Page 1 of 79

World Chess Plc

Annual Report & Financial Statements

for the year ended 31 December 2023

Company Registration No. 10589323

(England and Wales)

World Chess Plc – Company Registration No. 10589323

CONTENTS

Page 2 of 79

COMPANY INFORMATION

Page 3 of 79

Directors

Ilya Merenzon (Chief Executive Officer)

Matvey Shekhovtsov (Chief Operating Officer)

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

Graham Woolfman (Chair) - appointed on 6 April 2023

Jamison Reed Firestone (Non-Executive Director)

Neil Rafferty (Non-Executive Director) - appointed on 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

2nd Floor, 7-10 Chandos Street

London

W1G 9DQ

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

World Chess Plc – Company Registration No. 10589323

STRATEGIC REPORT

Page 4 of 79

Highlights and Principal Activities

World Chess plc., (‘World Chess’, the ‘Group’ or the ‘Company’) is the holding company of a group which is

committed to enhancing the global mass market appeal of chess by introducing a variety of innovative

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 FIDE Online Arena, the official online gaming platform

of the Fédération Internationale des Échecs ('FIDE'), and other chess-related lifestyle activities.

Since its admission to the Main Market of the London Stock Exchange in April 2023, raising approximately

€3.5 million (before expenses) on listing and a further €2.3 million from an existing investor after the listing,

World Chess has embarked on a transformative journey, marked by several strategic milestones that

underscore the Group’s commitment to revolutionising the global chess landscape and making chess

accessible and fun for millions of fans around the world.

Key highlights include:

• Listing Success: In April 2023 the Company listed on the Main Market of the London Stock

Exchange, raising approximately €3.5 million (before expenses) on lisitng and a further €2.3 million

from an existing investor after the listing.

• Berlin Club Opening: In May 2023 World Chess Club Berlin (worldchessclubberlin.com) officially

opened after a successful soft launch during the 2022 FIDE Grand Prix. The club has established a

vibrant, cultural hub for chess enthusiasts and is a model that World Chess hopes to replicate in

other cities worldwide.

• Armageddon Championship Series: In September 2023 the final of the inaugural Armageddon

Chess Championship was hosted by World Chess Club Berlin, the culmination of a five event series

which attracted top talent and a significant three-series sponsorship agreement with it.com

Domains.

• Broadcast Expansion: The Group has partnered with 33 television networks, including Bloomberg

and CNBC, to broadcast its Armageddon Championship highlights globally, making the

Armageddon Championship Series one of the most televised chess events.

• Digital Innovation: In October 2023, the FIDE Online Arena (chessarena.com) launched version 2.0,

introducing new features and improved gameplay following significant investment during the year.

World Chess Club Berlin

In May 2023, World Chess officially opened World Chess Club Berlin (the ‘Club’). Revenue has been

building and the Club has already successfully hosted the inaugural Armageddon Championship Series.

World Chess Club Berlin provides a model which can be replicated in other international cities and the

Group plans to assess other potential sites throughout 2024 and hopes to provide an update on this in due

course.

Armageddon Championship Series

In March 2023, the inaugural Armageddon Championship Series (the ‘Series’) commenced, where some of

the world's top male and female players competed for the €460,000 total prize fund. The Series concluded

with the Grand Finale in September 2023 held at World Chess Club Berlin. Polish Grandmaster Jan-

Krzysztof Duda emerged victorious and took the €80,000 winner's prize. As part of the commercial

development, World Chess signed it.com Domains as the Championships' official sponsor in a three-series

contract worth over €1.2 million.

Armageddon brings a fresh new twist to chess with its high-speed format and the intensity this creates in

matches. The format has proven to be a captivating entertainment product for TV audiences, with the Grand

Finale streamed across 147 territories with 33 international broadcasters, including Bloomberg television in

EMEA, CNBC, beIN SPORTS, Fox Australia and Sports TV Turkey, running the highlights.

World Chess Plc – Company Registration No. 10589323

STRATEGIC REPORT

Page 5 of 79

FIDE Online Arena

World Chess is the exclusive operator of the FIDE Online Arena, the online chess platform has 750,000

registered users and provides players with an online rating recognised by FIDE, the international chess

federation and world governing body recognised by the International Olympic Committee.

After committing further investment, the Company launched Arena 2.0 in October 2023, bringing important

upgrades to the platform, including technology upgrades that make the platform one of the fastest in the

industry, as well as exciting consumer-facing updates, such as personalised chess board skins. These

upgrades are expected to support the Company’s player acquisition strategy, with the inclusion of a revised

monthly subscription model and a host of new features that enhance the playing experience.

The FIDE Online Arena's anti-cheating system, NightWatch, received official certification from FIDE, which

underscores the platform’s commitment to fair play and the integrity of online chess competitions.

Merchandise

World Chess sells merchandise online, through its partner retailer network, and from World Chess Club

Berlin, with a product range encompassing premium chess boards and pieces, clothing and collectables for

chess enthusiasts. New products have been introduced in recent months, including the limited-edition chess

map artwork, which was designed by the artist Yuri Gordon as well as an expansive range of chess sets.

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 place 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.

World Chess Plc – Company Registration No. 10589323

STRATEGIC REPORT

Page 6 of 79

Statement from the Chair

I am pleased to report progress for World Chess Plc., during 2023. The Company continued to focus on its

goal of seeking to grow by tapping into the mass market appeal of chess, driving several growth initiatives

during the year.

The Company`s strategy for growth is to create diversified revenue streams spanning online gaming,

tournaments, chess clubs and merchandise. Despite being one of the oldest leisure and sporting activities in

the world, chess is, in the Board’s view, still in its infancy in terms of commercialisation.

The Company’s listing on the London Stock Exchange in April 2023, raised approximately €3.5m (before

expenses) of new funds from investors. Subsequent to the listing, an existing investor agreed to subscribe a

further €2.3m in tranches from September 2023, with the last tranche of this investment due to be received by

May 2024. The Board believes that the listing should provide access to future funding support and has

already helped to raise the profile of the World Chess brand and the sport.

During the financial year, the Company invested in the commercial areas described above, including major

investment for the development, and opening of World Chess Club Berlin and the subsequent staging of the

Armageddon Chess Championships at this venue.

In addition to the Berlin club, investment was made to improve the playing experience on the Company`s

chess gaming platform, FIDE Online Arena. Following the strategic investment made across the business, the

Board expects to see increased revenues during the course of 2024.

For the year ended 31 December 2023, the Company generated revenues of approximately €2.3m with an

operating loss of approximately €4.5m, with high expenditure attributed to the London listing costs and

investment projects, notably World Chess Club Berlin.

The Company continues to benefit from the considerable efforts of the management team and staff. I thank

them for their hard work and commitment throughout last year, and in going forward.

Outlook

The impact of inflation and higher interest rates, and resulting costs pressures, have made it a difficult

environment for the Company to navigate. These economic challenges remain for the business in 2024.

However, the Board is cautiously optimistic of achieving revenue growth over the course of the year. The

Board intends to pursue further opportunities that align with the Company`s strategy as a chess-focused

business to build shareholder value.

Graham Woolfman

Chair

25 April 2024

World Chess Plc – Company Registration No. 10589323

STRATEGIC REPORT

Page 7 of 79

Statement from the Chief Executive

2023 was a pivotal period for our Company, coinciding with our debut as a listed company. At the heart of

our strategic vision lies a dedication to pioneering innovative chess-related commercial ventures. By

diversifying our offerings and engaging our audiences in novel and captivating ways, we aim to propel

chess into the modern era while cementing its status as a cherished sport.

The funds raised through our listing on the London Stock Exchange have enabled us to make crucial

investments in our digital infrastructure, notably in the enhancement of the FIDE Online Arena and the

establishment of the World Chess Club Berlin. Furthermore, we have successfully increased brand

recognition, agreed new commercial partnerships and laid the groundwork for growth in 2024 and beyond.

Investment in the FIDE Platform

Throughout the year, we executed significant upgrades to the FIDE Online Arena, culminating in the

unveiling of Arena 2.0 in the final quarter. This enhanced platform not only gives players a FIDE-recognised

online rating but also delivers an improved gaming experience, boasting industry-leading speed.

Additionally, our proprietary anti-cheating technology, NightWatch, has been integrated to ensure fair play,

complemented by personalised chess board skins and consumer-centric updates aimed at enriching user

engagement.

To improve our player acquisition, we modified our subscription model, increasing our player base by 40%

to 750,000 registered users, with 8,500 ‘pro-members’ opting for the premium experience at €50 per year.

Opening World Chess Club Berlin and expanding our merchandise range

The opening of World Chess Club Berlin marks our first foray into physical spaces. It's not just a place to

play chess; it's where culture, community, and competition collide. We're crafting experiences that go

beyond the sport, making chess not just a game but a lifestyle.

We have seen revenue building through the Club’s café, the physical and online merchandise shop and

unique chess events, including our sold-out night of ‘Chess Boxing’. With plans to open more clubs in

strategic locations, we are excited at the prospect of creating more welcoming spaces in the coming years.

In line with our brand-building strategy and efforts to captivate new audiences, we have expanded our

range of chess-related products and branded merchandise. From exclusive chess maps to bespoke boards

and pieces, our merchandise celebrates the richness and diversity of chess culture. Through these

meticulously curated offerings and partnerships, we aim to elevate the chess experience and foster deeper

engagement within the global chess community.

New tournament format and events

Our Armageddon Championship Series, hosted at World Chess Club Berlin, redefined the excitement

surrounding chess, transforming a traditional game into a riveting spectator sport. Characterised by its high-

intensity and fast-paced format, the inaugural series gained widespread acclaim and was broadcast across 33

networks, including major media outlets like Bloomberg and CNBC.

Starting in March 2023 before concluding at the Grand Finale in September 2023, this fresh new twist on

competitive chess was able to take the game to a new level in terms of attracting a global audience. We also

signed a partnership with IT.com Domains Ltd (‘it.com Domains’)for a three-series contract worth over

€1.2m, underscoring the growing interest from sponsors to associate themselves with chess and the

audiences we can attract.

In line with our commitment to fostering a more inclusive global chess community, we are proud to

champion women within the sport. Through initiatives like our online tournament series, ‘Swiss Queens

Wednesday,’ in collaboration with FIDE, we are striving to address the gender disparity in chess

participation. A recent YouGov survey revealed that women comprise only 30% of chess players worldwide,

highlighting the untapped potential for positive change and the commercial opportunities it presents.

World Chess Plc – Company Registration No. 10589323

STRATEGIC REPORT

Page 8 of 79

2024 and further ahead

During 2023 the Group has been building the infrastructure for our digital offering, chessarena.com, as well

as the World Chess ecosystem. As we enter 2024, our primary objective is to launch these initiatives into the

market, with a keen emphasis on cultivating an engaging environment for both subscribers and partners.

Our strategic vision encompasses a multifaceted approach aimed at enhancing the online chess experience.

This entails leveraging innovative design elements and pioneering features to revolutionise gameplay.

Concurrently, our marketing efforts will be intensified to establish Chessarena as a household name,

bolstered by the introduction of media and merchandise offerings. Moreover, we are committed to

expanding our business-to-business sector, introducing new products tailored for chess clubs.

