Company registration number 07751649 (England and Wales)
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
COMPANY INFORMATION
Directors
B Ward
M Alibraheem
S Alfadhel
(Appointed 13 August 2024)
M Almogbel
(Appointed 13 August 2024)
Secretary
F Houhou
Company number
07751649
Registered office
Millbank Tower
25th Floor
21-24 Millbank
London
SW1P 4QP
Auditor
Mercer & Hole LLP
21 Lombard Street
London
EC3V 9AH
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Directors' responsibilities statement
5
Independent auditor's report
6 - 8
Income statement
9
Statement of financial position
10
Statement of changes in equity
11
Notes to the financial statements
12 - 32
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
Acitivities of the business
FACEIT is the leading independent competitive gaming platform for online multiplayer PvP games with more than thirty million registered users players worldwide. We aim to further the Esports ecosystem by offering players of all levels the chance to compete in a competitive environment with the games they love while providing publishers and third-party organisers with the tools needed to build their competitive environment.
FACEIT continued to operate as the digital platform for the ESL FACEIT Group, while operating as the entity for delivering Esports events in the UK.
In September 2023 Valve released Counterstrike 2 to replace Counterstrike: Global Offensive, the main game on the FACEIT platform. While some drop off in players and subscriptions occurred as players went to test out the Valve Matchmaking system, FACEIT ensured a seamless transition between the title for users and players on the platform.
In February 2023, the company provided additional capital to its subsidiary FaceIT Inc., in order to fund the acquisition of the entire share capital of Vindex LLC for £192.9m. Vindex provides infrastructure that helps the global gaming and esports business by connecting games and gamers and provides the videogame industry and gaming consumers with solutions, technologies, and experiences. The company offers competitive operations, broadcast technology, streaming services, content creation, and a network of communities designed to meet the needs of publishers, distributors, leagues, teams, sponsors, and fans.
However, an impairment of £158.3m on this investment was recorded in the financial year due to macroeconomic esport industry market conditions in 2023 where many publishers in the industry have experienced layoffs and budget cuts causing EFG revenues to decrease. EFG has launched cost saving programs to mitigate the market conditions.
EFG Vision
EFG’s vision and purpose is to create worlds beyond gameplay, where players and fans become community.
At ESL we create worlds where everybody can be somebody
At FACEIT we create a world where the community has the power to shape video games
At Dreamhack we create a world where the gaming community comes to life
At Dreamhack Sports Games we create a world where traditional sports meets eSports
Each of our brands play a significant role in creating worlds beyond gameplay. They build, connect and nurture beyond game ecosystems to unlock more fun, fame, and fortune for gamers across the globe.
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Key performance indicators
The company’s key financial and other performance indicators during the year are as follows:
2023 2022
£’000 £’000
Total Revenue 13,399 19,359
Gross Margin 47% 77%
Operating Loss (24,028) (10,024)
Registered Users Growth % 11% 13%
*Registered Users are defined as users that have created an account on our platform
Our Registered Users increased by 11% to 30.9M compared to the previous year.
The gross margin has declined by 38% in 2023, less than the previous year due to market conditions in eSports which have reduced advertising and sponsorship revenues.
The operating loss has increased by £14,004k to £24,028k mainly driven by quality increases in all areas, and recruitment of higher quality staff as an investment in future growth.
Description of Principal Risks and Uncertainties
The principal risks and uncertainties facing the company include the following:
Foreign Currency Risk
The company has exposure to exchange rate fluctuations mainly in the US dollar. Whilst the company does have a natural hedge in its receivables and payables, this remains a risk.
Cyber Risk
The business is subject to “cyber risk” including theft of customer and company information, as well as interruptions to trading. These risks are mitigated through continued risk management and supported by appropriate processes throughout the organisation.
Russia/Ukraine crisis
Since February 2022, the impact of the Russia and Ukraine crisis has continued to have a significant impact on the FACEIT subscriptions, sponsorship and advertising revenues. Growth had been seen in both regions prior to the war, however post start of the war the revenues dropped and have yet to recover to the prior levels. There has not yet been a full recovery of revenues in this region, and the uncertainty continues.
