Company registration number 13282279 (England and Wales)
REDBRAIN HOLDINGS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
REDBRAIN HOLDINGS LIMITED
COMPANY INFORMATION
Directors
D S Scott
A J Stevens
Company number
13282279
Registered office
Azets
Ventura Park Road
Tamworth
Staffordshire
United Kingdom
B78 3HL
Auditor
Azets Audit Services
6th Floor, Bank House
8 Cherry Street
Birmingham
United Kingdom
B2 5AL
Bankers
HSBC Bank Plc
1 Centenary Square
Birmingham
United Kingdom
B1 1HQ
REDBRAIN HOLDINGS LIMITED
CONTENTS
Page
Strategic report
1 - 4
Directors' report
5 - 6
Directors' responsibilities statement
7
Independent auditor's report
8 - 10
Group profit and loss account
11
Group statement of comprehensive income
12
Group balance sheet
13
Company balance sheet
14
Group statement of changes in equity
15
Company statement of changes in equity
16
Group statement of cash flows
17
Notes to the financial statements
18 - 35
REDBRAIN HOLDINGS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JANUARY 2024
- 1 -

The directors present the strategic report for the year ended 31 January 2024.

 

Principal Activity

The principal activity of Redbrain Holdings Limited and Redbrain Limited ("the Group”) is the provision of online performance marketing services. The principal activity of Redbrain Holdings Limited is that of a holding company.

Review of the business

The Group provides performance marketing services for marketplaces and retailers (“Clients”) selling products online via digital channels.

The business model of the Group is to act as a publisher of adverts for consumer category (shopping) products via digital channels and to acquire customers on behalf of clients to deliver additional sales that would otherwise not have been achieved.

The Group contracts its services either directly with clients or via an affiliate network intermediary.

The Group primarily operates a Cost Per Acquisition (CPA) business model. This means that revenue is earned based on the value of sales delivered for a client, not on the costs incurred by the Group to acquire customers.

The Group believes this to be a strategic differentiator compared to competitors in the market and provides higher value and a trusted business partner to clients where the success of the Group is tied directly to the success of its clients.

Principal risks and uncertainties

Principal business risks associated with the Group are the level of client online marketing spend budgets and, indirectly, consumer spending on shopping category products. A significant fall in either of these would potentially have a negative effect on the Group’s revenue.

Development and performance

The position of the Group at the year-end is disclosed on the balance sheet.

The Group had net assets of £27,276,883 (2023 £25,992,742) an increase of 4.9% and cash at bank of £983,977 (2023 £2,901,370) a decrease of 66.1%.

Disciplined and focused actions to increase revenues through existing channels, alongside exploring new revenue streams puts the business in a good position to continue to grow.

Based on positive forecasts for the following 18 months, the Group expects to maintain a strong trading position.

The Group continues to focus on increasing its level of investment in Research & Development, Commercial, Innovation and Marketing functions to introduce new products, drive accelerated growth and win additional market share.

 

REDBRAIN HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 2 -
Key performance indicators

 

Financial Objectives

The principal financial objectives of the Company are to deliver growth in turnover, gross profit, EBITDA and operating profit with sustainable EBITDA and operating profit margins.

The Group's Key Performance Indicators during the year were as follows:
KPI
2024
2023
£000
£000
Turnover
56,391
42,346
Gross Profit
13,367
10,324
Gross Profit Margin
23.70%
24.38%
EBITDA
5,309
2,651
EBITDA Margin
9.41%
6.26%
Operating Profit (2023: Loss)
2,542
16
Operating Profit (2023: Loss) Margin
4.51%
0.04%
The performance was driven by continued investment in products, technology, people as well as improvements made during the year to optimise operational efficiency while continuing to maintain high levels of customer service.
In addition, the Company continues to invest in training and development to position the Company for future.
Other information and explanations

 

People

 

Growth

During the year, the Group continued to invest in people and skills to position the Group for future growth.

