REG - World Chess PLC - Final Results for the year ended 31 December 2023
26/04/2024 07:00
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RNS Number : 0946M World Chess PLC 26 April 2024
26 April 2024
World Chess Plc
("World Chess" or the "Company")
Financial Results for the year ended 31 December 2023
World Chess plc (LSE:CHSS), a prominent chess organisation committed to
enhancing the global mass market appeal of chess by introducing a variety of
innovative chess-related activities, today publishes its financial results for
the year ended 31 December 2023.
Copies of the Company's full Annual Report and Financial Statements for the
period ended 31 December 2023 will be made available on the Company's website
at https://worldchess.com (https://worldchess.com) and uploaded to the
National Storage Mechanism at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
Highlights:
· Listing Success: In April 2023 the Company listed on the Main Market of the London Stock Exchange, raising approximately €3.5 million (before expenses) on listing and a further €2.3 million from an existing investor after the listing.
· Berlin Club Opening: In May 2023 World Chess Club Berlin (worldchessclubberlin.com) officially opened after a successful soft launch during the 2022 FIDE Grand Prix. The club has established a vibrant, cultural hub for chess enthusiasts and is a model that World Chess hopes to replicate in other cities worldwide.
· Armageddon Championship Series: In September 2023 the final of the inaugural Armageddon Chess Championship was hosted by World Chess Club Berlin, the culmination of a five event series which attracted top talent and a significant three-series sponsorship agreement with it.com Domains.
· Broadcast Expansion: The Group has partnered with 33 television networks, including Bloomberg and CNBC, to broadcast its Armageddon Championship highlights globally, making the Armageddon Championship Series one of the most televised chess events.
· Digital Innovation: In October 2023, the FIDE Online Arena (chessarena.com) launched version 2.0, introducing new features and improved gameplay following significant investment during the year.
Commenting on the World Chess's performance, Ilya Merenzon, CEO, said: "World
Chess has delivered on several major projects during 2023, which have
significantly enhanced our brand proposition. Our first chess club
successfully opened in Berlin and hosted the finals of the Armageddon series.
This new chess format has captured the attention of chess enthusiasts on a
global scale, with match content shown across 33 different broadcast networks.
"We made an important investment in the FIDE Online Arena chess platform to
upgrade the overall player experience. FIDE 2.0 went live towards to the end
of 2023 and has been well received by our community and subscriptions have
continued to rise.
"As we advance through 2024, we remain committed to expanding the World Chess
ecosystem. We will be launching new initiatives associated with the FIDE
Online Arena to help drive growth, whilst attracting new commercial partners.
We look forward to bringing news of our progress throughout the rest of 2024."
For more information, please visit https://worldchess.com/investors
(https://worldchess.com/investors) or contact:
World Chess Via Yellow Jersey PR
Ilya Merenzon, CEO
Novum Securities Limited (Financial Advisor) +44 (0) 20 7399 9400
David Coffman / George Duxberry
Allenby Capital Limited (Broker) +44 (0) 20 3328 5656
Joscelin Pinnington / Tony Quirke (Sales)
John Depasquale / Lauren Wright (Corporate Finance)
Yellow Jersey PR +44 (0) 774 778 8221
Charles Goodwin +44 (0) 777 519 4357
Annabelle Wills
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 organized the FIDE Championship Matches in the
USA, and the UK, and revolutionized 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
(https://worldchess.com/) .
Statement from the Chair
I am pleased to report progress for World Chess Plc., during 2023. The Company
continued to focus on its goal of seeking to grow by tapping into the mass
market appeal of chess, driving several growth initiatives during the year.
The Company`s strategy for growth is to create diversified revenue streams
spanning online gaming, tournaments, chess clubs and merchandise. Despite
being one of the oldest leisure and sporting activities in the world, chess
is, in the Board's view, still in its infancy in terms of commercialisation.
The Company's listing on the London Stock Exchange in April 2023, raised
approximately €3.5m (before expenses) of new funds from investors.
Subsequent to the listing, an existing investor agreed to subscribe a further
€2.3m in tranches from September 2023, with the last tranche of this
investment due to be received by May 2024. The Board believes that the listing
should provide access to future funding support and has already helped to
raise the profile of the World Chess brand and the sport.
During the financial year, the Company invested in the commercial areas
described above, including major investment for the development, and opening
of World Chess Club Berlin and the subsequent staging of the Armageddon Chess
Championships at this venue.
In addition to the Berlin club, investment was made to improve the playing
experience on the Company`s chess gaming platform, FIDE Online Arena.
Following the strategic investment made across the business, the Board expects
to see increased revenues during the course of 2024.
For the year ended 31 December 2023, the Company generated revenues of
approximately €2.3m with an operating loss of approximately €4.5m, with
high expenditure attributed to the London listing costs and investment
projects, notably World Chess Club Berlin.
The Company continues to benefit from the considerable efforts of the
management team and staff. I thank them for their hard work and commitment
throughout last year, and in going forward.
Outlook
The impact of inflation and higher interest rates, and resulting costs
pressures, have made it a difficult environment for the Company to navigate.
These economic challenges remain for the business in 2024. However, the
Board is cautiously optimistic of achieving revenue growth over the course of
the year. The Board intends to pursue further opportunities that align with
the Company`s strategy as a chess-focused business to build shareholder value.
Graham Woolfman
Chair
25 April 2024
Statement from the Chief Executive
2023 was a pivotal period for our Company, coinciding with our debut as a
listed company. At the heart of our strategic vision lies a dedication to
pioneering innovative chess-related commercial ventures. By diversifying our
offerings and engaging our audiences in novel and captivating ways, we aim to
propel chess into the modern era while cementing its status as a cherished
sport.
The funds raised through our listing on the London Stock Exchange have enabled
us to make crucial investments in our digital infrastructure, notably in the
enhancement of the FIDE Online Arena and the establishment of the World Chess
Club Berlin. Furthermore, we have successfully increased brand recognition,
agreed new commercial partnerships and laid the groundwork for growth in 2024
and beyond.
Investment in the FIDE Platform
Throughout the year, we executed significant upgrades to the FIDE Online
Arena, culminating in the unveiling of Arena 2.0 in the final quarter. This
enhanced platform not only gives players a FIDE-recognised online rating but
also delivers an improved gaming experience, boasting industry-leading speed.
Additionally, our proprietary anti-cheating technology, NightWatch, has been
integrated to ensure fair play, complemented by personalised chess board skins
and consumer-centric updates aimed at enriching user engagement.
To improve our player acquisition, we modified our subscription model,
increasing our player base by 40% to 750,000 registered users, with 8,500
'pro-members' opting for the premium experience at €50 per year.
Opening World Chess Club Berlin and expanding our merchandise range
The opening of World Chess Club Berlin marks our first foray into physical
spaces. It's not just a place to play chess; it's where culture, community,
and competition collide. We're crafting experiences that go beyond the sport,
making chess not just a game but a lifestyle.
We have seen revenue building through the Club's café, the physical and
online merchandise shop and unique chess events, including our sold-out night
of 'Chess Boxing'. With plans to open more clubs in strategic locations, we
are excited at the prospect of creating more welcoming spaces in the coming
years.
In line with our brand-building strategy and efforts to captivate new
audiences, we have expanded our range of chess-related products and branded
merchandise. From exclusive chess maps to bespoke boards and pieces, our
merchandise celebrates the richness and diversity of chess culture. Through
these meticulously curated offerings and partnerships, we aim to elevate the
chess experience and foster deeper engagement within the global chess
community.
New tournament format and events
Our Armageddon Championship Series, hosted at World Chess Club Berlin,
redefined the excitement surrounding chess, transforming a traditional game
into a riveting spectator sport. Characterised by its high-intensity and
fast-paced format, the inaugural series gained widespread acclaim and was
broadcast across 33 networks, including major media outlets like Bloomberg and
CNBC.
Starting in March 2023 before concluding at the Grand Finale in September
2023, this fresh new twist on competitive chess was able to take the game to a
new level in terms of attracting a global audience. We also signed a
partnership with IT.com Domains Ltd ('it.com Domains') for a three-series
contract worth over €1.2m, underscoring the growing interest from sponsors
to associate themselves with chess and the audiences we can attract.
In line with our commitment to fostering a more inclusive global chess
community, we are proud to champion women within the sport. Through
initiatives like our online tournament series, 'Swiss Queens Wednesday,' in
collaboration with FIDE, we are striving to address the gender disparity in
chess participation. A recent YouGov survey revealed that women comprise only
30% of chess players worldwide, highlighting the untapped potential for
positive change and the commercial opportunities it presents.
