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 30 June 2024		Year to 30 June 2023		Year to 30 June 2024		Year to 30 June 2023
Board	3		6		3		6
Operations	15		38		13		38
	18		44		16		44

 

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

            

	Group
	Year to 30 June 2024		Year to 30 June 2023
	£		£
Wages and salaries	826,808		2,726,670
Social security costs	81,799		323,812
Pensions	25,853		49,714
Share based payments (Note 22)	70,800		48,595
	1,005,260		3,148,791

 

Total remuneration for Directors during the year was £0 (2023: £595,780).

The board of directors comprise the only persons having authority and responsibility for planning, directing and controlling the activities of the Group. The Board consider there are no key management personnel other than the Board.

The number of directors to whom retirement benefits accrued during the period was 0 (2023: 3).

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
Earnings		(594,442)	(10,254,836)
Weighted Average Shares		3,280,945,063	1,735,787,903
EPS		(0.02)	(0.59)
DEPS		(0.02)	(0.59)
Continuing Operations
Earnings		(594,442)	(7,204,739)
Weighted Average Shares		3,280,945,063	1,735,787,903
EPS		(0.02)	(0.42)
DEPS		(0.02)	(0.42)
Discontinued Operations
Earnings		-	(3,050,097)
Weighted Average Shares		-	1,735,788,903
EPS		-	(0.18)
DEPS		-	(0.18)

 

 

 

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	685,951	9,597	4,575,141

 

 

	Web Platforms	Other Intangibles	Total
Cost
At 1 July 2023	5,393,265	2,415,562	7,808,827
At 30 June 2024	5,393,265	2,415,562	7,808,827
Amortisation and impairment
At 1 July 2023	4,978,110	2,415,562	7,393,672
Charge for the period	315,091	-	315,091
Impairment	100,064	-	100,064
At 30 June 2024	5,393,265	2,415,562	7,808,827
Net Book Value
30 June 2024	-	-	-
30 June 2023	415,155	-	415,155

 

Web platforms include web domains and platform technology acquired in the acquisitions of Megit Limited, Siege.gg and EpicStream.

Other intangibles include technology platforms and customer lists arising in earlier acquisitions.

 

Company	Web Platforms	Engage	Other Intangibles	Total
Cost	£	£	£	£
At 1 July 2022	713,546	685,951	7,195	1,406,692
Disposals	-	(685,951)	-	(685,951)
At 30 June 2023	713,546	-	7,195	720,741
Amortisation and impairment
At 1 July 2022	339,949	-	7,195	347,144
Charge for the period	241,325	137,190	-	378,515
Disposals	-	(137,190)	-	(137,190)
Impairment	6,678	-	-	6,678
At 30 June 2023	587,952	-	7,195	595,147
Net Book Value
30 June 2023	125,594	-	-	125,594
30 June 2022	373,597	685,951	-	1,059,548

 

 

	Web Platforms	Other Intangibles	Total
Cost
At 1 July 2023	713,546	7,195	720,741
At 30 June 2024	713,546	7,195	720,741
Amortisation and impairment
At 1 July 2023	587,952	7,195	595,147
Charge for the period	125,594	-	125,594
At 30 June 2024	713,546	7,195	720,741
Net Book Value
30 June 2024	-	-	-
30 June 2023	125,594	-	125,594

 

 

Web platforms includes web domains and platform technology acquired in the acquisitions of Megit Limited, Siege.gg and EpicStream.

 

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 undertaking	Country of incorporation	Holding	Proportion of voting rights and capital held	Nature of business
CEVO Inc.	USA	Ordinary shares	100%	IT Development
Megit Limited	England and Wales	Ordinary Shares	100%	eCommerce and affiliate revenues

 

Details of the impairment in the Company's investment in Megit Limited in the year are given in Note 3.

 

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 Capital £	Number	Share Capital £
As at 30 June 2022	1,315,696,579	1,315,697	-	-
Issued during the financial year March 2023 at £0.0015 per share	1,333,333,334	1,333,333	-	-
As at 30 June 2023	2,649,029,913	2,649,030	-	-
Share reorganisation	-	(2,384,127)	2,649,029,913	2,384,127
Issued August 2023 at £0.0006 per share	750,000,000	75,000	-	-
As at 30 June 2024	3,399,029,913	339,903	2,649,029,913	2,384,127

 

Ordinary shares entitle the holder to full voting, dividend and rights on winding up.

 

Deferred shares carry no rights to voting or dividends.

 

Pursuant to the Share Capital Reorganisation on 30 August 2023, each existing Ordinary Share in issue was subdivided into one New Ordinary Share of 0.01 pence each and one Deferred Share of 0.09 pence each. Immediately following the Share Capital Reorganisation, the number of New Ordinary Shares in issue was the same as the number of Existing Ordinary Shares currently in issue. The New Ordinary Shares arising on the Share Capital Reorganisation have the same rights as those previously attaching to the Existing Ordinary Shares, including the rights relating to voting and entitlement to dividends.

 

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