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GUILD ESPORTS PLC Earnings Release 2020
5043_10-q_2021-01-29_af7f3c53-af67-4f29-9ef8-84416afa5126.html
Earnings Release
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National Storage Mechanism | Additional information 
RNS Number : 2859N
Guild Esports PLC
29 January 2021
Press release
29 January 2021
Guild Esports PLC
("Guild" or "the Company")
FINAL RESULTS
Guild Esports PLC, a UK-based owner and developer of esports teams (LSE: GILD), announces its audited results from incorporation on 3 September 2019 to 30 September 2020, covering the period prior to the Company's flotation on the London Stock Exchange on 2 October 2020. All figures are in £millions (£m).
Since the IPO, the Company has signed two significant multi-year sponsorship deals, recruited teams in Fortnite and Valorant to complement its existing Rocket League and FIFA teams, expanded its content creation, marketing and operations staff, launched its Patch 0.0.1 line of apparel, and generated millions of video views and social impressions.
Summary
● Loss before tax of £2.7m, representing start-up and listing costs, and reflecting the pre-revenue stage of the Company
● Secured pre-IPO investments totalling £5m, including investment from David Beckham and a five-year commitment for him to act as Guild's brand ambassador
● Established esports teams to compete in FIFA and Rocket League
● Net cash as at the period-end of £1m
Post Period Highlights
● Became first esports teams organisation to list on the LSE, raising £20m gross proceeds
● Clinched maiden sponsorship deal with contracted revenues of £3.6m over three years
● Signed two-year sponsorship with HyperX, the leading gaming peripherals brand
● Two teams set-up with top-ranked players for major games: Valorant and Fortnite
● Fan base growing rapidly with video views of over 9.4 million and social impressions of 59 million at present
● Cash and near cash of £18m as at 28 January 2021
Outlook
● Robust pipeline of potential sponsors with several deals at advanced stages of negotiations
● On track to deliver strong growth in sponsorship revenues and fan base in 2021
● Expanding roster of top players means Guild is well-positioned to perform well and achieve high rankings in tournaments
Commenting on the results, Carleton Curtis, Executive Chairman, said: "The results reflect Guild's start-up phase before its IPO during which time we developed a long-term strategy to create one of the world's leading esports team organisations, modelled on the proven player development academy system of Premier League football.
"We have continued to make excellent progress in executing this strategy in the four months since the IPO. Our roster of leading players has been expanded across four major games, enabling our teams to reach millions of gamers worldwide and ramp-up a tribal fan base under the Guild brand. We are continuing to benefit from the funds raised at IPO and retain £18m of cash on balance sheet to deploy as needed in order to accelerate our growth and boost brand recognition.
"Our growing presence is attracting keen interest from major brands and sponsors as esports becomes a mainstream social and entertainment activity worldwide. As a result, we entered the new year with an excellent new business pipeline and remain on track to deliver significant sponsorship revenues in the current year.
"Our expansion into Fortnite with three esports athletes has given us a top-tier roster with a significant social following, and a track record of wins and trophies in global competitions. Our FIFA player is currently ranked 3rd in Europe and has already qualified for the pinnacle competitive FIFA tournament at the end of the season, the FIFAE World Cup. Our Rocket League team has gone from strength to strength and is still on track to qualify for the World Championship. Our Valorant roster, supported by a newly appointed head coach, is gearing up for the new season and anticipates being a top-three team.
The annual report and accounts will be available for download from the Company's website later today. www.Guildesports.com
FOR FURTHER INFORMATION, PLEASE CONTACT:
| Guild Esports | |
| Carleton Curtis Executive Chairman Kal Hourd Chief Executive Neil Thapar Investor Relations |
via Tancredi +44 207 887 7633 +44 7876 455 323 |
| Tennyson Securities Corporate Broker Peter Krens |
+44 207 186 9030 |
| Zeus Capital Corporate Broker John Goold Benjamin Robertson Jamie Peel |
+44 203 829 5000 |
| Tancredi Intelligent Communication Media Relations Salamander Davoudi [email protected] Emma Valgimigli [email protected] Helen Humphrey [email protected] |
+44 7957 549 906 +44 7727 180 873 +44 7449 226 720 |
About Guild Esports:
Guild Esports PLC is a global fan-focussed team organisation and lifestyle brand that fields professional players in gaming competitions under the Guild banner. Our in-house training academy aims to attract and nurture the best esports talent, and our goal is to provide the ultimate entertainment experience alongside a distinctive lifestyle brand authentic to the esports community worldwide. Guild is led by an experienced management team of esports veterans and is co-owned by David Beckham. The Company is headquartered in the UK and its shares are listed on the main market of the London Stock Exchange (Ticker: GILD).
CHAIRMAN'S STATEMENT
I am pleased to report Guild's maiden results spanning the first financial period from incorporation on 3 September 2019 to 30 September 2020, a period that pre-dates the Company's debut on the LSE on 2 October 2020.
