Guild Esports . Regulatory News (GILD)

Clarification: Annual Results

Earlier today the Company announced by RNS its audited results for the year ended 30 September 2022 in the usual abridged format and in addition uploaded a full set of its statutory annual report and accounts on its website.

In the full statutory accounts the independent auditor's report states that the Company is in the process of conducting an equity fund raising. The Company would like to clarify that it has had initial positive conversations with its brokers about a fundraise, however, as yet no financial adviser has been engaged to conduct a fundraising and no timetable or pricing for such an issue has been decided.

In order to avoid ambiguity, these results are being reissued in full in this announcement, which replaces the Company's earlier announcement.

The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014, as retained as part of the law of England and Wales. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

Press release

31 January 2023

Guild Esports PLC

("Guild Esports", "Guild", or "the Company")

Annual Results

Guild Esports PLC (LSE: GILD) a global teams organisation and lifestyle brand, is pleased to announce its audited results for the year ended 30 September 2022.

Operating and financial summary:

Post-period highlights:

Outlook:

*Defined as the cumulative value of all signed deals over the full lifetime of the contracts

Commenting on the results, Guild CEO Jasmine Skee said: "Guild delivered strong growth as we transformed our pipeline of potential sponsorship opportunities into revenues. The new year has started well with a lower cost base, a strengthened Board and senior management teams, as well as a focus on expanding our revenue streams and audience, all of which place Guild in an excellent position to continue its positive momentum. We therefore look to the future with confidence."

The annual report and accounts will be available for download from the Company's website (www.guildesports.com) later today.

For further information please contact:

About Guild Esports:

Guild Esports PLC is a global fan-focused 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 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) and on the OTCQB Venture Market in the United States (ticker: GULDF). Please visit www.guildesports.com for more information.

Notes:

This document contains forward-looking statements which are subject to known and unknown risks and uncertainties because they relate to future events, many of which are beyond the Company's control. These forward-looking statements include, without limitation, statements in relation to the Company's financial outlook and future performance. No assurance can be given that future results will be achieved; actual events or results may differ materially as a result of risks and uncertainties facing the Company.

You are cautioned not to rely on these forward-looking statements, which speak only as of the date of this announcement. The Company undertakes no obligation to update or revise any forward-looking statement to reflect any change in its expectations or any change in events, conditions or circumstances. Nothing in this document is or should be relied upon as a warranty, promise or representation, express or implied, as to the future performance of the Company or its businesses.

Chairman's statement

I am delighted to report that Guild Esports made excellent progress in the year to 30 September 2022 with stellar growth in its revenues, major sponsorship wins, outstanding team performances and an engaged fan base. This was accomplished while we continued with significant ongoing investment in the business and crossed a major milestone with the launch of our flagship Academy and headquarters in London during the year.

Total revenues surged by 137% year on year to £4.5m as the strong growth momentum seen in the first half continued into the second, driven by higher contributions from new sponsorship deals signed during the past year as well as in 2021, which was our maiden year of operations.

Revenues are made up of two elements: sponsorship and prize money. Guild keeps all its sponsorship, minus commissions. Guild retains a small proportion of the prize money won by its teams. During the year Sponsorship revenue increased by 168% to £3.2m. Prize money won increased by 81% to £1.3m.

Guild set a record for new sponsorship deals signed with several world class brand owners, validating the sustained investment in our infrastructure, teams, content creation and brand since the Company's IPO in October 2020.

The year under review kicked-off with a £4.5m three-year sponsorship deal with leading cryptocurrency exchange, Bitstamp and rounded off with an even bigger three-year deal with Sky UK, the media giant, our largest ever win to date.

Five new sponsorship deals, worth a total of £10.7m, were clinched during the year, taking the total complement of our sponsorship partners to eight, which now includes global brands such as Coca-Cola, Subway and Samsung. The sponsorship deals won during the year increased the total contracted value of all sponsorship deals signed to date to £14.6m spread over the lifetime of these contracts, representing a 174% increase from the £3.9m aggregate value reported in 2021.

