REG - World Chess PLC - Results for the year ended 31 December 2022
28/04/2023 14:45
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RNS Number : 9255X World Chess PLC 28 April 2023
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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
(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. (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
(https://worldchess.com/investors) or contact:
World Chess Via Yellow Jersey PR
Ilya Merenzon, CEO
Novum Securities Limited +44 (0) 20 7399 9400
David Coffman / George Duxberry
Yellow Jersey PR
Charles Goodwin +44 (0) 77 4778 8221
Annabelle Wills +44 (0) 77 7519 4357
Notes to Editors
About World Chess Plc
World Chess (LSE: CHSS) is a London-based chess gaming and entertainment
company and Fédération Internationale des Échecs ('FIDE') official
commercial partner. World Chess organized the FIDE Championship Matches in the
USA, and the UK, and revolutionized the sport by signing the biggest media
partnerships in history. World Chess develops Armageddon, the chess league for
prime-time television. World Chess also runs FIDE Online Arena, the exclusive
official chess gaming platform. More at worldchess.com
(https://worldchess.com/) .
Statement from the Chair
I 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
Statement from the Chief Executive
I am very happy to present the first annual report of World Chess as a listed Company.
Listing on the London Stock Exchange brings a new opportunity for the Group to grow, but with that opportunity comes greater responsibility, which is why I feel that it's important to include in this report our vision for the Company and what we hope to achieve.
World Chess has a long history at the heart of the chess community. However, this is the beginning for many of our new investors and I would like to welcome the new shareholders and partners to the Company and the chess community. We hope you benefit from and enjoy what we have to offer as the Company grows and realises its potential.
Chess has been a passion and profession for decades, but until relatively recently, it was not considered a business but rather an art and or hobby. The commercial aspects were secondary and chess events were often dependent on the patronage of wealthy donors, whilst being represented by a select group of chess stars and luminaries who were adored.
We intend to build a company that is one of the premier brands in chess, whilst reinventing the game for a modern consumer. This evolution will see us accommodate and satisfy customers' growing interests and offer them compelling products to build their passion for chess. Our range of products, from the official chess gaming platform to a concept chess club with a cocktail bar (visit it in Berlin if you have a chance!) can be accessed through different channels: online, retail, corporate, social and more. All sales channels are carefully curated to fit with the overall brand message and values and to be aspirational in terms of design.
World Chess will develop the sport based on the factors that we believe will
put our organisation on the map: creativity, pushing the conventional (and
sometimes outmoded) boundaries, and challenging the status quo, while
respecting and enjoying the sport we love.
London Stock Exchange Listing
On 6 April 2023 the entire issued share capital of World Chess PLC was
admitted to trading on the Main Market of the London Stock Exchange.
As part of the admission the Company completed a subscription and retail offer
issuing 49,650,972 new ordinary shares for total cash consideration of
€3,475,568 and a further 14,861,840 new ordinary shares on the conversion of
a loan totalling €1,040,329.
The entire issued share capital, comprising 666,905,501 ordinary shares were
admitted for trading on the main market of the London Stock Exchange with
ticker symbol CHSS.
World Chess Russia LLC
Following the Russian invasion of Ukraine in March 2022, the Group ceased its
Russian operations and relocated its Russian-based personnel from Russia,
disposing of its Russian subsidiary including the World Chess Club in Moscow
on 14 April 2022.
Board Changes
Following admission, the Company welcomed Richard Collett (Chief Financial
Officer), Graham Woolfman (Non-Executive Chair) and Neil Rafferty
(Non-Executive Director) to the board.
Ekaterina Chalykh resigned as a director on 13 April 2022 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 Merenzon
Chief Executive Officer
28 April 2023
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR
THE YEAR ENDED 31 DECEMBER 2022
2022 2021
as restated
Notes € €
Revenue 3 2,796,207 3,216,400
Cost of (2,090,754) (1,321,180)
sales
GROSS PROFIT 705,453 1,895,220
Other operating income 92,399 17,939
Administrative expenses (3,278,281) (3,114,803)
OPERATING LOSS BEFORE EXCEPTIONAL ITEMS (2,480,429) (1,201,644)
Exceptional Items 5 23,000 7,406,431
OPERATING LOSS (2,457,429) 6,204,787
Finance costs 6 (337,460) (308,299)
Finance income 6 521 -
(LOSS)/PROFIT BEFORE INCOME TAX 7 (2,794,368) 5,896,488
Income tax 8 332,680 (436,914)
(LOSS)/PROFIT FOR THE YEAR (2,461,688) 5,459,574
OTHER COMPREHENSIVE INCOME - -
(Loss)/gain on currency translation (19,787) 33,263
TOTAL COMPREHENSIVE INCOME FOR THE YEAR (2,481,475) 5,492,837
(Loss)/profit attributable to:
Owners of the parent (2,461,688) 5,459,574
Total comprehensive income attributable to:
Owners of the parent (2,481,475) 5,492,837
(LOSS)/PROFIT PER SHARE - CONTINUING AND TOTAL OPERATIONS
Basic and diluted 10 (0.004) 0.009
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 DECEMBER 2022
2022 2021
as restated
Notes € €
NON-CURRENT ASSETS
Owned: Intangible assets 11 2,763,358 3,749,355
Owned: Property, plant and equipment 12 714,116 126,812
Right-of-use: Property, plant and equipment 12, 23 1,236,968 22,034
Deferred tax 27 76,697 15,733
4,791,139 3,913,934
CURRENT ASSETS
Inventories 15 187,691 218,393
Trade and other receivables 16 662,566 3,362,515
Tax receivable 251,117 -
Cash and cash equivalents 17 35,565 152,689
1,136,939 3,733,597
TOTAL ASSETS 5,928,078 7,647,531
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Called up share capital 18 68,260 66,996
Share premium 19 6,518,849 5,520,114
Translation reserve 20 65,941 85,728
Retained earnings 20 (5,489,625) (3,027,937)
TOTAL EQUITY 1,163,425 2,644,901
NON-CURRENT LIABILITIES
Lease liabilities 23 1,308,003 -
Interest bearing loans and borrowings 22 - 54,987
Provision for liabilities 26 180,652 -
1,488,655 54,987
CURRENT LIABILITIES
Trade and other payables 21 2,098,204 3,576,469
Lease liabilities 23 95,686 21,266
Interest bearing loans and borrowings 22 1,082,108 1,349,908
3,275,998 4,947,643
TOTAL LIABILITIES 4,764,653 5,002,630
TOTAL EQUITY AND LIABILITIES 5,928,078 7,647,531
The financial statements were approved by the Board of Directors and
authorised for issue on 28 April 2023 and were signed on its behalf by:
Ilya Merenzon
Chief Executive Officer
COMPANY STATEMENT OF FINANCIAL POSITION 31 DECEMBER 2022
2022 2021
Notes € €
NON-CURRENT ASSETS
Investments 14 301,616 26,616
Trade and other receivables 16 - 272,544
301,616 299,160
CURRENT ASSETS
Trade and other receivables 16 4,919,305 3,188,193
Cash and cash equivalents 17 6,242 34,107
4,925,547 3,222,300
TOTAL ASSETS 5,227,163 3,521,460
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Called up share capital 18 68,260 66,996
Share premium 19 6,518,849 5,520,114
Retained earnings 20 (5,329,173) (4,750,727)
TOTAL EQUITY 1,257,936 836,383
CURRENT LIABILITIES
Trade and other payables 21 2,950,159 2,685,077
Interest bearing loans and borrowings 22 1,019,068 -
3,969,227 2,685,077
TOTAL LIABILITIES 3,969,227 2,685,077
TOTAL EQUITY AND LIABILITIES 5,227,163 3,521,460
As permitted by Section 408 of the Companies Act 2006, the statement of
comprehensive income of the parent company is not presented as part of these
financial statements. The parent company's loss for the financial year was
€578,448 (2021: €1,244,816 profit).
