Results for the year ended 31 December 2022

NOT FOR RELEASE, DISTRIBUTION, PUBLICATION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

This announcement is an advertisement that is being published in connection with the admission of the Company's issued, and to be issued ordinary share capital to the Standard List of the Official List and to trading on the London Stock Exchange PLC's Main Market for listed securities ("Admission") in respect of which the Company has published a prospectus dated 20 March 2023 which is available from  https://worldchess.com/investors ("Prospectus"). This announcement is not and does not constitute or form part of, and should not be construed as, an offer of securities for subscription or sale in any jurisdiction nor a solicitation of any offer to buy or subscribe for, any securities in any jurisdiction, nor shall it or any part of it, or the fact of its distribution, form the basis of or be relied on in connection with, any contract or commitment whatsoever. This announcement does not constitute a recommendation regarding any securities. Prospective investors should not subscribe for or purchase any securities on the basis of this announcement. Investors may invest in the Company's securities solely on the basis of the information in the Prospectus (together with any supplementary prospectus, if relevant,) including the risk factors set out therein, provided that (i) they are not subject to the laws of a jurisdiction in which the release, distribution, publication, directly or indirectly, in whole or in part of this announcement or the Prospectus might constitute a violation of the relevant laws or regulations of such jurisdiction and (ii) their subscription will not place the Company in breach of the laws of the jurisdiction that apply to the prospective investor. 

28 April 2023

World Chess Plc

("World Chess" or the "Company" or the "Group")

Results for the year ended 31 December 2022

Availability of Annual Report

World Chess Plc (LSE: CHSS) is pleased to announce its audited results for the period ended 31 December 2022 ("the period") alongside the Annual Report and Accounts.

Copies of the Company's full Annual Report and Financial Statements for the period ended 31 December 2022 will be made available on the Company's website at https://worldchess.com.

Financial Highlights

· Revenue of €2.8m (2021: €3.2m)

· Gross profit of €0.7m (2021: €1.9m)

· Pre- exceptional items EBITDA loss €1.8m (2021: €0.8m)

Corporate, strategic and operational progress

· Continued development and promotion of FIDE Online Arena, including NightWatch, an anti-cheating suite which uses advanced algorithms and machine learning techniques to detect and prevent cheating.

o  During the period the number of registered users increased by 31% from 497,981 to 650,473.

· Successful organisation of the FIDE Grand Prix Series held in Berlin and Belgrade where the events proved useful marketing and sponsorship ventures for the Company.

· Introduction of several new merchandise lines including the Bauhaus boards, a new edition to the World Chess Set collection.

· Signed a media distribution agreement with a large London-based media rights and sales group to distribute the Armageddon Series and establish World Chess' presence in international markets.

· The Company's talent agency, Chess & Co, continues to develop and has already signed to manage two top-30 players.

Post-period end

· Admitted to trading on the Main Market by way of a Standard Listing on the London Stock Exchange in April 2023, raising gross proceeds of £3.04m.

· Imminent launch of World Chess Club Berlin, a purpose-built chess club, café and social space to further encourage the sport of chess.

· Commencement of the Armageddon Series, a season of high-intensity, ultra-fast chess tournaments with ground-breaking broadcast and international TV distribution.

Ilya Merenzon, Chief Executive Officer of World Chess, said:

"The past year has been an incredibly exciting and evolutionary time for the Group as it prepared for the London Stock Exchange listing, while also adapting to the prolonged and ongoing impacts ensuing from COVID-19 and the Ukraine conflict. We remain confident that chess as a sport is continuing to grow and that World Chess will continue to facilitate and support this growth by bringing new and engaging products to the market.

"Our continued efforts in revolutionizing the sport have seen multiple success stories, highlighted in events such as the FIDE Grand Prix Series and the development and promotion of FIDE Online Arena, where the number of registered users has increased by 31%. We have also seen the growth of the Groups talent agency, Chess&Co, who over the past year has successfully signed to manage two top-30 players.

"Looking to the future, our recent admission to the Main Market of the London Stock Exchange in April 2023 puts us in an exciting position for growth. The commencement of the revolutionary Armageddon Series and the upcoming launch of World Chess Club Berlin, a purpose-built chess club and social space, promises for an encouraging upcoming year.

"I would like to take this opportunity to thank our team and partners for their hard work over the past year and to welcome all new investors and shareholders to World Chess."