No revenue was generated and a loss before tax of £2.7m was incurred in the period under review. These reflect the start-up costs of the business, professional and other costs relating to the early rounds of equity funding, followed by the Company's IPO. Cash and near cash amounted to £2.5m as at 30 September 2020.
The focus of 2020 was to formulate a clear strategy and raise the necessary capital to build one of the world's leading esports organisations with a global fan base and a roster of professional players to compete in major esports competitions under the Guild brand.
A key element of our vision was to find and nurture new talent by adopting the proven academy system pioneered by Premier League football clubs such as Manchester United. An early breakthrough was made after we clinched long-term backing from David Beckham as Guild's global brand ambassador and principal influencer, as well as securing financial investment that made him a co-owner of the Company.
David is closely involved in many aspects of the business and brings wide-ranging experience as a sports industry entrepreneur with an international brand management and marketing organisation behind him. He has a social media following of 125 million, providing Guild with the ability to reach a global audience, and gives Guild high-level access to many leading corporate advertisers and sponsors, which assists our strategy of developing mutually beneficial long-term partnerships leading to significant revenues for Guild. Furthermore, his direct experience, interest in and contribution to the development of Guild's academy system is of great value to the Company.
I would like to take this opportunity to thank all shareholders for their support, which has enabled the company to ramp up its resources and activities in a very short time. Our staff numbers have increased from just a handful to more than 20 at present and I commend all our employees, players and partners for their hard work and dedication as we navigate through the challenges posed by Covid-19.
The pandemic has caused widespread great human and economic disruption; however, Guild remains mostly unaffected and the growth of the esports sector has been accelerated by increased time at home during the pandemic and restrictions on other leisure activities. For example, Twitch saw its traffic jump by 50% from March to April during lockdown (as reported by The Economist), which shows how the e-gaming sector has provided an alternative to traditional leisure activity whilst at home. This dynamic has increased media consumption by existing esports followers and brought new followers into the esports ecosystem, which we expect to benefit the esports sector and Guild long term.
Post-period review
Good progress has been made in the four months since IPO, which coincided with the start of the Company's new financial year.
The esports sector continues to enjoy strong growth, driven by favourable long-term fundamentals such as increasing access to high-speed broadband, which facilitates multiplayer gaming, the introduction of a new generation of games consoles, as well as the growing popularity of esports as a mass market leisure and entertainment activity. As noted above, the virus and lockdowns have spurred much interest and engagement in esports which we expect to be an enduring factor in their long-term growth prospects well beyond the duration of the pandemic.
The esports market is forecast to grow by around 50% from approximately $1bn a year in 2019 to $1.6bn by 2023 (Source: Newzoo). The total viewing audience is estimated to increase from more than 400 million to approximately 650 million in the same period.
Sponsorship
Shortly after its stock market debut, Guild clinched its first sponsorship deal, with a new European fintech company for a total of £3.6m spread over three years. The deal enables the sponsor to promote its brand and logo on team jerseys, gain exposure during streaming of gameplay by Guild and its team players as well as other marketing initiatives. Our sponsor's plans to unveil their brand at a major marketing event were pushed back by travel disruption caused by Covid-19. The deal remains completely unaffected and both sides continue to work and collaborate normally. The brand is expected to be launched by the sponsor shortly at which point Guild's revenues will commence.
This deal was followed by a two-year contract, announced yesterday, with HyperX, a leading gaming peripherals brand of Kingston Technology Company Inc, the world's largest independent manufacturer of memory products, based in California. HyperX has a long association with the esports sector and will become Guild's exclusive peripherals partner and as part of the agreement, its products will be used by our pro-players, content-creators and academy students as well as to fit out our London headquarters.
Together these sponsorship deals have enabled Guild to take big strides towards achieving its goal of £5m in sponsorship revenues in the first year after flotation. The Company's pipeline of new business from other potential sponsors and advertisers has also strengthened significantly. Discussions are currently at an advanced stage with several such prospects. These potential sponsors are engaged in multiple industries and have shown great interest in partnering with Guild as we emerge as a leading esports brand and expand our audience in a rapidly growing esports sector.
Rapidly growing audience
Guild is building its endemic audience through the creation of original content, signing of top-tier players and working with influencers and content creators, with David Beckham's social posts bringing in fans from the general population. Guild's fanbase and social reach has gone from strength to strength, with subscribed fans rapidly approaching 100,000, and video views surpassing 9.4 million. With the Company's roster of players and influencers, Guild has direct access to over 1.8 million fans (excluding Beckham's own followers) via social media posts, an essential and attractive asset for potential sponsors.
This is in addition to brand exposure provided by media coverage of Guild's teams competing in esports games and tournaments. Guild's current games are widely covered by specialist media via platforms such as Twitch and YouTube, and there has been increasing coverage from mainstream media outlets such as BBC Sport, who live streamed a number of Guild's Rocket League fixtures in January 2021.