Among our upcoming enhancements, we are exploring the integration of social features, such as stickers, to

enrich the gaming experience. Additionally, we aspire to merge the dynamics of a sports platform with a

communication app, creating a unique synergy. The implementation of cutting-edge AI technology will

significantly elevate our anti-cheating measures, ensuring the integrity of gameplay. Furthermore, we

envision a dedicated television product for chess, granting the sport a permanent presence on television

screens globally.

We have invested substantial resources in terms of capital, expertise, and with the dedication of our team,

there is still much to do in pursuit of our journey to redefine and innovate across the landscape of chess

Ilya Merenzon

Chief Executive Officer

25 April 2024

World Chess Plc – Company Registration No. 10589323

STRATEGIC REPORT

Page 9 of 79

Operational review

Key Performance Indicators (KPIs)

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

profit and (Loss)/profit before tax which are included in the Statement of Profit or Loss and Other

Comprehensive Income.

2023

€

2022

€

Reasons for movement

Revenue

2,345,492

2,796,207

In 2023, we launched the inaugural Armageddon

Series, held at World Chess Club Berlin. While the

series gained significant media attention, it didn't

reach the sponsorship levels attained by the more

established FIDE Grand Prix held in 2022. This

outcome was anticipated, considering it was the

event's debut year. However, we remain optimistic

about future revenue prospects as the event gains

traction and visibility in subsequent years.

Gross Profit

179,102

705,453

The five event Armageddon series took place at World

Chess Club Berlin, whilst the five events used the same

staging, reducing the average cost per event, costs

increased overall compared to the three FIDE Grand

Prix events which took place in 2022.

Loss before tax

(4,671,470)

(2,794,368)

Losses increased during 2023, due to the one-off costs

associated with the Company’s listing on the Main

Market of the London Stock Exchange and the costs of

launching World Chess Club Berlin, as well as

international marketing and travel costs.

The Group uses a number of non-financial KPI’s as set out below. The Group also sees customer satisfaction

index and customer churn rate as important KPIs, and intends to develop additional KPI’s to reflect this in

2024.

2023

No.

2022

No.

Reasons for movement

Number of hosted

tournaments

In 2023, we launched the inaugural Armageddon

Series, held at World Chess Club Berlin., this was the

first proprietary series promoted by World Chess. In

2022 the Company promoted the three event FIDE

Grand Prix series.

Number of

registered users

752,884

650,743

The Group continues to promote the FIDE Online

Arena and launched a new version (Arena 2.0) in

October 2023, the new version continues to attract new

users at a price point approximately double that of the

previous version.

Number of paid

subscriptions

8,550

7,380

Combined social

media followings

521,139

343,929

Promotion of World Chess and Armageddon brands

on social and broadcast media.

World Chess Plc – Company Registration No. 10589323

STRATEGIC REPORT

Page 10 of 79

Financial Review

2023 saw the Company’s listing on the Main Market of the London Stock Exchange raising €3.5m for

investment of €817,533 (2022: €799,866) in the development of the FIDE Online Arena; and €510,898 (2022:

€635,818) in the opening of World Chess Club Berlin.

2023

2022

€

REVENUE

2,345,492

2,796,207

GROSS PROFIT

179,102

705,453

GROSS PROFIT %

25%

Other operating income

11,706

92,399

Administrative expenses

(4,344,248)

(3,278,281)

OPERATING LOSS BEFORE EXCEPTIONAL ITEMS

(4,153,440)

(2,480,429)

Addback: Depreciation and amortisation

843,237

632,936

PRE-EXCEPTIONAL ITEMS EBITDA LOSS

(3,310,203)

(1,847,493)

Exceptional Items

(326,776)

23,000

Finance costs

(191,393)

(337,460)

Finance income

139

521

LOSS BEFORE INCOME TAX

(4,671,470)

(2,794,368)

Revenue and Gross Profit

Whilst the Group has four distinct revenue generating activities, revenues in 2023 and 2022 were dominated

by tournament sponsorships. 2023 saw €1,381,340 of tournament revenue being 59% of total revenue (2022:

€1,711,331 being 61% of total revenue). This reduction in tournament revenue followed the Group’s strategic

decision to launch Armageddon, its own proprietary tournament series, rather than continue to solely

promote FIDE tournaments. Whilst the Armageddon was a great success in terms of participation and media

coverage, as a new event series it does not yet command the same level of sponsorship as the FIDE Grand

Prix events which took place in 2022.

Part of the Group’s tournament strategy is to use a dedicated event space, afforded by World Chess Club

Berlin, to host events rather than constructing temporary staging for each event. This strategy led to a

reduction in the average costs associated with hosting each of the five Armageddon series events, however

with five events taking place in 2023 compared to the three which took place in 2022 the overall cost of sales

increased by 4%, this together with the 16% fall in revenue resulted in a 75% reduction in gross profit.

Loss per share

The loss per share was €0.007 (2022: €0.004), resulting from both an increase in operating losses and in the

weighted average number of shares in issue, from 597,912,402 in 2022 to 650,232,851 in 2023. At 31 December

2023 there were a total of 667,193,501 shares in issue.

Cash flows

The Consolidated Statement of Cash Flows is set out on page 52 to these consolidated financial statements,

during 2023 the Group raised €3,475,569 from the issue of new equity capital on listing and a further

€1,040,329 in loans were also converted into new equity capital. The Company also received €1,508,737 from

an existing shareholder for a new share subscription which was issued in February 2024 as set out in note 32.

World Chess Plc – Company Registration No. 10589323

STRATEGIC REPORT

Page 11 of 79

Statement of Financial Position

The Consolidated Statement of Financial Position as at 31 December 2023 shows the Group’s total net assets

having decreased to €1,007,724 (2022: €1,163,425).

Capital expenditure

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

of €817,533 (2022: €799,866), bringing the total invested to €3,924,971 with a carrying value at 31 December

2023 of €2,692,024.

Investments and impairment

As detailed in notes 11, 13 and 14 to the consolidated financial statements the Directors considered the

carrying value of investments, goodwill and intangible assets at 31 December 2023 based on detailed

budgets and forecasts, these budgets and forecasts generally cover a five-year period. Based on this the

Directors concluded that no impairment was necessary at 31 December 2023 or 31 December 2022.

Cash and debt position

At the year end the Group has total cash balances of €186,881 (2022: €35,565) and total borrowings of

€1,453,470 (2022: €2,485,797) giving a net debt figure of €1,266,589 (2022: €2,450,232).

As at 23 April 2024, the date of signing these consolidated financial statements, the Group had total cash of

€220,122 (28 April 2023: €1,830,936) and total borrowings of €32,986 (28 April 2023: €62,676) giving a net debt

figure of €187,136 (28 April 2023: €1,768,260).

Going concern

Based on the Group’s Statement of Financial Position and a review of its forecast future operating budgets

and forecasts, the Directors have a reasonable expectation that the Group has adequate resources to continue

in operational existence for at least twelve months from the date of signing of these consolidated financial

statements. This review of future operating budgets and forecasts included certain reasonable downside

scenarios and confirmed that even in the case of such downside scenarios the Group could continue to

operate and meet its obligations as they fall due. Accordingly, the Directors have adopted the going concern

basis in preparing the Annual Report and consolidated financial statements.

In making this assessment, the Directors have considered the resilience of the Group in severe but plausible

scenarios, taking into account the principal risks and uncertainties facing the Group as detailed on page 12

and the effectiveness of any mitigating actions. The Directors’ assessment considered the potential impacts

of these scenarios, both individually and in combination, on the Group’s business model, future

performance, solvency and liquidity over the period. Sensitivity analysis was also used to stress test the

Group’s strategic plan and to confirm that sufficient headroom would remain under the Group’s available

sources of finance. The Directors consider that under each of these scenarios, the mitigating actions would be

effective and sufficient to ensure the continued viability of the Group.

Richard Collett

Chief Financial Officer

25 April 2024

World Chess Plc – Company Registration No. 10589323

STRATEGIC REPORT

Page 12 of 79

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 Group’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.

World Chess Plc – Company Registration No. 10589323

STRATEGIC REPORT

Page 13 of 79

Rating recognition and adoption

One of the key propositions of the Company’s gaming platform is the fact that it operates 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 are new, there could be substantial adoption issues. For

example, conversion of online rating into the in person over-the-board (‘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.

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.

The Group has implemented 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 Quoted Companies Alliance Corporate Governance Code (‘QCA Code’) and

Section 172 (see pages 15 to 25).

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

framework (see page 13 to 14).

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 to 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

World Chess Plc – Company Registration No. 10589323

STRATEGIC REPORT

Page 14 of 79

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

The Group reports 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.

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.

World Chess Plc – Company Registration No. 10589323

STRATEGIC REPORT

Page 15 of 79

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 16.

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.

World Chess Plc – Company Registration No. 10589323

STRATEGIC REPORT

Page 16 of 79

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 25 April 2024 and signed on its behalf by:

Ilya Merenzon

Chief Executive Officer

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 17 of 79

Corporate Governance Statement

As Chair 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 25 April 2024 and signed on its behalf

by:

Graham Woolfman

Chair

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 18 of 79

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 16. With principal risks being detailed on page 12

and climate change related risks on page 13 to 14.

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, where appropriate,

the Chief Financial Officer and Chair) 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

expectations, the Board will seek to engage with the

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 19 of 79

relevant shareholders to understand and address

any issues.

In addition to presentations at the AGM, the

Company will aim 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 Chair, 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 may 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.

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 20 of 79

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 is a process 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.

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 21 of 79

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 Chair, 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, since admission, comprises three

Executive Directors and three Non- Executive

Directors. 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 Remuneration Committee

(’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 28.

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 22 of 79

6. Ensure that

between them

the directors

have the

necessary up-to-

date experience,

skills and

capabilities

The Board must have an

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.

Details on each of the Directors, including a

summary of their past experience, is set out on page

26 to 27.

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.

The Board will perform an annual self-evaluation,

reviewing its operation and performance.

This review is carried out to ensure director

performance is, and continues to be effective, and

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

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 23 of 79

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 meets at least 4 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 Chair is responsible

for running the business of the Board and for

ensuring appropriate strategic focus and direction.

The Chief Executive Officer is responsible for

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 24 of 79

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 Remco will meet at least twice 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 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.

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 25 of 79

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 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.

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 26 of 79

Board of Directors

The Board is comprised of three Executive Directors, the Non-Executive Chair, 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 Jamison’s original Russian law firm exposed the largest tax fraud perpetrated against the Russian

Government. During the last ten years Jamison 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 Chair (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 27 of 79

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. was Chair of Ethernity Networks Ltd, quoted on AIM, from 2017 until 2021.

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

Committee of Peabody Trust. 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 plc, 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.

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

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 28 of 79

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

Audit

Committee

Remuneration

Committee

Ilya Merenzon

13 of 13

n/a

Matvey Shekhovtsov

13 of 13

n/a

Jamison Firestone

13 of 13

5 of 5

2 of 2

Graham Woolfman – appointed 6 April 2023

12 of 13

5 of 5

2 of 2

Richard Collett – appointed 6 April 2023

12 of 13

n/a

Neil Rafferty – appointed 6 April 2023

12 of 13

5 of 5

2 of 2

During the year ended 31 December 2023 the Board met thirteen times, of which one was prior to the

appointment of Graham Woolfman, Richard Collett and Neil Rafferty, The Audit Committee met five times

and the Remco met twice. (2022: the Board met six times and the Audit Committee and Remco were not

formed until 2023).