People
During the year, the Group has reduced staff headcount by 15 (20.8%).
End of year position
FY24
FY23
Directors/Management
9
5
Human resources
1
2
Finance
3
4
R&D (Innovation)
-
5
Marketing
3
3
Operations (Performance)
24
27
Technology
18
26
Total
58
72
REDBRAIN HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 3 -
Diversity
During the year, the Group continued to make good progress in hiring and retaining female members of staff and will continue to work improving the diversity of the workforce.
Gender
2024
2023
Male
55.00%
58.90%
Female
44.00%
41.10%
Society
The Company is committed to contributing its fair share to society by the amount of tax paid, charitable donations made and actions taken to address the impact on climate change of its operations.
Tax
The Company is tax-resident and domiciled in the UK. Total taxes paid by the Company in the year amounted to £5.112m (2023, £3.376m)
Tax
2024
£000s
2023
£000s
Corporation Tax
160
0
VAT
4,010
2,946
Employers NIC
404
455
Digital Services Tax
537
374
Insurance Premium Tax
1
1
Total Taxes paid
5,112
3,776
Charitable Donations
Charitable donations made by the Company during the year amounted to £87,528 (2023, £13,251).
Energy use and carbon emissions
Our employees remain key to the delivery of our strategy, with their personal and professional development is important for the continued success of Redbrain. We are aware of and monitor the impact on the environment and try to reduce our environmental footprint as we invest in new technology and facilities. Redbrain is not reporting on Energy use and carbon emissions because its 2023-2024 UK energy usage was below 40mWh.
Political Donations
The Company made no political donations during the year (2023 £nil).
Principal risks and uncertainties

Principal business risks associated with the Group are the level of client online marketing spend budgets and, indirectly, consumer spending on shopping category products. A significant fall in either of these would potentially have a negative effect on the Group’s revenue.

REDBRAIN HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 4 -
Credit Risk
Due to the nature of the business, the Company has two areas of credit exposure: from the “network” and from the “retailer”.

Credit exposure in relation to affiliate networks is managed by means of credit control procedures monitoring balance and days outstanding. Regular communication with the networks is maintained by the Company.
Credit exposure in relation to the retailer is largely managed by the networks who have their own credit limits and terms, but in addition, the Company also monitors the retailer payment performance. If there are any concerns, the Company can immediately stop campaigns to avoid further expenditure.

In both cases, the exposure is monitored regularly by management on a case-by-case basis.
Liquidity Risk
Exposure to liquidity risk is considered to be low. Although the nature of the Company's business model means that payment terms for suppliers are less than payment terms from its customers, the Company has built up and closely monitors its working capital to ensure sufficient funds are always available to meet its outflows.
Section 172 (1) Statement

The Board of Directors confirm that during the year covered by this report, they have discharged their duties under section 172 of the Companies Act 2006 in a way they consider, in good faith, is likely to best promote the longterm success of the Company for the benefit of its members as a whole, while having regard to other matters, including but not limited to:

 

(a) the likely consequences of any decision in the long term,

(b) the interests of the company's employees,

(c) continue to strengthen the relationship between our internal teams and our networks and merchants, scheduling regular communications to build trust, understanding, and transparency,

(d) select servers and services that are committed to ensuring sustainability,

(e) make regular charitable donations to selected charities each year,

(f) the impact of the company's operations on the community and the environment,

(g) the desirability of the company maintaining a reputation for high standards of business conduct, and

(h) the need to act fairly as between members of the company.

 

The Board of Directors continues its focus on a strong corporate governance strategy, applying the principles of the QCA corporate governance code. The Directors are actively committed to sustainable growth & development in order to promote the success of the Group, and for the benefit of all its stakeholders. Key strategic decisions are underpinned by the principle of S 172 factors, which help to maintain long term strategic decision making.

On behalf of the board

A J Stevens
Director
29 January 2025
REDBRAIN HOLDINGS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 JANUARY 2024
- 5 -

The directors present their annual report and financial statements for the year ended 31 January 2024.

Results and dividends

The results for the year are set out on page 11.

Ordinary dividends were paid amounting to £119,314 (0.067p per share). The directors do not recommend payment of a further dividend.

 

Post year end, Ordinary A dividends of £111,962 (11p per share), were declared in respect of the financial year ended 31 January 2024, of which Andrew Stevens waives his right to £11,196, payable before 5 April 2024. A second Ordinary A dividend of £332,482 (33p per share) was also declared payable before 5 April 2024.

 

In respect of the financial year ended 31 January 2025, an interim Ordinary A dividend of £4,444,444 (£4.44 per share) was declared payable after 6 April 2024 and before 30 April 2024.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

D S Scott
A J Stevens
Auditor

The auditor, Azets Audit Services, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

Going Concern

In assessing the appropriateness of the going concern assumption, the Directors have reviewed detailed profit and loss forecasts and cash flow forecasts, considering all reasonably foreseeable potential scenarios and uncertainties in relation to revenue and expenditure for a period of at least 12 months from the date these financial statements have been signed.

 

Based on these forecasts, the Directors have a reasonable expectation that the company can meet its liabilities as they fall due and the Directors have therefore concluded that it is appropriate to prepare the financial statements on the going concern basis.

