TIDMGILD
RNS Number : 5539D
Guild Esports PLC
30 June 2021
Press Release
30 June 2021
Guild Esports PLC
("The Company", "Guild Esports", or "Guild")
Interim results
Guild Esports, (LSE: GILD), a global teams organisation and
lifestyle brand, is pleased to announce its unaudited financial
results for the six months ended 31 March 2021.
Financial highlights
-- First esports teams organisation to list on the London Stock
Exchange, raising GBP20m gross proceeds
-- Loss before tax of GBP4.3m, reflecting investment in teams,
Guild Academy, content creation and corporate infrastructure
-- Revenues of GBP0.4m, and the Company expects to generate
significant revenues in H2 2021 arising from four partnership deals
announced previously
-- Adjusted cash* of GBP14.4m as at 31 March 2021, after
pre-payments for promotional and marketing commitments of GBP2.5m,
for the period to May 2022
Operating highlights
-- Established esports teams to compete in FIFA, Rocket League,
Valorant and Fortnite with several notable tournament placings and
total prize pool winnings of GBP0.3m
-- Clinched maiden sponsorship deal with contracted revenues of
GBP3.6m over three years with partner to launch in the second half
of the year
-- Signed a landmark sponsorship deal with global brand, Subway,
covering more than 50 EMEA markets over two years
-- Entered into a two-year gaming peripherals partnership with renowned endemic brand, Hyper X
-- Reached 160k followers on Guild channels and 8 million fans on the Guild network
Post-period highlights
-- Audience growth continues apace: Guild followers across
social media reached 500k on 20 May and now approaching 800k while
Guild network audience has surpassed 15.6 million, cementing the
Company as the world's fastest growing esports organisation
-- Entered into a display partnership deal with world-leader in
transformative technologies, Samsung, which brings the minimum
contracted revenues for display and gaming peripherals partnerships
to GBP0.9m in total, payable in cash and value-in-kind
-- Launched the Guild Academy, which will attract life-long
loyal fans to Guild; creates a pipeline of top-tier talent for
Guild's teams and the esports transfer markets; and a scalable
subscription revenue model
-- Won three major esports trophies, including the Fortnite
Champion Series All-Star Showdown in June, the Rocket League
Championship Series EU Spring Regional in April and Fortnite
Champion Series European Grand Finals in March
Outlook
-- Sponsorship revenue growing strongly with minimum aggregate
contracted revenues currently at GBP7.5m, putting Guild on track to
achieve first-year sponsorship revenue targets
-- Robust pipeline of potential sponsors with several deals at advanced stages of negotiations
-- On track to achieve one million subscribed fanbase by the end of 2021
*Calculated as cash at bank, less trade creditors, accruals and
other taxation, add trade debtors, accrued revenue and VAT
recoverable
Commenting on the results, Kal Hourd, Chief Executive Officer,
said: "In the first six months since our IPO we have executed our
strategy of investing in and building best-in-class esports teams,
content creators, lifestyle apparel and our academy system, along
with a fully supported operations team. This has attracted
multi-year partnerships with prestigious global brands such as
Subway, Hyper X and Samsung, with a minimum of GBP7.5m in
contracted revenue already secured. We look forward to announcing
more sponsors in the coming months and working strategically with
all of our partners, giving them access to authentic activations
and exposure to their target markets through Guild's audience.
"The rapidly growing fanbase, attraction of top-tier talent, and
multi-year authentic partnerships is a true testament to the brand
we have built in the short space of time since our IPO. As our
presence in the esports world and social media continues to grow,
our business pipeline of major brands and sponsors also increases.
We are having several exciting conversations which we look forward
to announcing as contracts materialise.
"The launch of the Guild Academy in May 2021 has established a
potentially major scalable revenue stream for Guild and will also
foster a loyal fan base and source of new talent for the Company.
The academy is the world's most comprehensive and innovative
esports online training platform and embodies the holistic nature
of our approach at Guild. As the academy expands and is populated
with content provided by our industry-leading coaches and players,
we will be promoting it through digital and physical events, the
Guild network (over 15.6m fans) and David Beckham's social channels
(125m+ fans), as well as targeting non-English users in EMEA and
beyond.
"Our future vision and strategy is data led, and now with our
significant audience numbers, we have access to a large amount of
information and insight to build upon. Guild's fanbase is a
lucrative asset to global brands who require an authentic way to
reach the younger, digitally focused audience and we continue to
evaluate expansion into further game titles and countries in order
to accelerate our growth."
Interim Management Report
Introduction
The Company is pleased to report this maiden set of interim
results since joining the Standard List of the LSE and dealings in
its ordinary shares commenced on 2 October 2020. The Company
successfully raised in aggregate GBP20m before costs via its
initial public offering of new ordinary shares for 8 pence per
share.
