REG - Gfinity PLC - Final Results
13/01/2025 07:00
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RNS Number : 9840S Gfinity PLC 13 January 2025
13 January 2025
For immediate release
Gfinity PLC
("Gfinity" or the "Company")
Audited Results for the year ended 30 June 2024
The Board of Gfinity announces the audited annual results for the year ended
30 June 2024. The Annual Report and Accounts will shortly be sent to
shareholders and will be available on the Company's website together with a
copy of this announcement at www.gfinityplc.com (http://www.gfinityplc.com)
For further information please contact:
Enquiries:
Gfinity Plc David Halley +44 (0)7516 948427
Beaumont Cornish Limited Roland Cornish +44 (0)207 628 3396
Nominated Adviser and Broker Michael Cornish www.beaumontcornish.co.uk (http://www.beaumontcornish.co.uk/)
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 David Halley, 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 2024.
It has been a difficult year for the Company as we completed the transition
from esports solutions and software development to a pure play digital media
company. By focussing on cost reduction and a quality product, we have been
able to navigate a very difficult period where many Digital Publishers
struggled, and AI solutions complicated the search market for websites.
The restructuring has led to a reduction in revenue to £1.9m, a decrease of
14% YOY, with a loss of £594k. Within this loss, we were able to complete the
full restructuring of the business so that we enter the new financial year in
a much stronger position.
In November 2023, we completed the exit the majority of Athlos Game
Technologies Ltd ("Athlos"), providing valuable funds to complete the
restructuring of the Company.
The economics of the business has become much more flexible and thus lower
risk, after we completed a full top-down review of the Company and removed the
majority of senior staff. Moving forward, Digital Media businesses need to
adapt to a new ecosystem with more competition to Google and a plethora if AI
search products in the market negating the use of some traditional features.
In addition, we were able to sign a non-binding MOU in November 2024, to
license the technology of 0M Technology Solutions Limited, with the option to
buy it within the next period. This MOU highlights our management team's
ability to adapt and utilise our commercial operations in ways which take
advantage of new secular trends in the market.
Our operating cost base has been streamlined, with the combined operating
costs of both continued and discontinued operations for FY2024, down 70%
year-on-year when compared to our current annualised cost base of £845k.
These changes by no means limit the opportunity of the Company, as we are now
operated by a leaner team, with known M&A experience in a market with many
opportunities. Our customer base of hard-to-reach gamers is one of the most
coveted by brands and advertisers, and gaming is a sector continuing to grow
year-on-year.
In summary, I would like to say thank you to the Gfinity team, who have
supported us through a challenging year of transition. They are dedicated
writers and developers, and have a clear passion for gaming. I would also like
to thank all our clients and partners that choose to work with Gfinity
together with our shareholders. Their continued support is never taken for
granted and we can now look forward to growing together.
Neville Upton
Chairman
10 January 2025
Strategic Report
Chief Executive Officer's Report
When appointed CEO in August 2023, I set out to quickly bring the economics of
our business under control after a long period of loss-making business
decisions trying to build long term value.
There would be an obvious transition period, where we could ascertain which
team members and technologies to retain, whilst also taking into account the
cost of being a publicly traded company. This was made much more complicated
in a year that Google also decided to transition their search business to a
newer model, ensuring that unlike previous years of 1 or 2 updates of their
product, there are now monthly updates.
For the year, Gfinity Digital Media recorded 97,992,773 sessions across all
websites, versus 180,833,842 which was recorded in the prior year. This
represented a 45% drop and was due to general market reductions, as users
experienced more choice through platforms such as Twitch, and also the
algorithms at Google affecting smaller publishers.
The focus has been consistent, in that it was now time for Gfinity to become a
profitable company. As such our operating costs for the Digital Media group
are now exceptionally low, as we embrace a flexible low-cost freelance model
and have cut out a huge layer of technology which is no longer required now
that companies such as Google provide the services for free.
When I came into the Company, it was with a view to embrace the new secular
trend in Artificial Intelligence ("AI"), with Large Language Models
potentially changing the way businesses operate. But how many companies
actually really embrace AI? This is a focus of the Company moving forward, in
that we are yet to see a large-scale deployment of these tools and thus there
is an enormous opportunity in the market.
In November 2024, I signed a non-binding MOU for the licensing of Connected
IQ. As a strategy, this takes advantage of our market position and commercial
operations as it is focused on monetization and advertising. The AI models
behind the Connected IQ are market leading, and I believe that this is a huge
opportunity to move into the growth market of connected TV and online video.
We are also building new tools in our sites to engage with the Trading Card
community, which is a very strong area for Gfinity based on the success of
www.mtgrocks.com.
This has been a difficult year for Gfinity. At the end of the June monthly
sessions across all sites were circa 10 million and combined with our social
media channels we reached more than 2.5 million gamers in November.
We have now built a stronger foundation for future growth and will work
opportunistically through the next year to find additive transactions to grow
the network and company.
Financial Highlights:
The company operated in FY 2024 with 2 loss-making business divisions.
While both presented opportunities to create shareholder value, Athlos
required more capital in order to achieve a completed product.
Athlos is a groundbreaking product but needed significant funding. Gfinity
sold the remaining 27.5% of Athlos in November 2023. This division was
significantly loss-making each month as it invested in further feature
development and needed to invest heavily in the go-to-market plan.
GDM witnessed significant headwinds with numerous changes to the google
algorithms and a well-publicised decline in the ad rates seen across all
digital media. This required a new approach to running the business. A lower
cost base, leaner management team and bigger focus on quality content and
improved User Experience was needed.
· Completed a significant cost reduction programme
· Moved to a more freelance focused model for content creation
· Improved site structure and completed the migration of all sites
to one operating system
Growth
Having stabilised the business with a lower cost base and stronger operating
foundations, we are now embarking on a growth plan. In November 2024, we
signed an MOU with 0M Technology Solutions Limited to license their market
leading AI advertising business for Connected TV and video. In 2025, we expect
this business to significantly add to the Company's revenue.
GDM's competitive advantage is technology and our deep industry knowledge and
connections.
We have;
· a small young team who understands the future of digital
communications and media
· a technology platform that allows us to scale the content suite
· an ad tech capability to increase our revenues
· a sales team to exploit the need for brands to reach the
difficult to reach Gen Z community
Our dedicated team
The progress we are making across the business is a direct consequence of the
passion and spirit shown by the team. Our team members are stepping up,
innovating, selling ideas, building networks, impressing partners with the
quality of their work, and making things happen in a challenging economic
environment. Gfinity is benefiting from having leaders across the business
driven by their desire to build something special.
Outlook
The strategic focus on GDM gives us greater control over our destiny. It
allows us to become a leader in one discipline while also navigating the
economic headwinds. We have seen a nervousness from publishers to commit
investment and advertising rates have been impacted across the whole of
digital media. It is crucial that we continue to manage our cost base
zealously while being innovative and adopting to the new technological
opportunities. The team will remain agile, flexible, and entrepreneurial,
continually adopting to new opportunities and providing compelling engagement
to the gaming community.
Conclusion
The first stage of the transformation of Gfinity' s business model is now
completed, and we are now confidently moving into the new year with a business
plan designed to create profitability and share price growth. I would like to
thank the Gfinity team, our business partners and our clients for their
continued hard work and support.
