Turtle Entertainment UK Limited - Limited company accounts 18.2

REGISTERED NUMBER: 07230944 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2018

FOR

TURTLE ENTERTAINMENT UK LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Statement of Comprehensive Income

7

Balance Sheet

8

Statement of Changes in Equity

9

Notes to the Financial Statements

10

DIRECTORS:

Mr J Dean

Mr N Wolter

REGISTERED OFFICE:

ESL UK

2nd Floor

64 Mansfield Street

Leicester

LE1 3DL

REGISTERED NUMBER:

07230944 (England and Wales)

AUDITORS:

Cube Partners Limited

Chartered Accountants and Registered Auditors

5 Giffard Court

Millbrook Close

Northampton

Northamptonshire

NN5 5JF

The directors present their strategic report for the year ended 31 December 2018.

REVIEW OF BUSINESS

Electronic Sports League (ESL) is the global leading brand in an emerging industry called Esports. Turtle Entertainment

UK Ltd is the UK subsidiary for the ESL brand alongside 17 other offices globally. Our mission is to operate Esports on

a local level, increasing the viewership, participation and number of tournaments, events and work alongside games

developers inside and outside the UK.

The business revenue is still in a rapid growth stage, 2015 to 2016 saw revenues grow from £718k to £2.2m and 2017

£3.4m, over £300k ahead of predictions. 2017 to 2018 hit £6.1m which was over £1.1m above expectations. The

additional revenue was due to large projects that the UK were able to execute that other Turtle offices were unable to

service.

2019 we expect revenues around £8m.

Turtle Entertainment UK Ltd will change it’s name to ESL Gaming UK Ltd as part of a global brand refresh and reduce

confusion about the relationship between ESL and Turtle.

We expect a small profit, with an EBITDA around 2-3%, which will ensure we grow the Esports total available market

in the UK and maintain a dominant market share.

Our main objectives in 2019 are:

i) continue to grow the UK National Esports League, reaching revenues of £1m and a viewership in excess of 6m per

year

ii) Grow the second ESL One in May utilising a large venue in the Midlands, revenue expected around £1.5m

iii) operating several new venues, including the Haymarket Theatre, Phoenix Arts Centre, Farringdon Studio and a new

office based studio in Leicester. We expect to also utilise mainstream TV studios across the UK and activate a wider

range of remote venues to operate the national league

iv) we will move our main operations to an office in Leicester City to cater for our continued growth accommodating 50

people

v) we will de-risk several business functions by engaging with external agencies rather than build on internal staffing

PRINCIPAL RISKS AND UNCERTAINTIES

Brexit remains a potential risk due to uncertainty around the open European market, however, the UK is still benefitting

for a competitive priced operation to the rest of the world due to a weak GBP. It will be difficult to attract talent from

the wider EU market to work for ESL.

It remains difficult to forecast Esports business, which makes management of overheads and HR resources difficult to

balance. The global leading company will centralise business units and remove resources on a local level which will

make operations less versatile, reduce control locally, reduce levels of locally driven innovation and R&D initiative and

impact quality control in a negative manner.

ON BEHALF OF THE BOARD:

Mr J Dean - Director

19 March 2019

The directors present their report with the financial statements of the company for the year ended 31 December 2018.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of PR, marketing and video production.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2018.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2018 to the date of this

report.

Mr J Dean

Mr N Wolter

Other changes in directors holding office are as follows:

Miss I Ozolina - appointed 24 January 2018 - resigned 5 July 2018

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements

in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors

have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting

Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not

approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the

company and of the profit or loss of the company for that period. In preparing these financial statements, the directors

are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the

company's transactions and disclose with reasonable accuracy at any time the financial position of the company and

enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for

safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud

and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act

2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken

as a director in order to make himself aware of any relevant audit information and to establish that the company's

auditors are aware of that information.

AUDITORS

The auditors, Cube Partners Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

Mr J Dean - Director

19 March 2019

Opinion

We have audited the financial statements of Turtle Entertainment UK Limited (the 'company') for the year ended

31 December 2018 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in

Equity and Notes to the Financial Statements, including a summary of significant accounting policies. The financial

reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting

Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and

Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2018 and of its profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.

Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the

financial statements section of our report. We are independent of the company in accordance with the ethical

requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard,

and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit

evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to

you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic

Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors

thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise

explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing

so, consider whether the other information is materially inconsistent with the financial statements or our knowledge

obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or

apparent material misstatements, we are required to determine whether there is a material misstatement in the financial

statements or a material misstatement of the other information. If, based on the work we have performed, we conclude

that there is a material misstatement of this other information, we are required to report that fact. We have nothing to

report in this regard.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit,

we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you

if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, the directors are

responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and

for such internal control as the directors determine necessary to enable the preparation of financial statements that are

free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a

going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of

accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic

alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs

(UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic

decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting

Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the

Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those

matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent

permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's

members as a body, for our audit work, for this report, or for the opinions we have formed.

