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Registered number: 05299489










RED ENGINEERING DESIGN LIMITED










ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022



 
RED ENGINEERING DESIGN LIMITED
 

COMPANY INFORMATION


Directors
O G V Auwera (resigned 29 July 2022)
S S Brzeski (resigned 29 July 2022)
L J Prescott (resigned 29 July 2022)
C J Stokes (resigned 29 July 2022)
N B Vaney (resigned 29 April 2022)
M R Smith (resigned 29 July 2022)
W Bradshaw (resigned 29 July 2022)
A J Sykes (resigned 29 July 2022)
M B Sieh 
E L Bentley (appointed 29 July 2022)




Registered number
05299489



Registered office
2 Church Street

Burnham

Buckinghamshire

SL1 7HZ




Independent auditor
James Cowper Kreston Audit
Chartered Accountants and Statutory Auditor

Reading Bridge House

George Street

Reading

Berkshire

RG1 8LS





 
RED ENGINEERING DESIGN LIMITED
 

CONTENTS



Page
Strategic Report
1 - 3
Directors' Report
4 - 5
Independent Auditor's Report
6 - 8
Statement of Comprehensive Income
9
Balance Sheet
10
Statement of Changes in Equity
11
Notes to the Financial Statements
12 - 25


 
RED ENGINEERING DESIGN LIMITED
 

STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022

Principal activities
 
Red Engineering Design Ltd (“RED”) is part of the RED Group, itself part of Tractebel and of the wider Engie Group. A global company of specialist building services and ICT engineers, RED has led the drive towards the zero-carbon goal for over a decade. This has been based on, an insistence, from the start, on providing step-change low carbon solutions which are also commercially viable. 
Formerly a business unit of Engie Impact, RED 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.
Principal risks and uncertainties facing the Company
The Company 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 Company’s commercial policy and procedures, with their identification, assessment and management forming an integral part of RED’s decision-making process. The Company is further ISO 9001 certified. 

Business review
Development and performance of the company’s business during the year
As a result of continued growth in its core markets together with the expansion of its activity base, the turnover in 2022 increased by 22% compared to 2021. Relative margins decrease reflects the extended investments realised in the development of new activities in the UK, which showed progressive growth in their revenue generation. The proportion of overall revenues in Europe increased compared to previous year, now representing 97% of the turnover, with European activities having known a particularly important growth (+29%). 
Position at the end of the year
Company’s operating results reached £-2,013,331 (2021: £3,391,482), and the loss for the period after taxation was of £-1,803,969 (2021: Profit of £2,530,782). In 2022, the negative results are explained by losses incurred in the new segments of activities in the UK as well as by management fees recharged by Engie Impact for £1.4m.
As at 31 December 2022, the Company’s current assets were £29,702,736 (2021: £23,062,035), and Net Assets were £11,557,844 (2021: £13,361,813).
Other Financial key performance indicators
Average staff numbers increased from 240 in 2021 to 331 in 2022, in support of the Company’s continued growth.
The balance sheet reflects the evolution of activities, maintaining a healthy financial position of the Company in terms of working capital and cash position.

Page 1

 
RED ENGINEERING DESIGN LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022

Section 172 Statement

Promote the success of the Company
Throughout the year RED promoted the long-term success of the company maintaining a strong base of operation in its existing markets, fostering long term relation with its clients through repeated collaboration opportunities, but also keeping its workforce at the heart of its strategy. 
Engagement with stakeholders
RED recognises the importance of stakeholders. Through regular communication and feedback mechanisms, RED actively engaged with clients, suppliers and shareholders, understanding their expectations for sustainable business relationship and growth of activities. Furthermore, RED’s commitment to its employees' welfare, professional development, and well-being remains a key focus, acknowledging their valuable contribution to our success.
Likely consequences of any decision in the long term
The company 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. RED thereby ensures all major decisions taken are made after careful consideration of long-term impacts. 
RED 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.
Greenhouse gas emissions and energy consumption  
With the purpose of reducing its environmental footprint, RED tracks its green-house 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:
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RED 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.

