TIDMCHSS
RNS Number : 3790M
World Chess PLC
14 September 2023
14 September 2023
World Chess Plc
("World Chess" or the "Company" or the "Group")
Interim Results for the Six Months Ended 30 June 2023
World Chess plc (LSE: CHSS), a leading chess organisation
seeking to promote the mass market appeal of chess globally through
the offering of different chess-related activities, is pleased to
announce its unaudited interim results for the six months ended 30
June 2023.
Financial Overview
The first half of 2023 has been transformative for the Company.
The structure of the business has changed significantly when
compared to the comparable period in 2022. In addition to the
listing, the Company has become digital-first, focusing on the
development of its official gaming platform as well as launching
and promoting the Armageddon Championship Series, and the opening
of World Chess Club Berlin.
This transition is reflected in the financial results for the
period, with EUR1.0m invested in the Arena, Club and strategic
growth but with the positioning of the Company now complete we look
forward to further development over the short and medium term.
-- Revenue of EUR1.2m (H1 2022: EUR2.0m)
-- Pre-tax loss of EUR2.3m (H1 2022: EUR0.9m)
-- Fundraise of EUR3.5m (H1 2022: EUR1.0m)
-- Invested EUR1.0m in development of the World Chess Arena and World Chess Club Berlin
Corporate, strategic and operational progress
-- Development of World Chess Arena, with multiple new
developments to the online platform including an IOS version and
multi-language options to further encourage and support the use of
the platform
-- Commencement of the World Chess Armageddon Series in March
2023. Armageddon offers a new 'speed' approach to the traditional
game and is being broadcasted on 30 TV channels across over 20
countries
-- Official opening of World Chess Club Berlin in April 2023,
which has a bar, event space, concept chess shop, coffee shop and
cafe
-- Listed on the Main Market of the London Stock Exchange on 6 April 2023
-- 3-year partnership with IT.com Domains announced in June. The
partnership will see IT.com become an official sponsor of
Armageddon
Post-period end
-- Appointment of Novum Securities Limited as sole broker in August 2023
-- Agreement to issue EUR1.5m of Equity in September 2023 of which EUR0.3m has been received
Ilya Merenzon, Chief Executive Officer of World Chess, said:
"It's been a game-changing period for World Chess. A pivotal
event was our successful listing on the Main Market of the London
Stock Exchange, attracting new investors in the process who have
shown great support for our plans.
"The opening of World Chess Club Berlin was another proud moment
for the team. We have been delighted with the environment we have
created, in terms of a social hub for the game, and the positive
reception we have received from players and customers. Taking the
same concept formula, we are assessing potential sites in other
countries and cities for the next World Chess Club.
"The inaugural Armageddon Series has been a huge success in
terms of player response, audience numbers, commercial partnerships
and promoting our brand. Anticipation among fans has been building
for the imminent Grande Finale and we wish the finalist the best of
luck.
"I would like to take this opportunity to thank our team and
partners for their hard work. With further exciting developments in
the pipeline, we look forward to bringing more news in due
course."
The half-yearly financial report has not been audited or
reviewed by auditors pursuant to the Financial Reporting Council
guidance on Review of Interim Financial Information.
For more information, please visit https://worldchess.com/investors or contact:
World Chess Via Yellow Jersey PR
Ilya Merenzon, CEO
Novum Securities Limited
David Coffman / George
Duxberry
Colin Rowbury +44 (0) 20 7399 9400
Yellow Jersey PR
Charles Goodwin +44 (0) 77 4778 8221
Annabelle Wills +44 (0) 77 7519 4357
Notes to Editors
About World Chess Plc
World Chess (LSE: CHSS) is a London-based chess gaming and
entertainment company and Fédération Internationale des Échecs
('FIDE') official commercial partner. World Chess organised the
FIDE Championship Matches in the USA, and the UK, and
revolutionised the sport by signing the biggest media partnerships
in history. World Chess develops Armageddon, the chess league for
prime-time television. World Chess also runs FIDE Online Arena, the
exclusive official chess gaming platform. More at worldchess.com
.
INTERIM MANAGEMENT REPORT
World Chess Arena
World Chess Arena (the 'Arena'), the official FIDE gaming
platform developed and managed by World Chess, has seen further
development and grown during the period, adding important parts of
the technical envelope and customer-facing features, which have
significantly improved the user experience.
Major updates in the period included server-side rendering and
the introduction of a new solution for the gaming engine that
allows major capacity and performance improvements and scalability
of the platform.
An IOS version of the platform has also been released and the
Arena has been set up for multi-language versions.
The Group also further developed its proprietary fair play and
anti-cheating software, 'NightWatch'; which has been tested and
approved by the FIDE FairPlay commission. NightWatch has been
deployed by the Arena and its capability is being improved on a
weekly basis.
World Chess Armageddon Series
Launched this year, Armageddon is a new format of tournament
chess pioneered by World Chess, with the games played at a fast
pace, creating a superior entertainment experience for both TV and
arena audiences. The World Chess Armageddon Series commenced in
March 2023 with the Americas Regionals, followed by the Asia and
Oceania Regionals in April 2023, Women's Armageddon Week in May
2023, and the Europe and Africa Regionals in June 2023. The Grand
Finale commenced on 14 September 2023 at the Armageddon studio at
the World Chess Club Berlin.
