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World Chess Plc

Annual Report & Financial Statements

for the year ended 31 December 2022

Company Registration No. 10589323

(England and Wales)

World Chess Plc – Company Registration No. 10589323

CONTENTS

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COMPANY INFORMATION

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Directors

Ilya Merenzon (Chief Executive Officer)

Matvey Shekhovtsov (Chief Operating Officer)

Richard Collett (Chief Financial Officer) – appointed 6 April 2023

Graham Woolfman (Chairman) – appointed 6 April 2023

Jamison Reed Firestone (Non-Executive Director)

Neil Rafferty (Non-Executive Director) – appointed 6 April 2023

Company No.

10589323 - incorporated in England and Wales

Secretary and Registered

Office

MSP Corporate Services Ltd

Eastcastle House

27/28 Eastcastle Street

W1W 8DH

Financial Adviser

Novum Securities Limited

57 Berkeley Square

London

W1J 6ER

Auditor

Moore Kingston Smith LLP

Floor

9 Appold Street

London

EC2A 2AP

Legal advisers

Marriott Harrison LLP

80 Cheapside

London

EC2V 6EE

Registrar

Share Registrars Ltd

3 The Millennium Centre

Crosby Way

Farnham

GU9 7XX

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Statement from the Chair

I joined the Board of World Chess plc (the ‘Group’ or the ‘Company’) as Chairman upon the formation of the

expanded Board at the date of the Company`s Admission to the Standard List of the London Stock

Exchange, and I am pleased to provide my first contribution to the Annual Report.

Over the past 11 years World Chess has developed and established itself as a business providing several

commercial products and platforms within the professional and amateur international chess arena. This

includes organising top-level tournaments, operating the Fédération Internationale des Échecs (‘FIDE’)

online gaming platform, chess merchandising and promotional activities.

For the year ended 31 December 2022, the Company has reported revenues of approximately €2.8m with an

operating loss of approximately €2.5m. The financial results are set out in detail below within the Financial

Statements and Notes on pages of 47 to 78 of the Annual Report.

The Board and Executive team entered the year with confidence despite the economic challenges and

political turmoil in the latter part of the year.

Since the year end the Company has focused on developing its various lines of business, in particular setting

up the World Chess Club in Berlin and launching the international Armageddon Chess tournament series.

The Board believes that the funds raised from the share placing at Admission will have a significant positive

impact enabling the Company to invest over the medium term in the marketing and development of the

business.

The Board is conscious of the business and economic uncertainties faced over the shorter-term and the

subsequent challenges that they represent for the executive management in predicting when substantive

increased revenues, and related profits will be earned, including for the current financial year in particular.

However, the Board is confident that market demand for the Company`s products, experiences, and events

continue to be well received, and will translate to significant revenues in the years ahead.

The Company would have been and continues to be, unable to achieve its success without the considerable

efforts of the management and staff. I thank them for their hard work and commitment both throughout the

last year, and in the period leading to the admission of the Company’s shares to the London Stock Exchange.

Outlook

A detailed commentary on the business strategy is set out within the Chief Executive`s Statement and the

Strategic and Financial Review on pages 5 to 13.

Despite the current economic headwinds, the Board remain confident of the Company`s progress in the

current financial year.

It is apparent that 2023 will be a year of challenges to steadily develop partnership relationships, and

customer participation, whilst delivering on the development and expansion of the business models. The

Company has adequate financial resources to meet this objective and the Board is confident of building

value over the longer term for shareholders.

Graham Woolfman

Chair

28 April 2023

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Statement from the Chief Executive

I am very happy to present the first annual report of World Chess as a listed Company.

Listing on the London Stock Exchange brings a new opportunity for the Group to grow, but with that

opportunity comes greater responsibility, which is why I feel that it’s important to include in this report our

vision for the Company and what we hope to achieve.

World Chess has a long history at the heart of the chess community. However, this is the beginning for many

of our new investors and I would like to welcome the new shareholders and partners to the Company and

the chess community. We hope you benefit from and enjoy what we have to offer as the Company grows

and realises its potential.

Chess has been a passion and profession for decades, but until relatively recently, it was not considered a

business but rather an art and or hobby. The commercial aspects were secondary and chess events were

often dependent on the patronage of wealthy donors, whilst being represented by a select group of chess

stars and luminaries who were adored.

We intend to build a company that is one of the premier brands in chess, whilst reinventing the game for a

modern consumer. This evolution will see us accommodate and satisfy customers’ growing interests and

offer them compelling products to build their passion for chess. Our range of products, from the official

chess gaming platform to a concept chess club with a cocktail bar (visit it in Berlin if you have a chance!) can

be accessed through different channels: online, retail, corporate, social and more. All sales channels are

carefully curated to fit with the overall brand message and values and to be aspirational in terms of design.

World Chess will develop the sport based on the factors that we believe will put our organisation on the

map: creativity, pushing the conventional (and sometimes outmoded) boundaries, and challenging the status

quo, while respecting and enjoying the sport we love.

London Stock Exchange Listing

On 6 April 2023 the entire issued share capital of World Chess PLC was admitted to trading on the Main

Market of the London Stock Exchange.

As part of the admission the Company completed a subscription and retail offer issuing 49,650,972 new

ordinary shares for total cash consideration of €3,475,568 and a further 14,861,840 new ordinary shares on the

conversion of a loan totalling €1,040,329.

The 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.

World Chess Russia LLC

Following the Russian invasion of Ukraine in March 2022, the Group ceased its Russian operations and

relocated its Russian-based personnel from Russia, disposing of its Russian subsidiary including the World

Chess Club in Moscow on 14 April 2022.

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.

Ekaterina Chalykh resigned as a director on 13 April 2022.

Current trading and outlook

The World Chess Armageddon Series commenced in March 2023 with the Americas Regionals, and was

subsequently followed by the Asia and Oceania Regionals in April 2023. The upcoming months will see the

Women’s Armageddon Week in May 2023, the Europe and Africa Regionals in June 2023 and the Grand

Finale in September 2023.

The Series has been well received, generating a strong brand presence with live or highlights covered on 30

broadcast channels across over 20 countries and territories.

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Through their support of the Armageddon Series we continue our partnership with Kaspersky, with whom

we have a long relationship through our involvement with tournament organised under the auspices of

FIDE, the governing body for international chess tournaments. We have also begun a new partnership with

it.com who have supported the Armageddon Series.

We completed the initial soft launch of the World Chess Club in Berlin during the commencement of the

Armageddon Series, with the official opening planned for May 2023. The full launch and the publicity

around the Armageddon Series will form the basis for increased promotion of the FIDE Online Arena.

Ilya Merenzon

Chief Executive Officer

28 April 2023

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Our Vision, Mission, and Values

Our vision

A world where everyone can easily become an active member of the vibrant international chess community

and grow intellectually and socially through involvement with this beautiful game and exciting sport.

Our mission

To reinvent how people discover, play, and enjoy chess.

Our core values and principles

Customer satisfaction – We treat each member as an important part of the chess community, support them

on their chess journey and provide them with the environment for long-term enjoyment and growth.

360-degree approach – Chess is placed uniquely at the intersection of sport, gaming and culture. This fusion

of competition, fun, challenge, creativity, timelessness and beauty is something that we strive to incorporate

in all our products, while also seeking to provide all members and friends with recognisable and beautiful

touch points through all of our products and services.

Quality innovation – We aim to constantly challenge the traditional fossilised approach to chess by creating

next generation formats. We hope to revolutionise the game while retaining its deep historical and cultural

roots that permeates much of society.

Inclusivity and unity – Chess is not defined by culture, age, class or gender. We seek to foster a more

inclusive, more connected and more harmonious society with our products This is why we lay such

emphasis on combatting discrimination, and promoting empathy, both in our products and in the Group’s

internal operations.

Being part of the society – Wherever we find ourselves, we seek to be sensitive, relevant and contribute to

the community around us.

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Operational review

Principal Activities

The Company is the holding company of a group which aims to promote the mass market appeal of chess

globally through the commercial offering of different chess related activities This includes, but is not limited

to, the organisation of top-level tournaments, the creation of chess-merchandise, the operation of the official

online gaming platform of FIDE and other sport, lifestyle and social activities.

Our Market

The world, and chess, has changed dramatically in the last decade which has consequently altered the

direction of the Group’s development plan.

Recent World Chess Championship Matches held in New York (2016) and London (2018) notably

reinvigorated excitement and attention towards the sport, with major media outlets highlighting these

tournaments on their front pages. In addition to this, the online consumer chess experience improving

through software development and the extraordinary growth of esports, paired with nations’ ever-growing

desire to display their intellectual dominance also massively contributed to growing excitement surrounding

the sport.

Growing interest in chess from this point became a notable trend. The global lockdowns faced as result of

COVID-19 in 2020 went on to exacerbate interest in chess, people unable to leave their homes increasingly

began to play the game online. Moreover, the Queen’s Gambit became an overnight Netflix hit changing the

perceptions of many and reminding the masses that chess be beautiful, phenomenally captivating, and very

sexy.

The combining effects of these events have seen an increased interest in chess from both the general public

and corporations. This interest continues to build in a virtuous cycle, supported by more young people

engaging with chess through school programs, online products, and social interactions.

The increasing attention surrounding chess makes the next few years an opportune time to expand our role

and profile in the market while it undergoes a process of transformational growth. Reinvigorated interest

has transformed a sport that had been forgotten into a vibrant and competitive social environment.

It should not to be ignored, however, that the previous structure of official chess games and their promotion

and accessibility, has resulted in a competition which currently resembles that of an oligopoly. The sport is

currently dominated by several big players, with competition concentrated at this high level. World Chess

acknowledges such players and aims to establish its own niche in this growing market. It hopes to build new

products that avoid other platforms' mistakes of being too rigid, too boring, too conventional. Chess is not

only a game, it is entertainment, it is art and World Chess is in the position to further develop it as such.

Our Business

Online Platform

In 2022, the Group continued to develop and promote FIDE Online Arena (chessarena.com). Several

important developments were made, including NightWatch, an anti-cheating suite, which uses advanced

algorithms and machine learning techniques to detect and prevent cheating. This suite includes a variety of

measures, such as anti-cheating algorithms, anti-bot measures and fair play policies, which ensure that

games are played fairly. FOA introduced key moments — a free analysis tool that allows users to analyse

key mistakes after each game. Additional updates include calorie tracker for online chess gaming, Arena (sit

and go) tournaments and other features.

In 2022 the number of registered users grew from 497,981 to 650,473, an increase of 31%, and the number of

paid subscribers from 5,214 to 7,380, an increase of 42%.

Tournaments

In 2022, World Chess successfully organised the FIDE Grand Prix Series: two of the tournaments took place

in the Group’s Berlin venue with the other being hosted in Belgrade. The events featured strong sponsorship

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line-ups and served as additional marketing vehicles for the Group’s portfolio of products. Building on from

this momentum the Group will be organising its Armageddon Series launching in 2023 – and will host five

tournaments at the World Chess Club Berlin, with top-level chess players from around the world specifically

suited for television broadcasting.

Merchandise

In 2022, the Group introduced several new products, which included the Bauhaus boards — a new edition to

the World Chess Set collection. Although the sales were notable in 2022, they still lagged behind the

previous year, as the company grappled with logistical issues stemming from COVID-19 and the Russian-

Ukrainian conflict,

Looking forward to 2023, World Chess is hoping to concentrate on developing new products, working more

actively with wholesale sellers and launching a merchandise shop within its soon to open Berlin chess Club.

The management also plans to continue collaborations with lifestyle brands.

World Chess Clubs

Following the Group’s disposal of World Chess Russia LLC in April 2022 and with it the World Chess Club

in Moscow, the Group has taken over a central location in Berlin. The Group has developed a World Chess

Club Flagship concept that includes a bar, a coffee shop, events space, merchandise shop, as well as scalable

design and hospitality concept. World Chess Club Berlin served as a home for the FIDE Grand Prix 2022 and

is being prepared for a grand opening in 2023, where it will subsequently host the World Chess

Armageddon Series.

Sponsorship

Sponsorship revenues this year were in line with expectations with the majority of of the sponsorship

derived from FIDE Grand Prix events. As World Chess is transferring from FIDE events to its own

proprietary events (initially the Armageddon Series), the sponsorship revenue is expected to decrease in

2023 and later pick up during the second cycle of the Series to be organised in 2024. The Group however, will

receive sponsorship revenue from the World Chess Championship Cycle events organised by FIDE as a part

of the profit-sharing arrangement.

Media

World Chess has signed a media distribution deal with a large London—based media rights and sales group

to distribute Armageddon series and establish World Chess presence in international markets around the

world. This work is expected to continue into and throughout 2023.

Talent

The Group is in the process of establishing Chess & Co. (the ‘Unit’), as a separate identifiable agency brand

within the Group to partner brands with individual chess players. Chess & Co. has been created in response

to growing corporate interest in partnering brands with individual players. Unlike other major sports, few

chess players can support themselves by becoming professionals and as such the chess community remains

largely self-funded.

Chess & Co. has already signed and manages two top-30 players who run digital and event activations for

World Chess programs and partner activations. The Unit was responsible for signing elite players into the

Armageddon Series and developing their media profiles and recognition, with the hopes that the increases

attention would complement offerings to clients in connection with the Armageddon Series.

In 2023, the Unit will continue working with the players and streamers to bundle their services with larger

marketing and product offerings.

Key Performance Indicators (KPIs)

The Group uses a number of KPI's within the business. The principal financial metrics are Revenue, Gross

profit and Profit before tax which are included in the Statement of Profit or Loss and Other Comprehensive

Income.

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2022

€

2021

€

Reasons for movement

Revenue

2,796,207

3,216,400

2022 revenues were impacted by the

disposal of the World Chess Club Moscow

and a reduction in sponsorship revenue

recognised under multiyear FIDE event

sponsorship agreements.

Gross Profit

705,453

1,895,220

Under the terms of the multiyear

sponsorship agreements, the Group

continued to recognise sponsorship

revenues in 2021 whilst not hosting any

events itself. In 2022 the Group resumed

hosting events with the FIDE Grand Prix

series and whilst it continues to recognise

significant sponsorship revenue for the

three-event series, associated event costs

reduced Gross Profit.

Gross Profit was also affected by increased

supply chain and logistics costs affecting

the Group’s merchandise business.