David Halley
Chief Executive Officer
10 January 2025
Group Statement of Profit or Loss
For the ended 30 June
2024
Notes Year to 30 June 2024 Year to 30
June 2023
Continuing Operations £ £
Revenue 4 1,895,029 2,190,216
Cost of Sales (844,951) (953,905)
Gross profit 1,050,078 1,236,311
Administration expenses 6 (2,054,057) (3,788,329)
Operating Loss from trading activities * (1,003,979) (2,552,018)
Impairment charge (284,408) (5,984,171)
Re-assessment of Deferred Consideration 24,541 931,311
Loss arising on loss of control of a subsidiary 5 - (548,761)
Gain on disposal of Athlos and Esports division 5 275,011 -
Net finance costs 8 (438) (25,976)
Loss on ordinary activities before taxation (989,273) (8,179,615)
Taxation 9 394,831 974,876
Loss from continuing operations (594,442) (7,204,739)
Loss on discontinued operations, net of tax 10 - (3,050,097)
Loss for the year (594,442) (10,254,836)
Earnings per share - Continuing operations 11 (0.02) (0.42)
(Pence - Basic and Diluted)
* Operating Loss from trading activities is the Operating Loss for the year
before impairment, movements on deferred consideration, and loss on the loss
of control of a subsidiary
Group Statement of Comprehensive Income
Year to 30 June 2024 Year to 30 June 2023
£ £
Loss for the Period (594,442) (10,254,836)
Items that may subsequently be reclassified to profit or loss
Foreign exchange profit / (loss) on retranslation of foreign subsidiaries 8,916 -
Other Comprehensive Income for the period 8,916 -
Loss and total comprehensive income for the period (585,526) (10,254,836)
Group Statement of Financial Position
As at June
2024
Notes 30-Jun-24 30-Jun-23
£ £
NON-CURRENT ASSETS
Property, plant and equipment 12 400 14,757
Goodwill 13 310,943 495,288
Intangible fixed assets 14 - 415,155
311,343 925,200
CURRENT ASSETS
Trade and other receivables 16 363,484 644,540
Cash and cash equivalents 17 23,155 270,476
386,640 915,016
TOTAL ASSETS 697,983 1,840,216
EQUITY AND LIABILITIES
Equity
Share capital 19 2,724,030 2,649,030
Share premium account 55,661,077 55,367,959
Other reserves 398,895 423,613
Retained earnings (58,419,049) (57,989,529)
Non-controlling interest - 3
Total equity 364,953 451,076
NON-CURRENT LIABILITIES
Other Payables 20 - 17,669
Deferred Tax Liabilities 18 - 72,390
CURRENT LIABILITIES
Trade and other payables 20 240,390 1,060,794
Provisions 25 92,640 238,287
Total liabilities 333,030 1,389,140
TOTAL EQUITY AND LIABILITIES 697,983 1,840,216
Group Statement of Financial Position
as at 30 June 2024
The notes form an integral part of these financial statements.
Registered number: 08232509
Signed on behalf of the board on 10 January 2025:
David Halley
Neville Upton
Chief Executive
Officer
Non-Executive Chairman
Company Statement of Financial Position
As at 30 June 2024
Notes 30-Jun-24 30-Jun-23
£ £
NON-CURRENT ASSETS
Property, plant and equipment 12 - 13,162
Goodwill 13 310,943 495,289
Intangible fixed assets 14 - 125,594
Investment in subsidiaries 15 - 139,146
Investment in associate 5 15 5
TOTAL NON-CURRENT ASSETS 310,958 773,196
CURRENT ASSETS
Trade and other receivables 16 346,841 531,365
Cash and cash equivalents 17 13,742 71,255
TOTAL CURRENT ASSETS 360,583 602,620
TOTAL ASSETS 671,541 1,375,816
EQUITY AND LIABILITIES
Equity
Share capital 19 2,724,030 2,649,030
Share premium account 55,661,077 55,367,959
Other reserves 411,937 423,613
Retained earnings (59,028,996) (58,779,718)
Total equity (231,952) (339,116)
NON-CURRENT LIABILITIES
Other payables 21 - 17,669
Deferred tax liabilities 19 - -
CURRENT LIABILITIES
Trade and other payables 21 810,852 1,459,026
Provisions 26 92,640 238,237
Total liabilities 903,492 1,714,932
TOTAL EQUITY AND LIABILITIES 671,541 1,375,816
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 £392,242 (2023:
£11,569,812).
Registered number: 08232509
Signed on behalf of the board on 10 January 2025:
David Halley
Neville Upton
Chief Executive
Officer
Non-Executive Chairman
Group Statement of Changes in Equity
As at 30 June 2024
Ordinary shares Share premium Share option reserve Retained earnings NCI Forex Total equity
£ £ £ £ £ £ £
At 30 June 2022 1,315,697 54,858,008 3,728,622 (51,113,657) 3 (21,958) 8,766,715
Loss for the period - - - (10,254,836) - -
(10,254,836)
Other comprehensive income - - - - - - -
Total comprehensive income - - - (10,254,836) (10,254,836)
- -
Proceeds of shares issued 1,333,333 666,667 - - - - 2,000,000
Share Issue Costs - (156,716) 44,010 - - - (112,706)
Share options expensed - - 51,903 - - - 51,903
Release to Retained Earnings - - (3,400,992) 3,400,992 - - -
Total transactions with owners, recognised directly in equity 1,333,333 509,951 (3,305,079) (6,853,844) - - 8,315,639
At June 2023 2,649,030 55,367,959 423,543 (57,967,501) 3 (21,958) 451,076
Loss for the period - - - (594,442) - - (594,442)
Other comprehensive income - - - - - 8,916 8,916
Total comprehensive income - - - (594,442) - 8,916 (585,526)
Proceeds of shares issued 75,000 375,000 - - - - 450,000
Share Issue Costs - (81,882) 60,488 - - - (21,394)
Share options expensed - - 70,800 - - - 70,800
Disposal of NCI - - - - (3) - (3)
Release to Retained Earnings - - (142,894) 142,894 - - -
Total transactions with owners, recognised directly in equity 75,000 293,118 (11,606) (451,548) (3) 8,916 86,123
2,724,030 55,661,077 411,937 (58,419,049) - (13,042) 364,953
At 30 June 2024
"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 2024
Ordinary shares Share premium Share option reserve Accumulated Deficit Total equity
£ £ £ £ £
At 30 June 2022 - restated 1,315,697 54,858,008 3,728,622 (50,588,868) 9,313,459
Loss for the period - - - (11,569,814) (11,569,814)
Other Comprehensive Income - - - - -
Total comprehensive income - - - (11,569,814) (11,569,814)
Proceeds of Shares Issued 1,333,333 666,667 - - 2,000,000
Share issue costs - (156,716) 44,010 - (112,706)
Share options expensed - - 29,945 - 29,945
Release to Retained Earnings - - (3,378,964) 3,378,964 -
Total transactions with owners, recognised directly in equity 1,333,333 509,951 (3,305,009) 3,378,964 1,917,239
At 30 June 2023 2,649,030 55,367,959 423,613 (58,779,718) (339,116)
Loss for the period - - - (392,242) (392,242)
Other Comprehensive Income - - - - -
Total comprehensive income - - - (392,242) (392,242)
Proceeds of Shares Issued 75,000 375,000 - - 450,000
Share issue costs - (81,882) 60,488 - (21,394)
Share options expensed - - 70,800 - 70,800
Release to Retained Earnings - - (142,964) 142,964 -
Total transactions with owners, recognised directly in equity 75,000 293,118 (11,676) (249,278) 107,164
At 30 June 2024 2,724,030 55,661,077 411,937 (59,028,996) (231,952)
Group Statement of Cash Flows
As at 30 June 2024
2024 2023
Operating £ £
Loss for the year (585,525) (10,254,837)
Adjustments for:
Depreciation 14,357 33,254
Amortisation 315,091 1,846,164
Impairment of assets 284,408 5,984,171
Gain on disposal of fixed assets - (112,808)
Gain on disposal of associate and eSports division (275,000) -
Finance income (153) (885)
Finance costs 591 77,691
Share based payments 70,800 29,945
Increase/(Decrease) in credit loss provision (48,000) 51,494
Re-evaluation of contingent consideration (24,541) (931,311)
Loss on loss of control of subsidiary - 548,761
Increase/(Decrease) in provisions (145,647) 238,287
Current and deferred tax credit (211,390) (974,876)
Total (605,008) (3,464,950)
Decrease in receivables 233,055 1,324,353
Decrease in payables excluding contingent consideration (813,518) (907,062)
Tax credit recovered 139,000 109,732
Net operating outflow (950,471) (2,937,927)
Investing
Interest received 152 885
PPE additions - (3,498)
Intangible additions (15) -
Payment of deferred/contingent consideration - (1,031,307)
Proceeds on disposal of associate and eSports division 275,000 -
Net proceeds on disposal of assets - 213,668
Cash generated by/(used in) investing activities 275,137 (820,252)
Financing
Interest paid (591) -
Net proceeds on issue of shares 428,604 1,887,294
Cash generated by financing activities 428,013 1,887,294
Net decrease in cash (247,321) (1,870,885)
Cash at the start of the year 270,476 2,141,361
Cash at the end of the year 23,155 270,476
Net decrease in cash (247,321) (1,870,885)
There were no investing or financing cash flows for discontinued operations.
