TIDMGFIN
RNS Number : 6956X
Gfinity PLC
22 December 2023
21 December 2023
For immediate release
Gfinity PLC
("Gfinity" or the "Company")
Audited Results for the year ended 30 June 2023
The Board of Gfinity announces the audited annual results for
the year ended 30 June 2023. The Annual Report and Accounts will
shortly be sent to shareholders and will be available on the
Company's website, http://www.gfinityplc.com together with a copy
of this announcement.
For further information please contact:
Enquiries:
Gfinity Plc Neville Upton ir@gfinity.net
Beaumont Cornish Limited Roland Cornish +44 (0)207 628 3369
Nominated Adviser and Michael Cornish www.beaumontcornish.co.uk
Broker
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as it forms part of
UK Domestic Law by virtue of the European Union (Withdrawal) Act
2018. The person who arranged for the release of this announcement
on behalf of the Company was Neville Upton, Director.
Beaumont Cornish Limited ("Beaumont Cornish") is the Company's
Nominated Adviser and is authorised and regulated by the FCA.
Beaumont Cornish's responsibilities as the Company's Nominated
Adviser, including a responsibility to advise and guide the Company
on its responsibilities under the AIM Rules for Companies and AIM
Rules for Nominated Advisers, are owed solely to the London Stock
Exchange. Beaumont Cornish is not acting for and will not be
responsible to any other persons for providing protections afforded
to customers of Beaumont Cornish nor for advising them in relation
to the proposed arrangements described in this announcement or any
matter referred to in it.
Chairman's Report
I have pleasure in presenting our annual accounts for the
financial year ended 30 June 2023.
It has been a difficult year for the Company as we transitioned
from esports solutions and software development, to a pure play
digital media company. The new focus is on cost reduction and a
quality product, targeting profitability, with the objective to
create longevity in the Company and support and stabilise the share
price for our investors.
The restructuring has led to a reduction in revenue to GBP2.2m,
a decrease of 60% YOY, with a loss of GBP10.3m. Within this loss,
we were able to complete the full restructuring of the business so
that we enter the new financial year in a much stronger
position.
FY 2023, we exited our esports arena in London and also decided
to no longer offer physical events in the future, as both the arena
and esports events had shown no profitability, longevity or
scalability for the business.
In June 2023, we exited the majority of Athlos Game Technologies
Ltd ("Athlos"), as the capital required to build a SaaS company
from scratch proved too much for our balance sheet to sustain.
Athlos continued to lose significant capital on a monthly basis
with no new contracts in the pipeline and we deemed it a prudent
decision to exit the company and focus our capital on business
areas with more consistent and known opportunity.
The economics of the business has become more predictable, with
the departure of previous senior management and our old business
model being stripped down. We now run a good business, with a
sensible and much smaller cost base. We expect our salary bill for
the following financial year to be reduced by over 65% and
headcount by 50%.
Our operating cost base has been streamlined, with the combined
operating costs of both continued and discontinued operations for
FY2023 as shown in note 10, down 68% year-on-year when compared to
our current annualised cost base of GBP2.5m.
These changes by no means limit the opportunity of the Company,
as we are now operated by a leaner team, with known M&A
experience in a market with many opportunities. Our customer base
of hard-to-reach gamers, is one of the most coveted by brands and
advertisers, and gaming is a sector continuing to grow
year-on-year. By focusing on one industry vertical, we have already
been able to improve our product offering including the launch of a
new website in the summer.
In summary, I would like to say thank you to the Gfinity team,
who have supported us through a challenging year of transition -
They are dedicated writers and developers, and have a clear passion
for gaming. And I would also like to thank all our clients and
partners that choose to work with Gfinity together with our
shareholders. Their continued support is never taken for granted
and we can now look forward to growing together.
Neville Upton
Chairman
20 December 2023
Chief Executive Officer's Report
When appointed CEO in August 2023, I set out to quickly bring
the economics of our business under control after a long period of
loss-making business decisions trying to build long term value.
The decision to focus the Company as a pure play digital media
company, was straightforward, as we not only had some excellent
sites, although they were in need of fresh management and some
fixing, but we also had a solid core team of writers, editors and
developers who are the backbone of the new look Gfinity.
By having a singular focus and product vertical, the team can
now really show their expertise in running digital assets to
rebuild our Ebitda and create a long term, reliably profitable
company. The digital asset space offers great opportunities,
including potential acquisitions, and rewards companies who deliver
great product and adapt to changes in the industry.
A significant subject in tech is obviously Artificial
Intelligence ("AI") and the impact of Large Language Models on
businesses. At Gfinity, we are embracing this opportunity by
utilising tools to improve our product and increase efficiencies,
while ensuring our own team can add their unique magical human
intervention for us to be the go-to sites for gamers and esports
enthusiasts looking for compelling and engaging content .
We are also very excited about the opportunities of AI in video,
and I believe video will increasingly become part of the future
product offering of the company, thus adapting to the needs of a
new generation of gamers.
We are building our own engagement tools in our sites where our
community will be entertained through playing games and watching
unique content.
We have emerged from a difficult year for GDM. At the end of the
June monthly sessions across all sites were 9 million and combined
with our social media channels we reach more than 20 million gamers
each month.
We have now built a stronger foundation for future growth and
will work opportunistically through the next year to find additive
transactions to grow the network and company.
Financial Highlights:
The company operated in FY 2023 with 3 loss-making business
divisions.
While all 3 presented opportunities to create shareholder value,
Athlos and Gfinity Esports Solutions were more risky ventures and
required more capital.
Athlos is a ground breaking product but needed significant
funding. Gfinity sold 72.5% of Athlos and removed liabilities for 6
months to relieve the balance sheet. This division was
significantly loss-making each month as it invested in further
feature development and started to invest heavily in the
go-to-market plan. Up to the date of disposal of 5 June 2023, the
Group recorded revenue from Athlos of GBP323,873 and a loss of
GBP715,616.
Gfinity esports solutions division was unpredictable with short
term, often one-off contracts with a large fixed cost base. The
Formula 1 contract which had been the cornerstone of the division
and which contributed 60% of revenue and 83% of gross profit of the
eSports division, was not renewed. Most of the other revenue was
one-off consultancy contracts and low margin content production. As
announced in the year, The Board decided to close down the
division:
-- December 2022, closed down the Gfinity Arena to reduce exposure to Esports
-- June 2023, announced the closure of the division
-- Since year end the division has been sold with Gfinity retaining a 15% stake
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.
-- Implemented a significant cost reduction programme in June 2023.
-- Moved advertising agency in April 2023 which saw an increase
in ad rates which negated the general decline in ad rates across
the digital media sector
-- We restructured the dense advertising structure in sites to
make it more favourable for search engine optimisation
-- We improved site mechanics so that numbers would increase in
the fourth quarter of calendar year 2023.
Changes in Organisation
The former Chief Executive Officer John Clarke, resigned in
February 2023.
With the closure of the esports division and divestment of
Athlos we did not need such a heavy central cost base and in August
2023 our former CFO, Jon Hall, left the business and all central
functions were reduced in size. I joined the company as Chief
Executive in August 2023 and have implemented a leaner operating
model with the prior Head of Operations now looking after day to
day running of the business with myself and the board overseeing
long term strategy. This new operating model has also seen a
reduced number of editors across the sites a new content production
process and more resource in direct revenue generation. Len Rinaldi
left the Board in May 2023.
Growth
Having stabilised the business with a lower cost base and
stronger operating foundations, we are now embarking on a growth
plan. In July 2023 we launched a new website, starfieldportal, it
is now receiving over 35k sessions a day. We aim to release more
websites in 2024, as this incurs minimal capital and can leverage
our scalable platform and extensive social media presence.
GDM's competitive advantage is technology; content and Search
Engine Optimisation (SEO) expertise; and commercial leverage.
We have;
-- a strong young team who understand the future of digital communications and media
-- a technology platform that allows us to scale the content suite
-- an ad tech capability to increase our revenues
-- a sales team to exploit the need for brands to reach the
difficult to reach Gen Z community
-- a continuing relationship with Athlos and esports solutions
team where we can provide some compelling gaming
solutions by amalgamating skill sets.
Our dedicated team
The progress we are making across the business is a direct
consequence of the passion and spirit shown by the team. Every day
team members are stepping up, innovating, selling ideas, building
networks, impressing partners with the quality of their work, and
making things happen in a challenging economic environment. Gfinity
is benefiting from having leaders across the business driven by
their desire to build something special.
Outlook
The strategic focus on GDM gives us greater control over our
destiny. It allows us to become a leader in one discipline while
also navigating the economic headwinds. We have seen a nervousness
from publishers to commit investment and advertising rates have
been impacted across the whole of digital media. It is crucial that
we continue to manage our cost base zealously while being
innovative and adopting to the new technological opportunities. The
team will remain agile, flexible, and entrepreneurial, continually
adopting to new opportunities and providing compelling engagement
to the gaming community.
Conclusion
The transformation of Gfinity' s business model is now well
underway; we are developing expertise to be leading force in
digital media across the gaming community. I would like to thank
the Gfinity team, our business partners and our clients for their
continued hard work and support.
David Halley
Chief Executive Officer
20 December 202 3
Group Statement of Profit or Loss
For the ended 30 June 2023
Notes Year to 30 June 2023 Year to 30 June 2022
Continuing Operations GBP GBP
Revenue 2,190,216 2,695,388
Cost of Sales (953,905) (1,247,317)
------------------------- ----------------------
Gross profit 1,236,311 1,448,071
Administration expenses 6 (3,788,329) (2,870,623)
------------------------- ----------------------
Operating Loss from trading activities * (2,552,018) (1,422,552)
Impairment charge (5,984,171) (76,989)
Re-assessment of Deferred Consideration 931,311 -
Loss arising on loss of control of a subsidiary 5 (548,761) -
Net finance costs 8 (25,976) 77
------------------------- ----------------------
Loss on ordinary activities before taxation (8,179,615) (1,499,464)
Taxation 9 974,876 209,968
------------------------- ----------------------
Loss from continuing operations (7,204,739) (1,289,496)
Loss on discontinued operations, net of tax 10 (3,050,097) (2,521,464)
Loss for the year (10,254,836) (3,810,960)
------------------------- ----------------------
Earnings per share - Continuing operations 11 (0.42) (0.13)
(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.
