TIDMSEMP
RNS Number : 2276U
Semper Fortis Esports PLC
29 July 2022
29 July 2022
SEMPER FORTIS ESPORTS PLC
("Semper Fortis Esports" or the "Company")
Annual Results for year to 31 January 2022
Chairman's Statement
This is our maiden Annual Report and Accounts to 31 January
2022, since listing on AQSE on 26 April 2021, when we raised
GBP2.55m.
Whilst COVID-19 accelerated the continued growth and popularity
of esports and gaming, the global pandemic and the related travel
restrictions did create challenges for the Company with three of
its directors, two of whom were executive directors, located
outside the UK.
Teams
Our SMPR Rocket League team continued to perform well this year,
successfully securing a top four position in the RLCS Fall Major
which was an in-person LAN (local area network) event held in
Sweden.
This was particularly pleasing on two fronts (1) the SMPR team
competed and even outperformed some of the largest global esports
organisations; and (2) there have been over 12 million views of the
tournament across Instagram, TikTok, Twitch, Twitter, and
YouTube.
In October 2021, SMPR was inducted into the official Rocket
League esports shop giving fans the opportunity to purchase SMPR
customised in-game items.
During the course of the year, we tried to build on the success
of the Rocket League team and increased the number of games we were
participating in, either through professional rosters and/or
content creators, gaining exposure in seven games.
Ambassadors
In May 2021, we were delighted to announce that Mr Dominic
Calvert-Lewin of Everton and England and Mr Harry Maguire captain
of Manchester United and England had been appointed as brand
ambassadors to the Company.
Expansion of Audience
During the year, we developed our brand identity and produced
consistent messaging and content on various social media channels.
This was an investment to help the Company build its online
presence and number of followers in order to monetise this through
sponsorship.
This has seen our social media numbers increase from zero at the
start of the year to 157,000 on SMPR channels and 12.1m total
digital footprint including players, content creators and
ambassadors.
Chief Executive Officer
In December 2021, Kevin Soltani stepped down as a director and
as Chief Executive Officer by mutual consent. Following his
departure and subsequent to the year-end, an Employee Benefit Trust
("EBT") set up by the Company acquired all of the share interests
held by Mr Soltani in Semper. The EBT was set up for the benefit of
current and future employees.
Post-period review
SMPR Rocket League team secured its first commercial sponsor for
an amount of GBP10,000 with The Topps Company, Inc. who are best
known as a leading producer of Match Attax trading cards.
In February 2022, we launched a new blockchain based
play-to-earn gaming division, SMPR Guild.
Play-to-earn is a new category in video gaming where blockchain
based games reward players with tokens which are free to convert
into cryptocurrency and then into fiat currency.
The play-to-earn market was rapidly expanding both in terms of
players and audience and the Directors felt that a move into
play-to-earn would bring the Company material revenues. However,
the sector has
been hit hard by the crypto crash in the second quarter of 2022
and therefore the Company has decided to pause any further
investment for the near future.
On 20 July 2022 Nolan Bushnell stepped down as non-executive
director. It has been a real pleasure working with Nolan and his
experience will be missed.
Outlook
The Board is aware of the current economic uncertainty and
difficult capital market conditions and therefore in recent weeks
the Company has looked to significantly reduce its overheads and
conserve cash. This has seen us withdraw from some of the new games
we entered into during the year, leaving us to focus on our core
Rocket League team which will take part in the World Championships
in Dallas in August 2022.
Moving forward the Company will continue to look at
opportunities in and around the esports and gaming sector.
Finally, I would like to take this opportunity to thank all our
shareholders and staff for their support to date, especially in
recent months during an unprecedented period of market
turbulence.
Keith Harris
Chairman
For more information, please contact:
Semper Fortis Esports plc via Square1 Consulting
https://semperfortisesports.com
Keith Harris, Chairman
Jassem Osseiran, Chief Operating Officer
Max Deeley, Finance Director
Hybridan LLP - AQSE Corporate Adviser and Broker https://hybridan.com/
Claire Noyce, Managing Partner, Corporate Finance +44 203 764 2341
Niall Pearson, Head of Corporate Broking & Sales +44 203 764 2343
Square1 Consulting +44 207 929 5599
David Bick +44 7831 381201
About Semper Fortis Esports plc
Semper Fortis Esports PLC is a multi-operational esports and
gaming organisation converging high growth team infrastructures
with digital gaming communities, primarily in the Rocket League
game.
STRATEGIC REPORT
The Directors present their Strategic Report on Semper Fortis
Esports PLC for the year ended 31 January 2022.
Review of the business and developments during the year
On 26 April 2021, Semper Fortis Esports PLC was listed on the
Access segment of the AQSE Growth Market raising GBP2.55m by way of
a Placing and Subscription in total of 255,500,000 new Ordinary
Shares.
Principal Activity
The Company is a professional esports organisation and lifestyle
brand.
Developments in the Sector
The gaming and esports landscape is still showing signs of
significant growth.
-- 3 billion gamers globally today and that number is predicted
to grow at 5.6% for the next three years.
-- 474 million total esports audience in 2021, a year-on-year growth of +8.7%.
-- $1.1 billion global esports revenues in 2021, a year-on-year growth of +14.5%.
The young fans of esports (Gen-Z generation) are changing
consumption behaviour and are a challenging demographic to reach
via traditional media.
-- 40% of 16-17 years olds prefer hanging out with friends
virtually and they spend more of their leisure time on games than
any other entertainment medium.
-- 61% of Gen-Z prefer to watch esports over traditional sports.