The net cash outflow on operating activities for discontinued operations was
£nil (2023: £2,166,061).
Company Statement of Cash Flows
As at 30 June 2024
2024 2023
£ £
Operating
Loss for the year (392,242) (11,569,814)
Adjustments for:
Depreciation 13,162 34,657
Amortisation 125,594 378,515
Impairment of assets 323,484 7,716,918
Gain on disposal of fixed assets - (112,808)
Gain on disposal of associate and eSports division (275,002) -
Finance income - (885)
Finance costs 591 77,691
Share based payments 70,800 29,945
Increase in credit loss provision (48,000) 187,815
Re-evaluation of contingent consideration (24,541) (931,311)
Loss on disposal of intangible asset - 548,761
Increase in provisions (145,597) 238,287
Current and deferred tax credit (139,000) 234
Total (490,751) (3,401,995)
Decrease in receivables 232,524 1,349,466
Decrease in payables excluding contingent consideration (517,842) (597,442)
Tax credit recovered 139,000 109,732
Net operating outflow (637,069) (2,540,239)
Investing
Interest received 3 885
PPE additions - (3,498)
Payment of deferred/contingent consideration - (495,416)
Proceeds on disposal of associate and eSports division 275,000 -
Net proceeds on disposal of assets - 213,668
Net amounts advanced to subsidiaries (123,460) (352,718)
Cash generated by/ (used in) investing activities 151,543 (637,079)
Financing
Interest paid (591) -
Net proceeds on issue of shares 428,604 1,887,294
Cash generated by financing activities 428,013 1,887,294
Net decrease in cash (57,513) (1,290,024)
Cash at the start of the year 71,255 1,361,279
Cash at the end of the year 13,742 71,255
Net decrease in cash (57,513) (1,290,024)
Notes to the Financial Statements
1. GENERAL INFORMATION
Gfinity plc ("the Company") is a public company limited by shares incorporated
in the United Kingdom under the Companies Act 2006, registered and domiciled
in England and Wales and is AIM listed. The address of the registered office
is given on page 1. The registered number of the company is 08232509.
The functional and presentational currency is £ sterling because that is the
currency of the primary economic environment in which the group operates.
Foreign operations are included in accordance with the policies set out in
note 2. Principal activities are discussed in the Strategic report.
2. ACCOUNTING POLICIES
Basis of preparation
The Company has prepared the accounts on the basis of all applicable
UK-adopted International Financial Reporting Standards (IFRS), including all
International Accounting Standards (IAS), Standing Interpretations Committee
(SIC) and the International Financial Reporting Interpretations Committee
(IFRIC) interpretations issued by the International Accounting Standards Board
(IASB), together with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS.
The accounts have been prepared on the historical cost basis, unless otherwise
stated below. The principal accounting policies, which have been consistently
applied throughout the period presented, are set out below.
The preparation of financial statements in conformity with IFRS requires the
use of certain estimates. It also requires management to exercise its
judgement in the process of applying the company's accounting policies.
Estimates and judgements are continually reviewed and are based on historical
experience and other factors including expectations of future events that are
believed to be reasonable under the circumstances.
New and amended accounting standards effective during the year
The following amended standards and interpretations were newly effective
during the year:
• Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of
accounting policies
• Amendments to IAS 8: Definition of accounting estimates
• Amendments to IAS 12: Deferred Tax related to assets and
liabilities arising from a single transaction
The adoption of the standards and interpretations has not led to any changes
to the Group's accounting policies or had any other material impact on the
financial position or performance of the Group.
New standards, interpretations and amendments issued but not yet effective
The following new accounting standards, amendments and interpretations to
accounting standards have been issued but these are not mandatory for 30 June
2024 and they have not been adopted early by the Group:
• Amendments to IAS 1: Classification of liabilities as current
and non-current
• Amendments to IAS 1: Amendment to Non-current liabilities with
covenants
• IFRS 18: Presentation and Disclosure in Financial Statements
The Directors anticipate that the adoption of planned standards and
interpretations in future periods will not have a material impact on the Group
Financial Statements.
Going Concern
As explained in the Chairman's Report and the Chief Executive Officer's
Report, it has been a difficult year for the Group and Company as it
transitioned away from esports solutions and software development to a pure
play Digital Media company.
At year end the Group held cash balances of £23,155 (2023: £270,476) and net
current assets of £53,610 (2023: net current liabilities £384,065).
At the time of issuing these Financial Statements, this restructuring is
largely complete, and the Group and Company has reduced its overhead base to
support and develop its Digital Media assets and the Directors firmly believe
that the steps taken will lead to profitability in the short term. In support
of this, no cash remuneration was paid to Directors in the year since all cash
entitlements were waived.
The Directors have prepared a base case cashflow forecast through to 31
January 2026, which assumes certain growth targets are met.
The Directors believe that the growth targets are reasonable and attainable,
and in view of this, the Directors are confident that the Group and Company
have adequate resources to continue to operate for at least twelve months from
the date of approval of these Financial Statements and have, therefore,
continued to adopt the going concern basis in preparing the Directors' Report
and Financial Statements.
However, the Directors recognise that achievement of the growth targets are
subject to external factors outside of their control and so they have also
prepared a severe but plausible cashflow projection to assess cashflows in
such a scenario. Should the forecast growth of the Group and Company be not
forthcoming or be slower than anticipated, the Group and Company will need to
secure additional funding in the period to 31 January 2026.
The Group is exposed to any unexpected short term cash requirements or
liquidity issues if trading revenues are lower than forecast. The Group notes
a letter of support issued by a Director, which, although there is no
expectation in the base case model for it to be called up, the Board considers
it to be sufficient to address any plausible cash shortfall in the review
period.
The Group and Company continues to enjoy the support of its major
shareholders, and should further funding be necessary, the Directors believe
that this support will continue. On this basis, the Directors consider that it
is appropriate that the going concern basis is applied in the preparation of
these Financial Statements.
However, whilst the Directors are confident of continuing to raise additional
funds as needed to finance the business in accordance with its Digital Media
and Connected IQ strategy, they nevertheless recognise that a material
uncertainty exists which might cast doubt over the Group and Company's ability
to continue to realise its assets and discharge its liabilities as they fall
due in the normal course of the business and therefore its ability to continue
to operate as a going concern.
Basis of consolidation
The Group accounts consolidate the results of the Company and all of its
subsidiary undertakings drawn up to 30 June each year. Subsidiary undertakings
are those entities over which the Group has the control, which is where the
Group has power over the investee, is exposed to variable returns from its
involvement with the investee and where the Group has the ability to use its
power over the investee to affect the amount of returns. The results of
subsidiaries acquired or sold are consolidated for the periods from or to the
date on which control passed. Acquisitions are accounted for under the
acquisition method.
Goodwill arising on acquisition is recognised as an asset and initially
measured at cost, being the excess of the cost of the business combination
over the Group's interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities recognised. If, after reassessment, the
Group's interest in the net fair value of the acquiree's identifiable assets,
liabilities and contingent liabilities exceeds the cost of the business
combination, the excess is recognised immediately in profit or loss.