The table below provides a snapshot of our increasing level of engagement with esports audiences.
| 30 September 2020 | 28 January 2021 | |||
| Viewership | ||||
| Guild fans | ||||
| - Individuals who have opted into Guild channels (e.g. YouTube, Instagram, Twitter, Twitch etc.) | 25k | 97k | ||
| Guild network | ||||
| - Individuals subscribed to the network of Guild teams, influencers and content creators | 0.5m | 1.86m | ||
| - Guild social reach on David Beckham's channels | 123m | 125m | ||
| Social impressions | ||||
| - Display of Guild content on individuals' social feeds | 7.6m | 59.0m | ||
| Video views | ||||
| - Views of videos on Guild channels | 0.6m | 9.4m | ||
| Viewership of Guild events | ||||
| - Views of live Guild events (online) | 148k | 207k |
We are highly encouraged by the strong growth in our audience and building a tribal fan base will be crucial to creating long term value for shareholders.
Expansion of teams at pace
Our esports audience is expanding partly due to the step-up in recruitment of outstanding professional players, and the total roster of talent has increased from four in September 2020, to twelve players to date. They are organised in teams specialising in four major games franchises and compete individually and jointly for prize money in FIFA, Fortnite, Rocket League and Valorant tournaments.
Guild has also started a program to manage and drive player's social channels and digital content creation, expanding the reach of Guild and increasing its fanbase. The Company is considering expansion into new games, giving access to larger audiences and partnership opportunities.
Our expansion into Fortnite with three esports athletes has given us a top-tier roster with a significant social following, and a track record of wins and trophies in global competitions. Our FIFA player is currently ranked 3rd in Europe, and has already qualified for the pinnacle competitive FIFA tournament at the end of season, the FIFAE World Cup. Our Rocket League team has gone from strength to strength, and is on track to qualify for the World Championship. Our Valorant roster, now supported by a newly appointed head coach, is gearing up for the new season and anticipates being a top three team.
Merchandising
The first range of Guild-branded apparel went on sale on the Company's website in November 2020. Sales volumes, as expected, were modest as these are still early days for the Company's merchandising operations. A second line of products is being planned for a launch during the first half of 2021. The new range, 'Patch 0.2.1', will continue to feature the iconic Guild logo (as designed by renowned London artist, Fergus Purcell) but will be bolder and brighter, targeting the endemic esports and youth culture markets. Guild also plans to partner with prominent influencers and artists who resonate with the young, esports and culture-driven audiences, to create exclusive collaborative collections.
The Guild Academy
The Guild Academy has advanced from its planning phase to the implementation stage with Guild's roster of top-tier teams already benefiting from academy content. The academy is currently in beta-test and set for a global launch this year, with an interactive tournament platform, fully integrated learning engine and exclusive live workshops to be delivered.
Modelled on the Premier League and with input from David Beckham, the academy will provide holistic training to improve a player's physical, psychological, social and personal skills together with in-game coaching and development. The academy will contribute to the growing fanbase and identify the next generation of professional esports athletes to compete for Guild.
Following the IPO, the build-out of Guild's operational management was completed, with senior hires for each of the Company's key verticals: Esports; Partnerships; Brand & Marketing; Merchandise & Apparel; and Academy.
2021 Outlook
Significant progress has been made to execute Guild's growth strategy since the flotation four months ago.
The Company has established a solid operational base, which together with our robust balance sheet and favourable industry fundamentals, provide an excellent backdrop to our prospects.
In 2021 the company looks forward to continuing to work closely with co-founder, David Beckham; the highly anticipated launch of the Guild Academy; success in global esports tournaments; and collaboration with content creators and influencers.
Our fan base is growing rapidly with video views now exceeding 9.4 million and social impressions at 59 million. These factors will continue to drive Guild's fanbase and social reach, leading to significant growth opportunities in the apparel and partnerships divisions.
Guild has also clinched its first two multiyear sponsorship deals and the new business pipeline has strengthened significantly as our sales activity gains momentum. Several significant sponsorship deals are at an advanced stage of negotiations which puts Guild on track to deliver solid growth in sponsorship revenues in the current year.
As a result, the Board looks to the future with considerable confidence.
Carleton Curtis
Executive Chairman
INDEPENDENT AUDITOR'S REPORT
The Company's auditor has reported on the accounts and their audit report is unqualified. The independent auditor's report is set out in full in the Annual Report and Financial Statements, available on the Company's website.
DIRECTORS' RESPONSIBILITIES STATEMENT
The directors are responsible for preparing the Annual Report and the 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 prepared the company and parent company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. 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 company and of the profit and loss of the company for that period.