(Loss)/profit before tax

(2,794,368)

5,896,488

2021 included a €7,406,431 exceptional gain

resulting from the Group’s interests in

certain crypto-assets received as a part of

sponsorship and other arrangements.

The Group has reviewed its non-financial KPIs. Henceforth, the Group will track the following indicators in

order to gather a better understanding of its progress:

2022

No.

2021

No.

Reasons for movement

Number of hosted

tournaments

2021 was significantly affected by COVID-

19 and no tournaments were held by World

Chess during this time. In 2022 World

Chess organised three major chess

tournaments (FIDE Grand Prix series).

Number of registered users

650,743

497,981

The Group continued to develop and

promote its platform, which resulted in

increased numbers throughout the main

KPIs.

Number of paid

subscriptions

7,380

5,214

Combined social media

followings

343,929

255,260

The Group plans to further promote the

platform in 2023 and expects higher growth

rates in 2023 onwards.

The Group also sees customer satisfaction index and customer churn rate as important KPIs, however due to

the fact that the full launch of the online gaming platform only took place in 2021, more time is required to

properly assess these KPIs.

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Financial Review

2022 was a transitional year for the Group, completing its divestment of World Chess Russia LLC, and with

it the World Chess Club in Moscow, and considerable investment in its new flagship World Chess Club in

Berlin as well as continued investment in the FIDE Online Arena.

2022

2021

€

REVENUE

2,796,207

3,216,400

GROSS PROFIT

705,453

1,895,220

GROSS PROFIT %

25%

59%

Other operating income

92,399

17,939

Administrative expenses

(3,278,281)

(3,114,803)

OPERATING LOSS BEFORE EXCEPTIONAL ITEMS

(2,480,429)

(1,201,644)

Addback: Depreciation and amortisation

632,935

396,425

PRE-EXCEPTIONAL ITEMS EBITDA LOSS

(1,847,494)

(805,219)

Exceptional Items

23,000

7,406,431

Finance costs

(337,460)

(308,299)

Finance income

521

(LOSS)/PROFIT BEFORE INCOME TAX

(2,794,368)

5,896,488

Revenue and Gross Profit

Revenues fell 13% compared to 2021 whilst cost of sales increased 58%, this was due in part to increased

costs associated with the resumption of hosted events in 2022 following the COVD-19 imposed hiatus. This

resulted in a 63% fall in Gross Profit. Under the terms of multiyear sponsorship agreements, the Group

continued to recognise sponsorship revenues in 2021 whilst not hosting any events itself. In 2022 the Group

resumed hosting events with the FIDE Grand Prix series and whilst it continues to recognise significant

sponsorship revenue for the three-event series associated event costs reduced Gross Profit. Gross Profit was

also affected by increased supply chain and logistics costs affecting the Group’s merchandise business.

The completion of the new World Chess Club in Berlin, which contains a dedicated event space, will reduce

the costs associated with hosting future events.

Loss per share

The loss per share was €0.004 (2021: profit per share of €0.009), whilst operating losses increased the more

significant effect on loss per share was the absence in 2022 of the exceptional gain that was present in 2021

resulting from the Group’s interests in certain crypto-assets pursuant to sponsorship and loan agreements.

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. As at 31 December 2022 the Group has only a minimal interest in crypto-assets which is

included in intangible assets in the Consolidated Statement of Financial Position.

Cash flows

The Consolidated Statement of Cash Flows is set out on page 51 to these consolidated financial statements,

during 2022 the Group raised €999,999 of new equity capital and a further €1,019,068 from borrowings whilst

repaying €1,341,854 of existing borrowings.

In 2021 The Group raised €1,970,822 of new equity capital whist repaying €677,378 of borrowings.

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Statement of Financial Position

The Consolidated Statement of Financial Position as at 31 December 2022 shows the Group’s total net assets

having decreased to €1,163,425 (2021: €2,644,901).

Capital expenditure

The development of the FIDE Online Arena remained a priority during the year with additional investment

of €799,866 (2021: €601,285).

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 including considering the continued war in

Ukraine and the Group’s decision to divest itself of World Chess Russia LLC and the World Chess Club in

Moscow.

The Group bases its impairment calculation on detailed budgets and forecasts, these budgets and forecasts

generally cover a five-year period The Directors concluded that no impairment was necessary at 31

December 2022.

Cash and debt position

At the year end the Group has total cash balances of €35,565 (2021: €152,689) and total borrowings of

€2,485,797 (2021: €1,426,161) giving a net debt figure of €2,450,232 (2021: €1,273,472).

Subsequent to 31 December 2022 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 as detailed in note 32.

As at the date of these consolidated financial statements the Group had total cash of €1,830,936 and total

borrowings of €62,676 giving a net debt figure of €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.

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 as detailed on page 14

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. The Directors believe that five years is

an appropriate period for this assessment, reflecting the average length of the Group’s contract base; key

markets; and the nature of its businesses and products.

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Summary

The Group has invested considerable time and resources over the last year in the World Chess Club Berlin

the World Chess Armageddon Series, and the FIDE Online Arena, which together with the listing of its

ordinary shares on the main market of the London Stock Exchange represents the completion of the first part

of its strategy to be at the heart of the business of chess, bringing together chess as a sport, as entertainment

and as a business.

Richard Collett

Chief Financial Officer

28 April 2023

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Managing Risk, Threats, and Opportunities

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 providing a structured way to recognise the unexpected and be

prepared for it.

The 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.

Our Principal Risks – related to the company's business and industry

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 Governance 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.

FIDE Online Arena contract

The FIDE Online Arena contract 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.

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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.

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Climate-Related Financial Disclosures

The Group business strategy, formulated by the Directors, considered, in consultation with different

functions and regions across the Group, what material risks climate change poses to our business, as well as

the opportunities that climate change mitigation and adaptation may create.

Climate related risks are included in our risk management framework and are reviewed by the Audit

Committee, whose terms of reference include responsibility for conducting a formal risk assessment and

maintenance of a risk register on an annual basis and for reporting, by exception, on any material changes

during the year.

This is the first year we have adopted the Task Force on Climate-related Financial Disclosures (TCFD)

guidelines and we provide details below of the progress we have made in strengthening our climate change

governance, risk management and strategy processes, as well as our plans to add to our TCFD-relevant

metrics in the next financial year.

Governance

Management and oversight of climate-related risk is integrated into the Group’s governance framework,

overseen by the Board, which considers broader environmental, social and governance (‘ESG’) matters in

line with duties included in the QCA Code and Section 172 (see pages 18 to 28).

The Audit Committee will assess the climate-related risk in accordance with the risk management

framework (see page 14 to 15).

Strategy

The Group’s management of climate-related risks is being developed by the Board with the ambition to

reduce the Group’s direct and indirect impacts on the environment.

Climate change poses risks to the business by increasing the likelihood and severity of macroeconomic and

natural crises, increasing the cost and availability of resources necessary for the Group’s continued

operations, and changing the behaviour of our customers and other stakeholders.

One of the key propositions of the FIDE Online Arena is the fact that it will operate as the official FIDE

gaming platform with ratings and titles being subsequently recognised by the official governing body. This

will therefore enable chess players to become professionals without the need travel to OTB tournaments.

A key part of the rationale for the establishment of the World Chess Club in Berlin is to create a permanent

tournament venue, allowing the Group to host tournaments without the costly and energy intensive need to

construct and then deconstruct event spaces for each tournament.

Risk management

Risks are usually first identified and understood at a functional or regional level and then consolidated and

reported to the Audit Committee to assess and make recommendations to the Board.

Supply chain disruption caused by climate-related risk is likely to increase the potential supplier risk,

including potential for shifts in supply and demand for certain products.

Changing weather patterns and an increase in natural and macroeconomic crises will increase the risk of

operational distribution, requiring additional business continuity planning.

Climate change is widely recognised as a critical issue by our customers, shareholders, and employees so it

is important for the Group’s reputation with our stakeholders to address climate-related risks and

opportunities.

Metrics and targets

This is our first year of reporting Scope 1, Scope 2 and Scope 3 greenhouse gas emissions in line with the

Greenhouse Gas Protocol (‘GHG protocol’) methodology (see page 37).

We will continue to develop our reporting in this area so we can more accurately understand and improve

our energy and carbon performance.

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We use a carbon footprint and carbon intensity (per €m revenue) metric to measure our energy and carbon

performance.

As part of business strategy, the Directors are continuing to develop our climate change targets in line with

TCFD recommendations.

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s. 172 Statement

Section 172(1) of the Companies Act 2006 requires the Directors of the Company to act in a way that they

consider, in good faith, would be most likely to promote the success of the Company for the benefit of its

members as a whole, and in doing so have regard (amongst other matters) to:

• The likely consequences of any decision in the long-term;

• The interests of the Company’s employees;

• The need to foster the Company’s business relationships with suppliers, customers and others;

• The impact of the Company’s operations on the community and the environment;

• The desirability of the Company maintaining a reputation for high standards of business conduct;

and

• The need to act fairly as between members of the Company.

The Board of Directors is collectively responsible for the decisions made towards the long-term success of

the Company and how the strategic, operational and risk management decisions have been implemented

throughout the business is detailed in the Strategic Report on pages 4 to 19.

The interests of the World Chess employees

Our employees' interests are always taken into consideration when decisions are made by the board. We

help to engage with team members by providing training and career development support and there is

formal and informal workplace communication. Staff are regularly consulted and provide valuable input

into management decisions.

Annual pay and benefit reviews are carried out to determine whether all levels of employees are benefited

equally and to retain and encourage skills vital for the business. The Remuneration Committee oversees and

makes recommendations of executive remuneration and option awards.

Our Customers

We invest heavily in product development and staff training to make sure that our customers (both

corporate and individual) receive the best value for their money in the market and we are always ready to go

the extra mile for them.

Our Suppliers

Over the years, we have built a highly effective network of suppliers and associate consultants in all the key

areas of our business. We are fortunate to be supported by extremely talented professionals from all

backgrounds and from various markets. We value these relationships and consider our long-term suppliers

and associates part of the World Chess family and an extension of our internal workforce.

Our community

We strive to create strong ties with the communities where our activities take place, be it in London, New

York or Berlin. We try to make sure that local authorities, charities, volunteer and community projects

become part of our activities and are able to benefit from such cooperation.

The environment

We recognise our environmental responsibilities and are committed to reducing our carbon footprint,

recycling waste materials and improving the efficiency of energy consumption. Where possible, we always

try to keep our training materials, contracts, invoices and other documents purely in electronic form.

Maintaining High Standards of Business Conduct

The Company is incorporated in England and Wales and governed by the Companies Act 2006. Following

its listing on the main market of the London Stock Exchange on 6 April 2023 the Company has adopted the

Quoted Companies Alliance Corporate Governance Code 2018 (the “QCA Code”) and the Board recognises

the importance of maintaining a good level of corporate governance, which, together with the requirements

to comply with the rules of a standard listing, ensures that the interests of the Company’s stakeholders are

safeguarded.

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Anti-corruption and anti-bribery training are compulsory for all staff and contractors, and the anti-bribery

statement and policy is contained in the Company’s Employee Manual. The Company’s expectation of

honest, fair and professional behaviour is reflected by this and there is zero tolerance for bribery and

unethical behaviour by anyone relating to the Company.

The importance of making all staff feel safe in their environment is maintained and a whistleblowing policy

is in place to enable staff to confidentially raise any concerns freely and to discuss any issues that arise.

Strong financial controls are in place and are well documented. The risk framework and key business risks

reviewed by the Audit Committee which in turn reports to the Board.

Conclusion

The Directors believe they have acted the way they consider most likely to promote the success of the

Company for the benefit of its members as a whole, as required by Section 172 (1) of the Companies Act

2006.

This Strategic Report was approved by the Board on 28 April 2023 and signed on its behalf by:

Ilya Merenzon

Chief Executive Officer

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Corporate Governance Statement

As Chairman of the Company, it is my responsibility to work with my fellow Board members to ensure that

the Company embraces the highest standards of corporate governance and to manage the Board in the best

interests of our many stakeholders. The Board shares my belief that practising solid corporate governance is

essential for building a successful and sustainable business.

As a Company with a Standard Listing, the Company is not required to comply with the provisions of the

UK Corporate Governance Code. However, in the interests of observing best practice on corporate

governance, the Directors intend to comply with the provisions of the Corporate Governance Code

published by the Quoted Companies Alliance (the QCA Code) insofar as is appropriate having regard to the

size and nature of the Company and the size and composition of the Board.

The QCA Code has ten principles of corporate governance, which are summarised in the following table

together with details of how, in broad terms, these principles are applied in the Company. Where the

Company departs from the QCA Code an explanation is included identifying the reasons for so doing.

This Corporate Governance Statement was approved by the Board on 28 April 2023 and signed on its behalf

by:

Graham Woolfman

Chair

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The Quoted Companies Alliance’s Ten Principles of Corporate Governance

Companies need to deliver growth in long-term shareholder value. This requires an efficient, effective and

dynamic management framework and should be accompanied by good communication which helps to

promote confidence and trust.

Deliver Growth

QCA Code

Principle Application

What we do and why

1. Establish a

strategy and

business model

which promote

long-term value

for shareholders

The Board must be able to

express a shared view of the

company’s purpose, business

model and strategy. It should

go beyond the simple

description of products and

corporate structures and set

out how the company intends

to deliver shareholder value in

the medium to long-term. It

should demonstrate that the

delivery of long-term growth is

underpinned by a clear set of

values aimed at protecting the

company from unnecessary

risk and securing its long-term

future.

The Group’s purpose, business model and strategy

are explained within the Strategic Report on pages 4

to 191. With principal risks being detailed on pages

14 to 15 and climate change related risks on page 16

to 17.

The Group uses its internal control systems to

identify risk and implement appropriate measures

to monitor, manage and mitigate known risks.

2. Seek to

understand and

meet

shareholder

needs and

expectations

Directors must develop a good

understanding of the needs

and expectations of all

elements of the company’s

shareholder base.

The Board must manage

shareholders’ expectations and

should seek to understand the

motivations behind

shareholder voting decisions.

The Board acknowledges the importance of open

and regular communication with shareholders,

within the regulatory constraints applicable to a

public company. As such, the Company will

primarily communicate with shareholders through

regulatory announcements. In addition, the

Company will make use of its investor website to

provide information to shareholders and other

interested parties.