B Ward
Director
7 April 2025
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Principal activities
ESL FACEIT Group Ltd, formally known as FACEIT is the leading competitive platform for online multiplayer games, allowing players to easily compete in tournaments and leagues for virtual and real-world prizes through automated tournament management and matchmaking technology.
Results and dividends
The results for the year are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
No preference dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
B Ward
M Alibraheem
S Alfadhel
(Appointed 13 August 2024)
M Almogbel
(Appointed 13 August 2024)
Supplier payment policy
The company's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU).
The company's current policy concerning the payment of trade creditors is to:
settle the terms of payment with suppliers when agreeing the terms of each transaction;
ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and
pay in accordance with the company's contractual and other legal obligations.
Trade creditors of the company at the year end were equivalent to 19 day's purchases, based on the average daily amount invoiced by suppliers during the year.
Research and development
The company continues to invest in the development of its software platform to improve both functionality and player experience.
Post reporting date events
On 27 February 2024, a resolution was made to change the name from FaceIT Ltd to ESL FaceIT Group Ltd.
Subsequent to the year end, the company has received further funding both in the form of loans from fellow group undertakings and capital contributions of £20.9m from its immediate parent company.
On 30 December 2024, the company acquired 100% of the US based company Gamers Net, Inc. ("Mobalytics"). Mobalytics is a digital platform developed to help players easily access useful data and information to improve their gameplay, and was acquired to further expand on the wider Group's digital offerings.
Since the year end, the wider Group has undergone a reorganisation which has impacted the underlying value of the company’s investment in its indirectly owned subsidiary, Vindex LLC. Consequently, the company has recognised a further impairment in 2024 reducing the value to £3.2m. This further reduction has not been reflected in these financial statements on the basis that the condition for recognition did not exist at 31 December 2023.
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
Auditor
The auditor, Mercer & Hole LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
B Ward
Director
7 April 2025
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
The directors are responsible for preparing the annual report 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;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
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.
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF ESL FACEIT GROUP LIMITED
- 6 -
Opinion
We have audited the financial statements of ESL FaceIT Group Limited (the 'company') for the year ended 31 December 2023 which comprise the income statement, the statement of financial position, the statement of changes in equity and notes to the financial statements, including 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 101 Reduced Disclosure Framework (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 2023 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.
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 Auditor's 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
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. 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. 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 course of 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 this gives rise to a material misstatement in the financial statements themselves. 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 our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF ESL FACEIT GROUP LIMITED (CONTINUED)
- 7 -
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 directors' report.
We have nothing to report in respect of the following matters in relation to which 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 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 directors' responsibilities statement, 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 is 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.
Auditor's 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 an auditor's report 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Based on our understanding of the company and the industry, we identified that there were no specific laws or regulations that were critical to the operation of the business. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006.
We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements and the financial report (including the risk of override of controls), and determined that the principle risks were related to posting inappropriate entries including journals to understate revenue or overstate expenditure, and management bias in accounting estimates.
Audit procedures performed by the engagement team included:
discussions with management, including considerations of known or suspected instances of non-compliance with laws and regulations and fraud;
evaluation of the operating effectiveness of management's controls designed to prevent and detect irregularities;
challenging assumptions and judgements made by management in its significant accounting estimates;
identifying and testing journal entries.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF ESL FACEIT GROUP LIMITED (CONTINUED)
- 8 -
A further description of our responsibilities is available on the Financial Reporting Council's website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
This report is made solely to the company’s member 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 member, those matters we are required to state to the member in an auditor's report 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 member, for our audit work, for this report, or for the opinions we have formed.
Ross Lane (Senior Statutory Auditor)
For and on behalf of Mercer & Hole LLP, Statutory Auditor
Chartered Accountants
21 Lombard Street
London
EC3V 9AH
9 April 2025
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
Notes
£'000
£'000
Revenue
3
13,399
19,362
Cost of sales
(7,055)
(4,484)
Gross profit
6,344
14,878
Administrative expenses
(41,309)
(25,672)
Other operating income
11,029
770
Operating loss
4
(23,936)
(10,024)
Investment income
7
129
64
Finance costs
8
(1,099)
(375)
Other gains and losses
9
(158,043)
Loss before taxation
(182,949)
(10,335)
Tax on loss
10
(183)
6
Loss and total comprehensive income for the financial year
(183,132)
(10,329)
The income statement has been prepared on the basis that all operations are continuing operations.