The financial statements were approved by the Board of Directors and
authorised for issue on 28 April 2023 and were signed on its behalf by:
Ilya Merenzon
Chief Executive Officer
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
Called up share capital Retained Earnings Share Premium Translation reserve Total equity
€ € € € €
Balance at 1 January 2021 64,219 (7,175,495) 3,552,069 52,465 (3,506,742)
Prior year adjustment (note 33) - (1,312,016) - - (1,312,016)
As restated 64,219 (8,487,511) 3,552,069 52,465 (4,818,758)
Changes in equity
Issue of share capital 2,777 - 1,968,045 - 1,970,822
Total comprehensive income - 5,459,574 - 33,263 5,492,837
Balance at 31 December 2021 66,996 (3,027,937) 5,520,114 85,728 2,644,901
Changes in equity
Issue of share capital 1,264 - 998,735 - 999,999
Total comprehensive income - (2,461,688) - (19,787) (2,481,475)
Balance at 31 December 2022 68,260 (5,489,625) 6,518,849 65,941 1,163,425
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
Called up share capital Retained Earnings Share Premium Total equity
€ € € €
Balance at 1 January 2021 64,219 (5,995,541) 3,552,069 (2,379,253)
Changes in equity
Issue of share capital 2,777 - 1,968,045 1,970,822
Total comprehensive income - 1,244,816 - 1,244,816
Balance at 31 December 2021 66,996 (4,750,725) 5,520,114 836,385
Changes in equity
Issue of share capital 1,264 - 998,735 999,999
Total comprehensive income - (578,448) - (578,448)
Balance at 31 December 2022 68,260 (5,329,173) 6,518,849 1,257,936
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2022
2022 2021
as restated
Notes € €
Cash flows from operating activities
Cash (absorbed)/generated from operations 1 (512,077) 4,014,467
Interest paid (179,610) (306,987)
Finance cost paid (157,850) (1,312)
Tax refund received 20,600 -
Net cash (used in)/generated from operating activities (828,937) 3,706,168
Cash flows from investing activities
Purchase of intangible fixed assets (799,865) (1,847,323)
Proceeds from disposal of intangible fixed assets 1,367,702 -
Purchase of property, plant and equipment (635,818) (91,966)
Proceeds from disposal of property, plant and equipment 23,214 -
Interest received 521 -
Net cash used in investing activities (44,246) (1,939,289)
Cash flows from financing activities
Loan advanced in the year 1,019,068 -
Loan repayments in year (1,341,854) (677,378)
Payment of lease liabilities (21,986) (50,352)
Amount introduced by directors 120,619 -
Proceeds from share issue 999,999 1,970,822
Payment on cancellation of share options - (3,200,000)
Net cash generated from/(used in) financing activities 775,846 (1,956,908)
Decrease in cash and cash equivalents (97,337) (190,029)
Cash and cash equivalents at beginning of year 2 152,689 309,455
Effect of foreign exchange rate changes (19,787) 33,263
Cash and cash equivalents at end of year 2 35,565 152,689
COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2022
2022 2021
Notes € €
Cash flows from operating activities
Cash absorbed from operations 1 (104,814) (1,818,222)
Interest paid (84,353) (85,057)
Finance cost paid (123,415) -
Net cash used in operating activities (312,582) (1,903,279)
Cash flows from investing activities
Purchase of intangible fixed assets (275,000) (100,000)
Loan repayment from related parties - 597,926
Loans issued - (272,544)
Interest received 20,820 6,792
Net cash (used in)/generated from investing activities (254,180) 232,174
Cash flows from financing activities
Loan advanced in the year 1,019,068 -
Amounts received from group undertakings 157,633 2,626,132
Amounts paid to group undertakings (1,640,863) (2,991,786)
Amount introduced by directors 3,060 -
Proceeds from share issue 999,999 1,970,822
Net cash from financing activities 538,897 1,605,168
Decrease in cash and cash equivalents (27,865) (65,937)
Cash and cash equivalents at beginning of year 2 34,107 100,044
Cash and cash equivalents at end of year 2 6,242 34,107
NOTES TO THE STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2022
1 RECONCILIATION OF (LOSS)/PROFIT BEFORE INCOME TAX TO CASH GENERATED FROM
OPERATIONS
Group 2022 2021
as restated
€ €
(Loss)/profit before income tax (2,794,368) 5,896,488
Depreciation and amortisation 632,935 396,425
Goodwill impairment - 142,474
Provision 180,652 -
Finance costs 337,460 308,299
Finance income (521) -
(1,643,842) 6,743,686
Decrease/(increase) in inventories 30,702 (159,796)
Decrease/(increase) in trade and other receivables 2,699,953 (2,284,486)
Decrease in trade and other payables (1,598,890) (284,937)
Cash (absorbed)/generated from operations (512,077) 4,014,467
Company 2022 2021
€ €
(Loss)/profit before income tax (578,448) 1,244,816
Investment impairment - 225,000
Finance costs 207,766 85,057
Finance income (20,820) (6,792)
(391,502) 1,548,081
Decrease/(increase) in trade and other receivables 182,297 (196,270)
Increase/(decrease) in trade and other payables 104,391 (3,170,033)
Cash absorbed from operations (104,814) (1,818,222)
2 CASH AND CASH EQUIVALENTS
The amounts disclosed on the Statements of Cash Flows in respect of cash and
cash equivalents are in respect of these Statement of Financial Position
amounts:
Group 2022 2021
as restated
€ €
Year ended 31 December 2022
Cash and cash equivalents 35,565 152,689
Year ended 31 December 2021
Cash and cash equivalents 152,689 309,455
Company 2022 2021
€ €
Year ended 31 December 2022
Cash and cash equivalents 6,242 34,107
Year ended 31 December 2021
