The directors present the strategic report for the year ended 28 February 2025.

The principal activity of the company is that of a holding company. The principal activity of the company and its subsidiaries (the "Group") is a Software-as-a-Service (SaaS) powered by artificial intelligence & machine learning that generates and optimizes on-brand marketing messages in real time to maximize engagement.

The group has a diverse international customer base across multiple sectors including retail, travel & hospitality and financial services. Primary operations are conducted in the United Kingdom and United States of America.

Group revenue for the year ended 28 February 2025 was £7,772,439 (2024: £9,014,478), an annual decrease of 14%. Group gross profit was £6,994,502 (2024: £8,315,115) a decrease of 15%, though margin remained above 90%. The performance of the group was impacted by increased competition in the space from companies including JasperAI and Writer, and the continued expansion and adoption of generative AI tools such as Chat-GPT and Gemini. The wider economic environment has seen pressure on spend across the customer base and new prospects.

The group has strong visibility of upcoming revenues through a majority of its contracts being on an annual basis.

In December 2024 the group received additional funding from its parent entity to continue the execution of the approved business plan.

As noted above, the group's performance was impacted in the current financial year by various internal and external factors, resulting in decreased Revenue and Gross Profit, along with a greater loss before taxation.

The primary non-financial KPI that management tracks is Annual Recurring Revenue (“ARR”). ARR is a non-GAAP metric and is defined as the annualised value of the company's subscription-based revenue at a point in time. As at 28 February 2025 this was £7.1M (2024: £7.7M) a 7.8% decrease on the prior year.

The directors assess risks and uncertainties facing the business on an ongoing basis. These include exposure to liquidity risk, foreign exchange risk and the wider economic environment.

Liquidity risk is managed by ongoing and frequent forward forecasting of the group's cash requirements, including scenario planning on revenue, operating costs and cash flow expectations. Management also explores additional financing options such as new equity, long-term debt and working capital financing to manage liquidity risk.

The group is exposed to movements in the USD (US dollar) foreign exchange rate, as a significant portion of customer transactions are conducted in USD. The group is somewhat naturally hedged as several of the large supplier and employee costs are in USD. The group does not currently exchange in any formal currency hedging transactions.

The group's largest sector is retail and therefore the group is exposed to the wider performance of this sector, which negatively impacted the business during the financial year. The business is focused on expanding its customer and industry base to counter these challenges.

The group continues to enhance its product offerings and technology platform, and undertake technological research and development. In addition the group has streamlined its operations and will continue to execute on cost control measures to ensure the business stays relevant and competitive in the fast-moving generative AI industry.

On behalf of the board

The directors present their annual report and financial statements for the year ended 28 February 2025.

The company’s future developments are set out in the strategic report on page 1 in accordance with s414C(11) of the Companies Act 2006 as the directors consider this to be of strategic importance.

The results for the year are set out on page 9.

No ordinary dividends were paid (2024: nil). The directors do not recommend payment of a final dividend.

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

As permitted by the Companies Act 2006, the Company has indemnified the directors in respect of proceedings brought by third parties and qualifying third party indemnity insurance was in place throughout the year and up to the date of approval of the financial statements.

Post balance sheet events are set out in note 23 to the financial statements.

The group has conducted systematic, extensive and eligible research and development overcoming significant technological uncertainty to develop new and innovative technology solutions for the AI-powered SaaS.

The auditor, Grant Thornton UK LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

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 and group is aware of that information.

The directors are responsible for preparing the Strategic Report, Directors Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law including FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and the profit or loss of the company and group 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;

• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.

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.

We have audited the financial statements of Monorail Midco Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 28 February 2025, which comprise the consolidated statement of comprehensive income, the consolidated and company statements of financial position, the consolidated and company statements of changes in equity, the consolidated statement of cash flow and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ (United Kingdom Generally Accepted Accounting Practice).

In our opinion:

• the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 28 February 2025 and of the group's loss for the year then ended;

• the financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the ‘Auditor’s responsibilities for the audit of the financial statements’ section of our report. We are independent of the group and the parent 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

We are responsible for concluding on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group's and the parent company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify the auditor’s opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause the group or the parent company to cease to continue as a going concern.