Future developments
 
Looking ahead, the company is expected to maintain the expansion of its core activities in 2023. RED further remains committed to fostering innovation, maintaining strong corporate governance and adapting to market dynamics while upholding its values. Finally, RED aims to continue investing in sustainable practices and its people to secure long-term growth and value for all stakeholders. 
In conclusion, we, as directors, are dedicated to promoting the success of Red Engineering Design by adhering to the principles outlined in Section 172 of the Companies Act 2006. Our decisions are made with careful consideration of the long-term consequences, ensuring the sustainable growth and prosperity of the company. 

Page 2

 
RED ENGINEERING DESIGN LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022


This report was approved by the board and signed on its behalf.



M B Sieh
Director

Date: 13 February 2024

Page 3

 
RED ENGINEERING DESIGN 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.

Results and dividends

The loss for the year, after taxation, amounted to £1,803,969 (2021 - profit £2,530,782).

Dividends of £Nil (2021: £Nil) were paid.

Directors

The directors who served during the year were:

O G V Auwera (resigned 29 July 2022)
S S Brzeski (resigned 29 July 2022)
L J Prescott (resigned 29 July 2022)
C J Stokes (resigned 29 July 2022)
N B Vaney (resigned 29 April 2022)
M R Smith (resigned 29 July 2022)
W Bradshaw (resigned 29 July 2022)
A J Sykes (resigned 29 July 2022)
M B Sieh 
E L Bentley (appointed 29 July 2022)

Directors' responsibilities statement

The directors are responsible for preparing the Strategic Report, 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 judgments 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 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 2006They 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.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements and other information included in Directors' Reports may differ from legislation in other jurisdictions.

Page 4

 
RED ENGINEERING DESIGN LIMITED
 

 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022

Future developments

The Company is expected to maintain the expansion of its activities in 2023, together with pursuing investing in the expansion of its consultancy business.  

Research and development

The Company pursued the development of its R&D activities, through engaging in bringing innovative, energy efficient and low emissions solutions to its clients. 
Branches
The Company has currently three branches outside of the UK, and one in Turkey and UAE as long term bases of operations, as well as in Denmark in support of its local projects.

Engagement with suppliers, customers and others

The company recognises, in its decision-making process and in the running of its operations, the pivotal role of fostering robust business relationships with suppliers, customers, and various stakeholders. Long-term partnerships with suppliers have enabled us to provide tailored solutions to our clients while ensuring the efficiency of RED’s operations. 
RED’s customer-centric approach, further emphasizes on strong communication and understanding of its clients’ evolving needs, thereby leading to continued service enhancements, and market expansion strategies. 

Disclosure of information to auditor

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.

Post balance sheet events

See note 25 for details of post balance sheet events.

Auditor

The auditor, James Cowper Kreston Auditwill 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.
 





M B Sieh
Director

Date: 13 February 2024

Page 5

 
RED ENGINEERING DESIGN LIMITED
 

 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF RED ENGINEERING DESIGN LIMITED
 

Opinion


We have audited the financial statements of Red Engineering Design Limited (the 'Company') for the year ended 31 December 2022, which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity and the related notes, including a summary of significant accounting policiesThe 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).


In our opinion the financial statements:


give a true and fair view of the state of the Company's affairs as at 31 December 2022 and of its loss 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 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.


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.


Other information


The other information comprises the information included in the Annual Report other than the financial statements and our Auditor's Report thereon. The directors are responsible for the other information contained within the Annual ReportOur 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.


Page 6

 
RED ENGINEERING DESIGN LIMITED
 

 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF RED ENGINEERING DESIGN LIMITED (CONTINUED)


Opinion 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 Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.


Matters on which we are required to report by exception
 

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.


We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:


adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.


Responsibilities of directors
 

As explained more fully in the Directors' Responsibilities Statement set out on page 4, 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.


