS
Group
Web
Platforms
Engage
Other
Intangibles
Total
Cost
£
£
£
£
At 1 July 2022
5,393,265
685,951
2,480,481
8,559,697
Disposals
-
(685,951)
(64,919)
(750,870)
At 30 June 2023
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
-
(137,190)
(64,919)
(202,109)
Impairment
1,765,061
-
-
1,765,061
At 30 June 2023
4,978,110
-
2,415,562
7,393,672
Net Book Value
30 June 2023
415,155
-
-
415,155
30 June 2022
3,879,593
685,951
9,597
4,575,141
Web
Platforms
Other
Intangibles
Total
Cost
At 1 July 2023
5,393,265
2,415,562
7,808,827
At 30 June 2024
5,393,265
2,415,562
7,808,827
Amortisation and impairment
At 1 July 2023
4,978,110
2,415,562
7,393,672
Charge for the period
315,091
-
315,091
Impairment
100,064
-
100,064
At 30 June 2024
5,393,265
2,415,562
7,808,827
Net Book Value
30 June 2024
-
-
-
30 June 2023
415,155
-
415,155
Web platforms include web domains and platform technology acquired in the acquisitions of Megit Limited,
Siege.gg and EpicStream.
Other intangibles include technology platforms and customer lists arising in earlier acquisitions.
Gfinity Plc
59
INTANGIBLE FIXED ASSETS (continued)
Company
Web
Platforms
Engage
Other
Intangibles
Total
Cost
£
£
£
£
At 1 July 2022
713,546
685,951
7,195
1,406,692
Disposals
-
(685,951)
-
(685,951)
At 30 June 2023
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
-
378,515
Disposals
-
(137,190)
-
(137,190)
Impairment
6,678
-
-
6,678
At 30 June 2023
587,952
-
7,195
595,147
Net Book Value
30 June 2023
125,594
- - 125,594
30 June 2022
373,597
685,951
-
1,059,548
Web
Platforms
Other
Intangibles
Total
Cost
At 1 July 2023
713,546
7,195
720,741
At 30 June 2024
713,546
7,195
720,741
Amortisation and impairment
At 1 July 2023
587,952
7,195
595,147
Charge for the period
125,594
-
125,594
At 30 June 2024
713,546
7,195
720,741
Net Book Value
30 June 2024
-
-
-
30 June 2023
125,594
-
125,594
Web platforms includes web domains and platform technology acquired in the acquisitions of Megit Limited,
Siege.gg and EpicStream.
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60
15. INVESTMENT IN SUBSIDIARIES
Company
Year to 30 June 2024
Year to 30 June 2023
£
£
At 1 July
139,146
6,069,716
Impairment
(139,146)
(5,930,565)
Loss of control of subsidiary
-
(5)
-
139,146
Subsidiary
undertaking
Country of
incorporation
Holding
Proportion of
voting rights
and capital held
Nature of business
CEVO Inc.
USA
Ordinary shares
100%
IT Development
Megit Limited
England and Wales
Ordinary Shares
100%
eCommerce and affiliate revenues
Details of the impairment in the Company’s investment in Megit Limited in the year are given in Note 3.
16. TRADE AND OTHER RECEIVABLES
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
Year to 30
June 2024
Year to 30
June 2023
Year to 30
June 2024
Year to 30
June 2023
£
£
£
£
Cash at bank and in hand
23,155
270,476
13,742
71,255
Total
23,155
270,476
13,742
71,255
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.
Group
Company
Year to 30
June 2024
Year to 30
June 2023
Year to 30
June 2024
Year to 30
June 2023
£
£
£
£
Trade receivables
346,740
524,690
330,097
487,490
Provision for expected credit loss
(10,650)
(58,864)
(10,650)
(58,864)
336,090
465,826
319,447
428,626
Prepayments and accrued income
27,394
178,714
27,394
102,739
Amounts due in less than one year
363,484
644,540
346,841
531,365
Amounts due from group undertakings
-
-
611,439
607,398
Provision for Group undertakings
-
-
(611,439)
(607,398)
-
-
-
-
Other receivables
-
-
-
-
Total
363,483
644,540
346,841
531,365
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61
18. DEFERRED TAX LIABILITIES
Group
Company
Year to 30
June 2024
Year to 30
June 2023
Year to 30
June 2024
Year to 30
June 2023
£
£
£
£
At 1 July
72,390
897.575
-
94,748
Arising on business
combination
-
-
-
-
Credited to profit or loss
(72,390)
(825,185)
-
(94,748)
At 30 June
-
72,390
-
-
The deferred tax liability relates entirely to temporary differences on intangible assets arising on business combinations.
As the respective intangible assets were fully impaired in the year, the associated deferred tax liability was released.