In our evaluation of the directors’ conclusions, we considered the inherent risks associated with the group's and the parent company's business model including effects arising from macro-economic uncertainties, we assessed and challenged the reasonableness of estimates made by the directors and the related disclosures and analysed how those risks might affect the group's and the parent company's financial resources or ability to continue operations over the going concern period.

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 the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is 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 the audit:

• the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.

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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

• the parent company financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

As explained more fully in the directors' responsibilities statement set out on page 4, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group's and 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 group or the parent company or to cease operations, or have no realistic alternative but to do so.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:

• We obtained an understanding of the legal and regulatory frameworks applicable to the parent company and group and determined the most significant which are directly relevant to specific assertions in the financial statements are those related to the reporting framework FRS 102 and the Companies Act 2006;

• We understood how the parent company and group are complying with those legal and regulatory frameworks by making enquiries of management and those responsible for legal and compliance procedures. We corroborated our inquires through our review of board minutes and walkthroughs performed with management;

• We assessed the susceptibility of the parent company’s and group’s financial statements to material misstatement, including how fraud might occur, by evaluating management’s incentives and opportunities for manipulation of the financial statements. This included the evaluation of the risk of management override of controls. Audit procedures performed by the engagement team included:

  • Identifying and assessing the design effectiveness of controls management have in place to prevent and detect fraud;

  • Challenging assumptions and judgments made by management in their significant accounting estimates;

  • Identifying and testing journal entries, which includes among others any journal entries posted by senior financial reporting personnel and unexpected journal entries made within the revenue cycle;

  • Assessing the extent of compliance with the relevant laws and regulations as part of our procedures on the related financial statement item.

• These audit procedures were designed to provide reasonable assurance that the financial statements were free from fraud or error. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error and detecting irregularities that result from fraud is inherently more difficult than detecting those that result from error, as fraud may involve collusion, deliberate concealment, forgery or intentional misrepresentations. Also, the further removed non-compliance with laws and regulations is from events and transactions reflected in the financial statements, the less likely we would become aware of it;

• The engagement leader assessed whether the engagement team collectively had the appropriate competence and capabilities, including consideration of the engagement team’s understanding of and practical experience with audit engagements of a similar nature and complexity, knowledge of the industry in which the parent company and group operate, and understanding of the legal and regulatory requirements specific to the entity.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 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.

The notes on pages 15 to 34 form part of these financial statements.

The notes on pages 15 to 34 form part of these financial statements.

The notes on pages 15 to 34 form part of these financial statements.

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 £34,710,517 (2024 - £16,405,216 loss) after impairment losses.

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.

The notes on pages 15 to 34 form part of these financial statements.

The notes on pages 15 to 34 form part of these financial statements.

The notes on pages 15 to 34 form part of these financial statements.

Monorail Midco Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is New Wing Somerset House New Wing, Lancaster Place, London, WC2R 1LA.

The group consists of Monorail Midco Limited and all of its subsidiaries.

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.

The 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 for parent company information presented within the consolidated financial statements:

• Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;

• Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.

In the parent company 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. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. 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. Investments in subsidiaries are accounted for at cost less impairment.

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.

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

All financial statements are made up to 28 February 2025. 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.

After reviewing the group's forecasts and projections, which cover the 12 month period from the date of signing these financial statements, the directors have a reasonable expectation the group has adequate resources (following a significant restructuring of the business after the balance sheet date - see Note 23) to continue in operational existence for the foreseeable future. These forecasts and projections have considered a downside scenario with reduced sales and increased customer churn, in this scenario the group has sufficient funds to meet its liabilities as they fall due over the next 12 months.

The group therefore continues to adopt the going concern basis in preparing its financial statements.

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

Revenue from contracts for the provision of software is recognised straight-line over the terms of the contract from the point in time at which the customer first gets access to the software to the final date of the contract.

Contracts with customers are for access to the Jacquard proprietary AI technology and vary in length from 3 months to multiple years. Revenue is recognised over the term of the contract. Where a contract is in a foreign currency, the revenue amount is translated using the exchange rate at the date of invoice. Contract liabilities represent invoices billed in advance for software services.

Contract assets represent software services provided but not yet invoiced for. Where a contract is in a foreign currency, the revenue and asset amount are translated using the year end spot rate.