Our existing order book, which is the portion of signed contracts yet to be recognised as revenues over the lifetime of the deals, amounted to £9.2m as at our year end. Based on this order visibility, the Company's annual sponsorship revenue run rate is approximately £5m at present providing a strong foundation for further progress in the current year and beyond.

The quality and size of our sponsorship deals is of great pride to the Company, as we have become one of the leading European esports teams and lifestyle brands in a relatively few short years. Guild resides in the top six esports teams in Europe for sponsorship revenue received over the previous two years.

Moreover, our pipeline of new business opportunities remains robust, and we continue to attract the interest of a wide range of potential new partners and sponsors from a variety of sectors, with some prospective agreements at advanced stages of negotiation.

The loss before tax decreased to £8.75m compared with £8.81m in the corresponding period in 2021, despite an approximate £1m rise in administration costs, which are expected to decline significantly this year following a streamlining of overheads under our new CEO Jasmine Skee. We are mindful of the need to streamline our cost base to reduce the cash requirements of the business and accelerate our path to profitability. Accordingly, a significant rationalisation programme was implemented towards the end of the financial year.

These actions, which included a streamlining of suppliers and expenditure relating to content creation, are anticipated to reduce our annual cost base by approximately £2.5m to approximately £5.3m from this year, and significantly reduce the ongoing cash requirements of the business. Importantly, the management team do not anticipate the right-sizing of the business to impact its ability to deliver on its objectives.

Our total staff numbers have come down from a peak of 45 reported at the half year to 35 at present. This number is expected to remain broadly unchanged for the remainder of this financial year, as part of efficiency measures.

Net cash as at 30 September 2022 amounted to £2.73m compared with £10.1m at the same time in the previous year. As at 25 January 2023 net cash was £1.6m.

As important as our financial results are, I would like to pay tribute to our esports teams for their outstanding performances and providing Guild's fans and followers worldwide with scintillating gameplay, entertainment and great fun. Their success, as well as the compelling content produced by Guild, is crucial to expanding our audiences and are key reasons why we are attracting global sponsors to our brand.

Looking ahead, Guild's robust order book and new business pipeline, much fancied team performances as well as tighter control over costs, provide a solid platform for further strong growth in the current year.

With the appointment of Jasmine Skee in November 2022 and further hires made in January this year to strengthen the executive leadership teams, Guild is well placed to enter the next phase of its development and deliver value to shareholders. On behalf of the Board, I would like to thank all of our staff and partners for their hard work and our investors for their continued support and patience as we look to the future with confidence.

Mr D Lew

Non-Executive Chairman

Strategy and operational review

Guild achieved strong growth in 2022 as the business continued to gain momentum from the sustained investment made since its IPO on the London Stock Exchange less than three years ago as well as favourable industry fundamentals. The esports sector grew by 22 percent in 2022 and is now a $1.4bn industry (source: Statista, 2023). It is also set to fare well for the long term and predicted to reach $1.87bn by 2025 according to the same forecasters. Total viewing audience is estimated to increase from more than 532 million to approximately 641 million in the same period (source: Newzoo, 2023).

Our strategy remains to establish Guild as one of Europe's top three esports teams organisations and brands, driven by a roster of great players, rich content and a global fan base, all supported by major consumer brands and sponsors and an esports academy system to nurture new talent. Excellent progress was made on several fronts to achieve this goal, led by a banner year of new revenue generating sponsorship deals.

Sponsorships

Guild secured five new sponsorships taking the total complement of its sponsors to eight, being Bitstamp, Coca-Cola, Hyper X, Hyperice, Razer Gaming Chairs, Sky UK, Samsung and Subway. As a result, the total contracted revenues signed by the company since IPO increased to £14.6m, compared with £3.9m in 2021 and £8.56m reported on 30 June 2022.

In January 2022, a three-year sponsorship deal worth £4.5m was signed with Bitstamp, one of the world's longest established cryptocurrency exchanges. Bitstamp became our exclusive Official Cryptocurrency Exchange partner and secured exposure to Guild's team jersey and feature content.

The Cola-Cola Company, one of the world's most respected consumer brands, signed a one-year deal in July, thereby becoming Guild's Official Soft Drinks and Hydration Partner. The sponsorship package, which is confidential, is based around creating unique experiences aimed at reaching a hard-to-reach and young audience through Guild's entertainment and content.

