ESL Gaming UK Limited - Limited company accounts 20.1

REGISTERED NUMBER: 07230944 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

FOR

ESL GAMING UK LIMITED

PREVIOUSLY KNOWN AS

TURTLE ENTERTAINMENT UK LTD

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

4

Statement of Comprehensive Income

6

Balance Sheet

7

Statement of Changes in Equity

8

Notes to the Financial Statements

9

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 2019.

REVIEW OF BUSINESS

ESL is the global leading brand in an emerging industry called Esports. ESL Gaming 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 has foregone a major restructure in order to align with a global direction set out by the headquarters in Cologne,

Germany. These changes will severely impact the revenue growth the business has enjoyed in the past 4 years. Impending changes

at the beginning of the year saw our sales staff reduced to a single person, the 2019 sales pipeline began to decrease on a local level

around Q2 as a result.

2019 revenues were originally forecast around £8m. However, due to changes in the structure of the business, total income reached

£6.3m. Due to the drop in revenue 2019 EBIT was negative, -5.2%. Simultaneously, the UK office made investments into a

government R&D project, Weavr. Considering the circumstances and disruption throughout the year imposed by various reasons

outside of the UK subsidiaries' control, we are pleased with the NET result. It is worth noting that the investment into the R&D

project in our belief has extremely strong strategic positive impact on the placement of the ESL business in the UK which will bring

many longer term benefits.

As of the end of December 2019, we have reduced our direct local resource down to 5 members of full time staff, mainly focused on

sales (3 people). All production staff were removed as direct costs. SG&A resources were vastly reduced to just two employees.

Weavr related staff remained unaffected, as did recharged staff relating to global roles outside of the UK entity's remit. Our focus as

a regional entity will now shift towards selling sponsorship for our various owned and operated ESL branded business globally. All

our local production and operational resources locally will be sourced externally with trusted partners.

Our main objectives in 2020 are:

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

ii) Operate a successful ESL One Birmingham online with advanced features from the Weavr R&D project;

iii) Continue to externalise operations and focus on the sales pipeline;

iv) Finalise opportunities for 2021 with sister company, Dreamhack;

v) Secure additional funding for Weavr R&D project.

With the current circumstances in mind, we forecast to hit a modest £3m revenue in 2020. This will be made up of around 60% local

revenues as our sales team gets up to speed and returns from a furloughed state in a flat sponsorship market, and 40% in

intercompany revenues.

PRINCIPAL RISKS AND UNCERTAINTIES

The current and potential impact of COVID-19 is a reduction in physical event production and overall sponsorship funding as

partners readjust to the global pandemic. The Weavr project may be affected by a poor cash flow state if we don't secure additional

support from the UK government.

We expect there to be a longer term uplift for the esports sector as a result of COVID-19 due to a large increase in gaming activity

and awareness of the type of content and tournaments that can be produced during these times. Viewership across our existing

tournaments that are now being run online in some cases reaching 2.4 times the normal rate of engagement.

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

The risk of externalising resources means that some of our clientele will no longer see value in working with ESL directly as there is

little added value to be offered on top of externalised resources. Our focus will be on owned and operated ESL branded products and

selling sponsorship around existing and future content.

ON BEHALF OF THE BOARD:

Mr J Dean - Director

5 June 2020

The directors present their report with the financial statements of the company for the year ended 31 December 2019.

CHANGE OF NAME

The company passed a special resolution on 4 April 2019 changing its name from Turtle Entertainment UK Ltd to ESL Gaming UK Limited.

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 2019.

EVENTS SINCE THE END OF THE YEAR

Information relating to events since the end of the year is given in the notes to the financial statements.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2019 to the date of this report.

Mr J Dean

Mr N Wolter

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

5 June 2020

Opinion

We have audited the financial statements of ESL Gaming UK Limited (the 'company') for the year ended 31 December 2019 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 2019 and of its loss 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.

Opinions 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

5 June 2020

TURNOVER

3

5,102,772

6,123,941

Cost of sales

4,717,921

5,026,990

GROSS PROFIT

384,851

1,096,951

Administrative expenses

2,003,104

1,165,508

(1,618,253

)

(68,557

)

Other operating income

1,284,610

278,597

OPERATING (LOSS)/PROFIT

5

(333,643

)

210,040

Interest receivable and similar income

3,893

-

(329,750

)

210,040

Interest payable and similar expenses

6

(4,643

)

38,327

(LOSS)/PROFIT BEFORE TAXATION

(325,107

)

171,713

Tax on (loss)/profit

7

(54,133

)

36,356

(LOSS)/PROFIT FOR THE FINANCIAL YEAR

(270,974

)

135,357

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(270,974

)

135,357

FIXED ASSETS

Tangible assets

8

289,120

265,281

CURRENT ASSETS

Debtors

9

1,092,560

851,221

Cash at bank and in hand

113,288

799,471

1,205,848

1,650,692

CREDITORS

Amounts falling due within one year

10

1,001,980

968,684

NET CURRENT ASSETS

203,868

682,008

TOTAL ASSETS LESS CURRENT LIABILITIES

492,988

947,289

CREDITORS

Amounts falling due after more than one year

11

753,310

936,637

NET (LIABILITIES)/ASSETS

(260,322

)

10,652

CAPITAL AND RESERVES

Called up share capital

14

200

200

Retained earnings

15

(260,522

)

10,452

SHAREHOLDERS' FUNDS

(260,322

)

10,652

The financial statements were approved by the Board of Directors and authorised for issue on 5 June 2020 and were signed on its behalf by:

Mr J Dean - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2018

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

Changes in equity

Total comprehensive income

-

(270,974

)

(270,974

)

Balance at 31 December 2019

200

(260,522

)

(260,322

)

1.	STATUTORY INFORMATION

ESL Gaming 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.