The Company is committed to listening to and

communicating openly with its shareholders to

ensure that its strategy, business model and

performance are clearly understood.

The Chief Executive Officer and Chief Financial

Officer (and, where appropriate, the Chairman) will

seek to talk to the Group’s major shareholders on a

regular basis and ensure that their views are shared

with the Board.

The Board recognises the AGM as an important

opportunity to meet private shareholders. The

Directors are available to listen to the views of all

shareholders informally immediately following the

AGM. Where shareholder voting decisions are not

in line with the Board’s recommendations or

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expectations, the Board will seek to engage with the

relevant shareholders to understand and address

any issues.

In addition to presentations at the AGM, the

Company will seek to hold an investor presentation

or event at least once a year, to which smaller and

retail shareholders are invited and at which

management present their latest thoughts on the

Company. In addition, the Chief Executive Officer

and/or the Chief Financial Officer may attend or

present at appropriate investor conferences.

The Chairman, Chief Executive Officer and Chief

Financial Officer are the relevant contacts for

investor relations purposes. The Company may be

required to exercise discretion as to which

shareholder questions shall be responded to, and the

information used to answer questions will be

information that is freely available in the public

domain. The Directors believe that these methods of

shareholder engagement are sufficient to support

the Company’s aims in meeting their needs and

expectations.

3. Take into

account wider

stakeholder and

social

responsibilities

and their

implications for

long-term

success

Long-term success relies upon

good relations with a range of

different stakeholder groups

both internal (workforce) and

external (suppliers, customers,

regulators and others). The

Board needs to identify the

company’s stakeholders and

understand their needs,

interests and expectations.

Where matters that relate to

the Company’s impact on

society, the communities

within which it operates or the

environment have the potential

to affect the company’s ability

to deliver shareholder value

over the medium to long-term,

then those matters must be

integrated into the company’s

strategy and business model.

Feedback is an essential part of

all control mechanisms.

Systems need to be in place to

solicit, consider and act on

feedback from all stakeholder

groups.

The Company recognises the importance of

establishing good relationships and maintaining

open communication channels with different

stakeholder groups. The Company is able to identify

its key stakeholders through the Directors’ and

management’s experience and knowledge of the

operation of the Company.

The Company’s key stakeholders include

employees, subscribers, sponsors and suppliers.

Engaging with our stakeholders strengthens our

relationships and helps the Company make better

business decisions. Some of the initiatives in place to

strengthen and support relationships with

Company’s key stakeholders include:

• representing the Company or speaking at

leading industry events;

• internal communications to enable all staff

to understand performance;

• annual Strategy Days;

• regular brainstorming sessions;

• semi-annual financial results analysis;

• regular meetings with sponsors and

prospective sponsors; and

• review of feedback from subscribers via the

online platform.

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4.Embed

effective risk

management,

throughout the

organisation

considering both

opportunities

and threats

The Board needs to ensure that

the Company’s risk

management framework

identifies and addresses all

relevant risks in order to

execute and deliver strategy;

companies need to consider

their extended business,

including the Company’s

supply chain, from key

suppliers to end-customer.

Setting strategy includes

determining the extent of

exposure to the identified risks

that the company is able to

bear and willing to take (risk

tolerance and risk appetite).

The key risks and challenges to the business are

detailed on pages 14 to 15. The Company uses its

internal control systems to identify risk and

implement appropriate measures to monitor,

manage and mitigate known risks.

The Board considers risk to the business at every

Board meeting (currently, at least 10 meetings are

planned each year). The Company formally reviews

and documents the principal risks to the business at

least annually.

Both the Board and senior managers are responsible

for reviewing and evaluating risk.

Audit, risk and internal financial controls:

The Company has an established framework of

internal financial controls, the effectiveness of which

is regularly reviewed by the executive management

and the Audit Committee in light of ongoing

assessment of significant risks facing the Company.

The Audit Committee assists the Board in

discharging its duties regarding the financial

statements, accounting policies and the maintenance

of proper internal business, and operational and

financial controls.

The Audit Committee meets at least three times a

year with the Company’s external auditor to discuss

any weakness in the internal control systems, any

fraudulent acts and possible financial risks

discovered by the auditor during their review and

audit process.

The Board is responsible for reviewing and

approving the Company’s overall strategy and its

budgets and plans. There are comprehensive

procedures for budgeting and planning, for

monitoring and reporting business performance

against those budgets and plans to the Board, and

for forecasting expected performance over the

remainder of the financial period.

The Board has ultimate responsibility for the

Group’s system of internal controls and for

reviewing their effectiveness. However, any such

system of internal control can provide only

reasonable, but not absolute, assurance against

material misstatement or loss. The Group continues

to review its system of internal controls to ensure

they are appropriate for the size, complexity and

risk profile of the Group.

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Maintain A Dynamic Management Framework

5. Maintain the

board as a well-

functioning,

balanced team

led by the chair

The Board members have a

collective responsibility and

legal obligation to promote the

interests of the company, and

are collectively responsible for

defining corporate governance

arrangements. Ultimate

responsibility for the quality of,

and approach to, corporate

governance lies with the chair of

the Board.

The Board (and any committees)

should be provided with high

quality information in a timely

manner to facilitate proper

assessment of the matters

requiring a decision or insight.

The Board should have an

appropriate balance between

executive directors and should

have at least two independent

non-executive directors.

Independence is a Board

judgement.

The Board should be supported

by committees (e.g., audit,

remuneration, nomination) that

have the necessary skills and

knowledge to discharge their

duties and responsibilities

effectively.

Directors must commit the time

necessary to fulfil their roles.

The Company is controlled by the Board of

Directors. The non- executive Chairman, is

responsible for the running of the Board and the

Chief Executive Officer, has executive responsibility

for running the Group’s business and implementing

Group strategy.

All Directors receive regular and timely information

regarding the Group’s operational and financial

performance. Relevant information is circulated to

the Directors in advance of Board and committee

meetings. All Directors have direct access to the

advice and services of the de facto Company

Secretary and are able to take independent

professional advice in the furtherance of their

duties, if necessary, at the Company’s expense.

The Board, at admission, will comprises three

Executive Directors and three Non- Executive

Directors. The Board considers, after careful review,

that two of the three Non-Executive Directors bring

their respective independent judgement to bear.

The third Non- Executive Director, having been

actively involved in the Company’s Events business

for a number of years in the past is considered non-

independent. The Board is satisfied that it has a

suitable balance between independence on the one

hand, and knowledge of the Company on the other,

to enable it to discharge its duties and

responsibilities effectively. Further information on

the Board of Directors is included in the Prospectus.

The Board has a formal schedule of matters

reserved to it and is supported by the Audit

Committee and Remco. Given the size and

composition of the Board, a separate Nominations

Committee (Nomco) is not considered necessary at

this stage in the Company’s development.

The Company has effective procedures in place to

monitor and deal with potential or actual Directors’

conflicts of interest. The Board is aware of the other

commitments and interests of its Directors, and

changes to these commitments and interests are

reported to and, where appropriate, agreed with the

rest of the Board. At present, each Board member

commits sufficient time to fulfil their duties and

obligations to the Board and the Company.

The number of Board and committee meetings, and

the attendance of the Directors is disclosed in the

Director’s Report on page 31.

6. Ensure that

The Board must have an

Details on each of the Directors, including a

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between them

the directors

have the

necessary up-to-

date experience,

skills and

capabilities

appropriate balance of sector,

financial and public markets

skills and experience, as well as

an appropriate balance of

personal qualities and

capabilities. The board should

understand and challenge its

own diversity, including gender

balance, as part of its

composition.

The Board should not be

dominated by one person or a

group of people. Strong

personal bonds can be

important but can also divide a

Board.

As companies evolve, the mix of

skills and experience required

on the Board will change, and

board composition will need to

evolve to reflect this change.

summary of their past experience, is set out on page

29 to 30.

The Directors have a wide range of industry,

financial and capital markets skills based on both

qualifications and experience including significant

fundraisings, M&A activity, running and growing

businesses and financial management. As such, the

Board believes that the collective capabilities of the

Directors enable the Company to deliver its strategy

for the benefit of the shareholders over the medium

to long- term.

The composition of the Board and its specific skills

and knowledge will be reviewed by the Board as

the Company continues to evolve. Where new

Board appointments are considered, the search for

candidates is conducted, and appointments are

made, on merit, against objective criteria and with

due regard for the benefits of diversity on the

Board, including gender identity and ethnic

background.

7. Evaluate

board

performance

based on clear

and relevant

objectives,

seeking

continuous

improvement

The Board should regularly

review the effectiveness of its

performance as a unit, as well as

that of its committees and the

individual directors.

The Board performance review

may be carried out internally or,

ideally, externally facilitated

from time to time. The review

should identify development or

mentoring needs of individual

directors or the wider senior

management team.

It is healthy for membership of

the board to be periodically

refreshed. Succession planning

is a vital task for boards. No

member of the Board should

become indispensable.

On admission, following the appointment of the

Chairman and the adoption of the QCA Code, the

Board will perform an annual self-evaluation

process reviewing the operation and performance

of the Board as a whole, and its committees, to

ensure that its members collectively function in an

efficient and productive manner.

This review will be carried out in the first quarter of

every year before the publication of the annual

report of the Company and before Directors are

proposed for re-election at the AGM (if relevant) to

ensure that their performance is and continues to be

effective, that where appropriate they maintain

their independence and that they are demonstrating

continued commitment to the role.

The Board will utilise the results of the evaluation

process when considering the adequacy of the

composition of the Board and for succession

planning.

Continuing Directors stand for re-election at the

AGM at least every 3 years.

8. Promote a

corporate

culture that is

based on ethical

values and

behaviours

The Board should embody and

promote a corporate culture that

is based on sound ethical values

and behaviours and use it as an

asset and a source of

competitive advantage.

The Board aims to lead by example and do what is

in the best interests of the Company.

The Company has adopted a Code of Conduct

detailing the Board’s expectations in relation to

social responsibility, sustainability, human rights

and ethical standards for all employees and

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The policy set by the board

should be visible in the actions

and decisions of the chief

executive and the rest of the

management team.

Corporate values should guide

the objectives and strategy of the

Company.

The culture should be visible in

every aspect of the business,

including recruitment,

nominations, training and

engagement. The performance

and reward system should

endorse the desired ethical

behaviours across all levels of

the Company.

The corporate culture should be

recognisable throughout the

disclosures in the annual report,

website and any other

statements issued by the

Company.

contractors. The Company aims to conduct its

business with honesty and integrity, respecting

human rights and the interests of its employees,

partners and third parties and endeavours to follow

sustainable and responsible management practices

in protecting the long-term interests of the business,

its employees and community stakeholders.

The Company has adopted a share dealing code for

the Directors and applicable employees of the

Group for the purpose of ensuring compliance by

such persons with the retained EU law version of

the Market Abuse Regulation.

9. Maintain

governance

structures and

processes that

are fit for

purpose and

support good

decision-

making by the

Board

The Company should maintain

governance structures and

processes in line with its

corporate culture and

appropriate to its:

• size and complexity; and

• capacity, appetite, and

tolerance for risk.

The governance structures

should evolve over time in

parallel with its objectives,

strategy and business model to

reflect the development of the

Company.

Currently the Board plans to meet at least 10 times

each year, either in person or by phone or other

“virtual” means. This may be supplemented by

additional meetings as and when required. The

Board and its Committees receive appropriate and

timely information prior to each meeting; a formal

agenda is produced for each meeting, and Board

and Committee papers are distributed several days

before meetings take place. Any Director may

challenge Company proposals and decisions are

taken democratically after discussion. Any specific

actions arising from such meetings are agreed by

the Board or relevant Committee and then followed

up at the next meeting.

The Board is responsible for the long-term success

of the Company. There is a formal schedule of

matters reserved to the Board. It is responsible for

overall Group strategy.

It monitors the exposure to key business risks and

reviews the Group’s strategic direction, annual

budgets and performance in relation to those

budgets. There is a clear division of responsibility at

the head of the Company. The Chairman is

responsible for running the business of the Board

and for ensuring appropriate strategic focus and

direction. The Chief Executive Officer is responsible

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for proposing the strategic focus to the Board,

implementing it once it has been approved and

overseeing the management of the Company

through the executive team.

Senior executives below Board level may attend

Board meetings where appropriate to present

business updates.

The Audit Committee meets at least three times a

year and is responsible for review and approval of

the half-yearly and annual reports and for

communication with the external auditor in relation

to any matters found during the courses of their

interim review and final audit of the Group. The

Audit Committee is also responsible for reviewing

the internal control system on a regular basis to

prevent the occurrence of any fraudulent acts

within the Group and reviewing the independence

of the external auditor.

The Remuneration Committee (Remco) will meet at

least three times a year. Recommendations will be

made to the Board for ensuring that the Executive

Directors are fairly rewarded for their individual

contribution to the Group.

The role of the Nominations Committee (Nomco) is

intended to be performed by the Board acting as a

whole until such time as a separate Nomco is

required.

The Board will continue to monitor its governance

structures with the QCA Code in mind. The

Company is committed to the evolution of its

corporate governance in line with best practice, to

the extent the Directors judge it appropriate

considering the Company’s size, stage of

development and resources.

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Build Trust

10.

Communicate

how the

Company is

governed and is

performing by

maintaining a

dialogue with

shareholders

and other

relevant

stakeholders.

A healthy dialogue should exist

between the Board and all of its

stakeholders, including

shareholders, to enable all

interested parties to come to

informed decisions about the

Company.

In particular, appropriate

communication and reporting

structure should exist between

the Board and all constituent

parts of its shareholder base.

This will assist:

• the communication of

shareholders’ views to the

board; and

• the shareholders’

understanding of the

unique circumstances and

constraints faced by the

Company.

It should be clear where these

communication practices are

described (annual report or

website).

The Company will communicate with shareholders

through the Annual Report and Accounts,

regulatory announcements (including full-year and

half-year reports), the AGM, one-to-one meetings

with large existing or potential new shareholders,

and investor presentations to smaller, retail

shareholders. A range of corporate information

(including all Company announcements and

presentations) is also available to shareholders,

investors and the public on the Company’s website:

www.worldchess.com.

The Board receives regular updates on the views of

shareholders through briefings from the Chairman,

the Chief Executive Officer, Chief Financial Officer

and the Company’s brokers.