2024 and further ahead
During 2023 the Group has been building the infrastructure for our digital
offering, chessarena.com, as well as the World Chess ecosystem. As we enter
2024, our primary objective is to launch these initiatives into the market,
with a keen emphasis on cultivating an engaging environment for both
subscribers and partners.
Our strategic vision encompasses a multifaceted approach aimed at enhancing
the online chess experience. This entails leveraging innovative design
elements and pioneering features to revolutionise gameplay. Concurrently, our
marketing efforts will be intensified to establish Chessarena as a household
name, bolstered by the introduction of media and merchandise offerings.
Moreover, we are committed to expanding our business-to-business sector,
introducing new products tailored for chess clubs.
Among our upcoming enhancements, we are exploring the integration of social
features, such as stickers, to enrich the gaming experience. Additionally, we
aspire to merge the dynamics of a sports platform with a communication app,
creating a unique synergy. The implementation of cutting-edge AI technology
will significantly elevate our anti-cheating measures, ensuring the integrity
of gameplay. Furthermore, we envision a dedicated television product for
chess, granting the sport a permanent presence on television screens globally.
We have invested substantial resources in terms of capital, expertise, and
with the dedication of our team, there is still much to do in pursuit of our
journey to redefine and innovate across the landscape of chess.
Ilya Merenzon
Chief Executive Officer
25 April 2024
Financial Review
2023 saw the Company's listing on the Main Market of the London Stock Exchange
raising €3.5m for investment of €817,533 (2022: €799,866) in the
development of the FIDE Online Arena; and €510,898 (2022: €635,818) in the
opening of World Chess Club Berlin.
2023 2022
€ €
REVENUE 2,345,492 2,796,207
GROSS PROFIT 179,102 705,453
GROSS PROFIT % 8% 25%
Other operating income 11,706 92,399
Administrative expenses (4,344,248) (3,278,281)
OPERATING LOSS BEFORE EXCEPTIONAL ITEMS (4,153,440) (2,480,429)
Addback: Depreciation and amortisation 843,237 632,936
PRE-EXCEPTIONAL ITEMS EBITDA LOSS (3,310,203) (1,847,493)
Exceptional Items (326,776) 23,000
Finance costs (191,393) (337,460)
Finance income 139 521
LOSS BEFORE INCOME TAX (4,671,470) (2,794,368)
Revenue and Gross Profit
Whilst the Group has four distinct revenue generating activities, revenues in
2023 and 2022 were dominated by tournament sponsorships. 2023 saw €1,381,340
of tournament revenue being 59% of total revenue (2022: €1,711,331 being 61%
of total revenue). This reduction in tournament revenue followed the Group's
strategic decision to launch Armageddon, its own proprietary tournament
series, rather than continue to solely promote FIDE tournaments. Whilst the
Armageddon was a great success in terms of participation and media coverage,
as a new event series it does not yet command the same level of sponsorship as
the FIDE Grand Prix events which took place in 2022.
Part of the Group's tournament strategy is to use a dedicated event space,
afforded by World Chess Club Berlin, to host events rather than constructing
temporary staging for each event. This strategy led to a reduction in the
average costs associated with hosting each of the five Armageddon series
events, however with five events taking place in 2023 compared to the three
which took place in 2022 the overall cost of sales increased by 4%, this
together with the 16% fall in revenue resulted in a 75% reduction in gross
profit.
Loss per share
The loss per share was €0.007 (2022: €0.004), resulting from both an
increase in operating losses and in the weighted average number of shares in
issue, from 597,912,402 in 2022 to 650,232,851 in 2023. At 31 December 2023
there were a total of 667,193,501 shares in issue.
Cash flows
The Consolidated Statement of Cash Flows is set out on page 52 to these
consolidated financial statements, during 2023 the Group raised €3,475,569
from the issue of new equity capital on listing and a further €1,040,329 in
loans were also converted into new equity capital. The Company also received
€1,508,737 from an existing shareholder for a new share subscription which
was issued in February 2024 as set out in note 32.
Statement of Financial Position
The Consolidated Statement of Financial Position as at 31 December 2023 shows
the Group's total net assets having decreased to €1,007,724 (2022:
€1,163,425).
Capital expenditure
The development of the FIDE Online Arena remained a priority during the year
with additional investment of €817,533 (2022: €799,866), bringing the
total invested to €3,924,971 with a carrying value at 31 December 2023 of
€2,692,024.
Investments and impairment
As detailed in notes 11, 13 and 14 to the consolidated financial statements
the Directors considered the carrying value of investments, goodwill and
intangible assets at 31 December 2023 based on detailed budgets and forecasts,
these budgets and forecasts generally cover a five-year period. Based on this
the Directors concluded that no impairment was necessary at 31 December 2023
or 31 December 2022.
Cash and debt position
At the year end the Group has total cash balances of €186,881 (2022:
€35,565) and total borrowings of €1,453,470 (2022: €2,485,797) giving a
net debt figure of €1,266,589 (2022: €2,450,232).
As at 23 April 2024, the date of signing these consolidated financial
statements, the Group had total cash of €220,122 (28 April 2023:
€1,830,936) and total borrowings of €32,986 (28 April 2023: €62,676)
giving a net debt figure of €187,136 (28 April 2023: €1,768,260).
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
these consolidated financial statements. 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 the Annual
Report and consolidated financial statements.
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 as detailed on page 12 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 under the Group's available sources of finance. 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.
Richard Collett
Chief Financial Officer
25 April 2024
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR
THE YEAR ENDED 31 DECEMBER 2023
2023 2022
Notes € €
Revenue 3 2,345,492 2,796,207
Cost of (2,166,390) (2,090,754)
sales
GROSS PROFIT 179,102 705,453
Other operating income 11,706 92,399
Administrative expenses (4,344,248) (3,278,281)
OPERATING LOSS BEFORE EXCEPTIONAL ITEMS (4,153,440) (2,480,429)
Exceptional Items 5 (326,776) 23,000
OPERATING LOSS (4,480,216) (2,457,429)
Finance costs 6 (191,393) (337,460)
Finance income 6 139 521
LOSS BEFORE INCOME TAX 7 (4,671,470) (2,794,368)
Income tax 8 (13,629) 332,680
LOSS FOR THE YEAR (4,685,099) (2,461,688)
OTHER COMPREHENSIVE INCOME
Loss on currency translation (7,323) (19,787)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR (4,692,422) (2,481,475)
Loss attributable to:
Owners of the parent (4,685,099) (2,461,688)
Total comprehensive income attributable to:
Owners of the parent (4,692,422) (2,481,475)
LOSS PER SHARE - CONTINUING AND TOTAL OPERATIONS
Basic and diluted 10 (0.007) (0.004)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 DECEMBER 2023
2023 2022
Notes € €
NON-CURRENT ASSETS
Owned: Intangible assets 11 3,086,827 2,763,358
Owned: Property, plant and equipment 12 1,029,516 714,116
Right-of-use: Property, plant and equipment 12, 23 1,206,820 1,236,968
Deferred tax 27 63,272 76,697
5,386,435 4,791,139
CURRENT ASSETS
Inventories 15 187,018 187,691
Trade and other receivables 16 256,464 662,566
Tax receivable - 251,117
Cash and cash equivalents 17 186,881 35,565
630,363 1,136,939
TOTAL ASSETS 6,016,798 5,928,078
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Called up share capital 18 75,647 68,260
Share premium 19 11,048,183 6,518,849
Translation reserve 20 58,618 65,941
Retained earnings 20 (10,174,724) (5,489,625)
TOTAL EQUITY 1,007,724 1,163,425
NON-CURRENT LIABILITIES
Lease liabilities 23 1,304,273 1,308,003
Provision for liabilities 26 157,887 180,652
1,462,160 1,488,655
CURRENT LIABILITIES
Trade and other payables 21 3,397,717 2,098,204
Lease liabilities 23 116,208 95,686
Interest bearing loans and borrowings 22 32,989 1,082,108
3,546,914 3,275,998
TOTAL LIABILITIES 5,009,074 4,764,653
TOTAL EQUITY AND LIABILITIES 6,016,798 5,928,078
The financial statements were approved by the Board of Directors and
authorised for issue on 25 April 2024 and were signed on its behalf by:
Ilya Merenzon
Chief Executive Officer
COMPANY STATEMENT OF FINANCIAL POSITION 31 DECEMBER 2023
2023 2022
Notes € €
NON-CURRENT ASSETS
Investments 14 301,616 301,616
301,616 301,616
CURRENT ASSETS
Trade and other receivables 16 5,790,209 4,919,305
Tax receivable 6,025 -
Cash and cash equivalents 17 21,366 6,242
5,817,600 4,925,547
TOTAL ASSETS 6,119,216 5,227,163
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Called up share capital 18 75,647 68,260
Share premium 19 11,048,183 6,518,849
Retained earnings 20 (6,871,864) (5,329,173)
TOTAL EQUITY 4,251,966 1,257,936
CURRENT LIABILITIES
Trade and other payables 21 1,867,250 2,950,159
Interest bearing loans and borrowings 22 - 1,019,068
1,867,250 3,969,227
TOTAL LIABILITIES 1,867,250 3,969,227
TOTAL EQUITY AND LIABILITIES 6,119,216 5,227,163
As permitted by Section 408 of the Companies Act 2006, the statement of
comprehensive income of the parent company is not presented as part of these
financial statements. The parent company's loss for the financial year was
€1,542,691 (2022: €578,448).