Brands are realising the potential of this new virtual world and
are seeing esports as a valuable conduit between the digital and
real world. In recent years we have seen various unlikely
collaborations between high-end designer brands and esports
organisations.
However, despite this growth in the sector, monitisation remains
a key challenge for all esports organisations globally.
SMPR Rocket League
The SMPR Rocket League team has continued to perform well this
year, successfully securing a top four position in the RLCS Fall
Major which was an in-person LAN (local area network) event held in
Sweden.
The RLCS Fall Major had total online views of 10.7 million
across Instagram, TikTok, Twitch, Twitter, and YouTube.
In October 2021 SMPR was inducted into the official Rocket
League esports shop through an agreement with Psyonix (the
developer and publisher of Rocket League) giving fans the
opportunity to purchase SMPR customised in-game items. In the first
three months to 31 December 2021, around 1,250 Semper items were
sold generating $7,800 for the Company.
Expansion of teams and content creators
During the course of the year, the Company increased the number
of rosters and content creators. The Company added a presence in
FIFA, Fortnite, Axie Infinity (a block-chain based game) and
Hearthstone - the online digital collectible card game.
Ambassadors
In May 2021, Semper appointed Mr Dominic Calvert-Lewin of
Everton and England and Mr Harry Maguire captain of Manchester
United and England as brand ambassadors.
During the year Dominic Calvert-Lewin took part in the eSoccer
Aid live streamed event for Unicef. The Company was pleased to
participate in the event which unlocked a large donation to
UNICEF.
Expansion of Audience
Recently the lines between esports, content creators, live
streaming, and social media have become blurred. During the year,
the Company looked to increase its creative content across its
social media and streaming channels in order to grow its audience
and engagement.
This has seen Semper's social media numbers increase from zero
at the start of the year to 157,000 on SMPR channels and 12.1m
total digital footprint including players and ambassadors.
Chief Executive Officer
In December 2021, Kevin Soltani stepped down as a director and
as Chief Executive Officer by mutual consent. Following his
departure and subsequent to the year-end, the Company established
an Employee Benefit Trust ("EBT") for the benefit of current and
future employees.
On 30 March 2022, the EBT completed the acquisition of all the
Ordinary Shares (41,000,000 Ordinary Shares) and all the Redeemable
Preference Shares (12,587 Redeemable Preference Shares) held by
GIMA Group Inc for a total consideration of GBP56,747. Mr Soltani
held his share interests in Semper Fortis Esports within GIMA Group
Inc.
Post-period review
First Sponsor
The SMPR Rocket League team secured its first commercial
sponsor, The Topps Company, Inc. who are best known as a leading
producer of Match Attax trading cards. The initial amount of this
sponsorship is GBP10,000 and whilst this amount is small the
Company believe this is something for it to build on.
Play-to-earn
In February 2022 Semper launched a new blockchain based
play-to-earn gaming division, SMPR Guild.
Play-to-earn is a new category in video gaming that rewards
players for winning and completing tasks with game-based tokens
which are free to use in-game or convert into cryptocurrency and
then into fiat currency.
However, the play-to-earn sector has been hit hard by the crypto
crash in the second quarter of 2022 and therefore the Company has
decided to pause any further investment into play-to-earn for the
time being.
Non-executive Director
On 20 July 2022 Nolan Bushnell stepped down as non-executive
director.
Reduction in overheads
In recent weeks, the Company has looked to significantly reduce
its overheads and has therefore withdrawn from the new games it
entered into during the year leaving the Company to focus on its
core Rocket League team.
Section 172(1) Statement - Promotion of the Company for the
benefit of members as a whole:
The Directors believe they have acted in the way they considered
in good faith, that would most likely to promote the success of the
Company for the benefit of its members as a whole, as required by
s172 of the Companies Act 2006, and in doing so have had regard
to:
-- the likely consequences of any decision in the long term;
-- The need to act fairly between the members of the Company;
-- The desirability of maintaining the Company's reputation for
high standards of business conduct;
-- Consider the interests of the Company's employees;
-- The need to foster the Company's relationships with suppliers, customers and others; and
-- the impact of the Company's operations on the community and the environment.
In order to fulfil their duties under section 172 and promote
the success of the Company for the benefit of all its stakeholders,
the directors need to ensure that they not only act in accordance
with the legal duties but also engage with, and have regard for,
all its stakeholders when taking decisions. The Company has a
number of key stakeholders that it is committed to maintaining a
strong relationship with. Understanding the Company's stakeholders
and how they and their interests will impact on the strategy and
success of the Company over the long term is a key factor in the
decisions that the Board make.
Shareholders The promotion of the success of the Company is
ultimately for the benefit of the Company's shareholders who
provide the Company's permanent capital. As a company listed on the
Access segment of the AQSE Growth Market, the Company is
responsible for ensuring that it is aware of shareholder needs and
expectations. The Directors attach great importance to maintaining
good relationships with all of its shareholders and interested
parties and seeks to ensure that they have access to correct and
adequate information in a timely fashion. The Directors are aware
that as stakeholders, its shareholders play a vital role in the
fabric of the Company and therefore regularly engages in dialogue
with the Company's shareholders and is available for meetings with
institutional and major shareholders following the release of the
Company's Annual and Interim Results. The Directors welcome all
shareholders to make contact with the Company and provide any
feedback or comments that they may have, and contact details are
available on the Company's website. The Company's Annual General
Meeting is also an important opportunity for shareholders to meet
and engage with Directors and ask questions on the Company and its
performance.
Employees Our employees are key to the success of the Company
and recruiting, retaining and developing our team is one of the
Company's most important priorities. The Directors expect a high
standard of integrity and accountability from the Company's
employees. Directors encourage an open communication forum, aided
by the Company's small size and relatively flat hierarchical
structure.