Other new agreements were signed with Hyperice, a California-based manufacturer of athletic recovery devices, while Samsung expanded its relationship with the Company as well as entered a new one-year deal, which appointed the South Korean technology giant as our Official TV partner for the UK and Ireland.

Our largest sponsorship deal came in September 2022, when Sky UK signed a three-year agreement which is 100% payable in cash over the lifetime of the contract. The deal is one of the largest esports sponsorships ever signed in Europe and also Sky's first with an esports teams organisation.

Our relationships with all our partners have continued to deepen since the deals were announced, as we collaborate with them on creating unique content and experiences to reach our fans and followers, particularly Generation Z.

The Company's pipeline of new business from other potential sponsors is surging, due to Guild's position as a leading esports brand with access to a hard-to-reach, young and growing audience.

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 different segments. Guild's fanbase and social reach has grown significantly since its IPO in 2020; the Company currently has an owned audience of 1.1 million. Guild expects to approximately double its owned audience to 2 million by the end of the calendar year.

To stimulate this growth in its audience numbers, Guild has shifted its strategy away from employing influencers on a full-time basis, instead placing a strategic emphasis on raising visibility for specific campaigns run with Guild's sponsorship partners and deploying content creators and influencers selectively to boost each campaign. In line with this, we have also updated and streamlined our roster of content creators and influencers to control costs and improve the quality of content they produce, which we expect to lead to renewed growth in, and deeper engagement from, esports audiences worldwide.

Additionally, Guild is placing greater emphasis on distributing its unique content to a broader range of social media platforms. In particular, Guild will focus on TikTok, which has rapidly emerged as a destination of choice among Gen Z audiences, an important target demographic for Guild.

This shift is exemplified by a contract awarded to creative studio Little Dot Studios ("Little Dot") in December 2022 for Guild's channel management and vertical video production. Little Dot's remit is focused on TikTok. The original content the partnership with Little Dot will yield will incorporate Guild's players, content creators, and the Sky Guild Gaming Centre, and will further support Guild's marketing activations with sponsorship partners. This campaign-led approach is more cost effective and impactful in reaching Gen Z audiences. Guild social campaigns on TikTok alone to date drew video views of 4.3m and an 11.06% channel growth, a testament to the new campaign-led strategy adopted.

Esports teams

During the year Guild teams won 5 competitions and tournaments including the RL EMEA Predator League 2022, Game Changers EMEA Series 3, Fortnite Champion Series, EA Sports FIFA 22 eChampions League and MrBeast's Extreme Survival Challenge. Our teams are ranked as follows:

The growth of our esports fan-base and audience is partly dependent on the success of our esports teams and the development or recruitment of outstanding professional players. They are organised in teams specialising in four major gaming franchises (FIFA, Fortnite, Rocket League, and Valorant) and compete in tournaments for trophies and prize money. While only a small proportion of the prize money goes to Guild as per industry norms, Guild benefits from the value of its players, content and brand following.

Guild's esports team strategy has been guided by the Company's brand values and culture, working with its partners to effect positive change in the esports industry. To this effect, Guild has focused on improving female representation within the esports industry and in its teams, and was delighted by the success of Valorant X, its all-female Valorant team, across 2022.With our latest sponsorship partner, Sky UK also committed to promoting female participation in esports, we will actively consider entering more all-female teams later this year.

The total pool of Guild team players was 17 and our big stars of the year include Anas El-Abd ("Anas") who recently won $1m in prize money in a popular online Fortnite competition organised by Epic Games and hosted by Jimmy "MrBeast" Donaldson, a YouTube personality and internet celebrity with the fourth-biggest channel on YouTube with more than 125 million subscribers.

Guild teams contributed £1.3m (2021: £0.72m) in prize money wins to revenues, of which Guild retains a small proportion.

Merchandising

Following a disappointing first run in terms of sales which generated negligible revenues in 2022, a new creative team has been hired and tasked with building out a clear and robust strategy for performance wear and Guild branded apparel. Guild brand recognition and affinity is favourable and accordingly our new approach to merchandise has been devised to ensure reduced manufacturing costs, 'no minimum order' partner suppliers and a development of the Guild brand and how that can manifest in fashion.