The Guild business model is to develop a global esports brand
with a large viewership and a loyal fanbase, derived from a
combination of top-tier esports teams, a world-class academy,
influencers and content creators. Operations are led by industry
experts and have the backing and support of David Beckham, a
significant shareholder, and his management team. Revenue is
predominantly generated through multi-year sponsorship deals with
corporate and consumer brands who are looking to access their
target market through esports. Merchandise, apparel and in-game
micro transactions are also available to purchase by fans of Guild.
The Guild Academy is a subscription-based service which gives
budding stars an interactive 'Path to Pro' system, and contributes
to Guild revenue through a scalable subscription model, and
provides a pipeline of talent for Guild's roster of teams and the
esports transfer market.
First half revenues amounted to GBP0.37m (H1 2020: nil) while
the pre-tax loss came in at GBP4.28m (H1 2020: GBP0.39m loss)
principally due to higher administrative costs as the Company
scaled up its commercial operations post IPO. Administrative
expenses included GBP0.73m of employee and executive director
salaries; GBP1.73m of marketing, ambassador fees and content
production; and GBP0.5m in player and coach fees.
The Company expects to generate significant sponsorship revenues
from the second half of 2021, arising from four partnership deals
including two multi-year, multi-million-pound deals announced
previously.
Partnerships
Building on existing sponsorship deals announced earlier in the
year, including one with a new European fintech company, and
HyperX, Guild announced a two-year partnership with Subway, a
global brand, on 25 March 2021. The deal spans over 50 EMEA
markets, and appointed Subway as Guild's official Quick-Service
Restaurant Partner. The partnership enables Subway to become an
official partner of the Guild Academy, to promote its brand logo on
team jerseys, feature across player and content creator channels,
activate at the future London Headquarters and during esports
events, and feature in exclusive Guild created content.
Earlier this month, Guild announced its fourth sponsorship deal
since the IPO by signing an up to two-year deal with Samsung,
marking the world leader in transformative technologies' first
foray into a partnership with a UK esports organisation.
These major wins have helped to attract further attention from
potential new partners and advertisers as a result of which the
pipeline of new business continues to strengthen, and discussions
are currently at an advanced stage with several such prospects.
There are still substantial revenue opportunities available for
Guild through remaining sponsorship inventory, including
headquarters naming rights, main shirt sponsors, further academy
rights and regional opportunities. Guild is also exploring
strategic partnerships and one-off activations - using the wealth
of talent, infrastructure and inventory available to such brands,
Guild has become a highly attractive prospect for corporate and
consumer brands seeking to create authentic activations within the
esports world.
Audience
Guild is continuing to strengthen its owned audience (users who
have actively subscribed or followed Guild) by creating original
content, the signing of top-tier players and content creators,
success on the field, and David Beckham's social posts bringing in
fans from the general population. As of 31 March 2021, Guild's
owned audience was over 160,000, alongside direct access through
Guild's roster of top-tier talent to over 8 million fans (excluding
David Beckham's own 125m plus followers) via social media posts, an
essential and attractive asset for potential sponsors to
authentically activate.
Guild's owned audience has continued to grow during the second
half, increasing by 50% month-on-month and is now rapidly
approaching 800k. Coupled with the expansion of the Company's
roster of content creators and pro-players, this has served to
increase our total network of fans to more than 15.6 million.
The growth in the owned audience is in addition to brand
exposure provided by media coverage of Guild throughout the year,
across partnership announcements, esports success and
content-creator signings. For example, Guild's Subway partnership
announcement garnered over 60 pieces of coverage and 1.8 million
reads. Additionally, the most recent Fortnite All-Star Showdown,
where Guild came in 1st place, was broadcast to an audience of 16.8
million.
Academy
The Guild Academy has advanced from its planning phase to the
implementation stage, with Guild's roster of top-tier teams already
benefiting from academy content. During the period, the academy was
in beta-test, launching in May 2021 with exclusive launch content
from David Beckham, featuring an interactive tournament platform,
fully integrated learning engine, and exclusive live workshops.
The academy is an interactive online platform which can be
accessed globally by any aspiring pro-player through a monthly
subscription of GBP4.99 after the first month, which is free to
newcomers.
Modelled on successful Premier League academies, the team also
sought input from David Beckham's own experience growing up in the
academy system, alongside the launch of the Inter Miami Academy.
The Guild Academy provides holistic training to improve a player's
physical, psychological, social and personal skills together with
in-game coaching and development.