Regulatory Bodies Although the Company is not itself directly
regulated, it operates within a regulated environment (e.g. AQSE
rules) and therefore actively engages with various regulatory
bodies and advisory firms to ensure that compliance standards are
maintained and that the Company continues to act with the high
standards of business conduct that have established its reputation
thus far.
Suppliers and Advisors The Company's suppliers and advisors are
integral to the day to day operation of the Company. Relationships
with suppliers are carefully managed to ensure that the Company is
always obtaining value for money. The Company seeks to ensure that
good relationships are maintained with its suppliers and advisors
through regular contact and the prompt payment of invoices. The
Company has appointed Shakespeare Martineau's company secretarial
services to ensure that high standards and timeliness are key to
the Board's delivery of its objectives to shareholders.
Other stakeholders and the wider community The Directors are
committed to ensuring that none of its activities have a
detrimental impact on the wider community and the environment.
Events after the reporting date
On 17 February 2022 the Company established an Employee Benefit
Trust ("EBT") for the benefit of current and future employees.
On 30 March 2022 the EBT completed the acquisition of all the
Ordinary Shares (41,000,000 Ordinary Shares representing 9.87% of
the issued capital) and all the Redeemable Preference Shares
(12,587 Redeemable Preference Shares) held by GIMA Group Inc for a
total consideration of GBP56,747. The Company provided the EBT with
a loan of GBP56,747 to fund this share acquisition. This
transaction had been agreed between Mr Soltani (the former CEO) and
the Company in December 2021 at the time of his departure. Mr
Soltani held his share interests in Semper Fortis Esports within
GIMA Group Inc.
Principal Risks and Uncertainties
Reliance on key personnel
The Company is dependent on the Directors, its management and
employees including contracting talented esports players. The
future success of the Company depends on the ability of the Company
to attract and retain its management and employees. Given the
Company's focus on establishing esports teams, talent selection is
a key factor for the success of the Company. As team players and
streamers become more successful in the industry, they may receive
competitive offers from other esports businesses which could be
more lucrative than what the Company is able to offer.
The unexpected departure or loss of members of the Board could
have an adverse impact on the financial condition and results of
operations of the Company, and there can be no assurance that the
Company will be able to attract or retain suitable replacements for
those members of the Board who depart.
Growth of esports industry
The performance of the Company depends on the continued growth
of the esports industry in the UK. At the moment, the industry is
in its infancy in the UK and is not well developed. While the
Directors believe that the industry will continue to grow
considerably, there can be no guarantee that it will. If the
industry fails to develop, opportunities to grow the business may
not materialise and the performance of the Company may be
negatively affected.
Due to the industry being in its infancy and the informal online
environment in which it operates, contractual arrangements in the
esports industry can be informal. Commercial arrangements can be
short term, ad hoc and in some cases can be terminated by either
party with no notice. Competition for esports players and
sponsorship is also increasing as more esports organisations enter
the industry. Although the Company will enter into formally
negotiated written agreements containing customary contractual
protections, there can be no assurance that arrangements negotiated
and entered into by the Company will not be terminated or will be
renewed at the end of the contractual term agreed by the Company.
The players contracts are short term and there is no guarantee that
the players will seek to renew them. The loss of: (i) one or more
of the players contracts, (ii) a key commercial arrangement, or
(iii) the loss of several smaller commercial arrangements could
have a material adverse effect on the Company's business,
operations, revenues and financial results.
Competition
The esports industry is competitive and fast moving and it may
become more competitive as the popularity of esports increases.
Some of the Company's competitors are more established with greater
financial, marketing and other resources than the Company. These
competitors may undertake more extensive marketing and advertising
campaigns, attract higher calibre players and host higher profile
events than the Company.
Competitors may also be able to solicit players and teams away
from the Company by offering them more favourable terms and larger
amounts of money. This may have a negative impact on the revenue of
the Company in the future. In addition, the Company would face an
increase in competition if existing competitors expanded or if
there were new entrants in the market.
Player performance
Though the Company intends to sign the best esports players
available, there is no guarantee that such recruitment will
translate into tournament success. If the Company does not perform
to a reasonably high level in tournaments, it will not generate the
publicity to grow its brand and to attract sponsors and the
Company's revenue from prize money and sponsors will be lower than
expected, making future or further recruitment more difficult.
Reliance on third party services
The vast majority of esports fans watch leagues and tournaments
via free, online live streaming of content on Twitch and YouTube.
If Twitch or YouTube were to change their business models and
charge for content, the attractiveness of esports to sponsors would
be reduced and profile raising opportunities for the Company will
be reduced. Furthermore, the esports sector is reliant on the
technical infrastructure of Twitch and YouTube; a disruption in
services offered by either may have a material adverse effect on
the Company.
Key performance indicators ("KPI's")
The key performance indicators currently put in place for the
Company are set out below:
-- the esports team's following on social media and streaming
channels (for example, the number of followers on Twitter,
Instagram, TikTok, Twitch, YouTube etc.). As at the year end the
number of followers on the Company's social media and streaming
channels was 157,000. Furthermore, the total number of followers
including those of players and content creators (but excluding
ambassadors) was 885,000.
-- revenue from subscribers, sponsors, advertising and
merchandising. There was no revenue from these sources this year as
the Company grew its number of followers.
Assessment of business risk
The Board regularly reviews operating and strategic risks. The
Company's operating procedures include a system for reporting
financial and non-financial information to the Board including:
-- reports from management with a review of the business at each
Board meeting, focusing on any new decisions/risks arising; and
-- consideration of reports prepared by third parties.