Research and Development

The Group continues to focus on increasing its level of investment in Research & Development, Commercial, Innovation and Marketing functions to introduce new products, drive accelerated growth and win additional market share.

REDBRAIN HOLDINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 6 -
On behalf of the board
A J Stevens
Director
29 January 2025
REDBRAIN HOLDINGS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 JANUARY 2024
- 7 -

The directors are responsible for preparing the Annual 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

REDBRAIN HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF REDBRAIN HOLDINGS LIMITED
- 8 -
Opinion

We have audited the financial statements of RedBrain Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 January 2024 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and 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 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:

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 group and 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 group's and 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.

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 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.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

REDBRAIN HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF REDBRAIN HOLDINGS LIMITED
- 9 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and their 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:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, 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 parent 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 parent company or to cease operations, or have no realistic alternative but to do so.

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.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

REDBRAIN HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF REDBRAIN HOLDINGS LIMITED
- 10 -

Extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.

 

We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework.  Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.  This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.

 

In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:

 

 

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 of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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.

Tom Mullard ACA (Senior Statutory Auditor)
For and on behalf of Azets Audit Services
30 January 2025
Chartered Accountants
Statutory Auditor
6th Floor, Bank House
8 Cherry Streeyt
Birmingham
United Kingdom
B2 5AL
REDBRAIN HOLDINGS LIMITED
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 JANUARY 2024
- 11 -
2024
2023
Notes
£
£
Turnover
3
56,391,019
42,346,040
Cost of sales
(43,024,040)
(32,022,316)
Gross profit
13,366,979
10,323,724
Administrative expenses
(10,825,121)
(10,339,558)
Operating profit/(loss)
4
2,541,858
(15,834)
Interest receivable and similar income
6
151,496
24,740
Interest payable and similar expenses
8
(9,081)
(85,381)
Amounts written off investments
(406,088)
-
Profit/(loss) before taxation
2,278,185
(76,475)
Tax on profit/(loss)
9
(908,128)
64,451
Profit/(loss) for the financial year
1,370,057
(12,024)
Profit/(loss) for the financial year is attributable to:
- Owners of the parent company
1,386,744
(12,024)
- Non-controlling interests
(16,687)
-
1,370,057
(12,024)

The profit and loss account has been prepared on the basis that all operations are continuing operations.

 

The profit/(loss) for the year attributable to non-controlling interest relates to Buyers Form Limited, which is not a wholly owned subsidiary of Redbrain Holdings Limited.

REDBRAIN HOLDINGS LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JANUARY 2024
- 12 -
2024
2023
£
£
Profit/(loss) for the year
1,370,057
(12,024)
Other comprehensive income
-
-
Total comprehensive income for the year
1,370,057
(12,024)
Total comprehensive income for the year is attributable to:
- Owners of the parent company
1,386,744
(12,024)
- Non-controlling interests
(16,687)
-
1,370,057
(12,024)
REDBRAIN HOLDINGS LIMITED
GROUP BALANCE SHEET
AS AT
31 JANUARY 2024
31 January 2024
- 13 -
2024
2023
Notes
£
£
£
£
Fixed assets
Goodwill
13
13,899,906
15,748,163
Other intangible assets
13
887,886
1,280,508
Total intangible assets
14,787,792
17,028,671
Tangible assets
12
42,518
61,279
14,830,310
17,089,950
Current assets
Debtors
16
18,905,947
12,631,588
Cash at bank and in hand
983,977
2,901,370
19,889,924
15,532,958
Creditors: amounts falling due within one year
17
(7,443,351)
(6,630,166)
Net current assets
12,446,573
8,902,792
Net assets
27,276,883
25,992,742
Capital and reserves
Called up share capital
20
61,247
61,247
Share premium account
29,844,753
29,844,753
Profit and loss reserves
(2,645,828)
(3,913,258)
Equity attributable to owners of the parent company
27,260,172
25,992,742
Non-controlling interests
16,711
-
27,276,883
25,992,742
The financial statements were approved by the board of directors and authorised for issue on 29 January 2025 and are signed on its behalf by:
29 January 2025
A J Stevens
Director
Company registration number 13282279 (England and Wales)
REDBRAIN HOLDINGS LIMITED
COMPANY BALANCE SHEET
AS AT 31 JANUARY 2024
31 January 2024
- 14 -
2024
2023
Notes
£
£
£
£
Fixed assets
Investments
14
1,310,259
1,310,259
Current assets
Debtors
16
6,001
1,940,010
Cash at bank and in hand
50,587
6
56,588
1,940,016
Creditors: amounts falling due within one year
17
(450,034)
(1,934,023)
Net current (liabilities)/assets
(393,446)
5,993
Net assets
916,813
1,316,252
Capital and reserves
Called up share capital
20
61,247
61,247
Profit and loss reserves
855,566
1,255,005
Total equity
916,813
1,316,252

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £280,125 (2023 - £0 profit).