The Company’s Report & Accounts and Notices of

General Meetings will be available in the Report

and Accounts section of the website.

The results of voting on all resolutions in future

general meetings will be posted to the Company’s

website and announced via RNS.

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Board of Directors

The Board is comprised of three Executive Directors, the Non-Executive Chairman, and a further two Non-

Executive Directors. The Board believes that the Directors have an effective blend of industry, financial and

public market experience, diversity, skillsets and capabilities. The Audit and Remuneration Committees are

comprised of Non-Executive Directors, the Nominations Committee, when it is formed, will also be

comprised of Non-Executive Directors.

The Board is collectively responsible for the long-term success of the Group. The Board provides

entrepreneurial leadership within a framework of controls which enables risk to be assessed and managed.

The Board determines strategy and ensures that the necessary resources are in place to execute that strategy.

An important part of the Board’s role is the review of management performance. The Company’s process for

evaluating the effectiveness of the Board and Directors’ performance comprises annual internal reviews of

executive and non-executive directors’ performance. The results of such reviews are used to determine

whether any alterations are needed or whether any additional training would be beneficial.

Non-Executive Directors are required to devote at least 2 days (on average) per month to their directors’

duties whereas Executive Directors are expected to devote such time as is required for the proper

performance of their duties.

Ilya Merenzon, Chief Executive Officer

Ilya was educated in the US and holds an MPhil in Economics and an MBA. His previous experience

includes working for the New York mayor’s office where he was part of the team that developed the ‘e-

government project’. Ilya led a successful communications and government relations practice in New York,

and his clients included the New York Stock Exchange and the New York Times. Ilya advised on several

IPOs in the US, including the listing of Rostelecom, Russia’s top telecommunications company. He has won

several awards for his work in communications and finance.

Matvey Shekhovtsov, Chief Operating Officer

Matvey obtained a master’s degree in International Economic Law at the Moscow State Institute of

International Relations and a Master I degree of the European and French Economic Law at Paris 1

Pantheon-Sorbonne University.

His fields of expertise include tax planning, compliance, sports law and corporate governance. He has

participated in numerous PR, sport, and media projects. He joined the World Chess project in 2014 and in his

current position oversees day-to-day operations of the company with special focus on compliance, corporate

governance, and finance.

Jamison Reed Firestone, Non-Executive Director

Jamison is a graduate of Tulane Law School and a member of the New York Bar. He founded the first

independent foreign law firm in Russia. He lived in Moscow for eighteen years and has managed a law

practice there since 1993. He was also a member of the Board of Directors of the American Chamber of

Commerce in Russia for six years, where he lobbied both the US and Russian governments for changes to

improve trade and business in Russia.

In 2007 Mr. Firestone’s original Russian law firm exposed the largest tax fraud perpetrated against the

Russian Government. During the last ten years Mr. Firestone has spent considerable effort advising on issues

of how to effectively sanction dictatorships and kleptocracies and what to do with the frozen funds of

kleptocratic regimes which belong to the people of their nations.

Graham Woolfman, Non-executive Chairman (appointed on 6 April 2023)

Graham has over 30 years’ experience in advising, investing, and supporting businesses. He was a founder

Director of Gateway VCT plc, a technology focussed venture capital trust listed on the London Stock

Exchange and managing partner of its investment adviser. Graham has worked with companies across a

range of sectors, including technology, industrial, renewable energy, general service based, and financial

services sectors. He is a director of public interest entities and private companies and has served as a director

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 30 of 78

of investor backed, AIM quoted, and LSE listed companies.

Graham was a Non-Executive Director of Filta Group Holdings plc quoted on AIM since 2016, until it was

taken over in March 2022, and Chair of the Audit Committee, and member of the Remuneration Committee.

He is a Non-Executive Director, and Chair of the Audit and Risk Committee, and member of the Treasury

Committee of Peabody Trust, and a Board member of its subsidiary, Catalyst Housing Limited. Graham was

Chair of Ethernity Networks Ltd, a growth technology company based in Israel, quoted on AIM since 2017,

where he advised and supported the process in the run up to its successful IPO and led and mentored the

Board team until 2021. Graham is a Fellow of the Institute of Chartered Accountants in England and Wales,

and previously a partner and head of Corporate Finance at a medium sized UK professional firm.

Richard Collett, Chief Financial Officer (appointed on 6 April 2023)

Richard is a member of the Chartered Institute of Management Accountants (CIMA) and a non-practicing

barrister, he has a degree in Economics from the University of Leeds and a post graduate diploma in Law

from the City Law School, City University, London. He has nearly 20 years’ experience leading finance, IT,

HR and legal teams in SME's and scale up businesses, both privately owned, AIM and main market listed,

across a range of industries including entertainment, travel, property, professional services, manufacturing,

and luxury retail.

Prior to joining World Chess Richard was Chief Financial Officer at Live Company Group, the AIM listed

events and entertainment group, and prior to that he was Chief Operating Officer at Ellwood Atfield. He has

also held senior finance positions at Ten Group, Donaldsons (now part of Cushman & Wakefield), and Hay

Group (now part of Korn Ferry).

Neil Rafferty, Non-Executive Director (appointed on 6 April 2023)

Neil has spent much of his career in the telecoms and technology sectors holding a variety of senior

executive positions. These range from being CEO & Board member of Easynet PLC (listed on the main

London Stock Exchange before being acquired), CEO of Priority Telecom (a Dutch based cable company),

and CEO of UCS (a Swiss based pan-European network carrier) which he managed through to sale after

completing a significant business ‘turn-around’. He was also Global Operation Director at Cisco Systems,

primarily responsible for the British Telecom relationship, which was one of Cisco’s largest global

customers.

Neil was a Non-Executive director of Ethernity Networks Ltd, quoted on AIM since 2017, where he

supported the process in the run up to its successful IPO and was Chair of the Nomination Committee as

well as serving on the Audit & Risk Committee and Remuneration Committee until December 2021. Latterly,

as founder of Portent Business Services, he has been advising companies across a variety of sectors primarily

helping them implement growth strategies.

Neil holds a BA (Hons) degree from Newcastle Polytechnic.

Ekaterina Chalykh – resigned 13 April 2022

Ekaterina acted as an event organiser and director during the biggest events in chess, including the 2016

World Chess Championship in New York and 2018 World Chess Championship in London. Before joining

World Chess, Ekaterina was a project director in V Confession, one of the top Eastern European event

agencies. She worked on projects in France, Italy, Belgium, Switzerland, USA, and collaborated with leading

companies in the luxury sector, such as Bureau Betak, LVMH, Gucci Group, Hermes, and BMW. She is a

graduate of Plekhanov Russian University of Economics.

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

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Role of the Board

The Company will hold timely board meetings as issues arise which require the attention of the Board. The

Board is responsible for the management of the business of the Company, setting the strategic direction of

the Company and establishing the policies of the Company. It is the Directors’ responsibility to oversee the

financial position of the Company and monitor the business and affairs of the Company, on behalf of the

Shareholders, to whom they are accountable. The primary duty of the Directors is to act in the best interests

of the Company at all times. The Board also addresses issues relating to internal control and the Company’s

approach to risk management and has formally adopted an anti-corruption and bribery policy.

Graham Woolfman, Neil Rafferty, and Jamison Reed Firestone are considered by the Board to be

independent Non-Executive Directors.

The Directors have established an Audit Committee, and a Remuneration Committee with formally

delegated duties and responsibilities. The Company Secretary has the responsibility of advising the Board on

corporate governance matters and assisting with the flow of information to and from the Board.

Audit Committee

The Audit Committee, which currently comprises Graham Woolfman, Jamison Reed Firestone and Neil

Rafferty as Chair and has the primary responsibility for monitoring the quality of internal control and

ensuring that the financial performance of the Company is properly measured and reported on and for

reviewing reports from the Company’s auditors relating to the Company’s accounting and internal controls.

The committee is also responsible for making recommendations to the Board on the appointment of auditors

and the audit fee and for ensuring the financial performance of the Company is properly monitored and

reported. The Audit Committee will meet not less than three times a year. This committee is chaired by Neil

Rafferty.

Remuneration Committee

The Remuneration Committee, which currently comprises Graham Woolfman, Jamison Reed Firestone and

Neil Rafferty and is responsible for the review and recommendation of the scale and structure of

remuneration for senior management, including any bonus arrangements or the award of share options with

due regard to the interests of the Shareholders and the performance of the Company. This committee is

chaired by Graham Woolfman.

Market Abuse Regulation

The Company has adopted a share dealing policy which sets out the requirements and procedures for the

Board and applicable employees' dealings in any of its Ordinary Shares in accordance with the provisions of

UK MAR.

Board Meeting Attendance

Board Meetings

Ilya Merenzon

6 of 6

Matvey Shekhovtsov

6 of 6

Jamison Firestone

6 of 6

Ekaterina Chalykh (resigned 13 April 2022)

1 of 1

During the year ended 31 December 2022 the Board met six times and passed unanimous written resolutions

four times, there were no meetings of the Audit Committee or the Remuneration Committee which were not

formed until 6 April 2023.

Directors’ Interest in Shares

The interest of Directors and their connected persons in shares of the Company were:

31 December 2022

31 December 2021

Ilya Merenzon

443,870,000

Matvey Shekhovtsov

16,680,000

Jamison Firestone

5,560,000

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 32 of 78

Term of Appointment

Year of

appointment

Number of years

completed

Date of current

engagement letter

Ilya Merenzon

2017

6 April 2023

Matvey Shekhovtsov

2017

6 April 2023

Jamison Firestone

2020

6 April 2023

Graham Wolfman

2023

6 April 2023

Richard Collett

2023

6 April 2023

Neil Rafferty

2023

6 April 2023

Board Diversity

Gender identity

Number of

board

members

Percentage

of the

board

Number of senior positions

on the board (CEO, CFO,

SID and Chair)

Men

100%

Women

Not specified/prefer not to say

Ethnic background

Number of

board

members

Percentage

of the

board

Number of senior positions

on the board (CEO, CFO,

SID and Chair)

White British or other White

(including minority-white groups)

100%

Mixed/Multiple Ethnic Groups

Asian/Asian British

Black/African/Caribbean/Black British

Other ethnic group, including Arab

Not specified/ prefer not to say

In the opinion of the Board, only the Directors of the Company, as detailed above, are regarded as key

management personnel and there are no additional executive management personnel.

The Board acknowledges the challenges of its composition and where new Board appointments are

considered, the search for candidates, and appointments, will have due regard to the benefits of diversity on

the Board, including gender identity and ethnic background.

Board Development

The Directors receive regular updates on legal, regulatory and governance matters from the Group’s

financial advisors, Company Secretary, independent external auditor and other external advisers to ensure

the Directors’ awareness and the Board’s governance processes are up to date.

Each Director keeps their relevant skills and knowledge up to date through formal and informal methods

including qualified continuing professional development (if applicable), memberships of leadership

communities and knowledge-based networking.

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

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Directors Remuneration Report

Remuneration Committee

The Board recognises the importance of attracting, retaining and motivating talent within the Board and the

wider team to ensure the success of the Company.

The Remuneration Committee is responsible for reviewing and determining compensation arrangements for

all Directors and senior Executives, including implementing and revieing performance targets, measuring

performance against targets and calculating any performance related remuneration as well considering and

approving any discretionary payments. The Committee considers the appropriateness of the nature and

amount of emoluments of such officers on a periodic basis by reference to relevant employment market

conditions with the overall objective of ensuring maximum stakeholder beneﬁt from the retention of a high-

quality Board and senior Executive team.

The company’s ordinary shares were admitted for trading on the main market of the London Stock

Exchange subsequent to 31 December 2022 (see note 32) as such the Company will be presenting its

Remuneration Policy for shareholder approval at its next Annual General Meeting which will be its first as a

listed Company.

Remuneration of Directors (audited)

Salary and

fees

€

Benefits-in-

kind

€

Pension

contributions

€

2022

Total

€

2021

Total

€

Ilya Merenzon

192,000

154,570

Matvey Shekhovtsov

106,300

73,859

Jamison Firestone

23,701

Ekaterina Chalykh

5,000

9,461

327,001

237,890

1 – Includes payment of €300 to Mr Merenzon and Mr Shekhovtsov in accordance with the Energiepreispauschale (Energy Lump

Sum) paid to all German employees to help ease the burden brought on by increasing energy price.

2 – Fees paid to FD Advisory LLP, a limited liability partnership of which Mr Firestone is a member and exerts significant control.

3 – Resigned 13 April 2022.

Service agreements and Letters of Appointment

In 2022 and 2021 the Directors were remunerated primarily through consultancy fees, during the year Mr

Merenzon and Mr Shekhovtsov both relocated to Germany and were remunerated via employment contracts

with World Chess Europe GmbH for their activities relating to the Group’s activities in Germany. Directors

remuneration, including consultancy fees and discretionary payments were agreed by the Board based on

market conditions with the overall objective of ensuring maximum stakeholder beneﬁt.

In April 2023, following its admission to trading, the Company reviewed the remuneration packages and

service contracts for existing Directors and appointed three new Directors, details of the new agreements for

all directors are summarised below.

UK-based executive directors are entitled to participate in the company’s auto-enrolment pension scheme if

they wish. The Directors are reimbursed by the Company for any travel, hotel, or other expenses that they

occur in connection with the discharge of their duties.

Matvey Shekhovtsov

Matvey Shekhovtsov entered into a service agreement with the Company dated 6 April 2023 as Chief

Operating Officer of the Company. The service agreement 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 which

has a notice period of four weeks to the 15th or end of a calendar month. Across the two agreements Matvey

Shekhovtsov’s combined salary is €115,200.

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

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Ilya Merenzon

Ilya Merenzon entered into a service agreement with the Company dated 6 April 2023 as Chief Executive

Officer of the Company. The service agreement 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 which has a notice

period of four weeks to the 15th or end of a calendar month. Across the two agreements Ilya Merenzon’s

combined salary is €212,400.

Richard Collett

Richard Collett entered into a service agreement with the Company dated 6 April 2023 he is entitled to a

salary of £100,000 to act as Chief Financial Officer of the Company. The service agreement is for an initial

term of 24 months, but terminable on three months’ notice by either party. After this time, Richard Collett’s

employment is stated to terminate without notice unless the parties agree in writing to extend the initial

term. The service agreement contains customary post-employment restrictive covenants.