Financial risk management
Details of the Company's financial instruments and its policies
with regard to financial risk management are contained in note 13
to the financial statements.
Results for the year and dividends
The loss for the year after tax was GBP1,221,367 (2021: loss of
GBP626,173). Since the Company does not have any distributable
reserves, the Directors are unable to recommend the payment of a
dividend.
INCOME STATEMENT AND STATEMENT OF COMPRENSIVE INCOME
For the year ended 31 January 2022
Year Period
ended ended
Note 31 January 2022 31 January 2021
GBP GBP
Revenue 4 31,629 -
Operating and administrative expenses 5 (1,252,996) (626,173)
--------------- ----------------
Loss before income tax (1,221,367) (626,173)
Income tax 7 - -
Loss for the y ear / period a nd total comprehensive loss (1,221,367) (626,173)
=============== ================
Earnings per share attributable to equity owners
Basic and diluted earnings per share 11 (0.003) (0.01)
--------------- ----------------
The income statement has been prepared on the basis that all
operations are continuing operations.
The accounting policies and notes form an integral part of these
financial statements.
STATEMENT OF FINANCIAL POSITION
As at 31 January 2022
As at As at
31 January 31 January 2021
2022
Note GBP GBP
ASSETS
Current assets
Trade and other receivables 8 107,622 57,345
Cash and cash equivalents 9 1,328,418 73,158
----------- -----------------
Total assets 1,436,040 130,503
=========== =================
EQUITY AND LIABILITIES
Equity attributable to owners
Share capital 12 76,550 50,500
Share premium 2,487,410 -
Share based payments reserve 155,077 -
Retained earnings (1,574,173) (356,674)
1,144,864 (306,174)
Current liabilities
Trade and other payables 10 291,176 436,677
Total equity and liabilities 1,436,040 130,503
=========== =================
STATEMENT OF CHANGES IN EQUITY
As at 31 January 202 2
Share Share Share based payments Retained
capital premium reserve earnings Total
GBP GBP GBP GBP GBP
At incorporation 1 - - - 1
Issue of ordinary shares 50,499 269,499 - - 319,998
Reduction in share
capital - (269,499) - 269,499 -
Total comprehensive loss
for the period - - - (626,173) (626,173)
At 31 January 2021 50,500 - - (356,674) (306,174)
Issue of ordinary shares 26,050 2,562,410 - - 2,588,460
Total comprehensive loss
for the year - - - (1,221,367) (1,221,367)
Share based payment - (75,000) 158,945 - 83,945
Forfeiture of share
options - - (3,868) 3,868 -
At 31 January 2022 76,550 2,487,410 155,077 (1,574,173) 1,144,864
Share Capital
Share capital represents the nominal value of shares that have
been issued.
Share premium
Share premium represents the aggregate amount of premiums
received on issuing shares after deduction of attributable
expenses.
Share based payments reserve
Share based payments reserve is a reserve used to recognise the
cost and equity associated with the fair value of share options and
warrants that have been issued by the Company.
Retained earnings
Retained earnings is the balance of profit or loss retained by
the Company net of any distributions made.
The accounting policies and notes form an integral part of these
financial statements.
STATEMENT OF CASH FLOWS
For the year ended 31 January 202 2
Year Period
ended ended
31 January 2022 31 January 2021
GBP GBP
Cash flows from operating activities
Loss before income tax (1,221,367) (626,173)
Adjustments:
Share based payments 83,945 -
Movement in working capital
Increase in receivables 8 (50,277) (57,345)
(Decrease)/increase in payables 10 (145,501) 436,677
--------------- ----------------
Net cash flow from operating activities (1,333,200) (246,841)
--------------- ----------------
Cash flows from financing activities
Issue of ordinary shares 12 2,588,460 319,999
Net cash flows from financing activities 2,588,460 319,999
--------------- ----------------
Net increase in cash and cash equivalents 1,255,260 73,158
Cash and cash equivalents at beginning of year / period 73,158 -
Cash and cash equivalents at end of year / period 1,328,418 73,158
=============== ================
The accounting policies and notes form an integral part of these
financial statements.
NOTES TO THE FINANCIAL INFORMATION
For the year ended 31 January 2022
1. General information
Semper Fortis Esports PLC (the "Company") was incorporated on 14
January 2020 in England and Wales, with registered number 12403380
under the Companies Act 2006. The registered office of the Company
is 6(th) Floor 60 Gracechurch Street, London, United Kingdom, EC3V
0HR.
The principal activity of the Company is an esports organisation
and lifestyle brand .
2. Basis of preparation
The financial information and accompanying notes are based on
the following policies which have been consistently applied:
The financial information of the Company has been prepared in
accordance with UK adopted International Accounting Standard in
conformity with the requirements of the Companies Act 2006.
The financial statements are presented in Sterling, which is the
Company's functional and presentational currency and has been
prepared under the historical cost convention.
The preparation of financial information requires the use of
certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the Company's
Accounting Policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates
are significant to the Financial Information are disclosed in Note
3.
Going Concern
The financial statements have been prepared on a going concern
basis notwithstanding operating losses and net current
liabilities.
The directors have prepared a liquidity forecast for a period of
at least 12 months from the date of approval of these financial
statements which indicate that the Company will have sufficient
funds to meet its liabilities as they fall due for that period.
These forecasts are dependent on the ability of the Company to
reduce its costs during the going concern period to meet its
working capital needs as they fall due and raise funds, if
required, to fund new business opportunities. This indicates that a
material uncertainty exists that may cast significant doubt on the
Company's ability to continue as a going concern.