The academy will contribute to the growing fanbase and identify
the next generation of professional esports athletes to compete for
Guild. Additionally, gamers who do not become professional athletes
will have had opportunities unavailable elsewhere and will create
the next generation of Guild fans. Players who are at the top of
their game will benefit from the academy's unique 'Path to Pro'
system, which incorporates talent identification, academy
philosophies, performance training, esports coaching and
professional development of players.
Once identified, incorporated and contracted, the graduates of
the 'Path to Pro' system will then have the opportunity to compete
for one of Guild's professional teams, ensuring a constant pipeline
of new talent for the esports team to develop. Additionally, any
athletes who cannot succeed at the highest level for Guild will
have the opportunity to transfer to other organisations, providing
an additional revenue source for Guild.
Safeguarding and providing a safe space for children was the
highest priority for Guild when developing the academy, and as
such, the academy partnered with SuperAwesome (recently acquired by
Epic Games). The company provides the tools to enable a safe
digital environment for half a billion children online every month.
Furthermore, the platform allows parents to give consent and manage
the experience their children have online. Additionally, the
world's first esports academy safeguarding procedure was developed,
which protects the users' health, well-being & rights, ensuring
they are guarded against abuse, harm and neglect in a digital
space.
The Guild Academy will function as an always-on service,
constantly evolving and adding new game titles, features and
support throughout the world. Planned additions for 2021
include:
-- Introduction of support for game titles: Valorant and FIFA
-- Integration of Aim Lab, an innovative FPS aim training tool
-- Expansion and localisation, providing native support for audiences throughout the world.
These additions ensure a widely expanded potential user base,
creating scalable revenue opportunities for Guild. Lifetime value
of a user is expected to increase alongside the constant updates
and tech expansion, providing a truly scalable experience.
Outside of the digital learning platform, the academy will
commence with its physical experience later this year, starting
with the Summer Roadshow. The Guild Academy plans to operate on a
regional basis, throughout the UK and Europe, alongside having the
Headquarters as the go-to destination for aspiring pros.
Esports teams
High-level performance within esports is one of the main pillars
behind Guild's business model. Continued success attracts the best
players, sponsors and talent. To ensure that Guild reaches its
potential, the organisation has recruited some of the best coaches
available, whilst also adopting a holistic approach to training,
ensuring that Guild players excel both inside and outside of the
gaming arena. Guild has also started a program to manage and drive
players' social channels and digital content creation, expanding
the reach of Guild and increasing its fanbase.
Alongside top-tier coaches, Guild has appointed backroom staff
consisting of sports psychologists, physical therapists,
nutritionists, mental wellbeing staff, safeguarding officers,
alongside being led by the science of performance behind the
scenes. Bringing this professional outlook to the esports world,
following the traditional sports model, allows for success on the
field and makes Guild an attractive organisation for top-tier
players.
Our esports audience is expanding massively due to the high
calibre of professional players, with the total roster of talent
increasing from four in September 2020, to fourteen players to
date. They are organised in teams specialising in four major games
franchises and compete individually and in teams for prize money in
FIFA, Fortnite, Rocket League and Valorant tournaments.
Guild's teams have been consistently top-ranked in their
respective divisions, with the Fortnite roster ranked number one in
Europe. In FIFA, Niklas is currently ranked in the top ten in
Europe, and has already qualified for the pinnacle competitive FIFA
tournament at the end of season, the FIFAE World Cup. Guild's
holistic approach and performance philosophies has shown best
results in the Rocket League and Valorant teams where they have
climbed from 12th to 4th, and 11th to 5th respectively, since
joining Guild.
Notable results to date:
-- Fortnite: FNCS (Season 5) 1st place and 2nd place, FNCS
(Season 6) 3rd place, FNCS All-Star Showdown 1st place
-- Rocket League: Spring Cup (Regional 3) 1st place, Spring
Major 3rd/4th place, Winter Major 4th place
-- Valorant: Challengers (VCT 1) 3rd/4th place, Challengers (VCT 2) 3rd/4th place
In the six months to 31 March 2021 Guild won GBP0.3m in prize
money, before deductions.
Guild announced its first branded digital product for sale in
Rocket League on 8 December 2020 and received GBP19k in royalties
in the period to 31 March 2021. As Guild's success on the field
increases and the fanbase grows, so will sales related to Guild
branded in-game micro transactions.
The Company is considering strategic expansion into new games,
giving access to larger audiences and partnership
opportunities.
Merchandise
Guild's second line of apparel went on sale during May 2021,
including a new extension to its always-on, Core Collection, and
the introduction of patch 0.2.1, a more colourful
streetwear-inspired range, which continued to feature the iconic
Guild logo (as designed by renowned London artist, Fergus Purcell).