Guild's branded apparel strategy in 2023 will be focused on building robust, cost effective and responsible manufacturing but with a greater focus on creative and design, trend led and trend forming.

Guild's new creative services team will focus on new design technologies, utilising experience in AI and digital consumables, to ensure that the design processes are low cost and innovative. Production of new products will be actioned only once the community and wider focus groups have expressed interest in a digital version of proposed product ranges.

New ranges will include the Core Pro range, fashion wear designed for esports teams and pros; Core Public, fashion wear designed for the everyday gamer, establishing Guild as a gaming fashion brand; Pro Utility, performance wear for professional and up-and-coming competitive gamers; and Skin Drops, which are design-led, short-run printed designs reactive to gaming culture.

The new Guild Jersey, beta launched at the end of 2022 on an exclusive short run, will be the lead creative as part of our launch of the upcoming Guild Store in Q2 2023.

Guild will not be moving forward with any branded peripherals or branded products (e.g. water bottles, keyrings). These 'giveaway' style items will be included as part of our partner agreements, allowing Guild to responsibly create branded equipment in conjunction with particular campaigns and giveaways.

The Guild Academy

A major element to Guild's player development strategy is to find and nurture new talent by adopting the proven academy system pioneered by Premier League football clubs such as Manchester United. We first launched our online academy followed by the opening of our physical academy, gaming centre and headquarters, at a single location in London's Shoreditch area. The online academy initially generated over 3,000 sign-ups and engagement from budding professionals and gamers alike. Despite the encouraging early market response, interest in the online academy has waned, leading to lower-than-expected returns for the Company. Accordingly, the online service, which was designed to provide long-distance coaching for professional development, has been scaled down to save on costs.

However, our face-to-face academy training and mentoring system at Shoreditch has continued to gain traction and is a growth segment that has the potential to develop multiple revenue streams, ranging from the provision of personalised coaching workshops for talented players to generating sponsor-supported content featuring individual young players, as well as by hosting corporate events. In addition, we continue to believe that the Guild Academy fulfils the primary purpose for which it was created - i.e., as a source of finding and developing future professional players and a beacon for Guild's fans and budding stars.

Moreover, we are also now developing new opportunities to leverage the Guild Academy with the Guild College, which was launched in November 2022 to provide a new career pathway for young people into the industry. As part of this venture, Guild entered into a four-year partnership with SCL Education, a leading UK-based provider of post-16 education specialising in sports, to deliver a one-year BTEC Level 2 Diploma in Esports and a further two-year BTEC Esports Level 3 Diploma as a progress route. Guild will receive a four-figure sum per student enrolled into the course. Since launching in November, Guild has filled more than 30% of spaces and expects to fill 100% of spaces by September 2023.

The scheme is drawing interest from overseas jurisdictions, which may lead to more tie-ups in due course.

Current trading and outlook

Guild made a good start to the new financial year and current trading remains in line with management expectations, helped by continuing industry tailwinds and growing interest from consumers and brand advertisers.

The Company is on track to deliver another year of strong revenue growth, underpinned by a strong contracted order book visibility and an annual sponsorship revenue run rate estimated to be approximately £5m at present.

Our pipeline of potential new sponsorship deals also remains robust and several significant deals are under active negotiations, providing significant upside potential to revenue growth for this year and beyond.

Following a significant rationalisation programme, the Company's annual operating costs have been reduced by approximately £2.5m, thereby significantly reducing the ongoing cash requirements of the business. As a result, the Board looks to the future with great confidence.

INCOME STATEMENT

FOR THE YEAR ENDED 30 SEPTEMBER 2022

The financial statements were approved by the board of directors and authorised for issue on 30 January 2023 and are signed on its behalf by:

Mr D Lew

Chairman

NOTES TO THE FINANCIAL STATEMENTS

FOR YEAR ENDED 30 SEPTEMBER 2022

1 GENERAL INFORMATION

Guild Esports PLC is a public limited company incorporated in England and Wales and domiciled in the United Kingdom. The registered office is 2 Chance Street, London, E1 6JT. The Company was incorporated on 3 September 2019 originally under the name "The Lords Esports Plc" before changing its name on 17 April 2020.