Cash and cash equivalents 34,107 100,044
3 RECONCILIATION OF NET DEBT
Group 2022 2021
as restated
€ €
At 31 December
Other loans (1,082,108) (1,404,895)
Lease liabilities (1,403,689) (21,266)
Total Borrowings (2,485,797) (1,426,161)
Cash and cash equivalents 35,565 152,689
Net debt (2,450,232) (1,273,472)
Company 2022 2021
€ €
At 31 December
Other loans (1,019,068) -
Cash and cash equivalents 6,242 34,107
Net (debt)/cash (1,012,826) 34,107
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
1 STATUTORY INFORMATION
World Chess PLC is a public company, limited by
shares, registered in England and Wales. The company's registered number and
registered office address can be found on the Company Information page.
2 ACCOUNTING POLICIES
Basis of preparation
These financial statements have been prepared in
accordance with UK - adopted International Accounting Standards and IFRIC
interpretations and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS. The financial statements have been prepared
under the historical cost convention.
The financial statements are presented in Euro which
is the functional currency of the Group and rounded to the nearest €.
Going concern
Based on the Group's Statement of Financial Position
and a review of its forecast future operating budgets and forecasts, the
Directors have a reasonable expectation that the Group has adequate resources
to continue in operational existence for at least twelve months from the date
of signing of these consolidated financial statements. This review of future
operating budgets and forecasts included certain reasonable downside scenarios
and confirmed that even in the case of such downside scenarios the Group could
continue to operate and meet its obligations as they fall due. Accordingly,
the Directors have adopted the going concern basis in preparing the Annual
Report and consolidated financial statements.
The Directors have assessed the viability of the
Group over a five-year period, taking account of the Group's current position
and prospects, its strategic plan and the principal risks and how these are
managed. Based on this assessment, the Directors have a reasonable expectation
that the Group will be able to continue in operation and meet its liabilities
as they fall due over this period.
In making this assessment, the Directors have
considered the resilience of the Group in severe but plausible scenarios,
taking into account the principal risks and uncertainties facing the Group and
the effectiveness of any mitigating actions. The Directors' assessment
considered the potential impacts of these scenarios, both individually and in
combination, on the Group's business model, future performance, solvency and
liquidity over the period. Sensitivity analysis was also used to stress test
the Group's strategic plan and to confirm that sufficient headroom would
remain available under the Group's credit facilities. The Directors consider
that under each of these scenarios, the mitigating actions would be effective
and sufficient to ensure the continued viability of the Group. 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):
Group
2022 2021
€ €
Exclusive FIDE rights 442,117 552,646
Software Licences 82,000 105,000
Online Platform 2,239,033 1,723,799
Crypto-assets valuation
The Group has historically received some sponsorship
revenue in the form of crypto-assets which it has converted to fiat currencies
at the earliest opportunity, usually upon receipt or in accordance with an
agreed schedule of conversion. The Group has not traded in crypto-assets to
date and such activities do not form part of its strategy.
The Group has the objective of converting
crypto-assets into fiat currency, predominately US Dollars or Euros at the
earliest opportunity; the rate of exchange for crypto-assets can be volatile
with significant increases and decreases occurring in a few hours, the
decision of when to convert crypto-assets into fiat currency is a key source
of uncertainty and estimation.
Crypto-assets held by the Group are shown within
intangible assets on the Consolidated Statement of Financial Position at the
prevailing exchange rate (see note 11).
Group Company
2022 2021 2022 2021
€ € € €
Crypto-assets 208 1,367,910 - -
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.
3 REVENUE
Revenue from contracts with customers
Revenue by business class 2022 2021
€ €
Events 1,711,331 1,407,501
Online 399,074 905,174
Merchandising and Clubs 685,802 903,725
2,796,207 3,216,400
By geographical area 2022 2021
€ €
United Kingdom 2,661,639 2,589,719
Russia 27,578 329,114
United States of America 50,540 257,508
Other 56,450 40,059
2,796,207 3,216,400
Major customer
Included in Events revenue are revenues of
€1,499,332 and in Online revenue are revenues of €262,893 which are
attributable to two major customers, being customers who each represent more
than 10% of revenue in the year (2021: €581,305 and €565,691
respectively).
Total revenue attributable to the two major customers
are: €1,163,411 (2021: €nil) and €598,814 (2021: €1,146,996).
4 EMPLOYEES AND DIRECTORS
The aggregate payroll costs (including Directors not under employment
contracts) were:
2022 2021
€ €
Wages and salaries 421,923 299,754
Social security costs 38,978 -
Pension costs - -
460,901 299,754
2022 2021
No. No.
Average number of employees during the year: 7 11
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).
