Donations to charity as % of turnover (adjusted): 0% (2003-04); 0.4922% (2004-05); 0.5896% (2005-06); 0.3421% (2006-07); 0.4221% (2007-08); 0.4657% (2008-09); 0.4404% (2009-10).
Profit margin (adjusted): 34.47% (2003-04); 48.49% (2004-05); 56.60% (2005-06); 49.86% (2006-07); 41.91% (2007-08); 43.66% (2008-09); 42.21% (2009-10).
Advertising as % of turnover (adjusted): 8.78% (2003-04); 8.06% (2004-05); 6.10% (2005-06); 6.46% (2006-07); 6.38% (2007-08); 5.23% (2007-08); 3.44%(2009-10).
Quotes from the report
PRINCIPAL ACTIVITY
The principal activity of the company is the development and publication of online games using proprietary software
tools and web systems technologies
BUSINESS REVIEW
During the year ended 31 March 2010 the company experienced further growth with turnover increasing by 8% and
operating profit increasing by £824,916 The price increases as well as the positive exchange rate movements
contributed to the rise in turnover and profits Although the company increased the investment in future products, It
remains very profitable.
The landscape is becoming increasingly competitive but the company is positive about the future as there are new
product launches in the coming financial year and the publishing capabilities are being expanded
The directors expect the general level of activity to continue for the foreseeable future
PRINCIPAL RISKS AND UNCERTAINTIES
The key risks to which the business is exposed are summarised as follows:
• competitive pressure, which could result in losing active players and subscription numbers to our key competitors or other on-line entertainment sites,
• expenditures increase without a commensurate increase in revenues, and rapid changes in market conditions could result in poor operating results,
• errors or defects in our products, which could negatively affect our revenues and the market acceptance our products and increase our costs,
• the return of unfavourable economic and market conditions, including significant fluctuations in foreign exchange rates,
• unsuccessful launch of new games,
• the hiring and retention of qualified personnel,and
• claims by others that we infringe on their intellectual property rights
KEY PERFORMANCE INDICATORS
The company has several key performance measures used internally to monitor and challenge performance and to
assist investment decisions. The most important indicators are:
• Revenue
• Operating profit
• Headcount
Performance in the current and prior years is summarised as follows:
Revenue: £44,520k (2010); £41,157k (2009); +8.2% change
Operating profit: £18,794k (2010); ££17,969k (2009); +4.6% change
Headcount: 374 (2010); 370 (2009); +1.1% change
GOING CONCERN
The company has significant cash reserves and is forecast to remain cash generative. The directors have reviewed the historic trading performance of the business and prepared forecasts which show that the company should have sufficient financial resources to meet its financial obligation as they fall due to the forseeable future. Therefire the directors believe it is appropriate to prepae the financial statements on a going concern basis.
RESULTS AND DIVIDENDS
The profit for the year, after taxation, amounted to £13,772,776 (2009 - £13,180,335)
The directors paid dividends in the year of £22,833,585 (2009 - £8,440,166)
POLITICAL AND CHARITABLE CONTRIBUTIONS
The company made charitable donations amounting to £196,087 (2009 - £191,685) during the year. Donations were
made to Cancer Research, in addition to a number of local and US based charities
FUTURE DEVELOPMENTS
The company hopes to continue to grow its player base by launching internally developed new games in various languages as well as act as publisher for third party developed games.
The company intends to release at least one of the projects currently in rapid development
FINANCIAL INSTRUMENTS
The company's activities expose it primarily to the financial risks of credit risk, foreign exchange risk and liquidity risk.
Foreign exchange risk: The company's activities expose it primarily to the financial risks of changes in foreign currency exchange rates. The company seeks to minimise the exposure to this by matching foreign currency receipts to payments where possible.
Credit risk: The company's principal financial assets are bank and cash balances, trade and other receivables. The majority fo the company's recievables are due from institutions regulated by the banking sector. Other receivables are monitored on a regular basis. Any potential bd deads are dealt with swiftly.
Liquidity risk: In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the company reviews the working capital requirements on a quarterly basis in light of the current business trend.
EMPLOYEE INVOLVEMENT
The company places considerable value on the involvement of its employees and has continued to keep them informed on matters affecting them as employees and on the various factors affecting the performance of the company. This is achieved through formal and informal meetings, as well as circulating data regarding subscriber growth.
4 PRIOR YEAR ADJUSTMENT
During the year the directors have re Viewed both the presentation of certain commission and transaction costs incurred
in sales transactions and the allocation of certain costs between cost of sales and administrative
expenses based upon the activities of the business. Previously the company deducted certain commission and
transaction costs in arriving at reported revenue. During the year the directors have revised that accounting
policy so as to include these commission costs within cost of goods sold as they believe this is a better
representations of the costs and revenue of the company's sales transaction. Following the review the
company has restated revenue, cost of sales and administrative expenses for the year ended 31 March 2009 to
reflect a comparable basis. This has led to an increase in sales of £2,735,171, a decrease in cost of goods
sold of £193,121 and an increase of administrative expenses of £2,928,292. The restatement has not led to a
change in either profit for the year ended 31 March 2009 or retained earnings as at 1 April 2008
The director's are not disclosing the geographical analysis of the company's turnover as they consider the information to be seriously prejudicial to the interests of the business
SHARE BASED PAYMENTS
Equity-settled share option schemes
The company has a share option scheme for certain employees of the company. Options are exercisable at a
price equal to the estimated fair value of the company's shares on the date of grant. The vesting period is up
to five years. Options are forfeited if the employee leaves the company before the options vest.
Number of share options granted in 2010: 662 (weighted average exercise price £0.10)
Number of outstanding share options at the end of 2010: 662 (weighted average exercise price £0.10)
Number of share options exercisable at the end of 2010: 248 (weighted average exercise price £0.10)
The options outstanding at 31 March 2010 had a weighted average exercise price of £0.10 and a weighted average remaining life of 14.4 years. In 2010, options were granted on 2nd July 2009 and 2nd November 2009. The aggregate of the estimated fair value of the options granted on those days is £739,334 million. No options were granted during the year ended 31 March 2009.
The inputs into the Black-Scholes model are as follows:
Weighted average share price (p): £1,388.89 (all for 2010)
Weighted average exercise price (p): £0.10
Expected volatility: 80%
Expected life (years): 4 to 5 years
Risk-free rate (%): 4%
Expected divided yield (%): 10%
Expected volatility was determined by referring to the share price of listed technology companies. The expected life used in the model has been adjusted, based on mangement's best estimate, for the effects of non-transferability, exercise restrctions, and behavioural considerations.
29. CONTROLLING PARTY
The controlling party is Mr A Gower and members of his close family, as a result of controlling directly, or indirectly, 52% of the Issued shar capital of the company
Note: Profit from subscriptions is technically "profit from game time sales" and might include iPhone app sales.