Directors’ Interest in Shares

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

31 December 2023

31 December 2022

Ilya Merenzon

443,870,000

Matvey Shekhovtsov

16,680,000

Jamison Firestone

5,560,000

Graham Woolfman – appointed 6 April 2023

Richard Collett – appointed 6 April 2023

5,319

Neil Rafferty – appointed 6 April 2023

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 29 of 79

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 Woolfman

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

Page 30 of 79

Audit Committee Report

The Board has established an Audit Committee, with the appropriate Terms of Reference, as stewards of the

Company's financial integrity and transparency.

Overview of Activities:

The Audit Committee has undertaken a review of the Company's financial reporting processes, internal

controls, risk management, and compliance with applicable laws and regulations.

Oversight of Financial Reporting:

Reviewed and approved the Company's financial statements, ensuring compliance with UK – adopted

International Accounting Standards and IFRIC interpretations and with those parts of the Companies Act

2006 applicable to companies reporting under IFRS and applicable regulatory requirements.

Engaged with management and external auditors to address any significant accounting policies, estimates,

or judgments impacting financial reporting.

External Audit:

Evaluated the independence, qualifications, and performance of the external auditors, Moore Kingston

Smith LLP, ensuring their suitability to carry out the audit engagement.

The Committee noted that this is the second year of Moore Kingston Smith LLP’s tenure and whilst the

Company has no specific policy on auditor rotation the Committee continues to monitor auditor

independence and effectiveness and concluded that a resolution to re-appoint Moore Kingston Smith LLP

should be put to the shareholders at the next Annual General Meeting.

Monitored the progress of the external audit, reviewed audit plans, and provided oversight to ensure the

audit was conducted efficiently and effectively.

Addressed any issues or concerns raised by the auditors and facilitated their communication with the Board

where necessary.

This Audit Committee Report was approved by Audit Committee on 25 April 2024 and signed on its behalf

by:

Neil Rafferty

Chair Audit Committee

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 31 of 79

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 Remuneration Policy was approved by shareholders at the Annual General Meeting held on

23 June 2023 with 93% of votes cast in favour nil% of votes cast against and 7% of votes (representing

31,424,601 shares) withheld.

Policy table for Executive Directors

Basic Salary

Purpose and link

to strategy

Operation

Opportunity & Performance

Conditions

Attract, retain,

and reward high

calibre directors

and managers.

Salary levels (and subsequent

increases) are set after reviewing

various factors including individual

and Company performance, role

and responsibility, internal

relativities such as the increases

awarded to other employees and

prevailing market levels at

companies of comparable status

and market value, considering the

total remuneration package.

Salaries are normally reviewed

annually, there is no guarantee of

an increase as such review.

While there is no maximum salary

level or maximum increase that

may be offered, salary increases

will normally be in line with typical

increases awarded to other

employees in the Group.

There are no specific performance

criteria, although performance of

both the company and the

individual are taken into account

when determining an appropriate

level of base salary (or subsequent

increase).

Benefits

Attract, retain,

and reward high

calibre directors

and managers.

Benefits, which are on similar terms

to those offered to the wider

workforce or required to remain

market competitive, generally

include private medical cover and

life assurance cover.

Overseas recruitment or an

international assignment may

require the benefits package to be

more tailored and may include, for

example, relocation costs, as

necessary.

There is no prescribed maximum

limit. However, the Committee

monitors annually the overall cost

of the benefits provided.

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 32 of 79

Pension

Attract, retain and

reward high

calibre directors

and managers.

Defined contribution pension

benefits reflect relevant market

practice and are determined by the

automatic enrolment laws under

the Pensions Act 2008 and a

potential separate private pension

plan arranged by the Company.

There is no prescribed maximum

limit. However, the Committee

monitors annually the overall cost of

the benefits provided.

Bonus

Rewards both

short and long-

term

performance.

Bonus arrangements encourage and

reward the delivery of business

objectives. Bonus payments are

discretionary and conditional upon

the director of manager meeting in

full or in part specific conditions

and targets.

Bonus may be based on a mix of

financial, operational, strategic, and

individual performance measures.

The exact metrics are determined

each year depending on the key

goals for the forthcoming year and

the annual bonus is normally paid

in cash.

There is no prescribed maximum

limit. However, the Committee

monitors annually the overall cost of

the benefits provided.

Shareholding

Aligns interests of

directors and

managers with

shareholders.

The Company intends to adopt an

incentive plan under which it may

award new Ordinary Shares to

directors, employees and

consultants pursuant to share

option and incentive schemes

approved by the Board.

It is intended that any individual

awards under any such scheme will

be subject to vesting and/or

performance conditions.

Ordinary Shares under such plans

will not exceed three percent of the

Company’s issued Ordinary Shares

from time to time without the prior

approval of Shareholders.

The Chief Executive Officer, Ilya

Merenzon, and Chief Operating

Officer, Matvey Shekhovtsov, built

up significant shareholdings in the

Company prior to listing.

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 33 of 79

Policy table for Non-executive Directors

Fees

Purpose and link

to strategy

Operation

Opportunity & Performance

Conditions

Attract, retain,

and reward high

calibre directors.

Director fees (and subsequent

increases) are set after reviewing

various factors including individual

responsibilities, such as Committee

Chairmanship, time commitment,

general employee pay increases,

and prevailing market levels at

companies of comparable status

and market value.

Fee increases are normally

reviewed annually.

Non-executive Directors also

receive reimbursement of

reasonable expenses incurred in

connection with Company.

There is no maximum fee level or

maximum increase that may be

offered and there are no specific

performance criteria.

Shareholding

Aligns interests of

directors and

with

shareholders.

The Company considers ownership

of Company shares by non-

executive directors as a positive

alignment of their interest with

shareholders.

Non-executive directors may

therefore be invited to participate in

any incentive share plan the

Company may adopt. It is intended

that any individual awards under

any such scheme will be subject to

vesting and/or performance

conditions.

The Company’s Executive Directors

will periodically review the

shareholdings of the Non-executive

Directors and will seek guidance

from its advisors if, at any time, it is

concerned that the shareholding of

any Non-executive Director may, or

could appear to, conflict with their

duties as an independent non-

executive director.

There is no target shareholding and

there are no specific performance

criteria, however the Company’s

Executive Directors will

periodically review the

shareholdings of the Non-executive

Directors and will seek guidance

from its advisors if, at any time, it is

concerned that the shareholding of

any Non-executive Director may, or

could appear to, conflict with their

independence.

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 34 of 79

Remuneration of Directors 2023 (audited)

Salary and

fees €

Benefits-in-kind

€

Pension

contributions €

2023

Total €

Ilya Merenzon

210,000

Matvey Shekhovtsov

114,600

Jamison Firestone

14,440

252

14,692

Graham Woolfman

36,880

Richard Collett

87,810

1,031

88,841

Neil Rafferty

27,760

491,490

1,283

492,773

1 – Pension contributions for Mr Collett and Mt Firestone are in accordance with the auto enrolment provisions of the Pensions Act 2008

Remuneration of Directors 2022 (audited)

Salary and

fees €

Benefits-in-kind

€

Pension

contributions €

2022

Total €

Ilya Merenzon

192,000

Matvey Shekhovtsov

106,300

Jamison Firestone

23,701

Ekaterina Chalykh

5,000

327,001

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.

Policy on payment for loss of office

Executive Directors’ service agreements include provisions for payment in lieu of notice, the circumstances

surrounding any departure, will be considered on a case-by-case basis however the Company strongly

opposes rewarding failure.

Service agreements may be terminated immediately without notice or payment in lieu of notice in instances

of gross misconduct. The Company may require the Executive Director to continue working during their

notice period or may opt to place them on ‘garden leave’, especially if they have access to sensitive

commercial information, to safeguard the Company’s and shareholders’ interests.

The Remuneration Committee retains the discretion to make additional payments upon an Executive

Director’s cessation of office or employment. Such payments are made in good faith, either to fulfil existing

legal obligations, settle claims arising from the departure, or bolster the Group’s post-termination rights.

These payments may encompass reasonable relocation costs, potential tax exposure expenses, fees for

outplacement assistance, and legal or professional advisory fees related to the cessation of office or

employment.

Service agreements and Letters of Appointment

In 2022 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.

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 35 of 79

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.

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.

Richard Collett

Richard Collett entered into a service agreement with the Company dated 6 April 2023 for an initial term of

24 months, but terminable on three months’ notice by either party. The service agreement contains

customary post-employment restrictive covenants.

Graham Woolfman

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

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. The appointment may be

terminated upon three months; notice by either party at any time.

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. The appointment may

be terminated upon three months; notice by either party at any time.

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 Remuneration Committee on 25 April 2024 and signed on

its behalf by:

Graham Woolfman

Chair Remuneration Committee

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 36 of 79

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 2023.

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)

Dividends

The Directors do not propose a dividend in respect of the year ended 31 December 2023 (2022: €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.

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 25 April 2024

Ilya Merenzon

404,520,000

58.48

Matvey Shekhovtsov

33,350,000

4.82

Jamison Firestone

5,560,000

0.80

Graham Woolfman

Richard Collett

5,319

0.00

Neil Rafferty

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.

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 37 of 79

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 25 April 2024:

No. of shares

Ilya Merenzon

404,520,000

58.48

Prytek Investment Holdings Pte Ltd

83,910,000

12.13

Yuri Milner

50,455,671

7.29

Matvey Shekhovtsov

33,350,000

4.82

Mikhail Merenzon

29,394,285

4.25

Andrey Insarov

25,288,089

3.66

AIC Capital LLC

24,740,000

3.58

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 58.48% 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 11, 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).

2023 is the second 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.

The Group 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 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.

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 38 of 79

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, however increases in activity,

and energy usage, in 2023 did not translate into increases in revenue, which saw a 16% fall compared to 2022

and thus an increase in both intensity ratios measured against €m of revenue.

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)

2023

2022

2023

2022

Scope 1

Scope 2

UK Electricity

Rest of world electricity

84,374

32,882

52.1

11.5

Scope 3

Business travel

260,957

58,949

55.9

11.4

Upstream transportation

and distribution

1,888,250

291,480

391.0

56.4

Purchased goods and

services

6,133,192

6,046,660

1,270.0

1,170.0

Total

8,366,713

6,429,971

1.769.0

1,249.3

Intensity ratio per €m

revenue

3,567,172

2,299,533

754

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

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

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 39 of 79

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

2023. 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 25 April 2024 and signed on its behalf by:

Ilya Merenzon

Chief Executive Officer

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 40 of 79

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 25 April 2024 and signed on its behalf by:

Ilya Merenzon

Chief Executive Officer

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 41 of 79

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 2023 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, notes to the 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 2023 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

engagement 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 engagement

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 audit or specified

audit procedures 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 audit 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.