In preparing these financial statements, the directors are required to:
· Select suitable accounting policies and then apply them consistently;
· Make judgements and accounting estimates that are reasonable and prudent;
· State whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
· Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company 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 company and 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 company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
INCOME STATEMENT
FOR THE PERIOD ENDED 30 SEPTEMBER 2020
| Period | ||||||
| ended | ||||||
| 30 September | ||||||
| 2020 | ||||||
| Notes | £ | |||||
| Operating and administrative expenses | (2,727,324) | |||||
| Operating loss | 3 | (2,727,324) | ||||
| Interest received | 6 | 129 | ||||
| Loss before taxation | (2,727,195) | |||||
| Taxation | 7 | - | ||||
| Loss and total comprehensive income for the period | (2,727,195) | |||||
| Earnings per share attributable to equity owners | 8 | |||||
| Basic and diluted earnings per share (pence) | (1.70) | |||||
| The income statement has been prepared on the basis that all operations are continuing operations. There are no recognised gains or losses other than those passing through the income statement. |
||||||
STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2020
| 2020 | ||||||
| Notes | £ | |||||
| Non-current assets | ||||||
| Intangible assets | 10 | 36,001 | ||||
| Property, plant and equipment | 11 | 4,342 | ||||
| Total non-current assets | 40,343 | |||||
| Current assets | ||||||
| Trade and other receivables | 12 | 2,065,626 | ||||
| Cash and cash equivalents | 2,517,734 | |||||
| Total current assets | 4,583,360 | |||||
| Total assets | 4,623,703 | |||||
| Current liabilities | ||||||
| Trade and other payables | 14 | 2,092,720 | ||||
| Net current assets | 2,490,640 | |||||
| Total liabilities | 2,092,720 | |||||
| Net assets | 2,530,983 | |||||
| Equity | ||||||
| Share capital | 15 | 264,617 | ||||
| Share premium | 15 | 4,880,511 | ||||
| Share-based payment reserve | 113,050 | |||||
| Retained deficit | (2,727,195) | |||||
| Total equity | 2,530,983 | |||||
| The financial statements were approved by the board of directors and authorised for issue on 28 January 2021 and are signed on its behalf by: | ||||||
| Mr J Savage | ||||||
| Finance Director | ||||||
| Company Registration No. 12187837 | ||||||
STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 SEPTEMBER 2020
| Share capital | Share premium | Share-based payment reserve | Retained deficit | Total | ||||||||||||
| Notes | £ | £ | £ | £ | £ | |||||||||||
| Balance at 3 September 2019 | - | - | - | - | - | |||||||||||
| Period ended 30 September 2020: | ||||||||||||||||
| Loss and total comprehensive income | - | - | - | (2,727,195) | (2,727,195) | |||||||||||
| Issue of share capital | 15 | 264,617 | 5,034,923 | - | - | 5,299,540 | ||||||||||
| Share-based payments | - | - | 113,050 | - | 113,050 | |||||||||||
| Share issue costs | - | (154,412) | - | - | (154,412) | |||||||||||
| Balance at 30 September 2020 | 264,617 | 4,880,511 | 113,050 | (2,727,195) | 2,530,983 | |||||||||||
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 30 SEPTEMBER 2020
| 2020 | |||||||
| Notes | £ | £ | |||||
| Cash flows from operating activities | |||||||
| Cash used by operations | 20 | (2,439, 079) | |||||
| Net cash outflow from operating activities | (2,439,079) | ||||||
| Investing activities | |||||||
| Purchase of intangible assets | (39,078) | ||||||
| Purchase of property, plant and equipment | (4,466) | ||||||
| Interest received | 129 | ||||||
| Net cash used in investing activities | (43,415) | ||||||
| Financing activities | |||||||
| Proceeds from issue of shares (net of issue costs) | 5,000,228 | ||||||
| Net cash generated from financing activities | 5,000,228 | ||||||
| Net increase in cash and cash equivalents | 2,517,734 | ||||||
| Cash and cash equivalents at beginning of period | - | ||||||
| Cash and cash equivalents at end of period | 2,517,734 | ||||||
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2020
| 1 | Accounting policies | ||
| Company information | |||
| Guild Esports PLC is a public limited company incorporated in England and Wales and domiciled in the United Kingdom. The registered office is Craven House, 16 Northumberland Avenue, London, WC2N 5AP. The Company's principal activities and nature of its operations are disclosed in the directors' report. | |||
| 1.1 | Basis of preparation | ||
| The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated. | |||
| The financial statements are prepared in sterling, which is the functional currency of the Company. Monetary amounts in these financial statements are rounded to the nearest £. | |||
| The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below. The Company applied IFRS 16 Leases and IFRIC 23 Uncertainty over Income Tax Treatments for the first time from 3 September 2019. The nature and effect of these changes as a result of the adoption of these new standards did not have an impact on the financial statements of the Company and, hence, have not been disclosed. The Company has not early adopted any standards, interpretations or amendments that have been issued but are not yet effective. |
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| 1.2 | Going concern | ||