Page 7

 
RED ENGINEERING DESIGN LIMITED
 

 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF RED ENGINEERING DESIGN 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.


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.


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 2006Our 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.


Alexander Peal BSc (Hons) FCA DChA (Senior Statutory Auditor)
  
for and on behalf of
James Cowper Kreston Audit
 
Chartered Accountants and Statutory Auditor
  
Reading Bridge House
George Street
Reading
Berkshire
RG1 8LS

19 February 2024
Page 8

 
RED ENGINEERING DESIGN LIMITED
 

STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022

2022
2021
Note
£
£

  

Turnover
 4 
55,974,812
45,857,093

Cost of sales
  
(36,547,714)
(31,402,957)

Gross profit
  
19,427,098
14,454,136

Administrative expenses
  
(22,197,503)
(11,277,654)

Other operating income
 5 
757,074
215,000

Operating (loss)/profit
 6 
(2,013,331)
3,391,482

Interest receivable and similar income
 10 
300,124
-

Interest payable and similar expenses
 11 
(515)
(376,050)

(Loss)/profit before tax
  
(1,713,722)
3,015,432

Tax on (loss)/profit
 12 
(90,247)
(484,650)

(Loss)/profit for the year
  
(1,803,969)
2,530,782

There was no other comprehensive income for 2022 (2021:£NIL).

The notes on pages 12 to 25 form part of these financial statements.

Page 9

 
RED ENGINEERING DESIGN LIMITED
REGISTERED NUMBER: 05299489

BALANCE SHEET
AS AT 31 DECEMBER 2022

2022
2021
Note
£
£

Fixed assets
  

Intangible assets
 13 
709,575
213,294

Tangible assets
 14 
1,536,972
841,929

  
2,246,547
1,055,223

Current assets
  

Debtors: amounts falling due within one year
 15 
23,978,805
18,227,382

Cash at bank and in hand
 16 
5,723,931
4,834,653

  
29,702,736
23,062,035

Creditors: amounts falling due within one year
 17 
(20,391,439)
(10,755,445)

Net current assets
  
 
 
9,311,297
 
 
12,306,590

Total assets less current liabilities
  
11,557,844
13,361,813

  

Net assets
  
11,557,844
13,361,813


Capital and reserves
  

Called up share capital 
 19 
4,200
4,200

Profit and loss account
 20 
11,553,644
13,357,613

  
11,557,844
13,361,813


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 




M B Sieh
Director

Date: 13 February 2024

The notes on pages 12 to 25 form part of these financial statements.

Page 10

 
RED ENGINEERING DESIGN LIMITED
 

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022


Called up share capital
Profit and loss account
Total equity

£
£
£

At 1 January 2022
4,200
13,357,613
13,361,813



Loss for the year
-
(1,803,969)
(1,803,969)


At 31 December 2022
4,200
11,553,644
11,557,844



STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021


Called up share capital
Profit and loss account
Total equity

£
£
£

At 1 January 2021
4,200
10,826,831
10,831,031



Profit for the year
-
2,530,782
2,530,782


At 31 December 2021
4,200
13,357,613
13,361,813


The notes on pages 12 to 25 form part of these financial statements.

Page 11

 
RED ENGINEERING DESIGN LIMITED
 

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

1.


General information

Red Engineering Design 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 Company's principal places of business are 100 New Oxford St. London, WC1A 1HB and Lower Farm Barns, 1 Bainton Road, Bucknell, OX27 7LT.
The Company’s principal activities are to deliver specialist building services and ICT infrastructure engineering with a focus on innovative, low energy solutions.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

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 management to exercise judgment in applying the Company's accounting policies (see note 3).

The following sections, 2.2 to 2.18 detail the principal accounting policies which have been applied. 

 
2.2

Financial Reporting Standard 102 - reduced disclosure exemptions

The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
the requirements of Section 7 Statement of Cash Flows;
the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
the requirements of Section 26 Share-based Payment paragraphs 26.18(b), 26.19 to 26.21 and 26.23;
the requirements of Section 33 Related Party Disclosures paragraph 33.7.