Group Statement of Comprehensive Income
Year to 30 June 2023 Year to 30 June 2022
GBP GBP
Loss for the Period (10,254,836) ( 3,810,960)
Items that may subsequently be reclassified to profit or
loss
Foreign exchange profit / (loss) on retranslation of foreign
subsidiaries - (3,458)
---------------------- ----------------------
Other Comprehensive Income for the period - (3,458)
Loss and total comprehensive income for the period (10,254,836) (3,814,418)
Group Statement of Financial Position
As at June 2023
Notes 30-Jun-23 30-Jun-22
GBP GBP
NON-CURRENT ASSETS
Property, plant and equipment 12 14,757 148,510
Goodwill 13 495,288 4,714,399
Intangible fixed assets 14 415,155 4,575,141
--------------------- -------------------
925,200 9,438,050
CURRENT ASSETS
Trade and other receivables 16 644,540 1,968,893
Cash and cash equivalents 17 270,476 2,141,361
--------------------- -------------------
915,016 4,110,254
--------------------- -------------------
TOTAL ASSETS 1,840,216 13,548,304
--------------------- -------------------
EQUITY AND LIABILITIES
Equity
Ordinary share capital 19 2,649,030 1,315,697
Share premium account 55,367,959 54,858,008
Other reserves 423,613 3,706,664
Retained earnings (57,989,529) (51,113,657)
Non controlling interest 3 3
--------------------- -------------------
Total equity 451,076 8,766,715
NON-CURRENT LIABILITIES
Other Payables 20 17,669 840,742
Deferred Tax Liabilities 18 72,390 897,575
CURRENT LIABILITIES
Trade and other payables 20 1,060,794 3,043,272
Provisions 27 238,287 -
Total liabilities 1,389,140 4,718,589
--------------------- -------------------
TOTAL EQUITY AND LIABILITIES 1,840,216 13,548,304
--------------------- -------------------
The notes form an integral part of these financial
statements.
Registered number: 08232509
Signed on behalf of the board on 20 December 2023:
David Halley Neville Upton
Chief Executive Officer Non-Executive Chairman
Company Statement of Financial Position
As at 30 June 2023
Restated
Notes 30-Jun-23 30-Jun-22
GBP GBP
NON-CURRENT ASSETS
Property, plant and equipment 12 13,162 145,079
Goodwill 13 495,289 2,274,565
Intangible fixed assets 14 125,594 1,059,549
Investment in subsidiaries 15 139,146 6,069,716
Investment in associate 5 5 -
------------------------------ ----------------------
TOTAL NON-CURRENT ASSETS 773,196 9,548,909
CURRENT ASSETS
Trade and other receivables 16 531,365 1,880,830
Cash and cash equivalents 17 71,255 1,361,279
TOTAL CURRENT ASSETS 602,620 3,242,109
------------------------------ ----------------------
TOTAL ASSETS 1,375,816 12,791,018
============================== ======================
EQUITY AND LIABILITIES
Equity
Ordinary share capital 19 2,649,030 1,315,697
Share premium account 55,367,959 54,858,008
Other reserves 423,613 3,728,622
Retained earnings (58,779,718) (50,588,868)
Total equity (339,116) 9,313,459
NON-CURRENT LIABILITIES
Other payables 20 17,669 840,751
Deferred tax liabilities 18 - 84,924
CURRENT LIABILITIES
Trade and other payables 20 1,459,026 2,551,884
Provisions 27 238,237 -
------------------------------ ----------------------
Total liabilities 1,714,932 3,477,559
TOTAL EQUITY AND LIABILITIES 1,375,816 12,791,018
The notes 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 GBP11,569,814 (2022: loss of GBP4,248,407).
Registered number: 08232509
Signed on behalf of the board on 20 December 2023:
David Halley Neville Upton
Chief Executive Officer Non-Executive Chairman
Group Statement of Changes in Equity
As at 30 June 2023
Ordinary Share premium Share option Retained NCI Forex Total equity
shares reserve earnings
GBP GBP GBP GBP GBP GBP GBP
At 30 June
2021 930,513 46,511,089 3,403,414 (47,302,697) - (18,500) 3,523,819
Loss for the
period - - - (3,810,960) - - (3,810,960)
Other
comprehensive
income - - - - - (3,458) (3,458)
Total
comprehensive
income - - - (3,810,960) - (3,458) (3,814,418)
------------- --------------- ---------------- ---------------- ----- ------------ -------------------
Proceeds of
shares issued 385,184 8,667,150 - - - - 9,052,334
Share Issue
Costs - (320,231) - - - - (320,231)
Share options
expensed - - 325,208 - - - 495,220
Addition of
NCI - - - - 3 - 3
Total
transactions
with owners,
recognised
directly in
equity 385,184 8,346,919 325,208 - 3 - 9,227,326
------------- --------------- ---------------- ---------------- ----- ------------ -------------------
At June 2022
- Restated 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) (6,853,914) - - 1,939,197
============= =============== ================ ================ ===== ============ ===================
At 30 June
2023 2,649,030 55,367,959 423,543 (57,967,501) 3 (21,958) 451,076
"Ordinary shares" represents the nominal value of issued share
capital.
"Share premium" represents the proceeds on issue of shares in
excess of nominal value, less directly attributable issue
costs.
"Share option reserve" represents the fair value of share based
payments that are in issue at the reporting date.
"Retained earnings" represents the cumulative profits and losses
of the business.
"NCI" represents the cumulative profit and losses attributable
to minority shareholders of subsidiaries
"Forex" represents the cumulative effect of retranslating the
results of foreign operations into the presentation currency
Company Statement of Changes in Equity
As at 30 June 2023
Ordinary Share Share Accumulated Total
shares premium option Deficit equity
reserve
GBP GBP GBP GBP GBP
At 30 June
2021 930,513 46,511,089 3,403,414 (46,340,461) 4,504,555
========================= ========================= ========================= ============================ ============================
Loss for the
period - - - (4,248,407) (4,248,407)
Other - - - - -
Comprehensive
Income
------------------------- ------------------------- ------------------------- ---------------------------- ----------------------------
Total
comprehensive
income - - - (4,248,407) (4,248,407)
------------------------- ------------------------- ------------------------- ---------------------------- ----------------------------
Shares Issued 385,184 8,667,150 - - 9,052,334
Share issue
costs - (320,231) - - (320,231)
Share options
issued - - 325,208 - 325,208
Shares as - - - - -
deferred
consideration
Total
transactions
with owners,
recognised
directly in
equity 385,184 8,346,919 325,208 - 9,227,323
------------------------- ------------------------- ------------------------- ---------------------------- ----------------------------
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)
========================= ========================= ========================= ============================ ============================
Group Statement of Cash Flows
As at 30 June 2023
Group Restated
2023 2022
Operating GBP GBP
Loss for the year (10,254,837) (3,810,960)
Adjustments for:
Depreciation 33,254 112,993
Amortisation 1,846,164 1,554,745
Impairment of assets 5,984,171 76,989
Gain on disposal of fixed assets (112,808) -
Gain on disposal of associate - (45,090)
Finance income (885) 77
Finance costs 77,691 -
Share based payments 29,945 325,208
Increase in credit loss provision 51,494 -
Re-evaluation of contingent consideration (931,311) -
Loss on loss of control of subsidiary 548,761 -
Increase in provisions 238,287 -
Current and deferred tax credit (974,876) (298,177)
Total (3,464,950) (2,084,215)
============================================== ============================= ==============================
Decrease in receivables 1,324,353 (524,205)
Decrease in payables excluding contingent
consideration (907,062) (110,916)
Tax credit recovered 109,732 142,162
Net operating outflow (2,937,927) (2,577,174)
============================================== ============================= ==============================
Investing
Interest received 885 77
PPE additions (3,498) (74,137)
Intangible additions - (685,951)
Payment of deferred/contingent consideration (1,031,307) (1,774,020)
Proceeds on disposal of associate - 45,090
Net proceeds on disposal of assets 213,668 -
Total (820,252) (2,488,941)
============================================== ============================= ==============================
Financing
Net proceeds on issue of shares 1,887,294 5,831,603
Total 1,887,294 5,831,603
============================================== ============================= ==============================
Net decrease in cash (1,870,885) 765,488
============================================== ============================= ==============================
Cash at the start of the year 2,141,361 1,375,873
Cash at the end of the year 270,476 2,141,361
Net decrease in cash (1,870,885) 765,488
============================================== ============================= ==============================
There were no investing or financing cash flows for discontinued
operations.
The net cash outflow on operating activities for discontinued
operations was GBP(2,166,061) (2022: GBP(2,679,157).