| The preparation of financial statements requires an assessment on the validity of the going concern assumption. The directors have a reasonable expectation that the Company has adequate cash resources to continue in operational existence for a period of at least one year from date of approval of these financial statements. The Company therefore has adopted the going concern basis in preparing its financial statements. The directors have reviewed the ongoing situation with Covid-19 and do not consider its effects to have a material impact on the Company's going concern. The directors note that esports tournaments which would have normally taken place in a physical location, have been adapted to take place virtually, in light of the practical restrictions enforced by regulations. The directors have also noted that during this period of "lock-down", esports viewership numbers have increased. |
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| 1.3 | Reporting period | ||
| The Company was incorporated on 3 September 2019. The figures in these financial statements therefore represent the period from 3 September 2019 to 30 September 2020. There are consequently no comparative figures presented in these financial statements and related notes. | |||
| 1.4 | Intangible assets other than goodwill | ||
| Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives. Website costs are amortised on a 33% per annum, straight-line basis. |
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| 1.5 | Property, plant and equipment | ||
| Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses. | |||
| Depreciation is recognised to write off the cost or valuation of assets less their residual values over their useful lives on the following bases: | |||
| Office equipment | 33% straight-line per annum | ||
| The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement. | |||
| 1.6 | Impairment of tangible and intangible assets | ||
| At each reporting end date, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. | |||
| Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired. | |||
| If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. |
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| 1.7 | Cash and cash equivalents | ||
| Cash and cash equivalents comprise cash at bank and in hand and demand deposits with banks and other financial institutions, that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. The Company monitors both short-term and long-term credit ratings of the financial institutions it banks with. NatWest Group Plc has a high rating from Fitch Ratings Inc, being 'F1' short-term and 'A' long-term. | |||
| 1.8 | Financial assets | ||
| Financial assets are recognised in the Company's statement of financial position when the Company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets. At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs. |
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| Financial assets at fair value through profit or loss | |||
| When any of the above-mentioned conditions for classification of financial assets is not met, a financial asset is classified as measured at fair value through profit or loss. Financial assets measured at fair value through profit or loss are recognized initially at fair value and any transaction costs are recognised in profit or loss when incurred. A gain or loss on a financial asset measured at fair value through profit or loss is recognised in profit or loss, and is included within finance income or finance costs in the statement of income for the reporting period in which it arises. | |||
| Financial assets held at amortised cost | |||
| Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary. | |||
| Financial assets at fair value through other comprehensive income | |||
| Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the Company's business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised. |
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| Impairment of financial assets | |||
| Financial assets, other than those measured at fair value through profit or loss, are assessed for indicators of impairment at each reporting end date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected. |
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| Derecognition of financial assets | |||
| Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity. | |||
| 1.9 | Financial liabilities | ||
| The Company recognises financial debt when the Company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'. | |||
| Financial liabilities at fair value through profit or loss | |||
| Financial liabilities are classified as measured at fair value through profit or loss when the financial liability is held for trading. A financial liability is classified as held for trading if: · it has been incurred principally for the purpose of selling or repurchasing it in the near term, or · on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit taking, or · it is a derivative that is not a financial guarantee contract or a designated and effective hedging instrument. Financial liabilities at fair value through profit or loss are stated at fair value with any gains or losses arising on remeasurement recognised in profit or loss. |
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| Other financial liabilities | |||
| Other financial liabilities, including trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding. | |||
| Derecognition of financial liabilities | |||
| Financial liabilities are derecognised when, and only when, the Company's obligations are discharged, cancelled, or they expire. | |||
| 1.10 | Equity and reserves | ||