The financial statements were approved by the board of directors and authorised for issue on 29 January 2025 and are signed on its behalf by:
29 January 2025
A J Stevens
Director
Company registration number 13282279 (England and Wales)
REDBRAIN HOLDINGS LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JANUARY 2024
- 15 -
Share capital
Share premium account
Profit and loss reserves
Total controlling interest
Non-controlling interest
Total
Notes
£
£
£
£
£
£
Balance at 1 February 2022
61,247
29,844,753
(3,901,234)
26,004,766
-
26,004,766
Year ended 31 January 2023:
Loss and total comprehensive income
-
-
(12,024)
(12,024)
-
(12,024)
Balance at 31 January 2023
61,247
29,844,753
(3,913,258)
25,992,742
-
0
25,992,742
Year ended 31 January 2024:
Profit and total comprehensive income
-
-
1,386,744
1,386,744
(16,687)
1,370,057
Dividends
10
-
-
(119,314)
(119,314)
-
(119,314)
Purchase of shares in subsidiary from non-controlling interest
-
-
-
-
33,398
33,398
Balance at 31 January 2024
61,247
29,844,753
(2,645,828)
27,260,172
16,711
27,276,883
REDBRAIN HOLDINGS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JANUARY 2024
- 16 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 February 2022
61,247
1,255,005
1,316,252
Year ended 31 January 2023:
Profit and total comprehensive income for the year
-
-
-
0
Balance at 31 January 2023
61,247
1,255,005
1,316,252
Year ended 31 January 2024:
Profit and total comprehensive income
-
(280,125)
(280,125)
Dividends
10
-
(119,314)
(119,314)
Balance at 31 January 2024
61,247
855,566
916,813
REDBRAIN HOLDINGS LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JANUARY 2024
- 17 -
2024
2023
Notes
£
£
£
£
Cash flows from operating activities
Cash absorbed by operations
26
(2,235,737)
(72,109)
Interest paid
(9,081)
(85,381)
Income taxes refunded/(paid)
367,653
(55,252)
Net cash outflow from operating activities
(1,877,165)
(212,742)
Investing activities
Purchase of intangible assets
(491,164)
(412,913)
Purchase of tangible fixed assets
(16,358)
(38,257)
Proceeds from disposal of tangible fixed assets
1,503
-
Purchase of subsidiaries, net of cash acquired
(366,391)
-
Repayment of loans
800,000
-
Interest received
151,496
24,740
Net cash generated from/(used in) investing activities
79,086
(426,430)
Financing activities
Dividends paid to equity shareholders
(119,314)
-
0
Net cash used in financing activities
(119,314)
-
Net decrease in cash and cash equivalents
(1,917,393)
(639,172)
Cash and cash equivalents at beginning of year
2,901,370
3,540,542
Cash and cash equivalents at end of year
983,977
2,901,370
REDBRAIN HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
- 18 -
1
Accounting policies
Company information

RedBrain Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Azets, Ventura Park Road, Tamworth, Staffordshire, United Kingdom, B78 3HL.

 

The group consists of RedBrain Holdings Limited and all of its subsidiaries.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

1.2
Business combinations

In the parent company group financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date.

 

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

1.3
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company RedBrain Holdings Limited together with all entities controlled by the parent company (its subsidiaries).

 

All financial statements are made up to 31 January 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

 

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

Non-controlling interest in subsidiaries is presented within the equity section of the consolidated balance sheet to reflect the fact that there is a portion of the subsidiary's net assets that is not attributable to the parent.

REDBRAIN HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
1
Accounting policies
(Continued)
- 19 -
1.4
Going concern

In assessing the appropriateness of the going concern assumption, the Directors have reviewed detailed profit and loss forecasts and cash flow forecasts for the Group, considering all reasonably foreseeable potential scenarios and uncertainties in relation to revenue and expenditure for a period of at least 12 months from the date these financial statements have been signed.

 

Based on these forecasts, the Directors have a reasonable expectation that the Group can meet its liabilities as they fall due and the Directors have therefore concluded that it is appropriate to prepare the financial statements on the going concern basis.

1.5
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for services provided in the normal course of business, and is shown net of VAT.

 

Turnover is recognised on the date the original underlying transaction takes place ('transaction date').

 

Each transaction is either approved or declined by the merchant at a later date ('validation date'). Amounts at the period end that have yet to be validated are referred to as 'pending transactions'.