Graham Wolfman

On 6 April 2023, the Company and Graham Woolfman entered into a letter of appointment pursuant to

which Graham Woolfman will act as an independent non-executive director and chairperson of the

Company from Admission. The agreement is for an initial term ending on the conclusion of the Company’s

next AGM following Admission. The appointment may be terminated upon three months’ notice by either

party at any time. Graham Woolfman will receive an annual fee of £42,500 to act as a non-executive director

and chairperson (which includes fees for membership of all board committees and subsidiaries). Where

Graham Woolfman is required to work in excess of 24 days per annum, he will be entitled to an additional

pro rata rate of £1,700 per day.

Neil Rafferty

On 6 April 2023, the Company and Neil Rafferty entered into a letter of appointment pursuant to which Neil

Rafferty will act as an independent non-executive director of the Company from Admission. The agreement

is for an initial term ending on the conclusion of the Company’s next AGM following Admission. The

appointment may be terminated upon three months; notice by either party at any time. Neil Rafferty will

receive an annual fee of £32,000 to act as a non-executive director (which includes fees for membership of all

board committees and subsidiaries). Where Neil Rafferty is required to work in excess of 24 days per annum,

he will be entitled to an additional pro rata rate of £1,500 per day.

Jamison Firestone

On 6 April 2023, the Company and Jamison Firestone entered into a letter of appointment pursuant to which

Jamison Firestone will act as an independent non-executive director of the Company from Admission. The

agreement is for an initial term ending on the conclusion of the Company’s next AGM following Admission.

The appointment may be terminated upon three months; notice by either party at any time. Jamison

Firestone will receive a monthly fee of £1,000 to act as a non-executive director for the first twelve months

(which includes fees for membership of all board committees and subsidiaries). After the first twelve

months, Jamison Firestone’s fees for further work will be agreed between Jamison Firestone and the Board or

Remuneration Committee.

Material Interests

So far as the Board is aware, no director had any material interest in a contract of significance (other than

their service contract) with the company or any of its subsidiary companies during the period.

This Remuneration Report was approved by the Board of Directors on 28 April 2023 and signed on its behalf

by:

Graham Wolfman

Chair Remuneration Committee

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 35 of 78

Directors’ Report

The Directors present their Annual Report and the audited Group and Company financial statements of

World Chess Plc for the year ended 31 December 2022.

In accordance with section 414c (11) of the Companies Act 2006, the Directors have chosen to include

information about the future developments and principal risks and uncertainties in the Strategic Report.

Principal Activities

The Company is the holding company of a group which aims to promote the mass market appeal of chess

globally through the commercial offering of different chess related activities, including the organisation of

top-level tournaments, operation of the official online gaming platform of FIDE and other sport, lifestyle and

social activities, and merchandise related to chess.

Directors

The Directors who served during the period, and up to the date of this report, were as follows:

• Ilya Merenzon

• Matvey Shekhovtsov

• Jamison Reed Firestone

• Graham Woolfman (appointed 6 April 2023)

• Richard Collett (appointed 6 April 2023)

• Neil Rafferty (appointed 6 April 2023)

• Ekaterina Chalykh (resigned 13 April 2022)

Dividends

The Directors do not propose a dividend in respect of the year ended 31 December 2022 (2021: €nil).

Political donations

The Company did not make any political donations or expenditure.

Directors and officers indemnity insurance

During the year, Directors’ and officers’ liability insurance was maintained for Directors and other officers of

the Company as permitted by the Companies Act 2006.

Branches in the EU

The Group has no branches in the EU.

Financial risk management

The Group’s financial risk management objectives are detailed in note 25.

Subsequent Events

Events occurring after the reporting period have been detailed in the Strategic Report and in note 32.

Current Director Shareholdings

Directors direct and indirect interests in the issued share capital of the Company as at the date of this report:

No. of shares

at 28 April 2023

Ilya Merenzon

404,520,000

60.66

Matvey Shekhovtsov

33,350,000

5.00

Jamison Firestone

5,560,000

0.83

Graham Wolfman

Richard Collett

Neil Rafferty

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 36 of 78

By an agreement dated 28 April 2023 Graham Woolfman was granted an option over 6,669,055 Ordinary

Shares exercisable between 6 April 2024 and 6 April 2029 at a price of €0.07 (seven euro cents) per share.

By an agreement dated 28 April 2023 Neil Rafferty was granted an option over 1,667,264 Ordinary Shares

exercisable between 6 April 2024 and 6 April 2029 at a price of €0.07 (seven euro cents) per share.

The Company does not have an annual or long-term incentive scheme in place for any of the Directors and

as such there are no disclosures in this respect.

Substantial Shareholdings

The Directors were advised of the following significant direct and indirect interests in the issued share

capital of the Company above 3% as at 28 April 2023:

No. of shares

Ilya Merenzon

404,520,000

60.66

Prytek Investment Holdings Pte Ltd

83,910,000

12.58

Yuri Milner

50,455,671

7.57

Matvey Shekhovtsov

33,350,000

5.00

Mikhail Merenzon

29,394,285

4.41

AIC Capital LLC

24,740,000

3.71

1 – Yuri Milner’s interest include ordinary shares held by Breakthrough Initiatives Ltd, Steinitz Investments Ltd, and Euler Fund

L.P., entities over which he exerts significant influence.

Controlling shareholder

Ilya Merenzon, who is the Chief Executive Officer of the Group, holds 60.66% of the total issued share capital

of the Company.

A relationship agreement dated 6 April 2023 between Mr Merenzon, 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.

Aside from as stated above, to the best of the Directors’ knowledge no-one, directly or indirectly, acting

jointly, exercise or could exercise control over the Company.

Going Concern

The Directors have assessed the viability of the Group as detailed on page 12, 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.

Carbon and greenhouse gas emissions

The Group does not maintain its own production facilities and makes use of serviced offices with many staff

working remotely from home, as such most of our carbon emissions are within Scope 3 (emissions from

activities not owned or controlled by the Group).

2022 is the first year the Group has reported carbon and greenhouse gas emissions under the Streamlined

Energy & Carbon Reporting (SECR) framework and has adopted a methodology based on the GHG

protocol.

In our first year of reporting, we have included energy usage based on meter readings from our own

operated premises in Scope 2 analysis and have included energy consumption from business travel,

upstream transportation and distribution and purchased goods and services within Scope 3. Figures in scope

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 37 of 78

3 are based on an EXIOBASE Multi-Regional Environmentally Extended Input Output (EEIO) Model which

is used to calculate upstream emissions from expenditure data. The multi-regional EEIO emission factors

contain the average ‘cradle-to-gate’ greenhouse gas emissions generated by purchasing a specific product or

service, based on the industry.

We use intensity ratios based on the tonnes of carbon dioxide equivalent (tCO2e) and the kilowatt hours of

energy (kWh) per total €m of revenue to monitor our energy efficiency performance and carbon footprint

and we are committed to reducing the carbon emitted based on these ratios.

We have adopted practices to conserve energy, water, and reducing waste, including using recyclers and

refurbished equipment. We make use of online collaboration tools, flexible working practices to reduce the

impact of business travel and commuting and with the opening of the World Chess Club in Berlin have

established a permanent event space to host future tournaments obviating the energy intensive process of

building and decommissioning event spaces for individual tournaments.

Kilowatt hours

of energy

(kWh)

Tonnes of carbon

dioxide equivalent

(tCO2e)

2022

Scope 1

Scope 2

UK Electricity

Rest of world electricity

32,882

11.5

Scope 3

Business travel

58,949

11.4

Upstream transportation and distribution

291,480

56.4

Purchased goods and services

6,046,660

1,170.0

Total

6,429,971

1,249.3

Intensity ratio per €m revenue

2,299,533

447

Equal opportunities

The Company promotes a policy for the creation of equal and ethnically diverse employment opportunities

including with respect to gender. The Company promotes and encourages employee involvement wherever

practical as it recognises employees as an asset and one of the key contributions to the Company’s success.

Internal controls

The Board has ultimate responsibility for the Group’s system of internal controls and for reviewing their

effectiveness. However, any such system of internal control can provide only reasonable, but not absolute,

assurance against material misstatement or loss. The Group continues to review its system of internal

controls to ensure they are appropriate for the size, complexity and risk profile of the Group.

The risk and control management system framework includes:

• close management of the day-to-day activities of the Group by the Executive Directors;

• regular reviews of its risk register;

• comprehensive annual budgeting process, which is approved by the Board;

• detailed monthly reporting of performance against budget; and

• central control over key areas such as capital expenditure authorisation and banking facilities.

The Executive Directors are responsible for ensuring that the risk and control management system

framework is implemented effectively within their respective business areas. This includes ensuring an

effective risk culture is in place, with risk management embedded in the business. The Board delegates its

responsibility to identify, assess and manage climate-related risk to the Audit Committee.

The Group continues to review its system of internal control to ensure adherence to best practice, whilst also

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 38 of 78

having regard to its size and the resources available. A whistle blowing policy is in place to enable

employees to report to the Board, in confidence, any risks or threats to the operations of the business,

however the Board considers that the introduction of an internal audit function is not appropriate at this

juncture but will keep this under review.

Provision of information to auditor

So far as each of the Directors is aware at the time this report is approved:

• there is no relevant audit information of which the Company’s auditor is unaware; and

• the Directors have taken all steps that they ought to have taken to make themselves aware of any

relevant audit information and to establish that the Company’s auditor is aware of that information.

Auditor

The Company appointed Moore Kingston Smith LLP as auditors for the Company for the financial year

2022. A resolution to re-appoint Moore Kingston Smith LLP will be put to the shareholders at the next

Annual General Meeting.

Website publication

The directors are responsible for ensuring the annual report and the financial statements are made available

on a website. Financial statements are published on the Company’s website in accordance with legislation in

the United Kingdom governing the preparation and dissemination of financial statements, which may vary

from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the

responsibility of the directors. The directors’ responsibility also extends to the ongoing integrity of the

financial statements contained therein.

Directors’ responsibilities pursuant to DTR4 (Disclosure and Transparency Rules)

The directors confirm to the best of their knowledge and belief:

• The Group and Company financial statements have been prepared in accordance with UK-adopted

International Accounting Standards, and give a true and fair view of the assets, liabilities, financial

position and profit or loss of the Group and Company; and

• The annual report includes a fair review of the development and performance of the business and

financial position of the Group and Company, together with a description of the principal risks and

uncertainties.

This Directors’ Report was approved by the Board of Directors on 28 April 2023 and signed on its behalf by:

Ilya Merenzon

Chief Executive Officer

World Chess Plc – Company Registration No. 10589323

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Statement of Directors’ Responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements in accordance

with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law

the Directors are required to prepare the Group and Company Financial Statements in accordance with UK-

adopted International Accounting Standards and as regards the Company financial statements, as applied in

accordance with the requirements of the Companies Act 2006.

Under company law the Directors must not approve the financial statements unless they are satisfied that

they give a true and fair view of the state of affairs of the Company and the Group as at the end of the

financial year and of the profit or loss of the Group and the Company for that period.

In preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgments and accounting estimates that are reasonable and prudent;

• state whether the applicable UK-adopted International Accounting Standards have been followed

subject to any material departures disclosed and explained in the financial statements; and

• prepare the financial statements on a going concern basis unless it is inappropriate to presume that

the Group and the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and

explain the Group and Company’s transactions and disclose with reasonable accuracy at any time the

financial position of the Company and the Group and enable them to ensure that the financial statements

comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company

and Group and hence for taking reasonable steps for the prevention and detection of fraud and other

irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information

included on the Company’s website. Legislation in the United Kingdom governing the preparation and

dissemination of the financial statements may differ from legislation in other jurisdictions.

This Report was approved by the Board of Directors on 28 April 2023 and signed on its behalf by:

Ilya Merenzon

Chief Executive Officer

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 40 of 78

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WORLD CHESS PLC

Opinion

We have audited the financial statements of World Chess Plc (the ‘parent company’) and its subsidiaries (the

‘group’) for the year ended 31 December 2022 which comprise the Consolidated Statement of Profit or Loss

and Other Comprehensive Income, the Consolidated and Company Statements of Financial Position, the

Consolidated and Company Statements of Changes in Equity, the Consolidated and Company Statements of

Cash Flows and notes to the financial statements, including significant accounting policies. The financial

reporting framework that has been applied in their preparation is applicable law and UK adopted

International Accounting Standards and, as regards the parent company financial statements, as applied in

accordance with the provisions of the Companies Act 2006.

In our opinion:

• the financial statements give a true and fair view of the state of the group’s and of the parent

company’s affairs as at 31 December 2022 and of the group’s loss for the year then ended;

• the group financial statements have been properly prepared in accordance with UK adopted

International Accounting Standards;

• the parent company financial statements have been properly prepared in accordance with UK

adopted International Accounting Standards and as applied in accordance with the provisions of the

Companies Act 2006; and

• the financial statements have been prepared in accordance with the requirements of the Companies

Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and

applicable law. Our responsibilities under those standards are further described in the Auditor’s

Responsibilities for the audit of the financial statements section of our report. We are independent of the

group and the parent company in accordance with the ethical requirements that are relevant to our audit of

the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest

entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We

believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

opinion.

Our approach to the audit

Our audit approach was a risk-based approach founded on a thorough understanding of the group’s

business, its environment and risk profile. We conducted substantive audit procedures and evaluated the

group’s internal control environment. We also addressed the risk of management override of internal

controls, including assessing whether there was evidence of bias by the directors that may have represented

a risk of material misstatement. The components of the group were evaluated by the group audit team based

on a measure of materiality, considering each component as a percentage of the group’s total assets, current

assets, revenue and gross profit, which allowed the group audit team to assess the significance of each

component and determine the planned audit response.

For those components that were evaluated as significant components, either a full scope or specified audit

approach was determined based on their relative materiality to the group and our assessment of the audit

risk. For significant components requiring a full scope approach, we evaluated controls by performing

walkthroughs over the financial reporting systems identified as part of our risk assessment, reviewed the

accounts production process and addressed critical accounting matters. We then undertook substantive

testing on significant transactions and material account balances.

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 41 of 78

In order to address the audit risks identified during our planning procedures, we performed a full scope

audit of the financial statements of the parent company and its subsidiaries World Chess Events Limited,

World Chess US, Inc. and World Chess Europe GmbH. All work was carried out by the group audit team.