The notes on pages 12 to 32 form part of these financial statements.
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 10 -
2023
2022
Notes
£'000
£'000
£'000
£'000
Non-current assets
Intangible assets
12
14,710
8,115
Property, plant and equipment
13
474
492
Right-of-use assets
13
133
333
Investments
14
37,007
2,278
52,324
11,218
Current assets
Trade and other receivables
16
19,192
7,607
Cash and cash equivalents
1,513
2,904
20,705
10,511
Current liabilities
18
(31,319)
(15,051)
Net current liabilities
(10,614)
(4,540)
Total assets less current liabilities
41,710
6,678
Non-current liabilities
18
(37,439)
(12,192)
Net assets/(liabilities)
4,271
(5,514)
Equity
Called up share capital
25
45
45
Share premium account
26
18,674
18,674
Capital contribution
27
192,917
-
Retained earnings
(207,365)
(24,233)
Total equity
4,271
(5,514)
The notes on pages 12 to 32 form part of these financial statements.
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The financial statements were approved by the board of directors and authorised for issue on 7 April 2025 and are signed on its behalf by:
B Ward
Director
Company registration number 07751649 (England and Wales)
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
Share capital
Share premium account
Capital contribution
Retained earnings
Total
Notes
£'000
£'000
£'000
£'000
£'000
Balance at 1 January 2022
43
18,297
-
(13,904)
4,436
Year ended 31 December 2022:
Loss and total comprehensive income
-
-
-
(10,329)
(10,329)
Transactions with owners:
Issue of share capital
25
2
377
-
-
379
Balance at 31 December 2022
45
18,674
-
(24,233)
(5,514)
Year ended 31 December 2023:
Loss and total comprehensive income
-
-
-
(183,132)
(183,132)
Transactions with owners:
Capital contribution from shareholders
-
-
192,917
192,917
Balance at 31 December 2023
45
18,674
192,917
(207,365)
4,271
The notes on pages 12 to 32 form part of these financial statements.
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
1
Accounting policies
Company information
ESL FaceIT Group Limited is a private company limited by shares incorporated in England and Wales. The registered office is Millbank Tower, 25th Floor, 21-24 Millbank, London, SW1P 4QP. The company's principal activities and nature of its operations are disclosed in the directors' report.
1.1
Accounting convention
The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting standards.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £1,000.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
As permitted by FRS 101, the company has taken advantage of the following disclosure exemptions from the requirements of IFRS
inclusion of an explicit and unreserved statement of compliance with IFRS;
presentation of a statement of cash flows and related notes;
disclosure of the objectives, policies and processes for managing capital;
disclosure of key management personnel compensation;
disclosure of the categories of financial instrument and the nature and extent of risks arising on these financial instruments;
the effect of financial instruments on the statement of comprehensive income;
comparative period reconciliations for the number of shares outstanding and the carrying amounts of property, plant and equipment, intangible assets, investment property and biological assets;
disclosure of the future impact of new International Financial Reporting Standards in issue but not yet effective at the reporting date;
a reconciliation of the number and weighted average exercise prices of share options, how the fair value of share-based payments was determined and their effect on profit or loss and the financial position;
comparative narrative information; and
related party disclosures for transactions with the parent or wholly owned members of the group.
Where required, equivalent disclosures are given in the group accounts of the Public Investment Fund of the Kingdom of Saudi Arabia. The group accounts of the Public Investment Fund of the Kingdom of Saudi Arabia are available to the public and can be obtained as set out in note 10.
The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.2
Going concern
The truefinancial statements have been prepared on a going concern basis which the directors consider to be appropriate for the following reasons.
The company is still considered to be in a developing stage and continuing to explore new growth opportunities, which require large cash investments. Detailed forecasts have been prepared through to FY2029 which indicate ongoing losses as part of this plan. Management acknowledges that the projected negative operating cash flow and the aggressive expansion strategy is dependent on cash contributions from its shareholders.