2022 2021
€ €
Directors' remuneration: 327,001 237,890
Further details of Directors', including
Non-Executive Directors', remuneration and fees during the year are set out in
the Directors Remuneration Report on page 33 of these consolidated financial
statements.
The highest paid director was Ilya Merenzon whose
total remuneration was €192,000 (2021: €154,570).
In 2022 Directors Remuneration included €5,000
(2021: €nil) in respect of compensation for loss of office.
The Group had no UK employees in 2022 and 2021 except
the directors.
5 EXCEPTIONAL ITEMS
2022 2021
as restated
€ €
Gain on disposal World Chess Russia LLC 27,330 -
Exchange (loss)/gain on Crypto-assets (13,472) 5,605,551
Crypto exchange fees - (441,502)
Collateral rewards received 9,142 2,242,382
23,000 7,406,431
Gain on disposal World Chess Russia LLC
In April 2022 the entire share capital of World Chess
Russia LLC was disposed of as a result, a profit on disposal of €27,330 has
been recognised.
Exchange (loss)/gain on Crypto-assets
During 2021 crypto-assets appreciated significantly,
the ALGO rate increased from €0.27 in January 2021 to €1.53 in December
2021. The majority of the crypto-assets held by the Group was converted into
fiat currency resulting in a large gain.
Crypto exchange fees
In 2021 the Group recognised an expense of €441,502
relating to crypto exchange fees.
Collateral rewards received
The Group was entitled to the interest receivable on
collateral provided in crypto-assets by a partner to secure a loan. The
interest receivable was in exchange for share options provided to the partner.
The share options were exercised in January 2021 and the loan was repaid and
the collateral returned in January 2022.
6 NET FINANCE COSTS
2022 2021
as restated
€ €
Finance income:
Loan interest receivable 521 -
521 -
Finance costs:
Other loan interest 179,610 306,987
Interest on IFRS 16 lease liabilities 157,850 1,312
337,460 308,299
7 (LOSS)/PROFIT BEFORE INCOME TAX
The loss before income tax (2021 - profit before
income tax) is stated after charging/(crediting):
2022 2021
€ €
Cost of inventories recognised as expense 2,090,754 1,264,902
Research costs expensed 88,874 66,809
Depreciation - owned assets 25,300 18,046
Depreciation - right-of-use assets 189,475 67,711
Exclusive FIDE rights amortisation 110,529 110,529
Licence amortisation 23,000 5,000
Computer software amortisation 284,632 224,503
Auditors' remuneration 72,641 16,626
Foreign exchange loss/(gain) 9,790 (5,072)
Amortisation of intangible assets is included in
Administrative expenses in the Consolidated Statement of Profit or Loss and
Other Comprehensive Income.
8 INCOME TAX
Analysis of tax (income)/expense
2022 2021
€ €
Current tax:
Corporation tax (255,983) 432,586
Deferred tax (76,697) 4,328
Total tax (income)/expense in consolidated statement of profit or loss and (332,680) 436,914
other comprehensive income
Factors affecting the tax expense
The tax assessed for the year is lower (2021 - lower)
the standard rate of corporation tax in the UK. The difference is explained
below:
2022 2021
€ €
(Loss)/profit before income tax (2,794,368) 5,896,488
(Loss)/profit multiplied by the standard rate of corporation tax in the UK of (530,930) 1,120,333
19% (2021 - 19%)
Effect of:
Originations and reversal of temporary differences (76,697) 436,679
Capital allowances in excess of depreciation (74,706) (12,411)
Non-taxable expenses/(income) 138,474 (246,717)
Tax losses carried forward/(utilised) 467,162 (861,205)
Research and development credit (256,197) -
Foreign tax 214 235
Tax (income)/expense (332,680) 436,914
9 LOSS OF PARENT COMPANY
As permitted by Section 408 of the Companies Act
2006, statement of profit or loss and other comprehensive income of the parent
company is not presented as part of these financial statements. The parent
company's loss for the financial year was €578,448 (2021: €1,244,816
profit).
10 EARNINGS PER SHARE
The basic earnings per share is calculated by
dividing the (loss)/profit attributable to owners of the parent company by the
weighted average number of shares in issue during the year. In calculating the
diluted earnings per share, any outstanding share options, warrants and
convertible loans are taken into account where the impact of these is
dilutive.
2022 2021
(Loss)/profit attributable to the owners of the parent company € (2,461,688) 5,459,574
Weighted average number of shares in issue 597,912,402 583,532,583
Basic and diluted earnings per share (€0.004) €0.009
11 INTANGIBLE ASSETS
Group
Exclusive FIDE rights Software Licence Online Platform Crypto-assets Total
€ € € € €
COST
At 1 January 2022 1,105,291 115,000 2,307,572 1,367,910 4,895,773
Additions - - 799,866 - 799,866
Disposals - - - (1,367,702) (1,367,702)
At 31 December 2022 1,105,291 115,000 3,107,438 208 4,327,937
AMORTISATION
At 1 January 2022 552,645 10,000 583,773 - 1,146,418
Amortisation for year 110,529 23,000 284,632 - 418,161
At 31 December 2022 663,174 33,000 868,405 - 1,564,579
NET BOOK VALUE
At 31 December 2022 442,117 82,000 2,239,033 208 2,763,358
Exclusive FIDE rights Software Licence Online Platform Crypto-assets Total
€ € € € €
COST
At 1 January 2021* 1,105,291 25,000 1,706,287 211,872 3,048,450
Additions - 90,000 601,285 1,156,038 1,847,323
At 31 December 2021* 1,105,291 115,000 2,307,572 1,367,910 4,895,773
AMORTISATION
At 1 January 2021* 442,116 5,000 359,270 - 806,386
Amortisation for year 110,529 5,000 224,503 - 340,032
At 31 December 2021* 552,645 10,000 583,773 - 1,146,418
NET BOOK VALUE
At 31 December 2021* 552,646 105,000 1,723,799 1,367,910 3,749,355
* as restated
The Directors considered the carrying value at 31
December 2022 for each asset identified above (except crypto-assets, based on
a detailed budget and forecast, discounted over five years at the Groups
current cost of capital, considered by the Directors to be 11.83%, and it was
determined that no impairment was required. Where an asset does not generate
cash inflows that are largely independent of the cash inflows from other
assets or groups of assets the carrying value was considered against the
smallest identifiable group of assets that generates cash inflows (cash
generating unit or CGU).