Where the Group assesses that it has significant influence over an investee,
but not control, the investment is accounted for as an associate. Associates
are not consolidated but are equity accounted, and the group records its share
of the associate's loss to the extent the cost less impairment of the
investment in greater than nil.
All intra group balances, transactions, income and expenses and profit and
losses on transactions between the Company and its subsidiaries and between
subsidiaries are eliminated.
Goodwill
Goodwill is initially recognised and measured as set out above.
Goodwill is not amortised but is reviewed for impairment at least annually.
For the purpose of impairment testing, goodwill is allocated to each of the
Group's cash-generating units ('CGUs') expected to benefit from the synergies
of the combination. CGUs to which goodwill has been allocated are tested for
impairment annually, or more frequently when there is an indication that the
unit may be impaired. If the recoverable amount of the CGU is less than the
carrying amount of the unit, the impairment loss is allocated first to reduce
the carrying amount of any goodwill allocated to the unit and then to the
other assets of the unit pro-rata on the basis of the carrying amount of each
asset in the unit. An impairment loss recognised for goodwill is not reversed
in a subsequent period.
Investment in subsidiaries
Investments in subsidiaries are held in the Company balance sheet at cost and
reviewed annually for impairment. Where the Company acquires subsidiaries with
contingent or deferred consideration, the initial estimate of the present
value of future payments is included in the cost of the investment and any
subsequent changes recorded through profit or loss.
Revenue
Revenue comprises the fair value of the consideration received or receivable
for the sale of services in the normal course of the Group's activities.
Revenue is shown net of value added tax.
To determine whether to recognise revenue, the Group follows a 5-step process:
1. Identifying the contract with a customer.
2. Identifying the performance obligations
3. Determining the transaction price.
4. Allocating the transaction price to the performance obligations.
5. Recognising revenue when/as performance obligation(s) are
satisfied.
Revenue is recognised either at a point in time or over time, when (or as) the
Group satisfies performance obligations by transferring the promised goods or
services to its customers. The Group bases its estimates on historical
results, taking into consideration the type of customer, the type of
transaction and the specifics of each arrangement.
Revenue comprises:
· Partner programme delivery fees: Revenue recognised in line with
the date at which work is performed.
· Advertising revenues: Fees are earned based on the number of
sessions where ads are displayed on the website. Revenue is recognised on a
Revenue per mille (RPM) basis.
· Consultancy Fees: Revenue is recognised in line with the profile
of resources dedicated to the programme across the assignment duration. Such
revenue is recognised over time based on an estimate of total costs incurred.
Foreign currencies
Transactions in foreign currencies are recorded at the rates of exchange
prevailing on the dates of the transactions. At each balance sheet date,
monetary assets and liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the balance sheet date.
Exchange differences arising on the settlement of monetary items, and on the
retranslation of monetary items, are included in the income statement for the
year.
For the purpose of presenting consolidated financial statements, the assets
and liabilities of the Group's foreign operations are translated at exchange
rates prevailing on the balance sheet date. Income and expense items are
translated at the average exchange rates for the period, unless exchange rates
fluctuate significantly during that period. Exchange differences arising from
the translation of the Group's foreign operations are recognised in other
comprehensive income.
Taxation
The taxation expense represents the sum of the tax currently payable and
deferred tax.
The charge for current tax is based on the results for the period as adjusted
for items that are non-assessable or disallowed. It is calculated using tax
rates that have been enacted or substantively enacted by the balance sheet
date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computations of taxable
profit and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences, and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from goodwill (or any discount
on acquisition) or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects
neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that the directors do not have a high degree of
certainty that sufficient taxable profits will be available in the medium-term
to allow all or part of the asset to be recovered.
Credits in respect of Research and Development activities are recognised upon
receipt of payment from HMRC.
Share based payments
The Company provides equity-settled share-based payments in the form of share
options and warrants. Equity-settled share-based payments are measured at fair
value (excluding the effect of non-market-based vesting conditions) at the
date of grant. The fair value determined at the date of grant is expensed on a
straight line basis over the vesting period, based on the Company's estimate
of shares which will eventually vest and adjusted for the effect of non-market
based vesting conditions. The Company uses an appropriate valuation model
utilising a Black-Scholes model in order to arrive at a fair value at the date
share options are granted.
In instances when shares are used as consideration for goods or services the
shares are valued at the fair value of the goods or services provided. The
expense to the company is recognised at the point the goods or services are
received.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated
depreciation and impairment, if any. Historical cost includes expenditure that
is directly attributable to the acquisition of the items. Subsequent costs are
included in the carrying amount of the asset or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits
associated with the item will flow to the company and that the cost of the
item can be measured reliably. The carrying amount of parts that are replaced
is derecognised. The costs of the day-to-day servicing of property, plant and
equipment are recognised in profit or loss as incurred.
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
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.
Judgements and estimates: Impairment of goodwill and intangible assets, and
estimation of the fair value of contingent consideration
The Group holds goodwill and intangible assets arising from business
combinations. Judgement is applied in determining the recoverable amount of
acquired assets.
On an annual basis, the Group reviews relevant classes of assets, including
investments, intangible assets and goodwill for indications of impairment.
Where such indications exist, a full impairment test is performed. In light of
the loss reported in the year, the Board determined that a full impairment
test should be performed on all intangible assets. Goodwill must be tested
for impairment annually. Where goodwill arises in a business combination,
management determined that each acquired website brand is a separate cash
generating unit with separately identifiable cash flows, and so any the
goodwill arising from that acquisition is associated with the acquired
brand. No goodwill is allocated across multiple Cash Generating Units.
For the purpose of impairment testing at 30 June 2024, management have
determined that the appropriate method to apply is a fair value less costs to
dispose approach. Management consider that a revenue based multiple is an
appropriate estimation tool for the recoverable amount of its intangible
assets.
Therefore, all impairment tests have been performed using a fair value method
on the basis of a multiple of revenue achieved for the respective brand in the
year ended 30 June 2024.
Management undertook a careful assessment of the appropriate revenue multiple
and determined that 1x reported revenue represents their best estimate of the
recoverable amount of each brand. This fair value estimation technique is a
Level 2 valuation technique in the Fair Value Hierarchy as there is no
directly observable market valuation of each brand, but management have
identified the valuation of similar assets through the relevant trading
multiples of similar businesses in similar sectors, through the observed
implied multiples in recent transactions involving similar assets and through
industry and other benchmarks.
Further detail of the results of impairment tests of each material Cash
Generating Unit are summarised below. All of Megit, Siege.gg, RealSport and
EpicStream are within the Gfinity Digital Media operating segment. In each
case, 'costs to sell' are considered to be immaterial as there are no physical
assets in any case. Impairment expenses have been separately identified in
the statement of profit or loss. No previous impairments were reversed
during the year.
Megit
The Group acquired the entire issued share capital of Megit Limited in
September 2021. Megit owns and operates the StockInformer website which
enables gamers to locate and find the best pricing and availability of tech
and other products.
At 30 June 2024 the Group held goodwill of nil and intangible assets of
£289,561 in respect of Megit prior to the impairment test. Amortisation of
intangible assets in the year was £189,497 and so the net book value tested
was £100,064.
The impairment test concluded that the recoverable amount was nil and
therefore an impairment charge of £100,064 was recorded against the
intangible asset.
The factors giving rise to the impairment were the well-publicised challenges
arising from changes to the algorithms applied by Google and other traffic
sources in the period.
At 30 June 2024, management have also applied judgement in their assessment of
any remaining contingent consideration based on revenue-based earnouts in the
acquisition agreement. Management's estimate of the undiscounted future
payment is £59,270 based on projected cash flows of the business and this has
been reflected in current liabilities. The figure is not discounted as it is
expected to be settled within a year. Contingent consideration is therefore
based on a Level 3 basis of the Fair Value Hierarchy as the inputs are not
directly or indirectly observable.