In order to address the audit risks in respect of the group and company financial statements 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., World Chess Europe

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 42 of 79

GmbH and World Chess Sakartvelo LLC. All work was carried out by the group audit engagement 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 group and company 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 audit 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 60 for the relevant

accounting policies and page 57 for the key

judgements taken by management in preparing

the consolidated financial statements.

As at the reporting date, the group had intangible

assets of €3.09m (2022: €2.76m).

Management and those charged with governance

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

impairment test of the recoverable value of the

intangible assets in accordance with the

requirements of IAS 36.

Management identified potential indicators of

impairment and consequently performed an

impairment test, based on which they concluded

that no impairment was required.

The assessment of the recoverable value of the

intangible assets required judgements and

estimates to be made 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:

• Critically assessing the appropriateness of

management’s determination of the Cash

Generating Units (CGUs).

• 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 financial reporting standards,

specifically IAS 36.

• Performing data integrity and mechanical

checks on the discounted cash flow model.

• Critically assessing and challenging the

impairment test prepared by management

including the forecast discounted cash

flows, focusing on the appropriateness of

the assumptions and key inputs used in

preparing them.

• Performing sensitivity analysis on the

impairment test 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

the information provided in the financial

statements is compliant with the

requirements of IAS 36 and consistent with

the results of the impairment test.

• Reviewing the amortisation accounting

policy for non-goodwill intangible fixed

assets to ensure it was appropriate.

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 43 of 79

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 the disclosures in the financial

statements relating to this area to be adequate.

Going concern

Refer to note 2 on page 56 in the consolidated

financial statements.

The group has incurred a loss of €4.69m for the

year (2022: €2.46m) and the net assets disclosed in

the Consolidated Statement of Financial Position at

31 December 2023 are €1.01m representing a

decrease from €1.16m at 31 December 2022.

The directors have prepared cashflow forecasts that

show that the group will be able to meet its

ongoing liabilities as they fall due for at least

twelve months from the date of signing of these

financial statements.

Our audit work and conclusions in respect of going

concern have been detailed in the ‘Conclusions

relating to going concern’ section of our audit

report.

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 the 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.

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

€219,600

€51,600

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

€109,800

€25,800

Basis for determining

performance

50% of group materiality. This was

considered an appropriate percentage

50% of parent company materiality.

This was considered an appropriate

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 44 of 79

materiality

based on our risk assessment and our

assessment of the overall control

environment of the group.

percentage based on our risk

assessment and our assessment of the

overall control environment of the

parent company.

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 €50,500 to €208,600. 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 €10,980 for the group and €2,580 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

• 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

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 45 of 79

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.

Responsibilities of directors

As explained more fully in the directors’ responsibilities statement set out on page 40, 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.

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 46 of 79

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.

• 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.

World Chess Plc – Company Registration No. 10589323

GOVERNANCE

Page 47 of 79

Other matters which we are required to address

Following the recommendation of the Audit Committee , we were reappointed by the Company’s Annual

General Meeting (AGM) on 30 June 2023 as auditor of the Company to hold office until the conclusion of the

next AGM of the Company. We were originally appointed by the Audit Committee on 6 March 2023 to audit

the financial statements for the year ended 31 December 2022. Our total uninterrupted period of engagement

is two years, covering periods from our appointment to the year ended 31 December 2023.

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

Floor

9 Appold Street

London

EC2A 2AP

World Chess Plc – Company Registration No. 10589323

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023

Page 48 of 79

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2023

		2023	2022
	Notes	€	€
Revenue	3	2,345,492	2,796,207
Cost of sales		(2,166,390)	(2,090,754)
GROSS PROFIT		179,102	705,453
Other operating income		11,706	92,399
Administrative expenses		(4,344,248)	(3,278,281)
OPERATING LOSS BEFORE EXCEPTIONAL ITEMS		(4,153,440)	(2,480,429)
Exceptional Items	5	(326,776)	23,000
OPERATING LOSS		(4,480,216)	(2,457,429)
Finance costs	6	(191,393)	(337,460)
Finance income	6	139	521
LOSS BEFORE INCOME TAX	7	(4,671,470)	(2,794,368)
Income tax	8	(13,629)	332,680
LOSS FOR THE YEAR		(4,685,099)	(2,461,688)
OTHER COMPREHENSIVE INCOME
Loss on currency translation		(7,323)	(19,787)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR		(4,692,422)	(2,481,475)
Loss attributable to:
Owners of the parent		(4,685,099)	(2,461,688)
Total comprehensive income attributable to:
Owners of the parent		(4,692,422)	(2,481,475)
LOSS PER SHARE – CONTINUING AND TOTAL
OPERATIONS
Basic and diluted	10	(0.007)	(0.004)

World Chess Plc – Company Registration No. 10589323

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023

Page 49 of 79

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 DECEMBER 2023

		2023	2022
	Notes	€	€
NON-CURRENT ASSETS
Owned: Intangible assets	11	3,086,827	2,763,358
Owned: Property, plant and equipment	12	1,029,516	714,116
Right-of-use: Property, plant and equipment	12, 23	1,206,820	1,236,968
Deferred tax	27	63,272	76,697
		5,386,435	4,791,139
CURRENT ASSETS
Inventories	15	187,018	187,691
Trade and other receivables	16	256,464	662,566
Tax receivable		-	251,117
Cash and cash equivalents	17	186,881	35,565
		630,363	1,136,939
TOTAL ASSETS		6,016,798	5,928,078
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Called up share capital	18	75,647	68,260
Share premium	19	11,048,183	6,518,849
Translation reserve	20	58,618	65,941
Retained earnings	20	(10,174,724)	(5,489,625)
TOTAL EQUITY		1,007,724	1,163,425
NON-CURRENT LIABILITIES
Lease liabilities	23	1,304,273	1,308,003
Provision for liabilities	26	157,887	180,652
		1,462,160	1,488,655
CURRENT LIABILITIES
Trade and other payables	21	3,397,717	2,098,204
Lease liabilities	23	116,208	95,686
Interest bearing loans and borrowings	22	32,989	1,082,108
		3,546,914	3,275,998
TOTAL LIABILITIES		5,009,0 74	4,764,653
TOTAL EQUITY AND LIABILITIES		6,016,798	5,928,078

The financial statements were approved by the Board of Directors and authorised for issue on 25 April 2024 and

were signed on its behalf by:

Ilya Merenzon

Chief Executive Officer

World Chess Plc – Company Registration No. 10589323

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023

Page 50 of 79

COMPANY STATEMENT OF FINANCIAL POSITION 31 DECEMBER 2023

2023

2022

Notes

€

NON-CURRENT ASSETS

Investments

301,616

CURRENT ASSETS

Trade and other receivables

5,790,209

4,919,305

Tax receivable

6,025

Cash and cash equivalents

21,366

6,242

5,817,600

4,925,547

TOTAL ASSETS

6,119,216

5,227,163

EQUITY AND LIABILITIES

SHAREHOLDERS' EQUITY

Called up share capital

75,647

68,260

Share premium

11,048,183

6,518,849

Retained earnings

(6,871,864)

(5,329,173)

TOTAL EQUITY

4,251,966

1,257,936

CURRENT LIABILITIES

Trade and other payables

1,867,250

2,950,159

Interest bearing loans and borrowings

1,019,068

1,867,250

3,969,227

TOTAL LIABILITIES

1,867,250

3,969,227

TOTAL EQUITY AND LIABILITIES

6,119,216

5,227,163

As permitted by Section 408 of the Companies Act 2006, the statement of comprehensive income of the parent

company is not presented as part of these financial statements. The parent company's loss for the financial year

was €1,542,691 (2022: €578,448).

The financial statements were approved by the Board of Directors and authorised for issue on 25 April 2024 and

were signed on its behalf by:

Ilya Merenzon

Chief Executive Officer

World Chess Plc – Company Registration No. 10589323

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023

Page 51 of 79

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2023

	Called	Retained	Share	Translation	Total
	up share	Earnings	Premium	reserve	equity
	capital
	€	€	€	€	€
Balance at 1 January 2022	66,996	(3,027,937)	5,520,114	85,728	2,644,901
Changes in equity
Issue of share capital	1,264	-	998,735	-	999,999
Total comprehensive income	-	(2,461,688)	-	(19,787)	(2,481,475)
Balance at 31 December 2022	68,260	(5,489,625)	6,518,849	65,941	1,163,425
Changes in equity
Issue of share capital	7,387	-	4,529,334	-	4,536,721
Total comprehensive income	-	(4,685,099)	-	(7,323)	(4,692,422)
Balance at 31 December 2023	75,647	(10,174 ,724)	11,048,183	58,618	1,007,724
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2023

Called up

share capital

Retained

Earnings

Premium

Total

equity

€

Balance at 1 January 2022

66,996

(4,750,725)

5,520,114

836,385

Changes in equity

Issue of share capital

1,264

998,735

999,999

Total comprehensive income

(578,448)

Balance at 31 December 2022

68,260

(5,329,173)

6,518,849

1,257,936

Changes in equity

Issue of share capital

7,387

4,529,334

4,536,721

Total comprehensive income

(1,542,691)

Balance at 31 December 2023

75,647

(6,871,864)

11,048,183

4,251,966

World Chess Plc – Company Registration No. 10589323

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023

Page 52 of 79

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2023

		2023	2022
	Notes	€	€
Cash flows from operating activities
Cash absorbed from operations	1	(3,338,149)	(512,077)
Interest paid		(6,638)	(179,610)
Finance cost paid		(163,495)	(157,850)
Tax refund received		250,913	20,600
Net cash used in operating activities		(3,257 ,369)	(828,93 7)
Cash flows from investing activities
Purchase of intangible fixed assets		(3,317,267)	(799,865)
Proceeds from disposal of intangible fixed assets		2,495,727	1,367,702
Purchase of property, plant and equipment		(631,603)	(635,818)
Proceeds from disposal of property, plant and equipment		1,185	23,214
Interest received		139	521
Net cash used in investing activities		(1,451 ,819)	(44,246)
Cash flows from financing activities
Loan advanced in the year		1,508,737	1,019,068
Loan repayments in year		(30,050)	(1,341,854)
Payment of lease liabilities		(100,596)	(21,986)
Amount introduced by directors		14,167	120,619
Proceeds from share issue		3,475,569	999,999
Net cash generated from financing activities		4,867,827	775,846
Increase/(decrease) in cash and cash equivalents		158,639	(97,337)
Cash and cash equivalents at beginning of year	2	35,565	152,689
Effect of foreign exchange rate changes		(7,323)	(19,787)
Cash and cash equivalents at end of year	2	186,881	35,565

World Chess Plc – Company Registration No. 10589323

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023

Page 53 of 79

COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2023

2023

2022

Notes

€

Cash flows from operating activities

Cash absorbed by operations

(1,655,432)

(104,814)

Interest paid

(84,353)

Finance cost paid

(123,415)

Net cash used in operating activities

(1,655,432)

(312,582)

Cash flows from investing activities

Purchase of intangible fixed assets

(275,000)

Interest received

106,145

20,820

Net cash generated from/(used in) from investing activities

106,145

(254,180)

Cash flows from financing activities

Loan advanced in the year

1,508,737

1,019,068

Amounts received from group undertakings

157,633

Amounts paid to group undertakings

(3,436,509)