The directors are confident that the Company will continue to
meet its liabilities as they fall due for at least 12 months from
the date of approval of the financial statements. Accordingly, they
continue to adopt the going concern basis in preparing the
financial statements.
Adoption of new and revised standards
New standards, amendments and interpretations
The Company has adopted all of the new and amended standards and
interpretations issued by the International Accounting Standards
Board that are relevant to its operations and effective for
accounting periods commencing on or after 14 February 2021, none of
which had a material impact on the financial statements.
New standards, amendments and Interpretations in issue but not
yet effective or not yet endorsed at 14 February 2021 and not early
adopted
Standard Key requirements Effective date for annual periods beginning on or
after:
IAS 37 Amendments to IAS 37, 'Provisions, Contingent 1 January 2022
Liabilities and Contractual Assets'
---------------------------------------------------- -----------------------------------------------------
IFRS Annual Improvements to IFRS Standards 2018-2020 1 January 2022
Cycle
---------------------------------------------------- -----------------------------------------------------
IAS 1 Amendments to IAS 1, 'Presentation of Financial 1 January 2023
Statements' regarding the classification of
liabilities
---------------------------------------------------- -----------------------------------------------------
IAS 12 Amendments to IAS 12, 'Income Taxes' regarding 1 January 2023
deferred tax related to assets and liabilities
arising from a single transaction
---------------------------------------------------- -----------------------------------------------------
IAS 1 Amendments to IAS 1, 'Presentation of Financial 1 January 2023
Statements' regarding the amendments of disclosure
of accounting policies
---------------------------------------------------- -----------------------------------------------------
IAS 8 Amendments to IAS 8 'Accounting Policies, Changes 1 January 2023
in Accounting Estimates and Errors' to distinguish
between accounting policies and accounting
estimates.
--------- ---------------------------------------------------- -----------------------------------------------------
IAS 16 Amendments to IAS 16 'Property, Plant and 1 January 2022
Equipment' regarding proceeds before intended use
---------------------------------------------------- -----------------------------------------------------
These standards are not considered to have a material impact on
the financial statements.
3. Accounting policies
The accounting policies set out below have, unless otherwise
stated, been applied consistently.
There have been no judgements made by the Directors, in the
application of these accounting policies that have significant
effect on the financial information and estimates with a
significant risk of material adjustment in the next year.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and short-term
deposits with an original maturity of three months or less.
Equity
An equity instrument is any contract that evidences a residual
interest in the assets of the Company after deducting all of its
liabilities. Equity instruments issued by the Company are recorded
at the proceeds received, net of direct issue costs, or at fair
value where no proceeds are received.
Financial instruments
Financial assets
Financial assets are recognised in the statement of financial
position when the Company becomes party to the contractual
provisions of the instrument.
Financial assets are classified into specified categories. The
classification depends on the nature and purpose of the financial
assets and is determined at the time of recognition.
Financial assets are subsequently measured at amortised cost,
fair value through OCI, or FVPL.
The classification of financial assets at initial recognition
that are debt instruments depends on the financial asset's
contractual cash flow characteristics and the Company's business
model for managing them. The Company initially measures a financial
asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss, transaction costs.
In order for a financial asset to be classified and measured at
amortised cost or fair value through OCI, it needs to give rise to
cash flows that are solely payments of principal and interest
("SPPI")' on the principal amount outstanding. This assessment is
referred to as the SPPI test and is performed at an instrument
level.
The Company's business model for managing financial assets
refers to how it manages its financial assets in order to generate
cash flows. The business model determines whether cash flows will
result from collecting contractual cash flows, selling the
financial assets, or both.
Subsequent measurement
For purposes of subsequent measurement, financial assets are
classified in four categories:
-- financial assets at amortised cost;
-- financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments);
-- financial assets designated at fair value through OCI with no
recycling of cumulative gains and losses upon derecognition (equity
instruments); and
-- financial assets at FVPL.
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Company. The Company
measures financial assets at amortised cost if both of the
following conditions are met:
-- the financial asset is held within a business model with the
objective to hold financial assets in order to collect contractual
cash flows; 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.
Financial assets at amortised cost are subsequently measured
using the effective interest rate ("EIR") method and are subject to
impairment. Interest received is recognised as part of finance
income in the statement of profit or loss and other comprehensive
income. Gains and losses are recognised in profit or loss when the
asset is derecognised, modified or impaired. IFRS 9.5.4 The
Company's financial assets at amortised cost include other
receivables and cash and cash equivalents.
Derecognition
A financial asset (or, where applicable, a part of a financial
asset or part of a Company of similar financial assets) is
primarily derecognised when:
-- the rights to receive cash flows from the asset have expired; or
-- the Company has transferred its rights to receive cash flows
from the asset or has assumed an obligation to pay the received
cash flows in full without material delay to a third party under a
'pass-through' arrangement; and either: (a) the Company has
transferred substantially all the risks and rewards of the asset,
or (b) the Company has neither transferred nor retained
substantially all the risks and rewards of the asset, but has
transferred control of the asset.
When the Company has transferred its rights to receive cash
flows from an asset or has entered into a pass-through arrangement,
it evaluates if, and to what extent, it has retained the risks and
rewards of ownership. When it has neither transferred nor retained
substantially all of the risks and rewards of the asset, nor
transferred control of the asset, the Company continues to
recognise the transferred asset to the extent of its continuing
involvement. In that case, the Company also recognises an
associated liability.
The transferred asset and the associated liability are measured
on a basis that reflects the rights and obligations that the
Company has retained.