However, management is convinced that the investments are the correct strategy based on the positive development in the interest of esports and gaming. The company is striving towards positive cash flows and profitable earnings in the foreseeable future.
The directors have received assurances of ongoing support from Saudi Electronic Gaming Holding Company (parent company of Savvy eSports Investments Limited) should they require it. Since the year end, the company has been provided with an additional loan facility from the group of $50m / £39m.
Based on the above the directors are confident that the company will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements.
1.3
Revenue
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The company recognises revenue when it transfers control of a product or service to a customer.
Advertising and sponsorship
Revenue from advertising and sponsorship is recognised evenly over the campaign period to which it relates.
Media Rights
Revenue from media rights is recognised over the period the agreed audio and audio-visual content is contracted to be made available for use by the licensee. Revenue is recognised evenly over the term of the contract unless there are clearly identifiable stages within the contract that varies the content and/or service to be provided; in which case revenue is then recognised by reference to the content to be provided in each stage separately.
Subscriptions
Revenue from subscriptions for a period greater than 1 month are spread over the period of the subscription. Subscriptions for 1 month only are recognised in full in the month of subscription which reflects the non-refundable nature of the subscription as well as the fact there are minimal incremental costs associated with the delivery of a 1 month subscription.
Other revenue
Revenue from the provision of other services is recognised as those services are provided.
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
1.4
Intangible assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
1.5
Property, plant and equipment
Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold land and buildings
Over the remaining life of the lease
Leasehold improvements
Over the remaining life of the lease
Fixtures, fittings & equipment
3 years straight line
Plant and machinery
3 years straight line
Computer equipment
3 years straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.
1.6
Impairment of tangible and intangible assets
At each reporting end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.7
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8
Financial assets
Financial assets are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.
At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.
Financial assets at fair value through profit or loss
When any of the above-mentioned conditions for classification of financial assets is not met, a financial asset is classified as measured at fair value through profit or loss. Financial assets measured at fair value through profit or loss are recognized initially at fair value and any transaction costs are recognised in profit or loss when incurred. A gain or loss on a financial asset measured at fair value through profit or loss is recognised in profit or loss, and is included within finance income or finance costs in the statement of income for the reporting period in which it arises.
Financial assets held at amortised cost
Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
Financial assets at fair value through other comprehensive income
Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the company’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.
The company has made an irrevocable election to recognize changes in fair value of investments in equity instruments through other comprehensive income, not through profit or loss. A gain or loss from fair value changes will be shown in other comprehensive income and will not be reclassified subsequently to profit or loss. Equity instruments measured at fair value through other comprehensive income are recognized initially at fair value plus transaction cost directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognized through other comprehensive income are directly transferred to retained earnings when the equity instrument is derecognized or its fair value substantially decreased. Dividends are recognized as finance income in profit or loss.
Impairment of financial assets
Financial assets carried at amortised cost and FVOCI are assessed for indicators of impairment at each reporting end date.
The expected credit losses associated with these assets are estimated on a forward-looking basis. A broad range of information is considered when assessing credit risk and measuring expected credit losses, including past events, current conditions, and reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.
For trade receivables, the simplified approach permitted by IFRS 9 is applied, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
1.9
Financial liabilities
The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.
Other financial liabilities
Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
1.10
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.12
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of inventories or non-current assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Leases
At inception, the company assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 18 -
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the company is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the company's estimate of the amount expected to be payable under a residual value guarantee; or the company's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.
1.15
Grants
Government grants are recognised when there is reasonable assurance that the grant conditions will be met and the grants will be received.
1.16
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
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.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.
Critical judgements
Capitalisation and amortisation of development costs
A critical judgement in applying accounting policies that had a significant effect on the amounts recognised in the financial statements for the financial year was the capitalisation of development costs, particularly on the assessment of technical, commercial and financial feasibility for the purposes of asset capitalisation.
There are also assumptions and estimation uncertainties that could have a significant risk of resulting in material adjustments within the next financial years in relation to the recoverability of the development costs. The carrying amount of intangible assets representing a development of software is £14,601,441. The directors have been required to exercise judgment in determining the useful life of this intangible for its amortisation.
