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CHSS World Chess Plc

11.50
0.50 (4.55%)
23 Jul 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
World Chess Plc LSE:CHSS London Ordinary Share GB00BN70RC41 ORD 0.01P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.50 4.55% 11.50 10.00 11.00 10.50 9.50 9.50 807,649 16:35:16
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Business Services, Nec 2.35M -4.69M -0.0070 -15.00 73.39M

World Chess PLC Interim Results for Six Months Ended 30 June 2023 (3790M)

14/09/2023 11:12am

UK Regulatory


World Chess (LSE:CHSS)
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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

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