The financial statements were approved by the Board of Directors and
authorised for issue on 25 April 2024 and were signed on its behalf by:
Ilya Merenzon
Chief Executive Officer
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 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 - (2,461,688) - (19,787) (2,481,475)
Balance at 31 December 2022 68,260 (5,489,625) 6,518,849 65,941 1,163,425
Changes in equity
Issue of share capital 7,387 - 4,529,334 - 4,536,721
Total comprehensive income - (4,685,099) - (7,323) (4,692,422)
Balance at 31 December 2023 75,647 (10,174,724) 11,048,183 58,618 1,007,724
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
Called up share capital Retained Earnings Share Premium Total equity
€ € € €
Balance at 1 January 2022 66,996 (4,750,725) 5,520,114 836,385
Changes in equity
Issue of share capital 1,264 - 998,735 999,999
Total comprehensive income - (578,448) - (578,448)
Balance at 31 December 2022 68,260 (5,329,173) 6,518,849 1,257,936
Changes in equity
Issue of share capital 7,387 - 4,529,334 4,536,721
Total comprehensive income - (1,542,691) - (1,542,691)
Balance at 31 December 2023 75,647 (6,871,864) 11,048,183 4,251,966
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2023
2023 2022
Notes € €
Cash flows from operating activities
Cash absorbed from operations 1 (3,338,149) (512,077)
Interest paid (6,638) (179,610)
Finance cost paid (163,495) (157,850)
Tax refund received 250,913 20,600
Net cash used in operating activities (3,257,369) (828,937)
Cash flows from investing activities
Purchase of intangible fixed assets (3,317,267) (799,865)
Proceeds from disposal of intangible fixed assets 2,495,727 1,367,702
Purchase of property, plant and equipment (631,603) (635,818)
Proceeds from disposal of property, plant and equipment 1,185 23,214
Interest received 139 521
Net cash used in investing activities (1,451,819) (44,246)
Cash flows from financing activities
Loan advanced in the year 1,508,737 1,019,068
Loan repayments in year (30,050) (1,341,854)
Payment of lease liabilities (100,596) (21,986)
Amount introduced by directors 14,167 120,619
Proceeds from share issue 3,475,569 999,999
Net cash generated from financing activities 4,867,827 775,846
Increase/(decrease) in cash and cash equivalents 158,639 (97,337)
Cash and cash equivalents at beginning of year 2 35,565 152,689
Effect of foreign exchange rate changes (7,323) (19,787)
Cash and cash equivalents at end of year 2 186,881 35,565
COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2023
2023 2022
Notes € €
Cash flows from operating activities
Cash absorbed by operations 1 (1,655,432) (104,814)
Interest paid - (84,353)
Finance cost paid - (123,415)
Net cash used in operating activities (1,655,432) (312,582)
Cash flows from investing activities
Purchase of intangible fixed assets - (275,000)
Interest received 106,145 20,820
Net cash generated from/(used in) from investing activities 106,145 (254,180)
Cash flows from financing activities
Loan advanced in the year 1,508,737 1,019,068
Amounts received from group undertakings - 157,633
Amounts paid to group undertakings (3,436,509) (1,640,863)
Amount introduced by directors 16,613 3,060
Proceeds from share issue 3,475,570 999,999
Net cash generated from financing activities 1,564,411 538,897
Increase/(decrease) in cash and cash equivalents 15,124 (27,865)
Cash and cash equivalents at beginning of year 2 6,242 34,107
Cash and cash equivalents at end of year 2 21,366 6,242
NOTES TO THE STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2023
1 RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH ABSORBED FROM OPERATIONS
Group 2023 2022
€ €
Loss before income tax (4,671,470) (2,794,368)
Depreciation and amortisation 843,237 632,935
Provision (22,765) 180,652
Finance costs 191,393 337,460
Finance income (139) (521)
(3,659,744) (1,643,842)
Decrease in inventories 673 30,702
Decrease in trade and other receivables 406,102 2,699,953
Decrease in trade and other payables (85,180) (1,598,890)
Cash absorbed from operations (3,338,149) (512,077)
Company 2023 2022
€ €
Loss before income tax (1,542,691) (578,448)
Finance costs 21,260 207,766
Finance income (106,145) (20,820)
(1,627,576) (391,502)
(Increase)/decrease in trade and other receivables (6,118) 182,297
(Decrease)/increase in trade and other payables (21,738) 104,391
Cash absorbed by operations (1,655,432) (104,814)
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 2023 2022
€ €
Year ended 31 December 2023
Cash and cash equivalents 186,881 35,565
Year ended 31 December 2022
Cash and cash equivalents 35,565 152,689
Company 2023 2022
€ €
Year ended 31 December 2023
Cash and cash equivalents 21,366 6,242
Year ended 31 December 2022
Cash and cash equivalents 6,242 34,107
3 RECONCILIATION OF NET DEBT
Group 2023 2022
€ €
At 31 December
Other loans (32,989) (1,082,108)
Lease liabilities (1,420,481) (1,403,689)
Total Borrowings (1,453,470) (2,485,797)
Cash and cash equivalents 186,881 35,565
Net debt (1,266,589) (2,450,232)
Company 2023 2022
€ €
At 31 December
Other loans - (1,019,068)
Cash and cash equivalents 21,366 6,242
Net cash/(debt) 21,366 (1,012,826)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
1 STATUTORY INFORMATION
World Chess PLC is a public company, limited by
shares, registered in England and Wales. The company's registered number and
registered office address can be found on the Company Information page.
2 ACCOUNTING POLICIES
Basis of preparation
These financial statements have been prepared in
accordance with UK - adopted International Accounting Standards and IFRIC
interpretations and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS. The financial statements have been prepared
under the historical cost convention.
The financial statements 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 these consolidated financial statements. 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 the Annual
Report and consolidated financial statements.
The Directors have assessed the viability of the
Group over a five-year period, taking account of the Group's current position
and prospects, its strategic plan and the principal risks and how these are
managed. Based on this assessment, the Directors have a reasonable expectation
that the Group will be able to continue in operation and meet its liabilities
as they fall due over this period.
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.
Basis of consolidation
The consolidated financial statements incorporate the
financial statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 December each year. Control is achieved where
the Company has the power to govern the financial and operating policies of an
investee entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of
during the year are included in the consolidated income statement from the
effective date of acquisition or up to the effective date of disposal, as
appropriate. Where necessary, adjustments are made to the financial statements
of subsidiaries to bring the accounting policies used in line with those used
by the Company.
Intra-group balances and transactions are eliminated
on consolidation. Unrealised gains arising from transactions with
equity-accounted investees are eliminated against the investment to the extent
of the Group's interest in the investee. Unrealised losses are eliminated in
the same way as gains, but only to the extent that there is no evidence of
impairment.
Critical accounting judgements and key sources of
estimation uncertainty
The preparation of the financial statements in
conformity with UK - adopted International Accounting Standards requires the
use of estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Although these
estimates are based on management's best knowledge of the amounts, events or
actions, actual results ultimately may differ from these estimates. The
estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised. The material areas in which estimates and judgements are
applied as follows:
Goodwill and other intangible assets for impairment
The Group is required to test, on an annual basis,
whether goodwill and other intangible assets have suffered any impairment.