 

At year end, revenue is adjusted to take account of those pending transactions which are estimated to be declined by the merchant. Pending transactions are reviewed for each merchant and an assumed approval rate is applied based on historical approval rates. Approval rates are updated on a quarterly basis.

1.6
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.

 

Goodwill is tested for impairment at least annually, or more frequently when there is an indication that the goodwill may be impaired. If the recoverable amount of goodwill is less than the carrying amount, the impairment loss is recognised in the profit and loss account.

1.7
Intangible fixed assets

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

 

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Software development
5 years straight line
Intellectual property
5 years straight line
Domain
3 years straight line
REDBRAIN HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
1
Accounting policies
(Continued)
- 20 -

Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the company are recognised as intangible assets when the following criteria are met:

 

 

Other development expenditures that do not meet these criteria are recognised as an expense as incurred.

1.8
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Fixtures and fittings
25% reducing balance
Computers
33% straight line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.

1.9
Fixed asset investments

In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The cost of the investment in the parent company includes the nominal value of shares issued in the parent company in exchange for shares acquired in RedBrain Limited. Consequently the company has taken advantage of the merger relief provisions in accounting for this investment rather than accounting for the investment at fair value.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

1.10
Impairment of fixed assets

At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

1.11
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

REDBRAIN HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
1
Accounting policies
(Continued)
- 21 -
1.12
Financial instruments

The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

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 and 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 debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method 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. Financial assets classified as receivable within one year are not amortised.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans and loans from related companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

Derecognition of financial liabilities

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

1.13
Equity instruments

Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.

1.14
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

REDBRAIN HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
1
Accounting policies
(Continued)
- 22 -
Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.15
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.16
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.17
Leases

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

1.18
Foreign exchange

Transactions in currencies other than sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

REDBRAIN HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 23 -
2
Judgements and key sources of estimation uncertainty

In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Revenue recognition policy

Revenue has two critical dates:

Amounts at the fiscal monthly period end that have yet to be validated are referred to as ‘pending transactions’.

Revenue is recognised based on the transaction date, with an adjustment at the end of each period for the amount of revenue that is estimated to declined within the pending transactions.

Pending transactions are reviewed for each merchant and an assumed approval rate is applied based on historical approval rates. Approval rates are reviewed and updated on a quarterly basis.

Transactions still pending after 180 days are deducted from the revenue for the period under review.

Should the outcome materially differ from the assumptions above, revisions to the estimated revenue are made.

Impairment of accrued income

In line with the above revenue recognition policy, transactions which have been approved but are not paid to the company 180 days after the validation date are written off as doubtful debts in the period in which they become aged 180 days.

REDBRAIN HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
2
Judgements and key sources of estimation uncertainty
(Continued)
- 24 -
Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Useful Economic Life of Goodwill

The Directors must assess the appropriate useful economic life of Goodwill, taking into consideration longevity of the business and associated intellectual property. Goodwill is amortised over 10 years. The Directors must also consider whether Goodwill requires impairment, taking into consideration the future expected performance and profitability of its trading subsidiary. No impairment has been recognised within these financial statements.

Valuation of Intangible Fixed Assets

The Directors make an assessment as to the capitalisation of development costs based on the contribution of employed staff to the development of internally generated software. The also assess the useful economic lives of intangible fixed assets which are based on the period over which the Company is expected to generate economic benefit from such assets. The directors have assessed the useful economic life to be 3-5 years.

 

Further information is provided within note 1.7 and note 14.

3
Turnover
2024
2023
£
£
Turnover analysed by class of business
Commissions
56,391,019
42,346,040
2024
2023
£
£
Turnover analysed by geographical market
UK
24,829,169
20,405,673
Europe
27,775,801
19,027,479
Rest of the World
3,786,049
2,912,888
56,391,019
42,346,040
REDBRAIN HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 25 -
4
Operating profit/(loss)
2024
2023
£
£
Operating profit/(loss) for the year is stated after charging/(crediting):
Exchange (gains)/losses
(8,031)
48,469
Fees payable to the company's auditor for the audit of the company's financial statements
37,000
25,000
Fees payable to the company's auditor for non-audit services
17,500
11,150
Depreciation of owned tangible fixed assets
35,119
38,866
Profit on disposal of tangible fixed assets
(1,503)
-
Amortisation of intangible assets
2,732,043
2,628,579
Impairment of intangible assets
406,088
-
0
Operating lease charges
213,110
131,140
5
Employees

The average monthly number of persons (including directors) employed by the group and company during the year was:

