Registered number:
SC296800
CHESS DIGITAL LIMITED
DIRECTORS' REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
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CHESS DIGITAL LIMITED
COMPANY INFORMATION
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Chartered Accountants
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Statutory Auditor
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CHESS DIGITAL LIMITED
CONTENTS
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Directors' Responsibilities Statement
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Independent Auditor's Report
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Statement of Income and Retained Earnings
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Notes to the Financial Statements
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CHESS DIGITAL LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 APRIL 2021
The directors present their report and the financial statements for the year ended 30 April 2021.
The Company's principal activity continues to be a Microsoft Partner and specialist in bespoke software design, development and support.
The directors who served during the year were:
Qualifying third party indemnity provisions
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The Company has granted an indemnity to one or more of its directors against liability in respect of proceedings brought by third-parties, subject to the conditions set out in section 234 of the Companies Act 2006. Such qualifying third party indemnity provision was in place throughout the year and remains in force as the date of approving the Directors' Report.
Disclosure of information to auditor
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Each of the persons who are
directors at the time when this Directors' Report is approved has confirmed that:
∙
so far as the director is aware, there is no relevant audit information of which the Company's auditor is unaware, and
∙
the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
The auditor, Nexia Smith & Williamson, was appointed in the year and will be proposed for reappointment in accordance with
section 485 of the Companies Act 2006.
In preparing this report, the directors have taken advantage of the small companies exemptions provided by section 415A of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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CHESS DIGITAL LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 APRIL 2021
The directors are responsible for preparing the Directors' Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year
. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the directors are required to:
∙
select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙
make judgements and accounting estimates that are reasonable and prudent; and
∙
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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CHESS DIGITAL LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CHESS DIGITAL LIMITED
Opinion
We have audited the financial statements of Chess Digital Limited (the 'Company') for the year ended 30 April 2021 which comprise the Statement of Income and Retained Earnings, the Balance Sheet and the notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice).
In our opinion, the financial statements:
∙
give a true and fair view of the state of the Company's affairs as at 30 April 2021 and of its
profit for the year then ended;
∙
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
∙
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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CHESS DIGITAL LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CHESS DIGITAL LIMITED (CONTINUED)
Other information
The other information comprises the information included in the Directors' Report and financial statements, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the Directors' Report and financial statements. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
∙
the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙
the Directors’ Report has been prepared in accordance with applicable legal requirements.
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Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Directors’ Report.
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We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
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adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
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the financial statements are not in agreement with the accounting records and returns; or
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certain disclosures of directors’ remuneration specified by law are not made; or
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we have not received all the information and explanations we require for our audit; or
∙
the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies exemption in preparing the Directors' Report and from the requirement to prepare a Strategic report.
Responsibilities of directors
As explained more fully in the Directors' Responsibilities Statement set out on page 2, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
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CHESS DIGITAL LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CHESS DIGITAL LIMITED (CONTINUED)
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We obtained an understanding of the Company’s legal and regulatory framework through enquiry of management of their understanding of the relevant laws and regulations, the Company’s policies and procedures regarding compliance and how they identify, evaluate and rectify any instances of noncompliance. We also drew on our existing understanding of the Company's industry and regulation.
We understand the Company complies with requirements of the framework through:
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The directors’ close involvement in the day-to-day running of the business, meaning that any litigation or claims would come to their attention directly; and
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The engagement of external experts to ensure ongoing tax compliance and to assist with the preparation of the statutory accounts.
In the context of the audit, we have considered those laws and regulations which determine the form and content of the financial statements, which are central to the Company’s ability to conduct business and where failure to comply could result in material penalties.
We have identified the following laws and regulations as being of significance in the context of the Company:
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The Companies Act 2006 and FRS 102 in respect of the preparation and presentation of the financial statements.
The senior statutory auditor led a discussion with senior members of the engagement team regarding the susceptibility of the entity’s financial statements to material misstatement, including how fraud might occur. The key areas identified as part of the discussion were with regard to the manipulation of the financial statements through manual journals and incorrect recognition of revenue. This was communicated to the other members of the engagement team who were not present at the discussion.
The procedures carried out to gain evidence in the above areas included:
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Testing of revenue transactions to underlying documentation; and
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Testing of manual journal entries, selected based on specific risk assessments applied based on the client processes and controls surrounding manual journals.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
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CHESS DIGITAL LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CHESS DIGITAL LIMITED (CONTINUED)
Use of our report
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Stephen Drew
(Senior Statutory Auditor)
for and on behalf of
Nexia Smith & Williamson
Chartered Accountants
Statutory Auditor
3rd Floor
9 Colmore Row
Birmingham
B3 2BJ
31 January 2022
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CHESS DIGITAL LIMITED
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 30 APRIL 2021
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Interest payable and similar expenses
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Retained earnings at the beginning of the year
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Retained earnings at the end of the year
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The notes on pages 9 to 16 form part of these financial statements.
*Operating profit before depreciation, amortisation, share-based payments and exceptional items.
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CHESS DIGITAL LIMITED
REGISTERED NUMBER:
SC296800
BALANCE SHEET
AS AT
30 APRIL 2021
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Capital redemption reserve
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The
financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and in accordance with the provisions of FRS 102 Section 1A - small entities.