The patch collection was launched in collaboration with HypeBeast,
a world-leading streetwear publication. Sales volumes are modest as
the Company works to develop its followers into loyal fans and
generate legitimacy within the fashion community. Guild anticipates
the release of more collections, including a partnership with a
prominent content-creator to enable the Company to authentically
market apparel to their audience.
Outlook
Excellent progress is being made across the Company's
activities.
Guild is competing at the highest level in its chosen esports
and its fanbase and audience is significant, and on track to
achieve one million subscribed fans by the end of the fourth
quarter and over 15.6m followers accessible via the Guild network.
Combining this asset with Guild's professional operations and
industry expertise has made the Company an in-demand brand for
potential sponsors. To date, the Company has signed four
sponsorship deals with an aggregate minimum contracted revenues of
GBP7.5m which provides good forward visibility to achieve our
first-year revenue objectives.
The new business pipeline continues to be robust and the Company
is in discussions with potential new sponsors to sign further deals
for its core inventory (being main shirt partners, HQ naming
rights, academy sponsors and regional partners), as well as
exploring opportunities for strategic partnerships and content
deals.
As Guild embeds its brand in the esports world, the loyal
fanbase will scale the merchandise and digital product sales. The
academy subscription model is a scalable revenue opportunity, with
possibilities for global expansion.
The growth of these products can be accelerated through
promotion through our content creators, influencers, esports
athletes and David Beckham's social media channels, as well as
strategic partnerships. As a result, the Company looks forward to
furthering these opportunities, and working alongside David Beckham
and his management team, with great confidence.
Kal Hourd
Chief Executive Officer
29 June 2021
Key risks to the business
The Board considers the principal risks of the Company to
revolve around the accumulation of fans and its ability to attract
sponsors. The Company mitigates the risk of low fan accumulation
through diversification and appealing to a broad market. The
Company engages a wide endemic audience by operating in multiple
esports; working with influencers and content creators; and
maintaining an active presence on several social media platforms.
Guild social posts made through David Beckham's channels provide a
mass market appeal and contribute significantly to the social reach
of the Company. The Company mitigates the risk of not attracting
sponsors through forming a partnerships team consisting of
experienced professionals, sector specialists and led by the CEO.
The team has an in-depth understanding of the demographic which
sponsors want to reach, and the market they intend to grow in.
Guild attracts top talent in target regions, and compounds this
with the social reach of David Beckham to create opportunities and
meet sponsors' needs. The Company operates in a changing
environment and is subject to a number of risk factors as outlined
in the Company's prospectus available on its website.
Responsibility Statement
We confirm that to the best of our knowledge:
-- the Interim Report has been prepared in accordance with
International Accounting Standards 34, Interim Financial Reporting,
as adopted by the EU; and
-- gives a true and fair view of the assets, liabilities,
financial position and profit/loss of the Company; and
-- the Interim Report includes a fair review of the information
required by DTR 4.2.7R of the Disclosure and Transparency Rules,
being an indication of important events that have occurred during
the first six months of the financial year and their impact on the
set of interim financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year.
-- the Interim Report includes a fair review of the information
required by DTR 4.2.8R of the Disclosure and Transparency Rules,
being the information required on related party transactions.
The Interim Report was approved by the Board of Directors and
the above responsibility statement was signed on its behalf by Kal
Hourd (CEO), on 29 June 2021.
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
The unaudited condensed statement comprehensive income of the
Company for the six months ended 31 March 2021 is set out
below.
Unaudited Unaudited
Period ended Period ended
31 March 31 March
2021 2020
Note GBP GBP
---------------------------------------------- ----- ------------- -------------
Revenue 3 368,990 -
Cost of sales 4 (261,784) -
Gross profit 107,206 -
---------------------------------------------- ----- ------------- -------------
Administrative expenses (4,395,980) (394,711)
Operating loss (4,288,774) (394,711)
---------------------------------------------- ----- ------------- -------------
Interest received 6,602 91
Loss before taxation (4,282,172) (394,620)
---------------------------------------------- ----- ------------- -------------
Tax on loss - -
Loss after taxation (4,282,172) (394,620)
---------------------------------------------- ----- ------------- -------------
Other comprehensive income - -
Total other comprehensive income, net - -
of tax
---------------------------------------------- ----- ------------- -------------
Total comprehensive income attributable
to the equity holders of the Company (4,282,172) (394,620)
---------------------------------------------- ----- ------------- -------------
Earnings per share attributable to equity
owners
Basic and diluted earnings per share (pence) 6 (0.83)
CONDENSED STATEMENT OF FINANCIAL POSTION
The unaudited condensed statement of financial position of the
Company as at 31 March 2021 is set out below.