Research and development expenditure is written off against profits in the year in which it is incurred.

The group claims tax relief under the Research and Development (R&D) Tax Credit scheme in respect of qualifying research and development expenditure. Qualifying expenditure comprises a proportion of staff costs, including salaries, employer’s national insurance contributions and pension contributions, a proportion of subcontractor costs, and certain consumable items such as server costs. The credit is recognised within the current tax charge in the profit and loss account in the period in which the qualifying expenditure is incurred, when it is reasonably certain to be received. A corresponding receivable is recognised within debtors for amounts due from HMRC.

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.

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are assessed annually at the reporting date for impairment indicators. If any such indication exists, the entity shall estimate the recoverable amount of the asset. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

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:

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:

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 income statement.

In the prior year, fixtures and fittings were depreciated over one year straight line.

In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

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.

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). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

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.

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

Financial instruments are recognised in the group's statement of financial position 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, 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.

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.

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, including creditors, bank loans and loans from fellow group 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. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

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

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.

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

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement 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.

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. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

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 income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. 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.

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.

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

Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.

When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and. under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.

Cancellations or settlements are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.

Transactions in currencies other than pounds 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.

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.

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.

The Group assesses at each reporting date whether intangible assets including goodwill may be impaired. The Group measures the recoverable amount of intangible assets and goodwill using fair value less costs of disposal (FVLCOD). FVLCOD has been estimated using market-based approaches, notably comparable revenue multiples derived from recent transactions and public and private companies of comparable sizes . Key judgments and inputs in this approach include the selection of the revenue multiple, the choice of comparable companies, recent transactions and associated multiples, any discounts to reflect size or illiquidity, and estimates of costs to sell. These inputs are inherently subjective and involve significant estimation uncertainty. See note 11.

Detail of assumptions

The group and company have made share based payments to certain employees during the year that fall within the scope of section 26 of FRS 102. The share based payment has been measured at fair value on the date of grant using Black Scholes valuation model. Estimation is required in determining the valuation, notably with regards to current valuation, volatility of the shares and vesting period. See note 21 for further information.

Detail of assumptions

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

Their aggregate remuneration comprised:

Employee remuneration includes charges relating to share based payments during the year, see note 21.

During the year, 2 (2024: 1) director of the company received C ordinary shares in Monorail Topco Limited. See note 21 for further detail.

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2024: 2).

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

The main factor affecting the tax charge for the year is the additional deduction for qualifying R&D expenditure and losses surrendered for R&D tax credits. Gross R&D expenditure was £2,261,596 (2024: £2,596,089).

Goodwill is considered to have a useful economic life of 10 years. Amortisation of intangible fixed assets is charged to administrative expenses. An impairment test was conducted as at 28 February 2025 and it was determined that further impairment of the goodwill was required due to the under performance of the acquired entity. Further impairment charges of £3,332,777 (2024: £nil) have been recognised in the year, bringing the total impairment provision against goodwill to £14,930,819 (2024: £11,598,042). This is included in amortisation and impairment above.

In 2024 the useful life of the Phrasee Brand was revised to 0 years and was thus fully impaired in the prior year. The impairment losses recognised in FY24 equate to £910,899.

An impairment loss of £765,291 (2024: £569,104) was recognised for the carrying value of the additional investment in Monorail Bidco Limited during the year. The subsidiary is parent to Jacquard Group Ltd which has traded below expectations during the course of the current and prior financial period.

Details of the company's subsidiaries at 28 February 2025 are as follows:

Monorail Bidco Limited is exempt from audit by virtue of Section 479A of the Companies Act 2006. Monorail Midco Limited has provided statutory guarantee for Monorail Bidco Limited in accordance with Section 479C of the Companies Act 2006.

Phrasee Canada Inc. was dormant and dissolved on 19 September 2024, during the reporting period.

Trade debtors are shown net of provisions of £nil (2024: £11,870).

An impairment provision of £73,212,259 (2024: £40,482,933) has been recognised against the amounts owed by group undertakings in the company accounts due to the potential non recoverability of these loans made to the subsidiary based on an assessment of fair value less costs to sell of the subsidiary.