The Directors considered the carrying value at 31
December 2022 for crypto-assets based on the prevailing exchange rate at which
the crypto-asset could readily be converted into US dollars or Euros and it
was determined that no impairment was required.
12 PROPERTY, PLANT AND EQUIPMENT
Group
Right of use asset Fixtures and fittings Computer Equipment Total
€ € € €
COST
At 1 January 2022 441,942 212,236 1,698 655,876
Additions 1,374,409 635,818 - 2,010,227
Disposals (441,942) (74,136) - (516,078)
At 31 December 2022 1,374,409 773,918 1,698 2,150,025
DEPRECIATION
At 1 January 2022 419,908 85,424 1.698 507,030
Charge for year 189,475 25,300 - 214,775
Elimination on disposal (441,942) (50,922) - (492,864)
Exchange difference (30,000) - - (30,000)
At 31 December 2022 137,441 59,802 1,698 198,941
NET BOOK VALUE
At 31 December 2022 1,236,968 714,116 - 1,951,084
Right of use asset Fixtures and fittings Computer Equipment Total
€ € € €
COST
At 1 January 2021 441,942 136,946 1,698 580,586
Additions - 91,966 - 91,966
Exchange difference - (16,676) - (16,676)
At 31 December 2021 441,942 212,236 1,698 655,876
DEPRECIATION
At 1 January 2021 355,110 67,378 1,698 424,186
Charge for year 67,711 18,046 - 85,757
Exchange difference (2,913) - - (2,913)
At 31 December 2021 419,908 85,424 1,698 507,030
NET BOOK VALUE
At 31 December 2021 22,034 126,812 - 148,846
Included in the net book value of fixtures and fittings is
€647,083 (2021: €91,966) relating to the World Chess Club Berlin which was
functionally complete at 31 December 2022 but had not yet fully opened. The
club opened briefly during 2022 to host the first and third legs of the FIDE
Grand Prix series before closing for the remaining construction work to be
completed. As at 31 December 2022 the Group had outstanding contractual
commitment for a further €20,000 in relation to the completion of
construction.
13 GOODWILL
Group
2022 2021
€ €
COST
At 1 January 142,474 142,474
At 31 December 142,474 142,474
IMPAIRMENTS
At 1 January (142,474) -
Impairment - (142,474)
At 31 December (142,474) (142,474)
CARRYING VALUE
At 1 January - 142,474
At 31 December - -
Goodwill arose on the acquisition of World Chess
Russia LLC and World Chess Digital Limited.
The Directors considered the carrying value at 31
December 2021 for each cash generating unit, identified above, and the
goodwill was impaired to €nil.
In 2022 the Group disposed of World Chess Russia LLC
and World Chess Digital Limited was dormant and in the process of being
dissolved. At 31 December 2022 the company remained dormant, and the
dissolution process is ongoing.
14 INVESTMENTS
Company
Shares in group undertakings
2022 2021
€ €
COST
At 1 January 251,616 151,616
Additions 275,000 100,000
Disposals (175,000) -
At 31 December 351,616 251,616
IMPAIRMENTS
At 1 January (225,000) -
Impairment - (225,000)
Disposals 175,000 -
At 31 December (50,000) (225,000)
CARRYING VALUE
At 1 January 26,616 151,616
At 31 December 301,616 26,616
The Directors considered the carrying value at 31
December 2021 for each group undertaking, identified below, and the Company's
investments in World Chess Russia LLC and World Chess Digital Limited were
impaired to €nil.
The Directors considered the carrying value at 31
December 2022 for each group undertaking, identified below, based on a
detailed budget and forecast, discounted over five years at the Groups current
cost of capital, considered by the Directors to be 11.83%, and it was
determined that no further impairment was required.
In 2022 the Group disposed of World Chess Russia LLC
and World Chess Digital Limited was dormant and in the process of being
dissolved at 31 December 2022 the company remained dormant and the dissolution
process is ongoing.
The Group's investments at the Statement of Financial
Position date in the share capital of companies include the following
subsidiaries:
World Chess Events Limited
Registered office: Eastcastle House, 27/28 Eastcastle
Street, United Kingdom, W1W 8DH
Nature of business: Organising chess events
(Worldwide)
Class of
shares:
% holding
Ordinary
100.00
World Chess US, Inc
Registered office: 1201 N. Orange Street, Suite 762,
Wilmington, New Castle County, DE, USA 19801
Nature of business: Organising chess events (USA),
online chess
Class of
shares:
% holding
Ordinary
100.00
World Chess Digital Limited (formerly CNCweb Limited)
Registered office: 21st Floor, Tay Chau Building, 262
Des Voeux Road Central, Hong Kong
Nature of business: Operation of online chess
platform
Class of
shares:
% holding
Ordinary
100.00
World Chess Digital Limited was dormant during 2022
and in the process of being dissolved at 31 December 2022 the company remained
dormant and the dissolution process is ongoing.
World Chess Europe GmbH
Registered office: Mittelstrasse 51 - 53, 10117
Berlin, Deutschland
Nature of business: Various chess related activities
Class of
shares:
% holding
Ordinary
100.00
During the year, World Chess PLC provided a capital
contribution of €275,000 (2021: €25,000) to this company.
World Chess Sakartvelo LLC
Registered office: Georgia, City Tbilisi, Didube
district, Ak. Tsereteli Avenue, N 49-51-51a, Entrance 3, Floor 13, Apartment N
128
Nature of business: Organising chess events, chess
club activities
Class of
shares:
% holding
Ordinary
100.00
This company was incorporated on 2 June 2022 but did
not commence trading until after 1 January 2023.
World Chess Russia LLC
Registered office: 123242, Moscow, Kudrinskaya
Square, 1 room XIIB
Nature of business: Organising chess events, chess
club activities
Class of
shares:
% holding
Ordinary
0.00
During the year, World Chess PLC provided a capital
contribution of €nil (2021: €100,000) to this company. In April 2022 the
entire share capital in this company was disposed of.