Determining whether there has been any impairment requires an estimation of
the fair value in use of the cash-generating units. The value in use
calculation requires the Directors to estimate the future cash flows expected
to arise from the cash-generating unit and a suitable discount rate in order
to calculate the present value, the discount rate applied is 16.15% (2022:
11.83%) and the carrying value of goodwill and other intangible assets is set
out in the table below (notes 11 and 13):
Group
2023 2022
€ €
Exclusive FIDE rights 331,588 442,117
Software Licences 59,000 82,000
Online Platform 2,692,024 2,239,033
Crypto-assets valuation
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. The Group has not traded in crypto-assets to
date and such activities do not form part of its strategy.
The Group has the objective of converting
crypto-assets into fiat currency, predominately US Dollars or Euros at the
earliest opportunity; the rate of exchange for crypto-assets can be volatile
with significant increases and decreases occurring in a few hours, the
decision of when to convert crypto-assets into fiat currency is a key source
of uncertainty and estimation.
Crypto-assets held by the Group are shown within
intangible assets on the Consolidated Statement of Financial Position at the
prevailing exchange rate (see note 11).
Group Company
2023 2022 2023 2022
€ € € €
Crypto-assets 4,215 208 - -
Legal proceedings provisions
Provisions for legal proceedings are recognised as
other expenses when the Group has a present legal or constructive obligation
as a result of past events; it is probable that an outflow of resources will
be required to settle the obligation; and the amount can be measured reliably.
At the Statement of Financial Position date there is an ongoing claim with one
supplier, if the claim is successful then an invoice, amounting to
€1,140,000, will become payable. The invoice is not included in the accounts
as the Directors consider it to be null and void and raised by the supplier in
breach of contract (see note 28).
Revenue recognition
Revenue is recognised to the extent that it is
probable that the economic benefits will flow to the Company and the revenue
can be reliably measured. Revenue from sale of goods is recognised when
control of the goods has transferred to the customer. Revenue is measured as
the fair value of the consideration received or receivable, excluding
discounts, rebates, value added tax and other sales taxes.
Any revenue received in advance gives rise to
contract liabilities which is deferred and included in accruals and deferred
income. The carrying amount of the deferred income included in payables being
€650,098 (2022: €959,012).
No obligation for returns, refunds or other similar obligation is recognised,
the Directors following careful consideration, having concluded that any
potential obligation is trivial.
The following criteria must also be met before
revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when all
the following conditions are satisfied:
· The Company has transferred the significant risks and rewards of
ownership to the buyer;
· The Company retains neither continuing managerial involvement to
the degree usually associated with ownership nor effective control over the
goods sold;
· The amount of revenue can be measured reliably;
· It is probable that the Company will receive the consideration
due under the transaction; and
· The costs incurred or to be incurred in respect of the
transaction can be measured reliably.
Rendering of services
Revenue from a contract to provide services is
recognised in the period in which the services are provided in accordance with
the stage of completion of the contract when all of the following conditions
are satisfied:
· The amount of turnover can be measured reliably;
· It is probable the Company will receive the consideration due
under the contract;
· The stage of completion of the contract at the end of the
reporting period can be measured reliably; and
· The costs incurred and the costs to complete the contract can be
measured reliably.
The policies specific to the Group's revenue types within its activities are
outlined below:
Events
Revenue is recognised in the period in which the
event takes place; revenue is typically linked to multiyear agreements where
payment is received in advance of the event to which it relates.
Online income
Revenue is recognised over the period of the
subscription; online subscriptions are paid annually in advance.
Merchandising and Clubs
Revenue is recognised when control of the goods has
transferred to the customer; typically, control is transferred upon payment by
the customer.
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. In 2023 rewards of €nil (2022:
€9,142) were recognised within exceptional items in the Consolidated
Statement of Profit or Loss and Other Comprehensive Income.
Segment reporting
IFRS 8 Operating Segments requires operating segments
to be identified and reported in a manner consistent with the internal
reporting provided to chief operating decision maker ('CODM'), who is
responsible for allocating resources and assessing performance of the
operating segments as identified by the Directors.
The Directors have reviewed the Group's activities
and consider the Group to comprise a single line of business being a mass
market promoter of chess. Within the single line of business, the Group
undertakes integrated revenue generating activities across tournaments, an
online platform and merchandise and clubs. These revenue generating activities
are closely aligned within a business model which seeks to promote a chess
community across tournaments, online and physical environments.
The individual revenue generating activities are
managed in an integrated way by the CODM and executive management team who
review financial information on the same integrated way. The Group has
geographically separate operations and a geographic split of revenue as well
as the split between the revenue types within its activities is included in
note 3.
Cash and cash equivalents
Cash represents cash in hand and deposits held on
demand with financial institutions. Cash equivalents are short-term,
highly-liquid investments with original maturities of three months or less (as
at their date of acquisition). Cash equivalents are readily convertible to
known amounts of cash and subject to an insignificant risk of change in that
cash value.
In the presentation of the Statement of Cash Flows,
cash and cash equivalents also include bank overdrafts. Any such overdrafts
are shown within borrowings under 'current liabilities' on the Statement of
Financial Position.
Goodwill
Goodwill is recorded as an intangible asset and is
the surplus of the cost of acquisition over the fair value of identifiable net
assets acquired. Goodwill is reviewed annually for impairment. Any
impairment identified as a result of the review is charged in the Statement of
Profit or Loss and Other Comprehensive Income.
Crypto-assets
Included within intangible assets are crypto-assets
held in the Group's name in the Binance crypto exchange, the Group has not
traded in crypto-assets to date and such activities do not form part of its
strategy. The crypto-assets are not held as long-term investments, nor do they
form part of the Group's inventory. The Group's strategy is to convert
crypto-assets to fiat currencies at the earliest opportunity, usually upon
receipt or in accordance with an agreed schedule of conversion.
Any crypto-assets received are recognised at the
exchange rate prevailing at the date that the risk and reward associated with
the crypto-asset passes to the Group. Where the exchange rate of the
crypto-assets has a guaranteed minimum floor price, a receivable is recognised
for any short-fall.
Crypto-assets are not amortised but are reviewed for
impairment if the prevailing exchange rate indicates their value has fallen
below their carrying value. Any impairment or realised exchange gains on the
conversion of crypto-assets to fiat currency are recognised within exceptional
items on the Consolidated Statement of Profit or Loss and Other Comprehensive
Income.
Other intangible assets
Amortisation is charged to the income statement on a
straight-line basis over the estimated useful lives of intangible assets.
Intangible assets are amortised from the date they
are available for use. The estimated useful lives are as follows:
· Exclusive rights to organise and host top level chess events in
association with FIDE, the life of the contract, being ten years, using the
straight-line method.
· Capitalised costs associated with developing the online platform
used for the FIDE Online Arena, ten years using the straight-line method.
· Licences to operate certain software incorporated into the
platform, the life of the contract, being five years. using the straight-line
method.
The basis for choosing these useful lives is with
reference to the years over which they can continue to generate value for the
Group.
The Group reviews the amortisation year and
methodology when events and circumstances indicate that the useful lives may
have changed since the last reporting date and the amortisation charge for the
year is included in Administrative Expenses in the Consolidated Statement of
Profit or Loss and Other Comprehensive Income.
Property, plant and equipment
Depreciation is provided in order to write off each
asset over its estimated useful life or, if held as a right-of-use asset, over
the lease term, whichever is the shorter, which are typically.
· Fixtures and fittings -
Straight line over 5 years
· Computer equipment - Straight line
over 3 years
Financial instruments
The Group only enters into basic financial instrument
transactions that result in the recognition of financial assets and
liabilities like trade and other receivables and payables, loans from banks
and other third parties, loans to related parties and investments in
non-puttable ordinary shares.
Debt instruments (other than those wholly repayable
or receivable within one year), including loans and other accounts receivable
and payable, are initially measured at present value of the future cash flows
and subsequently amortised cost using the effective interest method. Debt
instruments that are payable or receivable within one year, typically trade
receivables and payables, are measured, initially and subsequently, at the
undiscounted amount of the cash or other consideration expected to be paid or
received. However, if the arrangements of a short-term instrument constitute a
financing transaction, like the payment of trade debt deferred beyond normal
business terms or financed at a rate of interest that is not market rate or in
the case of an out-right short-term loan not at market rate, the financial
asset or liability is measured, initially, at the present value of the future
cash flow discounted at a market rate of interest for a similar debt
instrument and subsequently at amortised cost.