Company Statement of Cash Flows
As at 30 June 2023
Company Restated
2023 2022
GBP GBP
Operating
Loss for the year (11,569,814) (4,248,407)
Adjustments for:
Depreciation 34,657 108,787
Amortisation 378,515 235,738
Impairment of assets 7,716,918 41,616
Gain on disposal of fixed assets (112,808) -
Gain on disposal of associate - (45,090)
Finance income (885) (1)
Finance costs 77,691 -
Share based payments 29,945 495,220
Increase in credit loss provision 187,815 -
Re-evaluation of contingent consideration (931,311) -
Loss on disposal of intangible 548,761 -
Increase in provisions 238,287 -
Current and deferred tax credit 234 (213,562)
Total (3,401,995) (2,925,699)
============================================== ========================== ===============================
Decrease in receivables 1,349,466 28,603
Decrease in payables excluding contingent
consideration (597,442) (556,176)
Tax credit recovered 109,732 142,162
Net operating outflow (2,540,239) (3,311,110)
============================================== ========================== ===============================
Investing
Interest received 885 1
PPE additions (3,498) (74,149)
Intangible additions 0 (685,951)
Payment of deferred/contingent consideration (495,416) (1,774,020)
Proceeds on disposal of associate 0 45,090
Net proceeds on disposal of assets 213,668 0
Net amounts advanced to subsidiaries (352,718) 0
Total (637,079) (2,489,029)
============================================== ========================== ===============================
Financing
Net proceeds on issue of shares 1,887,294 5,831,603
Total 1,887,294 5,831,603
============================================== ========================== ===============================
Net decrease in cash (1,290,024) 31,464
============================================== ========================== ===============================
Cash at the start of the year 1,361,279 1,329,815
Cash at the end of the year 71,255 1,361,279
Net decrease in cash (1,290,024) 31,464
============================================== ========================== ===============================
Notes to the Financial Statements
1. GENERAL INFORMATION
Gfinity plc ("the Company") is a public company limited by
shares incorporated in the United Kingdom under the Companies Act
2006, registered and domiciled in England and Wales and is AIM
listed. The address of the registered office is given on page 2.
The registered number of the company is 08232509.
The functional and presentational currency is GBP sterling
because that is the currency of the primary economic environment in
which the group operates. Foreign operations are included in
accordance with the policies set out in note 2. Principal
activities are discussed in the Strategic report.
2. ACCOUNTING POLICIES
Basis of preparation
The Company has prepared the accounts on the basis of all
applicable UK-adopted International Financial Reporting
Standards (IFRS), including all International Accounting
Standards (IAS), Standing Interpretations Committee (SIC) and the
International Financial Reporting Interpretations Committee (IFRIC)
interpretations issued by the International Accounting Standards
Board (IASB) with effective dates for accounting periods beginning
on or after 1 July 2022, together with those parts of the Companies
Act 2006 applicable to companies reporting under IFRS.
The accounts have been prepared on the historical cost basis,
unless otherwise stated below. The principal accounting policies,
which have been consistently applied throughout the period
presented, are set out below.
The preparation of financial statements in conformity with IFRS
requires the use of certain estimates. It also requires management
to exercise its judgement in the process of applying the company's
accounting policies. Estimates and judgements are continually
reviewed and are based on historical experience and other factors
including expectations of future events that are believed to be
reasonable under the circumstances.
New and amended accounting standards effective during the
year
The following amended standards and interpretations were
effective during the year:
-- Amendments to IAS 16: Property, Plant and Equipment: proceeds
before intended use
-- IAS 37: Onerous Contracts: costs of fulfilling a contract
-- Annual Improvements to IFRS Standards 2018-2020
-- Amendments to IFRS 3: Business Combinations: reference to
conceptual framework
The adoption of the standards and interpretations has not led to
any changes to the Group's accounting policies or had any other
material impact on the financial position or performance of the
Group.
New standards, interpretations and amendments issued but not yet
effective
The following new accounting standards, amendments and
interpretations to accounting standards have been issued but these
are not mandatory for 30 June 2023 and they have not been adopted
early by the Group:
-- Amendments to IAS 1: Classification of liabilities as current
and non-current
-- Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure
of accounting policies
-- Amendments to IAS 8: Definition of accounting estimates
-- Amendments to IAS 12: Deferred Tax related to assets and
liabilities arising from a single transaction
The Directors anticipate that the adoption of planned standards
and interpretations in future periods will not have a material
impact on the Group Financial Statements.
Going Concern
As explained in the Chairman's Report and the Chief Executive
Officer's Report, it has been a difficult year for the Group and
Company as it transitioned away from esports solutions and software
development to a pure play Digital Media company.
At the time of issuing these Financial Statement, this
restructuring is largely complete and the Group and Company has
reduced its overhead base to support and develop its Digital Media
assets and the Directors firmly believe that the steps taken will
lead to profitability in the short term.
The Directors have prepared a base case cashflow forecast
through to 31 December 2024, which assumes certain growth targets
are met.
The Directors believe that the growth targets are reasonable and
attainable, and in view of this, the Directors are confident that
the Group and Company has adequate resources to continue to operate
for at least twelve months from the date of approval of these
Financial Statements and have, therefore, continued to adopt the
going concern basis in preparing the Directors' Report and
Financial Statements.
However, the Directors recognise that achievement of the growth
targets are subject to external factors outside of their control
and so they have also prepared a severe but plausible cashflow
projection to assess cashflows in such a scenario. Should the
forecast growth of the Group and Company be not forthcoming or be
slower than anticipated, the Group and Company will need to secure
additional funding in the period to 31 December 2024.
The Group and Company continues to enjoy the support of its
major shareholders, and should further funding be necessary, the
Directors believe that this support will continue. On this basis,
the Directors consider that it is appropriate that the going
concern basis is applied in the preparation of these Financial
Statements.
However, whilst the Directors are confident of continuing to
raise additional funds as needed to finance the business in
accordance with its Digital Media strategy, they nevertheless
recognise that a material uncertainty exists which might impact the
Group and Company's ability to continue to realise its assets and
discharge its liabilities as they fall due in the normal course of
the business and therefore its ability to continue to operate as a
going concern.
Basis of consolidation
The Group accounts consolidate the results of the Company and
all of its subsidiary undertakings drawn up to 30 June each year.
Subsidiary undertakings are those entities over which the Group has
the control, which is where the Group has power over the investee,
is exposed to variable returns from its involvement with the
investee and where the Group has the ability to use its power over
the investee to affect the amount of returns. The results of
subsidiaries acquired or sold are consolidated for the periods from
or to the date on which control passed. Acquisitions are accounted
for under the acquisition method.
Goodwill arising on acquisition is recognised as an asset and
initially measured at cost, being the excess of the cost of the
business combination over the Group's interest in the net fair
value of the identifiable assets, liabilities and contingent
liabilities recognised. If, after reassessment, the Group's
interest in the net fair value of the acquiree's identifiable
assets, liabilities and contingent liabilities exceeds the cost of
the business combination, the excess is recognised immediately in
profit or loss.
Where the Group assesses that it has significant influence over
an investee, but not control, the investment is accounted for as an
associate. Associates are not consolidated but are equity accounted
and the group records its share of the associate's loss to the
extent the cost less impairment of the investment in greater than
nil.
All intra group balances, transactions, income and expenses and
profit and losses on transactions between the Company and its
subsidiaries and between subsidiaries are eliminated.
Goodwill
Goodwill is initially recognised and measured as set out
above.
Goodwill is not amortised but is reviewed for impairment at
least annually. For the purpose of impairment testing, goodwill is
allocated to each of the Group's cash-generating units ('CGUs')
expected to benefit from the synergies of the combination. CGUs to
which goodwill has been allocated are tested for impairment
annually, or more frequently 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.
-- Sponsorship revenues: Revenue is recognised on the date the
relevant sponsored event takes place. In the event of long-term
sponsorship contracts, the revenue is released on a straight-line
basis across the term of the contract, except in instances where a
significant proportion of the revenue relates to specific
activation activities, in which case the revenue is released in
line with when that work is performed.
-- Advertising revenues: Fees are earned based on the number of
sessions where ads are displayed on the website. Revenue is
recognised on a cost per mille (CPM) basis.
-- Broadcaster revenues: Rights fees are received from linear
broadcasters and online streaming platforms in return for rights to
access broadcast content. Revenue is recognised once the relevant
performance obligations are completed which is typically at the
point the broadcast occurs.
-- Licensing revenues: Fees charged for the licensing of Gfinity
esports technology, outside of the scope of a broader managed
esports service provision.
-- Consultancy Fees: Revenue is recognised in line with the
profile of resources dedicated to the programme across the
assignment duration. Such revenue is recognised over time based on
an estimate of total costs incurred.
Foreign currencies
Transactions in foreign currencies are recorded at the rates of
exchange prevailing on the dates of the transactions. At each
balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing on the balance sheet date.
Exchange differences arising on the settlement of monetary
items, and on the retranslation of monetary items, are included in
the income statement for the year.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
translated at exchange rates prevailing on the balance sheet date.
Income and expense items are translated at the average exchange
rates for the period, unless exchange rates fluctuate significantly
during that period. Exchange differences arising from the
translation of the Group's foreign operations are recognised in
other comprehensive income.
Taxation
The taxation expense represents the sum of the tax currently
payable and deferred tax.
The charge for current tax is based on the results for the
period as adjusted for items that are non-assessable or disallowed.
It is calculated using tax rates that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computations of taxable profit and is accounted for using the
balance sheet liability method.
Deferred tax liabilities are generally recognised for all
taxable temporary differences, and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from goodwill (or any discount on
acquisition) or from the initial recognition (other than in a
business combination) of other assets and liabilities in a
transaction that affects neither the tax profit nor the accounting
profit.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that the directors do
not have a high degree of certainty that sufficient taxable profits
will be available in the medium-term to allow all or part of the
asset to be recovered.
Credits in respect of Research and Development activities are
recognised upon receipt of payment from HMRC.
Share based payments
The Company provides equity-settled share-based payments in the
form of share options. Equity-settled share-based payments are
measured at fair value (excluding the effect of non-market-based
vesting conditions) at the date of grant. The fair value determined
at the date of grant is expensed on a straight line basis over the
vesting period, based on the Company's estimate of shares which
will eventually vest and adjusted for the effect of non-market
based vesting conditions. The Company uses an appropriate valuation
model utilising a Black-Scholes model in order to arrive at a fair
value at the date share options are granted.