This information is included in the consolidated financial statements of Red Group Holdings Limited as at 31 December 2022 and these financial statements may be obtained from 2 Church Street, Burnham, Buckinghamshire SL1 7HZ.

Page 12

 
RED ENGINEERING DESIGN LIMITED
 

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

2.Accounting policies (continued)

 
2.3

Revenue

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 is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:

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 revenue can be measured reliably;
it is probable that 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.

 
2.4

Tangible fixed assets

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:

Leasehold improvements
-
Over the duration of the lease
Fixtures and fittings
-
13%
Office equipment
-
33%

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.

Page 13

 
RED ENGINEERING DESIGN LIMITED
 

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

2.Accounting policies (continued)

 
2.5

Intangible assets

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 the Statement of Comprehensive Income over its useful economic life.

Other intangible assets

Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

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.

 Amortisation is provided on the following bases:

Software expenditure
-
10 - 33% straight line

 
2.6

Research and development

In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight-line basis over their useful economic lives, which range from 3 to 6 years.
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.

 
2.7

Finance costs

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.

 
2.8

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

 
2.9

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

Page 14

 
RED ENGINEERING DESIGN LIMITED
 

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

2.Accounting policies (continued)

 
2.10

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

 
2.11

Pensions

Defined contribution pension plan

The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Company in independently administered funds.

 
2.12

Provisions for liabilities

Provisions are recognised when an event has taken place that gives rise to a legal or constructive obligation, a transfer of economic benefits is probable and a reliable estimate can be made.
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
 
Increases in provisions are generally charged as an expense to profit or loss.

 
2.13

Foreign currency translation

Functional and presentation currency
 
The Company's functional and presentational currency is GBP, rounded to the nearest pound.

Transactions and balances
 
Foreign currency transactions are translated into the functional currency using a monthly average exchange rate.

At each period-end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.

 
2.14

Operating leases: the Company as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

Page 15

 
RED ENGINEERING DESIGN LIMITED
 

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

2.Accounting policies (continued)

 
2.15

Financial instruments

The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.

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 Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.

 
2.16

Current and deferred taxation

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:
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
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.

Page 16

 
RED ENGINEERING DESIGN LIMITED
 

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

3.


Judgments in applying accounting policies and key sources of estimation uncertainty

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements. 
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.
Percentage of completion
The Company uses the percentage of completion method to determine the recognition of revenue on projects undertaken. This estimate depends on an accurate assessment of the costs to complete. Project managers who have adequate and sufficient knowledge of the projects undertaken make these estimates as appropriate. However, the estimates are sensitive to unforeseen deviation from expectations, following which the necessary amendments are made. 


4.


Turnover

An analysis of turnover by class of business is as follows:


2022
2021
£
£

Services
55,974,812
45,857,093


2022
2021
£
£

United Kingdom
27,276,147
15,727,529

Rest of Europe
27,237,630
26,896,474

Rest of the world
1,461,035
3,233,090

55,974,812
45,857,093


Page 17

 
RED ENGINEERING DESIGN LIMITED
 

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

5.


Other operating income

2022
2021
£
£

Research and development tax credits
757,074
215,000



6.


Operating (loss)/profit

The operating (loss)/profit is stated after charging:

2022
2021
£
£

Exchange differences
134,151
40,363

Other operating lease rentals
1,161,964
973,458


7.


Auditor's remuneration

During the year, the Company obtained the following services from the Company's auditor and its associates:


2022
2021
£
£

Fees payable to the Company's auditor and its associates for the audit of the Company's financial statements
20,000
13,965

The Company has taken advantage of the exemption not to disclose amounts paid for non-audit services as these are disclosed in the consolidated accounts of the parent Company.


8.