Amounts owed by group undertakings are unsecured and repayable on demand.

Amounts owed to the ultimate parent company and other related parties are due for repayment on 14 March 2032 and attracts interest at 10% p.a. No interest is payable in cash until maturity, interest accrues and is added to the principal balance.

Amounts owed to the parent company (Monorail Topco Ltd) are unsecured, attract interest at 10% and are repayable at the company's discretion with consent of the noteholder. No interest is payable in cash until maturity, interest accrues and is added to the principal balance.

On 22 May 2020 a subsidiary received a government Bounce Back Loan Scheme (BBLS) loan of £50,000. The government provides a guarantee for 100% of the loan and also provides business interruption payments whereby interest payments and any fees levied by the Lender are covered for the first year.

The loan is fully repayable after 72 months, by monthly instalments of £833 plus interest commencing 13 months after the loan drawdown date, with an interest rate of 2.5% per annum charged on the outstanding balance.

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

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.

The amounts due at the reporting date are £11,041 (2024: £13,895).

Group share-based payments

The company had no share based payment expense during the year.

As of March 2022, the group and company operates a management incentive scheme in which senior members of staff can acquire C Ordinary shares in the parent entity, Monorail Topco Limited.

The staff acquire the C Ordinary shares but the full economic rights to the shares vest over time as the individual renders service to the business or wider group entities. General vesting terms are 20% on first anniversary of the issuance, 20% per year thereafter on a straight line basis up to 80%, and the final 20% vests on an Exit event for the parent entity.

The scheme is classified as cash-settled for Monorail Topco Limited, but because Monorail Midco Limited has no obligation to settle the transaction the scheme is classified as equity-settled for Monorail Midco Limited.

While the equity issued is that of the parent entity, the subsidiary recognises the cost related to the service the employee renders to the subsidiary. The expense recognised in Monorail Midco Limited's statement of comprehensive income is related to direct employees of group companies who participate in the scheme.

Management has utilised the services of external experts to calculate the fair value of the C Ordinary shares as at the issuance date. The Black Scholes option pricing model has been used to value the C Ordinary shares as they have similar economic characteristics and payoffs to an option. Market data or market proxies have been used where possible, along with internal company data such as the liquidity preference of different share classes. Estimation is required in determining the valuation, notably with regards to current valuation, volatility of the shares and vesting period (see note 2).

During the period, the company issued 76,529,048 ordinary shares of 1p each at par.

The shares have attached to them full voting, dividend and capital distribution (including on winding up) rights; they do not confer any rights of redemption.

Consideration received for the allotment of ordinary shares during the year was £765,291.

The other components of equity are other reserves (relating to the accumulation of share based payment charges) and the PL loss reserve (relating to the accumulation of current and prior period losses).

On the 11th August 2025, the group announced a reorganisation which resulted in a significant reduction in headcount and a change in operational leadership.

Key management personnel includes the directors. Total key management personnel compensation was £711,468 (2024: £623,700). Key management personnel acquired preference shares of £nil (2024: £36,574), B ordinary shares of £nil (2024: £4,041), and C ordinary shares of £54,103 (2024: £139,500) in Monorail Topco Limited, controlling party of the group.

At the period end, other creditors includes loan notes £81,165,771 (2024: £68,675,768) issued to Monorail Luxco S.a.r.l. This company is a related party by virtue of common ownership.

At the period end, £38,130,068 (2024: £35,261,821) was owed to Monorail Topco Limited, including accrued interest which totalled £8,367,867 (2024: £5,499,620) at the reporting date. Monorail Topco Limited is a related party by virtue of common ownership.

At the balance sheet date the Group was owed £29,912 (2024: £82,761) from a director of the company and £4,845 (2024: £6,970) from a director of a subsidiary.

At the balance sheet date, the Company owed £181,101 (2024: £155,300) and the Group owed a net amount of £165,316 (2024: £135,588) to a director of the immediate parent company.

At the balance sheet date the Group was owed £51,635 (2024: £51,190) from the Employee Benefit Trust.

The immediate parent company is Monorail Topco Limited, a company registered in Guernsey.

The ultimate parent company is Monorail Luxco S.a.r.l., a company incorporated in Luxembourg.

There is no one ultimate controlling party.