Company registration number 10434678 (England and Wales)
REDBRAIN LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
REDBRAIN LIMITED
COMPANY INFORMATION
Directors
D S Scott
A J Stevens
Company number
10434678
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 LIMITED
CONTENTS
Page
Strategic report
1 - 4
Directors' report
5
Directors' responsibilities statement
6
Independent auditor's report
7 - 9
Profit and loss account
10
Statement of comprehensive income
11
Balance sheet
12
Statement of changes in equity
13
Notes to the financial statements
14 - 27
REDBRAIN 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 Limited ("the Company”) is the provision of online performance marketing services.
Fair review of the business
The Company provides performance marketing services for marketplaces and retailers (“Clients”) selling products online via digital channels.
The business model of the Company 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 Company contracts its services either directly with clients or via an affiliate network intermediary.
The Company 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 Company to acquire customers.
The Company 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 Company is tied directly to the success of its clients.
Development and performance
The position of the Company at the year-end is disclosed on the balance sheet.
The Company had net assets of £13,680,273 (2023 £10,224,566) an increase of 34% throughout and cash at bank of £783,728 (2022 £2,894,490) a decrease of 73% throughout.
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 Company expects to maintain a strong trading position.
The Company 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 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 Company's Key Performance Indicators during the year were as follows:
KPI
2024
2023
£000
£000
Turnover
56,271
42,303
Gross Profit
13,325
10,306
Gross Profit Margin
23.68%
24.36%
EBITDA
5,310
2,637
EBITDA Margin
9.44%
6.24%
Operating Profit
4,391
1,758
Operating Profit Margin
7.80%
4.16%
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
During the year, the Company has reduced staff headcount by 15 (20.8%).
End of year position
2024
2023
Directors/Management
7
5
Human resources
1
2
Finance
3
4
R&D (Innovation)
-
5
Marketing
3
3
Operations (Performance)
24
27
Technology
18
26
Total
56
72
REDBRAIN LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 3 -
Diversity
During the year, the Company 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
-
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 Company 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 Company’s revenue as would a new CSS competitor. We continue to invest in Innovation to mitigate these risks.
REDBRAIN 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.
A J Stevens
Director
29 January 2025
REDBRAIN 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 10.
Ordinary dividends were paid amounting to £170,000 (17p per share).
Post year end, dividends of £383,248 (38p per share) were declared in respect of the financial year ended 31 January 2024. In respect of the financial year ended 31 January 2025, an interim dividend of £4,444,444 (£4.44 per share) was declared payable after 6 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 company’s auditor 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 company’s auditor 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 Company 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.
On behalf of the board
A J Stevens
Director
29 January 2025
REDBRAIN LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 JANUARY 2024
- 6 -
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 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 and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements.
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 enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
REDBRAIN LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF REDBRAIN LIMITED
- 7 -
Opinion
We have audited the financial statements of RedBrain Limited (the 'company') for the year ended 31 January 2024 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity 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:
give a true and fair view of the state of the company's affairs as at 31 January 2024 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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:
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.
REDBRAIN LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF REDBRAIN LIMITED
- 8 -
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 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, 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.
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 LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF REDBRAIN LIMITED
- 9 -
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:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and 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 indicators of potential bias.
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.
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 Street
Birmingham
United Kingdom
B2 5AL
REDBRAIN LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 JANUARY 2024
- 10 -
2024
2023
Notes
£
£
Turnover
3
56,271,008
42,302,588
Cost of sales
(42,946,329)
(31,996,186)
Gross profit
13,324,679
10,306,402
Administrative expenses
(8,933,259)
(8,487,991)
Operating profit
4
4,391,420
1,818,411
Interest receivable and similar income
6
151,496
24,740
Interest payable and similar expenses
8
(9,081)
(85,381)
Profit before taxation
4,533,835
1,757,770
Tax on profit
9
(908,128)
64,451
Profit for the financial year
3,625,707
1,822,221
The profit and loss account has been prepared on the basis that all operations are continuing operations.