Unaudited Audited
As at As at
31 March 30 September
2021 2020
Note GBP GBP
------------------------------ ----- ------------ -------------
ASSETS
Non-current assets
Intangible fixed assets 54,109 36,001
Tangible fixed assets 23,193 4,342
Total non-current assets 77,302 40,343
------------------------------ ----- ------------ -------------
Current assets
Trade and other receivables 7 5,124,218 2,065,626
Inventory 40,082 -
Cash and cash equivalents 15,859,979 2,517,734
Total current assets 21,024,279 4,583,360
------------------------------ ----- ------------ -------------
Total assets 21,101,581 4,623,703
------------------------------ ----- ------------ -------------
EQUITY AND LIABILITIES
Equity
Share capital 10 518,617 264,617
Share premium 10 22,642,717 4,880,511
Share-based payment reserve 403,341 113,050
Retained deficit (7,001,820) (2,727,195)
------------------------------ ----- ------------ -------------
Total equity 16,562,855 2,530,983
------------------------------ ----- ------------ -------------
Current liabilities
Trade and other payables 8 4,538,726 2,092,720
------------------------------ ----- ------------ -------------
Total liabilities 4,538,726 2,092,720
------------------------------ ----- ------------ -------------
Total equity and liabilities 21,101,581 4,623,703
------------------------------ ----- ------------ -------------
CONDENSED STATEMENT OF CHANGES IN EQUITY
The unaudited condensed statement of changes in equity of the
Company for the six months ended 31 March 2021 is set out
below.
Share Share premium Share-based Retained Total
capital account payment earnings
reserve
GBP GBP GBP GBP GBP
---------------------------- --------- -------------- ------------ ---------- ----------
Balance at 3 September - - - - -
2019
---------------------------- --------- -------------- ------------ ---------- ----------
Total comprehensive loss
for the period:
Loss for the period - - - (394,621) (394,621)
Other comprehensive income - - - - -
---------------------------- --------- -------------- ------------ ---------- ----------
Total comprehensive loss
for the period - - - (394,621) (394,621)
---------------------------- --------- -------------- ------------ ---------- ----------
Transactions with equity
owners:
Share-based payments - - 5,670 - 5,670
Issue of share capital 139,250 353,250 - - 492,500
---------------------------- --------- -------------- ------------ ---------- ----------
Total transactions with
equity owners 139,250 353,250 5,670 - 498,170
---------------------------- --------- -------------- ------------ ---------- ----------
Balance at 31 March 2020 139,250 353,250 5,670 (394,621) 103,549
---------------------------- --------- -------------- ------------ ---------- ----------
Share Share premium Share-based Retained Total
capital account payment earnings
reserve
GBP GBP GBP GBP GBP
---------------------------- --------- -------------- ------------ ------------ ------------
Balance at 1 October 2020 264,617 4,880,511 113,050 (2,727,195) 2,530,983
---------------------------- --------- -------------- ------------ ------------ ------------
Total comprehensive loss
for the period:
Loss for the period - - - (4,282,172) (4,282,172)
Other comprehensive income - - - - -
---------------------------- --------- -------------- ------------ ------------ ------------
Total comprehensive loss
for the period - - - (4,282,172) (4,282,172)
---------------------------- --------- -------------- ------------ ------------ ------------
Transactions with equity
owners:
Share-based payments - (282,254) 297,838 - 15,584
Expiry of warrants - - (7,547) 7,547 -
Issue of share capital 254,000 19,836,000 - - 20,090,000
Share issue costs - (1,791,540) - - (1,791,540)
---------------------------- --------- -------------- ------------ ------------ ------------
Total transactions with
equity owners 254,000 17,762,206 290,291 7,547 18,314,044
---------------------------- --------- -------------- ------------ ------------ ------------
Balance at 31 March 2021 518,617 22,642,717 403,341 (7,001,820) 16,562,855
---------------------------- --------- -------------- ------------ ------------ ------------
CONDENSED STATEMENT OF CASH FLOWS
The unaudited condensed statement of cash flows of the Company
for the six months ended 31 March 2021 is set out below.
