14th Sep 2023 11:12
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 €1.0m 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 €1.2m (H1 2022: €2.0m)
· Pre-tax loss of €2.3m (H1 2022: €0.9m)
· Fundraise of €3.5m (H1 2022: €1.0m)
· Invested €1.0m 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 €1.5m of Equity in September 2023 of which €0.3m 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 Ilya Merenzon, CEO | Via Yellow Jersey PR
|
Novum Securities Limited David Coffman / George Duxberry Colin Rowbury | +44 (0) 20 7399 9400
|
Yellow Jersey PR Charles Goodwin Annabelle Wills |
+44 (0) 77 4778 8221 +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 €1.2 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 €3,475,568 and a further 14,861,840 new ordinary shares on the conversion of a loan totalling €1,040,329.
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 EventsIn 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 €1,508,737 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 €1.5m 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 of Directors | Chief Executive Officer |
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE PERIOD 1 JANUARY 2023 TO 30 JUNE 2023
|
|
| 6 months to 30 June 2023 Unaudited |
| 6 months to 30 June 2022 as restated Unaudited |
| Year ended 31 December 2022 Audited |
| Notes |
| € |
| € |
| € |
|
|
|
|
|
|
|
|
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 2023 Unaudited |
| 30 June2022 Unaudited |
| 31 December 2022 Audited |
| Notes |
| € |
| € |
| € |
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 EQUITYFOR THE PERIOD 1 JANUARY 2023 TO 30 JUNE 2023
Called up share capital |
| Retained Earnings
|
| Share Premium |
| Translation reserve |
| Total equity | |
€ |
| € |
| € |
| € |
| € | |
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 FLOWSFOR THE PERIOD 1 JANUARY 2023 TO 30 JUNE 2023
|
|
| 6 months to 30 June 2023 Unaudited |
| 6 months to 30 June 2022 as restated Unaudited |
| Year ended 31 December 2022 Audited |
| Notes |
| € |
| € |
| € |
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 €1,040,329 which was a significant non-cash transaction.
NOTES TO THE STATEMENTS OF CASH FLOWSFOR THE PERIOD 1 JANUARY 2023 TO 30 JUNE 2023
1 | RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS | |||||||
| Group |
|
| 6 months to 30 June 2023 Unaudited |
| 6 months to 30 June 2022 as restated Unaudited |
| Year ended 31 December 2022 Audited |
|
|
|
| € |
| € |
| € |
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 to 30 June 2023 Unaudited |
| 6 months to 30 June 2022 as restated Unaudited |
| Year ended 31 December 2022 Audited |
|
|
|
| € |
| € |
| € |
| 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 INFORMATIONThis 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 POLICIESBasis 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 €.
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 to 30 June 2023 Unaudited |
| 6 months to 30 June 2022 Unaudited |
| Year ended 31 December 2022 Audited |
|
|
|
| € |
| € |
| € |
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 to 30 June 2023 Unaudited |
| 6 months to 30 June 2022 Unaudited |
| Year ended 31 December 2022 Audited |
€ |
| € |
| € | ||||
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 to 30 June 2023 Unaudited |
| 6 months to 30 June 2022 as restated Unaudited |
| Year ended 31 December 2022 Audited |
|
|
|
| € |
| € |
| € |
| 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 €27,330 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 COSTS6 months to 30 June 2023 Unaudited |
| 6 months to 30 June 2022 as restated Unaudited |
| Year ended 31 December 2022 Audited | ||||
€ |
| € |
| € | ||||
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 to 30 June 2023 Unaudited |
| 6 months to 30 June 2022 as restated Unaudited |
| Year ended 31 December 2022 Audited | ||
Loss attributable to the owners of the parentcompany € | (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 € | (0.0037) | (0.0015) | (€0.0040) |
No dividend was recommended or paid for the period under review.
8 INTANGIBLE ASSETSExclusive FIDE rights |
| Software Licence |
| Online Platform |
| Crypto-assets |
| Total | ||
€ |
| € |
| € |
| € |
| € | ||
| 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 EQUIPMENTRight of use asset |
| Fixtures and fittings |
| Computer Equipment |
| Total | ||
€ |
| € |
| € |
| € | ||
| 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 | ||||
Shares in group undertakings
30 June2023 Unaudited |
| 30 June2022 Unaudited |
| 31 December 2022 Audited | ||
€ |
| € |
| € | ||
| 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 Limited | 100
| Eastcastle House, 27/28 Eastcastle Street, United Kingdom, W1W 8DH | Organising chess events (Worldwide)
|
| World Chess US, Inc | 100 | 1201 N. Orange Street, Suite 762, Wilmington, New Castle County, DE, USA 19801 | Organising chess events (USA), online chess |
| World Chess Digital Limited (formerly CNCweb Limited)1 | 100 | 21st Floor, Tay Chau Building, 262 Des Voeux Road Central, Hong Kong
| Dormant and in the process of being dissolved |
| World Chess Europe GmbH2 | 100 | Mittelstrasse 51 - 53, 10117 Berlin, Deutschland | Various chess related activities |
| World Chess Sakartvelo LLC3 | 100 | Georgia, City Tbilisi, Didube district, Ak. Tsereteli Avenue, N 49-51-51a, Entrance 3, Floor 13, Apartment N 128 | Organising chess events, chess club activities |
| World Chess Russia LLC4 | 0 | 123242, Moscow, Kudrinskaya Square, 1 room XIIB | Organising chess 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 €275,000 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 Unaudited |
| 31 December 2022 Audited | |||||
| Number of shares |
| € |
| Number of shares |
| € | |
Allotted, issued, and fully paid Ordinary shares of £0.0001 | 666,905,501 |
| 75,613 |
| 602,392,689 | 68,260 | ||
| Number of shares |
| Nominal value |
| Share capital (€) |
| Share Premium (€) | |
At 31 December 2022 | 602,392,689 | £0.0001 | 68,260 | 6,518,849 | ||||
6 April 2023 issue of new ordinary shares for cash consideration | 49,650,972 | £0.0001 | 5,659 | 3,469,909 | ||||
6 April 2023 issue of new ordinary shares on the conversion of a loan | 14,861,840 | £0.0001 | 1,694 | 1,038,635 | ||||
At 30 June 2023 | 666,905,501 | £0.0001 | 75,613 | 11,027,393 |
12 FINANCIAL LIABILITIES - BORROWINGS
Group | ||||||
30 June2023 Unaudited |
| 30 June2022 Unaudited |
| 31 December 2022 Audited | ||
€ |
| € |
| € | ||
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 €212,400.
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 €115,200.
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 £100,000 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 £42,500.
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 £32,000.
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 £12,000, 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 €20,000 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 €20,000 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 €0.07 (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 €0.07 (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 World Chess PLC |
| Payments to/ (receipts from) other group undertakings | ||
€ |
| € | ||
| 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) World Chess PLC |
| Due to/(from) other group undertakings |
| Total due to/(from) group undertakings | ||
€ |
| € |
| € | ||
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 |
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 €1,508,737 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 ADJUSTMENTIn 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 OTHERCopies 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.
Related Shares:
World Chess