REDBRAIN LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JANUARY 2024
- 11 -
2024
2023
£
£
Profit for the year
3,625,707
1,822,221
Other comprehensive income
-
-
Total comprehensive income for the year
3,625,707
1,822,221
REDBRAIN LIMITED
BALANCE SHEET
AS AT
31 JANUARY 2024
31 January 2024
- 12 -
2024
2023
Notes
£
£
£
£
Fixed assets
Intangible assets
11
887,886
1,280,508
Tangible assets
12
42,518
61,279
930,404
1,341,787
Current assets
Debtors
13
19,407,585
12,618,450
Cash at bank and in hand
783,728
2,894,490
20,191,313
15,512,940
Creditors: amounts falling due within one year
14
(7,441,444)
(6,630,161)
Net current assets
12,749,869
8,882,779
Net assets
13,680,273
10,224,566
Capital and reserves
Called up share capital
17
114
114
Share premium account
1,099,986
1,099,986
Profit and loss reserves
12,580,173
9,124,466
Total equity
13,680,273
10,224,566
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:
A J Stevens
Director
Company Registration No. 10434678
REDBRAIN LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JANUARY 2024
- 13 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 February 2022
114
1,099,986
7,302,245
8,402,345
Year ended 31 January 2023:
Profit and total comprehensive income for the year
-
-
1,822,221
1,822,221
Balance at 31 January 2023
114
1,099,986
9,124,466
10,224,566
Year ended 31 January 2024:
Profit and total comprehensive income for the year
-
-
3,625,707
3,625,707
Dividends
10
-
-
(170,000)
(170,000)
Balance at 31 January 2024
114
1,099,986
12,580,173
13,680,273
REDBRAIN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
- 14 -
1
Accounting policies
Company information
RedBrain Limited is a private company limited by shares incorporated in England and Wales. The registered office is Azets, Ventura Park Road, Tamworth, Staffordshire, United Kingdom, B78 3HL.
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.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ' Statement of Cash Flows': The disclosure requirements of paragraph 3.17(d);
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: The disclosure requirements of paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b), 11.48(c), 12.26, 12.27, 12.29(a), 12.29(b), and 12.29A;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of RedBrain Holdings Limited. These consolidated financial statements are available from its registered office, Azets, Ventura Park Road, Tamworth, Staffordshire, United Kingdom, B78 3HL.
1.2
Going concern
In assessing the appropriateness of the going concern assumption, the Directors have reviewed detailed profit and losstrue 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.
1.3
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.
REDBRAIN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
1
Accounting policies
(Continued)
- 15 -
1.4
Intangible fixed assets
Intangible assets are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
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
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:
It is technically feasible to complete the software so that it will be available for use.
Management intends to complete the software and use or sell it.
There is an ability to use or sell the software.
It can be demonstrated how the software will generate probable future economic benefits.
Adequate technical, financial and other resources to complete the development and to use or sell the software are available.
The expenditure attributable to the software during its development can be reliably measured.
Other development expenditures that do not meet these criteria are recognised as an expense as incurred.
1.5
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 credited or charged to profit or loss.
1.6
Impairment of fixed assets
At each reporting period end date, the company 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 is less than the carrying amount, the carrying amount is reduced to the recoverable amount.
1.7
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks and other short-term liquid investments with original maturities of three months or less.
REDBRAIN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
1
Accounting policies
(Continued)
- 16 -
1.8
Financial instruments
The company 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 company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include 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. Financial assets classified as receivable within one year are not amortised.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
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 company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities are initially recognised at transaction price. Financial liabilities classified as payable within one year are not amortised.
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 company’s contractual obligations expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company 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 company.
1.10
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 company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
REDBRAIN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
1
Accounting policies
(Continued)
- 17 -
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.
1.11
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.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
Rentals payable under operating leases are charged to profit or loss on a straight line basis over the term of the relevant lease.
1.14
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 LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 18 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’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:
The date the original transactions took place (‘transaction date’), and
The date the transaction is either approved or declined by the merchant (‘validation date’).
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 LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
2
Judgements and key sources of estimation uncertainty
(Continued)
- 19 -
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 1.4 and note 12.