Employees

Staff costs, including directors' remuneration, were as follows:


2022
2021
£
£

Wages and salaries
20,872,944
16,493,118

Social security costs
2,312,489
1,698,982

Cost of defined contribution scheme
1,030,876
833,824

24,216,309
19,025,924


The average monthly number of employees, including the directors, during the year was as follows:


        2022
        2021
            No.
            No.







Employees
331
240

Page 18

 
RED ENGINEERING DESIGN LIMITED
 

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

9.


Directors' remuneration

2022
2021
£
£

Directors' emoluments
1,670,234
1,535,970

Company contributions to defined contribution pension schemes
189,360
314,905

1,859,594
1,850,875


During the year retirement benefits were accruing to 9 directors (2021 - 8) in respect of defined contribution pension schemes.

The highest paid director received remuneration of £233,103 (2021 - £227,275).

The value of the Company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £20,913 (2021 - £20,375).


10.


Interest receivable and similar income

2022
2021
£
£


Difference on foreign exchange
300,124
-


11.


Interest payable and similar expenses

2022
2021
£
£



Other loan interest payable
515
1,140

Difference on foreign exchange
-
374,910

Page 19

 
RED ENGINEERING DESIGN LIMITED
 

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

12.


Taxation


2022
2021
£
£

Corporation tax


Current tax on profits for the year
90,247
484,650

90,247
484,650



Taxation on profit on ordinary activities
90,247
484,650

Factors affecting tax charge for the year

The tax assessed for the year is higher than (2021 - lower than) the standard rate of corporation tax in the UK of 19% (2021 - 19%). The differences are explained below:

2022
2021
£
£


(Loss)/profit on ordinary activities before tax
(1,713,722)
3,015,432


(Loss)/profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021 - 19%)
(325,607)
572,932

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
136,480
57,333

Capital allowances for year in excess of depreciation
(128,402)
(104,283)

Adjustments to tax charge in respect of prior periods
305,697
-

Non-taxable income
(23,109)
(40,850)

Adjustment relating to research and development expenditure credit accrual
125,188
(482)

Total tax charge for the year
90,247
484,650


Factors that may affect future tax charges

The main rate of corporation tax rose from 19% to 25% from 1 April 2023. On this basis deferred tax is provided at the future rate of 25%.

Page 20

 
RED ENGINEERING DESIGN LIMITED
 

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

13.


Intangible assets




Software expenditure
Goodwill
Total

£
£
£



Cost


At 1 January 2022
337,554
-
337,554


Additions
50,000
808,689
858,689


Disposals
(188,897)
-
(188,897)



At 31 December 2022

198,657
808,689
1,007,346



Amortisation


At 1 January 2022
124,260
-
124,260


Charge for the year on owned assets
49,552
161,738
211,290


On disposals
(37,779)
-
(37,779)



At 31 December 2022

136,033
161,738
297,771



Net book value



At 31 December 2022
62,624
646,951
709,575



At 31 December 2021
213,294
-
213,294



Page 21

 
RED ENGINEERING DESIGN LIMITED
 

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

14.


Tangible fixed assets





Leasehold improvements
Fixtures and fittings
Office equipment
Assets Under Construction
Total

£
£
£
£
£



Cost or valuation


At 1 January 2022
529,039
124,287
647,353
-
1,300,679


Additions
5,963
175,026
919,224
91,500
1,191,713



At 31 December 2022

535,002
299,313
1,566,577
91,500
2,492,392



Depreciation


At 1 January 2022
119,040
70,692
269,018
-
458,750


Charge for the year on owned assets
73,280
71,460
351,930
-
496,670



At 31 December 2022

192,320
142,152
620,948
-
955,420



Net book value



At 31 December 2022
342,682
157,161
945,629
91,500
1,536,972



At 31 December 2021
409,999
53,595
378,335
-
841,929


15.