In instances when shares are used as consideration for goods or
services the shares are valued at the fair value of the goods or
services provided. The expense to the company is recognised at the
point the goods or services are received.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less
accumulated depreciation and impairment, if any. Historical cost
includes expenditure that is directly attributable to the
acquisition of the items. Subsequent costs are included in the
carrying amount of the asset or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits
associated with the item will flow to the company and that the cost
of the item can be measured reliably. The carrying amount of parts
that are replaced is derecognised. The costs of the day-to-day
servicing of property, plant and equipment are recognised in profit
or loss as incurred.
Depreciation is calculated using the straight-line method to
allocate the cost or revalued amounts of tangible fixed assets to
their residual values over their useful economic lives, as
follows:
Office equipment 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:
Web Platforms 3-5 years
Engage 3-5 years
Other Intangible assets 3-5 years
Amortisation expense is included within administrative expenses
in the profit or loss account.
Research and development costs
Development expenditure is capitalised as an intangible asset,
only if the development costs can be measured reliably and it is
anticipated that the product being built will be completed and will
generate future economic benefits in the form of cash flows to the
Group or cost savings.
Research expenditure that does not meet this criteria is
recognised as an expense as incurred. Development costs previously
recognised as an expense are not recognised as an asset in a
subsequent period.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at
call with banks, and other short-term highly liquid investments
with original maturities of three months or less. These are readily
convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Financial liabilities and equity
Financial liabilities are obligations to pay cash or other
financial instruments and are recognised when the company becomes a
party to the contractual provisions of the instrument. Financial
liabilities are classified according to the substance of the
contractual arrangements entered into. All interest-related charges
are recognised as an expense in the income statement.
Trade and other payables are not interest bearing and are
recorded initially at fair value net of transactions costs and
thereafter at amortised cost using the effective interest rate
method.
An equity instrument is any contract that evidence a residual
interest in the assets of the Company after deducting all of its
liabilities. Equity instruments issued by the Company are recorded
at the proceeds received, net of direct issue costs.
Contingent consideration arising in a business combination is
held at fair value at each reporting date. After the initial
accounting for the business combination, any changes in the
estimated or actual consideration payable are taken to profit or
loss. Future expected payments are held at their present value
where the effect of discounting is material. The unwinding of
contingent consideration is recognised as a finance cost in profit
or loss.
Financial assets
Financial assets are recognised in the balance sheet when the
Company becomes a party to the contractual provisions of the
instrument and are recognised in the balance sheet at the lower of
cost and net realisable value.
Provision is made for diminution in value where appropriate.
Income and expenditure arising on financial instruments is
recognised on the accruals basis and credited or charged to the
statement of comprehensive income in the financial period to which
it relates.
Trade receivables do not carry any interest and are initially
recognised at fair value, subsequently reduced by appropriate
allowances for estimated irrecoverable amounts.
Warrants
Warrants are in respect of call options granted to investors by
the group and are classified as equity only to the extent that they
do not meet the definition of a financial liability or financial
asset.
The fair value of warrants is determined at the date of grant
and is recognised in equity. When the warrants are exercised, the
group transfers the appropriate amount of shares to the investor,
and the proceeds received net of any directly attributable
transaction costs are credited directly to equity.
The group uses an appropriate valuation model utilising a
Black-Scholes model in order to arrive at a fair value at the date
warrants are granted.
3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of financial statements in conformity with IFRS
requires the use of certain estimates. It also requires management
to exercise its judgement in the process of applying the company's
accounting policies. Estimates and judgements are continually
reviewed and are based on historical experience and other factors
including expectations of future events that are believed to be
reasonable under the circumstances.
Judgement: Revenue recognition:
The Group's revenue recognition policy is based on separating
contracts into discrete performance obligations with revenue then
recognised based on the percentage completion of each performance
obligation unless recognised at appoint in time. Where the value of
each distinct performance obligation is not set out in a contract
Management estimate the value of each performance obligation based
on the level of resource required to complete the performance
obligation in comparison to the overall level of resource required
to fulfil the contract. For example, if a contract did not
stipulate the value by region of a broadcast agreement management
would use appropriate weighting (e.g. audience size) to estimate
the value of each region, with each region viewed as a separate
performance obligation. Revenue would then be recognised based on
the percentage completion of each performance obligation. In
instances where there is no other readily available proxy
Management will estimate the value of each performance obligation
based on the relative cost to deliver.
Stock Informer Revenue that is recognised on a monthly is based
on the transactional sales value of all transactions in month for
all associate affiliate partners. The transactional sales value
represents the total commission value due to Gfinity of all pending
and approved payments coming in for a given month across the
affiliate 3rd party providers that are contracted and based on the
specific affiliate commission % with Stock Informer. In month
"Transactional Value" will specifically exclude approved payments
from prior months, as this has already been recognised as revenue
in the prior months. A credit note provision is raised monthly
which is based on the value of all pending commission transactions
across all affiliates with a credit note % assumption applied to
this which is based on the average return % over the past 6 months.
The credit note provision is assessed monthly in relation to the
level of pending transactions that have either been paid resulting
in earnings, which results in a release of the provision, or
declined, which results in a credit and offset against the credit
note provision, thus utilising the provision in place
There were no revenue contracts requiring judgement that impact
on the reported revenue for the financial year, or contract assets
or liabilities at the balance sheet date for either the current or
the prior year.
Judgements and estimates: Impairment of goodwill and intangible
assets, and estimation of the fair value of contingent
consideration
The Group holds goodwill and intangible assets arising from
business acquisitions or the internal generation of development
assets. Judgement is applied in determining the recoverable amount
of assets.
On an annual basis the Group reviews relevant classes of assets,
including investments, intangible assets and goodwill for
indications of impairment. Where such indications exist, a full
impairment test is performed. In light of the loss reported in the
year, the Board determined that a full impairment test should be
performed on all intangible assets. Goodwill must be tested for
impairment annually. Where goodwill arises in a business
combination, management determined that each website brand is a
separate cash generating unit and so any the goodwill arising from
that acquisition is associated with the acquired brand. No goodwill
is allocated across multiple Cash Generating Units.
For the purpose of impairment testing at 30 June 2023,
management have determined that the appropriate method to apply is
a fair value less costs to dispose approach. In previous years,
management have used a value in use model and therefore this
represents a change in methodology. The reason for the change in
methodology is due to the uncertainty experienced in the year and
therefore which had led to earlier forecasts not having been
achieved. Management consider that a revenue based multiple is a
more accurate estimation tool for the recoverable amount of its
intangible assets.
Therefore all impairment tests have been performed using a fair
value method on the basis of a multiple of revenue achieved for the
respective brand in the year ended 30 June 2023.
Management undertook a careful assessment of the appropriate
revenue multiple and determined that 1x revenue represents their
best estimate of the recoverable amount of each brand. This fair
value estimation technique is a Level 2 valuation technique in the
Fair Value Hierarchy as there is no directly observable market
valuation of each brand, but management have identified the
valuation of similar assets through the relevant trading multiples
of similar businesses in similar sectors, through the observed
implied multiples in recent transactions involving similar assets
and through industry and other benchmarks.
Further detail of the results of impairment tests of each
material Cash Generating Unit are summarised below. All of Megit,
Siege.gg, RealSport and EpicStream are within the Gfinity Digital
Media operating segment. In each case, 'costs to sell' are
considered to be immaterial as there are no physical assets in any
case. Impairment expenses have been separately identified in the
statement of profit or loss. No previous impairments were reversed
during the year.
Megit
The group acquired the entire issued share capital of Megit
Limited in September 2021. Megit operates the StockInformer website
which enables gamers to locate and find the best pricing and
availability of tech and other products.
At 30 June 2022 the group held goodwill of GBP2,439,834 and
intangible assets of GBP3,505,996 in respect of Megit. These assets
were tested for impairment collectively as they form a single Cash
Generating Unit.
The result of the impairment test was as a recoverable amount of
GBP289,561 and therefore an impairment charge of GBP4,198,217 was
recorded. This was allocated first to goodwill and then to
intangible assets as required by IAS 36.
The factors giving rise to the impairment were the
well-publicised challenges arising from changes to the algorithms
applied by Google and other traffic sources in the period.
At 30 June 2023, management have also applied judgement in their
assessment of any remaining contingent consideration based on
revenue-based earnouts in the acquisition agreement. The range of
potential payable amounts is between nil and GBP1.8m. Management's
estimate of the undiscounted future payment is GBP223,645 based on
projected cash flows of the business and this has been reflected in
liabilities on a discounted basis. Management have discounted
future cash flows using a discount rate of 20% which is based on a
review of the discount rates used by listed business with a similar
risk profile. Contingent consideration is therefore based on a
Level 3 basis of the Fair Value Hierarchy as the inputs are not
directly or indirectly observable.
Due to the challenging trading environment, amounts payable
under the contingent consideration arrangements were significantly
lower than initially forecast and therefore certain contingent
consideration liabilities were released to profit or loss in the
year, of a total of GBP855,482 in respect of Megit.
In respect of the Company's investment in Megit Limited as a
subsidiary, an impairment was recorded to bring the investment to
the directors' best estimate of the recoverable amount by reference
to the recoverable net assets of Megit. An impairment of
GBP5,930,565 was therefore recorded by the Company in profit or
loss.
Siege.gg
Siege.gg is the leading digital property in the competitive
Rainbow 6 Siege space. It has a strong audience and domain
authority, together with proprietary statistical database.
At 30 June 2022 the group held goodwill of GBP370,775 and
intangible assets of GBP100,215 in respect of Siege.gg. These were
tested within a single Cash Generating Unit.
The result of the impairment test was a recoverable amount of
GBP41,541 and so an impairment expense of GBP560,104 was recorded.
This was allocated first to goodwill and then to intangible assets
as required by IAS 36.
The factors giving rise to the impairment were changes to Google
algorithms and changes in the underlying user base of the
website.