3
Turnover
2024
2023
£
£
Turnover analysed by class of business
Commissions
56,271,008
42,302,588
2024
2023
£
£
Turnover analysed by geographical market
UK
24,829,169
20,405,674
Europe
27,775,801
19,027,479
Rest of the World
3,666,038
2,869,435
56,271,008
42,302,588
4
Operating profit
2024
2023
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange differences apart from those arising on financial instruments measured at fair value through profit or loss
(10,916)
48,546
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
14,300
6,750
Depreciation of owned tangible fixed assets
35,119
38,866
Profit on disposal of tangible fixed assets
(1,503)
-
Amortisation of intangible assets
883,786
780,322
Operating lease charges
213,110
131,140
REDBRAIN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 20 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2024
2023
Number
Number
Directors
2
2
Board
1
1
Management
4
2
Finance
3
4
Innovation
-
5
Marketing
3
3
New Business
1
-
Technology
18
26
Traffic
14
19
HR & Ops
1
2
Customer Success
7
8
Lichfield
2
-
Total
56
72
Their aggregate remuneration comprised:
2024
2023
£
£
Wages and salaries
4,154,727
4,029,224
Social security costs
359,211
454,909
Pension costs
173,978
166,865
4,687,916
4,650,998
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
REDBRAIN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 21 -
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
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2023 - 2).
Remuneration disclosed above include 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
146,694
143,530
8
Interest payable and similar expenses
2024
2023
£
£
Interest payable to group undertakings
9,081
79,381
Other interest
6,000
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 LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
9
Taxation
(Continued)
- 22 -
The actual charge/(credit) for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2024
2023
£
£
Profit before taxation
4,533,835
1,757,770
Expected tax charge based on the standard rate of corporation tax in the UK of 24.03% (2023: 19.00%)
1,089,481
333,976
Tax effect of expenses that are not deductible in determining taxable profit
30,600
368
Adjustments in respect of prior years
(14,250)
Effect of change in corporation tax rate
(2,869)
(26,092)
Group relief
(30)
Permanent capital allowances in excess of depreciation
(18)
(2,183)
Research and development tax credit
(209,036)
(356,270)
Taxation charge/(credit) for the year
908,128
(64,451)
10
Dividends
2024
2023
2024
2023
Per share
Per share
Total
Total
£
£
£
£
Ordinary shares
Final paid
0.17
170,000
REDBRAIN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 23 -
11
Intangible fixed assets
Software development
Intellectual property
Domain
Total
£
£
£
£
Cost
At 1 February 2023
1,901,605
2,000,000
3,901,605
Additions - internally developed
311,164
311,164
Additions - separately acquired
180,000
180,000
At 31 January 2024
2,212,769
2,000,000
180,000
4,392,769
Amortisation and impairment
At 1 February 2023
1,021,097
1,600,000
2,621,097
Amortisation charged for the year
433,786
400,000
50,000
883,786
At 31 January 2024
1,454,883
2,000,000
50,000
3,504,883
Carrying amount
At 31 January 2024
757,886
130,000
887,886
At 31 January 2023
880,508
400,000
1,280,508
12
Tangible fixed assets
Fixtures and fittings
Computers
Total
£
£
£
Cost
At 1 February 2023
7,630
154,870
162,500
Additions
16,358
16,358
Disposals
(1,448)
(1,448)
At 31 January 2024
7,630
169,780
177,410
Depreciation and impairment
At 1 February 2023
1,272
99,949
101,221
Depreciation charged in the year
2,544
32,575
35,119
Eliminated in respect of disposals
(1,448)
(1,448)
At 31 January 2024
3,816
131,076
134,892
Carrying amount
At 31 January 2024
3,814
38,704
42,518
At 31 January 2023
6,358
54,921
61,279
REDBRAIN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 24 -
13
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
188,386
182,379
Corporation tax recoverable
342,430
Amounts owed by group undertakings
560,245
29,364
Other debtors
18,059
817,880
Prepayments and accrued income
18,458,215
11,137,677
19,224,905
12,509,730
Deferred tax asset (note 15)
182,680
108,720
19,407,585
12,618,450
Amounts owed by group undertakings are unsecured, bear no interest and are repayable on demand.
14
Creditors: amounts falling due within one year
2024
2023
£
£
Trade creditors
3,184,905
2,245,523
Amounts owed to group undertakings
1,854,628
Corporation tax
1,007,311
Other taxation and social security
1,023,260
944,198
Other creditors
114,192
396,101
Accruals
2,111,776
1,189,711
7,441,444
6,630,161
Amounts owed to group undertakings are unsecured, bear no interest and are repayable on demand.