Financial assets that are measured at cost and
amortised cost are assessed at the end of each reporting period for objective
evidence of impairment. If objective evidence of impairment is found, an
impairment loss is recognised in the Consolidated Statement of Profit or Loss
and Other Comprehensive Income.
For financial assets measured at amortised cost, the
impairment loss is measured as the difference between an asset's carrying
amount and the present value of estimated cash flows discounted at the asset's
original effective interest rate. If a financial asset has a variable interest
rate, the discount rate for measuring any impairment loss is the current
effective interest rate determined under the contract.
For financial assets measured at cost less
impairment, the impairment loss is measured as the difference between an
asset's carrying amount and best estimate of the recoverable amount, which is
an approximation of the amount that the company would receive for the asset if
it were to be sold at the date of the Statement of Financial Position.
Financial assets and liabilities are offset, and the
net amount reported in the Statement of Financial Position when there is an
enforceable right to set off the recognised amounts and there is an intention
to settle on a net basis or to realise the asset and settle the liability
simultaneously.
Inventories
Inventories of finished goods are valued at the lower
of cost and net realisable value (the estimated selling price less the
estimated costs to sell), after making due allowance for obsolete and
slow-moving items.
Taxation
Current taxes are based on the results shown in the
financial statements and are calculated according to local tax rules in the
UK, USA and Germany where the Group operates, using tax rates enacted or
substantively enacted by the date of the Statement of Financial Position.
Current tax represents the amount of tax payable or
receivable in respect of the taxable profit (or loss) for the current or past
reporting periods. It is measured at the amount expected to be paid or
recovered using the tax rates and laws that have been enacted or substantively
enacted by the date of the Statement of Financial Position.
Commercial legislation within the Russian Federation
in which the Group operated prior to April 2022, including tax legislation, is
subject to varying interpretations and frequent changes. The Group's
management is confident that all necessary tax accruals have been made and,
accordingly, no additional provision is required in the Consolidated Financial
Statements.
Deferred tax is recognised in respect of all timing
differences that have originated but not reversed at the statement of
financial position date.
Deferred tax represents the future tax consequences
of transactions and events recognised in the financial statements of current
and previous periods. It is recognised in respect of all timing differences,
with certain exceptions. Timing differences are differences between taxable
profits and total comprehensive income as stated in the financial statements
that arise from the inclusion of income and expense in tax assessments in
periods different from those in which they are recognised in the financial
statements. Unrelieved tax losses and other deferred tax assets are recognised
only to the extent that it is probable that they will be recovered against the
reversal of deferred tax liabilities or other future taxable profits.
Deferred tax is measured using the tax rates and laws
that have been enacted or substantively enacted by the balance sheet date that
are expected to apply to the reversal of timing differences.
Research and development
Research and development expenditure is capitalised
if it can be demonstrated that:
· it is technically and commercially feasible to develop the asset
for future economic benefit;
· adequate resources are available to maintain and complete the
development;
· there is the intention to complete and develop the asset for
future economic benefit;
· the Group is able to use the asset;
· use of the asset will generate future economic benefit; and
· expenditure on the development of the asset can be measured
reliably.
Other development expenditure is recognised in the Consolidated Statement of
Profit and Loss as an expense as incurred.
Capitalised development expenditure is stated at cost
less accumulated amortisation and less accumulated impairment losses.
Foreign currencies
Assets and liabilities in foreign currencies are
translated into euro at the rates of exchange ruling at the statement of
financial position date. Transactions in foreign currencies are translated
into euro at the rate of exchange ruling at the date of transaction. Exchange
differences are taken into account in arriving at the operating result.
IFRS 16 'Leases'
Lease terms are negotiated on an individual basis and
contain a wide range of different terms and conditions. Leases are recognised
as a right-of-use asset and a corresponding liability at the date at which the
leased asset is available for use by the Group. Each lease payment is
allocated between the liability and finance cost. The finance cost is charged
to the income statement over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability for each
period.
Where ownership of the right-of-use asset transfers
to the lessee at the end of the lease term, the right-of-use asset is
depreciated over the asset's remaining useful life. If ownership of the
right-of-use asset does not transfer to the lessee at the end of the lease
term, depreciation is charged over the shorter of the useful life of the
right-of-use asset and the lease term.
Assets and liabilities arising from a lease are
initially measured on a present value basis. Lease liabilities include the net
present value of the following lease payments:
· Fixed payments (including in-substance fixed payments), less any
lease incentives receivable;
· Amounts expected to be payable by the lessee under residual value
guarantees; and
· Payments of penalties for terminating the lease, if the lease
term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the
lease, if that rate can be determined, or the Group's incremental borrowing
rate. Right-of-use assets are measured at cost comprising the following:
· The amount of the initial measurement of lease liability;
· Any lease payments made at or before the commencement date less
any lease incentives received; and
· Any initial direct costs.
Adoption of new and revised standards
There are a number of standards, amendments to
standards, and interpretations which have been issued by the IASB that are
effective from 1 January 2023, none of which have a material impact on these
financial statements.
Standards issued but not yet effective
There are a number of standards, amendments to
standards, and interpretations which have been issued by the IASB that are
effective in future accounting periods that the group has decided not to apply
early.
The following amendments are effective for the period beginning 1 January
2024;
· IAS 1 Presentation of Financial Statements (Amendment -
Classification of Liabilities as Current or Non-Current);
· IFRS 16 Leases (Amendment - Liability in a sale and leaseback);
and
· IAS 7 and IFRS 7 (Amendment - Supplier Finance Arrangements).
It is not expected that the amendments listed above,
once adopted, will have a material impact on the financial statements.
Financial liabilities
The Group does not have financial liabilities that
would be classified as fair value through the profit or loss. Therefore, all
financial liabilities are classified as other financial liabilities.
The Group use the amortised cost method for financial
liabilities include borrowings, trade and other payables and are recognised at
their original amount.
3 REVENUE
Revenue from contracts with customers
Revenue by business class 2023 2022
€ €
Tournaments 1,381,341 1,711,331
Online Arena 204,151 399,074
Clubs 163,305 110,335
Merchandising 596,695 575,467
2,345,492 2,796,207
By geographical area 2023 2022
€ €
United Kingdom 1,391,453 2,661,639
Russia - 27,578
United States of America 51,804 50,540
Europe 902,235 56,450
2,345,492 2,796,207
Major customer
Included in Tournament revenue are revenues of
€991,008 which are attributable to two major customers, being customers who
each represent more than 10% of revenue; revenue attributable to the two major
customers are Customer 1: €606,008 (2022: €1,163,411) and Customer 2:
€385,000 (2022: €nil).
4 EMPLOYEES AND DIRECTORS
The aggregate payroll costs (including Directors not under employment
contracts) were:
Contributions to a defined contribution pension
scheme on behalf of all employees of €1,544 (2022: €nil) were made during
the year.
In the opinion of the Board, only the Directors of
the Company, as detailed in the Corporate Governance Report, are regarded as
key management personnel. The remuneration of key management personnel during
2023 was, in aggregate, €491,490 (2022: €327,001).
Contributions to a defined contribution pension
scheme on behalf of directors of €1,283 (2022: €nil) were made during the
year.
2023 2022
€ €
Directors' remuneration: 491,490 327,001
Further details of Directors', including
Non-Executive Directors', remuneration and fees during the year are set out in
the Directors Remuneration Report on page 31 of these consolidated financial
statements.
The highest paid director was Ilya Merenzon whose
total remuneration was €210,000 (2022: €192,000).
In 2023 Directors Remuneration included €nil (2022:
€5,000) in respect of compensation for loss of office.
The Group had no UK employees in 2023 and 2022 except
the directors.
5 EXCEPTIONAL ITEMS
2023 2022
€ €
Listing costs 308,250 -
Exchange loss/(gain) on Crypto-assets 18,526 (13,472)
Gain on disposal of World Chess Russia LLC - 27,330
Collateral rewards received - 9,142
326,776 23,000
Listing Costs
One-off costs associated with the Company's listing
on the Main Market of the London Stock Exchange in April 2023.
Exchange loss/(gain) on Crypto-assets
The majority of the crypto-assets held by the Group
was converted into fiat currency on receipt, however where crypto assets are
received in stablecoin which track the US Dollar variances occur between the
USD value of the crypto assets received and their equivalent Euro value.