Group
Company
2024
2023
2024
2023
Number
Number
Number
Number
Directors
4
2
2
2
Board
1
1
-
-
Management
4
2
-
-
Finance
3
4
-
-
Innovation
-
5
-
-
Marketing
3
3
-
-
Performance
1
-
-
-
Technology
18
26
-
-
Traffic
14
19
-
-
HR & Ops
1
2
-
-
Customer Success
7
8
-
-
Lichfield
2
-
-
-
Total
58
72
2
2

Their aggregate remuneration comprised:

Group
Company
2024
2023
2024
2023
£
£
£
£
Wages and salaries
4,154,727
4,029,224
-
0
-
0
Social security costs
359,211
454,909
-
-
Pension costs
173,978
166,865
-
0
-
0
4,687,916
4,650,998
-
0
-
0
REDBRAIN HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 26 -
6
Interest receivable and similar income
2024
2023
£
£
Interest income
Interest on bank deposits
151,099
19,489
Other interest income
397
5,251
Total income
151,496
24,740
7
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
159,194
159,194
Company pension contributions to defined contribution schemes
97,300
75,110
256,494
234,304
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2024
2023
£
£
Remuneration for qualifying services
106,694
103,530
Company pension contributions to defined contribution schemes
40,000
40,000
8
Interest payable and similar expenses
2024
2023
£
£
Interest payable to group undertakings
9,081
79,381
Other interest
-
6,000
Total finance costs
9,081
85,381
9
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
982,088
22,216
Deferred tax
Origination and reversal of timing differences
(73,960)
(86,667)
Total tax charge/(credit)
908,128
(64,451)
REDBRAIN HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
9
Taxation
(Continued)
- 27 -

The actual charge/(credit) for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:

2024
2023
£
£
Profit/(loss) before taxation
2,278,185
(76,475)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 24.03% (2023: 19.00%)
547,448
(14,530)
Tax effect of expenses that are not deductible in determining taxable profit
30,600
368
Adjustments in respect of prior years
-
0
(14,250)
Effect of change in corporation tax rate
(2,869)
(26,092)
Group relief
(30)
-
0
Permanent capital allowances in excess of depreciation
(18)
(2,183)
Amortisation on assets not qualifying for tax allowances
444,136
351,169
Research and development tax credit
(209,036)
(356,270)
Other permanent differences
106,921
-
0
Effect of overseas tax rates
(9,024)
(2,663)
Taxation charge/(credit)
908,128
(64,451)
10
Dividends
2024
2023
Recognised as distributions to equity holders:
£
£
Final paid
119,314
-
Ordinary dividends were paid at 0.067p per share.
11
Impairments

Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:

2024
2023
Notes
£
£
In respect of:
Goodwill
13
406,088
-
Recognised in:
Amounts written off investments
406,088
-
Post year end, management have taken the decision to strike off Buyers Form Limited.  Hence the goodwill related to this acquisition has been fully impaired.
REDBRAIN HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 28 -
12
Tangible fixed assets
Group
Fixtures and fittings
Computers
Total
£
£
£
Cost
At 1 February 2023
7,630
107,973
115,603
Additions
-
0
16,358
16,358
Disposals
-
0
(1,448)
(1,448)
At 31 January 2024
7,630
122,883
130,513
Depreciation and impairment
At 1 February 2023
1,272
53,052
54,324
Depreciation charged in the year
2,544
32,575
35,119
Eliminated in respect of disposals
-
0
(1,448)
(1,448)
At 31 January 2024
3,816
84,179
87,995
Carrying amount
At 31 January 2024
3,814
38,704
42,518
At 31 January 2023
6,358
54,921
61,279
The company had no tangible fixed assets at 31 January 2024 or 31 January 2023.
13
Intangible fixed assets
Group
Goodwill
Software development
Intellectual property
Domain
Total
£
£
£
£
£
Cost
At 1 February 2023
18,482,571
1,420,921
989,247
-
0
20,892,739
Additions - internally developed
-
0
311,164
-
0
-
0
311,164
Additions - separately acquired
-
0
-
0
-
0
180,000
180,000
Additions - business combinations
406,088
-
0
-
0
-
0
406,088
At 31 January 2024
18,888,659
1,732,085
989,247
180,000
21,789,991
Amortisation and impairment
At 1 February 2023
2,734,408
540,413
589,247
-
0
3,864,068
Amortisation charged for the year
1,848,257
433,786
400,000
50,000
2,732,043
Impairment losses
406,088
-
0
-
0
-
0
406,088
At 31 January 2024
4,988,753
974,199
989,247
50,000
7,002,199
Carrying amount
At 31 January 2024
13,899,906
757,886
-
0
130,000
14,787,792
At 31 January 2023
15,748,163
880,508
400,000
-
0
17,028,671
REDBRAIN HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
13
Intangible fixed assets
(Continued)
- 29 -
The company had no intangible fixed assets at 31 January 2024 or 31 January 2023.