Impairment of financial assets
The Company recognises an allowance for expected credit losses
("ECLs") for all debt instruments not held at fair value through
profit or loss. ECLs are based on the difference between the
contractual cash flows due in accordance with the contract and all
the cash flows that the Company expects to receive, discounted at
an approximation of the original EIR. The expected cash flows will
include cash flows from the sale of collateral held or other credit
enhancements that are integral to the contractual terms.
The Company recognises an allowance for ECLs for all debt
instruments not held at fair value through profit or loss. ECLs are
based on the difference between the contractual cash flows due in
accordance with the contract and all the cash flows that the
Company expects to receive, discounted at an approximation of the
original EIR. For credit exposures for which there has not been a
significant increase in credit risk since initial recognition, ECLs
are provided for credit losses that result from default events that
are possible within the next 12 months (a 12-month ECL). For those
credit exposures for which there has been a significant increase in
credit risk since initial recognition, a loss allowance is required
for credit losses expected over the remaining life of the exposure,
irrespective of the timing of the default (a lifetime ECL).
For other receivables due in less than 12 months, the Company
applies the simplified approach in calculating ECLs, as permitted
by IFRS 9. Therefore, the Company does not track changes in credit
risk, but instead, recognises a loss allowance based on the
financial asset's lifetime ECL at each reporting date.
The Company considers a financial asset in default when
contractual payments are 90 days past due. However, in certain
cases, the Company may also consider a financial asset to be in
default when internal or external information indicates that the
Company is unlikely to receive the outstanding contractual amounts
in full before taking into account any credit enhancements held by
the Company. A financial asset is written off when there is no
reasonable expectation of recovering the contractual cash flows and
usually occurs when past due for more than one year and not subject
to enforcement activity.
At each reporting date, the Company assesses whether financial
assets carried at amortised cost are credit impaired. A financial
asset is credit-impaired when one or more events that have a
detrimental impact on the estimated future cash flows of the
financial asset have occurred.
Financial liabilities
Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through profit or loss, loans
and borrowings, payables, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate. All financial
liabilities are recognised initially at fair value and, in the case
of loans and borrowings and payables, net of directly attributable
transaction costs. The Company's financial liabilities include
trade and other payables.
Subsequent measurement
The measurement of financial liabilities depends on their
classification, as described below:
-- loans and borrowings and trade and other payables;
-- after initial recognition, interest-bearing loans and
borrowings and trade and other payables are subsequently measured
at amortised cost using the EIR method. Gains and losses are
recognised in the statement of profit or loss and other
comprehensive income when the liabilities are derecognised, as well
as through the EIR amortisation process;
-- amortised cost is calculated by taking into account any
discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included as
finance costs in the statement of profit or loss and other
comprehensive income.
This category generally applies to trade and other payables.
Derecognition
A financial liability is derecognised when the associated
obligation is discharged or cancelled or expires.
When an existing financial liability is replaced by another from
the same lender on substantially different terms, or the terms of
an existing liability are substantially modified, such an exchange
or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in
the respective carrying amounts is recognised in profit or loss and
other comprehensive income.
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 cash holdings are all held with major financial
institutions whose financial status is regularly reviewed.
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 to reduce exposure to credit risk, which is
stated under the cash and cash equivalents accounting policy.
Liquidity risk
The Company's continued future operations depend on its ability
to raise sufficient working capital through the issue of share
capital and generate revenue.
Capital risk management
The Company manages its capital to ensure that it will be able
to continue as a going concern while maximising the return to
stakeholders. The Company's capital structure primarily consists of
equity attributable to the owners, comprising issued capital,
reserves and retained losses.
Current and deferred tax
Current tax
The tax currently payable is based on taxable profit or loss for
the year. Taxable profit or loss differs from the profit or loss
for the financial year as reported in the statement of total
comprehensive income 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 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 or loss.
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 future 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 the initial
recognition of other assets and liabilities in a transaction that
affects neither the taxable profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to
apply in the year when the liability is settled or the asset is
realised based on tax laws and rates that have been enacted or
substantively enacted at the reporting date. Deferred tax is
charged or credited in the income statement, except when it relates
to items charged or credited in other comprehensive income, in
which case the deferred tax is also dealt with in other
comprehensive income.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the subsidiary intends to settle
its current tax assets and liabilities on a net basis.
Deferred tax will be recognised on the losses incurred when the
Company has sufficient visibility over the usage of these loses and
is forecasting future profits in the short term.
Critical accounting estimates and judgements
The Company makes estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. In the future, actual results may differ from these
estimates and assumptions. There are no estimates and assumptions
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year.
Revenue
Revenue relates to prize winnings and online in-game sales. It
is recognised to the extent that economic benefits will flow to the
Company and the revenue can be reliably measured. Revenue is
measured as the fair value of the consideration received or
receivable, excluding discounts, rebates and taxes.
Sponsorship and similar commercial income is recognised over the
duration of the respective contracts.
Provisions and contingencies
Provisions are recognised when the Company has an obligation at
the reporting date as a result of a past event, it is probable that
the Company will be required to transfer economic benefits in
settlement and the amount of the obligation can be estimated
reliably. Provisions are recognised as a liability in the statement
of financial position and the amount of provision as an
expense.
Provisions are initially measured at the best estimate of the
amount required to settle the obligation at the reporting date and
subsequently reviewed at each reporting date and adjusted to
reflect the current best estimate of the amount that would be
required to settle the obligation.
Expenses
Expenses on goods and services are recognised when, and to the
extent that they have been received, and is measured at the fair
value of those goods and services. Expenses are recognised in
operating expenses except where it results in the creation of
non-current assets or is related to issue of shares.