The Company's principal activities and nature of its operations are disclosed in the Directors' Report.

2 ACCOUNTING POLICIES

IAS 8 requires that management shall use its judgement in developing and applying accounting policies that result in information which is relevant to the economic decision-making needs of users, that are reliable, free from bias, prudent, complete and represent faithfully the financial position, financial performance and cash flows of the entity.

2.1 Basis of preparation

The financial statements have been prepared in accordance with UK-adopted international accounting standards 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 £'000.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

The Company has adopted the applicable amendments to standards effective for accounting periods commencing on 1 October 2021. The nature and effect of these changes as a result of the adoption of these amended 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.

2.2 Going concern

The preparation of financial statements requires an assessment on the validity of the going concern assumption. In assessing whether the going concern assumption is appropriate, the Directors have taken into account all relevant available information about the current and future position of the Company. The Directors have concluded that the adoption of the going concern assumption is appropriate based on the Company's ability to secure additional fundraising. The process of securing funding is currently underway and the Directors are confident in the ability of the Company to source this funding. However this does constitute a material uncertainty that may cast significant doubt on the company's ability to continue as a going concern. The Company's auditors have not modified their opinion in respect to this material uncertainty.

2.3 Revenue

Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The Company recognizes revenue when it transfers control of a product or service to a customer.

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

Sale of goods

Revenue is recognised when the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods and the amount of revenue can be measured reliably. Revenue is measured net of returns, trade discounts and volume rebates.

Royalties

The Company receives royalties from in-game digital products branded with the Guild logo. The rights to the digital products are held by the game developers, and Guild is not deemed to be the principal in such transactions. Therefore, the revenue recognised from the sale of these digital products is the net amount of commission earned by the Company.

Prize money

The Company operates esports teams in several game titles which each have multiple tournaments with varying amounts of prize pools. The Company recognises total prize winnings as revenue at the point that its esports teams' placing is confirmed in a tournament. Prize pool amounts payable to the Company's esports teams as part of the players' contracts are shown in cost of sales.

Long-term partnership contracts

The Company enters into partnership deals which provide rights over services and assets operated and owned by Guild. Contracts may include both fixed-price and variable-price services. Revenue from providing services is recognised in the accounting period in which the services are rendered. For fixed-price contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided, because the customer receives and uses the benefits simultaneously. This is determined based on actual services provided relative to the total expected services expected as part of the contract. The rights over services and assets are subject to minimum monthly commitments and as such, these fixed-price contracts accrue materially evenly over the life of the contract. Contributions in kind are included in revenue at the fair value of the goods and services agreed.

2.4 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision makers. The chief operating decision maker, who are responsible for allocating resources and assessing performance of the operating segments, has been identified as the executive Board of Directors.

2.5 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.

2.6 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.

2.7 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. During the period, the Company banked with National Westminster Bank Plc which has a high rating from Fitch Ratings Inc, being 'F1' short-term and 'A' long-term

2.8 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.

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.

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.

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.

2.9 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.

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.

2.10 Leases

Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Company.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

- Fixed payments (including in-substance fixed payments), less any lease incentives receivable;

- Variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date;

- Amounts expected to be payable by the Company under residual value guarantees;

- The exercise price of a purchase option if the Company is reasonably certain to exercise that option; and

- Payments of penalties for terminating the lease, if the lease term reflects the Company exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period. Right-of-use assets are measured at cost which comprises the following:

- The amount of the initial measurement of the lease liability;

- Any lease payments made at or before the commencement date less any lease incentives received;

- Any initial direct costs; and

- Restoration costs.

Right-of-use assets are depreciated over the shorter of the asset's useful life and the lease term on a straight line basis. If the Company is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset's useful life.

Payments associated with short-term leases (term less than 12 months) and all leases of low-value assets (generally less than £5k) are recognised on a straight-line basis as an expense in profit or loss. The Company has applied this exemption to £41,971 worth of rental expenses relating to short-term leases.