More information on impairment movements in the year is given in note 11.

Post year end, the decision was made to strike off Buyers Form Limited. As a result the goodwill balance recognised in relation to this subsidiary has been impaired.

14
Fixed asset investments
Group
Company
2024
2023
2024
2023
Notes
£
£
£
£
Investments in subsidiaries
15
-
0
-
0
1,310,259
1,310,259
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 February 2023
1,310,259
Additions
450,000
At 31 January 2024
1,760,259
Impairment
At 1 February 2023
-
Impairment losses
450,000
At 31 January 2024
450,000
Carrying amount
At 31 January 2024
1,310,259
At 31 January 2023
1,310,259
Post year end, Management have taken the decision to strike off subsidiary entity Buyers Form Limited.  Hence the investment in that subsidiary has been fully impaired.
15
Subsidiaries

Details of the company's subsidiaries at 31 January 2024 are as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
RedBrain Limited
United Kingdom
Ordinary shares
100.00
RedBrain Corporation
USA
Shares
100.00
Buyers Form Limited
United Kingdom
Ordinary shares
56.80
Order Legend Limited
United Kingdom
Ordinary shares
100.00

The investment in subsidiaries are all stated at cost.

REDBRAIN HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 30 -
16
Debtors
Group
Company
2024
2023
2024
2023
Amounts falling due within one year:
£
£
£
£
Trade debtors
240,892
218,881
-
0
-
0
Unpaid share capital
6,000
6,000
6,000
6,000
Corporation tax recoverable
-
0
342,430
-
0
-
0
Amounts owed by group undertakings
-
-
-
1,854,628
Other debtors
18,160
817,880
1
79,382
Prepayments and accrued income
18,458,215
11,137,677
-
0
-
0
18,723,267
12,522,868
6,001
1,940,010
Deferred tax asset (note 18)
182,680
108,720
-
0
-
0
18,905,947
12,631,588
6,001
1,940,010

Amounts owed by group undertakings are unsecured, bear no interest and are repayable on demand.

17
Creditors: amounts falling due within one year
Group
Company
2024
2023
2024
2023
£
£
£
£
Trade creditors
3,184,905
2,245,523
-
0
-
0
Amounts owed to group undertakings
-
0
1,654,628
450,008
1,654,636
Corporation tax payable
1,007,311
-
0
-
0
-
0
Other taxation and social security
1,024,828
944,198
-
-
Other creditors
114,218
596,106
26
279,387
Accruals and deferred income
2,112,089
1,189,711
-
0
-
0
7,443,351
6,630,166
450,034
1,934,023

Amounts owed to group undertakings are unsecured, bear no interest and are repayable on demand.

18
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:

Assets
Assets
2024
2023
Group
£
£
Accelerated capital allowances
(7,062)
(10,594)
Retirement benefit obligations
4,742
1,814
Provisions
185,000
117,500
182,680
108,720
REDBRAIN HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
18
Deferred taxation
(Continued)
- 31 -
The company has no deferred tax assets or liabilities.
Group
Company
2024
2024
Movements in the year:
£
£
Asset at 1 February 2023
(108,720)
-
Credit to profit or loss
(73,960)
-
Asset at 31 January 2024
(182,680)
-

The deferred tax asset set out above is expected to reverse within the next accounting period.

19
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
174,622
279,865

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

20
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and not fully paid
A Ordinary shares of £0.01 each
1,000,000
1,000,000
10,000
10,000
B1 Ordinary shares of £0.001 each
31,385,041
31,385,041
31,385
31,385
B2 Ordinary shares of £0.0001 each
138,614,959
138,614,959
13,862
13,862
B1a Ordinary shares of £0.001 each
6,000,000
6,000,000
6,000
6,000
177,000,000
177,000,000
61,247
61,247

The A Ordinary shares and B2 Ordinary shares do not have any voting rights. They have attached to them dividend and capital distribution (including on winding up) rights in accordance with the Articles of Association; they do not confer any rights of redemption.

 

The B1 Ordinary shares have one vote per share. They have attached to them dividend and capital distribution (including on winding up) rights in accordance with the Articles of Association; they do not confer any rights of redemption.

 

The B1a Ordinary shares do not have any voting rights.

All classes of share capital are paid except for the 6,000,000 B1a Ordinary shares which are issued and unpaid.