RealSport
Realsport101.com is a leading source of news and information
about competitive sport gaming.
The carrying value of goodwill in respect of RealSport at 30
June 2022 was GBP1,643,006.
The result of the impairment test was a recoverable amount of
GBP234,505 and therefore an impairment of GBP1,408,501 was
recorded.
The factors giving rise to the impairment were changes to Google
algorithms and changes in the underlying user base of the
website.
EpicStream
EpicStream.com is a leading online source of geek and pop
culture news.
The carrying value of goodwill in respect of EpicStream was
GBP260,783 at 30 June 2022 and intangibles were GBP273,382 at that
date. These assts were tested jointly as a single Cash Generating
Unit.
The result of the impairment test was that no impairment was
required, because the brand generated revenue in excess of the
value of assets tested. If management had applied a revenue
multiple of 0.93x or below, an impairment would have been
recorded.
Engage / Athlos
Engage is the company's proprietary gaming technology, developed
in-house, and marketed under the Athlos brand.
During the year, the associated IP was assigned to Athlos Game
Technologies Ltd and as the Group lost control of this entity in
the period, the asset was derecognised from the group balance
sheet. No amounts were capitalised in the period.
Therefore the asset was not tested for impairment. Further
details are given in Note 5, including in respect of judgements
applied by management in assessing the nature of the relationship
between the Company and Athlos at year end.
Athlos is recorded as a separate operating segment.
4. REVENUE
The Group's policy on revenue recognition is as outlined in note
2. The Group's revenue disaggregated by primary geographical market
is as follows:
Year to 30 June 2023 Total
GBP
United Kingdom 4,343,202
North America 265,605
ROW 814,764
Total 5,423,571
=====================
Year to 30 June
2022 Total
GBP
United Kingdom 2,830,620
North America 1,563,982
ROW 865,904
Total 5,260,506
===========
Profit and loss information for each operating segment is given
in note 10.
The Group's revenue disaggregated by pattern of revenue
recognition and business unit is as follows:
Year to 30 June 2023
Digital Media eSports Athlos Total
GBP GBP GBP GBP
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
============== ========== ======== ==========
Year to 30 June 2022
Digital Media eSports Athlos Total
GBP GBP GBP GBP
Services transferred
at 2,695,388 - - 2,695,388
a point in time
Services transferred
over time - 2,248,233 316,885 2,565,118
Total 2,695,388 2,248,233 316,885 5,260,506
============== ========== ======== ==========
As at 30 June 2023 the Group had the amounts shown below held on
the consolidated statement of financial position in relation to
contracts either performed in full during the year or ongoing as at
the year end. All amounts were either due within one year or, in
the case of contract liabilities, the work was to be performed
within one year of the balance sheet date
Year to 30 June Year to 30 June
2023 2022
GBP GBP
Contract Assets Nil 246,428
Contract Liabilities Nil 208,715
------------------- -----------------
The Group agrees payment terms with each customer at the outset
of the contract and typically agrees 30 day payment terms. All
revenue streams which are recognised over time were completed and
invoiced in the year resulting in no contract assets or liabilities
at 30 June 2023. All brought forward contract assets and
liabilities were realised in the year.
Contract assets are initially recognised for revenue earned
while the services are delivered over time or when billing is
subject to final agreement on completion of the milestone. Once the
amounts are billed the contract asset is transferred to trade
receivables.
5. DISCONTINUED OPERATIONS AND INTEREST IN ASSOCIATE
As disclosed in Note 10, management consider that the group's
activities in the year comprise three operating segments being
Gfinity Digital Media, Athlos and eSports.
The company announced on 6 June 2023 that it had decided to
close the eSports operating segment and to dispose of 72.5% of its
interest in Athlos Game Technologies Ltd ("Athlos").
Therefore the results of the eSports and Athlos segments are
reflected as discontinued operations in the group statement of
profit or loss. The results for the year to 30 June 2022 have been
represented as required by IFRS 5.
In respect of the eSports division, it was announced on 5
December 2023 that the remaining trade and assets of the eSports
segment had been sold to Ingenuity Loop Limited for consideration
of GBP15,000.
In respect of Athlos, on 5 June 2023 the group concluded a share
purchase agreement with Tourbillon Group UK Limited, under which
Tourbillon subscribed for new shares in Athlos resulting in
Tourbillon gaining a controlling interest. The SPA also provided
for the Athlos IP, previously referred to by Gfinity as the Engage
development asset, would be assigned to Athlos at the date of
completion of the SPA. Tourbillon undertook certain funding
commitments with effect from the effective date of the transaction,
significantly reducing Gfinity's funding obligations whilst
retaining a minority interest. The SPA also provided for Gfinity to
retain access to the Engage platform IP.
In light of the SPA, the Board considered the nature of the
resulting relationship with Athlos and considered that the facts
and circumstances indicated that Athlos was, from the date of the
transaction and as at 30 June 2023, an associate. This is because
of the group's continuing 27.5% equity and voting interest and the
entitlement to appoint a director to the board of Athlos. Therefore
the Group was deemed to have lost control and no longer
consolidated the results of Athlos from that date. Accordingly, the
group recorded a loss on loss of control of subsidiary in the group
profit and loss account of GBP548,761, representing the carrying
value of the Engage IP at the date of loss of control. Management
further considered the fair value of the resulting interest in
Athlos and concluded that whilst the business has significant
prospects, a value of nil was appropriate in light of the record of
losses of the Athlos business, its status as an early stage project
and the funding requirements to bring the product to
profitability.
Therefore the deemed cost of the equity-accounted associate is
nil and under equity accounting, no share of associate's losses are
reflected in the group profit and loss statement.
After the balance sheet date, on 27 November 2023, the company
announced the disposal of its remaining interest in Athlos for
consideration of GBP260,000. See note 25 for more details.
The registered office address of Athlos is 16 Great Queen
Street, London, WC2B 5AH.
At 30 June 2023, the Company's historic cost of investment in
Athlos was GBP5.
6. OPERATING EXPENSES
Group
Year to 30 Year to 30
June 2023 June 2022
GBP GBP
Depreciation of property, plant and equipment 33,254 112,993
Amortisation & impairment of intangible
fixed assets 3,611,225 1,631,734
Goodwill impairment 4,219,110 -
Staff costs (see note 7) 3,148,791 3,406,569
Auditors' remuneration for auditing the
accounts of the Company 55,000 72,000
Auditors' remuneration for other non-audit
services:
- Other services related to taxation 3,240 7,229
- All other services 4,025 16,101
Net foreign exchange (gains)/ losses 21,824 (54,405)
------------ ------------------
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
Year Year
to 30 to 30
June June
2023 2022
Board 6 6
Operations 38 38
44 44
======== ========
The aggregate payroll costs of staff (including directors)
were:
Group
Year to 30 June Year to 30 June
2023 2022
GBP GBP
Wages and salaries 2,726,670 2,514,773
Social security costs 323,812 340,929
Pensions 49,714 55,648
Share based payments
(Note 22) 48,595 495,220
3,148,791 3,406,570
================== ======================
Total remuneration for Directors during the year was GBP595,780
(2022: GBP520,141).
The board of directors comprise the only persons having
authority and responsibility for planning, directing and
controlling the activities of the Group.
The Board consider there are no key management personnel other
than the Board.
The number of directors to whom retirement benefits accrued
during the period was 3 (2022: 3).
8. FINANCE INCOME/COSTS
Group
Year to 30 Year to 30
June 2023 June 2022
GBP GBP
Interest income on bank deposits 885 77
Notional interest on contingent consideration (77,691) 0
(76,806) 77
========================== ============
The net finance cost relating to continuing operations was
GBP25,976.
9. TAXATION
Group
Year to 30 Year to 30
June 2023 June 2022
GBP GBP
Current tax
Corporation tax charge/ (credit) (146,691) 84,600
------------ ------------------------------
Total current tax (149,691) 84,600
Deferred tax
Relating to origination and reversal
of temporary differences (825,185) (294,568)
------------ ------------------------------
Taxation (credit) reported in the
income statement (974,876) (209,968)
============ ==============================
Factors affecting tax charge for the period
A reconciliation of taxation expense applicable to accounting
profit before taxation at the statutory tax rate of 19% (2021:
19%), to taxation expense at the Groups effective tax rate for the
period is as follows:
Year to 30 Year to 30
June 2023 June 2022
GBP GBP
Loss on ordinary activities before
taxation (10,254,836) (3,810,960)
---------------------------- ----------------------------
Profit/ (Loss) multiplied by effective
rate of 19% (1,948,419) (724,082)
---------------------------- ----------------------------
Effect of:
Expenses not deductible for tax purposes 349,574 102,803
Movement in unrecognised deferred
tax asset arising from tax
losses 1,598,845 536,679
Movement in deferred tax arising from
other temporary timing differences 825,184 294,568
R&D Credit received 109,732 -
Over Provision in prior years 39,960 -
Tax Credit 974,876 209,968
---------------------------- ----------------------------
Split as
Current tax 149,691 84,600
Deferred tax 825,185 379,168
---------------------------- ----------------------------
Taxation (credit)/charge reported in
the income statement 974,876 209,968
============================ ============================
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 GBP52.2m (2022: GBP43.75m)
available for offset against future taxable profits. A potential
deferred tax asset of GBP13.0m has not been recognised due to the
uncertainty of future profits. The tax losses have no expiry
date.
With effect from 1 April 2023, HMRC introduced a headline UK
corporation tax of 25%.