15
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2024
2023
Balances:
£
£
Accelerated capital allowances
(7,062)
(10,594)
Retirement benefit obligations
4,742
1,814
Provisions
185,000
117,500
182,680
108,720
REDBRAIN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
15
Deferred taxation
(Continued)
- 25 -
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.
16
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
173,978
279,865
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
17
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of 0.0001p each
1,000,000
1,000,000
100
100
B Ordinary shares of 0.0001p each
62,500
62,500
7
7
C Ordinary shares of 0.0001p each
71,429
71,429
7
7
1,133,929
1,133,929
114
114
The ordinary shares have full voting rights, full rights to dividends and are non-redeemable.
The B ordinary shares and C ordinary shares have no entitlement to receive notice of shareholder meetings, no voting rights, no dividend rights and are non-redeemable.
On a distribution of capital the surplus assets shall be distributed firstly to the holders of ordinary shares, the issue price thereof, secondly to the holders of B shares, the issue price thereof, thirdly to the holders of C shares, the issue price thereof and finally the balance shall be distributed with the part of the exit proceeds balance which comprises an amount below the B share hurdle amount shall be allocated and paid to the holders of the ordinary shares in proportion to the number of ordinary shares respectively held by them. The amount above the B share hurdle amount up to the C share hurdle amount of the exit proceeds balance shall be allocated and paid to the holders of the ordinary shares and the B shares in proportion to the number of such shares respectively held by them. Any remaining exit proceeds above the C share hurdle amount shall be allocated and paid to the holders of the ordinary shares and C shares in proportion to the number of such shares respectively held by them.
On 11 August 2021 share options were exercised allotting 62,500 Ordinary B shares with a nominal value of £6.25 and 71,429 Ordinary C shares with a nominal value of £7.14. The market value of these shares at the exercise date was £1,100,000.
REDBRAIN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 26 -
18
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2024
2023
£
£
Within one year
231,939
178,000
Between two and five years
150,555
252,167
382,494
430,167
19
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Purchases
2024
2023
£
£
Other related parties
114,545
90,192
2024
2023
Amounts due to related parties
£
£
Entities with control, joint control or significant influence over the company
1,854,628
2024
2023
Amounts due from related parties
£
£
Entities with control, joint control or significant influence over the company
450,000
-
Entities over which the entity has control, joint control or significant influence
110,120
29,364
Other related parties
-
800,000
20
Ultimate controlling party
The parent company of Redbrain Limited is Redbrain Holdings Limited a company registered in the UK. The ultimate controlling party is Mr D Scott.
Longsands Gaia Limited is the largest group which draws up consolidated accounts, its registered office is 1st Floor 5 Century Court, Tolpits Lane, Watford, Hertfordshire, England, WD18 9PX and the consolidated accounts can be obtained from the Registrar of Companies.
REDBRAIN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 27 -
21
Contingent liabilities
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.