| The share capital reserve represents the nominal value of equity shares. The share premium reserve is the amount subscribed for share capital in excess of nominal value. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds. Share based payments relating to incentive schemes or advisor warrants have been recognised at their fair value at grant within the share based payment reserve in line with IFRS2. The retained earnings reserve represents the cumulative net gains and losses and other transactions with equity holders not recognised elsewhere. | |||
| 1.11 | Financial risk management | ||
| Equity instruments issued by the Company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the Company. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. | |||
| Financial risk factors | |||
| The Company's activities expose it to a variety of financial risks: market risk (price risk), credit risk and liquidity risk. The Company's overall risk management programme seeks to minimise potential adverse effects on the Company's financial performance. The Company has no borrowings but is exposed to market risk in terms of foreign exchange risk. Risk management is undertaken by the board of directors. | |||
| Market risk - price risk | |||
| The Company is exposed to price risk primarily for the costs of operating in the Esports industry. | |||
| Credit risk | |||
| Credit risk arises from outstanding receivables. Management does not expect any losses from non-performance of these receivables. The amount of exposure to any individual counter party is subject to a limit, which is assessed by the board. The Company considers the credit ratings of banks in which it holds funds in order. | |||
| Liquidity risk | |||
| Liquidity risk arises from the Company's management of working capital. It is the risk that the Company will encounter difficulty in meeting its financial obligations as they fall due. Controls over expenditure are carefully managed, in order to maintain its cash reserves. | |||
| Capital risk management | |||
| The Company's objectives when managing capital is to safeguard the Company's ability to continue as a going concern, in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure. The Company has no borrowings. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares. The Company monitors capital on the basis of the total equity held by the Company,. | |||
| 1.12 | Taxation | ||
| The tax expense represents the sum of the tax currently payable and deferred tax. | |||
| Current tax | |||
| The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date. | |||
| Deferred tax | |||
| 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 computation 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 from the initial recognition 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 reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the Company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority. |
|||
| 1.13 | Share-based payments | ||
| Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black-Scholes option pricing model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity. | |||
| When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value. Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately. |
|||
| 2 | Critical accounting estimates and judgements | ||
| In the application of the Company's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. There are currently no estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities. |
|||
| 3 | Operating loss | ||
| Operating loss for the period is stated after charging: | |||
| Fees payable to the Company's auditor for the audit of the financial statements | |||
| Fees payable to the Company's auditor for work in respect of the IPO | |||
| Depreciation of property, plant and equipment | |||
| Amortisation of intangible assets (included within administrative expenses) | |||
| Share-based payments | |||
| 4 | Employees | ||
| The average monthly number of persons (excluding directors) employed by the Company during the period was Nil. Amounts paid to Directors during the period are disclosed in note 18. | |||
| 5 | Directors' remuneration | ||
| Remuneration for qualifying services | |||
| Remuneration disclosed above include the following paid to the highest-paid director: | |||
| Remuneration for qualifying services | |||
| 6 | Finance income | ||
| Interest income | |||
| Bank deposits | |||
| Total interest income for financial assets that are not held at fair value through profit or loss was £129. |
| 7 | Taxation | |||||||||
| The charge for the period can be reconciled to the loss per the income statement as follows: | ||||||||||
| 2020 | ||||||||||
| £ | ||||||||||
| Loss before taxation | (2,727,195) | |||||||||
| Expected tax credit based on a corporation tax rate of 19% | (518,167) | |||||||||
| Effect of expenses not deductible in determining taxable profit | 57,562 | |||||||||
| Unutilised tax losses carried forward | 440,036 | |||||||||
| Permanent capital allowances in excess of depreciation | (911) | |||||||||
| Share based payment charge | 21,480 | |||||||||
| Taxation credit for the period | - | |||||||||
| The Company has tax losses of £2,315,978 available to be carried forward against trading profits arising in future periods. At this time, a deferred tax asset has not been recognised due to insufficient certainty over the level of future profits to utilise against this amount. | ||||||||||
| 8 | Earnings per share | |||||||||
| The basic earnings per share is calculated by dividing the loss attributable to equity shareholders by the weighted average number of shares in issue. | ||||||||||
| 2020 | ||||||||||
| No. | ||||||||||
| Number of shares | ||||||||||
| Weighted average number of ordinary shares for basic earnings per share | 160,342,559 | |||||||||