Unaudited Unaudited
Period ended Period ended
31 March 31 March
2021 2020
Note GBP GBP
---------------------------------------------- ----- ------------- -------------
Cash flows from operating activities
Cash used by operations 13 (4,914,448) (457,633)
Net cash flow used in operating activities (4,914,448) (457,633)
---------------------------------------------- ----- ------------- -------------
Investing activities
Purchase of intangible assets (26,803) -
Purchase of tangible fixed assets (21,565) -
Interest received 6,602 91
---------------------------------------------- ----- ------------- -------------
Net cash used in investing activities (41,766) 91
---------------------------------------------- ----- ------------- -------------
Financing activities
Proceeds from issue of shares net of
issue costs 18,298,459 492,500
---------------------------------------------- ----- ------------- -------------
Net cash generated from financing activities 18,298,459 492,500
---------------------------------------------- ----- ------------- -------------
Net increase in cash and cash equivalents 13,342,245 34,958
---------------------------------------------- ----- ------------- -------------
Cash and cash equivalents at beginning 2,517,734 -
of period
Cash and cash equivalents at end of period 15,859,979 34,958
---------------------------------------------- ----- ------------- -------------
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 31 MARCH 2021
1 Accounting policies
1.1 Basis of preparation
The condensed interim financial statements ("interim financial
statements") have been prepared in accordance with International
Accounting Standard 34 "Interim Financial Reporting" (IAS 34) as
adopted by the European Union (EU). The interim financial
statements have been prepared on the historical cost basis, except
for assets and liabilities measured at fair value through profit
and loss, and are presented in pounds sterling, which is the
currency of the primary economic environment in which the Company
operates. All amounts have been rounded to the nearest pound,
unless otherwise stated. The financial information contained in the
interim financial statements is unaudited and does not constitute
statutory accounts within the meaning of section 434 of the
Companies Act 2006. The accounting policies are unchanged from
those disclosed in the previously filed audited financial
statements for the period ended 30 September 2020.
The interim financial statements are for the six months to 31
March 2021, being six months from the financial year end for Guild
Esports Plc ("Guild" or "the Company"), 30 September 2020. The
interim financial information does not include all the information
and disclosures required in the annual financial statements and
should be read in conjunction with the Company's annual audited
financial statements for the period ended 30 September 2020. The
Company has disclosed comparative data for the statement of
comprehensive income for the Company for the period from
incorporation (3 September 2019) to 31 March 2020, being not
materially different from comparative data for the six months ended
31 March 2020, as required for disclosure by accounting
standards.
The condensed interim financial statements have not been
audited, nor have they been reviewed by the Company's auditors in
accordance with the International Standard on Review Engagements
2410 issued by the Auditing Practices Board. The figures have been
prepared using applicable accounting policies and practices
consistent with those adopted in the audited annual financial
statements for the year ended 30 September 2020.
The Company has not early adopted any standards in issue but not
yet effective. The directors continue to assess any new or revised
standards and their potential impact on the financial
statements.
Cyclicality
The interim results for the six months ended 31 March 2021 are
not necessarily indicative of the results to be expected for the
full year ending 30 September 2021. Due to the nature of the
entity, the operations are not affected by seasonal variations at
this stage.
1.2 Going concern
The preparation of financial statements requires an assessment
on the validity of the going concern assumption.
The directors have a reasonable expectation that the Company has
adequate cash resources to continue in operational existence for a
period of at least one year from date of approval of these
financial statements. The Company therefore has adopted the going
concern basis in preparing its financial statements.
The directors have reviewed the ongoing situation with Covid-19
and do not consider its effects to have a material impact on the
Company's going concern. The directors note that esports
tournaments which would have normally taken place in a physical
location, have been adapted to take place virtually, in light of
the practical restrictions enforced by regulations. The directors
have also noted that during this period of lock down, esports
viewership numbers have increased. The launch of the Company's
maiden sponsorship deal with a new European fintech company, as
announced on 19 October 2020, has been delayed due to travel
restrictions caused by Covid-19. The contract start date has been
delayed to coincide with the company's brand launch date, which is
when revenue recognition for the sponsorship will begin. The terms
of the deal remain unaffected, with an annual fee of GBP1.1m in the
first year, GBP1.2m in the second year and GBP1.3m in the third
year, aggregating to GBP3.6m over the three-year period.
1.3 New accounting policies
Inventory
Inventories, consisting of merchandise and apparel, are measured
at the lower of cost and net realisable value. In the case of
manufactured inventories, cost includes materials and labour to
complete the finished product. The cost of inventories is based on
the first-in, first-out principle where appropriate.
Revenue - 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.
Revenue - 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.
Revenue - 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.
Revenue - 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.
2 Critical accounting estimates and judgements
In the application of the Company's accounting policies, the
directors are required to make judgements, estimates and
assumptions about the carrying amount of assets and liabilities
that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised, if the revision
affects only that period, or in the period of the revision and
future periods if the revision affects both current and future
periods.
During the period, 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 interim financial statements are
outlined in these interim financial statements.