Key sources of estimation uncertainty
Impairment of investments
The Company assesses impairment at each reporting date by evaluating conditions specific to the Company that may lead to an impairment of investments in subsidiaries. Where indicators of impairment exist, the recoverable amount of the asset is determined on the basis of the underlying recoverable value of the investments. See note 11 for details.
3
Revenue
2023
2022
£'000
£'000
Revenue analysed by class of business
Advertising
1,565
3,873
Subscriptions
10,796
10,341
Events
-
2,739
Other
1,038
2,409
13,399
19,362
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
3
Revenue
(Continued)
- 20 -
2023
2022
£'000
£'000
Revenue analysed by geographical market
United Kingdom
690
809
Europe
6,549
7,267
USA
2,806
2,818
Rest of World
3,354
8,468
13,399
19,362
2023
2022
£'000
£'000
Other income
Grants received
1,069
770
Recharges to group
9,075
-
Government grants of £1,069k are estimated amounts receivable under the government's RDEC scheme for large companies.
4
Operating loss
2023
2022
Operating loss for the year is stated after charging/(crediting):
£'000
£'000
Exchange (gains)/losses
(1,535)
149
Research and development costs
4,634
2,364
Government grants
(1,069)
(770)
Fees payable to the company's auditor for the audit of the company's financial statements
80
17,550
Depreciation of property, plant and equipment
892
399
Amortisation of intangible assets (included within administrative expenses)
2,671
2,081
Loss on disposal of intangible assets
274
-
Impairment loss recognised on trade receivables
-
1,158
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Development
36
35
Product Development & Operations
60
35
Sales & Business Development
29
7
Management & Other
24
12
Total
149
89
Their aggregate remuneration comprised:
2023
2022
£'000
£'000
Wages and salaries
22,976
10,098
Social security costs
1,764
1,251
Pension costs
162
90
24,902
11,439
6
Directors' remuneration
2023
2022
£'000
£'000
Remuneration for qualifying services
97
During the year the directors received no emoluments for qualifying services provided. The directors are remunerated by other companies in the group.
7
Investment income
2023
2022
£'000
£'000
Interest income
Interest on bank deposits
11
Interest receivable from group companies
6
6
Other interest income
112
58
Total income
129
64
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
8
Finance costs
2023
2022
£'000
£'000
Interest on financial liabilities measured at amortised cost:
Interest payable to group undertakings
1,088
255
Interest on lease liabilities
11
18
Interest on other loans
102
1,099
375
9
Other gains and losses
2023
2022
Notes
£'000
£'000
Amounts written back to current loans
256
-
Impairment of investments
11
(158,299)
-
(158,043)
10
Taxation
2023
2022
£'000
£'000
Current tax
Adjustments in respect of prior periods
183
(10)
Other tax reliefs
-
4
Total UK current tax
183
(6)
An increase in the UK corporation tax rate from 19% to 25% (effective 1 April 2023) was substantively enacted on 24 May 2021. This will increase the company's future current tax charge and the deferred tax assets and liabilities accordingly.
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
10
Taxation
(Continued)
- 23 -
The charge for the year can be reconciled to the loss per the income statement as follows:
2023
2022
£'000
£'000
Loss before taxation
(182,949)
(10,335)
Expected tax credit based on a corporation tax rate of 23.52% (2022: 19.00%)
(43,030)
(1,964)
Effect of expenses not deductible in determining taxable profit
7
Change in unrecognised deferred tax assets
5,427
3,674
Adjustment in respect of prior years
183
4
Group relief
92
Depreciation on assets not qualifying for tax allowances
(24)
Other non-reversing timing differences
37,511
-
Tax relief on share options
-
(1,703)
Taxation charge/(credit) for the year
183
(6)
The company has estimated tax losses of £49m (2022: £28.3m) to be used against future profits. Deferred tax has not been recognised on these as it is currently not considered probable that there will be future taxable profits available in the near future.
11
Impairments
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
2023
2022
£'000
£'000
In respect of:
Investments in subsidiaries
158,299
-
Financial assets - loans and receivables
(256)
-
Recognised in:
Other gains and losses
158,043
-
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
11
Impairments
(Continued)
- 24 -
The company carries out its impairment testing on investments by comparing the recoverable amounts of the cash-generating units (CGU) to its carrying amount. Since the individual entities have been integrated into a combined operation, with one Group management and interdependent cash inflows, Management monitors the entity's operations as a single CGU. For the purpose of investment impairment testing, the recoverable amount of a CGU is the higher of its fair value less costs of disposal and its value in use. For the impairment test performed as of 31 December 2023, value in use was utilised as the recoverable amount.