The results of the subsidiaries identified above are
included in the consolidated financial statements, results for World Chess
Russia LLC are included up to April 2022. All subsidiaries are exempt from an
audit except World Chess Events Ltd.
15 INVENTORIES
Group
2022 2021
€ €
Inventories: 187,691 218,393
16 TRADE AND OTHER RECEIVABLES
Group Company
2022 2021 2022 2021
€ € € €
Current:
Trade receivables 452,754 317,665 - -
Amounts owed by group undertakings - - 4,905,195 2,991,788
Other receivables 205,244 2,910,064 12,362 178,876
Prepayments and accrued income 4,568 134,786 1,748 17,529
662,566 3,362,515 4,919,305 3,188,193
Non-current
Amounts owed by group undertakings - - - 272,544
Aggregate amounts 662,566 3,362,515 4,919,305 3,460,737
17 CASH AND CASH EQUIVALENTS
Group Company
2022 2021 2022 2021
as restated
€ € € €
Cash in hand - 694 - -
Bank accounts 35,565 151,995 - --
35,565 152,689 6,242 34,107
18 CALLED UP SHARE CAPITAL
2022 2021
Number of shares € Number of shares €
Allotted, issued, and fully paid Ordinary shares of £0.0001 602,392,689 68,260 591,640,000 66,996
10,752,689 Ordinary shares of £0.0001 each were
allotted as fully paid at a premium of €0.09 per share during the year
(2021: 12,644,500 Ordinary shares at a premium of €0.08 per share).
At 31 December 2022 the number of additional shares
authorised for issue is 100,000,000 (2021: nil).
As detailed in note 32, on 6 April 2023 the Company
issued 49,650,972 new ordinary shares for total cash consideration of
€3,475,568 and a further 14,861,840 new ordinary shares on the conversion of
a loan totalling €1,040,329 and the entire issued share capital, comprising
666,905,501 ordinary shares were admitted for trading on the main market of
the London Stock Exchange with ticker symbol CHSSS. Following admission, the
number of additional shares authorised for issue is 66,690,550.
19 SHARE PREMIUM
2022 2021
€ €
At 1 January 5,520,114 3,552,069
Premium arising on issue of equity shares 998,735 1,968,045
At 31 December 6,518,849 5,520,114
20 RESERVES
Share capital comprises the amount for the nominal
value of shares issued.
Share premium comprises the amount subscribed for
share capital exceeds the nominal value, after deducting costs of issue.
Retained earnings comprises of the brought forward
cumulative profit and loss balances carried forward from previous accounting
periods.
The translation reserve comprises all foreign
currency differences arising from the translation of the financial statements
of foreign operations.
21 TRADE AND OTHER PAYABLES
Group Company
2022 2021 2022 2021
€ € € €
Trade payables 657,006 262,915 81,173 37,373
Amounts owed to group undertakings - - 2,783,767 2,626,134
Social security and other taxes 21,318 9,541 - -
Other payables 2,650 9,494 1,376 1,376
Accruals and deferred income 1,296,317 3,294,280 80,547 19,955
Amounts owed to Directors 120,913 239 3,296 239
2,098,204 3,576,469 2,950,159 2,685,077
22 FINANCIAL LIABILITIES - BORROWINGS
Group Company
2022 2021 2022 2021
€ € € €
Current:
Other loans 1,082,108 1,349,908 1,019,068 -
Lease liabilities (see note 23) 95,686 21,266 - -
1,177,794 1,371,174 1,019,068 -
Non-current:
Other loans - 1-2 years - 54,987 - -
Lease liabilities (see note 23) 1,308,003 - - -
1,308,003 54,987 - -
Terms and debt repayment schedule
Group
1 year or less More than 1 year and less than 5 years More than 5 years Totals
€ € € €
Other loans 1,082,108 - - 1,082,108
Lease liabilities (see note 23) 95,686 510,145 797,858 1,403,689
1,177,794 510,145 797,858 2,485,797
Company
1 year or less More than 1 year and less than 5 years More than 5 years Totals
€ € € €
Other loans 1,019,068 - - 1,019,068
Loans due in less than one year includes a loan of
€1,019,068 which accrues interest at 8% per year, subsequent to 31 December
2022 this loan was converted into new ordinary shares (see note 32), and
€63,040 which accrues interest at 10% per year. (2021: €1,349,908 which
accrued interest at 14% per year and was secured by collateral put up by a
partner company, the loan was repaid, and the collateral returned in January
2022).
On 6 April 2023, subsequent the date of these
consolidated financial statements, the loan totalling €1,040,329 including
accrued interest was converted into new ordinary shares in the Company (see
note 32).
23 LEASES
Group
Right of use asset - property, plant, and equipment
2022 2021
€ €
COST
At 1 January 441,942 441,942
Additions 1,374,409 -
Disposals (441,942) -
At 31 December 1,374,409 441,942
DEPRECIATION
At 1 January 419,908 355,110
Charge for year 189,475 67,711
Elimination on disposal (441,942) -
Exchange difference (30,000) (2,913)
At 31 December 137,441 419,908
NET BOOK VALUE
At 31 December 1,236,968 22,034
All leases are accounted for in accordance with IFRS 16 Leases.
31 December 2022 31 December 2021 31 December 2020
€ € €
Right of use asset 1,236,968 22,034 86,832
Lease liability 1,403,689 21,266 71,619
A right-of-use asset was disposed of during the year
relating to premises occupies by the World Chess Club Moscow, the lease was
for a term of 5 years ended on 30 April 2022 with an effective interest rate
of 10.65%.
A new right-of-use asset was recognised in 2022 for a
lease on premises to be occupied by the World Chess Club Berlin for a term of
10 years ending on 31 December 2031 with an effective interest rate of 11.83%.
Total finance lease interest for 2022 was €157,850
(2021: €1,312) as detailed in note 6.
Right of use assets relating to lease properties are
presented as property, plant, and equipment and amortised to the end of the
lease term.