3 Revenue
Unaudited Unaudited
period ended period ended
31 March 31 March
2021 2020
GBP GBP
-------------------------- -------------- --------------
Partnership revenue 58,058 -
Prize money 283,625 -
Digital product royalties 18,929 -
Merchandise sales 8,255 -
Other revenue 123 -
Total revenue 368,990 -
-------------------------- -------------- --------------
4 Cost of sales
Unaudited Unaudited
period ended period ended
31 March 31 March
2021 2020
GBP GBP
-------------------------------- -------------- --------------
Prize money payments to players 256,625 -
Opening inventory - -
Inventory purchases 45,241 -
Closing inventory (40,082) -
Total cost of sales 261,784 -
-------------------------------- -------------- --------------
5 Employees
The average monthly number of persons (including executive
directors) employed by the Company during the period was 21 (2020:
2).
Unaudited Unaudited
period ended period ended
31 March 31 March
2021 2020
Number Number
--------------------- -------------- --------------
Executive directors 3 2
Senior management 5 -
Operations 13 -
The aggregate remuneration of employees and executive directors
comprised:
Unaudited Unaudited
period ended period ended
31 March 31 March
2021 2020
GBP GBP
----------------------- -------------- --------------
Wages and salaries 659,847 38,000
Social security costs 62,820 -
Pension costs 4,583 -
727,250 38,000
----------------------- -------------- --------------
6 Earnings per share
The basic earnings per share is calculated by dividing the
profit/(loss) attributable to equity shareholders by the weighted
average number of shares in issue.
The Company had in issue 41,247,694 warrants and options at 31
March 2021 (7,325,000 at 31 March 2020). 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. This
is because the exercise of warrants and options would have the
effect of reducing the loss per ordinary share and is therefore
anti-dilutive.
Unaudited
At 31 March
2021
Net loss for the period attributable to ordinary
equity holders for continuing operations (GBP) (4,282,172)
Weighted average number of ordinary shares
in issue 515,708,522
Basic and diluted earnings per share for continuing
operations (pence) (0.83)
------------------------------------------------------ -------------
7 Trade and other receivables
Unaudited Audited
At 30 September
At 31 March 2020
2021
GBP GBP
----------------------------------- ------------- -----------------
Trade debtors 750,000 -
Accrued revenue 335,886 -
Prepayments 2,730,555 1,486,338
VAT recoverable 1,307,777 579,288
Total trade and other receivables 5,124,218 2,065,626
------------------------------------- ------------- -----------------
The directors consider that the carrying amount of trade and
other receivables is approximately equal to their fair value.
8 Trade and other payables
Unaudited Audited
At 30 September
At 31 March 2020
2021
GBP GBP
--------------------------------- ------------- -----------------
Trade creditors 3,137,572 79,746
Accruals 620,299 227,974
Other payables 4,022 1,785,000
Deferred income 725,275 -
Other taxation and social 51,558 -
security
Total trade and other creditors 4,538,726 2,092,720
----------------------------------- ------------- -----------------
The directors consider that the carrying value of trade and
other payables is approximately equal to their fair value.
9 Share-based payments
The following options and warrants over ordinary shares have
been granted by the Company and are outstanding:
Options Grant date Expiry date Exercise Number of Number of
/ warrants price options options and
and warrants warrants
outstanding exercisable
at 31 March at 31 March
2021 2021
------------- ------------------ ------------------------ ----------- -------------- ------------------
24 months from
the first anniversary
Warrants 18 February 2020 of admission GBP0.01 3,250,000 3,250,000
36 months from
the first vesting
Warrants 13 March 2020 date GBP0.01 75,000 25,000
Warrants 30 March 2020 36 months GBP0.01 1,000,000 750.000
Warrants 9 June 2020 36 months GBP0.01 250,000 250,000
Warrants 18 June 2020 36 months from GBP0.06 5,000,000 -
the first vesting
date
Five years from
Warrants 19 June 2020 issue GBP0.06 6,963,000 6,963,000
Warrants 29 June 2020 36 months from GBP0.06 250,000 -
the first vesting
date
Warrants 7 July 2020 36 months from GBP0.06 225,000 -
the first vesting
date
Warrants 5 August 2020 36 months GBP0.06 250,000 -
Warrants 7 August 2020 36 months from GBP0.06 500,000 -
the first vesting
date
Warrants 14 August 2020 36 months from GBP0.06 750,000 -
the first vesting
date
Warrants 17 August 2020 36 months from GBP0.06 1,000,000 -
the first vesting
date
Warrants 20 August 2020 36 months from GBP0.06 1,000,000 -
the first vesting
date
Warrants 28 August 2020 36 months from GBP0.06 150,000 -
the first vesting
date
Five years from
Warrants 2 October 2020 issue GBP0.104 20,584,694 20,584,694
41,247,694 31,073,444
-------------- ------------------
Number of Weighted
options and average exercise
warrants price GBP
------------------------------------------------------------ ---------- -------------- ------------------
At 1 October 2020 26,163,000 0.04
Granted 20,584,694 0.104
Exercised (3,000,000) 0.01
Lapsed (2,500,000) 0.01
------------------------------------------------------------ ---------- -------------- ------------------
Outstanding at 31 March 2021 41,247,694 0.07
------------------------------------------------------------ ---------- -------------- ------------------
Exercisable at 31 March 2021 31,073,444 0.08
------------------------------------------------------------ ---------- -------------- ------------------
The weighted average remaining contractual life of options and
warrants as at 31 March 2021 is 3.6 years.