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
Deferred Shares
Number
Share
Capital £
Number
Share
Capital £
As at 30 June 2022
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
-
-
Share reorganisation
-
(2,384,127)
2,649,029,913
2,384,127
Issued August 2023 at £0.0006
per share
750,000,000
75,000
-
-
As at 30 June 2024
3,399,029,913
339,903
2,649,029,913
2,384,127
Ordinary shares entitle the holder to full voting, dividend and rights on winding up.
Deferred shares carry no rights to voting or dividends.
Pursuant to the Share Capital Reorganisation on 30 August 2023, each existing Ordinary Share in issue was
subdivided into one New Ordinary Share of 0.01 pence each and one Deferred Share of 0.09 pence each.
Immediately following the Share Capital Reorganisation, the number of New Ordinary Shares in issue was the
same as the number of Existing Ordinary Shares currently in issue. The New Ordinary Shares arising on the
Share Capital Reorganisation have the same rights as those previously attaching to the Existing Ordinary
Shares, including the rights relating to voting and entitlement to dividends.
20. TRADE AND OTHER PAYABLES
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62
Group
Company
Year to 30
June 2024
Year to 30
June 2023
Year to 30
June 2024
Year to 30
June 2023
£
£
£
£
Non-current liabilities
Other payables (deferred consideration)
-
17,669
-
17,669
Deferred tax liabilities
-
72,390
-
-
-
90,059
-
17,669
Current liabilities
Trade payables
139,838
412,395
136,788
383,737
Other taxation and social security
14,504
201,745
13,294
201,745
Accrued expenditure and deferred revenue
45,000
226,181
45,000
226,188
Other payables
41,048
220,473
59,270
220,473
Amounts owed to group undertakings
-
-
556,500
426,883
240,390
1,060,794
810,852
1,459,026
Total
240,390
1,150,853
810,852
1,476,695
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. The
fair value of remaining contingent consideration at 30 June 2024 was assessed as £59,270 (2023: £202,455)
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 bank balance and trade and other receivables, its credit risk exposure
is as follows:
Group
Company
Year to 30 June
2024
Year to 30 June
2023
Year to 30 June
2024
Year to 30 June
2023
£
£
£
£
359,245
736,302
333,189
499,881
The Group trade receivables balance represents amounts due from third parties. At the balance sheet date, the Group’s trade
receivables totalled £346,740 against which an expected credit loss provision of £10,650 had been raised (2023: £524,690 less
a provision of £58,864).
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63
The Company’s receivables include £611,439 of inter-company funding (2023: £575,177) 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 £330,097 less a provision for doubtful debt of £10,650 (2023: £487,490 less a
provision for expected credit losses of £58,864).
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 82% of gross Group trade receivables. This amount was collected in full
after the balance sheet date.
There were no contract assets at 30 June 2024.
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.
The majority of revenue is billed in United States Dollar (USD).
Financial instruments held by the Company and their carrying values were as follows:
Group
Year to 30 June 2024
Year to 30 June 2023
USD ($)
EUR (€)
GBP (£)
USD ($)
EUR (€)
GBP (£)
Trade and other receivables
275,792
528
128,263
622,988
3,000
150,148
Cash
16,769
-
9,899
74,259
-
211,779
Trade and other payables
21,801
-
130,768
125,643
8,413
971,990
Net current assets/ liabilities
314,362
528
268,930
822,890
11,413
1,333,917
Company
Year to 30 June 2024
Year to 30 June 2023
USD ($)
EUR (€)
GBP (£)
USD ($)
EUR (€)
GBP (£)
Trade and other receivables
255,192
528
127,905
506,015
3,000
129,740
Amounts due from Group Undertakings
-
-
-
-
-
-
Cash
9,964
-
5,865
42,520
-
37,728
Trade and other payables
11,878
-
127,398
89,505
8,413
971,990
Amounts due to Group Undertakings
-
-
556,500
-
-
426,883
Net current assets/ liabilities
277,034
528
817,668
638,040
11,413
1,566,341
Fair value estimation
Gfinity Plc
64
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:
Share options
Number
Weighted
average exercise
price (£)
Shares options as at 30 June 2022
97,172,624
0.0483
Shares options granted
-
-
Share options forfeited
(62,322,624)
0.0578
Share options exercised
-
-
LTIP share options as at 30 June 2023
34,850,000
0.0257
Shares options as at 30 June 2023
34,850,000
0.0257
Shares options granted
479,262,889
0.0006
Share options forfeited
(22,447,000)
0.0142
Share options exercised
-
-
LTIP share options as at 30 June 2024
491,665,889
0.0018
Options vest over periods defined in the respective option agreements and at the discretion of the board of
directors.
Options issued in the year were valued using a Black Scholes model with the following inputs: exercise price
0.06p, volatility 34-36%, risk free rate 4.4%, dividends nil. Exercise period 7-10 years. An expense of £70,800
was recorded in profit or loss in respect of share options. The options issued in the year either vest 50% on
issue and 50% after one year, or 33% immediately and 33% after one and two years.
