Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2022
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RED GROUP HOLDINGS LIMITED
COMPANY INFORMATION
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RED GROUP HOLDINGS LIMITED
CONTENTS
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RED GROUP HOLDINGS LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors present their strategic report for the year ended 31 December 2022.
Red Group, through its subsidiaries and affiliates, is a global business active in the provision of specialist building services, process & ICT engineering solutions, and aiming at providing for a more sustainable connected world.
Active in the fields of MEP services, Sustainability consultancy and solutions, ICT engineering, Health and Safety and Process Engineering, Red Group covers the entire life cycle of any building project. Red Group enjoys a worldwide footprint, deploying activities in Europe, Middle East, Africa and Asia Pacific. Formerly a business unit of Engie Impact, Red Group is now part of Tractebel, a global engineering and consulting company delivering integrated solutions for sustainable energy and built environment projects. ENGIE is a global energy and services group operating in the three key business sectors of low-carbon electricity generation (with particular emphasis on natural gas and renewables), energy infrastructures and customer solutions. Business review Development and performance of the company’s business during the year 2022 has seen Red Group pursuing the expansion of its global activities in response to demand in its core markets, particularly in Europe and in Asia Pacific. This translated into a strong increase in its revenue generation compared to previous year by 35%. Red Group further consolidated its position in its historical segments of activities, generating positive earnings in UK, APAC, Ireland and in the Philippines. Investments were further maintained in the development of consultancy services relating to Sustainability Solutions, thereby explaining the loss incurred in the financial year. In the UK, Red Group Holdings acquired in March three entities from the Engie Group active in the field of sustainability solutions, more particularly in the management and optimisation of utility supplies to its customers. The acquired business was later transferred to its subsidiary Red Engineering Design in the UK. The base of operations in the Philippines has undergone a significant development through the provision of services to Group affiliates in the US, thereby requiring the hiring of approximately 200 employees. Position at the end of the year Red Group incurred a loss after taxation for the period of -£3,184,921 (2021: Profit of £974,251) as a result of losses incurred in the new consultancy segments of activities in the UK and APAC. As at December 31, 2022, Group’s current assets amounted to £42,034,016 (2021: £29,933,475), and Net Assets to £7,903,181 (2021: £11,275,559). Other Financial key performance indicators Average staff numbers increased from 645 in 2021 to 1,090 in 2022, in support of the Group’s continued growth particularly in the Philippines.
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RED GROUP HOLDINGS LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Red Group is exposed to normal risks associated with its sectors of activity, projects and geographies, namely:
- Market fluctuations in terms of demand, competition, - Availability and retention of skilled resources, - Debt collection and cash flow management, - Commitments and potential liabilities arising from its ongoing projects, - Exchange rate fluctuations with exposition being mainly in EUR. Risks are managed in accordance with Group’s commercial policy and procedures, with their identification, assessment and management forming an integral part of RED’s decision-making process.
Promote the success of the Group
Throughout the year RED Group, through the supervision of its board of directors, monitors the commercial, operational and financial success of its operations on a worldwide basis, involving period business reviews, tracking of individual projects, strategic and financial planning, having at stake the long term perennity and success of its activities. Engagement with stakeholders - Clients, suppliers and shareholders Through regular communication and feedback mechanisms, RED actively engages with clients, suppliers and shareholders, understanding their expectations for sustainable business relationship and growth of activities. Project managers and directors translate this commitment in their day-to-day collaboration with representatives from these key stakeholders, always ensuring optimum quality of committed deliverables. Acting as a key contributor to a successful unfolding of its clients’ operations, the Red Group teams up with like-minded business suppliers, not only sharing its high professional standards but also its core values. - Employees RED Group’s commitment to its employees' welfare, professional development, and well-being remains a key focus, acknowledging their valuable contribution to our success. Therefore, keeping its workforce at the heart of its strategy definition, Red Group creates working environments aimed at encouraging, challenging and enabling employees to develop their talent. Likely consequences of any decision in the long term Red Group establishes on a yearly basis a strategic plan aimed at covering its expected evolution in following year, but also in the medium term, taking into consideration its current and future market position, as well as key stakeholders, both local and transversal. Red Group thereby ensures all major decisions taken are made after careful consideration of long-term impacts. Red Group further critically evaluates potential outcomes of decisions made, emphasizing on sustainable practices and environmentally friendly initiatives not only aligns with regulatory requirements but also contributes to minimizing our carbon footprint, positively impacting the environment in the long term.
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RED GROUP HOLDINGS LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Greenhouse gas emissions and energy consumption With the purpose of reducing its environmental footprint, RED Group tracks its greenhouse gas emissions, thereby aiming at setting ambitious targets for reducing its carbon footprint, energy efficiency, water consumption and waste disposal. In 2022 emissions and consumption reached following levels:
At the exception of business travel and commuting, emissions were defined based on absolute values from data collection and did not involve estimations (and/or their corresponding smoothing methods). Commuting related emissions were based on the office attendance percentage (occupancy tracking) at RED sites, while business travel data was defined based on assumptions enabling the conversion of mileage into CO2 emissions.
RED Group has been able to mitigate the expansion of its carbon footprint associated with traveling thanks to lower emissions generated by heating, commuting, and electricity consumption.