10. OPERATING SEGMENTS
Year to 30 June 2023
Esports Athlos Digital Media Total
GBP GBP GBP GBP
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) (5,987,171)
Admin expenses (3,300,378) (855,862) (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) (7,204,739) (10,254,837)
======================= ================= =============================== ========================
Year to 30 June 2022
Esports Athlos Digital Media Total
GBP GBP GBP GBP
Revenue 2,248,233 316,885 2,695,388 5,260,506
Cost of sales (1,146,974) (152,217) (1,247,317) (2,546,507)
Impairment Charge - - (76,989) (76,989)
Admin expenses (3,302,189) (530,293) (2,870,623) (6,703,105)
Loss on disposal of
Associate 45,090 - - 45,090
Restructuring Cost - - - -
Re-assessment of
Deferred
Consideration - - 0 0
Net Finance Expenses - - 77 77
Tax - - 209,968 209,968
----------------------- ----------------- ------------------------------- ------------------------
Loss (2,155,839) (365,625) (1,289,496) (3,810,960)
======================= ================= =============================== ========================
Management identify operating segments through consideration of
the aggregated data reviewed by the Board in monitoring the
performance of the business.
As disclosed in Note 5, during the year both the Esports and
Athlos segments were discontinued. Therefore the loss after tax
from discontinued operations was GBP3,050,097.
In line with IFRS 8 para 23, assets and liabilities split by
segment are not disclosed as these are not regularly reviewed by
the Board in this way. All material assets at year end relate only
to Gfinity Digital Media, being the only segment which is a
continuing operation. Within continuing operations, being only the
Digital Media division, two key customers accounted for 46% and 12%
of revenue. Within discontinued operations, three key customers
accounted for 67%, 14%, 13% respectively, all within the Esports
segment.
11. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the loss
attributable to shareholders by the weighted average number of
ordinary shares in issue during the period.
IAS 33 requires presentation of diluted EPS when a Company could
be called upon to issue shares that would decrease earnings per
share or increase the loss per share. For a loss making Company
with outstanding share options, net loss per share would be
decreased by the exercise of options and therefore the effect of
options has been disregarded in the calculation of diluted EPS.
All EPS and DEPS figures stated below are presented in
pence.
2023 2022
All Operations
Earnings (10,254,836) (3,980,972)
Weighted Average
Shares 1,735,787,903 1,122,821,000
EPS (0.59) (0.35)
DEPS (0.59) (0.35)
---------------------------- ----------------------------------------
Continuing Operations
2023 2022
Earnings (7,204,739) (1,459,508)
Weighted Average
Shares 1,735,787,903 1,122,821,000
EPS (0.42) (0.13)
DEPS (0.42) (0.13)
---------------------------- ----------------------------------------
Discontinued Operations
2023 2022
Earnings (3,050,097) (2,251,464)
Weighted Average
Shares 1,735,788,903 1,122,821,000
EPS (0.18) (0.22)
DEPS (0.18) (0.22)
---------------------------- ----------------------------------------
12 . PROPERTY, PLANT AND EQUIPMENT
Group
Computer
Office & Production Leasehold
equipment Equipment Improvements Total
Cost GBP GBP GBP GBP
At 1 July 2021 63,143 1,096,133 1,633,942 2,793,218
Addition - 74,137 - 74,137
At 30 June 2022 63,143 1,170,270 1,633,942 2,867,355
---------------------- ---------------------- ---------------------- ----------------------
Amortisation
At 1 July 2021 62,346 1,006,802 1,536,704 2,605,852
Charge for the period 797 106,510 5,686 112,993
At 30 June 2022 63,143 1,113,312 1,542,390 2,718,845
---------------------- ---------------------- ---------------------- ----------------------
Net Book Value
30 June 2022 - 56,958 91,552 148,510
---------------------- ---------------------- ---------------------- ----------------------
30 June 2021 797 89,331 97,238 187,366
---------------------- ---------------------- ---------------------- ----------------------
Computer
Office & Production Leasehold
equipment Equipment Improvements Total
Cost GBP GBP GBP GBP
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
---------------------- ---------------------- ---------------------- ----------------------
Company
Computer
Office & Production Leasehold
equipment Equipment Improvements Total
Cost GBP GBP GBP GBP
At 1 July 2021 51,743 1,068,236 1,633,941 2,753,920
Addition - 74,138 - 74,138
At 30 June 2022 51,743 1,142,374 1,633,941 2,828,058
---------------------- ---------------------- ---------------------- ----------------------
Amortisation
At 1 July 2021 39,997 997,491 1,536,704 2,574,192
Charge for the period 9,546 93,555 5,686 108,787
At 30 June 2022 49,543 1,091,046 1,542,390 2,682,979
---------------------- ---------------------- ---------------------- ----------------------
Net Book Value
30 June 2022 2,200 51,328 91,551 145,079
---------------------- ---------------------- ---------------------- ----------------------
30 June 2021 11,746 70,745 97,237 179,728
---------------------- ---------------------- ---------------------- ----------------------
Computer
Office & Production Leasehold
equipment Equipment Improvements Total
Cost GBP GBP GBP GBP
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
---------------------- ---------------------- ---------------------- ----------------------
13. GOODWILL
Group
Cost
At 1 July 2021 1,903,790
Additions arising from business combinations 2,810,609
At 30 June 2022 4,714,399
---------------
Impairment
At 1 July 2021 -
Charge for the period -
At 30 June 2022 -
---------------
Net Book Value
30 June 2022 4,714,399
---------------
30 June 2021 1,903,790
---------------
Cost GBP
At 1 July 2022 and 30 June 2023 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
---------------
Company
Cost
At 1 July 2021 2,568,417
Additions arising from business combinations 370,775
At 30 June 2022 2,939,192
---------------
Impairment
At 1 July 2021 -
Charge for the period 664,627
At 30 June 2022 664,627
---------------
Net Book Value
30 June 2022 2,274,565
---------------
30 June 2021 2,568,417
---------------
Cost GBP
At 1 July 2022 and 30 June 2023 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
---------------
The Group and Company hold goodwill in respect of the
acquisitions of the trade and assets of Siege.gg, EpicStream and
RealSport in earlier periods. An impairment charge of GBP370,775
and GBP1,408,501 was recorded in respect of Siege.gg and RealSport
respectively, in both the Group and Company profit and loss
accounts.
Additionally, the Group carries goodwill in respect of the
acquisition of Megit Limited in the prior year. An impairment
charge of GBP2,439,834 was recorded in the group profit and loss
account.
In all cases, management assigned goodwill to cash generating
units, being the group of assets associated with the acquired
website and associated infrastructure, since each online brand has
separately identifiable cash flows.
Refer to Note 3 for details of impairment tests.
14. INTANGIBLE FIXED ASSETS
Other
Group Web Platforms Engage Intangibles Total
Cost GBP GBP GBP GBP
At 1 July
2021 576,822 - 2,480,481 3,057,303
Addition - 685,951 - 685,951
Acquired
through
business
combination 4,816,443 - - 4,816,443
At 30 June
2022 5,393,265 685,951 2,480,481 8,559,697
------------------------- ------------------------------ ----------------------- -----------------------
Amortisation
and
impairment
At 1 July
2021 104,211 - 2,248,611 2,352,822
Charge for
the period 1,390,196 - 164,549 1,554,745
Impairment 19,265 - 57,724 76,989
At 30 June
2022 1,513,672 - 2,470,724 3,984,556
------------------------- ------------------------------ ----------------------- -----------------------
Net Book
Value
30 June 2022 3,879,593 685,951 9,597 4,575,141
------------------------- ------------------------------ ----------------------- -----------------------
30 June 2021 472,611 - 231,870 704,481
------------------------- ------------------------------ ----------------------- -----------------------
Other
Web Platforms Engage 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 includes web domains and platform technology
acquired in the acquisitions of Megit Limited, Siege.gg and
EpicStream.
Engage is the group's proprietary software which was assigned to
Athlos Game Technologies Ltd in the year and therefore disposed,
since the group lost control of Athlos during the period (see Note
5).
Other intangibles includes technology platforms and customer
lists arising in earlier acquisitions.
INTANGIBLE FIXED ASSETS (continued)
Company Web Platforms Engage Other Intangibles Total
Cost GBP GBP GBP GBP
At 1 July
2021 576,822 - 64,919 641,741
Addition - 685,951 - 685,951
Acquired
through
business
combination 155,989 - - 155,989
At 30 June
2022 732,811 685,951 64,919 1,483,681
------------------------ --------------------------- --------------------------- -------------------------
Amortisation
and
impairment
At 1 July
2021 104,211 - 7,195 111,406
Charge for
the period 235,738 - - 235,738
Impairment 19,265 - 57,724 76,989
At 30 June
2022 359,214 - 64,919 424,133
------------------------ --------------------------- --------------------------- -------------------------
Net Book
Value
30 June 2022 373,597 685,951 - 1,059,548
------------------------ --------------------------- --------------------------- -------------------------
30 June 2021 472,611 - 57,724 530,335
------------------------ --------------------------- --------------------------- -------------------------
Web Platforms Engage Other Intangibles Total
Cost
At 1 July
2022 713,546 685,951 7,195 1,406,692
Addition - - - -
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 6678 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
------------------------ --------------------------- --------------------------- -------------------------
15. INVESTMENT IN SUBSIDIARIES
Company
Restated (Note
27)
Year to 30 Year to 30
June 2023 June 2022
GBP GBP
At 1 July 6,069,716 -
Additions - 6,069,716
Impairment (5,930,565) -
Loss of control of subsidiary (5) -
139,146 6,069,716
======================== =========================
Subsidiary Country of Holding Proportion Nature of business
undertaking incorporation of voting
rights
and capital
held
CEVO Inc. USA Ordinary 100% IT Development and Tournament
shares and event operator
RealSM Limited England Ordinary 100% Online media
Shares
Megit Limited England Ordinary 100% eCommerce and affiliate
Shares revenues
AFG-Games Ltd England Ordinary 72%
Shares Dormant
RealSM Ltd's registered office address is The Foundry, 77 Fulham
Palace Road, London, United Kingdom, W6 8JB. CEVO's registered
address is 128 Maringo Rd, Ephrata, WA 98823. AFG-Games Limited's
registered office address is 77 Fulham Palace Road, Foundry
Building, Smiths Square, London, England, W6 8AF. Megit Limited's
registered office address is 16 Great Queen Street, London,
England, WC2B 5AH
RealSM Limited, AFG-Games Limited and Megit Limited are exempt
from the requirements of the Act relating to the audit of
individual accounts in accordance with 479A of the C.A. 2006.