For more information, please visit https://worldchess.com/investors or contact:

Notes to Editors

About World Chess Plc

World Chess (LSE: CHSS) is a London-based chess gaming and entertainment company and Fédération Internationale des Échecs ('FIDE') official commercial partner. World Chess organized the FIDE Championship Matches in the USA, and the UK, and revolutionized the sport by signing the biggest media partnerships in history. World Chess develops Armageddon, the chess league for prime-time television. World Chess also runs FIDE Online Arena, the exclusive official chess gaming platform. More at worldchess.com.

I joined the Board of World Chess plc (the 'Group' or the 'Company') as Chairman upon the formation of the expanded Board at the date of the Company`s Admission to the Standard List of the London Stock Exchange, and I am pleased to provide my first contribution to the Annual Report.

Over the past 11 years World Chess has developed and established itself as a business providing several commercial products and platforms within the professional and amateur international chess arena. This includes organising top-level tournaments, operating the Fédération Internationale des Échecs ('FIDE') online gaming platform, chess merchandising and promotional activities.

For the year ended 31 December 2022, the Company has reported revenues of approximately €2.8m with an operating loss of approximately €2.5m. The financial results are set out in detail within the Financial Statements and Notes of the Annual Report which can be found on the Company's website.

The Board and Executive team entered the year with confidence despite the economic challenges and political turmoil in the latter part of the year.

Since the year end the Company has focused on developing its various lines of business, in particular setting up the World Chess Club in Berlin and launching the international Armageddon Chess tournament series.

The Board believes that the funds raised from the share placing at Admission will have a significant positive impact enabling the Company to invest over the medium term in the marketing and development of the business.

The Board is conscious of the business and economic uncertainties faced over the shorter-term and the subsequent challenges that they represent for the executive management in predicting when substantive increased revenues, and related profits will be earned, including for the current financial year in particular. However, the Board is confident that market demand for the Company`s products, experiences, and events continue to be well received, and will translate to significant revenues in the years ahead.

The Company would have been and continues to be, unable to achieve its success without the considerable efforts of the management and staff. I thank them for their hard work and commitment both throughout the last year, and in the period leading to the admission of the Company's shares to the London Stock Exchange.

Outlook

A detailed commentary on the business strategy is set out within the Chief Executive`s Statement below and in the Strategic and Financial Review of the Annual Report.

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

It is apparent that 2023 will be a year of challenges to steadily develop partnership relationships, and customer participation, whilst delivering on the development and expansion of the business models. The Company has adequate financial resources to meet this objective and the Board is confident of building value over the longer term for shareholders.

Graham Woolfman

Chair

28 April 2023

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

Listing on the London Stock Exchange brings a new opportunity for the Group to grow, but with that opportunity comes greater responsibility, which is why I feel that it's important to include in this report our vision for the Company and what we hope to achieve.

World Chess has a long history at the heart of the chess community. However, this is the beginning for many of our new investors and I would like to welcome the new shareholders and partners to the Company and the chess community. We hope you benefit from and enjoy what we have to offer as the Company grows and realises its potential.

Chess has been a passion and profession for decades, but until relatively recently, it was not considered a business but rather an art and or hobby. The commercial aspects were secondary and chess events were often dependent on the patronage of wealthy donors, whilst being represented by a select group of chess stars and luminaries who were adored.

We intend to build a company that is one of the premier brands in chess, whilst reinventing the game for a modern consumer. This evolution will see us accommodate and satisfy customers' growing interests and offer them compelling products to build their passion for chess. Our range of products, from the official chess gaming platform to a concept chess club with a cocktail bar (visit it in Berlin if you have a chance!) can be accessed through different channels: online, retail, corporate, social and more. All sales channels are carefully curated to fit with the overall brand message and values and to be aspirational in terms of design.

World Chess will develop the sport based on the factors that we believe will put our organisation on the map: creativity, pushing the conventional (and sometimes outmoded) boundaries, and challenging the status quo, while respecting and enjoying the sport we love.

London Stock Exchange Listing

On 6 April 2023 the entire issued share capital of World Chess PLC was admitted to trading on the Main Market of the London Stock Exchange.

As part of the admission the Company completed a subscription and retail offer issuing 49,650,972 new ordinary shares for total cash consideration of €3,475,568 and a further 14,861,840 new ordinary shares on the conversion of a loan totalling €1,040,329.

The entire issued share capital, comprising 666,905,501 ordinary shares were admitted for trading on the main market of the London Stock Exchange with ticker symbol CHSS.

World Chess Russia LLC

Following the Russian invasion of Ukraine in March 2022, the Group ceased its Russian operations and relocated its Russian-based personnel from Russia, disposing of its Russian subsidiary including the World Chess Club in Moscow on 14 April 2022.

Board Changes

Following admission, the Company welcomed Richard Collett (Chief Financial Officer), Graham Woolfman (Non-Executive Chair) and Neil Rafferty (Non-Executive Director) to the board.