The Series, which features the winners of the online
qualifications fighting it out in blitz and Armageddon matches
against the world's strongest grandmasters, has been well received,
generating a strong brand presence with live or highlights covered
on 30 broadcast channels across over 20 countries and
territories.
Through their support of the Armageddon Series, the Company
continue its partnership with Kaspersky, with whom we have a
longstanding relationship through our involvement with tournaments
organised under the auspices of FIDE, the governing body for
international chess tournaments. We have also begun a new
partnership with IT.com which, following the success of the first
Armageddon Series, has entered into a new partnership agreement
valued at more than EUR1.2 million over three years.
World Chess Club Berlin
We were delighted to officially open the doors to the World
Chess Club Berlin in April 2023. The club is located in the centre
of Berlin's cultural and shopping district and is a stark contrast
to the traditional chess clubs, which tend to function out of
multipurpose rooms.
The club, which features a bar, event space, concept chess shop,
and coffee shop, marks the launch of World Chess' ambitions to
reinvent the chess club culture in its entirety. The aim is to
modernise the concept and function more as a social and
collaborative centre. World Chess sees Berlin as an obvious
location to debut this new and revised approach, given the
cumulative factors of the substantial popularity of chess within
Germany, and its vibrant café and bar scene.
World Chess Club Berlin will also act as a hub, hosting chess
events for the respective city as well as the rest of Europe. In
addition, it will operate as the Armageddon Chess Series'
headquarters, with the 2023 series already being staged and filmed
from its bespoke, purpose-built Armageddon studio.
Listing and Fund Raise
In April 2023, the entire issued share capital of the Company
was listed and admitted for trading on the Main Market of the
London Stock Exchange. The Directors believe this will help to
build the Company's profile, create value for its shareholders and
improve the Company's ability to raise further capital over the
coming years to support its growth strategy. The Directors further
believe that the reputation of the Main Market for regulation and
good governance structures will improve the Company's international
visibility and reputation, helping it to achieve its strategy.
At listing the Company issued 49,650,972 new ordinary shares for
total cash consideration of EUR3,475,568 and a further 14,861,840
new ordinary shares on the conversion of a loan totalling
EUR1,040,329.
The funds raised on listing provided the Group the ability to
undertake the development of the World Chess Arena and the release
of the Arena 2.0 - a set of new gaming features that will be
released later this year.
Board Changes
Following admission, the Company welcomed Richard Collett (Chief
Financial Officer), Graham Woolfman (Non-Executive Chair) and Neil
Rafferty (Non-Executive Director) to the board.
Post-Period Events
In September 2023, the Company entered into an agreement for the
issue of equity to an existing shareholder whereby the Company will
issue 21,663,386 new ordinary shares for total consideration of
EUR1,508,737 payable in seven instalments, the shares will be
issued upon receipt of the final instalment of the consideration
which is to be paid in March 2024.
Further details of subsequent events are set out in note 14 of
this unaudited condensed consolidated interim financial
information.
Principal Risks and Uncertainties
Taking considered risk is the essence of all business and
investment activity, in relation to risk the Company's main
objective is to minimise the chance of a material adverse outcome
arising from causes which could reasonably have been foreseen, this
includes both 'upside' (opportunity) and 'downside' (threat)
risks.
The principal risks that are specific to the Group are
summarised below, in the opinion of the Directors these risks
remain unchanged from those detailed in the Company's prospectus
which was published on 20 March 2023 and were set out in the
Company's annual report for the year ended 31 December 2022 which
was approved by the Board of Directors on 28 April 2023.
Subscriber growth
The Group's efforts to retain existing online subscribers and to
attract new online subscribers are critical to its business and
depend, in part, on the quality and breadth of the products it
offers to online subscribers, the overall online user experience
and broader trends that impact online subscribers' preferences and
the Group's response to such changes. If not successful, the
Group's business could be negatively impacted.
Platform stability
Any significant disruption in service on the Group's platforms,
in the Group's computer systems or software or in the systems
operated by third parties that the Group utilises could damage the
Group's reputation and result in a loss of customers, which could
have a material adverse effect on the Group's business, results of
operations, financial condition or prospects. The Group's brand,
reputation, and ability to attract and retain customers to use its
platforms depend upon the reliable performance of the Group's or
its third-party suppliers' cloud infrastructure, physical
infrastructure, network infrastructure and content delivery
processes.
Data security
A significant part of the Company's business and products rely
on the Group's ability to comply with data protection laws
(including, in particular, GDPR) and to adequately protect the end
users' data and privacy. An actual or perceived failure to do so
would significantly harm the Group's business and could potentially
lead to significant claims being made against the Group. In order
to mitigate this risk, the group has recently appointed a new head
of products risk and compliance, who will focus on ensuring that
the Group's products incorporate high standards of data governance
and security.
Anti-Cheating
As seen from the recent media coverage around the fair play
issues between elite grandmasters, cheating can be a major obstacle
for the development of online chess on a professional level.
Players receive an individual rating and when attempting to raise
it can try to violate fair play norms, cheating is a major hurdle
that exists on chess platforms and can harm the reputation and
overall integrity of a platform the problem persists.
World Chess is currently using state-of-the-art anti-cheating
and fair play technologies that comprise both the technical
analysis, machine learning and human component. The system will
improve with time as more AI technologies are employed, but for the
meantime will continue to be an issue.
Fair play and anti-cheating measures require constant
improvement and investment, as well as enhanced chess education and
understanding amongst users. World Chess will also take steps to
incentivise players to start their over-the-board ('OTB') chess
journey. Because of physical fair play measures at OTB tournaments,
players will have fewer (if any) incentives to cheat, thus reducing
their potential incentive to violate fair play norms online.