(1,640,863)

Amount introduced by directors

16,613

3,060

Proceeds from share issue

3,475,570

999,999

Net cash generated from financing activities

1,564,411

538,897

Increase/(decrease) in cash and cash equivalents

15,124

(27,865)

Cash and cash equivalents at beginning of year

6,242

34,107

Cash and cash equivalents at end of year

21,366

6,242

World Chess Plc – Company Registration No. 10589323

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023

Page 54 of 79

NOTES TO THE STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2023

RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH ABSORBED FROM

OPERATIONS

Group

2023

2022

€

Loss before income tax

(4,671,470)

(2,794,368)

Depreciation and amortisation

843,237

632,935

Provision

(22,765)

180,652

Finance costs

191,393

337,460

Finance income

(139)

(521)

(3,659,744)

(1,643,842)

Decrease in inventories

673

30,702

Decrease in trade and other receivables

406,102

2,699,953

Decrease in trade and other payables

(85,180)

(1,598,890)

Cash absorbed from operations

(3,338,149)

(512,077)

Company

2023

2022

€

Loss before income tax

(1,542,691)

(578,448)

Finance costs

21,260

207,766

Finance income

(106,145)

(20,820)

(1,627,576)

(391,502)

(Increase)/decrease in trade and other receivables

(6,118)

182,297

(Decrease)/increase in trade and other payables

(21,738)

104,391

Cash absorbed by operations

(1,655,432)

(104,814)

World Chess Plc – Company Registration No. 10589323

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023

Page 55 of 79

CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statements of Cash Flows in respect of cash and cash equivalents are

in respect of these Statement of Financial Position amounts:

Group

2023

2022

€

Year ended 31 December 2023

Cash and cash equivalents

186,881

35,565

Year ended 31 December 2022

Cash and cash equivalents

35,565

152,689

Company

2023

2022

€

Year ended 31 December 2023

Cash and cash equivalents

21,366

6,242

Year ended 31 December 2022

Cash and cash equivalents

6,242

34,107

RECONCILIATION OF NET DEBT

Group

2023

2022

€

At 31 December

Other loans

(32,989)

(1,082,108)

Lease liabilities

(1,420,481)

(1,403,689)

Total Borrowings

(1,453,470)

(2,485,797)

Cash and cash equivalents

186,881

35,565

Net debt

(1,266,589)

(2,450,232)

Company

2023

2022

€

At 31 December

Other loans

(1,019,068)

Cash and cash equivalents

21,366

6,242

Net cash/(debt)

21,366

(1,012,826)

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 56 of 79

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31

DECEMBER 2023

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.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities

controlled by the Company (its subsidiaries) made up to 31 December each year. Control is achieved

where the Company has the power to govern the financial and operating policies of an investee entity so

as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated

income statement from the effective date of acquisition or up to the effective date of disposal, as

appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring

the accounting policies used in line with those used by the Company.

Intra-group balances and transactions are eliminated on consolidation. Unrealised gains arising from

transactions with equity-accounted investees are eliminated against the investment to the extent of the

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 57 of 79

Group's interest in the investee. Unrealised losses are eliminated in the same way as gains, but only to the

extent that there is no evidence of impairment.

Critical accounting judgements and key sources of estimation uncertainty

The preparation of the financial statements in conformity with UK – adopted International Accounting

Standards requires the use of estimates and assumptions that affect the reported amounts of assets and

liabilities at the date of the financial statements and the reported amounts of revenue and expenses

during the reporting period. Although these estimates are based on management's best knowledge of the

amounts, events or actions, actual results ultimately may differ from these estimates. The estimates and

underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are

recognised in the period in which the estimate is revised. The material areas in which estimates and

judgements are applied as follows:

Goodwill and other intangible assets for impairment

The Group is required to test, on an annual basis, whether goodwill and other intangible assets have

suffered any impairment. Determining whether there has been any impairment requires an estimation of

the fair value in use of the cash-generating units. The value in use calculation requires the Directors to

estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate

in order to calculate the present value, the discount rate applied is 16.15% (2022: 11.83%) and the carrying

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

Group

2023

2022

€

Exclusive FIDE rights

331,588

442,117

Software Licences

59,000

82,000

Online Platform

2,692,024

2,239,033

Crypto-assets valuation

The Group has historically received some sponsorship revenue in the form of crypto-assets which it has

converted to fiat currencies at the earliest opportunity, usually upon receipt or in accordance with an

agreed schedule of conversion. The Group has not traded in crypto-assets to date and such activities do

not form part of its strategy.

The Group has the objective of converting crypto-assets into fiat currency, predominately US Dollars or

Euros at the earliest opportunity; the rate of exchange for crypto-assets can be volatile with significant

increases and decreases occurring in a few hours, the decision of when to convert crypto-assets into fiat

currency is a key source of uncertainty and estimation.

Crypto-assets held by the Group are shown within intangible assets on the Consolidated Statement of

Financial Position at the prevailing exchange rate (see note 11).

Group

Company

2023

2022

2023

2022

€

Crypto-assets

4,215

208

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 58 of 79

Legal proceedings provisions

Provisions for legal proceedings are recognised as other expenses when the Group has a present legal or

constructive obligation as a result of past events; it is probable that an outflow of resources will be

required to settle the obligation; and the amount can be measured reliably. At the Statement of Financial

Position date there is an ongoing claim with one supplier, if the claim is successful then an invoice,

amounting to €1,140,000, will become payable. The invoice is not included in the accounts as the

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

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the

Company and the revenue can be reliably measured. Revenue from sale of goods is recognised when

control of the goods has transferred to the customer. Revenue is measured as the fair value of the

consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Any revenue received in advance gives rise to contract liabilities which is deferred and included in

accruals and deferred income. The carrying amount of the deferred income included in payables being

€650,098 (2022: €959,012).

No obligation for returns, refunds or other similar obligation is recognised, the Directors following

careful consideration, having concluded that any potential obligation is trivial.

The following criteria must also be met before revenue is recognised:

Sale of goods

Revenue from the sale of goods is recognised when all the following conditions are satisfied:

• The Company has transferred the significant risks and rewards of ownership to the buyer;

• The Company retains neither continuing managerial involvement to the degree usually associated

with ownership nor effective control over the goods sold;

• The amount of revenue can be measured reliably;

• It is probable that the Company will receive the consideration due under the transaction; and

• The costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services

Revenue from a contract to provide services is recognised in the period in which the services are

provided in accordance with the stage of completion of the contract when all of the following conditions

are satisfied:

• The amount of turnover can be measured reliably;

• It is probable the Company will receive the consideration due under the contract;

• The stage of completion of the contract at the end of the reporting period can be measured reliably;

and

• The costs incurred and the costs to complete the contract can be measured reliably.

The policies specific to the Group’s revenue types within its activities are outlined below:

Events

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

multiyear agreements where payment is received in advance of the event to which it relates.

Online income

Revenue is recognised over the period of the subscription; online subscriptions are paid annually in

advance.

Merchandising and Clubs

Revenue is recognised when control of the goods has transferred to the customer; typically, control is

transferred upon payment by the customer.

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 59 of 79

Collateral rewards received

The Group was entitled to the interest receivable on collateral provided in crypto-assets by a partner to

secure a loan. The interest receivable was in exchange for share options provided to the partner. The

share options were exercised in January 2021 and the loan was repaid and the collateral returned in

January 2022. In 2023 rewards of €nil (2022: €9,142) were recognised within exceptional items in the

Consolidated Statement of Profit or Loss and Other Comprehensive Income.

Segment reporting

IFRS 8 Operating Segments requires operating segments to be identified and reported in a manner

consistent with the internal reporting provided to chief operating decision maker (‘CODM’), who is

responsible for allocating resources and assessing performance of the operating segments as identified by

the Directors.

The Directors have reviewed the Group’s activities and consider the Group to comprise a single line of

business being a mass market promoter of chess. Within the single line of business, the Group undertakes

integrated revenue generating activities across tournaments, an online platform and merchandise and

clubs. These revenue generating activities are closely aligned within a business model which seeks to

promote a chess community across tournaments, online and physical environments.

The individual revenue generating activities are managed in an integrated way by the CODM and

executive management team who review financial information on the same integrated way. The Group

has geographically separate operations and a geographic split of revenue as well as the split between the

revenue types within its activities is included in note 3.

Cash and cash equivalents

Cash represents cash in hand and deposits held on demand with financial institutions. Cash equivalents

are short-term, highly-liquid investments with original maturities of three months or less (as at their date

of acquisition). Cash equivalents are readily convertible to known amounts of cash and subject to an

insignificant risk of change in that cash value.

In the presentation of the Statement of Cash Flows, cash and cash equivalents also include bank

overdrafts. Any such overdrafts are shown within borrowings under ‘current liabilities’ on the Statement

of Financial Position.

Goodwill

Goodwill is recorded as an intangible asset and is the surplus of the cost of acquisition over the fair value

of identifiable net assets acquired. Goodwill is reviewed annually for impairment. Any impairment

identified as a result of the review is charged in the Statement of Profit or Loss and Other Comprehensive

Income.

Crypto-assets

Included within intangible assets are crypto-assets held in the Group’s name in the Binance crypto

exchange, the Group has not traded in crypto-assets to date and such activities do not form part of its

strategy. The crypto-assets are not held as long-term investments, nor do they form part of the Group’s

inventory. The Group’s strategy is to convert crypto-assets to fiat currencies at the earliest opportunity,

usually upon receipt or in accordance with an agreed schedule of conversion.

Any crypto-assets received are recognised at the exchange rate prevailing at the date that the risk and

reward associated with the crypto-asset passes to the Group. Where the exchange rate of the crypto-

assets has a guaranteed minimum floor price, a receivable is recognised for any short-fall.

Crypto-assets are not amortised but are reviewed for impairment if the prevailing exchange rate indicates

their value has fallen below their carrying value. Any impairment or realised exchange gains on the

conversion of crypto-assets to fiat currency are recognised within exceptional items on the Consolidated

Statement of Profit or Loss and Other Comprehensive Income.

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 60 of 79

Other intangible assets

Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of

intangible assets.

Intangible assets are amortised from the date they are available for use. The estimated useful lives are as

follows:

• Exclusive rights to organise and host top level chess events in association with FIDE, the life of the

contract, being ten years, using the straight-line method.

• Capitalised costs associated with developing the online platform used for the FIDE Online Arena, ten

years using the straight-line method.

• Licences to operate certain software incorporated into the platform, the life of the contract, being five

years. using the straight-line method.

The basis for choosing these useful lives is with reference to the years over which they can continue to

generate value for the Group.

The Group reviews the amortisation year and methodology when events and circumstances indicate that

the useful lives may have changed since the last reporting date and the amortisation charge for the year is

included in Administrative Expenses in the Consolidated Statement of Profit or Loss and Other

Comprehensive Income.

Property, plant and equipment

Depreciation is provided in order to write off each asset over its estimated useful life or, if held as a right-

of-use asset, over the lease term, whichever is the shorter, which are typically.