As shown on the Balance Sheet, the company has net liabilities at the balance sheet date (net assets in 2018). The company is

financially supported by its parent company ESL Gaming GmbH and therefore the financial statements are prepared on a

going concern basis.

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

-

Over 3 or 5 years

Fixtures and fittings

-

20% on cost

Motor vehicles

-

25% on cost

Computer equipment

-

Straight line over 3 years

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 loss (2018 - profit) before taxation are attributable to the one principal activity of the company.

An analysis of turnover by geographical market is given below:

2019

2018

£

£

UK

1,182,530

1,670,877

Europe

3,014,618

2,605,466

Rest of the World

905,624

1,847,598

5,102,772

6,123,941

4.	EMPLOYEES AND DIRECTORS

2019

2018

£

£

Wages and salaries

2,048,768

1,135,772

Social security costs

172,050

110,520

Other pension costs

24,652

14,228

2,245,470

1,260,520

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

2019

2018

Directors and management

1

1

Other

39

36

40

37

2019

2018

£

£

Directors' remuneration

90,656

71,806

Directors' long term incentive schemes

1,188

800

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

Money purchase schemes

1

1

5.	OPERATING (LOSS)/PROFIT

The operating loss (2018 - operating profit) is stated after charging/(crediting):

2019

2018

£

£

Depreciation - owned assets

89,443

78,272

Loss on disposal of fixed assets

43,378

10,282

Auditors' remuneration

7,500

8,000

Foreign exchange differences

(11,702

)

78,480

Operating lease rentals

92,169

71,444

Fees payable to the company's auditor for other services

28,100

27,095

Pension cost

25,840

15,028

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

2019

2018

£

£

Bank interest

-

118

Loan interest

39,916

58,482

Foreign exchange losses from

financial items

(44,559

)

(20,273

)

(4,643

)

38,327

7.

TAXATION

Analysis of the tax (credit)/charge

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

2019

2018

£

£

Current tax:

UK corporation tax

(25,876

)

25,561

Under provision prior year

315

15,276

Total current tax

(25,561

)

40,837

Deferred tax

(28,572

)

(4,481

)

Tax on (loss)/profit

(54,133

)

36,356

Reconciliation of total tax (credit)/charge 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:

2019

2018

£

£

(Loss)/profit before tax

(325,107

)

171,713

(Loss)/profit multiplied by the standard rate of corporation tax in the UK of 19% (2018 - 19%)

(61,770

)

32,625

Effects of:

Expenses not deductible for tax purposes

3,989

3,176

Capital allowances in excess of depreciation

(12,121

)

-

Depreciation in excess of capital allowances

-

7,424

Utilisation of tax losses

-

(19,618

)

Deferred taxation (credit)/charge

(28,572

)

(4,481

)

Taxation losses carried forward

35,784

-

Taxation underprovided prior year

315

15,276

Loss on disposal of assets

8,242

1,954

Total tax (credit)/charge

(54,133

)

36,356

8.	TANGIBLE FIXED ASSETS

Fixtures

Leasehold

Plant and

and

improvements

machinery

fittings

£

£

£

COST

At 1 January 2019

201,918

237,437

6,734

Additions

42,241

31,895

64,999

Disposals

(664

)

(140,838

)

(499

)

Reclassification/transfer

-

(3,743

)

3,743

At 31 December 2019

243,495

124,751

74,977

DEPRECIATION

At 1 January 2019

58,125

138,111

532

Charge for year

23,822

41,193

12,879

Eliminated on disposal

(203

)

(97,302

)

(174

)

Reclassification/transfer

-

(2,182

)

2,182

At 31 December 2019

81,744

79,820

15,419

NET BOOK VALUE

At 31 December 2019

161,751

44,931

59,558

At 31 December 2018

143,793

99,326

6,202

Motor

Computer

vehicles

equipment

Totals

£

£

£

COST

At 1 January 2019

1,000

35,600

482,689

Additions

-

26,066

165,201

Disposals

(1,000

)

(26,231

)

(169,232

)

Reclassification/transfer

-

-

-

At 31 December 2019

-

35,435

478,658

DEPRECIATION

At 1 January 2019

563

20,077

217,408

Charge for year

146

11,403

89,443

Eliminated on disposal

(709

)

(18,925

)

(117,313

)

Reclassification/transfer

-

-

-

At 31 December 2019

-

12,555

189,538

NET BOOK VALUE

At 31 December 2019

-

22,880

289,120

At 31 December 2018

437

15,523

265,281

9.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2019

2018

£

£

Trade debtors

124,705

537,365

Amounts owed by group undertakings

49,084

142,497

Other debtors

933

12,125

Directors' current accounts

2,423

-

Tax

25,876

-

VAT

50,548

-

Deferred tax asset

36,444

7,872

Prepayments and accrued income

802,547

151,362

1,092,560

851,221

10.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2019

2018

£

£

Trade creditors

313,513

110,844

Amounts owed to group undertakings

93,563

354,322

Tax

-

25,561

Social security and other taxes

135,794

35,092

VAT

-

45,583

Other creditors

17,311

25,274

Accruals and deferred income

441,799

372,008

1,001,980

968,684

11.

CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

2019

2018

£

£

Amounts owed to group undertakings

753,310

936,637