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Company Registration Number 09346537
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FACEPUNCH GROUP LIMITED
COMPANY INFORMATION
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Senior Statutory Auditor
Independent auditors
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Matthew Adam Bailey
Howards Limited
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Chartered Certified Accountants & Statutory Auditors
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FACEPUNCH GROUP LIMITED
CONTENTS
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Independent Auditors' Report
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Consolidated Profit and Loss Account
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Consolidated Statement of Comprehensive Income
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Consolidated Statement of Financial Position
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Company Statement of Financial Position
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Consolidated Statement of Changes in Equity
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Company Statement of Changes in Equity
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Consolidated Statement of Cash Flows
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Notes to the Financial Statements
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FACEPUNCH GROUP LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2019
The directors present their strategic report for the year ended 30 September 2019.
Facepunch Group Limited is a holding company.
Facepunch Studios Limited is 100% wholly owned subsidiary, it is a game development company developing games mainly in the United Kingdom for sale worldwide. The games currently being developed are principally downloadable and multiplayer/openworld.
Facepunch Limited is 100% wholly owned subsidary and a dormant company.
Group results and performance
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The results for the group for the year, as set out on pages 7 to 13, show:
2019 2018
Turnover £17,267,326 £11,252,943
Profit on ordinary activities before tax £8,424,353 £4,193,389
Shareholders' funds £4,780,809 £5,379,391
The increase in income is due to ongoing strong consumer interest in the group's core games as well as an improvement in distribution terms.
Future revenues will increase through continued focus on our core product Rust, including both new platforms as well as introducing both paid and free content for end users.
The video games market is expected to be worth over 90 billion U.S. dollars by 2020, from nearly 78.61 billion in 2017.
80% of the total video game industry's 36 billion U.S dollars revenue in 2017 belongs to software sales. There are more than 2.5 billion video gamers from all over the world, with China alone having 600 million and is the most rapidly growing market.
The group's top selling game Rust is regularly in Steam’s top sales list.
Page 1
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FACEPUNCH GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
Principal risks and uncertainties
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The company's activities are subject to risks and uncertainties, which may affect future financial performance. The worldwide gaming market is highly competitive, particularly in the online streaming sector where our business is focused. Many companies offer similar products, giving rise to ongoing development to differentiate us from our competitors and to keep our customers engaged.
The principal risk to our game development business arises from the use of third party developers, and theft and/or sabotage of our work. We accept that some of the best developers are freelancers and to hire them full time would be unjustifiable. We minimise this risk via our contract for services written by a gaming law expert and various monitoring procedures carried out by our directors.
The companys operations expose it to a variety of financial risks, these include liquidity, credit, currency and interest rate risks. The company is exposed to finanical risk via download customers. Our products are downloaded and although they are subject to rigorous testing before release, the company could be liable if the download proves to be harmful to our customers' computers. The third party download platform reduces this risk to low, however with various periodic updates to the games and due to the number of customers, the potential claims and risk to the company's reputation is sufficient enough to be addressed. In the event of finanical losses as a result of a customer claim we are fully covered by our insurance and have retained sufficient reserves in the group to cover this.
The company is fortunate to have sufficient cash to negate financing and therefore liquidity risk as such. The company utilises funds to maximise the interest received and would review and implement an appropriate structure of financing should this be used in the future, thus no short terms plans surrounding this.
The company seeks to balance the flows of revenues and costs across currencies to minimise exposure to currency risk.
The effects of Brexit is a risk to our company and though there has been significant movements on this in the period there is still no certainty around the risks the company face in light of this movement. The directors will continue to monitor this situation and put into place any measures considered neccessary to mitigate the risks to the business.
The directors have considered the impact on the group of the current Coronavirus Pandemic and conclude that the group has not been adversely affected post year end.
The gaming market shows no signs of slowing down, the company is actively looking to expand across different platforms and increase sales in more markets by translating and adapting its games for more regions.