World Chess Online Arena Contract with FIDE
The World Chess Online Arena Contract with FIDE has an initial
term which expires in 2026, providing World Chess with a time frame
to establish theirs as the pre-eminent gaming platform while also
giving the Group time to seek a greater or indefinite contract
extension. The agreement will automatically renew at the expiry of
its initial term, for a further five-year period, subject to
certain conditions.
Rating recognition and adoption
One of the key propositions of the Company's gaming platform is
the fact that it will operate as the official FIDE gaming platform
with ratings and titles recognised by FIDE. This is an important
benefit that provides the opportunity for online chess players to
establish themselves as professional sportspeople. However, it
should be noted that because the online ratings proposition is new
and not developed yet, there could be substantial adoption issues.
For example, conversion of online rating into the OTB ratings
requires the development of additional rules and procedures.
Acceptance of online-rated players into the OTB tournaments will
also require development of special rules and regulations.
Reliance on certain key individuals
The Group's business, development and prospects are dependent on
a small number of key management personnel. The loss of the
services of one or more of such key management personnel may have
an adverse effect on the Group.
Related Parties' Transactions
In April 2023, following its admission to trading, the Company
appointed three new Directors, details of these and other material
transactions with Directors are disclosed in note 13. Transactions
with and between the Company and its subsidiary undertakings, who
are related parties, have been eliminated on consolidation and are
disclosed in note 13.
Other than as disclosed in note 13 to this unaudited condensed
consolidated interim financial information there have been no
changes to the related parties' transactions described in the
Company's annual report for the year ended 31 December 2022 which
was approved by the Board of Directors on 28 April 2023.
Outlook
The Company's multiple revenue streams are all developing. We
believe that the Company's chess gaming product, FIDE Online Arena,
will attract increasing numbers of users over the coming months and
into 2024 based on the Company's current focus on investing in its
core team, strengthening its software envelope and a robust roadmap
of new features.
Similarly, the Company is developing its flagship venue, World
Chess Club Berlin, as a model for further expansion, and the
Company is confident that the concept will grow, both with visitor
numbers as it becomes an established specialist hospitality venue
in Berlin, as well as a concept for potential geographical
expansion.
The anticipated receipt, as previously announced, of staged
additional investment of approximately EUR1.5m by March 2024, will
support our continued investment programme over the short and
medium term.
Approved by the Board on 14 September 2023 and signed on its
behalf by:
Graham Woolfman Ilya Merenzon
Non Executive Chair of the Board Chief Executive Officer
of Directors
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME FOR THE PERIOD 1 JANUARY 2023 TO 30 JUNE 2023
6 months 6 months Year ended
to 30 June to 30 June 31 December
2023 Unaudited 2022 as 2022 Audited
restated
Unaudited
Notes EUR EUR EUR
Revenue 3 1,234,713 1,978,506 2,796,207
Cost of sales (1,347,197) (1,506,028) (2,097,754)
---------------- ------------ --------------
GROSS PROFIT (112,484) 472,478 705,453
Other operating income 151,872 - 17,939
Administrative expenses (1,974,288) (1,420,029) (3,114,803)
---------------- ------------ --------------
OPERATING LOSS BEFORE EXCEPTIONAL
ITEMS (1,934,900) (947,551) ((2,480,429
Exceptional Items 4 (311,216) 142,353 23,000
---------------- ------------ --------------
OPERATING LOSS (2,246,116) (805,198) (2,457,429)
Finance costs 5 (101,164) (79,903) (337,460)
Finance income 5 68 521 521
---------------- ------------ --------------
LOSS BEFORE INCOME TAX (2,347,212) (884,580) (2,794,368)
Income tax - - 332,680
---------------- ------------ --------------
LOSS FOR THE PERIOD (2,347,212) (884,580) (2,461,688
OTHER COMPREHENSIVE INCOME - - -
(Loss)/gain on currency translation - - (19,787)
TOTAL COMPREHENSIVE INCOME FOR
THE YEAR (2,347,212) (884,580) (2,484,475)
---------------- ------------ --------------
Loss attributable to:
Owners of the parent (2,347,212) (884,580) (2,461,688)
---------------- ------------ --------------
Total comprehensive income attributable
to:
Owners of the parent (2,347,212) (884,580) (2,481,475)
---------------- ------------ --------------
LOSS PER SHARE - CONTINUING AND
TOTAL OPERATIONS
Basic and diluted 6 (0.0037) (0.0015) (0.0040)