Due to the challenging trading environment, amounts payable under the
contingent consideration arrangements were significantly lower than initially
forecast and therefore £17,398 of the contingent consideration liability was
released to profit or loss in the year in respect of Megit.
In respect of the Company's investment in Megit Limited as a subsidiary, an
impairment was recorded to bring the investment to the directors' best
estimate of the recoverable amount by reference to the recoverable net assets
of Megit. An impairment of £139,146 was therefore recorded by the Company
in profit or loss to bring the carrying amount of the investment to nil.
RealSport
Realsport101.com is a leading source of news and information about competitive
sport gaming.
The carrying value of goodwill in respect of RealSport at 30 June 2024 was
£234,505, prior to the impairment test.
The result of the impairment test was a recoverable amount of £185,833 and
therefore an impairment of £48,672 was recorded in profit or loss.
The factors giving rise to the impairment were changes to Google algorithms
and changes in the underlying user base of the website.
EpicStream
EpicStream.com is a leading online source of geek and pop culture news.
The carrying value of goodwill in respect of EpicStream was £260,783 at 30
June 2024 prior to the impairment test, and intangibles were £0 at that date.
The result of the impairment test was a recoverable amount of £125,110 and
therefore an impairment of £135,673 was recorded in profit or loss.
4. REVENUE
The Group's policy on revenue recognition is as outlined in note 2. The
Group's revenue disaggregated by primary geographical market is as follows:
Year to 30 June 2024 Year to 30 June 2023
£ £
United Kingdom 410,561 4,343,202
North America 1,284,392 265,605
ROW 200,076 814,764
Total 1,895,029 5,423,571
Profit and loss information for each operating segment is given in note 10.
The Group's revenue disaggregated by pattern of revenue recognition and
business unit is as follows:
Year to 30 June 2024
Digital Media eSports Athlos Total
£ £ £ £
Services transferred at 1,817,731 - - 1,817,731
a point in time
77,298 - - 77,298
Services transferred over time
Total 1,895,029 - - 1,895,029
Year to 30 June 2023
Digital Media eSports Athlos Total
£ £ £ £
Services transferred at 2,190,216 - - 2,190,216
a point in time
Services transferred over time - 2,909,482 323,873 3,233,355
Total 2,190,216 2,909,482 323,873 5,423,571
As at 30 June 2024 the Group had the amounts shown below held on the
consolidated statement of financial position in relation to contracts either
performed in full during the year or ongoing as at the year end. All amounts
were either due within one year or, in the case of contract liabilities, the
work was to be performed within one year of the balance sheet date
Year to 30 June 2024 Year to 30 June 2023
£ £
Contract Assets Nil Nil
Contract Liabilities Nil Nil
The Group agrees payment terms with each customer at the outset of the
contract and typically agrees 30 day payment terms. All revenue streams
which are recognised over time were completed and invoiced in the year
resulting in no contract assets or liabilities at 30 June 2024. All brought
forward contract assets and liabilities were realised in the year.
Contract assets are initially recognised for revenue earned while the services
are delivered over time or when billing is subject to final agreement on
completion of the milestone. Once the amounts are billed the contract asset is
transferred to trade receivables.
DISCONTINUED OPERATIONS AND INTEREST IN ASSOCIATE
The group's activities in the year comprised one operating segments Gfinity
Digital Media.
The company announced on 6 June 2023 that it had decided to close the eSports
operating segment and to dispose of 72.5% of its interest in Athlos Game
Technologies Ltd ("Athlos").
During the year, as part of the restructuring, RealSM Ltd and AFG-Games Ltd
were dissolved. Both companies were dormant and provided no services.
In respect of the eSports division, it was announced on 5 December 2023 that
the remaining trade and assets of the eSports segment had been sold to
Ingenuity Loop Limited for consideration of £15,000 plus 15% equity interest
in that company.
In respect of Athlos, on 5 June 2023 the Group concluded a share purchase
agreement with Tourbillon Group UK Limited, under which Tourbillon subscribed
for new shares in Athlos resulting in Tourbillon gaining a controlling
interest. The SPA also provided for the Athlos IP, previously referred to by
Gfinity as the Engage development asset, would be assigned to Athlos at the
date of completion of the SPA. Tourbillon undertook certain funding
commitments with effect from the effective date of the transaction,
significantly reducing Gfinity's funding obligations whilst retaining a
minority interest. The SPA also provided for Gfinity to retain access to the
Engage platform IP.
In light of the SPA, the Board considered the nature of the resulting
relationship with Athlos and considered that the facts and circumstances
indicated that Athlos was, from the date of the transaction and as at 30 June
2023, an associate. This is because of the group's continuing 27.5% equity
and voting interest and the entitlement to appoint a director to the board of
Athlos. Therefore the Group was deemed to have lost control and no longer
consolidated the results of Athlos from that date.
On 27 November 2023, the Company announced the disposal of its remaining
interest in Athlos for consideration of £260,000. See note 24 for details.
As the Group's interest in Ingenuity Loop is held as an associate at nil
carrying value, no share of loss has been reported.
5. OPERATING EXPENSES
Expenses analysed by nature include:
Group
Year to 30 June 2024 Year to 30 June 2023
£ £
Depreciation of property, plant and equipment 14,357 33,254
Amortisation & impairment of intangible fixed assets 415,155 3,611,225
Goodwill impairment 184,345 4,219,110
Staff costs (see note 7) 1,005,260 3,148,791
Auditors' remuneration for auditing the accounts of the Group and Company 36,000 55,000
Auditors' remuneration for other non-audit services:
- Other services related to taxation 4,884 3,240
- All other services - 4,025
Net foreign exchange (gains)/ losses (4,904) 21,824
6. PARTICULARS OF EMPLOYEES
Number of employees
The average number of people (including directors) employed by the Group and
Company during the financial period
was:
Group Company
Year to Year to
30 June 2024 30 June 2023 Year to Year to
30 June 2024 30 June 2023
3 6 3 6
Board
Operations 15 38 13 38
18 44 16 44
The aggregate payroll costs of staff (including directors) were:
Group
Year to 30 June 2024 Year to 30 June 2023
£ £
Wages and salaries 826,808 2,726,670
Social security costs 81,799 323,812
Pensions 25,853 49,714
Share based payments (Note 22) 70,800 48,595
1,005,260 3,148,791
Total remuneration for Directors during the year was £0 (2023: £595,780).
The board of directors comprise the only persons having authority and
responsibility for planning, directing and controlling the activities of the
Group. The Board consider there are no key management personnel other than the
Board.
The number of directors to whom retirement benefits accrued during the period
was 0 (2023: 3).
7. FINANCE INCOME/COSTS
Group
Year to 30 June 2024 Year to 30 June 2023
£ £
Interest income on bank deposits 153 885
Interest Paid (591) -
Notional interest on contingent consideration - (77,691)
(438) (76,806)
8. TAXATION
Major components of taxation expense for the period ended 30 June
2024 are:
Group
Year to 30 June 2024 Year to 30 June 2023
£ £
Current tax charge 8,370 -
Corporation tax credit (330,812) (149,691)
Total current tax (322,442) (149,691)
Deferred tax credit (note 18) (72,390) -
Relating to origination and reversal of temporary differences - (825,185)
Taxation (credit) reported in the income statement (394,831) (974,876)
A reconciliation of taxation expense applicable to accounting profit before
taxation at the statutory tax rate of 25% (2023: 19%), to taxation expense at
the Groups effective tax rate for the period is as follows:
Year to 30 June 2024 Year to 30 June 2023
£ £
Loss on ordinary activities before taxation (989,274) (10,254,836)
At applicable rate of 25% (2023: 19%) (247,318) (1,948,419)
Income not taxable (65,000) -
Expenses not deductible for tax purposes 159,435 349,574
Movement in unrecognised deferred tax asset 152,883 1,598,845
Movement in deferred tax liability on temporary differences (72,390) (825,184)
R&D Credit received (330,824) (109,732)
Overseas tax paid 8,383 -
Over Provision in prior years - (39,960)
Tax Credit (394,831) (974,876)
Split as
Current tax credit (322,441) (149,691)
Deferred tax credit (72,390) (825,185)
Taxation (credit) reported in the income statement (394,831) (974,876)
The whole current and deferred tax credit in the consolidated profit and loss
account relates to continued operations.