Ekaterina Chalykh resigned as a director on 13 April 2022 following cessation of the Group's Russian operations.

Current trading and outlook

The World Chess Armageddon Series commenced in March 2023 with the Americas Regionals, and was subsequently followed by the Asia and Oceania Regionals in April 2023. The upcoming months will see the Women's Armageddon Week in May 2023, the Europe and Africa Regionals in June 2023 and the Grand Finale in September 2023.

The Series has been well received, generating a strong brand presence with live or highlights covered on 30 broadcast channels across over 20 countries and territories.

Through their support of the Armageddon Series we continue our partnership with Kaspersky, with whom we have a long relationship through our involvement with tournament organised under the auspices of FIDE, the governing body for international chess tournaments. We have also begun a new partnership with it.com who have supported the Armageddon Series.

We completed the initial soft launch of the World Chess Club in Berlin during the commencement of the Armageddon Series, with the official opening planned for May 2023. The full launch and the publicity around the Armageddon Series will form the basis for increased promotion of the FIDE Online Arena.

Ilya MerenzonChief Executive Officer

28 April 2023

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 DECEMBER 2022

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

Ilya MerenzonChief Executive Officer

COMPANY STATEMENT OF FINANCIAL POSITION 31 DECEMBER 2022

As permitted by Section 408 of the Companies Act 2006, the statement of comprehensive income of the parent company is not presented as part of these financial statements. The parent company's loss for the financial year was €578,448 (2021: €1,244,816 profit).

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

Ilya MerenzonChief Executive Officer

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2022

COMPANY STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2022

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

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

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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022

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.

Basis of preparation

These financial statements have been prepared in accordance with UK - adopted International Accounting Standards and IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention.

The financial statements are presented in Euro which is the functional currency of the Group and rounded to the nearest €.

Going concern

Based on the Group's Statement of Financial Position and a review of its forecast future operating budgets and forecasts, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for at least twelve months from the date of signing of these consolidated financial statements. This review of future operating budgets and forecasts included certain reasonable downside scenarios and confirmed that even in the case of such downside scenarios the Group could continue to operate and meet its obligations as they fall due. Accordingly, the Directors have adopted the going concern basis in preparing the Annual Report and consolidated financial statements.

The Directors have assessed the viability of the Group over a five-year period, taking account of the Group's current position and prospects, its strategic plan and the principal risks and how these are managed. Based on this assessment, the Directors have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over this period.

In making this assessment, the Directors have considered the resilience of the Group in severe but plausible scenarios, taking into account the principal risks and uncertainties facing the Group and the effectiveness of any mitigating actions. The Directors' assessment considered the potential impacts of these scenarios, both individually and in combination, on the Group's business model, future performance, solvency and liquidity over the period. Sensitivity analysis was also used to stress test the Group's strategic plan and to confirm that sufficient headroom would remain available under the Group's credit facilities. The Directors consider that under each of these scenarios, the mitigating actions would be effective and sufficient to ensure the continued viability of the Group. The Directors believe that five years is an appropriate period for this assessment, reflecting the average length of the Group's contract base; key markets; and the nature of its businesses and products.

The significant accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented unless otherwise stated.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by the Company.

Intra-group balances and transactions are eliminated on consolidation. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same way as gains, but only to the extent that there is no evidence of impairment.

Critical accounting judgements and key sources of estimation uncertainty

The preparation of the financial statements in conformity with UK - adopted International Accounting Standards requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amounts, events or actions, actual results ultimately may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised. The material areas in which estimates and judgements are applied as follows:

Goodwill and other intangible assets for impairment

The Group is required to test, on an annual basis, whether goodwill and other intangible assets have suffered any impairment. Determining whether there has been any impairment requires an estimation of the fair value in use of the cash-generating units. The value in use calculation requires the Directors to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the present value, the discount rate applied is 11.83% and the carrying value of goodwill and other intangible assets is set out in the table below (notes 11 and 13):

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).

Legal proceedings provisions

Provisions for legal proceedings are recognised as other expenses when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount can be measured reliably. At the Statement of Financial Position date there is an ongoing claim with one supplier, if the claim is successful then an invoice, amounting to €1,140,000, will become payable. The invoice is not included in the accounts as the Directors consider it to be null and void and raised by the supplier in breach of contract (see note 28).

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue from sale of goods is recognised when control of the goods has transferred to the customer. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Any revenue received in advance gives rise to contract liabilities which is deferred and included in accruals and deferred income. The carrying amount of the deferred income included in payables being €959,012 (2021: €1,418,686).