---------------- ------------ --------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2022
30 June 30 June 31 December
2023 2022 Unaudited 2022
Unaudited Audited
Notes EUR EUR EUR
NON-CURRENT ASSETS
Intangible assets 8 2,976,044 2,349,319 2,763,358
Property, plant and equipment 9 1,217,104 246,635 714,116
Right-of-use assets 9 1,214,763 1,355,943 1,236,968
Deferred tax 76,697 - 76,697
------------ ---------------- ------------
5,484,608 3,951,897 4,791,139
CURRENT ASSETS
Inventories 152,265 160,545 187,691
Trade and other receivables 560,866 650,184 662,566
Tax receivable 214,171 20,873 251,117
Cash and cash equivalents 254,308 592,325 35,565
------------ ---------------- ------------
1,181,610 1,423,927 1,136,939
------------ ---------------- ------------
TOTAL ASSETS 6,666,218 5,375,824 5,928,078
------------ ---------------- ------------
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Called up share capital 11 75,613 68,260 68,260
Share premium 11 11,027,393 6,518,849 6,518,849
Translation reserve 61,824 16,175 65,941
Retained earnings (7,836,834) -3,912,517 (5,489,625)
------------ ---------------- ------------
TOTAL EQUITY 3,327,996 2,690,767 1,163,425
NON-CURRENT LIABILITIES
Lease liabilities 12 1,331,944 1,410,766 1,308,003
Interest bearing loans and borrowings 12 - - -
Provision for liabilities 184,154 - 180,652
------------ ---------------- ------------
1,516,098 1,410,766 1,488,655
------------ ---------------- ------------
CURRENT LIABILITIES
Trade and other payables 1,527,524 1,175,800 2,098,204
Lease liabilities 12 109,889 36,302 95,686
Interest bearing loans and borrowings 184,711 62,189 1,082,108
------------ ---------------- ------------
1,822,124 1,274,291 3,275,998
------------ ---------------- ------------
TOTAL LIABILITIES 3,338,222 2,685,057 4,764,653
TOTAL EQUITY AND LIABILITIES 6,666,218 5,375,824 5,928,078
------------ ---------------- ------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD 1 JANUARY 2023 TO 30 JUNE 2023
Called Retained Share Translation Total
up share Earnings Premium reserve equity
capital
EUR EUR EUR EUR EUR
Balance at 1 January
2022 66,996 (3,027,937) 5,520,114 85,728 2,644,901
Changes in equity
Issue of share capital 1,264 - 998,735 - 999,999
Total comprehensive
income - (884,580) - (69,554) (954,134)
---------- ------------ ----------- ------------ ------------
Balance at 30 June
2022 68,260 (3,912,517) 6,518,849 16,174 2,690,766
---------- ------------ ----------- ------------ ------------
Balance at 1 January
2023 68,260 (5,489,625) 6,518,849 65,941 1,163,425
Changes in equity
Issue of share capital 7,353 - 4,508,544 - 4,515,897
Total comprehensive
income - (2,347,209) - (4,117) (2,351,326)
---------- ------------ ----------- ------------ ------------
Balance at 30 June
2023 75,613 (7,836,834) 11,027,393 61,824 3,327,996
---------- ------------ ----------- ------------ ------------
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD 1 JANUARY 2023 TO 30 JUNE 2023
6 months 6 months Year ended
to 30 June to 30 June 31 December
2023 Unaudited 2022 as 2022 Audited
restated
Unaudited
Notes EUR EUR EUR
Cash flows from operating activities
Cash absorbed generated from
operations 1 (2,233,412) (171,566) (512,077)
Interest paid (23,769) (593) (179,610)
Finance cost paid (77,395) (79,310) (157,850)
Tax refund received 36,946 (20,875) 20,600
---------------- ------------ --------------
Net cash used in from operating
activities (2,297,630) (272,344) (828,937)
---------------- ------------ --------------
Cash flows from investing activities
Addition to intangible fixed
assets (736,977) (176,717) (799,865)
Proceeds from disposal of intangible
fixed assets 275,256 1,367,674 1,367,702
Purchase of property, plant and
equipment (588,868) (124,683) (635,818)
Proceeds from disposal of property,
plant and equipment - - 23,214
Interest received 68 521 521
Net cash used in investing activities (1,050,521) 1,066,795 (44,246)
Cash flows from financing activities
Loan advanced in the period 13,019 57,445 1,019,068
Loan repayments in period - (1,342,706) (1,341,854)
Payment of lease liabilities (47,489) - (21,986)
Amount introduced by directors 129,913 - 120,619
Proceeds from share issue 3,475,568 999,999 999,999
Net cash generated from/(used
in) financing activities 3,571,011 (285,262) 775,846
---------------- ------------ --------------
Decrease in cash and cash equivalents 222,860 509,189 (97,337)
Cash and cash equivalents at
beginning of period 2 35,565 152,689 152,689
Effect of foreign exchange rate
changes (4,117) (69,554) (19,787)
---------------- ------------ --------------
Cash and cash equivalents at
end of period 2 254,308 592,324 35,565
---------------- ------------ --------------
At listing the Company issued 14,861,840 new ordinary shares on
the conversion of a loan totalling EUR1,040,329 which was a
significant non-cash transaction.