Steven Jones ACA (Senior Statutory Auditor)

for and on behalf of Cube Partners Limited

Chartered Accountants and Registered Auditors

5 Giffard Court

Millbrook Close

Northampton

Northamptonshire

NN5 5JF

19 March 2019

TURNOVER

3

6,123,941

3,443,587

Cost of sales

4,904,117

2,551,738

GROSS PROFIT

1,219,824

891,849

Administrative expenses

1,268,108

1,040,901

(48,284

)

(149,052

)

Other operating income

278,597

47,202

OPERATING PROFIT/(LOSS)

5

230,313

(101,850

)

Interest receivable and similar income

-

123

230,313

(101,727

)

Interest payable and similar expenses

6

58,600

42,617

PROFIT/(LOSS) BEFORE TAXATION

171,713

(144,344

)

Tax on profit/(loss)

7

36,356

(24,917

)

PROFIT/(LOSS) FOR THE FINANCIAL YEAR

135,357

(119,427

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

135,357

(119,427

)

FIXED ASSETS

Tangible assets

8

265,281

327,892

CURRENT ASSETS

Debtors

9

851,221

727,939

Cash at bank and in hand

799,471

511,732

1,650,692

1,239,671

CREDITORS

Amounts falling due within one year

10

968,684

643,571

NET CURRENT ASSETS

682,008

596,100

TOTAL ASSETS LESS CURRENT LIABILITIES

947,289

923,992

CREDITORS

Amounts falling due after more than one year

11

936,637

1,048,697

NET ASSETS/(LIABILITIES)

10,652

(124,705

)

CAPITAL AND RESERVES

Called up share capital

14

200

200

Retained earnings

15

10,452

(124,905

)

SHAREHOLDERS' FUNDS

10,652

(124,705

)

The financial statements were approved by the Board of Directors on 19 March 2019 and were signed on its behalf by:

Mr J Dean - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2017

200

(5,478

)

(5,278

)

Changes in equity

Total comprehensive income

-

(119,427

)

(119,427

)

Balance at 31 December 2017

200

(124,905

)

(124,705

)

Changes in equity

Total comprehensive income

-

135,357

135,357

Balance at 31 December 2018

200

10,452

10,652

1.	STATUTORY INFORMATION

Turtle Entertainment UK Limited is a private company, limited by shares , registered in England and Wales. The

company's registered number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemption in preparing these financial statements,

as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows.

Significant judgements and estimates

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 where the revision affects only that period, or in the

period of revision and future periods where the revision affects both current and future periods.

Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services

provided in the normal course of business, and is shown net of value added tax and other sales related taxes. The

fair value of consideration takes into account trade discounts, settlement discounts and volume rebates. For sales

of goods, the turnover is shown net of distribution and carriage charges.

Revenue from sale of goods is recognised when significant risks and rewards of ownership have been transferred

to the buyer, when the amount of revenue can be measured reliably, when it is probable that the economic

benefits associated with the transaction will flow to the entity and when the costs incurred or to be incurred in

respect of the transaction can be measured reliably.

Revenue from sale of services is recognised when the stage of completion of the transaction can be measured

reliably.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Leasehold improvements

-

Over the term of the lease

Plant and machinery

-

20% on cost

Fixtures and fittings

-

20% on cost

Motor vehicles

-

25% on cost

Computer equipment

-

25% on cost

Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine

whether there is any indication that those assets have suffered an impairment loss. If any such indication exists,

the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the

recoverable amount of the cash-generating unit to which the asset belongs.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive

Income, except to the extent that it relates to items recognised in other comprehensive income or directly in

equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or

substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance

sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from

those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that

have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the

timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they

will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the

balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at

the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension

scheme are charged to profit or loss in the period to which they relate.

3.

TURNOVER

The turnover and profit (2017 - loss) before taxation are attributable to the one principal activity of the company.