The Group has estimated tax losses of £47.7m (2023: £47.1m) available for
offset against future taxable profits. A potential deferred tax asset of
£11.9m has not been recognised due to the uncertainty of future profits. The
tax losses have no expiry date.
With effect from 1 April 2023, HMRC introduced a headline UK corporation tax
rate of 25%.
9. OPERATING SEGMENTS
Year to 30 June 2024
Digital Media Total
£ £
Revenue 1,895,029 1,895,029
Cost of sales (844,951) (844,951)
Impairment Charge (284,408) (284,408)
Admin expenses (2,054,057) (2,054,057)
Gain on disposal of Associate 275,011 275,011
Re-assessment of Deferred Consideration 24,541 24,541
Net Finance Expenses (438) (438)
Tax 394,831 394,831
Loss (594,442) (594,442)
Year to 30 June 2023
Esports Athlos Digital Media Total
£ £ £ £
Revenue 2,909,482 323,873 2,190,216 5,423,571
Cost of sales (1,665,890) (172,205) (953,904) (2,791,999)
Impairment Charge - - (5,984,171) (5,984,171)
Admin expenses (3,300,378) (855,863) (3,788,329) (7,944,570)
Loss on disposal of Associate - - (548,761) (548,761)
Restructuring Cost (238,287) - - (238,287)
Re-assessment of Deferred Consideration - - 931,311 931,311
Net Finance Expenses (39,369) (11,461) (25,976) (76,806)
Tax - - 974,876 974,876
Loss (2,334,442) (715,656) (7,204,738) (10,254,836)
Management identify operating segments through consideration of the aggregated
data reviewed by the Board in monitoring the performance of the business.
In line with IFRS 8 para 23, assets and liabilities split by segment are not
disclosed as these are not regularly reviewed by the Board in this way.
Within continuing operations, being only the Digital Media division, two key
customers accounted for 62% and 18% of revenue.
10. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the loss attributable to
shareholders by the weighted average number of ordinary shares in issue during
the period.
IAS 33 requires presentation of diluted EPS when a Company could be called
upon to issue shares that would decrease earnings per share or increase the
loss per share. For a loss making Company with outstanding share options, net
loss per share would be decreased by the exercise of options and therefore the
effect of options has been disregarded in the calculation of diluted EPS.
All EPS and DEPS figures stated below are presented in pence.
2024 2023
All Operations
(594,442) (10,254,836)
Earnings
Weighted Average Shares 3,280,945,063 1,735,787,903
EPS (0.02) (0.59)
DEPS (0.02) (0.59)
Continuing Operations
Earnings (594,442) (7,204,739)
Weighted Average Shares 3,280,945,063 1,735,787,903
EPS (0.02) (0.42)
DEPS (0.02) (0.42)
Discontinued Operations
Earnings - (3,050,097)
Weighted Average Shares - 1,735,788,903
EPS - (0.18)
DEPS - (0.18)
11. PROPERTY, PLANT AND EQUIPMENT
Group
Office equipment Computer & Production Equipment Leasehold Improvements Total
Cost £ £ £ £
At 1 July 2022 63,143 1,170,270 1,633,942 2,867,355
Addition - 3,498 - 3,498
Disposals (63,143) (1,145,455) (1,633,942) (2,842,540)
At 30 June 2023 - 28,313 - 28,313
Amortisation
At 1 July 2022 63,143 1,113,312 1,542,390 2,718,845
Charge for the period - 32,457 - 32,457
Disposals (63,143) (1,132,213) (1,542,390) (2,737,746)
At 30 June 2023 - 13,556 - 13,556
Net Book Value
30 June 2023 - 14,757 - 14,757
30 June 2022 - 56,958 91,552 148,510
Office equipment Computer & Production Equipment Leasehold Improvements Total
Cost £ £ £ £
At 1 July 2023 - 28,313 - 28,313
At 30 June 2024 - 28,313 - 28,313
Amortisation
At 1 July 2023 - 13,556 - 13,556
Charge for the period - 14,357 - 14,357
At 30 June 2024 - 27,913 - 27,913
Net Book Value
30 June 2024 - - 400
400
30 June 2023 - 14,757 - 14,757
Company
Office equipment Computer & Production Equipment Leasehold Improvements Total
Cost £ £ £ £
At 1 July 2022 51,743 1,142,374 1,633,941 2,828,058
Addition - 3,498 - 3,498
Disposals (51,743) (1,117,559) (1,633,941) (2,803,243)
At 30 June 2023 - 28,313 - 28,313
Amortisation
At 1 July 2022 49,543 1,091,046 1,542,390 2,682,979
Charge for the period 2,200 32,457 - 34,657
Disposals (51,743) (1,108,352) (1,542,390) (2,702,485)
At 30 June 2023 - 15,151 - 15,151
Net Book Value
30 June 2023 - 13,162 - 13,162
30 June 2022 2,200 51,328 91,551 145,079
Office equipment Computer & Production Equipment Leasehold Improvements Total
Cost £ £ £ £
At 1 July 2023 - 28,313 - 28,313
At 30 June 2024 - 28,313 - 28,313
Amortisation
At 1 July 2023 - 15,151 - 15,151
Charge for the period - 13,162 - 13,162
At 30 June 2024 - 28,313 - 28,313
Net Book Value
30 June 2024 - - -
-
30 June 2023 - 13,162 - 13,162
12. GOODWILL
Group £
Cost
At 1 July 2022 4,714,399
Impairment
At 1 July 2022 -
Charge for the period 4,219,111
At 30 June 2023 4,219,111
Net Book Value
30 June 2023 495,288
30 June 2022 4,714,399
Cost £
At 1 July 2023 4,714,399
Impairment
At 1 July 2023 4,219,111
Charge for the period 184,345
At 30 June 2024 4,403,456
Net Book Value
30 June 2024 310,943
30 June 2023 495,288
Company £
Cost
At 1 July 2022 2,939,192
Impairment
At 1 July 2022 664,627
Charge for the period 1,779,276
At 30 June 2023 2,443,903
Net Book Value
30 June 2023 495,289
30 June 2022 2,274,565
Cost £
At 1 July 2023 2,939,192
Impairment
At 1 July 2023 2,443,903
Charge for the period 184,345
At 30 June 2024 2,628,248
Net Book Value
30 June 2024 310,944
30 June 2023 495,289
The Group and Company hold goodwill in respect of the acquisitions of the
trade and assets of EpicStream and RealSport in earlier accounting periods.
An impairment charge of £135,673 and £48,672 was recorded in respect of
EpicStream and RealSport respectively, in both the Group and Company profit
and loss accounts.
In all cases, management assigned goodwill to cash generating units, being the
group of assets associated with the acquired website and associated
infrastructure, since each online brand has separately identifiable cash
flows.
Refer to Note 3 for details of impairment tests.