Group
Lease liabilities - minimum lease payments fall due as follows:
31 December 2022 1 year or less More than 1 year and less than 5 years More than 5 years Totals
€ € € €
Gross obligations repayable: 246,234 984,936 984,936 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
31 December 2021 1 year or less More than 1 year and less than 5 years More than 5 years Totals
€ € € €
Gross obligations repayable: 21,411 - - 21,411
Finance charges repayable: (145) - - (145)
Net obligations repayable: 21,266 - - 21,266
24 FINANCIAL INSTRUMENTS
All financial instruments are measured at amortised
cost and financial instruments used by the Group, from which financial
instrument risk arises are as follows:
· trade and other payables
· cash and cash equivalents; and
· trade and other receivables
The main purpose of these financial instruments is to
finance the Group's operations.
2022 2021
€ €
Other financial assets
Trade and other receivables less than one year 821,028 3,362,515
Cash and cash equivalents 35,773 152,689
Total financial assets 856,801 3.515.204
2022 2021
€ €
Other financial liabilities
Interest bearing loans and borrowings less than one year 1,177,794 1,371,173
Trade and other payables less than one year 2,098,199 3,576,469
Interest bearing loans and borrowings more than one year 1,308,003 54,987
Total financial liabilities 4,583,996 5,002,629
The Directors consider that the carrying value for
each class of financial asset and liability, approximates to their fair value.
Financial risk management
The Group's activities expose it to a variety of
risks, including market risk (foreign currency risk and interest rate risk),
credit risk and liquidity risk. The Group manages these risks through an
effective risk management programme, and, through this programme, the Board
seeks to minimise the potential adverse effects on the Group's financial
performance.
Credit risk
Credit risk is the risk of financial loss to the
Group if a customer to a financial instrument fails to meet its contractual
obligations. The Group's credit risk is primarily attributable to its
receivables and its cash deposits. It is Group policy to assess the credit
risk of new customers before entering contracts. The Group continues to assess
the risk and a further loss allowance for the full lifetime expected credit
losses is recognised if the credit risk has increased significantly since
initial recognition. The Group consider any contractual payment being 30 days
past due, and each subsequent period of 30 days, to be an indicator of a
significant increase in credit risk which may require an additional loss
allowance to be recorded.
The risks specific to the Group's revenue types
within its activities are outline below:
· Events, payment is typically received in accordance with
multi-year agreement in advance of the event to which it relates, the
Directors therefore consider the credit risk to be non-trivial but minimal.
· Online income, payment is typically received annually in advance,
the Directors therefor consider the credit risk to be trivial.
· Merchandising and Clubs, payment is typically received prior to
control of goods purchased being transferred to the customer, the Directors
therefor consider the risk to be non-trivial but minimal.
No credit loss was recognised in 2022 or 2021.
Financial assets past due but not impaired as at 31
December 2022:
Not impaired and not past due Not impaired but past due by the following amounts
>30 days >60 days >90 days >120 days
€ € € € €
Group: Trade and other receivables 646,901 - - - 15,635
Company: Trade and other receivables 4,919,305 - - - -
Financial assets past due but not impaired as at 31
December 2021:
Not impaired and not past due Not impaired but past due by the following amounts
>30 days >60 days >90 days >120 days
€ € € € €
Group: Trade and other receivables 3,289,295 70,991 - - 2,228
Company: Trade and other receivables 3,188,195 - - - -
Liquidity risk and interest rate risk
Liquidity risk arises from the Group's management of
working capital. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due.
The Group's funding strategy is to ensure a mix of
funding sources offering flexibility and cost effectiveness to match the
requirements of the Group.
At 31 December 2021 the Group had outstanding loans
of €1,019,068 which accrues interest at a fixed rate of 8% per year, and
€63,040 which accrues interest at a fixed rate of 10% per year. (2021:
€1,349,908 which accrued interest at a fixed rate of 14% per year and was
secured by collateral put up by a partner company, the loan was repaid, and
the collateral returned in January 2022).
Foreign currency risk
The Group's exposure to foreign currency risk is
limited as most of its invoicing and payments are denominated in Euro. The
Group identifies and manages currency risks using an integrated approach that
takes into account the possibility of natural (economic) hedging. For the
purpose of short-term management of currency risk, the Group selects the
currency to reduce the open currency position (the difference between assets
and liabilities in foreign currencies).
Analysis of sensitivity of financial instruments to
foreign currency exchange rate risk
Currency risk is assessed monthly using sensitivity
analysis and maintained within parameters approved in accordance with the
Group's policy. At the reporting date, the effect of the Euro's
growth/(depreciation) against other currencies in the Group's profit/(loss)
before tax is not significant.
25 CAPITAL MANAGEMENT
The Group's objective when managing capital is to
safeguard the Group's ability to continue as a going concern, so that it can
continue to provide returns to shareholders and benefits for other
stakeholders.
The Group's capital management strategy is to retain
sufficient working capital for operating requirements and to ensure sufficient
funding is available to meet commitments as they fall due and to support
growth. There are no externally imposed capital requirements.
The Group had net assets of €1,163,425 at 31
December 2022 (2021: €2,644,901), and to maintain or adjust the capital
structure the Group may issue new shares of increase borrowings.
2022 2021
€ €
Interest bearing loans and borrowings (2,485,797) (1,426,160)
Cash and cash equivalents 35,565 152,689
Net indebtedness (2,450,232) (1,273,471)
26 PROVISIONS
Group
2022 2021
€ €
PROVISIONS
At 1 January - -
Dilapidations provision 180,652 -
At 31 December 180,652 -
A dilapidations provision was recognised in 2022
relating to the estimated reinstatement costs at the expiry of a new 10-year
lease ending on 31 December 2031.
27 DEFERRED TAX
Group
2022 2021
€ €
Balance at 1 January 2022 (15,733) (451,098)
Movement in current year (60,964) 435,365
Balance at 31 December 2022 (76,697) (15,733)
There are €3,878,681 of tax losses available to the
Group which at the applicable tax rate of 25%would provide an additional
deferred tax asset of €537,784. This has not been recognised in the
financial statements due to the uncertainty of the timing of future taxable
profits against which these losses could be utilised.