Gain on disposal of 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 was
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.
6 NET FINANCE COSTS
2023 2022
€ €
Finance income:
Loan interest receivable 139 521
139 521
Finance costs:
Other loan interest 27,898 179,610
Interest on IFRS 16 lease liabilities 163,495 157,850
191,393 337,460
7 LOSS BEFORE INCOME TAX
The loss before income tax is stated after
charging/(crediting):
2023 2022
€ €
Cost of inventories recognised as expense 2,166,390 2,090,754
Research costs expensed 90,124 88,874
Depreciation - owned assets 194,313 25,300
Depreciation - right-of-use assets 150,853 189,475
Exclusive FIDE rights amortisation 110,529 110,529
Licence amortisation 23,000 23,000
Computer software amortisation 364,542 284,632
Auditors' remuneration 109,908 72,641
Foreign exchange loss 1,970 9,790
Amortisation of intangible assets is included in
Administrative expenses in the Consolidated Statement of Profit or Loss and
Other Comprehensive Income.
8 INCOME TAX
Analysis of tax expense/(income)
2023 2022
€ €
Current tax:
Corporation tax 204 (255,983)
Deferred tax 13,425 (76,697)
Total tax expense/(income) in consolidated statement of profit or loss and 13,629 (332,680)
other comprehensive income
Factors affecting the tax expense
The tax assessed for the year is lower (2022 - lower)
the standard rate of corporation tax in the UK. The difference is explained
below:
2023 2022
€ €
Loss before income tax (4,671,470) (2,794,368)
Loss multiplied by the standard rate of corporation tax in the UK of 23.52% (1,098,730) (530,930)
(2022 - 19%)
Effect of:
Originations and reversal of temporary differences 13,425 (76,697)
Capital allowances in excess of depreciation (262,437) (74,706)
Non-taxable expenses 155,622 138,474
Tax losses carried forward 1,205,545 467,162
Research and development credit - (256,197)
Foreign tax 204 214
Tax expense/(income) 13,629 (332,680)
The corporation tax in the UK increased from 19% to
25% on 1 April 2023 an equivalent annual rate of 23.52% for the year ended 31
December 2023.
9 LOSS OF PARENT COMPANY
As permitted by Section 408 of the Companies Act
2006, statement of profit or loss and other comprehensive income of the parent
company is not presented as part of these financial statements. The parent
company's loss for the financial year was €1,542,691 (2022: €578,448).
10 EARNINGS PER SHARE
The basic earnings per share is calculated by
dividing the loss 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.
2023 2022
Loss attributable to the owners of the parent company € (4,685,099) (2,461,688)
Weighted average number of shares in issue 650,232,851 597,912,402
Basic and diluted earnings per share (€0.007) (€0.004)
After the reporting period, and as set out in note
32, 24,538,536 new ordinary shares were issued in February 2024 and the
Company has agreed to issue a further 11,667,187 new ordinary shares in May
2024.
11 INTANGIBLE ASSETS
Group
Exclusive 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 1,105,291 - 817,533 2,499,734 4,422,558
Disposals (1,105,291) - - (2,495,727) (3,601,018)
At 31 December 2023 1,105,291 115,000 3,924,971 4,215 5,149,477
AMORTISATION
At 1 January 2023 663,174 33,000 868,405 - 1,564,579
Amortisation for year 110,529 23,000 364,542 - 498,071
Additions 773.703 - - - 773.703
Elimination on disposals (773,703) - - - (773,703)
At 31 December 2023 773,703 56,000 1,232,947 - 2,062,650
NET BOOK VALUE
At 31 December 2023 331,588 59,000 2,692,024 4,215 3,086,827
The Exclusive FIDE rights were varied after the 2022
FIDE Grand Prix, this variation has been treated as the disposal if the
original Exclusive FIDE rights and the acquisition of alternative Exclusive
FIDE rights of the same cost and accumulated amortisation.
Exclusive FIDE rights Software Licence Online Platform Crypto-assets Total
€ € € € €
COST
At 1 January 2022 1,105,291 115,000 2,307,572 1,367,910 4,895,773
Additions - - 799,866 - 799,866
Disposals - - - (1,367,702) (1,367,702)
At 31 December 2022 1,105,291 115,000 3,107,438 208 4,327,937
AMORTISATION
At 1 January 2022 552,645 10,000 583,773 - 1,146,418
Amortisation for year 110,529 23,000 284,632 - 418,161
At 31 December 2022 663,174 33,000 868,405 - 1,564,579
NET BOOK VALUE
At 31 December 2022 442,117 82,000 2,239,033 208 2,763,358
The Directors considered the carrying value at 31
December 2023 for each asset identified above (except crypto-assets), based on
a detailed budget and forecast, discounted over five years at the Groups
current cost of capital, considered by the Directors to be 16.15%, 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 31
December 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.
12 PROPERTY, PLANT AND EQUIPMENT
Group
Right 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 120,705 510,898 - 631,603
Disposals - (1,185) - (1,185)
At 31 December 2023 1,495,114 1,283,631 1,698 2,780,443
DEPRECIATION
At 1 January 2023 137,441 59,802 1,698 198,941
Charge for year 150,853 194,313 - 345,166
At 31 December 2023 288,294 254,115 1,698 544,107
NET BOOK VALUE
At 31 December 2023 1,206,820 1,029,516 - 2,236,336
Right of use asset Fixtures and fittings Computer Equipment Total
€ € € €
COST
At 1 January 2022 441,942 212,236 1,698 655,876
Additions 1,374,409 635,818 - 2,010,227
Disposals (441,942) (74,136) - (516,078)
At 31 December 2022 1,374,409 773,918 1,698 2,150,025
DEPRECIATION
At 1 January 2022 419,908 85,424 1,698 507,030
Charge for year 189,475 25,300 - 214,775
Elimination on disposal (441,942) (50,922) - (492,864)
Exchange difference (30,000) - - (30,000)
At 31 December 2022 137,441 59,802 1,698 198,941
NET BOOK VALUE
At 31 December 2022 1,236,968 714,116 - 1,951,084
Included in the net book value of fixtures and fittings is
€1,027,734 (2022: €647,083) relating to World Chess Club Berlin which was
functionally complete at 31 December 2022 but did not yet fully open until May
2023.
13 GOODWILL
Group
2023 2022
€ €
COST
At 1 January 136,244 142,474
Disposal (136,244 (6,230)
At 31 December - 136,244
IMPAIRMENTS
At 1 January 136,244 142,474
Elimination on disposal (136,244) (6,230)
At 31 December - 136,244
CARRYING VALUE
At 1 January - -
At 31 December - -
Goodwill arose on the acquisition of World Chess
Russia LLC and World Chess Digital Limited.
World Chess Digital Limited was dormant throughout
2022 and remained dormant until it was dissolved on 15 September 2023.
In 2022 the Group disposed of World Chess Russia LLC.
14 INVESTMENTS
Company
Shares in group undertakings
2023 2022
€ €
COST
At 1 January 351,616 251,616
Additions - 275,000
Disposals - (175,000)
At 31 December 351,616 351,616
IMPAIRMENTS
At 1 January 50,000 225,000
Disposals - (175,000)
At 31 December 50,000 50,000
CARRYING VALUE
At 1 January 301,616 26,616
At 31 December 301,616 301,616
The Directors considered the carrying value at 31
December 2023 for each group undertaking, identified below, based on a
detailed budget and forecast, discounted over five years at the Groups current
cost of capital, considered by the Directors to be 16.15% and it was
determined that no further impairment was required.
World Chess Digital Limited was dormant throughout
2022 and remained dormant until it was dissolved on 15 September 2023, the
carrying value of the investment at 31 December 2022 and the date of disposal
was €nil.
In 2022 the Group disposed of World Chess Russia LLC.
The Group's investments at the Statement of Financial
Position date in the share capital of companies include the following
subsidiaries:
World Chess Events Limited
Registered office: Eastcastle House, 27/28 Eastcastle
Street, United Kingdom, W1W 8DH
Nature of business: Organising chess events
(Worldwide)
Class of
shares:
% holding
Ordinary
100.00
World Chess US, Inc
Registered office: 1201 N. Orange Street, Suite 762,
Wilmington, New Castle County, DE, USA 19801
Nature of business: Organising chess events (USA),
online chess
Class of
shares:
% holding
Ordinary
100.00
World Chess Europe GmbH
Registered office: Mittelstrasse 51 - 53, 10117
Berlin, Deutschland
Nature of business: Various chess related activities
Class of
shares:
% holding
Ordinary
100.00
During the year, World Chess PLC provided a capital
contribution of €nil (2022: €275,000) to this company.