| Earnings | £ | |||||||||
| Loss for the period from continued operations | (2,727,195) | |||||||||
| Earnings for basic and diluted earnings per share being net profit attributable to equity shareholders of the Company for continued operations | (2,727,195) | |||||||||
| Earnings per share for continuing operations | ||||||||||
| Basic and diluted earnings per share | (1.70) pence | |||||||||
| Outstanding warrants are non-dilutive given the loss for the period. | ||||||||||
| 9 | Share-based payments | |||||
| The following warrants over ordinary shares have been granted by the Company and are outstanding: | ||||||
| Options/warrants | Grant date | Expiry period | Exercise price | Outstanding at 30 September 2020 | ||
| Warrants | 3 December 2019 | 3 months from admission | £0.01 | 3,000,000 | ||
| Warrants | 18 February 2020 | 24 months from the first anniversary of admission | £0.01 | 3,250,000 | ||
| Warrants | 13 March 2020 | 36 months from the first vesting date | £0.01 | 75,000 | ||
| Warrants | 30 March 2020 | 36 months | £0.01 | 1,000,000 | ||
| Warrants | 9 June 2020 | 36 months | £0.01 | 250,000 | ||
| Warrants | 12 June 2020 | Upon admission | £0.01 | 2,500,000 | ||
| Warrants | 18 June 2020 | 36 months from the first vesting date | £0.06 | 5,000,000 | ||
| Warrants | 19 June 2020 | Five years from issue | £0.06 | 6,963,000 | ||
| Warrants | 29 June 2020 | 36 months from the first vesting date | £0.06 | 250,000 | ||
| Warrants | 7 July 2020 | 36 months from the first vesting date | £0.06 | 225,000 | ||
| Warrants | 5 August 2020 | 36 months | £0.06 | 250,000 | ||
| Warrants | 7 August 2020 | 36 months from the first vesting date | £0.06 | 500,000 | ||
| Warrants | 14 August 2020 | 36 months from the first vesting date | £0.06 | 750,000 | ||
| Warrants | 17 August 2020 | 36 months from the first vesting date | £0.06 | 1,000,000 | ||
| Warrants | 20 August 2020 | 36 months from the first vesting date | £0.06 | 1,000,000 | ||
| Warrants | 28 August 2020 | 36 months from the first vesting date | £0.06 | 150,000 | ||
| 26,163,000 | ||||||
| 9 | Share-based payments | ||||||||||
| Number of options and warrants | Weighted average exercise price | ||||||||||
| 2020 | 2020 | ||||||||||
| No. | £ | ||||||||||
| At incorporation | - | - | |||||||||
| Granted in the period | 26,163,000 | 0.04 | |||||||||
| Forfeited in the period | - | - | |||||||||
| Exercised in the period | - | - | |||||||||
| Expired in the period | - | - | |||||||||
| Outstanding at 30 September 2020 | 26,163,000 | 0.04 | |||||||||
| Exercisable at 30 September 2020 | 10,213,000 | 0.04 | |||||||||
| At the grant date, the fair value of the warrants issued have been determined using the Black-Scholes option pricing model. Volatility was calculated based on data from comparable esports companies, with an appropriate discount applied due to being an unlisted entity at the grant date. Risk-free interest has been based on UK Government Gilt rates. The weighted average remaining life of warrants as at the balance sheet date was 2.6 years. | |||||||||||
| 10 | Intangible assets | ||||||||||
| Website costs | |||||||||||
| £ | |||||||||||
| Cost | |||||||||||
| Additions | 39,078 | ||||||||||
| At 30 September 2020 | 39,078 | ||||||||||
| Amortisation and impairment | |||||||||||
| Charge for the period | 3,077 | ||||||||||
| At 30 September 2020 | 3,077 | ||||||||||
| Carrying amount | |||||||||||
| At 30 September 2020 | 36,001 | ||||||||||
| 11 | Property, plant and equipment | |
| Cost | ||
| Additions | ||
| At 30 September 2020 | ||
| Accumulated depreciation and impairment | ||
| Charge for the period | ||
| At 30 September 2020 | ||
| Carrying amount | ||
| At 30 September 2020 | ||
| 12 | Trade and other receivables | |
| VAT recoverable | ||
| Prepayments | ||
| The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value. No significant receivable balances are impaired at the reporting date. | ||
| 13 | Financial instruments | |
| Financial assets measured at amortised cost | ||
| Financial liabilities measured at amortised cost | ||
| The directors consider the carrying amounts of financial instruments in the financial statements approximate to their fair values. | ||
| 14 | Trade and other payables | |
| Trade payables | ||
| Accruals | ||
| Other payables | ||
| Other payables relates to amounts received in advance for share capital issued post-period end. |
| 15 | Share capital and premium | |||||||
| Number of shares | Share capital | Share premium | ||||||
| No. | £ | £ | ||||||
| At incorporation | 1,000 | 1 | - | |||||
| Issue of ordinary shares (13/09/2019) | 99,999,000 | 99,999 | - | |||||
| Issue of ordinary shares (21/10/2019) | 27,500,000 | 27,500 | 247,500 | |||||
| Issue of ordinary shares (28/10/2019) | 3,000,000 | 3,000 | 27,000 | |||||
| Issue of ordinary shares (30/12/2019) | 1,250,000 | 1,250 | 11,250 | |||||
| Issue of ordinary shares (30/03/2020) | 7,500,000 | 7,500 | 67,500 | |||||
| Issue of ordinary shares (19/05/2020) | 1,600,000 | 1,600 | 14,400 | |||||
| Issue of ordinary shares (12/06/2020) | 52,700,029 | 52,700 | 474,300 | |||||
| Issue of ordinary shares (30/06/2020) | 64,600,667 | 64,601 | 3,811,439 | |||||
| Issue of ordinary shares (17/07/2020) | 5,133,333 | 5,133 | 302,867 | |||||
| Issue of ordinary shares (27/08/2020) | 1,333,333 | 1,333 | 78,667 | |||||
| Share issue costs deducted from share premium | - | - | (154,412) | |||||
| At 30 September 2020 | 264,617,362 | 264,617 | 4,880,511 | |||||