REDBRAIN HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
20
Share capital
(Continued)
- 32 -
At the year end there is a contingent right to the allotment of shares under the terms of the company CSOP scheme.  The rights are exercisable over 11,600,000 of B1 ordinary shares conditional on the peformance conditions being met which will be assessed on the occurrence of a change in control of the company, a listing of the shares on the stock exchange or a sale of substantially the whole business and assets of the company. The exercise price will be £0.01 per share.
21
Acquisition of a business

On 18 May 2023 the group acquired 100 percent of the issued capital of Order Legend Limited.

Book Value
Adjustments
Fair Value
Net assets acquired
£
£
£
Cash and cash equivalents
100
-
100
Goodwill
(100)
Total consideration
-
Contribution by the acquired business for the reporting period included in the group statement of comprehensive income since acquisition:
£
Turnover
-
Loss after tax
(204)

On 17 August 2023 the group acquired 56.8 percent of the issued capital of Buyers Form Limited.

Book Value
Adjustments
Fair Value
Net assets acquired
£
£
£
Trade and other receivables
100
(43)
57
Cash and cash equivalents
83,509
(36,076)
47,433
Trade and other payables
(4,834)
2,088
(2,746)
Tax liabilities
(1,028)
444
(584)
Retirement benefit pension scheme
(438)
189
(249)
Total identifiable net assets
77,309
(33,398)
43,911
Goodwill
406,089
Total consideration
450,000
The consideration was satisfied by:
£
Cash
450,000
REDBRAIN HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
21
Acquisition of a business
(Continued)
- 33 -
Contribution by the acquired business for the reporting period included in the group statement of comprehensive income since acquisition:
£
Turnover
-
Loss after tax
(38,628)
22
Operating lease commitments
Lessee

At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

Group
Company
2024
2023
2024
2023
£
£
£
£
Within one year
231,939
178,000
-
-
Between two and five years
150,555
252,167
-
-
382,494
430,167
-
-
23
Related party transactions
Transactions with related parties

During the year the group entered into the following transactions with related parties:

Purchases
Purchases
2024
2023
£
£
Group
Other related parties
114,545
90,192
Dividends paid
Interest payable
2024
2023
2024
2023
£
£
£
£
Group
Entities with control, joint control or significant influence over the company
119,314
-
9,081
79,381
Company
Entities with control, joint control or significant influence over the company
119,314
-
9,081
79,381
REDBRAIN HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
23
Related party transactions
(Continued)
- 34 -

The following amounts were outstanding at the reporting end date:

Amounts due to related parties
2024
2023
£
£
Group
Entities with control, joint control or significant influence over the group
-
1,654,628
Company
Entities with control, joint control or significant influence over the company
-
1,654,628
Entities over which the company has control, joint control or significant influence
450,008
8

The following amounts were outstanding at the reporting end date:

Amounts due from related parties
2024
2023
Balance
Balance
£
£
Group
Other related parties
-
800,000
Company
Entities over which the company has control, joint control or significant influence
-
1,854,628
24
Controlling party

The ultimate controlling party of the group is Mr D. Scott by virtue of his majority shareholding.

25
Contingent Liabiliites

As at the year end date, the Company was involved in legal action where claims had been bought against the Company. The Directors estimate that there are a range of potential outcomes which could result in an economic outflow in the range of £0 - £2,000,000. The Directors believe they have a defensible position and that it is more likely than not that the Company will be successful in its defence. The ongoing action is expected to be resolved within 24 months from the year end date. Until the point of resolution, it is unclear whether there will be an actual liability and what such liability may be. The Directors also believe the possibility of reimbursement cannot be estimated at this stage.

REDBRAIN HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 35 -
26
Cash absorbed by group operations
2024
2023
£
£
Profit/(loss) for the year after tax
1,370,057
(12,024)
Adjustments for:
Taxation charged/(credited)
908,128
(64,451)
Finance costs
9,081
85,381
Investment income
(151,496)
(24,740)
Gain on disposal of tangible fixed assets
(1,503)
-
Amortisation and impairment of intangible assets
3,138,131
2,628,579
Depreciation and impairment of tangible fixed assets
35,119
38,866
Other gains and losses
(100)
-
Movements in working capital:
Increase in debtors
(7,342,728)
(2,717,560)
Decrease in creditors
(200,426)
(6,160)
Cash absorbed by operations
(2,235,737)
(72,109)
27
Analysis of changes in net funds - group
1 February 2023
Cash flows
31 January 2024
£
£
£
Cash at bank and in hand
2,901,370
(1,917,393)
983,977
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