An analysis of turnover by geographical market is given below:

2018

2017

£

£

UK

1,670,877

879,423

Europe

2,605,466

1,013,180

Rest of the World

1,847,598

1,550,984

6,123,941

3,443,587

4.	EMPLOYEES AND DIRECTORS

2018

2017

£

£

Wages and salaries

1,135,772

915,543

Social security costs

110,520

89,615

Other pension costs

14,228

7,102

1,260,520

1,012,260

The average number of employees during the year was as follows:

2018

2017

Directors and management

1

1

Other

36

30

37

31

2018

2017

£

£

Directors' remuneration

71,806

63,576

Directors' long term incentive schemes

800

484

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes

1

1

5.	OPERATING PROFIT/(LOSS)

The operating profit (2017 - operating loss) is stated after charging:

2018

2017

£

£

Depreciation - owned assets

78,272

75,961

Loss on disposal of fixed assets

10,282

-

Auditors' remuneration

8,000

13,000

Foreign exchange differences

58,206

72,867

Operating lease rentals

71,444

16,500

Fees payable to the company's auditor for other services

27,095

30,440

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

2018

2017

£

£

Bank interest

118

154

Bank loan interest

-

16

Interest paid on taxation

-

45

Loan interest

58,482

42,402

58,600

42,617

7.

TAXATION

Analysis of the tax charge/(credit)

The tax charge/(credit) on the profit for the year was as follows:

2018

2017

£

£

Current tax:

UK corporation tax

25,561

-

Under provision prior year

15,276

-

Total current tax

40,837

-

Deferred tax

(4,481

)

(24,917

)

Tax on profit/(loss)

36,356

(24,917

)

Reconciliation of total tax charge/(credit) included in profit and loss

The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is

explained below:

2018

2017

£

£

Profit/(loss) before tax

171,713

(144,344

)

Profit/(loss) multiplied by the standard rate of corporation tax in the UK of 19% (2017 - 19%)

32,625

(27,425

)

Effects of:

Expenses not deductible for tax purposes

3,176

1,259

Depreciation in excess of capital allowances

7,424

8,635

Utilisation of tax losses

(19,618

)

-

Deferred taxation (credit)/charge

(4,481

)

(24,917

)

Taxation losses carried forward

-

17,531

Taxation underprovided prior year

15,276

-

Loss on disposal of assets

1,954

-

Total tax charge/(credit)

36,356

(24,917

)

8.	TANGIBLE FIXED ASSETS

Fixtures

Leasehold

Plant and

and

improvements

machinery

fittings

£

£

£

COST

At 1 January 2018

201,918

244,407

6,331

Additions

-

9,668

6,318

Disposals

-

(16,638

)

(5,915

)

At 31 December 2018

201,918

237,437

6,734

DEPRECIATION

At 1 January 2018

37,934

97,084

4,016

Charge for year

20,191

49,134

967

Eliminated on disposal

-

(8,107

)

(4,451

)

At 31 December 2018

58,125

138,111

532

NET BOOK VALUE

At 31 December 2018

143,793

99,326

6,202

At 31 December 2017

163,984

147,323

2,315

Motor

Computer

vehicles

equipment

Totals

£

£

£

COST

At 1 January 2018

1,000

33,379

487,035

Additions

-

9,957

25,943

Disposals

-

(7,736

)

(30,289

)

At 31 December 2018

1,000

35,600

482,689

DEPRECIATION

At 1 January 2018

313

19,796

159,143

Charge for year

250

7,730

78,272

Eliminated on disposal

-

(7,449

)

(20,007

)

At 31 December 2018

563

20,077

217,408

NET BOOK VALUE

At 31 December 2018

437

15,523

265,281

At 31 December 2017

687

13,583

327,892

9.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2018

2017

£

£

Trade debtors

537,365

551,407

Amounts owed by group undertakings

142,497

142,664

Other debtors

12,125

420

Deferred tax asset

7,872

3,391

Prepayments and accrued income

151,362

30,057

851,221

727,939

10.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2018

2017

£

£

Trade creditors

110,844

315,506

Amounts owed to group undertakings

354,322

31,618

Tax

25,561

-

Social security and other taxes

35,092

58,098

VAT

45,583

416

Other creditors

25,274

40,053

Accruals and deferred income

372,008

197,880

968,684

643,571

11.

CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

2018

2017

£

£

Amounts owed to group undertakings

936,637

1,048,697

12.	LEASING AGREEMENTS

Minimum lease payments under non-cancellable operating leases fall due as follows:

2018

2017

£

£

Within one year

39,500

16,500

Between one and five years

28,875

45,375

68,375

61,875

13.	DEFERRED TAX

£

Balance at 1 January 2018

(3,391

)

Deferred tax asset

(4,481

)

Balance at 31 December 2018

(7,872

)

14.	CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:

Number:

Class:

Nominal

2018

2017

value:

£

£

190

Ordinary

1

190

190

10

M Ordinary

1

10

10

200

200