The outlook Red Group will pursue its expansion in 2023, with strong growth foreseen from its overseas markets and operations in Asia Pacific. Red Group will further focus on maintaining its long-term successful partnerships with key stakeholders. 2023 will also see some changes in the Group structure, with the business in the Middle East being transferred under its Dubai Branch, a part of Red Engineering Design Limited.
This report was approved by the board and signed on its behalf.
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RED GROUP HOLDINGS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The Directors present their report and the financial statements for the year ended 31 December 2022.
The loss for the year, after taxation, amounted to £3,184,921 (2021 - profit £974,251).
Dividends of £Nil (2021: £Nil) were paid.
The Directors who served during the year were:
The Directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the Directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 the Group 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Group pursued the development of its R&D activities through its UK subsidiary, engaging in bringing innovative, energy efficient and low emissions solutions to its clients.
Red Group indirectly owns through its UK subsidiary three branches outside of the UK, in Turkey and UAE as long term bases of operations, as well as in Denmark in support of its local projects.
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RED GROUP HOLDINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
See note 29 for details of post balance sheet events.
The auditor, James Cowper Kreston Audit, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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RED GROUP HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF RED GROUP HOLDINGS LIMITED
We have audited the financial statements of Red Group Holdings Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2022, which comprise the Consolidated statement of comprehensive income, the Consolidated Balance Sheet, the Company Balance Sheet, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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.
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 Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the Annual Report other than the financial statements and our Auditor's report thereon. The Directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. 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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RED GROUP HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF RED GROUP HOLDINGS LIMITED (CONTINUED)
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group strategic report or the Directors' report.
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RED GROUP HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF RED GROUP HOLDINGS LIMITED (CONTINUED)
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 Group financial statements.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.
The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. The specific procedures for this engagement that we designed and performed to detect material misstatements in respect of irregularities, including fraud, were as follows: • Enquiry of management and those charged with governance around actual and potential litigation and claims; • Enquiry of management and those charged with governance to identify any material instances of non- compliance with laws and regulations; • Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations; • Performing audit work to address the risk of irregularities due to management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for evidence of bias.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's 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.
for and on behalf of
Chartered Accountants and Statutory Auditor
Reading Bridge House
George Street
Berkshire
RG1 8LS
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RED GROUP HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
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RED GROUP HOLDINGS LIMITED
REGISTERED NUMBER: 10211704
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 16 to 38 form part of these financial statements.
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RED GROUP HOLDINGS LIMITED
REGISTERED NUMBER: 10211704
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 16 to 38 form part of these financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
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RED GROUP HOLDINGS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
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RED GROUP HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Red Group Holdings Limited is a private limited company incorporated in the UK and registered in England and Wales. The registered office is 2 Church Street, Burnham, Bucks, SL1 7HZ.
The Group's principal places of business are Woolverstone House, 61 Berners Street, London, W1T 3NJ and Lower Farm Barns, 1 Bainton Road, Bucknell, OX27 7LT. The Group's principal activity is the design of MEP engineering services for infrastructure, new buildings and refurbishment projects with a focus on innovative, low energy solutions.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases. Subsidiaries are deemed to be those under the control of the Company. Please see note 25. The group continues to recognise a merger reserve which arose on a past business combination that was accounted for as a merger in accordance with UK GAAP as applied at that time.
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Goodwill
Other intangible assets
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
The Group has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.
Financial instruments are recognised in the Group's Balance sheet when the Group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally 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.
Basic financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
Defined benefit pension plan
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Taxation The Company establishes provisions based on reasonable estimates, for possible consequences of audits by the tax authorities. The amount of such provisions is based on various factors, such as previous tax submissions. Tangible fixed assets Tangible fixed assets are depreciated over their useful economic lives taking into accounts residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. Residual value assessments consider issues such as the remaining life of the asset and projected disposal value. Work in progress The Group assesses the stage of completion on an individual project basis in order to determine the level of work in progress to recognise at the reporting date. Treatment of quasi-subsidiary During the year ended 31 December 2020, a fellow group subsidiary acquired 100% of the net assets of Callaghan Engineering Limited, a company whose office is registered in Ireland. The Company has deemed Callaghan Engineering Limited to be under the full control of the Company by way of a Power of Attorney document. The investment has therefore been accounted for as a quasi-subsidiary within these financial statements.
The whole of the turnover is attributable to the provision of services.
Analysis of turnover by country of destination:
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
12.Taxation (continued)
The main rate of corporation tax has risen from 19% to 25% from 1 April 2023. On this basis deferred tax is provided at the future rate of 25%. The impact of these changes is not expected to be material.
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Foreign exchange reserve
Merger Reserve
Profit and loss account
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The total consideration paid by the group across these transactions is greater than the book value of the net assets acquired, meaning goodwill of £808,069 arose from these transactions. The details of the business combinations were as follows:
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £1,030,876 (2021: £833,824). Contributions totalling £152,045 (2021: £82,246) were payable to the fund at the balance sheet date and are included in creditors.
The Group operates a Defined benefit pension scheme.
For 2022 and 2021, the Group engaged the services of Zalamea Actuarial Services to determine the retirement benefit obligation and retirement expense as at 31 December 2022. The following tables summarise the component of retirement expense recognised in the financial statements based on the actuarial valuation dated 31 December 2022.
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
26.Pension commitments (continued)
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RED GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
On 16 May 2023, a resolution was passed by the Company that the subsidiary RED Group Services DWC LLC will be dissolved.
The controlling party is
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