It was concluded that the carrying amount was higher than the recoverable amount and an impairment charge was recorded. The recoverable amount was calculated as £34.7m and the carrying amount was calculated as £193m. As a result there is an impairment charge of £158.3m.
Impairment was recorded due to the macroeconomic esports industry market conditions in 2023 and an increase in the discount rate applied. Many publishers in the industry have experienced layoffs and budget cuts causing EFG revenues to decrease. EFG has launched cost saving programs to mitigate the market conditions. The key assumptions used in the value in use calculations were the terminal growth rate and discount rate.
Key assumptions used in the value in use calculation:
Discount rate: 10.80 %
Terminal growth rate: 2.5 %
See additional information provided in note 28 'Events after the reporting date'.
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 25 -
12
Intangible fixed assets
Software
Development Costs
Total
£'000
£'000
£'000
Cost
At 31 December 2022
163
13,053
13,216
Additions - internally generated
9,540
9,540
Disposals
(288)
(288)
At 31 December 2023
163
22,305
22,468
Amortisation and impairment
At 31 December 2022
5,101
5,101
Charge for the year
54
2,617
2,671
Eliminated on disposals
(14)
(14)
At 31 December 2023
54
7,704
7,758
Carrying amount
At 31 December 2023
109
14,601
14,710
At 31 December 2022
163
7,952
8,115
13
Property, plant and equipment
Leasehold land and buildings
Leasehold improvements
Plant and machinery
Fixtures, fittings & equipment
Computer equipment
Total
£'000
£'000
£'000
£'000
£'000
£'000
Cost
At 1 January 2023
905
403
149
732
2,188
Additions
1
146
147
Acqusition from subsidiary undertaking
525
525
At 31 December 2023
905
403
525
150
878
2,861
Accumulated depreciation and impairment
At 1 January 2023
572
244
125
421
1,363
Charge for the year
200
82
424
11
175
892
At 31 December 2023
772
326
424
136
596
2,254
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
13
Property, plant and equipment
Leasehold land and buildings
Leasehold improvements
Plant and machinery
Fixtures, fittings & equipment
Computer equipment
Total
£'000
£'000
£'000
£'000
£'000
£'000
(Continued)
- 26 -
Carrying amount analysed between owned assets and right-of-use assets
At 31 December 2023
Owned assets
-
77
101
14
282
474
Right-of-use assets
133
-
-
-
-
133
133
77
101
14
282
607
At 31 December 2022
Owned assets
-
159
-
24
311
492
Right-of-use assets
333
-
-
-
-
333
333
159
24
311
825
Property, plant and equipment includes right-of-use assets, as follows:
Right-of-use assets
2023
2022
£'000
£'000
Net values at the year end
Property
133
333
Depreciation charge for the year
Property
200
191
14
Investments
Current
Non-current
2023
2022
2023
2022
£'000
£'000
£'000
£'000
Investments in subsidiaries
-
-
34,723
106
Other investments
-
-
2,284
2,172
37,007
2,278
Fair value of financial assets carried at amortised cost
Except as detailed below the directors believe that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
14
Investments
(Continued)
- 27 -
Movements in non-current investments
Shares in subsidiaries
Other investments
Total
£'000
£'000
£'000
Cost or valuation
At 1 January 2023
106
2,172
2,278
Additions
192,916
-
192,916
Interest
-
112
112
At 31 December 2023
193,022
2,284
195,306
Impairment
At 1 January 2023
-
-
-
Impairment losses
(158,299)
-
(158,299)
At 31 December 2023
(158,299)
-
(158,299)
Carrying amount
At 31 December 2023
34,723
2,284
37,007
At 31 December 2022
106
2,172
2,278
In February 2023, the company provided additional capital to its subsidiary FaceIT Inc., in order to fund the acquisition of the entire share capital of Vindex LLC for £192.9m.