Share-based payments
For grants of share options and warrants, the fair value as at
the date of grant is calculated using the Black-Scholes option
pricing model, taking into account the terms and conditions upon
which the options are granted. The amount recognised as an expense
is adjusted to reflect the actual number of share options that are
likely to vest.
4. Revenue
2022 202 1
GBP GBP
Prize winnings and online in-game sales 31,629 -
========= ======
In the opinion of the directors, the Company has one class of
business, the operation of a professional esports organisation and
lifestyle brand.
All the Company's revenue was generated in the United Kingdom
and recognised at a point in time.
5. Operating expenses by nature
2022 202 1
GBP GBP
Directors' remuneration 240,313 -
Accrued costs - 48,333
Professional fees 575,502 493,976
Esports team costs 297,757 67,047
Share based payments 83,945 -
Sundry expenses 55,479 16,817
1,252,996 626,173
---------- --------
Auditors' remuneration included in the above amounted to
GBP18,000 (2021: GBP14,800) for audit services and nil (2021:
GBP2,500) for non-audit services.
6. Staff costs
The average monthly number of employees, including Directors,
during the year was three. Their aggregate remuneration
comprised:
2022 202 1
GBP GBP
Wages and salaries 214,506 -
Social security costs 25,807 -
Share based payments 5,801 -
246,114 -
---------- ------
Directors' remuneration for the year was GBP214,506 (2021:
GBPNil).
Remuneration disclosed above includes GBP70,000 paid to the
highest paid director (2021: GBPnil).
No pension contributions were paid.
7. Taxation
2022 202 1
GBP GBP
Current tax - -
Deferred tax - -
Tax charge/(credit) for the year / period - -
------- ------
The Company has a potential deferred tax asset arising from
unutilised management expenses available for carry forward and
relief against future taxable profits. The deferred tax asset has
not been recognised in the financial statements in accordance with
the Company's accounting policy for deferred tax.
The Company's unutilised tax losses carried forward at 31
January 2022 amounted to GBP1,184,436 (2021: GBP236,177).
The standard rate of tax for the current year, based on the UK
effective rate of corporation tax is 19% (2021: 19%). The actual
tax for the current and previous year varies from the standard rate
for the reasons set out in the following reconciliation:
2022 202 1
GBP GBP
Loss for theyear / period (1,221,367) (626,173)
Tax on ordinary activities at standard rate (232,060) (118,973)
Effects of:
Expenses not deductible for tax purposes 51,891 74,099
Tax losses available for carry forward against future profits 180,169 44,874
------------
Tax for the year / period - -
------------ ----------
On 24 May 2021, the Government enacted that from 1 April 2023
the corporation tax rate would increase to 25% for companies with
profits of over GBP250,000. A small profits rate will also be
introduced for companies with profits of GBP50,000 or less so that
they will continue to pay corporation tax at 19%. From this date
companies with profits between GBP50,000 and GBP250,000 will pay
tax at the main rate reduced by a marginal relief providing a
gradual increase in the effective corporation tax rate.
The Company is loss making at present and an assessment of the
impact of the change in future tax rates is not possible at this
stage.
8. Trade and other receivables
2022 2021
GBP GBP
Trade receivables 25,817 -
Other receivables 81,805 57,345
-------- -------
107,622 57,345
======== =======
9. Cash and cash equivalents
2022 2021
GBP GBP
Cash at bank 1,328,418 73,158
---------- -------
1,328,418 73,158
========== =======
10. Trade and other payables
Amounts falling due within one year:
2022 2021
GBP GBP
Trade payables 125,413 183,767
Other payables 165,763 252,910
-------- --------
291,176 436,677
======== ========
11. 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.
The Company had in issue 415,499,800 ordinary shares at 31
January 2022. The loss attributable to equity holders and weighted
average number of ordinary shares for the purposes of calculating
diluted earnings per ordinary share are identical to those used for
basic earnings per ordinary share.
2022 2021
Loss for the year / period attributable to equity holders (GBP) 1,221,367 626,173
Weighted average number of shares in issue (number) 355,287,471 60,463,747
Basic and diluted earnings per share (GBP) (0.003) (0.01)
============ ===========
12. Share capital and premium
On 24 March 2021, the Company issued 5,000,000 new ordinary
shares of GBP0.0001 each at a price of GBP0.01 per ordinary share
creating a share premium of GBP49,500. Amounts paid up of GBP50,000
in respect of the share capital issued was received into the
Company's bank account.
On 26 April 2021, the Company issued 255,500,000 new ordinary
shares of GBP0.0001 each at a price of GBP0.01 per ordinary share
creating a share premium of GBP2,529,450. Amounts paid up of
GBP2,555,000 in respect of the share capital issued was received
into the Company's bank account. Broker fees of GBP16,540 in
relation to the share issue have been offset against the premium.
Furthermore, on or around 26 April 2021, 7,500,000 warrants were
issued to the Company's broker which if fully exercised would
represent a total aggregate price of GBP75,000, this amount has
been offset against the premium.
Number of Number of Deferred shares Share Share
Ordinary shares capital premium Total
GBP GBP GBP
At 1 February 2021 154,999,800 35,000 50,500 - 50,500
Issue of ordinary shares
(24/03/2021) 5,000,000 - 500 49,500 50,000
Issue of ordinary shares
(26/04/2021) 255,500,000 - 25,550 2,437,910 2,463,460
----------------- ------------------------- --------- ---------- ----------
At 31 January 2022 415,499,800 35,000 76,550 2,487,410 2,563,960
================= ========================= ========= ========== ==========
The ordinary shares have full voting, dividend and capital
distribution (including on winding up) rights.