• Fixtures and fittings - Straight line over 5 years

• Computer equipment - Straight line over 3 years

Financial instruments

The Group only enters into basic financial instrument transactions that result in the recognition of

financial assets and liabilities like trade and other receivables and payables, loans from banks and other

third parties, loans to related parties and investments in non-puttable ordinary shares.

Debt instruments (other than those wholly repayable or receivable within one year), including loans and

other accounts receivable and payable, are initially measured at present value of the future cash flows

and subsequently amortised cost using the effective interest method. Debt instruments that are payable

or receivable within one year, typically trade receivables and payables, are measured, initially and

subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or

received. However, if the arrangements of a short-term instrument constitute a financing transaction, like

the payment of trade debt deferred beyond normal business terms or financed at a rate of interest that is

not market rate or in the case of an out-right short-term loan not at market rate, the financial asset or

liability is measured, initially, at the present value of the future cash flow discounted at a market rate of

interest for a similar debt instrument and subsequently at amortised cost.

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting

period for objective evidence of impairment. If objective evidence of impairment is found, an impairment

loss is recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.

For financial assets measured at amortised cost, the impairment loss is measured as the difference

between an asset's carrying amount and the present value of estimated cash flows discounted at the

asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for

measuring any impairment loss is the current effective interest rate determined under the contract.

For financial assets measured at cost less impairment, the impairment loss is measured as the difference

between an asset's carrying amount and best estimate of the recoverable amount, which is an

approximation of the amount that the company would receive for the asset if it were to be sold at the date

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 61 of 79

of the Statement of Financial Position.

Financial assets and liabilities are offset, and the net amount reported in the Statement of Financial

Position when there is an enforceable right to set off the recognised amounts and there is an intention to

settle on a net basis or to realise the asset and settle the liability simultaneously.

Inventories

Inventories of finished goods are valued at the lower of cost and net realisable value (the estimated

selling price less the estimated costs to sell), after making due allowance for obsolete and slow-moving

items.

Taxation

Current taxes are based on the results shown in the financial statements and are calculated according to

local tax rules in the UK, USA and Germany where the Group operates, using tax rates enacted or

substantively enacted by the date of the Statement of Financial Position.

Current tax represents the amount of tax payable or receivable in respect of the taxable profit (or loss) for

the current or past reporting periods. It is measured at the amount expected to be paid or recovered using

the tax rates and laws that have been enacted or substantively enacted by the date of the Statement of

Financial Position.

Commercial legislation within the Russian Federation in which the Group operated prior to April 2022,

including tax legislation, is subject to varying interpretations and frequent changes. The Group's

management is confident that all necessary tax accruals have been made and, accordingly, no additional

provision is required in the Consolidated Financial Statements.

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the

statement of financial position date.

Deferred tax represents the future tax consequences of transactions and events recognised in the financial

statements of current and previous periods. It is recognised in respect of all timing differences, with

certain exceptions. Timing differences are differences between taxable profits and total comprehensive

income as stated in the financial statements that arise from the inclusion of income and expense in tax

assessments in periods different from those in which they are recognised in the financial statements.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable

that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by

the balance sheet date that are expected to apply to the reversal of timing differences.

Research and development

Research and development expenditure is capitalised if it can be demonstrated that:

• it is technically and commercially feasible to develop the asset for future economic benefit;

• adequate resources are available to maintain and complete the development;

• there is the intention to complete and develop the asset for future economic benefit;

• the Group is able to use the asset;

• use of the asset will generate future economic benefit; and

• expenditure on the development of the asset can be measured reliably.

Other development expenditure is recognised in the Consolidated Statement of Profit and Loss as an

expense as incurred.

Capitalised development expenditure is stated at cost less accumulated amortisation and less

accumulated impairment losses.

Foreign currencies

Assets and liabilities in foreign currencies are translated into euro at the rates of exchange ruling at the

statement of financial position date. Transactions in foreign currencies are translated into euro at the rate

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 62 of 79

of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at

the operating result.

IFRS 16 ‘Leases’

Lease terms are negotiated on an individual basis and contain a wide range of different terms and

conditions. Leases are recognised as a right-of-use asset and a corresponding liability at the date at which

the leased asset is available for use by the Group. Each lease payment is allocated between the liability

and finance cost. The finance cost is charged to the income statement over the lease period so as to

produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Where ownership of the right-of-use asset transfers to the lessee at the end of the lease term, the right-of-

use asset is depreciated over the asset’s remaining useful life. If ownership of the right-of-use asset does

not transfer to the lessee at the end of the lease term, depreciation is charged over the shorter of the

useful life of the right-of-use asset and the lease term.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities

include the net present value of the following lease payments:

• Fixed payments (including in-substance fixed payments), less any lease incentives receivable;

• Amounts expected to be payable by the lessee under residual value guarantees; and

• Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that

option.

The lease payments are discounted using the interest rate implicit in the lease, if that rate can be

determined, or the Group’s incremental borrowing rate. Right-of-use assets are measured at cost

comprising the following:

• The amount of the initial measurement of lease liability;

• Any lease payments made at or before the commencement date less any lease incentives received;

and

• Any initial direct costs.

Adoption of new and revised standards

There are a number of standards, amendments to standards, and interpretations which have been issued

by the IASB that are effective from 1 January 2023, none of which have a material impact on these

financial statements.

Standards issued but not yet effective

There are a number of standards, amendments to standards, and interpretations which have been issued

by the IASB that are effective in future accounting periods that the group has decided not to apply early.

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

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

Non-Current);

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

• IAS 7 and IFRS 7 (Amendment – Supplier Finance Arrangements).

It is not expected that the amendments listed above, once adopted, will have a material impact on the

financial statements.

Financial liabilities

The Group does not have financial liabilities that would be classified as fair value through the profit or

loss. Therefore, all financial liabilities are classified as other financial liabilities.

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

payables and are recognised at their original amount.

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 63 of 79

REVENUE

Revenue from contracts with customers

Revenue by business class

2023

2022

€

Tournaments

1,381,341

1,711,331

Online Arena

204,151

399,074

Clubs

163,305

110,335

Merchandising

596,695

575,467

2,345,492

2,796,207

By geographical area

2023

2022

€

United Kingdom

1,391,453

2,661,639

Russia

27,578

United States of America

51,804

50,540

Europe

902,235

56,450

2,345,492

2,796,207

Major customer

Included in Tournament revenue are revenues of €991,008 which are attributable to two major customers,

being customers who each represent more than 10% of revenue; revenue attributable to the two major

customers are Customer 1: €606,008 (2022: €1,163,411) and Customer 2: €385,000 (2022: €nil).

EMPLOYEES AND DIRECTORS

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

Contributions to a defined contribution pension scheme on behalf of all employees of €1,544 (2022: €nil)

were made during the year.

In the opinion of the Board, only the Directors of the Company, as detailed in the Corporate Governance

Report, are regarded as key management personnel. The remuneration of key management personnel

during 2023 was, in aggregate, €491,490 (2022: €327,001).

Contributions to a defined contribution pension scheme on behalf of directors of €1,283 (2022: €nil) were

made during the year.

2023

2022

€

Directors' remuneration:

491,490

327,001

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

are set out in the Directors Remuneration Report on page 31 of these consolidated financial statements.

The highest paid director was Ilya Merenzon whose total remuneration was €210,000 (2022: €192,000).

In 2023 Directors Remuneration included €nil (2022: €5,000) in respect of compensation for loss of office.

The Group had no UK employees in 2023 and 2022 except the directors.

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 64 of 79

EXCEPTIONAL ITEMS

2023

2022

€

Listing costs

308,250

Exchange loss/(gain) on Crypto-assets

18,526

(13,472)

Gain on disposal of World Chess Russia LLC

27,330

Collateral rewards received

9,142

326,776

23,000

Listing Costs

One-off costs associated with the Company’s listing on the Main Market of the London Stock Exchange in

April 2023.

Exchange loss/(gain) on Crypto-assets

The majority of the crypto-assets held by the Group was converted into fiat currency on receipt, however

where crypto assets are received in stablecoin which track the US Dollar variances occur between the

USD value of the crypto assets received and their equivalent Euro value.

Gain on disposal of World Chess Russia LLC

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

disposal of €27,330 was recognised.

Collateral rewards received

The Group was entitled to the interest receivable on collateral provided in crypto-assets by a partner to

secure a loan. The interest receivable was in exchange for share options provided to the partner. The

share options were exercised in January 2021 and the loan was repaid and the collateral returned in

January 2022.

NET FINANCE COSTS

2023

2022

€

Finance income:

Loan interest receivable

139

521

139

521

Finance costs:

Other loan interest

27,898

179,610

Interest on IFRS 16 lease liabilities

163,495

157,850

191,393

337,460

LOSS BEFORE INCOME TAX

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

2023

2022

€

Cost of inventories recognised as expense

2,166,390

2,090,754

Research costs expensed

90,124

88,874

Depreciation - owned assets

194,313

25,300

Depreciation – right-of-use assets

150,853

189,475

Exclusive FIDE rights amortisation

110,529

Licence amortisation

23,000

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 65 of 79

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 expense/(income)

2023

2022

€

Current tax:

Corporation tax

204

(255,983)

Deferred tax

13,425

(76,697)

Total tax expense/(income) in consolidated statement

of profit or loss and other comprehensive income

13,629

(332,680)

Factors affecting the tax expense

The tax assessed for the year is lower (2022 - lower) the standard rate of corporation tax in the UK. The

difference is explained below:

2023

2022

€

Loss before income tax

(4,671,470)

(2,794,368)

Loss multiplied by the standard rate of corporation

tax in the UK of 23.52% (2022 - 19%)

(1,098,730)

(530,930)

Effect of:

Originations and reversal of temporary differences

13,425

(76,697)

Capital allowances in excess of depreciation

(262,437)

(74,706)

Non-taxable expenses

155,622

138,474

Tax losses carried forward

1,205,545

467,162

Research and development credit

(256,197)

Foreign tax

204

214

Tax expense/(income)

13,629

(332,680)

The corporation tax in the UK increased from 19% to 25% on 1 April 2023 an equivalent annual rate of

23.52% for the year ended 31 December 2023.

LOSS OF PARENT COMPANY

As permitted by Section 408 of the Companies Act 2006, statement of profit or loss and other

comprehensive income of the parent company is not presented as part of these financial statements. The

parent company's loss for the financial year was €1,542,691 (2022: €578,448).

EARNINGS PER SHARE

The basic earnings per share is calculated by dividing the loss attributable to owners of the parent

company by the weighted average number of shares in issue during the year. In calculating the diluted

earnings per share, any outstanding share options, warrants and convertible loans are taken into account

Computer software amortisation

364,542

284,632

Auditors' remuneration

109,908

72,641

Foreign exchange loss

1,970

9,790

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 66 of 79

where the impact of these is dilutive.

2023

2022

Loss attributable to the owners of the parent

company €

(4,685,099)

(2,461,688)

Weighted average number of shares in issue

650,232,851

597,912,402

Basic and diluted earnings per share

(€0.007)

(€0.004)

After the reporting period, and as set out in note 32, 24,538,536 new ordinary shares were issued in

February 2024 and the Company has agreed to issue a further 11,667,187 new ordinary shares in May

2024.