We communicated with those charged with governance regarding, among other matters, the planned scope

and timing of the audit and significant findings, including any significant deficiencies in internal controls

that we identified during the audit.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our

audit of the financial statements of the current period and include the most significant assessed risks of

material misstatement (whether or not due to fraud) we identified, including those which had the greatest

effect on the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the

engagement team. These matters were addressed in the context of our audit of the financial statements as a

whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This

is not a complete list of risks identified during our audit.

Key Audit Matters

How our scope addressed this matter

Valuation of intangible assets

Refer to note 2 on page 55 for the accounting

policies and page 56 for key judgements in the

consolidated financial statements.

As at the reporting date, the group had intangible

assets of €2.76m (2021: €2.38m), excluding crypto-

currency assets.

Management and the Directors are required to

assess whether there are potential indicators of

impairment of the Group’s intangible assets at each

reporting date and, if potential indicators of

impairment are identified, management are

required to perform a full assessment of the

recoverable value of the intangible assets in

accordance with the requirements of IAS 36.

Management performed an impairment test, based

on which it concluded that no impairment was

required.

The assessment of the recoverable value of the

intangible assets required judgments and estimates

by management regarding the inputs applied in the

models including future cash flows, operating and

development costs and discount rates.

The carrying value of the intangible assets were

therefore considered to be a key audit matter.

Our audit work included, but was not restricted to,

the following procedures:

• Assessing the appropriateness of

management’s determination of the Cash

Generating Unit (CGU).

• Obtaining management’s assessment of the

future forecast discounted cash flows and

critically assessing the Value In Use (VIU)

model for intangible assets to test

compliance with the requirements of the

applicable accounting standards,

specifically IAS 36.

• Performing data integrity and mechanical

checks on the model.

• Critically assessing and challenging the

impairment model prepared by

management focussing on the

appropriateness of the assumptions and

key inputs.

• Performing sensitivity analysis on the

impairment model and assessing the

accuracy of the forecasts used based on

historical trading performance for the CGU.

• Evaluating the accounting policy and

detailed disclosures in the notes to the

financial statements to determine whether

information provided in the financial

statements is compliant with the

requirements of IAS 36 and consistent with

the results of the impairment review.

•

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 42 of 78

• Reviewing the amortisation accounting

policy for intangible fixed assets to ensure it

was appropriate.

Key observations:

Based on our audit work, we concluded that

intangible assets are not materially misstated at the

reporting date and that management’s assessment

that no impairment was required was appropriate.

We consider that the disclosures in the financial

statements relating to this area to be adequate.

Prior year adjustment due to error in

classification of crypto-currency assets held as at

31 December 2021

Refer to note 33 on page 78 in the consolidated

financial statements.

The accounting treatment of crypto-currency assets

which had been included in cash and cash

equivalents in the 31 December 2021 financial

statements and in the draft 31 December 2022

financial statements, was reassessed with reference

to the requirements of IAS 1, IFRS 13, IAS 2, IAS 8

and IAS 38. We concluded that the crypto-currency

assets should be treated as intangible assets in

accordance with IAS 38 rather than as cash and

cash equivalents. After performing their own

analysis of the relevant standards, management

concluded that a change in accounting treatment

was required and as a result the comparatives were

restated to reclassify crypto-currency assets to

intangible assets.

This resulted in a reduction of cash and cash

equivalents previously reported in the

Consolidated Statement of Financial Position at 31

December 2021 from €1.52m to €0.15m and an

increase in intangible assets from €2.38m to €3.75m.

Due to the impact of adjustment on the prior year

comparatives, it is considered to be a key audit

matter.

Our audit work included, but was not restricted to,

the following procedures:

• Critically assessing the classification of the

crypto-currency assets in line with the

requirements of the relevant financial

reporting standards and challenging the

client as to the appropriateness of the

previous classification of the assets as cash

and cash equivalents.

• Critically assessing management’s

accounting for the restatement of the

previous year amounts in accordance with

IAS 8.

• Assessing the accuracy of the adjustment

and related accounting entries.

• Evaluating the accounting policy and

detailed disclosures in the notes to the

financial statements in relation to prior year

restatement.

Key observations:

Based on our audit work, we concluded that the

prior year adjustment was required to reclassify the

crypto-currency assets as intangible assets at 31

December 2021.

We consider that the disclosures in the financial

statements relating to this area are adequate.

Our application of materiality

The scope and focus of our audit were influenced by our assessment and application of materiality. We

define materiality as the magnitude of misstatement that could reasonably be expected to influence the

economic decisions of the users of financial statements. We use materiality to determine the scope of our

audit and the nature, timing, and extent of our audit procedures and to evaluate the effect of misstatements,

both individually and on the financial statements as a whole. We apply the concept of materiality both in

planning and performing our audit, and in evaluating the effect of misstatements.

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 43 of 78

Based on our professional judgement we determined materiality for the financial statements as a whole and

performance materiality as follows:

Group financial statements

Parent company financial statements

Materiality

€128,000

€29,000

Basis for determining

materiality

5% of loss before tax

Rationale for the

benchmark applied

As the group is a profit-oriented group

and profit/loss is a key financial

indicator of the business performance

we considered this to be an appropriate

basis for materiality.

As the parent company heads up a

profit-oriented group and profit/loss is

a key financial indicator of the

business performance, the loss before

tax has been considered as an

appropriate benchmark.

Performance

materiality

€64,000

€14,500

Basis for determining

performance

materiality

50% of group materiality. This was

considered an appropriate percentage

based on our risk assessment and our

assessment of the overall control

environment of the group.

50% of parent company materiality.

Materiality levels for World Chess Events Limited were set at 5% of loss before tax and for all the other

components, we set materiality based on a percentage of group materiality dependent on the size of each

component and our assessment of the risk of material misstatement relevant to that component. Component

materiality, other than that of the parent company, ranged from €64,000 to €73,000. In the audit of each

component, we further applied performance materiality levels of 50% of the component materiality to our

testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated.

We agreed with the Audit Committee that we would report to them all individual audit differences in excess

of €6,400 for the group and €1,450 for the parent company. We also agreed to report differences below this

threshold that, in our view, warranted reporting on qualitative grounds. We also reported to the Audit

Committee on disclosure matters that we identified when assessing the overall presentation of the financial

statements.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of

accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’

assessment of the group’s and the parent company’ ability to continue to adopt the going concern basis of

accounting included the following procedures:

• Critically assessing the going concern assessment prepared by management covering at least twelve

months from the date of the audit report and challenging the client as regards the key assumptions

and forecasts used in their assessment;

• Performing sensitivity analysis on the forecasts to ensure there is sufficient cash flow headroom for

the group to continue as a going concern for at least that period;

• Reviewing the trading performance of the group post year end and comparing it to the forecasts to

assess their accuracy; and

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 44 of 78

• Assessing the adequacy of the going concern disclosures in the financial statements.

Based on the work we have performed, we have not identified any material uncertainties relating to events

or conditions that, individually or collectively, may cast significant doubt on the group’s and parent

company's ability to continue as a going concern for a period of at least twelve months from when the

financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in

the relevant sections of this report.

Other information

The other information comprises the information included in the annual report, other than the financial

statements and our auditor’s report thereon. The directors are responsible for the other information

contained within the annual report. Our opinion on the financial statements does not cover the other

information and, except to the extent otherwise explicitly stated in our report, we do not express any form of

assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information

and, in doing so, consider whether the other information is materially inconsistent with the financial

statements or our knowledge obtained in the course of the audit or otherwise appears to be materially

misstated. If we identify such material inconsistencies or apparent material misstatements, we are required

to determine whether there is a material misstatement in the financial statements themselves. If, based on the

work we have performed, we conclude that there is a material misstatement of this other information, we are

required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in

accordance with the Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the strategic report and the directors’ report for the financial year for which

the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors’ report have been prepared in accordance with applicable legal

requirements;

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and its environment

obtained in the course of the audit, we have not identified material misstatements in the strategic report or

the directors’ report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to

report to you if, in our opinion:

• adequate accounting records have not been kept by the parent company, or returns adequate for our

audit have not been received from branches not visited by us; or

• the parent company financial statements and the part of the directors’ remuneration report to be

audited are not in agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit; or

• a corporate governance statement has not been prepared by the parent company.

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 45 of 78

Responsibilities of directors

As explained more fully in the directors’ responsibilities statement set out on page 39, the directors are

responsible for the preparation of the financial statements and for being satisfied that they give a true and

fair view, and for such internal control as the directors determine is necessary to enable the preparation of

financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group’s and the parent

company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern

and using the going concern basis of accounting unless the directors either intend to liquidate the group or

the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor’s Responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free

from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our

opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in

accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can

arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably

be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities is available on the FRC’s website at

https://www.frc.org.uk/auditors/auditor-assurance/auditor-s-responsibilities-for-the-audit-of-the-

fi/description-of-the-auditor's-responsibilities-for

This description forms part of our auditor’s report.

Explanation as to what extent the audit was considered capable of detecting irregularities, including

fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design

procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of

irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,

including fraud is detailed below.

The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement

of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the

assessed risks of material misstatement due to fraud, through designing and implementing appropriate

responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud

identified during the audit. However, the primary responsibility for the prevention and detection of fraud

rests with both management and those charged with governance of the company.

Our approach was as follows:

• We obtained an understanding of the legal and regulatory requirements applicable to the group and

parent company and considered that the most significant are the Companies Act 2006, UK adopted

International Accounting Standards, the Listing Rules, the Disclosure and Transparency Rules, and

UK taxation legislation.

• We obtained an understanding of how the group and parent company complies with these

requirements by discussions with management and those charged with governance.

• We assessed the risk of material misstatement of the financial statements, including the risk of

material misstatement due to fraud and how it might occur, by holding discussions with

management and those charged with governance.

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 46 of 78

• We inquired of management and those charged with governance as to any known instances of non-

compliance or suspected non-compliance with laws and regulations.

• Based on this understanding, we designed specific appropriate audit procedures to identify

instances of non-compliance with laws and regulations. This included making enquiries of

management and those charged with governance and obtaining additional corroborative evidence

as required.

• We evaluated managements’ incentives to fraudulently manipulate the financial statements and

determined that the principal risks related to management bias in accounting estimates and

judgemental areas of the financial statements. We challenged the assumptions and judgements made

by management in respect of the significant areas of estimation, as described in the key audit matters

section. Further audit procedures performed to address the risk of fraud included but were not

limited to the testing of journals and evaluating the business rationale of any significant transactions

that are unusual or outside the normal course of business.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of

instances of non-compliance with laws and regulations that are not closely related to events and transactions

reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is

higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment

by, for example, forgery or intentional misrepresentations, or through collusion.

Other matters which we are required to address

We were appointed by the Audit Committee on 6 March 2023 to audit the financial statements for the year

ending 31 December 2022. Our total uninterrupted period of engagement is 1 year, covering the period

ending 1 January 2022 to 31 December 2022.

The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the

parent company and we remain independent of the group and the parent company in conducting our audit.

Our audit opinion is consistent with the additional report to the Audit Committee.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of

the Companies Act 2006. Our audit work has been undertaken for no purpose other than to draw to the

attention of the company’s members those matters which we are required to include in an auditor’s report

addressed to them. To the fullest extent permitted by law, we do not accept or assume responsibility to any

party other than the company and company’s members as a body, for our work, for this report, or for the

opinions we have formed.

Matthew Banton (Senior Statutory Auditor)

for and on behalf of Moore Kingston Smith LLP, Statutory Auditor

28 April 2023

Floor

9 Appold Street

London

EC2A 2AP

World Chess Plc – Company Registration No. 10589323

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022

Page 47 of 78

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2022

2022

2021

as restated

Notes

€

Revenue

2,796,207

3,216,400

Cost of sales

(2,090,754)

(1,321,180)

GROSS PROFIT

705,453

1,895,220

Other operating income

92,399

17,939

Administrative expenses

(3,278,281)

(3,114,803)

OPERATING LOSS BEFORE EXCEPTIONAL ITEMS

(2,480,429)

(1,201,644)

Exceptional Items

23,000

7,406,431

OPERATING LOSS

(2,457,429)

6,204,787

Finance costs

(337,460)

(308,299)

Finance income

521

(LOSS)/PROFIT BEFORE INCOME TAX

(2,794,368)

5,896,488

Income tax

332,680

(436,914)

(LOSS)/PROFIT FOR THE YEAR

(2,461,688)

5,459,574

OTHER COMPREHENSIVE INCOME

(Loss)/gain on currency translation

(19,787)

33,263

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(2,481,475)

5,492,837

(Loss)/profit attributable to:

Owners of the parent

(2,461,688)

5,459,574

Total comprehensive income attributable to:

Owners of the parent

(2,481,475)

5,492,837

(LOSS)/PROFIT PER SHARE – CONTINUING AND

TOTAL OPERATIONS

Basic and diluted

(0.004) 0.009

World Chess Plc – Company Registration No. 10589323

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022

Page 48 of 78

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 DECEMBER 2022

2022

2021

as restated

Notes

€

NON-CURRENT ASSETS

Owned: Intangible assets

2,763,358

3,749,355

Owned: Property, plant and equipment

714,116

126,812

Right-of-use: Property, plant and equipment

12, 23

1,236,968

22,034

Deferred tax

76,697

15,733

4,791,139

3,913,934

CURRENT ASSETS

Inventories

187,691

218,393

Trade and other receivables

662,566

3,362,515

Tax receivable

251,117

Cash and cash equivalents

35,565

152,689

1,136,939

3,733,597

TOTAL ASSETS

5,928,078

7,647,531

EQUITY AND LIABILITIES

SHAREHOLDERS' EQUITY

Called up share capital

68,260

66,996

Share premium

6,518,849

5,520,114

Translation reserve

65,941

85,728

Retained earnings

(5,489,625)

(3,027,937)

TOTAL EQUITY

1,163,425

2,644,901

NON-CURRENT LIABILITIES

Lease liabilities

1,308,003

Interest bearing loans and borrowings

54,987

Provision for liabilities

180,652

1,488,655

54,987

CURRENT LIABILITIES

Trade and other payables

2,098,204

3,576,469

Lease liabilities

95,686

21,266

Interest bearing loans and borrowings

1,082,108

1,349,908

3,275,998

4,947,643

TOTAL LIABILITIES

4,764,653

5,002,630

TOTAL EQUITY AND LIABILITIES

5,928,078

7,647,531

The financial statements were approved by the Board of Directors and authorised for issue on 28 April 2023 and

were signed on its behalf by:

Ilya Merenzon

Chief Executive Officer

World Chess Plc – Company Registration No. 10589323

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022

Page 49 of 78

COMPANY STATEMENT OF FINANCIAL POSITION 31 DECEMBER 2022

2022

2021

Notes

€

NON-CURRENT ASSETS

Investments

301,616

26,616

Trade and other receivables

272,544

301,616

299,160

CURRENT ASSETS

Trade and other receivables

4,919,305

3,188,193

Cash and cash equivalents

6,242

34,107

4,925,547

3,222,300

TOTAL ASSETS

5,227,163

3,521,460

EQUITY AND LIABILITIES

SHAREHOLDERS' EQUITY

Called up share capital

68,260

66,996

Share premium

6,518,849

5,520,114

Retained earnings

(5,329,173)

(4,750,727)

TOTAL EQUITY

1,257,936

836,383

CURRENT LIABILITIES

Trade and other payables

2,950,159

2,685,077

Interest bearing loans and borrowings

1,019,068

3,969,227

2,685,077

TOTAL LIABILITIES

3,969,227

2,685,077

TOTAL EQUITY AND LIABILITIES

5,227,163

3,521,460

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 €578,448 (2021: €1,244,816 profit).