The exercise prices of options outstanding at 30 June 2024 range from 0.06p to 6.25p.
The number of exercisable share options outstanding at 30 June 2024 was 246,935,895 (2023: 34,850,000).
The weighted average remaining exercise period of options at 30 June 2024 was 7.5 years.
Of the options outstanding at the year end, 416,883,590 (2023: 18,000,000) were held by directors. Details of
all options and warrants held by directors are contained within the Directors’ Remuneration Report.
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.
Gfinity Plc
65
All options are held in Gfinity plc with no options held over any of the Group’s subsidiaries.
23. WARRANTS
The Company has granted warrants over Ordinary Shares as outlined in the table below.
75,990,299 warrants were granted to advisors in the year.
All warrants have an exercise period of 24 months from the date of issue.
The fair value of the warrants issued in the year of £60,488 was calculated according to a Black Scholes model,
and taken to share premium, being in relation to the issue of share capital. The key inputs into the Black Scholes
model were: exercise price 0.06p, Risk free rate 3.9%, volatility 36%, dividends nil. Volatility was determined
by reference to the company's share price over a relevant period. The warrants are immediately exercisable.
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. Directors were issued 407,883,590 options during the year and no directors
exercised share options in the year.
Transactions and balances with Group subsidiaries in the year:
CEVO:
During the year, the Company advanced cash of £0 (2023: £502,718) to Cevo and Cevo incurred costs of £0
(2023: £477,092) on the Company’s behalf. The year end amount repayable to the Company was £592,710
(2023: £592,710). The full amount was provided against as at year end.
RealSM:
During the year, the Company incurred costs on RealSM’s behalf of £6,155 (2023: £6,595). The year end
amount payable to the Company was £18,729 (2023: £12,574). The full amount was provided for as at 14 May
2024, on which date RealSM was dissolved.
Megit:
During the year, the Company incurred costs of £231,056 (2023: £250,355) on behalf of Megit. Megit
advanced cash of £360,671 to the Company and incurred costs on behalf of the Company of £0 (2023:
£604,115). The year end position is that the Company owed £556,500 to Megit (2023: £426,833 due to Megit).
Transactions with other related parties in the year:
David Halley, a Director, subscribed for shares in the Company for a total of £40,000 in August 2023.
The 1st Drop Limited:
Number
Weighted average
exercise price (£)
Warrants
Warrants as at 30 June 2022
216,000,000
0.0125
Warrants granted
1,373,053,333
0.0022
Warrants exercised
-
-
Warrants lapsed/forfeited
(216,000,000)
0.0125
Warrants as at 30 June 2023
1,373,053,333
0.0022
Warrants as at 30 June 2023
1,373,053,333
0.0022
Warrants granted
75,990,299
0.0006
Warrants exercised
-
-
Warrants lapsed/forfeited
-
-
Warrants as at 30 June 2024
1,449,043,632
0.0021
Gfinity Plc
66
During the year, the company incurred Consultancy costs of £24,000 (2023: £0) from The 1st Drop Limited.
At year end the Company owed £12,000 to The 1st Drop Ltd (2023: £0). Neville Upton is a director of The 1st
Drop Limited.
Athlos Game Technologies Ltd (“Athlos”):
During the year, the company incurred costs of £0 (2023: £63,717) on behalf of Athlos. Athlos advanced cash
of £46,956 (2023: £0) to the Company. The year end amount payable to the Company was £16,791 (2023:
£63,717).
During the year, the Group incurred cost of £349,005 ((2023: £0) on behalf of Athlos. The Group recharged
Athlos £349,005 (2023: £0). The year end amount payable to the Group was £25,162 (2023: £25,162).
David Halley is a director of both Athlos.
All of the above balances are interest free, repayable on demand and unsecured.
25. PROVISIONS
There was a provision on 30 June 2023 of £238,237 and certain costs pertaining to historic M&A activity and
employee contracts were utilised or released, therefore the closing balance was £92,640. The provision is not
discounted as remaining amounts are expected to be utilised within a year.
Year to 30 June 2024
Year to 30 June 2023
£
£
At 1 July
238,237
-
Additions
-
238,237
Utilised
69,978
-
Released
75,619
-
At 30 June
92,640
238,237
During the year, the company utilised £69,978 of provisions to pay for redundancy costs and associated notice
periods. Additionally, the Company released £75,619, of which £37,000 had been allocated to legal costs
relating to prior employees and £38,619 had been allocated to employee redundancy and notice period costs,
which were not utilised.
26. EVENTS AFTER THE REPORTING PERIOD
In September 2024 the Company raised £30,000 before expenses through the issue of 200,000,000 shares at
0.015p each to David Halley and through the issue of £120,000 of unsecured loan notes to Robert Keith.
At the same time the Company signed a non-binding MOU with 0M Technology Solutions Limited to license
their ConnectedIQ technology.
27. CONTROL
The Directors consider that there is no overall controlling party.