INTANGIBLE ASSETS

Group

Exclusive

FIDE rights

Software

Licence

Online

Platform

Crypto-

assets

Total

€

COST

At 1 January 2023

1,105,291

115,000

3,107,438

208

4,327,937

Additions

1,105,291

817,533

2,499,734

4,422,558

Disposals

(1,105,291)

(2,495,727)

(3,601,018)

At 31 December 2023

1,105,291

115,000

3,924,971

4,215

5,149,477

AMORTISATION

At 1 January 2023

663,174

33,000

868,405

1,564,579

Amortisation for year

110,529

23,000

364,542

498,071

Additions

773.703

Elimination on disposals

(773,703)

At 31 December 2023

773,703

56,000

1,232,947

2,062,650

NET BOOK VALUE

At 31 December 2023

331,588

59,000

2,692,024

4,215

3,086,827

The Exclusive FIDE rights were varied after the 2022 FIDE Grand Prix, this variation has been treated as

the disposal if the original Exclusive FIDE rights and the acquisition of alternative Exclusive FIDE rights

of the same cost and accumulated amortisation.

Exclusive

FIDE rights

Software

Licence

Online

Platform

Crypto-

assets

Total

€

COST

At 1 January 2022

1,105,291

115,000

2,307,572

1,367,910

4,895,773

Additions

799,866

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

The Directors considered the carrying value at 31 December 2023 for each asset identified above (except

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 67 of 79

crypto-assets), based on a detailed budget and forecast, discounted over five years at the Groups current

cost of capital, considered by the Directors to be 16.15%, and it was determined that no impairment was

required. Where an asset does not generate cash inflows that are largely independent of the cash inflows

from other assets or groups of assets the carrying value was considered against the smallest identifiable

group of assets that generates cash inflows (cash generating unit or CGU).

The Directors considered the carrying value at 31 December 2023 for crypto-assets based on the

prevailing exchange rate at which the crypto-asset could readily be converted into US dollars or Euros

and it was determined that no impairment was required.

PROPERTY, PLANT AND EQUIPMENT

Group

Right of use

asset

Fixtures and

fittings

Computer

Equipment

Total

€

COST

At 1 January 2023

1,374,409

773,918

1,698

2,150,025

Additions

120,705

510,898

631,603

Disposals

(1,185)

At 31 December 2023

1,495,114

1,283,631

1,698

2,780,443

DEPRECIATION

At 1 January 2023

137,441

59,802

1,698

198,941

Charge for year

150,853

194,313

345,166

At 31 December 2023

288,294

254,115

1,698

544,107

NET BOOK VALUE

At 31 December 2023

1,206,820

1,029,516

2,236,336

Right of use

asset

Fixtures and

fittings

Computer

Equipment

Total

€

COST

At 1 January 2022

441,942

212,236

1,698

655,876

Additions

1,374,409

635,818

2,010,227

Disposals

(441,942)

(74,136)

(516,078)

At 31 December 2022

1,374,409

773,918

1,698

2,150,025

DEPRECIATION

At 1 January 2022

419,908

85,424

1,698

507,030

Charge for year

189,475

25,300

214,775

Elimination on disposal

(441,942)

(50,922)

(492,864)

Exchange difference

(30,000)

At 31 December 2022

137,441

59,802

1,698

198,941

NET BOOK VALUE

At 31 December 2022

1,236,968

714,116

1,951,084

Included in the net book value of fixtures and fittings is €1,027,734 (2022: €647,083) relating to World

Chess Club Berlin which was functionally complete at 31 December 2022 but did not yet fully open

until May 2023.

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 68 of 79

GOODWILL

Group

2023

2022

€

COST

At 1 January

136,244

142,474

Disposal

(136,244

(6,230)

At 31 December

136,244

IMPAIRMENTS

At 1 January

136,244

142,474

Elimination on disposal

(136,244)

(6,230)

At 31 December

136,244

CARRYING VALUE

At 1 January

At 31 December

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

World Chess Digital Limited was dormant throughout 2022 and remained dormant until it was dissolved

on 15 September 2023.

In 2022 the Group disposed of World Chess Russia LLC.

INVESTMENTS

Company

Shares in group undertakings

2023

2022

€

COST

At 1 January

351,616

251,616

Additions

275,000

Disposals

(175,000)

At 31 December

351,616

IMPAIRMENTS

At 1 January

50,000

225,000

Disposals

(175,000)

At 31 December

50,000

CARRYING VALUE

At 1 January

301,616

26,616

At 31 December

301,616

The Directors considered the carrying value at 31 December 2023 for each group undertaking, identified

below, based on a detailed budget and forecast, discounted over five years at the Groups current cost of

capital, considered by the Directors to be 16.15% and it was determined that no further impairment was

required.

World Chess Digital Limited was dormant throughout 2022 and remained dormant until it was dissolved

on 15 September 2023, the carrying value of the investment at 31 December 2022 and the date of disposal

was €nil.

In 2022 the Group disposed of World Chess Russia LLC.

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 69 of 79

The Group’s investments at the Statement of Financial Position date in the share capital of companies

include the following subsidiaries:

World Chess Events Limited

Registered office: Eastcastle House, 27/28 Eastcastle Street, United Kingdom, W1W 8DH

Nature of business: Organising chess events (Worldwide)

Class of shares: % holding

Ordinary 100.00

World Chess US, Inc

Registered office: 1201 N. Orange Street, Suite 762, Wilmington, New Castle County, DE, USA 19801

Nature of business: Organising chess events (USA), online chess

Class of shares: % holding

Ordinary 100.00

World Chess Europe GmbH

Registered office: Mittelstrasse 51 – 53, 10117 Berlin, Deutschland

Nature of business: Various chess related activities

Class of shares: % holding

Ordinary 100.00

During the year, World Chess PLC provided a capital contribution of €nil (2022: €275,000) to this

company.

World Chess Sakartvelo LLC

Registered office: Georgia, City Tbilisi, Didube district, Ak. Tsereteli Avenue, N 49-51-51a, Entrance 3,

Floor 13, Apartment N 128

Nature of business: Organising chess events, chess club activities

Class of shares: % holding

Ordinary 100.00

This company was incorporated on 2 June 2022 but did not commence trading until 1 January 2023.

World Chess Russia LLC

Registered office: 123242, Moscow, Kudrinskaya Square, 1 room XIIB

Nature of business: Organising chess events, chess club activities

Class of shares: % holding

Ordinary 0.00

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

World Chess Digital Limited (formerly CNCweb Limited)

Registered office: 21st Floor, Tay Chau Building, 262 Des Voeux Road Central, Hong Kong

Nature of business: Operation of online chess platform

Class of shares: % holding

Ordinary 0.00

World Chess Digital Limited was dormant throughout 2022 and remained dormant until it was dissolved

on 15 September 2023.

The results of the subsidiaries identified above are included in the consolidated financial statements,

results for World Chess Russia LLC are included up to April 2022. All subsidiaries are exempt from an

audit except World Chess Events Ltd.

INVENTORIES

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 70 of 79

Group

2023

2022

€

Inventories:

187,018

187,691

TRADE AND OTHER RECEIVABLES

Group

Company

2023

2022

2023

2022

€

Current:

Trade receivables

29,668

452,754

Amounts owed by group

undertakings

5,769,981

4,905,195

Other receivables

204,974

205,244

1,306

12,362

Prepayments and accrued

income

21,822

4,568

18,922

1,748

256,464

662,566

5,790,209

4,919,305

CASH AND CASH EQUIVALENTS

Group

Company

2023

2022

2023

2022

€

Bank accounts

186,881

35,565

21,366

6,242

186,881

35,565

21,366

6,242

CALLED UP SHARE CAPITAL

2023

2022

Number of

€

Number of

€

Allotted, issued, and fully

paid Ordinary shares of

£0.0001

667,193,501

75,647

602,392,689

68,260

On 6 April 2023 the Company issued 49,650,972 new ordinary shares for total cash consideration of

€3,475,568 and a further 14,861,840 new ordinary shares on the conversion of a loan totalling €1,040,329

and the entire issued share capital, comprising 666,905,501 ordinary shares were admitted for trading on

the main market of the London Stock Exchange with ticker symbol CHSS.

On 4 August 2023 a further 288,000 new ordinary shares were issued to the Company’s broker in

settlement of their brokerage fees of €20,823.

At 31 December 2023 the number of additional shares authorised for issue is 100,000,000 (2022:

100,000,000).

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 71 of 79

SHARE PREMIUM

2023

2022

€

At 1 January

6,518,849

5,520,114

Premium arising on issue of equity shares

4,529,334

998,735

At 31 December

11,048,183

6,518,849

RESERVES

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

Share premium comprises the amount subscribed for share capital which exceeds the nominal value,

after deducting costs of issue.

Retained earnings comprises of the brought forward cumulative profit and loss balances carried forward

from previous accounting periods.

The translation reserve comprises all foreign currency differences arising from the translation of the

financial statements of foreign operations.

TRADE AND OTHER PAYABLES

Group

Company

2023

2022

2023

2022

€

Trade payables

728,213

657,006

7,582

81,173

Amounts owed to group

undertakings

212,044

2,783,767

Social security and other

taxes

45,430

21,318

8,250

Other payables

1,526,843

2,650

1,519,465

1,376

Accruals and deferred

income

962,151

1,296,317

100,000

80,547

Amounts owed to Directors

135,080

120,913

19,909

3,296

3,397,717

2,098,204

1,867,250

2,950,159

Included in accruals and deferred income at the start of the period was €679,087 (2022: €812,678) of

deferred income which was recognised as revenue during the year.

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 72 of 79

FINANCIAL LIABILITIES - BORROWINGS

Group

Company

2023

2022

2023

2022

€

Current:

Other loans

32,989

1,082,108

1,019,068

Lease liabilities (see note 23)

116,208

95,686

149,197

1,177,794

1,019,068

Non-current:

Other loans – 1-2 years

Lease liabilities (see note 23)

1,304,273

1,308,003

1,304,273

1,308,003

Terms and debt repayment schedule

Group

1 year or less

More than 1

year and less

than 5 years

More than 5

years

Totals

€

Other loans

32,989

Lease liabilities (see note 23)

116,208

619,552

684,721

1,420,481

149,197

619,552

684,721

1,453,470

Company

1 year or less

More than 1

year and less

than 5 years

More than 5

years

Totals

€

Other loans

At 31 December 2023 outstanding loans due in less than one year comprise a loan of €32,989 which

accrues interest at 10% per year. (2022: loan of €1,019,068 which accrues interest at 8% per year and

€63,040 which accrues interest at 10% per year.)

On 6 April 2023, a loan totalling €1,040,329 including accrued interest was converted into new ordinary

shares in the Company.

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 73 of 79

LEASES

Group

Right of use asset – property, plant, and equipment

2023

2022

€

COST

At 1 January

1,374,409

441,942

Additions

120,705

1,374,409

Disposals

(441,942)

At 31 December

1,495,114

1,374,409

DEPRECIATION

At 1 January

137,441

419,908

Charge for year

150,853

189,475

Elimination on disposal

(441,942)

Exchange difference

(30,000)

At 31 December

288,294

137,441

NET BOOK VALUE

At 31 December

1,206,820

1,236,968

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

31 December

2023

31 December

2022

31 December

2021

€

Right of use asset

1,206,820

1,236,968

22,034

Lease liability

1,420,481

1,403,689

21,266

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

Berlin for a term of 10 years ending on 31 December 2031 with an effective interest rate of 11.83%. An

addition to the right of use asset of €120,705 was recognised during the year following an increase in

lease payments following a review.