Details of the impairment are recorded in note11.
15
Subsidiaries
Details of the company's subsidiaries at 31 December 2023 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Indirect
Overlord Media Ltd
Millbank Tower, 25th Floor, 21-24 Millbank, London SW1P 4QP
Ordinary
100.00
-
FaceIT, Inc.
Millbank Tower, 25th Floor, 21-24 Millbank, London SW1P 4QP
CommonStock
100.00
-
Esports Championship Series CS Ltd
Millbank Tower, 25th Floor, 21-24 Millbank, London SW1P 4QP
A Ordinary
0
85.00
Vindex LLC
10 East 53rd Street, New York, NY 10022
Ordinary
0
100.00
Let's Play LLC
10 East 53rd Street, New York, NY 10022
Ordinary
0
100.00
Vindex Global Solutions LLC
10 East 53rd Street, New York, NY 10022
Ordinary
0
100.00
Esports Engine LLC
10 East 53rd Street, New York, NY 10022
Ordinary
0
100.00
Vindex Orginals LLC
10 East 53rd Street, New York, NY 10022
Ordinary
0
100.00
Esports Engine California LLC
10 East 53rd Street, New York, NY 10022
Ordinary
0
100.00
Esports Engine UK Ltd
10 East 53rd Street, New York, NY 10022
Ordinary
0
100.00
Esports Engine (Ohio) LLC
10 East 53rd Street, New York, NY 10022
Ordinary
0
100.00
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
15
Subsidiaries
(Continued)
- 28 -
Overlord Media Ltd and Esports Championship Series CS Ltd were dissolved on 16 April 2024 and 9 July 2024.
16
Trade and other receivables
2023
2022
£'000
£'000
Trade receivables
680
1,851
Provision for bad and doubtful debts
-
(1,158)
680
693
Corporation tax recoverable
1,426
770
VAT recoverable
93
242
Amount owed by parent undertaking
114
Amounts owed by subsidiary undertakings
14,719
4,276
Amounts owed by fellow group undertakings
945
107
Other receivables
202
97
Prepayments and accrued income
1,013
1,422
19,192
7,607
Amounts owed by group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.
17
Trade receivables - credit risk
Fair value of trade receivables
The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.
Impaired trade receivables
Allowances for impairment of trade receivables is made up of specific allowances of £nil (2022: £1,158k) and expected credit losses of £nil (2022: £nil).
Movement in the allowances for impairment of trade receivables
2023
2022
£'000
£'000
Balance at 1 January 2023
1,158
7
Additional allowance recognised
-
1,158
Amounts written off as uncollectible
(1,158)
(7)
Balance at 31 December 2023
-
1,158
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 29 -
18
Liabilities
Current
Non-current
2023
2022
2023
2022
Notes
£'000
£'000
£'000
£'000
Borrowings
19
30,780
12,071
Trade and other payables
21
28,723
11,897
6,659
Taxation and social security
681
483
-
-
Lease liabilities
22
122
190
121
Deferred income
23
1,793
2,481
31,319
15,051
37,439
12,192
19
Borrowings
Non-current
2023
2022
£'000
£'000
Borrowings held at amortised cost:
Loans from fellow group undertakings
30,780
12,071
Loans from other group entities bear interest at a margin which is currently set at 4.5% plus 3 month EURIBOR. The loans are due for repayment between 27 April 2027 and 29 May 2028.
20
Fair value of financial liabilities
Except as detailed below, the directors consider that the carrying amounts of financial liabilities carried at amortised cost in the financial statements approximate to their fair values.