NOTES TO THE STATEMENTS OF CASH FLOWS
FOR THE PERIOD 1 JANUARY 2023 TO 30 JUNE 2023
1 RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH GENERATED FROM
OPERATIONS
Group 6 months 6 months Year ended
to 30 June to 30 June 31 December
2023 Unaudited 2022 as 2022 Audited
restated
Unaudited
EUR EUR EUR
Loss before income tax (2,347,212) (884,580) (2,794,368)
Depreciation and amortisation 442,753 278,385 632,935
Provision 3,502 - 180,652
Finance costs 101,164 79,903 337,460
Finance income (68) (521) (521)
---------------- ------------ --------------
(1,799,861) (526,813) (1,643,842)
Decrease/(increase) in inventories 35,426 57,848 30,702
Decrease/(increase) in trade
and other receivables 101,700 2,698,067 2,699,953
Decrease in trade and other
payables (570,677) (2,400,668) (1,598,890)
---------------- ------------ --------------
Cash absorbed from operations (2,233,412) (171,566) (512,077)
---------------- ------------ --------------
2 CASH AND CASH EQUIVALENTS
The amounts disclosed on the Statements of Cash Flows in respect
of cash and cash equivalents are in respect of these Statement of
Financial Position amounts:
Group 6 months 6 months Year ended
to 30 June to 30 June 31 December
2023 Unaudited 2022 as 2022 Audited
restated
Unaudited
EUR EUR EUR
Year ended 30 June 2023
Cash and cash equivalents 254,308 592,325 35,565
---------------- ------------ --------------
Year ended 31 December 2022
Cash and cash equivalents 35,565 152,689 152,689
---------------- ------------ --------------
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
INFORMATION FOR THE PERIOD 1 JANUARY 2023 TO 30 JUNE 2023
1 STATUTORY INFORMATION
This unaudited condensed consolidated interim financial
information is for World Chess PLC ('the Company') and its
subsidiary undertakings, (together the 'Group'). The Company is a
public limited company incorporated and domiciled in England with
registration number 10589323 and registered office Eastcastle
House, 27/28 Eastcastle Street, London, W1W 8DH.
The Company is listed on the Official List and its entire issued
share capital was admitted for trading on the Main Market of the
London Stock Exchange on 6 April 2023 with ticker symbol CHSS.
2 ACCOUNTING POLICIES
Basis of preparation
This unaudited condensed consolidated financial information
which incorporate the financial information of the Company and its
subsidiary undertakings, have been prepared in accordance with
Accounting Standard IAS 34 'Interim Financial Reporting' as
contained in UK - adopted International Accounting Standards and
IFRIC interpretations and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS.
The interim report does not include all the notes of the type
normally included in an annual financial report. Accordingly, this
report is to be read in conjunction with the annual report for the
year ended 31 December 2022 which was approved by the Board of
Directors on 28 April 2023 and any public announcements made by the
Company during the interim reporting period.
This financial information has been prepared under the
historical cost convention and unless otherwise specified are
presented in Euro which is the functional currency of the Group and
rounded to the nearest EUR.
Going concern
Based on the Group's Statement of Financial Position and a
review of its forecast future operating budgets and forecasts, the
Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for at least twelve
months from the date of signing of this unaudited condensed
consolidated interim financial information. This review of future
operating budgets and forecasts included certain reasonable
downside scenarios and confirmed that even in the case of such
downside scenarios the Group could continue to operate and meet its
obligations as they fall due. Accordingly, the Directors have
adopted the going concern basis in preparing this financial
information.
In making this assessment, the Directors have considered the
resilience of the Group in severe but plausible scenarios, taking
into account the principal risks and uncertainties facing the Group
and the effectiveness of any mitigating actions. The Directors'
assessment considered the potential impacts of these scenarios,
both individually and in combination, on the Group's business
model, future performance, solvency and liquidity over the period.
Sensitivity analysis was also used to stress test the Group's
strategic plan and to confirm that sufficient headroom would remain
available under the Group's credit facilities. The Directors
consider that under each of these scenarios, the mitigating actions
would be effective and sufficient to ensure the continued viability
of the Group.
Risks and uncertainties
Taking considered risk is the essence of all business and
investment activity, the Audit Committee is responsible for a
formal risk assessment on an annual basis and also for reporting,
by exception, on any material changes during the year affecting the
risks the Group is currently exposed to and any potential future
risks that need to be considered. The Group's activities expose it
to a variety of risks, including market risk (foreign currency risk
and interest rate risk), credit risk and liquidity risk, these
risks and the activities of the Directors to minimise their
potential adverse effects on the Group's financial performance have
not substantially changed from those set out in the Company's
annual report for the year ended 31 December 2022 which is
available from the Company's website: www.worldchess.com.
3 REVENUE
Revenue from contracts with customers
Revenue by business class 6 months 6 months Year ended
to 30 June to 30 June 31 December
2023 Unaudited 2022 Unaudited 2022 Audited
EUR EUR EUR
Events 825,507 1,491,484 1,711,331
Online 101,051 193,445 399,074
Merchandising and Clubs 308,155 293,577 685,802
---------------- ---------------- --------------
1,234,713 1,978,506 2,796,207
---------------- ---------------- --------------
By geographical area 6 months 6 months Year ended
to 30 June to 30 June 31 December
2023 Unaudited 2022 Unaudited 2022 Audited
EUR EUR EUR
United Kingdom 1,172,857 1,901,768 2,661,639
Germany 45,099 28,621 27,578
United States of America 16,757 20,539 50,540
Russia - 27,578 56,450
1,234,713 1,978,506 2,796,207
---------------- ---------------- --------------
4 EXCEPTIONAL ITEMS
6 months 6 months Year ended
to 30 June to 30 June 31 December
2023 Unaudited 2022 as 2022 Audited
restated
Unaudited
EUR EUR EUR
Exchange gain on Crypto-assets 6,829 105,881 (13,472)
Crypto exchange fees (672) - -
Listing costs (317,373) - -
Gain on disposal World Chess
Russia LLC - 27,330 27,330
Collateral rewards received - 9,142 9,142
---------------- ------------ --------------
(311,216) 142,353 23,000
---------------- ------------ --------------
Listing costs
Legal and professional costs associated with the listing of the
entire issued share capital of World Chess PLC on the Main Market
of the London Stock Exchange in April 2023.