World Chess Sakartvelo LLC
Registered office: Georgia, City Tbilisi, Didube
district, Ak. Tsereteli Avenue, N 49-51-51a, Entrance 3, Floor 13, Apartment N
128
Nature of business: Organising chess events, chess
club activities
Class of
shares:
% holding
Ordinary
100.00
This company was incorporated on 2 June 2022 but did
not commence trading until 1 January 2023.
World Chess Russia LLC
Registered office: 123242, Moscow, Kudrinskaya
Square, 1 room XIIB
Nature of business: Organising chess events, chess
club activities
Class of
shares:
% holding
Ordinary
0.00
In April 2022 the entire share capital in this
company was disposed of.
World Chess Digital Limited (formerly CNCweb Limited)
Registered office: 21st Floor, Tay Chau Building, 262
Des Voeux Road Central, Hong Kong
Nature of business: Operation of online chess
platform
Class of
shares:
% holding
Ordinary
0.00
World Chess Digital Limited was dormant throughout
2022 and remained dormant until it was dissolved on 15 September 2023.
The results of the subsidiaries identified above are
included in the consolidated financial statements, results for World Chess
Russia LLC are included up to April 2022. All subsidiaries are exempt from an
audit except World Chess Events Ltd.
15 INVENTORIES
Group
2023 2022
€ €
Inventories: 187,018 187,691
16 TRADE AND OTHER RECEIVABLES
Group Company
2023 2022 2023 2022
€ € € €
Current:
Trade receivables 29,668 452,754 - -
Amounts owed by group undertakings - - 5,769,981 4,905,195
Other receivables 204,974 205,244 1,306 12,362
Prepayments and accrued income 21,822 4,568 18,922 1,748
256,464 662,566 5,790,209 4,919,305
17 CASH AND CASH EQUIVALENTS
Group Company
2023 2022 2023 2022
€ € € €
Bank accounts 186,881 35,565 21,366 6,242
186,881 35,565 21,366 6,242
18 CALLED UP SHARE CAPITAL
2023 2022
Number of shares € Number of shares €
Allotted, issued, and fully paid Ordinary shares of £0.0001 667,193,501 75,647 602,392,689 68,260
On 6 April 2023 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 and the entire issued share capital, comprising 666,905,501
ordinary shares were admitted for trading on the main market of the London
Stock Exchange with ticker symbol CHSS.
On 4 August 2023 a further 288,000 new ordinary
shares were issued to the Company's broker in settlement of their brokerage
fees of €20,823.
At 31 December 2023 the number of additional shares
authorised for issue is 100,000,000 (2022: 100,000,000).
19 SHARE PREMIUM
2023 2022
€ €
At 1 January 6,518,849 5,520,114
Premium arising on issue of equity shares 4,529,334 998,735
At 31 December 11,048,183 6,518,849
20 RESERVES
Share capital comprises the amount for the nominal
value of shares issued.
Share premium comprises the amount subscribed for
share capital which exceeds the nominal value, after deducting costs of issue.
Retained earnings comprises of the brought forward
cumulative profit and loss balances carried forward from previous accounting
periods.
The translation reserve comprises all foreign
currency differences arising from the translation of the financial statements
of foreign operations.
21 TRADE AND OTHER PAYABLES
Group Company
2023 2022 2023 2022
€ € € €
Trade payables 728,213 657,006 7,582 81,173
Amounts owed to group undertakings - - 212,044 2,783,767
Social security and other taxes 45,430 21,318 8,250 -
Other payables 1,526,843 2,650 1,519,465 1,376
Accruals and deferred income 962,151 1,296,317 100,000 80,547
Amounts owed to Directors 135,080 120,913 19,909 3,296
3,397,717 2,098,204 1,867,250 2,950,159
Included in accruals and deferred income at the start
of the period was €679,087 (2022: €812,678) of deferred income which was
recognised as revenue during the year.
22 FINANCIAL LIABILITIES - BORROWINGS
Group Company
2023 2022 2023 2022
€ € € €
Current:
Other loans 32,989 1,082,108 - 1,019,068
Lease liabilities (see note 23) 116,208 95,686 - -
149,197 1,177,794 - 1,019,068
Non-current:
Other loans - 1-2 years - - - -
Lease liabilities (see note 23) 1,304,273 1,308,003 - -
1,304,273 1,308,003 - -
Terms and debt repayment schedule
Group
1 year or less More than 1 year and less than 5 years More than 5 years Totals
€ € € €
Other loans 32,989 - - 32,989
Lease liabilities (see note 23) 116,208 619,552 684,721 1,420,481
149,197 619,552 684,721 1,453,470
Company
1 year or less More than 1 year and less than 5 years More than 5 years Totals
€ € € €
Other loans - - - -
At 31 December 2023 outstanding loans due in less
than one year comprise a loan of €32,989 which accrues interest at 10% per
year. (2022: loan of €1,019,068 which accrues interest at 8% per year and
€63,040 which accrues interest at 10% per year.)
On 6 April 2023, a loan totalling €1,040,329
including accrued interest was converted into new ordinary shares in the
Company.
23 LEASES
Group
Right of use asset - property, plant, and equipment
2023 2022
€ €
COST
At 1 January 1,374,409 441,942
Additions 120,705 1,374,409
Disposals - (441,942)
At 31 December 1,495,114 1,374,409
DEPRECIATION
At 1 January 137,441 419,908
Charge for year 150,853 189,475
Elimination on disposal - (441,942)
Exchange difference - (30,000)
At 31 December 288,294 137,441
NET BOOK VALUE
At 31 December 1,206,820 1,236,968
All leases are accounted for in accordance with IFRS 16 Leases.
31 December 2023 31 December 2022 31 December 2021
€ € €
Right of use asset 1,206,820 1,236,968 22,034
Lease liability 1,420,481 1,403,689 21,266
A right-of-use asset was recognised in 2022 for a
lease on premises to be occupied by World Chess Club Berlin for a term of 10
years ending on 31 December 2031 with an effective interest rate of 11.83%. An
addition to the right of use asset of €120,705 was recognised during the
year following an increase in lease payments following a review.
In 2022 a right-of-use asset was disposed of during
the year relating to premises occupied by the World Chess Club Moscow, the
lease was for a term of 5 years ended on 30 April 2022 with an effective
interest rate of 10.65%.
Total finance lease interest for 2023 was €163,495
(2022: €157,850) as detailed in note 6.
Right of use assets relating to lease properties are
presented as property, plant, and equipment and amortised to the end of the
lease term.
Group
Lease liabilities - minimum lease payments fall due as follows:
31 December 2023 1 year or less More than 1 year and less than 5 years More than 5 years Totals
€ € € €
Gross obligations repayable: 267,408 1,069,632 802,224 2,139,264
Finance charges repayable: (151,200) (450,080) (117,503) (718,783)
Net obligations repayable: 116,208 619,552 684,721 1,420,481
31 December 2022 1 year or less More than 1 year and less than 5 years More than 5 years Totals
€ € € €
Gross obligations repayable: 246,234 984,936 984,936 2,216,106
Finance charges repayable: (150,548) (474,791) (187,078) (812,417)
Net obligations repayable: 95,686 510,145 797,858 1,403,689
24 FINANCIAL INSTRUMENTS
All financial instruments are measured at amortised
cost and financial instruments used by the Group, from which financial
instrument risk arises are as follows:
· trade and other payables
· cash and cash equivalents; and
· trade and other receivables
The main purpose of these financial instruments is to
finance the Group's operations.
2023 2022
€ €
Other financial assets
Trade and other receivables less than one year 256,464 821,028
Cash and cash equivalents 186,881 35,773
Total financial assets 443,345 856,801
2023 2022
€ €
Other financial liabilities
Interest bearing loans and borrowings less than one year 149,197 1,177,794
Trade and other payables less than one year 3,397,717 2,098,199
Interest bearing loans and borrowings more than one year 1,304,273 1,308,003
Total financial liabilities 4,851,187 4,583,996
The Directors consider that the carrying value for
each class of financial asset and liability, approximates to their fair value.
Financial risk management
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. The Group manages these risks through an
effective risk management programme, and, through this programme, the Board
seeks to minimise the potential adverse effects on the Group's financial
performance.