The company currently has four games available for purchase and plans to keep releasing regular updates to ensure sales remain strong. The company will continue to develop and release new games. The company is working closer with partners to explore opportunities for collaboration and cross promotion.
The company's principal game, Rust, is celebrating its sixth year of release and has planned a number of promotions to celebrate the remarkable success of this award winning game. We look forward to sharing some exciting announcements for the upcoming year which should see revenue grow considerably over the next several years, we are pleased with the progress and success of the company thus far.
Page 2
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FACEPUNCH GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
This report was approved by the board and signed on its behalf.
Page 3
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FACEPUNCH GROUP LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2019
The directors present their report and the financial statements for the year ended 30 September 2019.
Directors' responsibilities statement
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The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The profit for the year, after taxation, amounted to £8,399,369 (2018 - £4,057,105).
During the period ended 30 September 2019 the directors paid a dividend of £9,000,000 (2018 - £6,000,000).
The directors who served during the year were:
Please refer to the strategic report on pages 1 and 2 for activities and the likely future developments of the company and a discussion of the risks and uncertainties.
Disclosure of information to auditors
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Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the director is aware, there is no relevant audit information of which the company and the Group's auditors are unaware, and
∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the company and the Group's auditors are aware of that information.
Page 4
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FACEPUNCH GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
Post balance sheet events
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There have been no significant events affecting the Group since the year end.
The auditors, Howards Limited, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
Page 5
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FACEPUNCH GROUP LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FACEPUNCH GROUP LIMITED
We have audited the financial statements of Facepunch Group Limited (the 'group') for the year ended 30 September 2018 which comprise the Income Statement, Other Comprehensive Income, the Statement of Financial Position, the Statement of Cash Flows, the Statement of Changes in Equity and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
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We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
The directors are responsible for the other information. The other information comprises the information included in the Report to the Directors, other than the financial statements and our Auditors' Report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinion on other matters prescribed by the Companies Act 2006
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In our opinion, based on the work undertaken in the course of the audit:
Page 6
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FACEPUNCH GROUP LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FACEPUNCH GROUP LIMITED (CONTINUED)
Matters on which we are required to report by exception
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In the light of the knowledge and understanding of the group and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
Responsibilities of directors
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As explained more fully in the Directors' Responsibilities Statement on page 4, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditors' responsibilities for the audit of the financial statements
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Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
This report is made solely to the company's members in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members for our audit work, for this report, or for the opinions we have formed.
Matthew Adam Bailey (Senior Statutory Auditor)
for and on behalf of
Howards Limited
Chartered Certified Accountants & Statutory Auditors
Newport House
Newport Road
Stafford
Staffordshire
ST16 1DA
16 July 2020
Page 7
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FACEPUNCH GROUP LIMITED
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2019
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Amounts written off investments
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Interest receivable and similar income
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Interest payable and similar expenses
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Profit for the financial year
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Profit for the year attributable to:
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The notes on pages 15 to 29 form part of these financial statements.
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Page 8
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FACEPUNCH GROUP LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2019
Profit for the financial year
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Other comprehensive income
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Total comprehensive income for the year
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Profit for the year attributable to:
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Owners of the parent company
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Total comprehensive income attributable to:
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Owners of the parent company
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The notes on pages 15 to 29 form part of these financial statements.
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Page 9
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FACEPUNCH GROUP LIMITED
REGISTERED NUMBER: 09346537
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2019
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Provisions for liabilities
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 15 to 29 form part of these financial statements.
Page 10
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FACEPUNCH GROUP LIMITED
REGISTERED NUMBER: 09346537
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2019
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Debtors: amounts falling due within one year
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Total assets less current liabilities
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Profit and loss account brought forward
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Other changes in the profit and loss account
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Profit and loss account carried forward
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 15 to 29 form part of these financial statements.