Gain on Crypto-assets
The Group has historically received some sponsorship revenue in
the form of crypto-assets which it has converted to fiat currencies
at the earliest opportunity, usually upon receipt or in accordance
with an agreed schedule of conversion. Crypto-assets are not
amortised but are reviewed for impairment if the prevailing price
at which they can be converted into fiat currency indicates their
value has fallen below their carrying value. Any impairment or
realised gains on the conversion of crypto-assets to fiat currency
are recognised within exceptional items.
Crypto exchange fees
Costs relating to crypto exchange fees.
Gain on disposal World Chess Russia LLC
In April 2022 the entire share capital of World Chess Russia LLC
was disposed of as a result, a profit on disposal of EUR27,330 has
been recognised.
Collateral rewards received
The Group was entitled to the interest receivable on collateral
provided in crypto-assets by a partner to secure a loan. The
interest receivable was in exchange for share options provided to
the partner. The share options were exercised in January 2021 and
the loan was repaid and the collateral returned in January
2022.
5 NET FINANCE COSTS
6 months 6 months Year ended
to 30 June to 30 June 31 December
2023 Unaudited 2022 as 2022 Audited
restated
Unaudited
EUR EUR EUR
Finance income:
Loan interest receivable 68 521 521
68 521 521
---------------- ------------ --------------
Finance costs:
Other loan interest 23,769 593 179,610
Interest on IFRS 16 lease
liabilities 77,395 79,310 157,850
101,164 79,903 337,460
---------------- ------------ --------------
6 LOSS PER SHARE
The basic earnings per share is calculated by dividing the
(loss)/profit attributable to owners of the parent company by the
weighted average number of shares in issue during the year. In
calculating the diluted earnings per share, any outstanding share
options, warrants and convertible loans are taken into account
where the impact of these is dilutive.
6 months 6 months Year ended
to 30 June to 30 June 31 December
2023 Unaudited 2022 as 2022 Audited
restated
Unaudited
Loss attributable to the owners
of the parent
company EUR (2,347,212) (884,580) (2,461,688)
Weighted average number of shares
in issue 632,688,761 593,422,214 597,912,402
Basic and diluted earnings per share
EUR (0.0037) (0.0015) (EUR0.0040)
7 DIVIDS
No dividend was recommended or paid for the period under
review.
8 INTANGIBLE ASSETS
Exclusive Software Online Crypto-assets Total
FIDE rights Licence Platform
EUR EUR EUR EUR EUR
COST
At 1 January 2023 1,105,291 115,000 3,107,438 208 4,327,937
Additions - - 409,072 327,905 736,977
Disposals - - - (275,256) (275,256)
------------ -------- ---------- ------------- ---------
At 30 June 2023 1,105,291 115,000 3,516,510 52,857 4,789,658
------------ -------- ---------- ------------- ---------
AMORTISATION
At 1 January 2023 663,174 33,000 868,405 - 1,564,579
Amortisation for
year 55,265 11,500 182,270 - 249,035
------------ -------- ---------- ------------- ---------
At 30 June 2023 718,439 44,500 1,050,675 - 1,813,614
------------ -------- ---------- ------------- ---------
NET BOOK VALUE
At 30 June 2023 386,852 70,500 2,465,835 52,857 2,976,044
------------ -------- ---------- ------------- ---------
At 31 December 2022 442,117 82,000 2,239,033 208 2,763,358
------------ -------- ---------- ------------- ---------
The Directors considered the carrying value at 30 June 2023 for
each asset identified above, except crypto-assets, and it was
determined that no impairment was required. Where an asset does not
generate cash inflows that are largely independent of the cash
inflows from other assets or groups of assets the carrying value
was considered against the smallest identifiable group of assets
that generates cash inflows (cash generating unit or CGU).
The Directors considered the carrying value at 30 June 2023 for
crypto-assets based on the prevailing exchange rate at which the
crypto-asset could readily be converted into US dollars or Euros
and it was determined that no impairment was required.
9 PROPERTY, PLANT AND EQUIPMENT
Right of Fixtures Computer Total
use asset and fittings Equipment
EUR EUR EUR EUR
COST
At 1 January 2023 1,374,409 773,918 1,698 2,150,025
Additions 85,633 588,868 - 674,501
At 30 June 2023 1,460,042 1,362,786 1,698 2,824,526
---------- ------------- ---------- ---------
DEPRECIATION
At 1 January 2023 137,441 59,802 1,698 198,941
Charge for year 107,838 85,880 - 193,718
At 30 June 2023 245,279 145,682 1,698 392,659
---------- ------------- ---------- ---------
NET BOOK VALUE
At 30 June 2023 1,214,763 1,217,104 - 2,431,867
---------- ------------- ---------- ---------
At 31 December 2022 1,236,968 714,116 - 1,951,084
---------- ------------- ---------- ---------
10 INVESTMENTS
Shares in group undertakings
30 June 30 June 31 December
2023 2022 Unaudited 2022
Unaudited Audited
EUR EUR EUR
COST
At start of the period 351,616 251,616 251,616
Additions - 225,000 275,000
Disposals - (175.000) (175,000)
At 30 June 2023 351,616 301,616 351,616
---------- --------------- -----------
IMPAIRMENTS
At start of the period (50,000) (225,000) (225,000)
Disposals - 175,000 175,000
---------- --------------- -----------
At 30 June 2023 (50,000) (50,000) (50,000)
---------- --------------- -----------
CARRYING VALUE
At end of the period 301,616 251,616 301,616
---------- --------------- -----------
At start of the period 301,616 26,616 26,616
---------- --------------- -----------
The Directors considered the carrying value at 30 June 2023 for
each group undertaking, identified below, and it was determined
that no further impairment was required.