The financial statements were approved by the Board of Directors and authorised for issue on 28 April 2023 and

were signed on its behalf by:

Ilya Merenzon

Chief Executive Officer

World Chess Plc – Company Registration No. 10589323

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022

Page 50 of 78

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2022

Called

up share

capital

Retained

Earnings

Premium

Translation

reserve

Total

equity

€

Balance at 1 January 2021

64,219

(7,175,495)

3,552,069

52,465

(3,506,742)

Prior year adjustment (note 33)

(1,312,016)

As restated

64,219

(8,487,511)

3,552,069

52,465

(4,818,758)

Changes in equity

Issue of share capital

2,777

1,968,045

1,970,822

Total comprehensive income

5,459,574

33,263

5,492,837

Balance at 31 December 2021

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

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2022

Called up

share capital

Retained

Earnings

Premium

Total

equity

€

Balance at 1 January 2021

64,219

(5,995,541)

3,552,069

(2,379,253)

Changes in equity

Issue of share capital

2,777

1,968,045

1,970,822

Total comprehensive income

1,244,816

Balance at 31 December 2021

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)

Balance at 31 December 2022

68,260

(5,329,173)

6,518,849

1,257,936

World Chess Plc – Company Registration No. 10589323

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022

Page 51 of 78

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2022

2022

2021

as restated

Notes

€

Cash flows from operating activities

Cash (absorbed)/generated from operations

(512,07 7)

4,014,467

Interest paid

(179,610)

(306,987)

Finance cost paid

(157,850)

(1,312)

Tax refund received

20,600

Net cash (used in)/generated from operating activities

(828,93 7)

3,706,168

Cash flows from investing activities

Purchase of intangible fixed assets

(799,865)

(1,847,323)

Proceeds from disposal of intangible fixed assets

1,367,702

Purchase of property, plant and equipment

(635,818)

(91,966)

Proceeds from disposal of property, plant and equipment

23,214

Interest received

521

Net cash used in investing activities

(44,246)

(1,939,289)

Cash flows from financing activities

Loan advanced in the year

1,019,068

Loan repayments in year

(1,341,854)

(677,378)

Payment of lease liabilities

(21,986)

(50,352)

Amount introduced by directors

120,619

Proceeds from share issue

999,999

1,970,822

Payment on cancellation of share options

(3,200,000)

Net cash generated from/(used in) financing activities

775,846

(1,956,908)

Decrease in cash and cash equivalents

(97,337)

(190,029)

Cash and cash equivalents at beginning of year

152,689

309,455

Effect of foreign exchange rate changes

(19,787)

33,263

Cash and cash equivalents at end of year

35,565

152,689

World Chess Plc – Company Registration No. 10589323

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022

Page 52 of 78

COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2022

2022

2021

Notes

€

Cash flows from operating activities

Cash absorbed from operations

(104,814)

(1,818,222)

Interest paid

(84,353)

(85,057)

Finance cost paid

(123,415)

Net cash used in operating activities

(312,582)

(1,903,279)

Cash flows from investing activities

Purchase of intangible fixed assets

(275,000)

(100,000)

Loan repayment from related parties

597,926

Loans issued

(272,544)

Interest received

20,820

6,792

Net cash (used in)/generated from investing activities

(254,180)

232,174

Cash flows from financing activities

Loan advanced in the year

1,019,068

Amounts received from group undertakings

157,633

2,626,132

Amounts paid to group undertakings

(1,640,863)

(2,991,786)

Amount introduced by directors

3,060

Proceeds from share issue

999,999

1,970,822

Net cash from financing activities

538,897

1,605,168

Decrease in cash and cash equivalents

(27,865)

(65,937)

Cash and cash equivalents at beginning of year

34,107

100,044

Cash and cash equivalents at end of year

6,242

34,107

World Chess Plc – Company Registration No. 10589323

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022

Page 53 of 78

NOTES TO THE STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2022

RECONCILIATION OF (LOSS)/PROFIT BEFORE INCOME TAX TO CASH GENERATED

FROM OPERATIONS

Group

2022

2021

as restated

€

(Loss)/profit before income tax

(2,794,368)

5,896,488

Depreciation and amortisation

632,935

396,425

Goodwill impairment

142,474

Provision

180,652

Finance costs

337,460

308,299

Finance income

(521)

(1,643,842)

6,743,686

Decrease/(increase) in inventories

30,702

(159,796)

Decrease/(increase) in trade and other receivables

2,699,953

(2,284,486)

Decrease in trade and other payables

(1,598,890)

(284,937)

Cash (absorbed)/generated from operations

(512,077)

4,014,467

Company

2022

2021

€

(Loss)/profit before income tax

(578,448)

1,244,816

Investment impairment

225,000

Finance costs

207,766

85,057

Finance income

(20,820)

(6,792)

(391,502)

1,548,081

Decrease/(increase) in trade and other receivables

182,297

(196,270)

Increase/(decrease) in trade and other payables

104,391

(3,170,033)

Cash absorbed from operations

(104,814)

(1,818,222)

World Chess Plc – Company Registration No. 10589323

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022

Page 54 of 78

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

2022

2021

as restated

€

Year ended 31 December 2022

Cash and cash equivalents

35,565

152,689

Year ended 31 December 2021

Cash and cash equivalents

152,689

309,455

Company

2022

2021

€

Year ended 31 December 2022

Cash and cash equivalents

6,242

34,107

Year ended 31 December 2021

Cash and cash equivalents

34,107

100,044

RECONCILIATION OF NET DEBT

Group

2022

2021

as restated

€

At 31 December

Other loans

(1,082,108)

(1,404,895)

Lease liabilities

(1,403,689)

(21,266)

Total Borrowings

(2,485,797)

(1,426,161)

Cash and cash equivalents

35,565

152,689

Net debt

(2,450,232)

(1,273,472)

Company

2022

2021

€

At 31 December

Other loans

(1,019,068)

Cash and cash equivalents

6,242

34,107

Net (debt)/cash

(1,012,826)

34,107

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 55 of 78

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31

DECEMBER 2022

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.

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. The Directors believe

that five years is an appropriate period for this assessment, reflecting the average length of the Group’s

contract base; key markets; and the nature of its businesses and products.

The significant accounting policies applied in the preparation of these financial statements are set out

below. These policies have been consistently applied to all years presented unless otherwise stated.

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

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 56 of 78

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 11.83% and the carrying value of

goodwill and other intangible assets is set out in the table below (notes 11 and 13):

Group

2022

2021

€

Exclusive FIDE rights

442,117

552,646

Software Licences

82,000

105,000

Online Platform

2,239,033

1,723,799

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

2022

2021

2022

2021

€

Crypto-assets

208

1,367,910

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 57 of 78

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

€959,012 (2021: €1,418,686).

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 outline below:

Events

Revenue is recognised in the period in which the event takes place; revenue is typically linked to

multiyear agreement 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.

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 58 of 78

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 2022 rewards of €9,142 (2021: €2,242,382) 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 separate wallets, 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

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 59 of 78

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 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 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 Consolidate Statement of Profit or Loss and Other

Comprehensive Income.

Property, plant and equipment

Depreciation is provided at the following annual rates 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.

• 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, are 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

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 60 of 78

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 income statement 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.

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 61 of 78

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;

• 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 2022, 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 2023:

• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);

• Definition of Accounting Estimates (Amendments to IAS 8); and

• Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS

12).

The following amendments are effective for the period beginning 1 January 2024;

• IFRS 16 Leases (Amendment - Liability in a sale and leaseback);

• IAS 1 Presentation of Financial Statements (Amendment - Classification of Liabilities as Current or

Non-Current); and

• IAS 1 Presentation of Financial Statements (Amendment – Non-Current liabilities and covenants).

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.

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 62 of 78

The Group use the amortised cost method for financial liabilities include borrowings, trade and other

payables and are recognised at their original amount.

REVENUE

Revenue from contracts with customers

Revenue by business class

2022

2021

€

Events

1,711,331

1,407,501

Online

399,074

905,174

Merchandising and Clubs

685,802

903,725

2,796,207

3,216,400

By geographical area

2022

2021

€

United Kingdom

2,661,639

2,589,719

Russia

27,578

329,114

United States of America

50,540

257,508

Other

56,450

40,059

2,796,207

3,216,400

Major customer

Included in Events revenue are revenues of €1,499,332 and in Online revenue are revenues of €262,893

which are attributable to two major customers, being customers who each represent more than 10% of

revenue in the year (2021: €581,305 and €565,691 respectively).

Total revenue attributable to the two major customers are: €1,163,411 (2021: €nil) and €598,814 (2021:

€1,146,996).

EMPLOYEES AND DIRECTORS

The aggregate payroll costs (including Directors not under employment contracts) were:

2022

2021

€

Wages and salaries

421,923

299,754

Social security costs

38,978

Pension costs

460,901

299,754

2022

2021

No.

Average number of employees during the year:

Payroll costs of €nil (2021: €56,278) included in the figure above are included in cost of sales.

No pension contributions were made in either 2022 or 2021.

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 2022 was, in aggregate, €327,001 (2021: €237,890).

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 63 of 78

2022

2021

€

Directors' remuneration:

327,001

237,890

Further details of Directors’, including Non-Executive Directors’, remuneration and fees during the year

are set out in the Directors Remuneration Report on page 33 of these consolidated financial statements.

The highest paid director was Ilya Merenzon whose total remuneration was €192,000 (2021: €154,570).

In 2022 Directors Remuneration included €5,000 (2021: €nil) in respect of compensation for loss of office.

The Group had no UK employees in 2022 and 2021 except the directors.

EXCEPTIONAL ITEMS

2022

2021

as restated

€

Gain on disposal World Chess Russia LLC

27,330

Exchange (loss)/gain on Crypto-assets

(13,472)

5,605,551

Crypto exchange fees

(441,502)

Collateral rewards received

9,142

2,242,382

23,000

7,406,431

Gain on disposal World Chess Russia LLC

In April 2022 the entire share capital of World Chess Russia LLC was disposed of as a result, a profit on

disposal of €27,330 has been recognised.

Exchange (loss)/gain on Crypto-assets

During 2021 crypto-assets appreciated significantly, the ALGO rate increased from €0.27 in January 2021

to €1.53 in December 2021. The majority of the crypto-assets held by the Group was converted into fiat

currency resulting in a large gain.

Crypto exchange fees

In 2021 the Group recognised an expense of €441,502 relating to crypto exchange fees.

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.

NET FINANCE COSTS

2022

2021

as restated

€

Finance income:

Loan interest receivable

521

Finance costs:

Other loan interest

179,610

306,987

Interest on IFRS 16 lease liabilities

157,850

1,312

337,460

308,299

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 64 of 78

(LOSS)/PROFIT BEFORE INCOME TAX

The loss before income tax (2021 - profit before income tax) is stated after charging/(crediting):

Amortisation of intangible assets is included in Administrative expenses in the Consolidated Statement

of Profit or Loss and Other Comprehensive Income.

INCOME TAX

Analysis of tax (income)/expense

2022

2021

€

Current tax:

Corporation tax

(255,983)

432,586

Deferred tax

(76,697)

4,328

Total tax (income)/expense in consolidated statement

of profit or loss and other comprehensive income

(332,680)

436,914

Factors affecting the tax expense

The tax assessed for the year is lower (2021 - lower) the standard rate of corporation tax in the UK. The

difference is explained below:

2022

2021

€

(Loss)/profit before income tax

(2,794,368)

5,896,488

(Loss)/profit multiplied by the standard rate of

corporation tax in the UK of 19% (2021 - 19%)

(530,930)

1,120,333

Effect of:

Originations and reversal of temporary differences

(76,697)

436,679

Capital allowances in excess of depreciation

(74,706)

(12,411)

Non-taxable expenses/(income)

138,474

(246,717)

Tax losses carried forward/(utilised)

467,162

(861,205)

Research and development credit

(256,197)

Foreign tax

214

235

Tax (income)/expense

(332,680)

436,914

2022

2021

€

Cost of inventories recognised as expense

2,090,754

1,264,902

Research costs expensed

88,874

66,809

Depreciation - owned assets

25,300

18,046

Depreciation – right-of-use assets

189,475

67,711

Exclusive FIDE rights amortisation

110,529

Licence amortisation

23,000

5,000

Computer software amortisation

284,632

224,503

Auditors' remuneration

72,641

16,626

Foreign exchange loss/(gain)

9,790

(5,072)

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 65 of 78

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 €578,448 (2021: €1,244,816 profit).

EARNINGS 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.