Credit risk
Credit risk is the risk of financial loss to the
Group if a customer to a financial instrument fails to meet its contractual
obligations. The Group's credit risk is primarily attributable to its
receivables and its cash deposits. It is Group policy to assess the credit
risk of new customers before entering contracts. The Group continues to assess
the risk and a further loss allowance for the full lifetime expected credit
losses is recognised if the credit risk has increased significantly since
initial recognition. The Group consider any contractual payment being 30 days
past due, and each subsequent period of 30 days, to be an indicator of a
significant increase in credit risk which may require an additional loss
allowance to be recorded.
The risks specific to the Group's revenue types
within its activities are outline below:
· Events, payment is typically received in accordance with
multi-year agreement in advance of the event to which it relates, the
Directors therefore consider the credit risk to be non-trivial but minimal.
· Online income, payment is typically received annually in advance,
the Directors therefore consider the credit risk to be trivial.
· Merchandising and Clubs, payment is typically received prior to
control of goods purchased being transferred to the customer, the Directors
therefore consider the risk to be non-trivial but minimal.
No credit loss was recognised in 2023 or 2022.
Financial assets past due but not impaired as at 31
December 2023:
Not impaired and not past due Not impaired but past due by the following amounts
>30 days >60 days >90 days >120 days
€ € € € €
Group: Trade and other receivables 236,187 2,975 1,098 16,204
Company: Trade and other receivables 5,790,209 - - - -
Financial assets past due but not impaired as at 31
December 2022:
Not impaired and not past due Not impaired but past due by the following amounts
>30 days >60 days >90 days >120 days
€ € € € €
Group: Trade and other receivables 646,901 - - - 15,635
Company: Trade and other receivables 4,919,305 - - - -
Liquidity risk and interest rate risk
Liquidity risk arises from the Group's management of
working capital. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due.
The Group's funding strategy is to ensure a mix of
funding sources offering flexibility and cost effectiveness to match the
requirements of the Group.
At 31 December 2023 the Group had outstanding loans
of €32,989 which accrues interest at a fixed rate of 10% per year. (2022:
€1,019,068 which accrued interest at a fixed rate of 8% per year and was
secured by collateral put up by a partner company, and €63,040 which accrues
interest at a fixed rate of 10%).
Foreign currency risk
The Group's exposure to foreign currency risk is
limited as most of its invoicing and payments are denominated in Euro. The
Group identifies and manages currency risks using an integrated approach that
takes into account the possibility of natural (economic) hedging. For the
purpose of short-term management of currency risk, the Group selects the
currency to reduce the open currency position (the difference between assets
and liabilities in foreign currencies).
Analysis of sensitivity of financial instruments to
foreign currency exchange rate risk
Currency risk is assessed monthly using sensitivity
analysis and maintained within parameters approved in accordance with the
Group's policy. At the reporting date, the effect of the Euro's
growth/(depreciation) against other currencies in the Group's profit/(loss)
before tax is not significant.
25 CAPITAL MANAGEMENT
The Group's objective when managing capital is to
safeguard the Group's ability to continue as a going concern, so that it can
continue to provide returns to shareholders and benefits for other
stakeholders.
The Group's capital management strategy is to retain
sufficient working capital for operating requirements and to ensure sufficient
funding is available to meet commitments as they fall due and to support
growth. There are no externally imposed capital requirements.
The Group had net assets of €1,007,724 at 31
December 2023 (2022: €1,163,425), and to maintain or adjust the capital
structure the Group may issue new shares of increase borrowings.
2023 2022
€ €
Interest bearing loans and borrowings (1,453,470) (2,485,797)
Cash and cash equivalents 186,881 35,565
Net indebtedness (1,266,589) (2,450,232)
26 PROVISION FOR LIABILITIES
Group
2023 2022
€ €
PROVISIONS
At 1 January 180,652 -
Dilapidations provision (22,765) 180,652
At 31 December 157,887 180,652
A dilapidations provision was recognised in 2022
relating to the estimated reinstatement costs at the expiry of a new 10-year
lease ending on 31 December 2031.
27 DEFERRED TAX
Group
2023 2022
€ €
Balance at 1 January (76,697) (15,733)
Movement in current year 13,425 (60,964)
Balance at 31 December (63,272) (76,697)
There are €6,397,725 (2022: €4,188,207) of tax
losses available to the Group which at the applicable tax rate of 25% would
provide an additional deferred tax asset of €1,169,681 (2022: €784,992).
This has not been recognised in the financial statements due to the
uncertainty of the timing of future taxable profits against which these losses
could be utilised.
Deferred tax assets and liabilities are offset when
the Company has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to taxes levied
by the same tax authority.
Analysis of deferred tax:
2023 2022
€ €
Timing differences arising on provisions for liabilities, lease liabilities (470,052) (531,931)
and losses carried forward
Timing difference arising on capital allowances in excess of depreciation 406,780 455,234
(63,272) (76,697)
28 CONTINGENT LIABILITIES
The Group has an ongoing claim with one supplier, if
the claim is successful then an invoice, amounting to €1,140,000, will
become payable. The invoice is not included in the financial statements as the
Directors consider it to be null and void and raised by the supplier in breach
of contract.
29 RELATED PARTY DISCLOSURES
Details of the Directors' remuneration and
consultancy fees are disclosed in note 4.
Group undertakings
The following transactions took place during the year
ended 31 December 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 29,152 -
· Purchase of inventory - 48,107
· Sale of inventory - (21,289)
· Staff and other services 78,791 1,588,378
· Commission paid on third party transactions - 58,810
World Chess Europe GmbH
· Payment of interest 76,968 -
· Purchase of inventory - 21,289
· Sale of Inventory - (48,107)
· Provision of staff and other services - (674,815)
World Chess US Inc.
· Commission charged on third party transactions (58,810)
· Provision of staff and other services - (637.563)
World Chess Sakartvelo LLC
· Provision of staff and other services - (276,000)
The following transactions took place during the year
ended 31 December 2022 with and between group undertakings.
Payments to World Chess PLC Payments to/ (receipts from) other group undertakings
€ €
World Chess Events Ltd
· Payment of interest 12,331 -
· Purchase of inventory - 56,153
· Sale of inventory - (3,823)
· Commission paid on third party transactions - 26,473
· Interest received - (4,848)
World Chess Europe GmbH
· Payment of interest 7,512 -
· Purchase of inventory - 3,823
· Sale of Inventory - (56,153)
World Chess US Inc.
· Commission charged on third party transactions - (26,473)
· Payment of interest - 4,848
The following balances remained outstanding at 31
December 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 (18,015) (115,171) (133,186)
Matvey Shekhovtsov (1,582) - (1,582)
Neil Rafferty (312) - (312)
Group undertakings
· World Chess Events Ltd 3,290,077 781,529 4,071,606
· World Chess Europe GmbH 2,479,904 (737,526) 1,742,378
· World Chess US Inc. (212,044) (25,652) (237,696)
· World Chess Sakartvelo LLC - (18,351) (18,351)
5,538,028 (115,171) 5,522,857
The following balances remained outstanding at 31
December 2022 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 (238) (93,256) (93,494)
Matvey Shekhovtsov (2,818) (24,600) (27,418)
Group undertakings
· World Chess Events Ltd 4,044,942 (2,005,174) 2,039,768
· World Chess Europe GmbH 860,253 99,327 959,580
· World Chess US Inc. (2,783,767) 1,905,848 (877,919)
2,118,372 (117,855) 2,000,517
30 ULTIMATE CONTROLLING PARTY
The ultimate controlling party is Ilya Merenzon by
virtue of his shareholding in the Company.
31 SHARE-BASED PAYMENT TRANSACTIONS
On 4 August 2023 the Company issued 288,000 new ordinary shares to its sole
broker, Novum Securities Limited, for the equivalent of €20,160 in
settlement of its first year's fees.
32 SUBSEQUENT EVENTS
On 7 February 2024 the Company issued 21,663,386 new ordinary shares to an
existing shareholder for total consideration of €1,508,737 and a further
2,867,152 new ordinary shares to Engiscent PTE Ltd, a development partner of
the Company, in consideration for €200,000 of development work completed by
Engiscent PTE Ltd.
On 8 February 2024 the Company announced that an existing shareholder had
agreed to subscribe for 11,667,187 new ordinary shares for total consideration
of €816,703 to be paid in five tranches between February 2024 and May 2024.
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