2024-01-312023-02-01falseCCH SoftwareCCH Accounts Production 2024.210No description of principal activityD S ScottA J Stevensfalsefalse104346782023-02-012024-01-3110434678bus:Director12023-02-012024-01-3110434678bus:Director22023-02-012024-01-3110434678bus:RegisteredOffice2023-02-012024-01-3110434678bus:Agent12023-02-012024-01-31104346782024-01-31104346782022-02-012023-01-3110434678core:RetainedEarningsAccumulatedLosses2022-02-012023-01-3110434678core:RetainedEarningsAccumulatedLosses2023-02-012024-01-3110434678core:OtherResidualIntangibleAssets2024-01-3110434678core:OtherResidualIntangibleAssets2023-01-3110434678core:ComputerSoftware2024-01-3110434678core:Non-standardIntangibleAssetClass1ComponentIntangibleAssetsOtherThanGoodwill2024-01-3110434678core:Non-standardIntangibleAssetClass2ComponentIntangibleAssetsOtherThanGoodwill2024-01-3110434678core:ComputerSoftware2023-01-3110434678core:Non-standardIntangibleAssetClass1ComponentIntangibleAssetsOtherThanGoodwill2023-01-3110434678core:Non-standardIntangibleAssetClass2ComponentIntangibleAssetsOtherThanGoodwill2023-01-31104346782023-01-3110434678core:FurnitureFittings2024-01-3110434678core:ComputerEquipment2024-01-3110434678core:FurnitureFittings2023-01-3110434678core:ComputerEquipment2023-01-3110434678core:CurrentFinancialInstrumentscore:WithinOneYear2024-01-3110434678core:CurrentFinancialInstrumentscore:WithinOneYear2023-01-3110434678core:CurrentFinancialInstruments2024-01-3110434678core:CurrentFinancialInstruments2023-01-3110434678core:ShareCapital2024-01-3110434678core:ShareCapital2023-01-3110434678core:SharePremium2024-01-3110434678core:SharePremium2023-01-3110434678core:RetainedEarningsAccumulatedLosses2024-01-3110434678core:RetainedEarningsAccumulatedLosses2023-01-3110434678core:ShareCapital2022-01-3110434678core:SharePremium2022-01-3110434678core:RetainedEarningsAccumulatedLosses2022-01-31104346782022-01-3110434678core:ShareCapitalOrdinaryShares2024-01-3110434678core:ShareCapitalOrdinaryShares2023-01-3110434678core:IntangibleAssetsOtherThanGoodwill2023-02-012024-01-3110434678core:ComputerSoftware2023-02-012024-01-3110434678core:Non-standardIntangibleAssetClass1ComponentIntangibleAssetsOtherThanGoodwill2023-02-012024-01-3110434678core:Non-standardIntangibleAssetClass2ComponentIntangibleAssetsOtherThanGoodwill2023-02-012024-01-3110434678core:FurnitureFittings2023-02-012024-01-3110434678core:ComputerEquipment2023-02-012024-01-311043467812023-02-012024-01-311043467812022-02-012023-01-3110434678core:UKTax2023-02-012024-01-3110434678core:UKTax2022-02-012023-01-3110434678bus:OrdinaryShareClass12023-02-012024-01-3110434678bus:OrdinaryShareClass12022-02-012023-01-3110434678core:ComputerSoftware2023-01-3110434678core:Non-standardIntangibleAssetClass1ComponentIntangibleAssetsOtherThanGoodwill2023-01-3110434678core:Non-standardIntangibleAssetClass2ComponentIntangibleAssetsOtherThanGoodwill2023-01-31104346782023-01-3110434678core:ComputerSoftwarecore:InternallyGeneratedIntangibleAssets2023-02-012024-01-3110434678core:Non-standardIntangibleAssetClass1ComponentIntangibleAssetsOtherThanGoodwillcore:InternallyGeneratedIntangibleAssets2023-02-012024-01-3110434678core:Non-standardIntangibleAssetClass2ComponentIntangibleAssetsOtherThanGoodwillcore:InternallyGeneratedIntangibleAssets2023-02-012024-01-3110434678core:InternallyGeneratedIntangibleAssets2023-02-012024-01-3110434678core:ComputerSoftwarecore:ExternallyAcquiredIntangibleAssets2023-02-012024-01-3110434678core:Non-standardIntangibleAssetClass1ComponentIntangibleAssetsOtherThanGoodwillcore:ExternallyAcquiredIntangibleAssets2023-02-012024-01-3110434678core:Non-standardIntangibleAssetClass2ComponentIntangibleAssetsOtherThanGoodwillcore:ExternallyAcquiredIntangibleAssets2023-02-012024-01-3110434678core:ExternallyAcquiredIntangibleAssets2023-02-012024-01-3110434678core:FurnitureFittings2023-01-3110434678core:ComputerEquipment2023-01-3110434678core:WithinOneYear2024-01-3110434678core:WithinOneYear2023-01-3110434678core:BetweenTwoFiveYears2024-01-3110434678core:BetweenTwoFiveYears2023-01-3110434678core:EntitiesWithJointControlOrSignificantInfluenceOverReportingEntity2024-01-3110434678bus:PrivateLimitedCompanyLtd2023-02-012024-01-3110434678bus:FRS1022023-02-012024-01-3110434678bus:Audited2023-02-012024-01-3110434678bus:FullAccounts2023-02-012024-01-31xbrli:purexbrli:sharesiso4217:GBP