2.11 Provisions

Provisions have been recognised in relation to leasehold dilapidations. This provision relates to the estimated cost of returning a leasehold property to its original state at the end of the lease in accordance with the lease terms. The cost is recognised as depreciation of leasehold improvements over the remaining term of the lease. The main uncertainty relates to estimating the cost that will be incurred at the end of the lease.

2.12 Equity and reserves

Share capital is determined using the nominal value of shares that have been issued.

Share to be issued relates to monies received in advance ahead of the issue of shares that was completed post period end following the admission to the London Stock Exchange. Upon the issue of these shares this reserve will be split between share capital and share premium reserves.

The Share premium account includes any premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from the Share premium account, net of any related income tax benefits.

The share-based payment reserve is used to recognise the grant date fair value of options and warrants issued but not exercised.

Retained losses includes all current and prior period results as disclosed in the income statement.

2.13 Earnings per share

The Company presents basic and diluted earnings per share data for its Ordinary Shares.

Basic earnings per Ordinary Share is calculated by dividing the profit or loss attributable to Shareholders by the weighted average number of Ordinary Shares outstanding during the period.

Diluted earnings per Ordinary Share is calculated by adjusting the earnings and number of Ordinary Shares for the effects of dilutive potential Ordinary Shares.

2.14 Taxation

Tax currently receivable or payable is based on taxable profit or loss for the period. Taxable profit or loss differs from profit or loss as reported in the income statement because it excludes items of income and expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is proved in full on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statement. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised of the deferred tax asset or liability is settled.

2.15 Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.

When the Company acquires any plant and equipment it is stated in the accounts at its cost of acquisition less a provision.

Depreciation is charged to write off the costs less estimated residual value of plant and equipment on a straight basis over their estimated useful lives being:

- Office equipment 33% straight-line per annum

- Office equipment (furniture) 33% straight-line per annum

- Computer equipment 33% straight-line per annum

- Leasehold improvements 10% 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.

2.16 Critical accounting judgements and key sources of estimation uncertainty

The preparation of the financial statements requires management to make estimates and judgements and form assumptions that affects the reported amounts of the assets, liabilities, revenue and costs during the periods presented therein, and the disclosure of contingent liabilities at the date of the financial information. Estimates and judgements are continually evaluated and based on management's historical experience and other factors, including future expectations and events that are believed to be reasonable.

During the year, the Company issued warrants. The directors have applied the Black-Scholes pricing model to assess the costs associated with the share-based payments. The Black-Scholes model is dependent upon several inputs where the directors must exercise their judgement, specifically: risk-free investment rate; expected share price volatility at the time of the grant; and expected level of redemption. The assumptions applied by the directors, and the associated costs recognised in the financial statements are outlined in these financial statements.

2.17 New standards, amendments and interpretations

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

2.18 New standards, amendments and interpretations

At the date of approval of these financial statements, the following standards and interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases have not yet been adopted by the UK): 

The effect of these amended Standards and Interpretations which are in issue but not yet mandatorily effective is not expected to be material.

The directors are evaluating the impact that these standards may have on the financial statements of Company.

3. REVENUE

The Company derives revenue from various sources, including revenue from contracts with customers. These revenue sources involve the transfer of goods and/or services over time and at a point in time in the following major product lines and geographical regions.

4. OPERATING COSTS AND ADMINISTRATIVE EXPENDITURE

5. AUDITORS REMUNERATION

6. STAFF COSTS AND DIRECTORS' EMOLUMENTS

Directors' remuneration and employee costs for the Company is set out below and as per Directors Remuneration report:

Their aggregate remuneration comprised:

Settlement and termination agreements during the period amounted to £Nil (2021:£170,000), included within the totals above.

The highest paid director received remuneration of £150,000 (2021: £159,000).

On average, including non-executive directors, the Company employed 36 staff members of which 5 were in management positions.

7. TAXATION

No liability to corporation taxes arise in the period.