The financial statements were approved and authorised for issue by the board and were signed on its behalf by
:
The notes on pages 9 to 16 form part of these financial statements.
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CHESS DIGITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
Chess Digital Limited is a private company, limited by shares, domiciled and incorporated in England and Wales (registered number: SC296800). The registered office address is Suite 2/3, 2nd Floor, 48 West George Street, Glasgow, Scotland, G2 1BP.
The Company's functional and presentational currency is GBP.
2.
Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Section 1A of
Financial Reporting Standard 102, the Financial Reporting Standard applicable in
the UK and the Republic of Ireland and the Companies Act 2006
.
The following principal accounting policies have been applied:
The directors have considered the principal risks and uncertainties facing the Company and has established policies for managing these. The directors have prepared a cash flow forecast covering the period to 30 April 2023 which, taking into account all reasonably possible changes in trading that the Company should be able to meets its liabilities as they fall due. As at 30 April 2021, the Company has net liabilities of £508,801 (
2020 - £999,445
). This business also generated an Adjusted EBITDA of £610,452 in the last financial year (
2020 - £285,741
), which is expected to be at least maintained going forward. The business will therefore generate sufficient cashflow to ensure that liabilities can be met as they fall due.
The Company has received confirmation from the ultimate parent company that it will provide adequate support to enable the Company to meet its liabilities as they fall due. The directors therefore have a reasonable expectation that the Company has adequate resources to continue in operational existence for the 12 months post signing. This analysis supports the conclusion of the directors that it is appropriate to prepare the financial statements on a going concern basis for the Company.
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CHESS DIGITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
2.
Accounting policies (continued)
Turnover represents the value, net of value added tax and discounts, of goods provided to customers and work carried out in respect of services provided to customers. Turnover is recognised as services are delivered.
A significant amount of the Company's activities is undertaken via long-term contracts. These contracts are accounted for in accordance with the percentage of completion guidance in Section 23 of FRS 102.
The percentage of completion is measured by reference to the number of days completed on a contract at the balance sheet date, compared to the total expected number of days required on that contract.
When it is probable that total contract costs will exceed total contract revenue on a construction contract, the expected loss shall be recognised as an expense immediately, with a corresponding provision for an onerous contract.
Where the amount invoiced at the balance sheet date exceeds the value of the work performed, the excess is recognised as deferred revenue within current liabilities. If the level of invoicing is less than the value of work performed the shortfall is recognised as amounts recoverable on contracts in current assets.
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Operating leases: the Company as lessee
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Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Exceptional items are transactions that fall within the ordinary activities of the Company but are presented separately due to their size or incidence.
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CHESS DIGITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
2.
Accounting policies (continued)
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight-line basis to profit or loss over its useful economic life up to a maximum of 5 years.
Intellectual property
Intellectual property is initially recognised at cost. Initial capitalisation of costs is based on managements' judgement that technical and economic feasibility is confirmed, usually when a product development project has reached a defined milestone. The capitalised expenditure is the subsequently amortised on a straight-line basis over their useful economic life of 5 years.
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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CHESS DIGITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
2.
Accounting policies (continued)
Financial assets and financial liabilities are recognised in the Balance Sheet when the Company becomes a party to the contractual provisions of the instrument.
Trade and other debtors and creditors are classified as basic financial instruments and measured on initial recognition at transaction price. Debtors and creditors are subsequently measured at amortised cost using the effective interest rate method. A provision is established when there is objective evidence that the Company will not be able to collect all amounts due.
Cash and cash equivalents are classified as basic financial instruments and comprise cash in hand and at bank, short-term bank deposits with an original maturity of three months or less and bank overdrafts which are an integral part of the Company’s cash management.
Financial liabilities and equity instruments issued by the Company are classified in accordance with the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
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Current and deferred taxation
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The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
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The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
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Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
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CHESS DIGITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
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The Company has no employees other than the directors, who did not receive any remuneration
(2020 - £
Nil
)
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The directors are also directors of other group companies and are remunerated through another group company.
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CHESS DIGITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
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Amounts owed by group undertakings
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Prepayments and accrued income
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Amounts owed to group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.
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CHESS DIGITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Accruals and deferred income
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Amounts owed to group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.
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Share premium account
The share premium account is used to record the aggregate amount or value of premiums paid when the Company's shares are issued at an amount in excess of nominal value.
Capital redemption reserve
This reserve relates to the nominal value of shares that the Company has bought back.
Retained earnings
This reserve relates to the cumulative retained earnings less amounts distributed to shareholders.
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Commitments under operating leases
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At 30 April 2021 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
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CHESS DIGITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
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Related party transactions
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The Company has taken advantage of the exemption in FRS 102 Section 33.1A to not disclosure transactions with wholly owed group entities.
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The immediate parent undertaking is
Chess ICT Limited
, a company registered in England and Wales.
The ultimate parent undertaking is
Chess Limited
, a company registered in England and Wales.
The largest and smallest group of undertakings for which group accounts for the year ending 30 April 2021 have been drawn up, is that headed by
Chess Limited
. Copies of the group accounts are available from Companies House.
The ultimate controlling party is
C D Pollock
, by virtue of their shareholding and directorship in the ultimate parent undertaking.
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