Page 11
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FACEPUNCH GROUP LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2019
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At 1 October 2017 (as previously stated)
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At 1 October 2017 (as restated)
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Comprehensive income for the year
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Taxation in respect of items of other comprehensive income
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Deficit on revaluation of leasehold property
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Total comprehensive income for the year
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Dividends: Equity capital
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Shares issued during the year
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Transfer to/from profit and loss account
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At 1 October 2018 (as previously stated)
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At 1 October 2018 (as restated)
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Comprehensive income for the year
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Taxation in respect of items of other comprehensive income
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Surplus on revaluation of leasehold property
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Total comprehensive income for the year
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Dividends: Equity capital
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Transfer to/from profit and loss account
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Total transactions with owners
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The notes on pages 15 to 29 form part of these financial statements.
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Page 12
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FACEPUNCH GROUP LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2019
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At 1 October 2017 (as previously stated)
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At 1 October 2017 (as restated)
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Dividends: Equity capital
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Shares issued during the year
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At 1 October 2018 (as previously stated)
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At 1 October 2018 (as restated)
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Dividends: Equity capital
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The notes on pages 15 to 29 form part of these financial statements.
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Page 13
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FACEPUNCH GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
Cash flows from operating activities
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Profit for the financial year
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Depreciation of tangible assets
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Loss on disposal of tangible assets
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(Increase)/decrease in debtors
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Net fair value losses/(gains) recognised in P&L
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Net cash generated from operating activities
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Cash flows from investing activities
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Purchase of tangible fixed assets
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Sale of listed investments
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Net cash from investing activities
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Cash flows from financing activities
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Net cash used in financing activities
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Net (decrease)/increase in cash and cash equivalents
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Cash and cash equivalents at beginning of year
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Cash and cash equivalents at the end of year
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Cash and cash equivalents at the end of year comprise:
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The notes on pages 15 to 29 form part of these financial statements.
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Page 14
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FACEPUNCH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
Facepunch Group Limited is a private company, limited by shares, registered in England and Wales. The
company's registered number is 09346537 and the registered office address is Concept House, Elmore Green Road, Bloxwich, Walsall, West Midlands, WS3 2QW.
The principal activity of the group is the development and retail of computer games.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Profit and Loss Account in these financial statements.
The consolidated financial statements present the results of the company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Profit and Loss Account from the date on which control is obtained. They are deconsolidated from the date control ceases.
In accordance with the transitional exemption available in FRS 102, the group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 09 December 2014.
Page 15
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FACEPUNCH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
2.Accounting policies (continued)
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Foreign currency translation
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Functional and presentation currency
The company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Consolidated Profit and Loss Account except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Consolidated Profit and Loss Account within 'finance income or costs'. All other foreign exchange gains and losses are presented in the Consolidated Profit and Loss Account within 'other operating income'.
On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Group revenue represents royalties received from globally recognised digital platforms in respect of games downloaded. Revenue is recognised in the month the game is downloaded by the end customer.
Royalties received in advance are deferred in full alongside the associated costs, both are released and recognised once a game is downloaded or physcially distributed.
Company revenue relates to investment income.
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Operating leases: the Group as lessee
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Rentals paid under operating leases are charged to the Consolidated Profit and Loss Account on a straight line basis over the lease term.
Page 16
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FACEPUNCH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
2.Accounting policies (continued)
Interest income is recognised in the Consolidated Profit and Loss Account using the effective interest method.
Finance costs are charged to the Consolidated Profit and Loss Account over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as an expense in the Consolidated Profit and Loss Account when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Group in independently administered funds.
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Current and deferred taxation
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The tax expense for the year comprises current and deferred tax. Tax is recognised in the Consolidated Profit and Loss Account, except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company and the Group operate and generate income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Statement of Financial Position date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
∙Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
Page 17
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FACEPUNCH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
2.Accounting policies (continued)
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the methods listed below.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Consolidated Profit and Loss Account.
Investments in subsidiaries are measured at cost less accumulated impairment.