13. INTANGIBLE FIXED ASSETS
Group Web Platforms Engage Other Intangibles Total
Cost £ £ £ £
At 1 July 2022 5,393,265 685,951 2,480,481 8,559,697
Disposals - (685,951) (64,919) (750,870)
At 30 June 2023 5,393,265 - 2,415,562 7,808,827
Amortisation and impairment
At 1 July 2022 1,513,672 - 2,470,884 3,984,556
Charge for the period 1,699,377 137,190 9,597 1,846,164
Disposals - (137,190) (64,919) (202,109)
Impairment 1,765,061 - - 1,765,061
At 30 June 2023 4,978,110 - 2,415,562 7,393,672
Net Book Value
30 June 2023 415,155 - 415,155
-
30 June 2022 3,879,593 9,597 4,575,141
685,951
Web Platforms Other Intangibles Total
Cost
At 1 July 2023 5,393,265 2,415,562 7,808,827
At 30 June 2024 5,393,265 2,415,562 7,808,827
Amortisation and impairment
At 1 July 2023 4,978,110 2,415,562 7,393,672
Charge for the period 315,091 - 315,091
Impairment 100,064 - 100,064
At 30 June 2024 5,393,265 2,415,562 7,808,827
Net Book Value
30 June 2024 - - -
30 June 2023 415,155 - 415,155
Web platforms include web domains and platform technology acquired in the acquisitions of Megit Limited, Siege.gg and EpicStream.
Other intangibles include technology platforms and customer lists arising in earlier acquisitions.
Company Web Platforms Engage Other Intangibles Total
Cost £ £ £ £
At 1 July 2022 713,546 685,951 7,195 1,406,692
Disposals - (685,951) - (685,951)
At 30 June 2023 713,546 - 7,195 720,741
Amortisation and impairment
At 1 July 2022 339,949 - 7,195 347,144
Charge for the period 241,325 137,190 - 378,515
Disposals - (137,190) - (137,190)
Impairment 6,678 - - 6,678
At 30 June 2023 587,952 - 7,195 595,147
Net Book Value
125,594 - - 125,594
30 June 2023
373,597 685,951 - 1,059,548
30 June 2022
Web Platforms Other Intangibles Total
Cost
At 1 July 2023 713,546 7,195 720,741
At 30 June 2024 713,546 7,195 720,741
Amortisation and impairment
At 1 July 2023 587,952 7,195 595,147
Charge for the period 125,594 - 125,594
At 30 June 2024 713,546 7,195 720,741
Net Book Value
30 June 2024 - - -
30 June 2023 125,594 - 125,594
Web platforms includes web domains and platform technology acquired in the acquisitions of Megit Limited, Siege.gg and EpicStream.
14. INVESTMENT IN SUBSIDIARIES
Company
Year to 30 June 2024 Year to 30 June 2023
£ £
At 1 July 139,146 6,069,716
Impairment (139,146) (5,930,565)
Loss of control of subsidiary - (5)
- 139,146
Subsidiary Country of Holding Proportion of voting rights Nature of business
undertaking incorporation and capital held
CEVO Inc. USA Ordinary shares 100% IT Development
Megit Limited England and Wales Ordinary Shares 100% eCommerce and affiliate revenues
Details of the impairment in the Company's investment in Megit Limited in the
year are given in Note 3.
15. TRADE AND OTHER RECEIVABLES
Group Company
Year to 30 June 2024 Year to 30 June 2023 Year to 30 June 2024 Year to 30 June 2023
£ £ £ £
Trade receivables 346,740 524,690 330,097 487,490
Provision for expected credit loss (10,650) (58,864) (10,650) (58,864)
336,090 465,826 319,447 428,626
Prepayments and accrued income 27,394 178,714 27,394 102,739
Amounts due in less than one year 363,484 644,540 346,841 531,365
Amounts due from group undertakings - - 611,439 607,398
Provision for Group undertakings - - (611,439) (607,398)
- - - -
Other receivables - - - -
Total 363,483 644,540 346,841 531,365
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.
16. CASH AND CASH EQUIVALENTS
Group Company
Year to 30 June 2024 Year to 30 June 2023 Year to 30 June 2024 Year to 30 June 2023
£ £ £ £
Cash at bank and in hand 23,155 270,476 13,742 71,255
Total 23,155 270,476 13,742 71,255
Cash at bank and in hand earns interest at floating rates based on daily bank
deposit rates. The fair value of cash and cash equivalents does not differ
from the carrying value.
17. DEFERRED TAX LIABILITIES
Group Company
Year to 30 June 2024 Year to 30 June 2023 Year to 30 June 2024 Year to 30 June 2023
£ £ £ £
At 1 July 72,390 897.575 - 94,748
Arising on business combination - - - -
Credited to profit or loss (72,390) (825,185) - (94,748)
At 30 June - 72,390 - -
The deferred tax liability relates entirely to temporary differences on
intangible assets arising on business combinations.
As the respective intangible assets were fully impaired in the year, the
associated deferred tax liability was released.
18. ISSUED SHARE CAPITAL
The Company has a single class of ordinary share with nominal value of £0.001
each. Movements in the issued share capital of the Company can be summarised
as follows:
Ordinary Shares Deferred Shares
Number Share Number Share Capital £
Capital £
As at 30 June 2022 1,315,696,579 1,315,697 - -
Issued during the financial year March 2023 at £0.0015 per share 1,333,333,334 1,333,333 -
-
As at 30 June 2023 2,649,029,913 2,649,030 - -
Share reorganisation - (2,384,127) 2,649,029,913 2,384,127
Issued August 2023 at £0.0006 per share 750,000,000 75,000 -
-
As at 30 June 2024 3,399,029,913 339,903 2,649,029,913 2,384,127
Ordinary shares entitle the holder to full voting, dividend and rights on
winding up.
Deferred shares carry no rights to voting or dividends.
Pursuant to the Share Capital Reorganisation on 30 August 2023, each existing
Ordinary Share in issue was subdivided into one New Ordinary Share of 0.01
pence each and one Deferred Share of 0.09 pence each. Immediately following
the Share Capital Reorganisation, the number of New Ordinary Shares in issue
was the same as the number of Existing Ordinary Shares currently in issue. The
New Ordinary Shares arising on the Share Capital Reorganisation have the same
rights as those previously attaching to the Existing Ordinary Shares,
including the rights relating to voting and entitlement to dividends.
19. TRADE AND OTHER PAYABLES
Group Company
Year to 30 June 2024 Year to 30 June 2023 Year to 30 June 2024 Year to 30 June 2023
£ £ £ £
Non-current liabilities
Other payables (deferred consideration) - 17,669 - 17,669
Deferred tax liabilities - 72,390 - -
- 90,059 - 17,669
Current liabilities
Trade payables 139,838 412,395 136,788 383,737
Other taxation and social security 14,504 201,745 13,294 201,745
Accrued expenditure and deferred revenue 45,000 226,181 45,000 226,188
Other payables 41,048 220,473 59,270 220,473
Amounts owed to group undertakings - - 556,500 426,883
240,390 1,060,794 810,852 1,459,026
Total 240,390 1,150,853 810,852 1,476,695
Trade and other payables principally comprise amounts outstanding for trade
purchases and ongoing costs. The directors consider that the carrying amount
of trade payables approximates to their fair value due to their short-term
nature.
Contingent consideration arising from business combinations is held at fair
value at each reporting date. The fair value of remaining contingent
consideration at 30 June 2024 was assessed as £59,270 (2023: £202,455)
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 bank balance and trade and other
receivables, its credit risk exposure is as follows:
Group Company
Year to 30 June 2024 Year to 30 June 2023 Year to 30 June 2024 Year to 30 June 2023
£ £ £ £
359,245 736,302 333,189 499,881
The Group trade receivables balance represents amounts due from third parties.
At the balance sheet date, the Group's trade receivables totalled £346,740
against which an expected credit loss provision of £10,650 had been raised
(2023: £524,690 less a provision of £58,864).
The Company's receivables include £611,439 of inter-company funding (2023:
£575,177) and this receivable is provided against in full due to uncertainty
of the timing over which the respective subsidiaries will be in a position to
reimburse these amounts.
The Company's trade receivables totalled £330,097 less a provision for
doubtful debt of £10,650 (2023: £487,490 less a provision for expected
credit losses of £58,864).