No obligation for returns, refunds or other similar obligation is recognised, the Directors following careful consideration, having concluded that any potential obligation is trivial.

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

Sale of goods

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

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

· The Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

· The amount of revenue can be measured reliably;

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

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

Rendering of services

Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:

· The amount of turnover can be measured reliably;

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

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

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

The policies specific to the Group's revenue types within its activities are outline below:

Events

Revenue is recognised in the period in which the event takes place; revenue is typically linked to multiyear agreement where payment is received in advance of the event to which it relates.

Online income

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

Merchandising and Clubs

Revenue is recognised when control of the goods has transferred to the customer; typically, control is transferred upon payment by the customer.

Collateral rewards received

The Group was entitled to the interest receivable on collateral provided in crypto-assets by a partner to secure a loan. The interest receivable was in exchange for share options provided to the partner. The share options were exercised in January 2021 and the loan was repaid and the collateral returned in January 2022. In 2022 rewards of €9,142 (2021: €2,242,382) were recognised within exceptional items in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.

Segment reporting

IFRS 8 Operating Segments requires operating segments to be identified and reported in a manner consistent with the internal reporting provided to chief operating decision maker ('CODM'), who is responsible for allocating resources and assessing performance of the operating segments as identified by the Directors.

The Directors have reviewed the Group's activities and consider the Group to comprise a single line of business being a mass market promoter of chess. Within the single line of business, the Group undertakes integrated revenue generating activities across tournaments, an online platform and merchandise and clubs. These revenue generating activities are closely aligned within a business model which seeks to promote a chess community across tournaments, online and physical environments.

The individual revenue generating activities are managed in an integrated way by the CODM and executive management team who review financial information on the same integrated way. The Group has geographically separate operations and a geographic split of revenue as well as the split between the revenue types within its activities is included in note 3.

Cash and cash equivalents

Cash represents cash in hand and deposits held on demand with financial institutions. Cash equivalents are short-term, highly-liquid investments with original maturities of three months or less (as at their date of acquisition). Cash equivalents are readily convertible to known amounts of cash and subject to an insignificant risk of change in that cash value.

In the presentation of the Statement of Cash Flows, cash and cash equivalents also include bank overdrafts. Any such overdrafts are shown within borrowings under 'current liabilities' on the Statement of Financial Position.

Goodwill

Goodwill is recorded as an intangible asset and is the surplus of the cost of acquisition over the fair value of identifiable net assets acquired. Goodwill is reviewed annually for impairment. Any impairment identified as a result of the review is charged in the Statement of Profit or Loss and Other Comprehensive Income.

Crypto-assets

Included within intangible assets are crypto-assets held in separate wallets, the Group has not traded in crypto-assets to date and such activities do not form part of its strategy. The crypto-assets are not held as long-term investments, nor do they form part of the Group's inventory. The Group's strategy is to convert crypto-assets to fiat currencies at the earliest opportunity, usually upon receipt or in accordance with an agreed schedule of conversion. 

Any crypto-assets received are recognised at the exchange rate prevailing at the date that the risk and reward associated with the crypto-asset passes to the Group. Where the exchange rate of the crypto-assets has a guaranteed minimum floor price, a receivable is recognised for any short-fall.

Crypto-assets are not amortised but are reviewed for impairment if the prevailing exchange rate indicates their value has fallen below their carrying value. Any impairment or realised exchange gains on the conversion of crypto-assets to fiat currency are recognised within exceptional items on the Consolidated Statement of Profit or Loss and Other Comprehensive Income.

Other intangible assets

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

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

· Exclusive rights to organise and host top level chess events in association with FIDE, the life of the contract using the straight-line method.

· Capitalised costs associated with developing the online platform used for the FIDE Online Arena, ten years using the straight-line method.

· Licences to operate certain software incorporated into the platform, the life of the contract using the straight-line method.

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

The Group reviews the amortisation year and methodology when events and circumstances indicate that the useful lives may have changed since the last reporting date and the amortisation charge for the year is included in Administrative Expenses in the Consolidate Statement of Profit or Loss and Other Comprehensive Income.

Property, plant and equipment

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held as a right-of-use asset, over the lease term, whichever is the shorter.

· Fixtures and fittings - Straight line over 5 years

· Computer equipment - Straight line over 3 years

Financial instruments

The Group only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other receivables and payables, loans from banks and other third parties, loans to related parties and investments in non-puttable ordinary shares.

Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently, are amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade receivables and payables, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of trade debt deferred beyond normal business terms or financed at a rate of interest that is not market rate or in the case of an out-right short-term loan not at market rate, the financial asset or liability is measured, initially, at the present value of the future cash flow discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost.