Investments in listed company shares are remeasured to market value at each Statement of Financial Position date. Gains and losses on remeasurement are recognised in profit or loss for the period.
Equity investments are recognised initially at fair value which is normally the transaction price (but excludes any transactions costs, where the investment is subsequently measured at fair value through profit or loss). Subsequently, they are measured at fair value through profit or loss with gains or losses transferred to a fair value reserve except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably which are recognised at cost less impairment until a reliable measure of fair value becomes available. If a reliable measure of fair value is no longer available, the equity instrument’s fair value on the last date the instrument was reliably measured is treated as the cost of the instrument. Where a gain is realised upon sale of the investments, a transfer from the non-distributable fair value reserve is made to retained earnings.
Page 18
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FACEPUNCH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
2.Accounting policies (continued)
Work in progress is valued by calculating the cost of games currently being developed but not yet released.
Development expenditure is capitalised in accordance with the accounting policy given below. Initial capitalisation of costs is based on management’s judgement that technical and economic feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model. In determining the amounts to be capitalised management makes assumptions regarding the expected future cash generation of the assets and the expected period of benefits.
Development costs are capitalised if the company can demonstrate that the product is technically and commercially feasible, the company intends and has the technical ability and sufficient resources to complete development, future economic benefits are probable and if the company can measure reliably the expenditure attributable to the product during its development.
Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
In the Consolidated Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.
Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
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Provisions for liabilities
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Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to the Consolidated Profit and Loss Account in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the Statement of Financial Position date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.
The Group only enters into basic financial instrument transactions that result in the recognition of
Page 19
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FACEPUNCH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
2.Accounting policies (continued)
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Financial instruments (continued)
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financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in non-puttable ordinary shares.
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Impairment of non-financial assets
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At each reporting date non-financial assets not carried at fair value, like tangible fixed assets, are reviewed to determine whether there is an indication that an asset may be impaired. If there is an indication of possible impairment, the recoverable amount of any asset or group of related assets, which is the higher of value in use and the fair value less cost to sell, is estimated and compared with its carrying amount. If the recoverable amount is lower, the carrying amount of the asset is reduced to its recoverable amount and an impairment loss is recognised immediately in profit or loss.
If an impairment loss is subsequently reversed, the carrying amount of the asset or group of related assets is increased to the revised estimate of its recoverable amount, but not to exceed the amount that would have been determined had no impairment loss been recognised for the asset or group of related assets in prior periods. A reversal of an impairment loss is recognised immediately in profit or loss.
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
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Judgments in applying accounting policies and key sources of estimation uncertainty
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In determining and applying accounting policies, judgement is often required in respect of items where choice of specific policy, accounting estimate or assumption to be followed could materially affect the reported results or net asset position of the company; it may later be determined that a different choice would have been more appropriate. Management considers that certain accounting estimates and assumptions relating to revenue, taxation, work in progress, provisions and contingent liabilities and accruals are its critical accounting estimates.
Analysis of turnover by country of destination:
Page 20
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FACEPUNCH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
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The operating profit is stated after charging:
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Other operating lease rentals
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Depreciation - owned assets
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Fees payable to the Group's auditor and its associates for the audit of the Group's annual financial statements
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Staff costs, including directors' remuneration, were as follows:
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Cost of defined contribution scheme
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Key management personnel comprise of the directors. Their aggregate remuneration was £12,276 (2018 - £15,840).