The Group's policy is to raise expected credit loss provisions where payments
have been not received within the contractual due date. The Group continues
to seek to collect all debts until such time as a debt it written off. The
Group writes off debt when it considers that there is no prospect of recovery,
for example when a debtor enters into administration, or the Group is aware of
other factors indicative of this outcome.
At the balance sheet date, one customer represented 82% of gross Group trade
receivables. This amount was collected in full after the balance sheet date.
There were no contract assets at 30 June 2024.
Liquidity risk
All trade and other payables are due for settlement within one year of the
balance sheet date. The use of instant access deposits ensures sufficient
working capital is available at all times.
Foreign exchange risk
The Company operates in overseas markets by selling directly from the UK, owns
an overseas subsidiary and reports in GBP. It is therefore subject to currency
exposures on transactions while the Group is subject to currency exposures on
consolidation of the overseas subsidiary.
The majority of revenue is billed in United States Dollar (USD).
Financial instruments held by the Company and their carrying values were as
follows:
Group
Year to 30 June 2024 Year to 30 June 2023
USD ($) EUR (€) GBP (£) USD ($) EUR (€) GBP (£)
Trade and other receivables 275,792 528 128,263 622,988 3,000 150,148
Cash 16,769 - 9,899 74,259 - 211,779
Trade and other payables 21,801 - 130,768 125,643 8,413 971,990
Net current assets/ liabilities 314,362 528 268,930 822,890 11,413 1,333,917
Company
Year to 30 June 2024 Year to 30 June 2023
USD ($) EUR (€) GBP (£) USD ($) EUR (€) GBP (£)
Trade and other receivables 255,192 528 127,905 506,015 3,000 129,740
Amounts due from Group Undertakings - - - - - -
Cash 9,964 - 5,865 42,520 - 37,728
Trade and other payables 11,878 - 127,398 89,505 8,413 971,990
Amounts due to Group Undertakings - - 556,500 - - 426,883
Net current assets/ liabilities 277,034 528 817,668 638,040 11,413 1,566,341
Fair value estimation
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 (£)
Shares options as at 30 June 2022 97,172,624 0.0483
Shares options granted - -
Share options forfeited (62,322,624) 0.0578
Share options exercised - -
LTIP share options as at 30 June 2023 34,850,000 0.0257
Shares options as at 30 June 2023 34,850,000 0.0257
Shares options granted 479,262,889 0.0006
Share options forfeited (22,447,000) 0.0142
Share options exercised - -
LTIP share options as at 30 June 2024 491,665,889 0.0018
Options vest over periods defined in the respective option agreements and at
the discretion of the board of directors.
Options issued in the year were valued using a Black Scholes model with the
following inputs: exercise price 0.06p, volatility 34-36%, risk free rate
4.4%, dividends nil. Exercise period 7-10 years. An expense of £70,800 was
recorded in profit or loss in respect of share options. The options issued in
the year either vest 50% on issue and 50% after one year, or 33% immediately
and 33% after one and two years.
The exercise prices of options outstanding at 30 June 2024 range from 0.06p to
6.25p.
The number of exercisable share options outstanding at 30 June 2024 was
246,935,895 (2023: 34,850,000).
The weighted average remaining exercise period of options at 30 June 2024 was
7.5 years.
Of the options outstanding at the year end, 416,883,590 (2023: 18,000,000)
were held by directors. Details of all options and warrants held by
directors are contained within the Directors' Remuneration Report.
The inputs into option pricing models are available in earlier annual
reports. All share options were valued using Black Scholes models.
All share options were granted at an exercise price equivalent to the market
price at the date of grant.
All options are held in Gfinity plc with no options held over any of the
Group's subsidiaries.
22. WARRANTS
The Company has granted warrants over Ordinary Shares as outlined in the table
below.
Number Weighted average exercise price (£)
Warrants
Warrants as at 30 June 2022 216,000,000 0.0125
Warrants granted 1,373,053,333 0.0022
Warrants exercised - -
Warrants lapsed/forfeited (216,000,000) 0.0125
Warrants as at 30 June 2023 1,373,053,333 0.0022
Warrants as at 30 June 2023 1,373,053,333 0.0022
Warrants granted 75,990,299 0.0006
Warrants exercised - -
Warrants lapsed/forfeited - -
Warrants as at 30 June 2024 1,449,043,632 0.0021
75,990,299 warrants were granted to advisors in the year.
All warrants have an exercise period of 24 months from the date of issue.
The fair value of the warrants issued in the year of £60,488 was calculated
according to a Black Scholes model, and taken to share premium, being in
relation to the issue of share capital. The key inputs into the Black Scholes
model were: exercise price 0.06p, Risk free rate 3.9%, volatility 36%,
dividends nil. Volatility was determined by reference to the company's share
price over a relevant period. The warrants are immediately exercisable.
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. Directors
were issued 407,883,590 options during the year and no directors exercised
share options in the year.
Transactions and balances with Group subsidiaries in the year:
CEVO:
During the year, the Company advanced cash of £0 (2023: £502,718) to Cevo
and Cevo incurred costs of £0 (2023: £477,092) on the Company's behalf.
The year end amount repayable to the Company was £592,710 (2023: £592,710).
The full amount was provided against as at year end.
RealSM:
During the year, the Company incurred costs on RealSM's behalf of £6,155
(2023: £6,595). The year end amount payable to the Company was £18,729
(2023: £12,574). The full amount was provided for as at 14 May 2024, on which
date RealSM was dissolved.
Megit:
During the year, the Company incurred costs of £231,056 (2023: £250,355) on
behalf of Megit. Megit advanced cash of £360,671 to the Company and
incurred costs on behalf of the Company of £0 (2023: £604,115). The year
end position is that the Company owed £556,500 to Megit (2023: £426,833 due
to Megit).
Transactions with other related parties in the year:
David Halley, a Director, subscribed for shares in the Company for a total of
£40,000 in August 2023.
The 1st Drop Limited:
During the year, the company incurred Consultancy costs of £24,000 (2023:
£0) from The 1(st) Drop Limited. At year end the Company owed £12,000 to The
1st Drop Ltd (2023: £0). Neville Upton is a director of The 1(st) Drop
Limited.
Athlos Game Technologies Ltd ("Athlos"):
During the year, the company incurred costs of £0 (2023: £63,717) on behalf
of Athlos. Athlos advanced cash of £46,956 (2023: £0) to the Company.
The year end amount payable to the Company was £16,791 (2023: £63,717).
During the year, the Group incurred cost of £349,005 ((2023: £0) on behalf
of Athlos. The Group recharged Athlos £349,005 (2023: £0). The year end
amount payable to the Group was £25,162 (2023: £25,162).
David Halley is a director of both Athlos.
All of the above balances are interest free, repayable on demand and
unsecured.
24. PROVISIONS
There was a provision on 30 June 2023 of £238,237 and certain costs
pertaining to historic M&A activity and employee contracts were utilised
or released, therefore the closing balance was £92,640. The provision is
not discounted as remaining amounts are expected to be utilised within a year.
Year to 30 June 2024 Year to 30 June 2023
£ £
At 1 July 238,237 -
Additions - 238,237
Utilised 69,978 -
Released 75,619 -
At 30 June 92,640 238,237
During the year, the company utilised £69,978 of provisions to pay for
redundancy costs and associated notice periods. Additionally, the Company
released £75,619, of which £37,000 had been allocated to legal costs
relating to prior employees and £38,619 had been allocated to employee
redundancy and notice period costs, which were not utilised.
25. EVENTS AFTER THE REPORTING PERIOD
In September 2024 the Company raised £30,000 before expenses through the
issue of 200,000,000 shares at 0.015p each to David Halley and through the
issue of £120,000 of unsecured loan notes to Robert Keith.
At the same time the Company signed a non-binding MOU with 0M Technology
Solutions Limited to license their ConnectedIQ technology.
26. CONTROL
The Directors consider that there is no overall controlling party.
ENDS
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