The redeemable deferred shares hold no voting rights or rights
to receive dividends.
13. Financial instruments
The Company's financial instruments comprise cash, trade and
other receivables and trade and other payables that arise from its
operations. The main purpose of these financial instruments is to
provide finance for the Company's future activities and day to day
operational needs.
The main risks faced by the Company are limited to interest rate
risk on surplus cash deposits and liquidity risk associated with
raising sufficient funding to meet the operational needs of the
business.
The Board reviews and agrees policies for managing these risks
and they are summarised below.
Financial assets by category
The categories of financial assets included in the statement of
financial position and the headings in which they are included are
as follows:
2022 2021
At amortised cost GBP GBP
Trade and other receivables 107,622 57,345
Cash and cash equivalents 1,328,418 73,158
1,436,040 130,503
========== ========
Financial liabilities by category
The categories of financial liabilities included in the
statement of financial position and the headings in which they are
included are as follows:
2022 2021
At amortised cost GBP GBP
Trade and other payables 291,176 436,677
======== ========
The above trade and other payables are due within six months and
represent the undiscounted contractual payments.
Interest rate risk
The Company manages the interest rate risk associated with the
Company's cash assets by ensuring that interest rates are as
favourable as possible, whilst managing the access the Company
requires to the funds for working capital purposes.
The Company's cash and cash equivalents are subject to interest
rate exposure due to changes in interest rates. Short-term
receivables and payables are not exposed to interest rate risk.
Capital risk management
The Company manages its capital to ensure that it will be able
to continue as going concern while maximising the return to
stakeholders through optimisation of the debt and equity balance.
The capital structure of the Company currently consists cash and
cash equivalents, and equity attributable to equity holders of the
Company, comprising issued capital, reserves and retained earnings,
all as disclosed in the Statement of Financial Position.
Significant accounting policies
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are
recognised, in respect of each class of financial asset, financial
liability and equity instrument are disclosed in Note 3 to the
financial statements.
14. Share based payments
Share options
On 26 April 2021, 12,464,994 share options were granted with an
exercise price of GBP0.031 and a vesting period of 2 to 4 years.
One third of the shares subject to options vest on each of the
2(nd) , 3(rd) and 4(th) anniversaries of admission to AQSE.
The fair value has been calculated using the Black-Scholes
valuation model. Volatility was in the range of 74% to 86%, with a
dividend yield of 0% and a risk-free interest rate in the range of
0.05% to 0.22%. This resulted in a charge of GBP5,802.
One of the directors has since left the Company, resulting in
8,309,996 options lapsing.
At 31 January 2022, 4,154,998 options were outstanding with an
average exercise price of GBP0.031 per share.
Warrants
On 4 September 2020, 50,000,000 warrants were granted to
investors with an exercise price of GBP0.005 exercisable in whole
or in part within a period of five years from Admission, although
they may not be exercised during the first 12 months following
Admission. There was no charge to the Income Statement in respect
of these warrants. 18,000,000 of these warrants have been
forfeited.
On or around 26 April 2021, 26,000,000 warrants were granted
with an exercise price of GBP0.01 exercisable in whole or in part
within a period of five years from Admission although they may not
be exercised during the first 12 months following their grant. Of
these 7,500,000 warrants were issued to the Company's broker which
if fully exercised would represent a total aggregate price of
GBP75,000. 18,500,000 warrants were granted in exchange for
services provided. The fair value has been calculated using the
Black-Scholes valuation model. Volatility was 86%, with a dividend
yield of 0% and a risk-free interest rate in the range of 0.05%.
This resulted in a charge of GBP78,143.
At 31 January 2022, 58,000,000 warrants were outstanding with a
weighted average exercise price of GBP0.007 per share.
15. Non-cash financing activities
The Company has issued to its broker, Hybridan LLP, warrants
over 7,500,000 Ordinary Shares, exercisable at one pence per share
and which if fully exercised would represent a total aggregate
price of GBP75,000. These warrants are exercisable in whole or in
part within a period of five years from Admission although they may
not be exercised during the first 12 months following their
grant.
The Company has issued to its brand ambassadors, warrants over
18,500,000 Ordinary Shares, exercisable at one penny per share and
which if fully exercised would represent a total fair value of
GBP78,143. These warrants are exercisable in whole or in part
within a period of five years from Admission although they may not
be exercised during the first 12 months following their grant.
16. Related party transactions
There were no related party transactions during the year. During
the previous period the Company paid GBP13,355 to GIMA Group Inc
related to travel and marketing services provided, in which Kevin
Soltani was a Director.
17. Controlling party
The Directors do not consider there to be an ultimate
controlling party.
18. Subsequent events
On 17 February 2022 the Company established an Employee Benefit
Trust ("EBT") for the benefit of current and future employees.
On 30 March 2022 the EBT completed the acquisition of all the
Ordinary Shares (41,000,000 Ordinary Shares representing 9.87% of
the issued capital) and all the Redeemable Preference Shares
(12,587 Redeemable Preference Shares) held by GIMA Group Inc for a
total consideration of GBP56,747. The Company provided the EBT with
a loan of GBP56,747 to fund this share acquisition. This
transaction had been agreed between Mr Soltani (the former CEO) and
the Company in December 2021 at the time of his departure. Mr
Soltani held his share interests in Semper Fortis Esports within
GIMA Group Inc.
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END
NEXFIFFRDRIAFIF
(END) Dow Jones Newswires
July 29, 2022 02:35 ET (06:35 GMT)
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