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The average monthly number of employees, including the directors, during the year was as follows:
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Page 21
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FACEPUNCH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
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Other interest receivable
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Interest payable and similar expenses
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Current tax on profits for the year
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Adjustments in respect of previous periods
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Origination and reversal of timing differences
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Taxation on profit on ordinary activities
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Page 22
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FACEPUNCH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
11.Taxation (continued)
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Factors affecting tax charge for the year
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The tax assessed for the year is lower than (2018 - lower than) the standard rate of corporation tax in the UK of 19% (2018 - 19%). The differences are explained below:
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Profit on ordinary activities before tax
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Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2018 - 19%)
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Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
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Capital allowances for year in excess of depreciation
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Short term timing difference leading to an increase (decrease) in taxation
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Changes in provisions leading to an increase (decrease) in the tax charge
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Total tax charge for the year
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Ordinary shares of £1 each (Ordinary shares of £0.01 each from 6 September 2018)
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Page 23
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FACEPUNCH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
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Long-term leasehold property
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Charge for the year on owned assets
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Page 24
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FACEPUNCH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
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Investments in subsidiary companies
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The following were subsidiary undertakings of the company:
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Facepunch Limited (dormant)
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Facepunch Studios Limited
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Facepunch Ireland Limited
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The aggregate of the share capital and reserves as at 30 September 2019 and the profit or loss for the year ended on that date for the subsidiary undertakings were as follows:
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Aggregate of share capital and reserves
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Facepunch Limited (dormant)
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Facepunch Studios Limited
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Facepunch Ireland Limited
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Work in progress (development costs)
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The difference between purchase price or production cost of stocks and their replacement cost is not material.
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Page 25
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FACEPUNCH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
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Amounts owed by group undertakings
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Prepayments and accrued income
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Cash and cash equivalents
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Creditors: Amounts falling due within one year
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Other taxation and social security
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Accruals and deferred income
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Page 26
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FACEPUNCH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
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Charged to profit or loss
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Accelerated capital allowances
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Tax losses carried forward
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Allotted, called up and fully paid
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11,112 (2018 - 11,112) Ordinary shares of £0.01 each
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1 (2018 - 1) Ordinary A share of £1.00
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1 (2018 - 1) Ordinary B share of £1.00
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1 (2018 - 1) Ordinary C share of £1.00
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Share premium account
This reserve relates to accumulated non-distributable profits and losses in respect of amounts paid for company shares over and above their issue price.
Other reserves
This reserve relates to accumulated non-distributable profits and losses in respect of fair value movements.
Page 27
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FACEPUNCH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
The group operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the group in an independently administered fund. The pension cost charge represents contributions payable by the group to the fund and amounted to £18,446 (2018 - £14,727). Contributions totalling £2,742 (2018 - £3,019) were payable to the fund at the reporting date and are included in creditors.
There are no directors accruing benefits under the pension scheme (2018 - Same).
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Commitments under operating leases
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At 30 September 2019 the group had future minimum lease payments under non-cancellable operating leases as follows:
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Later than 1 year and not later than 5 years
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Transactions with directors
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During the year a director had a loan account with the company. At 1 October 2018, the director owed the company £18,456. During the year the company provided further advances of £40,737 and the director made repayments of £68,688. At the reporting date £9,945 (2018 - £18,456 overdrawn) was owed to the director in this respect and is included within creditors (2018 - Debtors). Interest of £556 was charged on the loan at the offical HM Revenue & Customs rate for beneficial loan. The loan is unsecured and repayable on demand.
During the year another director had a loan account with the company. At 1 October 2018, the director was owed £118,449 by the company. During the year the company provided advances of £2,615,972 and the director made repayments of £2,507,691. At the reporting date £10,168 (2018 - £118,449) was owed to the director in this respect and is included within creditors (2018 - Same). Interest of £12,978 was charged on the loan at the offical HM Revenue & Customs rate for beneficial loan. The loan is unsecured and repayable on demand.
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Related party transactions
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The company has taken advantage of the exemption in FRS 102 (section 33) “Related Party Disclosures” with respect to disclosure of related party transactions with wholly owned group companies.
During the period the company paid Purewal & Partners and Jaspunch Limited, companies owned by Mr J S Purewal, director, an amount of £8,766 and £56,482 respectively (2018 - £117,307 and £Nil) for legal consultancy services.
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Page 28
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FACEPUNCH GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
The company was under the control of Mr G J Newman, director, throughout the current and previous year by virtue of his majority shareholding.
Page 29
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