In 2022 a right-of-use asset was disposed of during the year relating to premises occupied by the World

Chess Club Moscow, the lease was for a term of 5 years ended on 30 April 2022 with an effective interest

rate of 10.65%.

Total finance lease interest for 2023 was €163,495 (2022: €157,850) as detailed in note 6.

Right of use assets relating to lease properties are presented as property, plant, and equipment and

amortised to the end of the lease term.

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 74 of 79

Group

Lease liabilities – minimum lease payments fall due as follows:

31 December 2023

1 year or less

More than 1

year and less

than 5 years

More than 5

years

Totals

€

Gross obligations repayable:

267,408

1,069,632

802,224

2,139,264

Finance charges repayable:

(151,200)

(450,080)

(117,503)

(718,783)

Net obligations repayable:

116,208

619,552

684,721

1,420,481

31 December 2022

1 year or less

More than 1

year and less

than 5 years

More than 5

years

Totals

€

Gross obligations repayable:

246,234

984,936

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

FINANCIAL INSTRUMENTS

All financial instruments are measured at amortised cost and financial instruments used by the Group,

from which financial instrument risk arises are as follows:

• trade and other payables

• cash and cash equivalents; and

• trade and other receivables

The main purpose of these financial instruments is to finance the Group's operations.

2023

2022

€

Other financial assets

Trade and other receivables less than one year

256,464

821,028

Cash and cash equivalents

186,881

35,773

Total financial assets

443,345

856,801

2023

2022

€

Other financial liabilities

Interest bearing loans and borrowings less than one year

149,197

1,177,794

Trade and other payables less than one year

3,397,717

2,098,199

Interest bearing loans and borrowings more than one year

1,304,273

1,308,003

Total financial liabilities

4,851,187

4,583,996

The Directors consider that the carrying value for each class of financial asset and liability, approximates

to their fair value.

Financial risk management

The Group's activities expose it to a variety of risks, including market risk (foreign currency risk and

interest rate risk), credit risk and liquidity risk. The Group manages these risks through an effective risk

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 75 of 79

management programme, and, through this programme, the Board seeks to minimise the potential

adverse effects on the Group's financial performance.

Credit risk

Credit risk is the risk of financial loss to the Group if a customer to a financial instrument fails to meet its

contractual obligations. The Group's credit risk is primarily attributable to its receivables and its cash

deposits. It is Group policy to assess the credit risk of new customers before entering contracts. The

Group continues to assess the risk and a further loss allowance for the full lifetime expected credit losses

is recognised if the credit risk has increased significantly since initial recognition. The Group consider

any contractual payment being 30 days past due, and each subsequent period of 30 days, to be an

indicator of a significant increase in credit risk which may require an additional loss allowance to be

recorded.

The risks specific to the Group’s revenue types within its activities are outline below:

• Events, payment is typically received in accordance with multi-year agreement in advance of the

event to which it relates, the Directors therefore consider the credit risk to be non-trivial but

minimal.

• Online income, payment is typically received annually in advance, the Directors therefore consider

the credit risk to be trivial.

• Merchandising and Clubs, payment is typically received prior to control of goods purchased being

transferred to the customer, the Directors therefore consider the risk to be non-trivial but minimal.

No credit loss was recognised in 2023 or 2022.

Financial assets past due but not impaired as at 31 December 2023:

Not

impaired

and not

past due

Not impaired but past due by the following

amounts

>30 days

>60 days

>90 days

>120 days

€

Group: Trade and other receivables

236,187

2,975

1,098

16,204

Company: Trade and other receivables

5,790,209

Financial assets past due but not impaired as at 31 December 2022:

Not

impaired

and not

past due

Not impaired but past due by the following

amounts

>30 days

>60 days

>90 days

>120 days

€

Group: Trade and other receivables

646,901

15,635

Company: Trade and other receivables

4,919,305

Liquidity risk and interest rate risk

Liquidity risk arises from the Group's management of working capital. It is the risk that the Group will

encounter difficulty in meeting its financial obligations as they fall due.

The Group’s funding strategy is to ensure a mix of funding sources offering flexibility and cost

effectiveness to match the requirements of the Group.

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 76 of 79

At 31 December 2023 the Group had outstanding loans of €32,989 which accrues interest at a fixed rate of

10% per year. (2022: €1,019,068 which accrued interest at a fixed rate of 8% per year and was secured by

collateral put up by a partner company, and €63,040 which accrues interest at a fixed rate of 10%).

Foreign currency risk

The Group's exposure to foreign currency risk is limited as most of its invoicing and payments are

denominated in Euro. The Group identifies and manages currency risks using an integrated approach

that takes into account the possibility of natural (economic) hedging. For the purpose of short-term

management of currency risk, the Group selects the currency to reduce the open currency position (the

difference between assets and liabilities in foreign currencies).

Analysis of sensitivity of financial instruments to foreign currency exchange rate risk

Currency risk is assessed monthly using sensitivity analysis and maintained within parameters approved

in accordance with the Group's policy. At the reporting date, the effect of the Euro's

growth/(depreciation) against other currencies in the Group's profit/(loss) before tax is not significant.

CAPITAL MANAGEMENT

The Group’s objective when managing capital is to safeguard the Group’s ability to continue as a going

concern, so that it can continue to provide returns to shareholders and benefits for other stakeholders.

The Group's capital management strategy is to retain sufficient working capital for operating

requirements and to ensure sufficient funding is available to meet commitments as they fall due and to

support growth. There are no externally imposed capital requirements.

The Group had net assets of €1,007,724 at 31 December 2023 (2022: €1,163,425), and to maintain or adjust

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

2023

2022

€

Interest bearing loans and borrowings

(1,453,470)

(2,485,797)

Cash and cash equivalents

186,881

35,565

Net indebtedness

(1,266,589)

(2,450,232)

PROVISION FOR LIABILITIES

Group

2023

2022

€

PROVISIONS

At 1 January

180,652

Dilapidations provision

(22,765)

180,652

At 31 December

157,887

180,652

A dilapidations provision was recognised in 2022 relating to the estimated reinstatement costs at the

expiry of a new 10-year lease ending on 31 December 2031.

DEFERRED TAX

Group

2023

2022

€

Balance at 1 January

(76,697)

(15,733)

Movement in current year

13,425

(60,964)

Balance at 31 December

(63,272)

(76,697)

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 77 of 79

There are €6,397,725 (2022: €4,188,207) of tax losses available to the Group which at the applicable tax rate

of 25% would provide an additional deferred tax asset of €1,169,681 (2022: €784,992). This has not been

recognised in the financial statements due to the uncertainty of the timing of future taxable profits

against which these losses could be utilised.

Deferred tax assets and liabilities are offset when the Company has a legally enforceable right to offset

current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the

same tax authority.

Analysis of deferred tax:

2023

2022

€

Timing differences arising on provisions for liabilities,

lease liabilities and losses carried forward

(470,052)

(531,931)

Timing difference arising on capital allowances in excess of

depreciation

406,780

455,234

(63,272)

(76,697)

CONTINGENT LIABILITIES

The Group has an ongoing claim with one supplier, if the claim is successful then an invoice, amounting

to €1,140,000, will become payable. The invoice is not included in the financial statements as the Directors

consider it to be null and void and raised by the supplier in breach of contract.

RELATED PARTY DISCLOSURES

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

Group undertakings

The following transactions took place during the year ended 31 December 2023 with and between group

undertakings.

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 78 of 79

Payments to World

Chess PLC

Payments to/ (receipts

from) other group

undertakings

€

World Chess Events Ltd

• Payment of interest

29,152

• Purchase of inventory

48,107

• Sale of inventory

(21,289)

• Staff and other services

78,791

1,588,378

• Commission paid on third party

transactions

58,810

World Chess Europe GmbH

• Payment of interest

76,968

• Purchase of inventory

21,289

• Sale of Inventory

(48,107)

• Provision of staff and other services

(674,815)

World Chess US Inc.

• Commission charged on third party

transactions

(58,810)

• Provision of staff and other services

(637.563)

World Chess Sakartvelo LLC

• Provision of staff and other services

(276,000)

The following transactions took place during the year ended 31 December 2022 with and between group

undertakings.

Payments to World

Chess PLC

Payments to/ (receipts

from) other group

undertakings

€

World Chess Events Ltd

• Payment of interest

12,331

• Purchase of inventory

56,153

• Sale of inventory

(3,823)

• Commission paid on third party

transactions

26,473

• Interest received

(4,848)

World Chess Europe GmbH

• Payment of interest

7,512

• Purchase of inventory

3,823

• Sale of Inventory

(56,153)

World Chess US Inc.

• Commission charged on third party

transactions

(26,473)

• Payment of interest

4,848

World Chess Plc – Company Registration No. 10589323

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page 79 of 79

The following balances remained outstanding at 31 December 2023 from and between group

undertakings.

Due to/(from)

World Chess PLC

Due to/(from)

other group

undertakings

Total due

to/(from) group

undertakings

€

Ilya Merenzon

(18,015)

(115,171)

(133,186)

Matvey Shekhovtsov

(1,582)

Neil Rafferty

(312)

Group undertakings

• World Chess Events Ltd

3,290,077

781,529

4,071,606

• World Chess Europe GmbH

2,479,904

(737,526)

1,742,378

• World Chess US Inc.

(212,044)

(25,652)

(237,696)

• World Chess Sakartvelo

LLC

(18,351)

5,538,028

(115,171)

5,522,857

The following balances remained outstanding at 31 December 2022 from and between group

undertakings.

Due to/(from)

World Chess PLC

Due to/(from)

other group

undertakings

Total due

to/(from) group

undertakings

€

Ilya Merenzon

(238)

(93,256)

(93,494)

Matvey Shekhovtsov

(2,818)

(24,600)

(27,418)

Group undertakings

• World Chess Events Ltd

4,044,942

(2,005,174)

2,039,768

• World Chess Europe GmbH

860,253

99,327

959,580

• World Chess US Inc.

(2,783,767)

1,905,848

(877,919)

2,118,372

(117,855)

2,000,517

ULTIMATE CONTROLLING PARTY

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

SHARE-BASED PAYMENT TRANSACTIONS

On 4 August 2023 the Company issued 288,000 new ordinary shares to its sole broker, Novum Securities

Limited, for the equivalent of €20,160 in settlement of its first year’s fees.

SUBSEQUENT EVENTS

On 7 February 2024 the Company issued 21,663,386 new ordinary shares to an existing shareholder for

total consideration of €1,508,737 and a further 2,867,152 new ordinary shares to Engiscent PTE Ltd, a

development partner of the Company, in consideration for €200,000 of development work completed by

Engiscent PTE Ltd.

On 8 February 2024 the Company announced that an existing shareholder had agreed to subscribe for

11,667,187 new ordinary shares for total consideration of €816,703 to be paid in five tranches between

February 2024 and May 2024.