Gfinity Plc guarantees all outstanding liabilities to which these
subsidiaries are subject at year-end, until they are satisfied in
full and the guarantee is enforceable against the parent
undertaking by any person to whom the subsidiary company is liable
in respect of those liabilities.
During the year, additional ordinary shares were issued in
Athlos Game Technologies Ltd such that the company considered the
relationship with Athlos to be an associate rather than a
subsidiary at the year end. Further details are given in Note
5.
16. TRADE AND OTHER RECEIVABLES
Group Company
Year to Year to Year to Year to
30 June 30 June 30 June 30 June
2023 2022 2023 2022
GBP GBP GBP GBP
Trade receivables 524,690 1,495,773 487,490 1,445,075
Provision for expected
credit loss (58,864) (7,370) (58,864) (243)
------------------ ----------------- ----------------- ------------------
465,826 1,488,403 428,626 1,444,832
Prepayments and accrued
income 178,714 478,372 102,739 351,028
------------------ ----------------- ----------------- ------------------
Amounts due in less than
one year 644, 540 1,966,775 531,365 1,795,860
Amounts due from group
undertakings - - - 82,856
Other receivables - 2,118 - 2,114
------------------ ----------------- ----------------- ------------------
Total 644,540 1,968,893 531,365 1,880,830
================== ================= ================= ==================
Amounts due from group undertakings of GBPnil are considered to
be due in more than one year (2022: GBP82,856).
The directors consider that the carrying amount of trade and
other receivables approximates to their fair value due to the
short-term nature of these financial assets.
17. CASH AND CASH EQUIVALENTS
Group Company
Year Year to Year to Year to
to 30 30 June 30 June 30 June
June 2023 2022 2023 2022
GBP GBP GBP GBP
Cash at bank and
in hand 270,476 2,141,361 71,255 1,361,279
Total 270,476 2,141,361 71,255 1,361,279
============ =========== ============ ===========
Cash at bank and in hand earns interest at floating rates based
on daily bank deposit rates. The fair value of cash and cash
equivalents does not differ from the carrying value.
18. DEFERRED TAX LIABILITIES
Group
Year to 30 June
Year to 30 June 2023 2022
GBP GBP
At 1 July 897.575 127,835
Arising on business combination - 1,064,308
Credited to profit or loss (825,185) (294,568)
At 30 June 72,390 897,574
============================ =========================
Company
Year to 30
Year to 30 June 2023 June 2022
GBP GBP
At 1 July 94,748 94,748
Credited to profit or loss (94,748) -
At 30 June 0 94,748
================================== ==============================
The deferred tax liability relates entirely to temporary
differences on intangible assets arising on business
combinations.
19. ISSUED SHARE CAPITAL
The Company has a single class of ordinary share with nominal
value of GBP0.001 each. Movements in the issued share capital of
the Company can be summarised as follows:
Ordinary Shares
Share Capital
Number GBP
As at 30 June
2021 930,513,248 930,513
Issued during the financial
year 385,183,331 385,184
September to April 2022 at between GBP0.001
and GBP0.004 per share
-------------- --------------
As at 30 June
2022 1,315,696,579 1,315,697
-------------- --------------
Issued during the financial
year March 2023 at GBP0.0015
per share 1,333,333,334 1,333,333
As at 30 June
2023 2,649,029,913 2,649,030
============== ==============
Ordinary shares entitle the holder to full voting, dividend and
rights on winding up.
Subsequent to the year end, 750,000,000 shares were issued at
GBP0.0006 per share, generating proceeds
of GBP450,000 before expenses.
In respect of the issue of 1,333,333,334 shares in the period,
the company issued 39,720,000 warrants exercisable between 6 and 18
months from the issue date at 0.1325p. A fair value of GBP44,010,
derived using the Black Scholes model, was credited to share
premium as a directly attributed cost of issue.
20. TRADE AND OTHER PAYABLES
Group Company
Year
to 30 Year to Year Year to
June 30 June to 30 30 June
2023 2022 June 2023 2022
GBP GBP GBP GBP
Non-current liabilities
Other payables (deferred
consideration) 17,669 840,751 17,669 840,751
Deferred tax liabilities 72,390 897,575 - 895,751
----------- --------------- ------------ -----------
90,059 1 ,738,326 17,669 1,736,502
Current liabilities
Trade payables 412,395 571,389 383,737 533,395
Other taxation and social
security 201,745 145,021 201,745 144,300
Accrued expenditure and
deferred revenue 226,181 1,033,303 226,188 896,299
Other payables 220,473 1,293,550 220,473 977,890
Amounts owed to group undertakings - 426,883 -
----------- --------------- ------------ -----------
1,060,794 3,043,263 1,459,026 2,551,884
Total 1,150,853 4,781,589 1,476,695 4,288,386
=========== =============== ============ ===========
Trade and other payables principally comprise amounts
outstanding for trade purchases and ongoing costs. The directors
consider that the carrying amount of trade payables approximates to
their fair value due to their short-term nature.
Contingent consideration arising from business combinations is
held at fair value at each reporting date. During the year,
payments of GBP1,075,416 were paid and the fair value of remaining
contingent consideration at 30 June 2023 was assessed as
GBP202,455, of which GBP17,669 is expected to be payable in more
than 1 year.
20. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Company uses a limited number of financial instruments,
comprising cash, short-term deposits, and various items such as
trade receivables and payables, which arise directly from
operations. The Company does not trade in financial instruments.
All of the Company's financial instruments are measured at
amortised cost other than contingent consideration arising on
business combinations which is held at fair value at each reporting
date.
The Company's activities expose it to a variety of financial
risks: market risk (including currency risk and interest rate
risk), credit risk and liquidity risk.
Credit risk
The Company's principal financial assets are bank balances and
cash, trade and other receivables.
Bank balances and cash are held by banks with high credit
ratings assigned by independent credit rating agencies. Management
is of the opinion that cash balances do not represent a significant
credit risk.
As the Group does not hold security against trade and other
receivables, its credit risk exposure is as follows:
Group Company
Year to 30 Year to 30 Year to 30 Year to 30
June 2023 June 2022 June 2023 June 2022
GBP GBP GBP GBP
465,826 1,968,893 428,626 1,880,830
------------ ------------ ------------ ------------
The Group trade receivables balance represents amounts due from
third parties. At the balance sheet date, the Group's trade
receivables totalled GBP524,690 against which an expected credit
loss provision of GBP58,864 had been raised (2022: GBP1,495,773
less a provision of GBP7,370).
The Company's receivables include GBP575,177 of inter-company
funding (2022: GBP652,054) and this receivable is provided against
in full due to uncertainty of the timing over which the respective
subsidiaries will be in a position to reimburse these amounts.
The Company's trade receivables totalled GBP487,490 less a
provision for doubtful debt of GBP58,864 (2022: GBP1,445,075 less a
provision for expected credit losses of GBP243).
The Group's policy is to raise expected credit loss provisions
where payments have been not received within the contractual due
date. The Group continues to seek to collect all debts until such
time as a debt it written off. The Group writes off debt when it
considers that there is no prospect of recovery, for example when a
debtor enters into administration or the Group is aware of other
factors indicative of this outcome.
At the balance sheet date, one customer represented 59% of gross
Group trade receivables. This amount was collected in full after
the balance sheet date.
There were no contract assets at 30 June 2023.
Liquidity risk
All trade and other payables are due for settlement within one
year of the balance sheet date. The use of instant access deposits
ensures sufficient working capital is available at all times.
Foreign exchange risk
The Company operates in overseas markets by selling directly
from the UK, owns an overseas subsidiary and reports in GBP. It is
therefore subject to currency exposures on transactions while the
Group is subject to currency exposures on consolidation of the
overseas subsidiary.
Financial instruments held by the Company and their carrying
values were as follows:
Group
Year to 30 June 2023 Year to 30 June 2022
USD EUR GBP (GBP) USD EUR GBP (GBP)
($) (EUR) ($) (EUR)
Trade and other
receivables 622,988 3,000 150,148 53,048 - 1,446,932
Accrued income - - - 41,018 - 444,668
Cash 74,259 211,779 98,695 - 2,060,264
Trade and other
payables 125,643 8,413 971,990 70,212 - 4,723,896
------------------------ ------------------
Net current
assets/
liabilities 822,890 11,413 1,333,917 262,973 0 8,675,760
======================== ================== ======================== ==================== ==================== ================
Company
Year to 30 June 2023 Year to 30 June 2022
USD EUR GBP (GBP) USD ($) EUR GBP (GBP)
($) (EUR) (EUR)
Trade and other
receivables 506,015 3,000 129,740 896,172 - 708,454
Amounts due from
Group
Undertakings - - - - - 82,856
Accrued income - - - - - 351,028
Cash 42,520 37,728 71,416 - 1,302,597
Trade and other
payables 89,505 8,413 971,990 99,960 - 4,206,250
Amounts due to - - 426,883 - - -
Group
Undertakings
Net current
assets/
liabilities 638,040 11,413 1,566,341 1,067,548 - 6,651,185
================ ================== ======================== ==================== ================= =======================
Fair value estimation
The aggregate fair values of all financial assets and
liabilities are consistent with their carrying values due to the
relatively short-term maturity of these financial instruments.
As cash is held at floating interest rates, its carrying value
approximates to fair value.
Capital management
The Company is funded entirely through shareholders' funds.