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.

For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the company would receive for the asset if it were to be sold at the date of the Statement of Financial Position.

Financial assets and liabilities are offset, and the net amount reported in the Statement of Financial Position when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Inventories

Inventories of finished goods are valued at the lower of cost and net realisable value (the estimated selling price less the estimated costs to sell), after making due allowance for obsolete and slow-moving items.

Taxation

Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules in the UK, USA and Germany where the Group operates, using tax rates enacted or substantively enacted by the date of the Statement of Financial Position.

Current tax represents the amount of tax payable or receivable in respect of the taxable profit (or loss) for the current or past reporting periods. It is measured at the amount expected to be paid or recovered using the tax rates and laws that have been enacted or substantively enacted by the date of the Statement of Financial Position.

Commercial legislation within the Russian Federation in which the Group operated prior to April 2022, including tax legislation, is subject to varying interpretations and frequent changes. The Group's management is confident that all necessary tax accruals have been made and, accordingly, no additional provision is required in the Consolidated Financial Statements.

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position date.

Deferred tax represents the future tax consequences of transactions and events recognised in the financial statements of current and previous periods. It is recognised in respect of all timing differences, with certain exceptions. Timing differences are differences between taxable profits and total comprehensive income as stated in the financial statements that arise from the inclusion of income and expense in tax assessments in periods different from those in which they are recognised in the financial statements. Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date that are expected to apply to the reversal of timing differences.

Research and development

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

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

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

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

· the Group is able to use the asset;

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

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

Other development expenditure is recognised in the income statement as an expense as incurred.

Capitalised development expenditure is stated at cost less accumulated amortisation and less accumulated impairment losses.

Foreign currencies

Assets and liabilities in foreign currencies are translated into euro at the rates of exchange ruling at the statement of financial position date. Transactions in foreign currencies are translated into euro at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

IFRS 16 'Leases'

Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. 

Where ownership of the right-of-use asset transfers to the lessee at the end of the lease term, the right-of-use asset is depreciated over the asset's remaining useful life. If ownership of the right-of-use asset does not transfer to the lessee at the end of the lease term, depreciation is charged over the shorter of the useful life of the right-of-use asset and the lease term.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

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

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

· Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined, or the Group's incremental borrowing rate. Right-of-use assets are measured at cost comprising the following:

· The amount of the initial measurement of lease liability;

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

· Any initial direct costs.

Adoption of new and revised standards

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective from 1 January 2022, none of which have a material impact on these financial statements.

Standards issued but not yet effective

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the group has decided not to apply early. The following amendments are effective for the period beginning 1 January 2023:

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

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

· Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).

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

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

· IAS 1 Presentation of Financial Statements (Amendment - Classification of Liabilities as Current or Non-Current); and

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

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

Financial liabilities

The Group does not have financial liabilities that would be classified as fair value through the profit or loss. Therefore, all financial liabilities are classified as other financial liabilities.

The Group use the amortised cost method for financial liabilities include borrowings, trade and other payables and are recognised at their original amount.

Major customer

Included in Events revenue are revenues of €1,499,332 and in Online revenue are revenues of €262,893 which are attributable to two major customers, being customers who each represent more than 10% of revenue in the year (2021: €581,305 and €565,691 respectively).

Total revenue attributable to the two major customers are: €1,163,411 (2021: €nil) and €598,814 (2021: €1,146,996).

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

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

No pension contributions were made in either 2022 or 2021.

In the opinion of the Board, only the Directors of the Company, as detailed in the Corporate Governance Report, are regarded as key management personnel. The remuneration of key management personnel during 2022 was, in aggregate, €327,001 (2021: €237,890).

Further details of Directors', including Non-Executive Directors', remuneration and fees during the year are set out in the Directors Remuneration Report on page 33 of these consolidated financial statements.

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

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

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

Gain on disposal World Chess Russia LLC

In April 2022 the entire share capital of World Chess Russia LLC was disposed of as a result, a profit on disposal of €27,330 has been recognised.

Exchange (loss)/gain on Crypto-assets

During 2021 crypto-assets appreciated significantly, the ALGO rate increased from €0.27 in January 2021 to €1.53 in December 2021. The majority of the crypto-assets held by the Group was converted into fiat currency resulting in a large gain.

Crypto exchange fees

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

Collateral rewards received

The Group was entitled to the interest receivable on collateral provided in crypto-assets by a partner to secure a loan. The interest receivable was in exchange for share options provided to the partner. The share options were exercised in January 2021 and the loan was repaid and the collateral returned in January 2022.

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