The Group's investments at the Statement of Financial Position
date in the share capital of companies include the following
subsidiaries:
Subsidiary Name % holding Registered Office Nature of business
World Chess Events 100 Eastcastle House, 27/28 Organising chess
Limited Eastcastle Street, United events (Worldwide)
Kingdom, W1W 8DH
World Chess US, Inc 100 1201 N. Orange Street, Organising chess
Suite 762, Wilmington, events (USA),
New Castle County, DE, online chess
USA 19801
World Chess Digital 100 21st Floor, Tay Chau Dormant and
Limited (formerly Building, 262 Des Voeux in the process
CNCweb Limited)(1) Road Central, Hong Kong of being dissolved
World Chess Europe 100 Mittelstrasse 51 - 53, Various chess
GmbH(2) 10117 Berlin, Deutschland related activities
World Chess Sakartvelo 100 Georgia, City Tbilisi, Organising chess
LLC(3) Didube district, Ak. events, chess
Tsereteli Avenue, N 49-51-51a, club activities
Entrance 3, Floor 13,
Apartment N 128
World Chess Russia 0 123242, Moscow, Kudrinskaya Organising chess
LLC(4) Square, 1 room XIIB events, chess
club activities
1 - World Chess Digital Limited at 30 June 2023 the company
remained dormant and the dissolution process is ongoing.
2 - During 2022, World Chess PLC provided a capital contribution
of EUR275,000 to World Chess Europe GmbH.
3 - World Chess Sakartvelo LLC was incorporated on 2 June 2022
but did not commence trading until after 1 January 2023.
4 - In April 2022 the Group disposed of its entire interest in
World Chess Russia LLC
11 CALLED UP SHARE CAPITAL
30 June 2023 31 December 2022
Unaudited Audited
Number of EUR Number of EUR
shares shares
Allotted, issued,
and fully paid Ordinary
shares of GBP0.0001 666,905,501 75,613 602,392,689 68,260
Number of Nominal value Share capital Share Premium
shares (EUR) (EUR)
At 31 December 2022 602,392,689 GBP0.0001 68,260 6,518,849
6 April 2023 issue
of new ordinary shares
for cash consideration 49,650,972 GBP0.0001 5,659 3,469,909
6 April 2023 issue
of new ordinary shares
on the conversion
of a loan 14,861,840 GBP0.0001 1,694 1,038,635
----------- ------------- -------------
At 30 June 2023 666,905,501 GBP0.0001 75,613 11,027,393
----------- ------------- ------------- -------------
12 FINANCIAL LIABILITIES - BORROWINGS
Group
30 June 30 June 31 December
2023 2022 Unaudited 2022
Unaudited Audited
EUR EUR EUR
Current:
Other loans less than 1 year 184,711 62,189 1,082,108
Lease liabilities 109,889 36,302 95,686
---------- --------------- -----------
294,600 98,491 1,177,794
Non-current:
Lease liabilities 1,331,944 1,410,766 1,308,003
---------- --------------- -----------
1,331,944 1,410,766 1,308,003
---------- --------------- -----------
13 RELATED PARTIES' DISCLOSURES
Appointment of Directors
In April 2023, following its admission to trading, the Company
appointed three new Directors, and reviewed the remuneration
packages and service contracts for existing Directors and details
of the new agreements for all directors are summarised below.
Ilya Merenzon's service agreement as Chief Executive Officer is
terminable on six months' notice by either party and contains
customary post-employment restrictive covenants. He also has a
German employment agreement dated 1 March 2022 in respect of duties
undertaken direct for World Chess Europe GmbH. Across the two
agreements Ilya Merenzon's combined salary is EUR212,400.
Matvey Shekhovtsov's service agreement as Chief Operating
Officer is terminable on six months' notice by either party and
contains customary post-employment restrictive covenants. He also
has a German employment agreement dated 1 March 2022 in respect of
duties undertaken direct for World Chess Europe GmbH. Across the
two agreements Matvey Shekhovtsov's combined salary is
EUR115,200.
Richard Collett's service agreement is for an initial term of 24
months, but terminable on three months' notice by either party and
contains customary post-employment restrictive covenants. His total
salary is GBP100,000 per annum.
Graham Woolfman's appointment as an independent non-executive
director and chair of the Board of Directors is terminable upon
three months' notice by either party. His annual fee as
non-executive director and chair (which includes fees for
membership of all board committees and subsidiaries) is
GBP42,500.
Neil Rafferty's appointment as an independent non-executive
director is terminable upon three months' notice by either party.
His annual fee as non-executive director (which includes fees for
membership of all board committees and subsidiaries) is
GBP32,000.
Jamison Firestone's appointment as an independent non-executive
director is terminable upon three months' notice by either part.
His fee for the first 12 months as non-executive director (which
includes fees for membership of all board committees and
subsidiaries) is GBP12,000, after which fees for further work will
be agreed between Jamison Firestone and the Board or Remuneration
Committee.