| On incorporation, the Company issued 1,000 ordinary shares for a total consideration of £1. On 13 September 2019, 99,999,000 shares were issued for consideration of £0.001 each, at par value. Between 21 October 2019 and 12 June 2020, the Company issued a total of 93,550,029 Ordinary shares for a consideration of £0.01 each, at a premium of £0.009. Of this amount, 14,490,000 shares were issued for non-cash consideration in respect of service fees, including Directors fees as disclosed in note 18. Between 30 June 2020 and 27 August 2020, the Company issued a total of 71,067,333 Ordinary shares for consideration of £0.06 each, at a premium of £0.059. All shares are authorised, issued and fully paid. | ||||||||
| 16 | Financial commitments | |||||||
| During the period, the Company entered into an influencer agreement with Footwork Productions Limited. Pursuant to this agreement, Footwork will procure that David Beckham provides certain personal services to the Company, including personal appearances and social media posts. In addition Footwork will provide the Company with a non-exclusive, non-transferable licence to use David Beckham's name, voice, biography, image and likeness and signature to advertise and promote the Company for a five-year term. In consideration for these services the Company will pay Footwork an annual fee equal to 15% of the net proceeds of all of the Company's merchandising sales and 15% of all sponsorship revenue received in respect of contracts entered into during the term. Such payments will be subject to a minimum payment of £2,250,000 in the first twelve-month period, and further annual minimum payments of £2,500,000 in the second year, £3,000,000 in the third year, £3,500,000 in the fourth year and £4,000,000 in the final year of the term. Of these amounts, £13,000,000 is remaining as payable over the next four years. The Company has not entered into any long-term commitments other than that outlined above. |
||||||||
| 17 | Controlling party | |||||||
| The directors do not consider there to be an ultimate controlling party. |
| 18 | Related-party transactions | |||
| During the period, remuneration was paid to the directors, as set out below: | ||||
| Fees settled by cash | Fees settled by shares | Share-based incentives | ||
| £ | £ | £ | ||
| Carleton Curtis (Executive chairman) | 58,157 | - | 4,875 | |
| Kal Hourd (CEO) | 35,000 | 20,000 | - | |
| James Savage (CFO) | 30,000 | 12,000 | 907 | |
| Andrew Drake (Non-executive director) | 30,000 | 20,000 | - | |
| Derek Lew (Non-executive director) | 9,000 | 18,000 | - | |
| David Gardner | - | - | 12,863 | |
| Jonathan Bixby (Director - resigned 03/12/19) | 5,000 | - | - | |
| Timothy Le Druillenec (Director - resigned 30/03/20) | - | 3,000 | - | |
| Simon Walters | 3,500 | - | 390 | |
| Christopher Sullivan | 3,500 | - | 418 | |
| The Company issued to Andrew Drake 1,500,000 warrants exercisable at £0.01 each pursuant to a warrant instrument dated 3 December 2019 for advisory services rendered to the Company prior to Andrew becoming a director. The warrants are conditional on admission and expire three months from the date of admission. These warrants are not subject to any provisions. The warrant was exercised post year-end. During the period to 30 September 2020, Bad Moon Talent LLC, a company for which Andrew Drake (non-executive director of Guild Esports plc) is the CEO and 55% shareholder provided esports consulting services to the Company. The total amount was £110,000 and no amounts remained payable at the period end. The consulting agreement with Bad Moon Talent LLC ended on 31 December 2020. |
||||
| The Company issued to Derek Lew 1,500,000 warrants exercisable at £0.01 each pursuant to a warrant instrument dated 3 December 2019 for advisory services rendered to the Company prior to Derek becoming a director. The warrants are conditional on admission and expire three months from the date of admission. These warrants are not subject to any lock-in provisions. The warrant was exercised post year-end. | ||||
| 19 | Events after the reporting date | |||
| On 2 October 2020, in the Company's initial public offering, 250,000,000 ordinary shares were issued at £0.08 each (premium of £0.079 per share). Subsequent to the period end, a further 4,000,000 ordinary shares were issued, including 3,000,000 in Director warrants as disclosed in note 18. As at the date of this document, the total number of ordinary shares in issue is 518,617,362. On 19 October 2020, the Company announced its first sponsorship deal, with a new European fintech company serving esports fans. Under the terms of the agreement, the sponsor will pay a guaranteed fee of £3.6m over a three-year period. On 28 January 2021, HyperX (a leading gaming peripherals brand of Kingston Technology Company Inc, the world's largest independent manufacturer of memory products), signed a two-year contract as a peripherals sponsor of Guild, which includes consideration in cash (75%) and gaming hardware (25%). |
| 20 | Cash absorbed by operations | ||||
| 2020 | |||||
| £ | |||||
| Loss for the period after tax | (2,727,195) | ||||
| Adjustments for: | |||||
| Investment income | (129) | ||||
| Amortisation and impairment of intangible assets | 3,077 | ||||
| Depreciation and impairment of property, plant and equipment | 124 | ||||
| Services settled by issue of shares | 144,900 | ||||
| Services settled by issue of warrants | 113,050 | ||||
| Movements in working capital: | |||||
| Increase in trade and other receivables | (2,065,626) | ||||
| Increase in trade and other payables | 2,092,720 | ||||
| Cash absorbed by operations | (2,439,079) | ||||
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