Debtors

2022
2021
£
£


Trade debtors
10,494,409
7,109,018

Amounts owed by group undertakings
2,374,166
3,170,251

Other debtors
949,305
20,830

Prepayments and accrued income
9,905,598
7,927,283

Deferred taxation
255,327
-

23,978,805
18,227,382


Amounts owed by group undertakings are not interest bearing and repayable on demand.


16.


Cash and cash equivalents

2022
2021
£
£

Cash at bank and in hand
5,723,931
4,834,653


Page 22

 
RED ENGINEERING DESIGN LIMITED
 

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

17.


Creditors: Amounts falling due within one year

2022
2021
£
£

Trade creditors
3,962,564
3,076,182

Amounts owed to group undertakings
1,783,838
356,619

Cash pool account with group undertaking
1,496,805
-

Corporation tax
-
890,434

Other taxation and social security
1,763,954
1,370,271

Other creditors
853,181
87,276

Accruals and deferred income
10,531,097
4,974,663

20,391,439
10,755,445


Amounts owed to group undertakings are not interest bearing and repayable on demand.


18.


Deferred taxation




2022


£






Charged to profit or loss
255,327



At end of year
255,327

The deferred tax asset is made up as follows:

2022
2021
£
£


Accelerated capital allowances
255,327
-

255,327
-


19.


Share capital

2022
2021
£
£
Allotted, called up and fully paid



29,400 (2021 - 29,400) Ordinary A Shares of £0.10 each
2,940
2,940
126,020 (2021 - 126,020) Ordinary B Shares of £0.01 each
1,260
1,260

4,200

4,200


Page 23

 
RED ENGINEERING DESIGN LIMITED
 

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

20.


Reserves

Profit and loss account

The profit and loss account is the Company's cumulative retained earning since incorporation.


21.
 

Business combinations

During the year ended 31 December 2022, the Company acquired the trade and assets of the following group entities: 
- Engie Impact UK Limited
- C3 Resources Limited
The consideration paid (via an intercompany loan) is greater than the book value of the net assets acquired, meaning goodwill of £808,689 arose from these transactions. The details of the business combinations were as follows: 

Acquisition of the trade and assets of Engie Impact UK Limited and C3 Resources Limited

Recognised amounts of identifiable assets acquired and liabilities assumed

Book value
Fair value
£
£

Fixed Assets

Tangible
270,173
270,173

Intangible
129,127
129,127

399,300
399,300

Current Assets

Debtors
983,963
983,963

Total Assets
1,383,263
1,383,263

Creditors

Due within one year
(1,518,244)
(1,518,244)

Deferred taxation
316,692
316,692

Total Identifiable net assets
181,711
181,711


Goodwill
808,689

Total purchase consideration
990,400

Consideration

£


Debt instruments
990,400



Page 24

 
RED ENGINEERING DESIGN LIMITED
 

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

22.


Pension commitments

The Company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £1,089,021 (2021: £833,824). Contributions totalling £152,045 (2021: £82,246) were payable to the fund at the balance sheet date.


23.


Commitments under operating leases

At 31 December 2022 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:

2022
2021
£
£


Not later than 1 year
822,851
804,776

Later than 1 year and not later than 5 years
1,261,294
2,033,823

2,084,145
2,838,599


24.


Related party transactions

In accordance with Section 33 of FRS102, the Company has not disclosed transactions with companies wholly owned by the Company or its parent company.


25.


Post balance sheet events

On 1 January 2023, the Company acquired the trade and assets of the following group entity: 
- RED Group Services DWC LLC
The consideration paid (via an intercompany loan) is equal to the book value of the net liabilities acquired, meaning no goodwill arose from this transaction. The value of the net liabilities acquired was £1,804,344 and an equivalent intercompany debtor has been recognised accordingly.


26.


Controlling party

The controlling party and the smallest group preparing consolidated financial statements is Red Group Holdings Limited, the registered office of the company is 2 Church Street, Burnham, Bucks, SL1 7HZ.
The ultimate controlling party is Engie SA, the registered office of the company is 1, Place Samuel de Champlain Courbevoie, 92400 France.
Page 25