Deferred tax assets and liabilities are offset when
the Company has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to taxes levied
by the same tax authority.
Analysis of deferred tax:
2022 2021
€ €
Timing differences arising on provisions for liabilities, lease liabilities (531,931) (15,733)
and losses carried forward
Timing difference arising on capital allowances in excess of depreciation 455,234 -
(76,697) (15,733)
28 CONTINGENT LIABILITIES
The Group has an ongoing claim with one supplier, if
the claim is successful then an invoice, amounting to €1,140,000, will
become payable. The invoice is not included in the accounts as the Directors
consider it to be null and void and raised by the supplier in breach of
contract (see note 28).
29 RELATED PARTY DISCLOSURES
Details of the Directors' remuneration and
consultancy fees are disclosed in note 4.
Ilya Merenzon
On 21 December 2022 Mr Merenzon advanced a short-term
loan of €20,000 to World Chess Europe GmbH, this loan is unsecured, does not
bear interest and remained outstanding at 31 December 2022.
Matvey Shekhovtsov
On 29 December 2022 Mr Shekhovtsov advanced a
short-term loan of €20,000 to World Chess Europe GmbH, this loan is
unsecured and does not bear interest and remained outstanding at 31 December
2022.
Group undertakings
The following transactions took place during the year
ended 31 December 2022 with and between group undertakings.
Payments to World Chess PLC Payments to/ (receipts from) other group undertakings
€ €
World Chess Events Ltd
Payment of interest 12,331 -
Purchase of inventory - 56,153
Sale of inventory - (3,823)
Commission paid on third party transactions - 26,473
Interest received - (4,848)
World Chess Europe GmbH
Payment of interest 7,512 -
Purchase of inventory - 3,823
Sale of Inventory - (56,153)
World Chess US Inc.
Commission charged on third party transactions - (26,473)
Payment of interest - 4,848
The following transactions took place during the year
ended 31 December 2021 with and between group undertakings.
Payments to/(receipts from) World Chess PLC Payments to/ (receipts from) other group undertakings
€ €
World Chess Russia LLC
Sale of inventory - (133,995)
World Chess Events Ltd
Payment of interest 10,710 -
Purchase of inventory - 133,995
Commission paid on third party transactions 56,238 8,562
World Chess US Inc.
Commission charged on third party transactions (18,749) (8,562)
Payment of interest 2,115 -
Balances at 31 December 2022
The following balances remained outstanding at 31
December 2022 from and between group undertakings.
Due to/(from) World Chess PLC Due to/(from) other group undertakings Total due to/(from) group undertakings
€ € €
Ilya Merenzon (238) (93,256) (93,495)
Matvey Shekhovtsov (2,818) (24,600) (27,418)
Group undertakings
· World Chess Events Ltd 4,044,942 (2,005,174) 2,039,768
· World Chess Europe GmbH 860,253 99,327 959,580
· World Chess US Inc. (2,783,767) 1,905,848 (877,919)
2,118,372 (117,855) 2.000.516
Balances at 31 December 2021
The following balances remained outstanding at 31
December 2021 from and between group undertakings.
Due to/(from) World Chess PLC Due to/(from) other group undertakings Total due to/(from) group undertakings
€ € €
Ilya Merenzon (238) - (238)
Group undertakings
· World Chess Events Ltd 3,214,251 (2,511,790) 702,461
· World Chess Europe GmbH - 187,072 187,072
· World Chess US Inc. (2,626,134) 2,300,688 (325,446)
· World Chess Russia LLC 50,079 23,913 73,992
637,958 (117) 637,841
30 ULTIMATE CONTROLLING PARTY
The ultimate controlling party is Ilya Merenzon by
virtue of his shareholding in the Company.
31 SHARE-BASED PAYMENT TRANSACTIONS
In exchange for providing collateral for a loan in
World Chess Events Limited, the Company granted an option to Algorand Cayman
SEZC to convert part or all of the collateral into ordinary shares, the option
was exercised in January 2021 and World Chess Plc issued 2,474 shares to
Algorand Cayman SEZC for total consideration of 33m Algo's (at the date of
conversion this represented €2,060,374).
32 SUBSEQUENT EVENTS
On 20 February 2023 Mr Merenzon advanced a short-term
loan of €500,000 to World Chess PLC, this loan remains outstanding at 28
April 2023.
On 20 February 2023 Mr Shekhovtsov advanced a
short-term loan of €13,000 to World Chess PLC, this loan remains outstanding
at 28 April 2023.
On 16 March 2023 Mr Merenzon advanced a short-term
loan of €150,000 to World Chess PLC, this loan remains outstanding at 28
April 2023.
On 6 April 2023 the Company issued 49,650,972 new
ordinary shares for total cash consideration of €3,475,568 and a further
14,861,840 new ordinary shares on the conversion of a loan totalling
€1,040,329.
On 6 April 2023 the entire issued share capital,
comprising 666,905,501 ordinary shares were admitted for trading on the Main
Market of the London Stock Exchange with ticker symbol CHSSS. The Directors
believe this will help to build the Company's profile, create value for
Shareholders and improve the Company's ability to raise further capital over
the coming years to support its growth strategy. The Directors further believe
that the reputation of the Main Market for regulation and good governance
structures will improve the Company's international visibility and reputation
helping it to achieve its strategy.
33 PRIOR YEAR ADJUSTMENT
During the year the Directors reassessed the accounting treatment of the
crypto-assets which previously had been included within cash and cash
equivalents on the Consolidated Statement of Financial Position at 31 December
2021. The Directors concluded that in accordance with IAS 1, IFRS 13, IAS 2,
IAS 8, and IAS 38 the correct accounting treatment was to treat them as
intangible assets. This resulted in a reduction of cash and cash equivalents
previously reported in the Consolidated Statement of Financial Position at 31
December 2021 from €1,520,599 to €152,689 and an increase in intangible
assets from €2,381,445 to €3,749,355.
In 2021 a prior year adjustment was made to correct
bookkeeping errors from 2018 and 2019. Income of €1,412,016 for sponsorship
should have been recognised as; €100,000 in 2019, €606,608 in 2021 and
€706,008 in 2022.
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