The charge/credit for the year can be reconciled to the loss per the statement of comprehensive income as follows:

The Company has total carried forward losses of £19,634,235 (2021: £10,885,738) available to be carried forward against trading profits arising in future periods. No deferred tax assets in respect of tax losses have been recognised in the accounts because there is currently insufficient evidence of the timing of suitable future taxable profits against which they can be recovered.

On 23 September 2022 the Chancellor announced that he has cancelled the planned corporation tax increase and rather than rising to 25 per cent from April 2023, the rate will remain at 19 per cent for all firms, regardless of the amount of profit made. This was subsequently reversed by the Chancellor on 17 October 2022, confirming corporation tax will rise to 25% from April 2023.

8. FINANCE INCOME AND COSTS

9. EARNINGS PER SHARE

The calculation of the basic and diluted earnings per share is calculated by dividing the profit or loss for the year by the weighted average number of ordinary shares in issue during the period.

There is no difference between the diluted loss per share and the basic loss per share presented due to the loss position of the Company. Share options and warrants could potentially dilute basic earnings per share in the future, but were not included in the calculation of diluted earnings per share as they are anti-dilutive for the year presented. See note 20 for further details.

10. PROPERTY, PLANT AND EQUIPMENT

11. INTANGIBLE ASSETS

12. LEASES

The Company had the following lease assets and liabilities:

Right of use assets

A reconciliation of the carrying amount of the right-of-use asset is as follows:

Lease liabilities

A reconciliation of the carrying amount of the lease liabilities is as follows:

The Company also incurred the following expenses during the year of £41,971 which related to leases that were either short term in nature (12 months of less) or of low value in nature (less than £2,000 per annum), thus being excluded from treatment under IFRS 16: Leases.

13. OTHER RECEIVABLES

14. CASH AND CASH EQUIVALENTS

15. TRADE AND OTHER RECEIVABLES

16. TRADE AND OTHER PAYABLES

17. DEFERRED REVENUE

All deferred revenues are expected to be recognised within 12 months from the reporting date.

18. PROVISIONS

The Company is required to restore the leased premises to their original condition at the end of the lease term. A provision has been recognised for the present value of the estimated expenditure required to remove any leasehold improvements. These costs have been capitalised as part of the cost of the right of use asset and are amortised over the shorter of the term of the lease and the useful life of the assets.

19. SHARE CAPITAL

Change in issued Share Capital and Share Premium:

1 During the period the Company cancelled 1 million 1 pence warrants. The value the share based payment has been credited to the share premium account.

20. SHARE BASED PAYMENTS

1 On 27 September 2022 the Company granted 25,930,868 warrants to Footwork Productions Ltd as part of the renegotiation of an influencer agreement. The warrants have an expiry date of 5 years from the grant date with an exercise price of 2.7 pence.

2 During the period the Company cancelled 1 million, £0.01 warrants

The estimated fair values of options which fall under IFRS 2, and the inputs used in the Black-Scholes pricing model to calculate those fair values are as follows:

The following warrants over ordinary shares have been granted by the Company and are outstanding:

21. 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.

22. FINANCIAL ASSETS AND FINANCIAL LIABILITIES

23. CAPITAL COMMITMENTS & CONTINGENT LIABILITIES

Rental lease agreement

The Company has signed a 10 year lease beginning on 22 November 2021. The Company has a 26 month rent free period and a five year break clause so has no committed cash flows due in the 12 month period from September 2022. Maturity on these liabilities can been referenced at Note 12.

Influencer agreement - Footwork Productions

In May 2020 the Company entered into an influencer agreement with Footwork Productions Ltd ("Footwork") to make annual influencer payments. The Company is committed to a minimum payment of £3,000,000 (VAT excl) in the 3rd year of the deal. Prior to year end the Company had made £833,333 of this payment.

There were no contingent liabilities at 30 September 2022.

24. RELATED PARTY TRANSACTIONS

There were no related party transactions during the period.

25. EVENTS SUBSEQUENT TO PERIOD END

Influencer agreement - Footwork Productions

Since period end the Company has made further payments of £1.417 million in relation to the agreement mentioned in Note 23.

26. CONTROL

In the opinion of the Directors as at the year end and the date of these financial statements there is no single ultimate controlling par