If the exercisable shares had been exercised on 31 March 2021
this would have represented 5.7% of the enlarged share capital. At
the grant date, the fair value of the warrants issued have been
determined using the Black-Scholes option pricing model. Volatility
was calculated based on data from comparable esports companies,
with an appropriate discount applied due to being an unlisted
entity at the grant date, if applicable. Risk-free interest has
been based on UK Government Gilt rates. The Company intends to
introduce a share-based payment scheme for employees, whereby
options are granted over between 75,000 and 250,000 shares at an
exercise price of GBP0.08, vesting over three years.
10 Share capital and share premium
Number Share Capital Share premium Total
of shares
No. GBP GBP GBP
--------------------------------------- ------------ -------------- -------------- ------------
At 1 October 2020 264,617,362 264,617 4,880,511 5,145,128
Issue of ordinary shares (02/10/2020) 250,000,000 250,000 19,750,000 20,000,000
Issue of ordinary shares (22/10/2020) 1,500,000 1,500 13,500 15,000
Issue of ordinary shares (07/01/2021) 2,500,000 2,500 72,500 75,000
Share issue costs deducted
from share premium - - (2,073,794) (2,073,794)
At 31 March 2021 518,617,362 518,617 22,642,717 23,161,334
--------------------------------------- ------------ -------------- -------------- ------------
On 2 October 2020, in the Company's initial public offering,
250,000,000 ordinary shares were issued at GBP0.08 each (premium of
GBP0.079 per share). Subsequent to the period end, a further
4,000,000 ordinary shares were issued, including 3,000,000 on the
exercise of Director warrants.
11 Financial commitments
In May 2020 the Company entered into an influencer agreement
with Footwork Productions Limited. Pursuant to this agreement,
Footwork will procure that David Beckham provides certain personal
services to the Company, including personal appearances and social
media posts. In addition Footwork will provide the Company with a
non-exclusive, non-transferable licence to use David Beckham's
name, voice, biography, image and likeness and signature to
advertise and promote the Company for a five-year term. In
consideration for these services the Company will pay Footwork an
annual fee equal to 15% of the net proceeds of all of the Company's
merchandising sales and 15% of all sponsorship revenue received in
respect of contracts entered into during the term. Such payments
will be subject to a minimum payment of GBP2,250,000 in the first
twelve-month period, and further annual minimum payments of
GBP2,500,000 in the second year, GBP3,000,000 in the third year,
GBP3,500,000 in the fourth year and GBP4,000,000 in the final year
of the term. Of these amounts, GBP13,000,000 is remaining as
payable over the next four years, as at 31 March 2021.
The Company has not entered into any long-term commitments other
than that outlined above.
12 Related-party transactions
During the period, Derek Lew and Andrew Drake (non-executive
directors of the Company) each exercised warrants of 1,500,000
ordinary shares at an exercise price of GBP0.01, on 22 October 2020
and 7 January 2021 respectively.
During the period to 31 March 2021, Bad Moon Talent LLC, a
company of which Andrew Drake is the CEO and 55% shareholder,
provided esports consulting services to the Company. The total fee
was GBP20,000 and no amounts remained payable at the period end.
The consulting agreement with Bad Moon Talent LLC ended on 31
December 2020.
13 Cash absorbed by operations
Unaudited Unaudited
At 31 March At 31 March
2021 2020
GBP GBP
------------------------------------------- ------------- -------------
Loss for the period after tax (4,282,172) (394,620)
Adjustments for:
Finance income (6,602) (91)
Amortisation and impairment of intangible 8,695 -
assets
Depreciation and impairment of property, 2,714 -
plant and equipment
Movements in share options and warrants 15,584 5,670
Movements in working capital:
Increase in trade and other receivables (3,058,591) (141,229)
Increase in trade and other payables 2,446,006 72,637
Increase in inventory (40,082) -
Total cash absorbed by operations (4,914,448) (457,633)
--------------------------------------------- ------------- -------------
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IR DKCBDOBKDPAB
(END) Dow Jones Newswires
June 30, 2021 02:00 ET (06:00 GMT)
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