Other material Contracts with Directors
Ilya Merenzon
On 6 April 2023 Mr Merenzon entered into a relationship
agreement with the Company and Novum Securities Limited ('Novum')
pursuant to which Mr Merenzon has agreed with the Company and Novum
that for such time as he and his affiliates own or control
interests in Ordinary Shares comprising not less than 25% of the
Company's issued Ordinary Shares from time to time, he will not
exercise and will procure that his affiliates will not exercise,
his voting rights to influence the Directors or to change the
Company's articles of association to result in his position and
those of his affiliates being preferred or promoted ahead of those
of other shareholders, and to exercise (or to refrain from
exercising, as the case may be) such voting rights so as to ensure
that the Company is managed and conducted independently from him
and such affiliates acting as majority shareholder on the
operational level.
On 21 December 2022 Mr Merenzon advanced a short-term loan of
EUR20,000 to World Chess Europe GmbH, this loan was unsecured, did
not bear interest and was fully repaid at 30 June 2023.
Matvey Shekhovtsov
On 29 December 2022 Mr Shekhovtsov advanced a short-term loan of
EUR20,000 to World Chess Europe GmbH, this loan was unsecured, did
not bear interest and was fully repaid at 30 June 2023.
Graham Woolfman
On 28 April 2023 Mr Woolfman was granted an option over
6,669,055 Ordinary Shares exercisable between 6 April 2024 and 6
April 2029 at a price of EUR0.07 (seven euro cents) per share.
Neil Rafferty
On 28 April 2023 Mr Rafferty was granted an option over
1,667,264 Ordinary Shares exercisable between 6 April 2024 and 6
April 2029 at a price of EUR0.07 (seven euro cents) per share.
Group undertakings
The following transactions took place during the six months
ended 31 June 2023 with and between group undertakings.
Payments to Payments to/
World Chess (receipts
PLC from) other
group undertakings
EUR EUR
World Chess Events Ltd
Payment of interest 14,491 -
Sale of inventory - (9,974)
Purchase of inventory - 48,490
Purchase of services - 126,000
Commission paid on third party transactions - 11,165
World Chess Europe GmbH
Payment of interest 28,522 -
Purchase of inventory - 9,974
Sale of inventory - (40,370)
World Chess US Inc.
Commission charged on third party transactions - (11,165)
Purchase of inventory - (8,120)
World Chess Sakartvelo LLC
Provision of services - (126,000)
Balances at 30 June 2023
The following balances remained outstanding at 30 June 2023 from
and between group undertakings.
Due to/(from) Due to/(from) Total due to/(from)
World Chess other group group undertakings
PLC undertakings
EUR EUR EUR
Ilya Merenzon (6,761) 121,874 115,113
Matvey Shekhovtsov - 4,800 4,800
Graham Woolfman - 474 474
Group undertakings
* World Chess Events Ltd 5,057,161 (2,510,556) 2,546,605
* World Chess Europe GmbH 2,410,908 56,556 2,467,464
* World Chess US Inc. (2,738,158) 2,460,544 (277,614)
* World Chess Sakartvelo LLC - (9,000) (9,000)
------------- ------------- -------------------
4,723,150 124,692 4,847,842
------------- ------------- -------------------
14 SUBSEQUENT EVENTS
On 4 August 2023 the Company issued 288,000 ordinary shares to
Novum Securities Limited ('Novum') in consideration for Novum's
appointment as the Company's sole broker.
On 4 September 2023 the Company announced an agreement for the
issue of equity to an existing shareholder whereby the Company will
issue 21,663,386 new ordinary shares for total consideration of
EUR1,508,737 to be paid in seven instalments, the shares will be
issued upon receipt of the final instalment of the consideration
which is to be paid in March 2024.
15 PRIOR YEAR ADJUSTMENT
In 2022, the Directors reassessed the accounting treatment of
the crypto-assets which previously had been included within cash
and cash equivalents. The Directors concluded that in accordance
with IAS 1, IFRS 13, IAS 2, IAS 8, and IAS 38 the correct
accounting treatment was to treat them as intangible assets.
16 OTHER
Copies of the unaudited half-yearly results have not been sent
to shareholders, however copies are available at www.worldchess.com
or on request from the Company's Registered Office.
17 APPROVAL OF UNAUDITED CONDENSED CONSOLIDATED FINANCIAL INFORMSTION
Responsibility Statement
The Company's Directors, whose names and functions appear below
this statement, are responsible for preparing this unaudited
interim condensed consolidated financial information in accordance
with the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority ('DTR') and with Accounting
Standard IAS 34 'Interim Financial Reporting'.
The Directors, and each Director individually, confirms that, to
the best of their knowledge, this unaudited condensed consolidated
financial information gives a true and fair view of the assets,
liabilities, financial position and profit or loss of the Group and
that the interim management report includes a fair review of the
information required by DTR4.2.7R 7R (indication of important
events during the first six months and description of principal
risks and uncertainties for the remaining six months of the year)
and by DTR4.2.8R (disclosure of material related parties'
transactions).
Board of Directors:
Ilya Merenzon (Chief Executive Officer)
Matvey Shekhovtsov (Chief Operating Officer)
Richard Collett (Chief Financial Officer) - appointed 6 April
2023
Graham Woolfman (Chair) - appointed 6 April 2023
Neil Rafferty (Non-Executive Director) - appointed 6 April
2023
Jamison Reed Firestone (Non-Executive Director)
This unaudited condensed consolidated financial information was
approved by the Board on 14 September 2023.
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END
IR FFFIIAAIVLIV
(END) Dow Jones Newswires
September 14, 2023 06:12 ET (10:12 GMT)
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