2022

2021

(Loss)/profit attributable to the owners of the parent

company €

(2,461,688)

5,459,574

Weighted average number of shares in issue

597,912,402

583,532,583

Basic and diluted earnings per share

(€0.004)

€0.009

INTANGIBLE ASSETS

Group

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

Disposals

(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

Exclusive

FIDE rights

Software

Licence

Online

Platform

Crypto-

assets

Total

€

COST

At 1 January 2021*

1,105,291

25,000

1,706,287

211,872

3,048,450

Additions

90,000

601,285

1,156,038

1,847,323

At 31 December 2021*

1,105,291

115,000

2,307,572

1,367,910

4,895,773

AMORTISATION

At 1 January 2021*

442,116

5,000

359,270

806,386

Amortisation for year

110,529

5,000

224,503

340,032

At 31 December 2021*

552,645

10,000

583,773

1,146,418

NET BOOK VALUE

At 31 December 2021*

552,646

105,000

1,723,799

1,367,910

3,749,355

* as restated

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 66 of 78

The Directors considered the carrying value at 31 December 2022 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 11.83%, 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 2022 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.

PROPERTY, PLANT AND EQUIPMENT

Group

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)

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

Right of use

asset

Fixtures and

fittings

Computer

Equipment

Total

€

COST

At 1 January 2021

441,942

136,946

1,698

580,586

Additions

91,966

Exchange difference

(16,676)

At 31 December 2021

441,942

212,236

1,698

655,876

DEPRECIATION

At 1 January 2021

355,110

67,378

1,698

424,186

Charge for year

67,711

18,046

85,757

Exchange difference

(2,913)

At 31 December 2021

419,908

85,424

1,698

507,030

NET BOOK VALUE

At 31 December 2021

22,034

126,812

148,846

Included in the net book value of fixtures and fittings is €647,083 (2021: €91,966) relating to the World

Chess Club Berlin which was functionally complete at 31 December 2022 but had not yet fully opened.

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 67 of 78

The club opened briefly during 2022 to host the first and third legs of the FIDE Grand Prix series before

closing for the remaining construction work to be completed. As at 31 December 2022 the Group had

outstanding contractual commitment for a further €20,000 in relation to the completion of construction.

GOODWILL

Group

2022

2021

€

COST

At 1 January

142,474

At 31 December

142,474

IMPAIRMENTS

At 1 January

(142,474)

Impairment

(142,474)

At 31 December

(142,474)

CARRYING VALUE

At 1 January

142,474

At 31 December

Goodwill arose on the acquisition of World Chess Russia LLC and World Chess Digital Limited.

The Directors considered the carrying value at 31 December 2021 for each cash generating unit, identified

above, and the goodwill was impaired to €nil.

In 2022 the Group disposed of World Chess Russia LLC and World Chess Digital Limited was dormant

and in the process of being dissolved. At 31 December 2022 the company remained dormant, and the

dissolution process is ongoing.

INVESTMENTS

Company

Shares in group undertakings

2022

2021

€

COST

At 1 January

251,616

151,616

Additions

275,000

100,000

Disposals

(175,000)

At 31 December

351,616

251,616

IMPAIRMENTS

At 1 January

(225,000)

Impairment

(225,000)

Disposals

175,000

At 31 December

(50,000)

(225,000)

CARRYING VALUE

At 1 January

26,616

151,616

At 31 December

301,616

26,616

The Directors considered the carrying value at 31 December 2021 for each group undertaking, identified

below, and the Company’s investments in World Chess Russia LLC and World Chess Digital Limited

were impaired to €nil.

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 68 of 78

The Directors considered the carrying value at 31 December 2022 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 11.83%, and it was determined that no further impairment was

required.

In 2022 the Group disposed of World Chess Russia LLC and World Chess Digital Limited was dormant

and in the process of being dissolved at 31 December 2022 the company remained dormant and the

dissolution process is ongoing.

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 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 100.00

World Chess Digital Limited was dormant during 2022 and in the process of being dissolved at 31

December 2022 the company remained dormant and the dissolution process is ongoing.

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 €275,000 (2021: €25,000) 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 after 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

During the year, World Chess PLC provided a capital contribution of €nil (2021: €100,000) to this

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 69 of 78

company. In April 2022 the entire share capital in this company was disposed of.

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.

INVENTORIES

Group

2022

2021

€

Inventories:

187,691

218,393

TRADE AND OTHER RECEIVABLES

Group

Company

2022

2021

2022

2021

€

Current:

Trade receivables

452,754

317,665

Amounts owed by group

undertakings

4,905,195

2,991,788

Other receivables

205,244

2,910,064

12,362

178,876

Prepayments and accrued

income

4,568

134,786

1,748

17,529

662,566

3,362,515

4,919,305

3,188,193

Non-current

Amounts owed by group

undertakings

272,544

Aggregate amounts

662,566

3,362,515

4,919,305

3,460,737

CASH AND CASH EQUIVALENTS

Group

Company

2022

2021

as restated

2022

2021

€

Cash in hand

694

Bank accounts

35,565

151,995

35,565

152,689

6,242

34,107

CALLED UP SHARE CAPITAL

2022

2021

Number of

€

Number of

€

Allotted, issued, and fully

paid Ordinary shares of

£0.0001

602,392,689

68,260

591,640,000

66,996

10,752,689 Ordinary shares of £0.0001 each were allotted as fully paid at a premium of €0.09 per share

during the year (2021: 12,644,500 Ordinary shares at a premium of €0.08 per share).

At 31 December 2022 the number of additional shares authorised for issue is 100,000,000 (2021: nil).

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 70 of 78

As detailed in note 32, 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 CHSSS.

Following admission, the number of additional shares authorised for issue is 66,690,550.

SHARE PREMIUM

2022

2021

€

At 1 January

5,520,114

3,552,069

Premium arising on issue of equity shares

998,735

1,968,045

At 31 December

6,518,849

5,520,114

RESERVES

Share capital comprises the amount for the nominal value of shares issued.

Share premium comprises the amount subscribed for share capital 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.

TRADE AND OTHER PAYABLES

Group

Company

2022

2021

2022

2021

€

Trade payables

657,006

262,915

81,173

37,373

Amounts owed to group

undertakings

2,783,767

2,626,134

Social security and other

taxes

21,318

9,541

Other payables

2,650

9,494

1,376

Accruals and deferred

income

1,296,317

3,294,280

80,547

19,955

Amounts owed to Directors

120,913

239

3,296

239

2,098,204

3,576,469

2,950,159

2,685,077

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 71 of 78

FINANCIAL LIABILITIES - BORROWINGS

Group

Company

2022

2021

2022

2021

€

Current:

Other loans

1,082,108

1,349,908

1,019,068

Lease liabilities (see note 23)

95,686

21,266

1,177,794

1,371,174

1,019,068

Non-current:

Other loans – 1-2 years

54,987

Lease liabilities (see note 23)

1,308,003

54,987

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

1,082,108

Lease liabilities (see note 23)

95,686

510,145

797,858

1,403,689

1,177,794

510,145

797,858

2,485,797

Company

1 year or less

More than 1

year and less

than 5 years

More than 5

years

Totals

€

Other loans

1,019,068

Loans due in less than one year includes a loan of €1,019,068 which accrues interest at 8% per year,

subsequent to 31 December 2022 this loan was converted into new ordinary shares (see note 32), and

€63,040 which accrues interest at 10% per year. (2021: €1,349,908 which accrued interest at 14% per year

and was secured by collateral put up by a partner company, the loan was repaid, and the collateral

returned in January 2022).

On 6 April 2023, subsequent the date of these consolidated financial statements, the loan totalling

€1,040,329 including accrued interest was converted into new ordinary shares in the Company (see note

32).

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 72 of 78

LEASES

Group

Right of use asset – property, plant, and equipment

2022

2021

€

COST

At 1 January

441,942

Additions

1,374,409

Disposals

(441,942)

At 31 December

1,374,409

441,942

DEPRECIATION

At 1 January

419,908

355,110

Charge for year

189,475

67,711

Elimination on disposal

(441,942)

Exchange difference

(30,000)

(2,913)

At 31 December

137,441

419,908

NET BOOK VALUE

At 31 December

1,236,968

22,034

All leases are accounted for in accordance with IFRS 16 Leases.

31 December

2022

31 December

2021

31 December

2020

€

Right of use asset

1,236,968

22,034

86,832

Lease liability

1,403,689

21,266

71,619

A right-of-use asset was disposed of during the year relating to premises occupies 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%.

A new right-of-use asset was recognised in 2022 for a lease on premises to be occupied by the World

Chess Club Berlin for a term of 10 years ending on 31 December 2031 with an effective interest rate of

11.83%.

Total finance lease interest for 2022 was €157,850 (2021: €1,312) 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 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

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

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 73 of 78

31 December 2021

1 year or less

More than 1

year and less

than 5 years

More than 5

years

Totals

€

Gross obligations repayable:

21,411

Finance charges repayable:

(145)

Net obligations repayable:

21,266

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.

2022

2021

€

Other financial assets

Trade and other receivables less than one year

821,028

3,362,515

Cash and cash equivalents

35,773

152,689

Total financial assets

856,801

3,515,204

2022

2021

€

Other financial liabilities

Interest bearing loans and borrowings less than one year

1,177,794

1,371,173

Trade and other payables less than one year

2,098,199

3,576,469

Interest bearing loans and borrowings more than one year

1,308,003

54,987

Total financial liabilities

4,583,996

5,002,629

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:

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 74 of 78

• 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 therefor 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 therefor consider the risk to be non-trivial but minimal.

No credit loss was recognised in 2022 or 2021.

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

Financial assets past due but not impaired as at 31 December 2021:

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

3,289,295

70,991

2,228

Company: Trade and other receivables

3,188,195

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 2021 the Group had outstanding loans of €1,019,068 which accrues interest at a fixed rate

of 8% per year, and €63,040 which accrues interest at a fixed rate of 10% per year. (2021: €1,349,908 which

accrued interest at a fixed rate of 14% per year and was secured by collateral put up by a partner

company, the loan was repaid, and the collateral returned in January 2022).

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).

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 75 of 78

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.

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 €1,163,425 at 31 December 2022 (2021: €2,644,901), and to maintain or adjust

the capital structure the Group may issue new shares of increase borrowings.

2022

2021

€

Interest bearing loans and borrowings

(2,485,797)

(1,426,160)

Cash and cash equivalents

35,565

152,689

Net indebtedness

(2,450,232)

(1,273,471)

PROVISIONS

Group

2022

2021

€

PROVISIONS

At 1 January

Dilapidations provision

180,652

At 31 December

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.

DEFERRED TAX

Group

2022

2021

€

Balance at 1 January 2022

(15,733)

(451,098)

Movement in current year

(60,964)

435,365

Balance at 31 December 2022

(76,697)

(15,733)

There are €3,878,681 of tax losses available to the Group which at the applicable tax rate of 25%would

provide an additional deferred tax asset of €537,784. 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.

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 76 of 78

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:

2022

2021

€

Timing differences arising on provisions for liabilities,

lease liabilities and losses carried forward

(531,931)

(15,733)

Timing difference arising on capital allowances in excess of

depreciation

455,234

(76,697)

(15,733)

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 accounts as the Directors consider it

to be null and void and raised by the supplier in breach of contract (see note 28).

RELATED PARTY DISCLOSURES

Details of the Directors’ remuneration and consultancy fees are disclosed in note 4.

Ilya Merenzon

On 21 December 2022 Mr Merenzon advanced a short-term loan of €20,000 to World Chess Europe

GmbH, this loan is unsecured, does not bear interest and remained outstanding at 31 December 2022.

Matvey Shekhovtsov

On 29 December 2022 Mr Shekhovtsov advanced a short-term loan of €20,000 to World Chess Europe

GmbH, this loan is unsecured and does not bear interest and remained outstanding at 31 December 2022.

Group undertakings

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

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 77 of 78

The following transactions took place during the year ended 31 December 2021 with and between group

undertakings.

Payments

to/(receipts

from) World

Chess PLC

Payments to/

(receipts from)

other group

undertakings

€

World Chess Russia LLC

Sale of inventory

(133,995)

World Chess Events Ltd

Payment of interest

10,710

Purchase of inventory

133,995

Commission paid on third party transactions

56,238

8,562

World Chess US Inc.

Commission charged on third party transactions

(18,749)

(8,562)

Payment of interest

2,115

Balances at 31 December 2022

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)

(93,495)

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)

2.000.516

Balances at 31 December 2021

The following balances remained outstanding at 31 December 2021 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)

Group undertakings

• World Chess Events Ltd

3,214,251

(2,511,790)

702,461

• World Chess Europe GmbH

187,072

• World Chess US Inc.

(2,626,134)

2,300,688

(325,446)

• World Chess Russia LLC

50,079

23,913

73,992

637,958

(117)

637,841

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 78 of 78

ULTIMATE CONTROLLING PARTY

The ultimate controlling party is Ilya Merenzon by virtue of his shareholding in the Company.

SHARE-BASED PAYMENT TRANSACTIONS

In exchange for providing collateral for a loan in World Chess Events Limited, the Company granted an

option to Algorand Cayman SEZC to convert part or all of the collateral into ordinary shares, the option

was exercised in January 2021 and World Chess Plc issued 2,474 shares to Algorand Cayman SEZC for

total consideration of 33m Algo's (at the date of conversion this represented €2,060,374).

SUBSEQUENT EVENTS

On 20 February 2023 Mr Merenzon advanced a short-term loan of €500,000 to World Chess PLC, this loan

remains outstanding at 28 April 2023.

On 20 February 2023 Mr Shekhovtsov advanced a short-term loan of €13,000 to World Chess PLC, this

loan remains outstanding at 28 April 2023.

On 16 March 2023 Mr Merenzon advanced a short-term loan of €150,000 to World Chess PLC, this loan

remains outstanding at 28 April 2023.

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.

On 6 April 2023 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 CHSSS. The Directors

believe this will help to build the Company’s profile, create value for 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.

PRIOR YEAR ADJUSTMENT

During the year the Directors reassessed the accounting treatment of the crypto-assets which previously

had been included within cash and cash equivalents on the Consolidated Statement of Financial Position

at 31 December 2021. 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. This resulted in a

reduction of cash and cash equivalents previously reported in the Consolidated Statement of Financial

Position at 31 December 2021 from €1,520,599 to €152,689 and an increase in intangible assets from

€2,381,445 to €3,749,355.

In 2021 a prior year adjustment was made to correct bookkeeping errors from 2018 and 2019. Income of

€1,412,016 for sponsorship should have been recognised as; €100,000 in 2019, €606,608 in 2021 and

€706,008 in 2022.