21
Trade and other payables
Current
Non-current
2023
2022
2023
2022
£'000
£'000
£'000
£'000
Trade payables
957
1,264
Amounts owed to subsidiary undertakings
9,697
2,902
Amounts owed to fellow group undertakings
7,741
360
-
-
Accruals and deferred income
9,611
6,397
6,659
Other payables
717
974
-
-
28,723
11,897
6,659
-
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 30 -
22
Lease liabilities
2023
2022
Maturity analysis
£'000
£'000
Within one year
123
200
In two to five years
-
123
Total undiscounted liabilities
123
323
Future finance charges and other adjustments
(1)
(12)
Lease liabilities in the financial statements
122
311
Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
2023
2022
£'000
£'000
Current liabilities
122
190
Non-current liabilities
121
122
311
2023
2022
Amounts recognised in profit or loss include the following:
£'000
£'000
Interest on lease liabilities
11
18
23
Deferred revenue
2023
2022
£'000
£'000
Arising from subscription revenue
1,793
2,481
24
Retirement benefit schemes
2023
2022
Defined contribution schemes
£'000
£'000
Charge to profit or loss in respect of defined contribution schemes
162
90
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 31 -
25
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£'000
£'000
Issued and fully paid
Ordinary shares of 1p each
2,183,226
2,183,226
22
22
B Ordinary shares of 1p each
285,672
285,672
3
3
2,468,898
2,468,898
25
25
2023
2022
2023
2022
Preference share capital
Number
Number
£'000
£'000
Issued and fully paid
Preference shares of 1p each
275,580
275,580
2,756
2,756
Series A Preferred shares of 1p each
984,730
984,730
9,847
9,847
Series B Preferred shares of 1p each
668,119
668,119
6,681
6,681
1,928,429
1,928,429
19,284
19,284
Preference shares classified as equity
20
20
Preference shares classified as liabilities
19,264
19,264
19,284
19,284
Total equity share capital
45
45
All share classes other than the B Ordinary shares are entitled to participate in dividends, any dividend would be distributed pari passu to these shareholders as if these shares were all one class.
On a distribution of assets on a liquidation or return of capital the surplus asses of the company shall be applied as follows:
First, in paying to each Series B Preferred Shareholder an amount per Series B Preferred Share equal to the Issue Price of that share
Second, in paying to each Series B Preferred Shareholder an amount per Series A Preferred Share equal to the Issue Price of that share
Third if requested in writing by any holder of Preference Shares, in paying to each such Shareholder an amount per Preference Share held by them equal to the Issue Price of that share
The balance of the surplus assets shall be distributed among the holders of Ordinary Shares, the holders of B Ordinary shares and any holder of Preference Shares who have not made an election above as if these constituted once class of share.
All share classes other than the B Ordinary shares are entitled to attend, speak and vote at any general meeting.
All shares are non-redeemable.
ESL FACEIT GROUP LIMITED
(FORMERLY FACE IT LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 32 -
26
Share premium account
2023
2022
£'000
£'000
At the beginning of the year
18,674
18,297
Issue of new shares
-
377
At the end of the year
18,674
18,674
27
Capital contribution
2023
2022
£'000
£'000
At the beginning of the year
-
-
Additions
192,917
-
At the end of the year
192,917
-
28
Events after the reporting date
On 27 February 2024, a resolution was made to change the name from FaceIT Ltd to ESL FaceIT Group Ltd.
Subsequent to the year end, the company has received further funding both in the form of loans from fellow group undertakings and capital contributions of £20.9m from its immediate parent company
On 30 December 2024, the company acquired 100% of the US based company Gamers Net, Inc. ("Mobalytics"). Mobalytics is a digital platform developed to help players easily access useful data and information to improve their gameplay, and was acquired to further expand on the wider Group's digital offerings.
Since the year end, the wider Group has undergone a reorganisation which has impacted the underlying value of the company’s investment in its indirectly owned subsidiary, Vindex LLC. Consequently, the company has recognised a further impairment in 2024 reducing the value to £3.2m. This further reduction has not been reflected in these financial statements on the basis that the condition for recognition did not exist at 31 December 2023.
29
Controlling party
Savvy eSports Investments Limited, a company incorporated in England and Wales, holds 67% of the issued share capital of the company.
The ultimate controlling party is the Public Investment Fund of the Kingdom of Saudi Arabia, whose registered office is MU04, Al Taqneeyah Road, Al Raidah Digital City, Al Nakheel District, P.O. Box 6121, Riyadh - Kingdom of Saudi Arabia.
The smallest and largest group within which the company's financial statements are consolidated are those of the Public Investment Fund of the Kingdom of Saudi Arabia. A copy of the consolidated financial statements can be obtained from the group's registered office: Millbank Tower, 25th Floor, 21-24 Millbank, London, SW1P 4QP.
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