If financing is required, the Board will consider whether debt
or equity financing is more appropriate and proceed accordingly.
The Company is not subject to any externally imposed capital
requirements.
21. 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
(GBP)
Shares options as at 30 June 2021 96,176,363 0.0556
Shares options granted 13,300,000 0.0125
Share options forfeited (14,870,408) 0.0257
Share options exercised (1,433,331) 0.0100
LTIP share options as at 30 June 2022 93,172,624 0.0483
---------------------------- ------------------
Shares options as at 30 June 2022 93,172,624 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
============================ ==================
Options vest over periods defined in the respective option
agreements and at the discretion of the board of directors.
The exercise prices of options outstanding at 30 June 2023 range
from 1p to 6.25p.
All share options outstanding at 30 June 2023 were
exercisable.
The weighted average remaining exercise period of options at 30
June 2023 was 7.5 years.
Of the options outstanding at the year end, 18,000,000 (2022:
36,000,000) were held by directors. Details of all options and
warrants held by directors are contained within the Directors'
Remuneration Report.
No share options were granted in the period. The inputs into
option pricing models are available in earlier annual reports. All
share options were valued using Black Scholes models.
All share options were granted at an exercise price equivalent
to the market price at the date of grant.
All options are held in Gfinity plc with no options held over
any of the group's subsidiaries.
Subsequent to the year end, the CEO David Halley was granted
271,922,393 share options; see Note 25 for more details.
22. WARRANTS
The Company has granted warrants over Ordinary Shares as
outlined in the table below.
Number Weighted average
exercise price
(GBP)
Warrants
Warrants as at 30 June 2021 20,050,500 0.010
Warrants granted 216,000,000 0.013
Warrants exercised (13,750,000) 0.010
Warrants lapsed/forfeited (6,300,500) 0.010
Warrants as at 30 June 2022 216,000,000 0.0125
=========================== ==================
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
=========================== ==================
1,373,053,333 warrants were granted in the period. The warrants
exercised were granted prior to the year ended June 2021 and this
figure represented one warrant per ordinary share acquired as part
of the fundraise at an exercise price equal to that at which shares
were acquired in the fundraise. All warrants are non-transferrable
and have an exercise period of 18 months from the date of
issue.
The fair value of warrants was calculated according to the Black
Scholes model, however, no adjustment has been recognised in
respect of the warrants, as directors consider this amount to be
immaterial.
23. RELATED PARTY TRANSACTIONS
The Directors' Report provides details of director remuneration
and share options and warrants held by the directors at the end of
the period. No directors were issued options during the year and no
directors exercised share options in the year. Certain directors
received warrants by virtue of participating in the fundraising in
the year on the same terms as other investors.
Transactions and balances with Group subsidiaries and associates
in the year:
CEVO:
During the year, the Company advanced cash of GBP502,718 (2022:
nil) to Cevo and Cevo incurred costs of GBP477,092 (2022:
GBP234,959) on the Company's behalf. The year end amount repayable
to the Company was GBP594,824 (2022: GBP569,198).
RealSM:
During the year, the Company costs on RealSM's behalf of
GBP6,595 (2022: GBP5,979). The year end amount payable to the
Company was GBP12,574 (2022: GBP5,979).
Megit:
During the year, the company incurred costs of GBP250,355 (2022:
GBP109,718) on behalf of Megit. Megit advanced cash of GBP150,000
to the Company and incurred costs on behalf of the Company of
GBP604,115 (2022: GBP32,842). The year end position is that the
Company owed GBP426,883 to Megit (2022: GBP76,877 due from
Megit).
Athlos:
Whilst Athlos was a subsidiary of the Group, the Company
incurred net costs on behalf of Athlos of GBP87,417 (2022: nil)
which was released under the terms of the sale agreement.
Subsequent to the disposal, the Company incurred costs of GBP63,717
on behalf of Athlos and the amount receivable at the year end was
GBP63,717 (2022: nil).
Subsequent to the year end, the Company disposed of its
remaining interest in Athlos to Tourbillon Group UK Limited of
which David Halley is a Director and shareholder.
24. EVENTS AFTER THE REPORTING PERIOD
In August 2023 the company raised GBP450,000 before expenses
through the issue of 750,000,000 shares at 0.06p each. At the same
time, the company's ordinary shares were reorganised such that each
ordinary share of 0.1p nominal value was split into one share of
0.01p nominal value and one deferred share of 0.09p. Ordinary
shares retain the same rights and deferred shares have no
substantive rights.
Also in August 2023, David Halley joined the Board as CEO and
Jonathan Hall resigned as a director. David Halley will receive no
cash remuneration and instead will be issued 271,922,393 share
options exercisable at 0.06p for 7 years from issue, vesting 50% on
grant and 50% after one year.
In September 2023, Neville Upton and Hugo Drayton, Directors,
were issued 91,773,808 and 44,187,389 share options respectively.
The options vest 50% immediately and 50% after one year, at an
exercise price of 0.06p. The exercise period is 7 years from grant.
A further 33,990,300 new share options were issued to certain
employees on the same terms. In addition, 75,990,299 new warrants
were issued to certain advisers on the same terms.
In November 2023, the Group disposed of its remaining interest
in Athlos for cash proceeds of GBP260,000.
In December 2023, the Group sold the remaining trade and assets
of its Esports division for cash proceeds of GBP15,000. The eSports
division was closed in June 2023. Gfinity also received a 15%
equity interest in Ingenuity Loop Limited which the majority
shareholder has the option to buy out for GBP200,000 in cash at any
time for the first 12 months post transaction. Neville Upton,
director of Gfinity, joined the board of Ingenuity Loop as CEO and
indirectly holds approximately 41% equity interest in Ingenuity
Loop.
25. RESTATEMENT
The Directors noted that certain adjustments had been
incorrectly reflected in the prior year annual report and financial
statements. These related to the following areas:
1) In the Company financial statements only, deferred tax
arising on the business combination with Megit had incorrectly been
reflected as part of the cost of investment in subsidiary in Megit.
Therefore the cost of investment has been reduced by GBP1,030,581
with a corresponding reduction in deferred tax liability within the
Company balance sheet.
2) In the Company financial statements only, movement on
deferred tax liabilities in respect of Megit, arising from the
above error, had been posted to profit or loss. As the initial
recognition of a deferred tax liability as incorrect, the movements
were incorrect. Therefore GBP219,347 has been reversed in profit or
loss and has been removed from deferred tax liabilities.
3) In the Group and Company financial statements, the directors
noted that the vesting period of certain share options used for
accounting purposes did not align with the contractual vesting
conditions of option issues. The result was excess of share option
charges in the prior year of GBP170,012, with a corresponding
adjustment to the share based payment reserve.
The summarised impact of the restatements is presented
below:
Group
As previously reported Restatement Corrected position
at 30 June
at 30 June 2022 2022
GBP GBP GBP
Revenue 5,693,385 - 5,693,385
Cost of
sales (2,546,508) - (2,546,508)
Gross profit 3,146,877 - 3,146,877
Admin
expenses (6,950,105) 170,012 (6,780,093)
Other profit
and loss
items (177,744) - (177,744)
------------------------------------------- ----------------------------- ---------------------------------
Loss for the
year (3,980,972) 170,012 (3,810,960)
Non-current
assets 9,438,050 - 9,438,050
Current
assets 4,110,254 - 4,110,254
Current
liabilities (3,043,272) - (3,043,272)
Non-current
liabilities (1,738,317) - (1,738,317)
------------------------------------------- ----------------------------- ---------------------------------
Net assets 8,766,715 - 8,766,715
Other
reserves 3,876,676 (170,012) 3,706,664
Retained
earnings (51,283,669) 170,012 (51,113,657)
Other equity
items 56,173,708 - 56,173,708
------------------------------------------- ----------------------------- ---------------------------------
Total equity 8,766,715 - 8,766,715
------------------------------------------- ----------------------------- ---------------------------------
The impact of the above adjustment to profit or loss was to
reduce the reported loss per share from 0.35p to 0.34p.
Note that as a result of the decision to discontinue Athlos and
Esports in the year, the group profit and loss account has
otherwise been represented to separate the results from
discontinued operations and so the above analysis is not directly
comparable to the comparatives as they are presented this year. The
represented Operating Segments note provides a profit and loss
analysis by segment in the current and comparative year.
Company
As previously reported Restatement Corrected position
at 30 June 2022 at 30 June 2022
GBP GBP GBP
Loss for the
year (4,198,665) (49,742) (4,248,407)
Investment in
subsidiary 7,100,297 (1,030,581) 6,069,716
Other
non-current
assets 3,479,193 - 3,479,193
Current assets 3,242,109 - 3,242,109
Current
liabilities (2,551,884) - (2,551,884)
Deferred tax
liability (895,751) 810,827 (84,924)
Other
non-current
liabilities (840,751) - (840,751)
-------------------------------------- ---------------------------- -----------------------------
Net assets 9,533,213 (219,754) 9,313,459
Other reserves 3,898,634 (170,012) 3,728,622
Retained
earnings (50,539,126) (49,742) (50,588,868)
Other equity
items 56,173,705 - 56,173,705
-------------------------------------- ---------------------------- -----------------------------
Total equity 9,533,213 (219,754) 9,313,459
-------------------------------------- ---------------------------- -----------------------------
26. PROVISIONS
As announced during the year under review, the company closed
its eSports division. Some of the costs of closure were incurred
and expensed during the year. However, some costs remained
unsettled as at 30 June 2023, and the company has a provision of
GBP238,287 to meet these costs, post year end.
There were no provisions at 30 June 2022; the provision of
GBP238,237 was created during the year and there was no release or
utilisation of the provision, therefore the closing provision was
GBP238,237. The provision is not discounted as amounts are expected
to be utilised within a year.
END
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FR FFFSIFVLLFIV
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December 22, 2023 02:00 ET (07:00 GMT)
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