Company registration number 14370324 (England and Wales)
PCARBON TOPCO LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023
PCARBON TOPCO LIMITED
COMPANY INFORMATION
Directors
Ms Sherry Vaswani
(Appointed 7 October 2022)
Mr Scott Silver
(Appointed 11 August 2023)
Mr Jacques Marine
(Appointed 11 August 2023)
Mr Andrew Goldwater
(Appointed 7 October 2022)
Mr Steven Daniëls
(Appointed 13 December 2023)
Mr Mark Cooke
(Appointed 7 October 2022)
Mr Simon Church
(Appointed 23 February 2023)
Mr Marc-Antoine Andreoli
(Appointed 22 September 2022)
Ms Elizabeth Griskova
(Appointed 9 October 2024)
Company number
14370324
Registered office
3rd Floor
1 Ashley Road
Altrincham
Cheshire
United Kingdom
WA14 2DT
Auditors
Rawlinson & Hunter Audit LLP
8th Floor
6 New Street Square
New Fetter Lane
London
EC4A 3AQ
Bankers
HSBC PLC
6th Floor
71 Queen Victoria Street
London
EC4V 4AY
PCARBON TOPCO LIMITED
CONTENTS
Page(s)
Strategic report
1 - 2
Directors' report
3 - 6
Independent Auditors' report
7 - 9
Consolidated statement of comprehensive income
10
Consolidated statement of financial position
11 - 12
Company statement of financial position
13 - 14
Consolidated statement of changes in equity
15
Company statement of changes in equity
16
Consolidated statement of cash flows
17
Notes to the financial statements
18 - 50
PCARBON TOPCO LIMITED
STRATEGIC REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for Pcarbon Topco Limited and its subsidiaries for the period from its incorporation on 22 September 2022 to 31 December 2023.
Principal Business Activities
Pcarbon Topco Limited ("the company") and its subsidiaries ("Xalient" or "the group") provide advisory and managed IT services, specialising in digital identity management, cybersecurity, and enterprise networking. Helping enterprises become more resilient, adaptive, and secure, Xalient delivers services into more than 50 countries with strategic hubs in the UK, USA, APAC, and Europe. The group is dedicated to driving security-led innovation and service excellence in an increasingly digital world.
The company, through its subsidiary Pcarbon Bidco Limited, acquired Xalient Holdings Limited on 7 October 2022.
2023: Strategic Growth and Acquisitions
2023 marked a year of transformative growth for Xalient, characterised by global expansion, strategic acquisitions, and innovative solutions development. A focus on providing secure and flexible IT solutions, together with Xalient’s deep expertise and innovation, has solidified our role as a specialist partner in secure digital transformation for large enterprises worldwide.
Key Achievements:
Acquisitions: Xalient acquired specialist Identity and Access Management (IAM) companies, Integral Partners LLC (USA) in August 2023, and Grabowsky BV (Benelux) in December 2023. The acquisitions strengthened our digital identity expertise, allowing us to offer comprehensive, integrated solutions to support organisations' zero-trust security strategies, from advisory through to managed services. These acquisitions enable Xalient to capitalise on the growing demand for IAM solutions, a central pillar within modern cybersecurity frameworks.
Market Conditions
Throughout the period, the cybersecurity and enterprise networking sectors were shaped by several global trends. Most notably increased cybersecurity threats prompting a shift toward zero-trust security models, requiring more stringent identity verification and continuous monitoring.
Hybrid work models drove continued demand for secure access to corporate systems, reshaping enterprise infrastructure needs, while the adoption of AI-powered tools for threat detection and network management, became crucial in managing the rising complexity of enterprise IT environments. The industry-wide shortage of skilled cybersecurity and network professionals persisted, leading to greater reliance on automation.
Enhanced global data privacy standards drove demand for sophisticated cybersecurity and compliance solutions across all industries.
PCARBON TOPCO LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 2 -
2024 and Beyond Strategic Goals
To ensure continuous growth and value generation, Xalient pursues five strategic priorities:
1. Customer-focus: Expanding our worldwide reach, leveraging our 2023 acquisitions to cross-sell services
and accelerate growth, with a particular focus on the Americas and mainland Europe.
2. Portfolio: Continuous development of our integrated value proposition and investing in advanced AiOps
solutions to differentiate and retain customers.
3. People: Building our global talent pool and enhancing employee experience remain a core focus, ensuring
we remain agile and can scale with market demand.
4. Operational excellence: Continuous focus on automation and process improvements, increasing
productivity and efficiency across all functions, and meeting the highest ESG standards.
5. Partnerships: Forging relationships with market-leading, global vendors and partners to strengthen
and solidify our market position. Xalient’s 2023 acquisitions brought additional high valued strategic
partners which we capitalised on in 2024 and will continue to do so in the future.
Governance and Risk Management
Xalient operates a robust governance framework, adhering to stringent policies on supplier management, ethical conduct, data security, and health and safety. Despite global economic challenges, demand for our secure, resilient solutions remains robust. Our financial planning and rigorous risk management strategies ensure that Xalient is well-prepared for future growth.
Conclusion
As we close 2023, the directors believe Xalient is well-positioned at the forefront of cybersecurity and enterprise networking, helping enterprises navigate the complexities of the digital age. Our strategic acquisitions, innovative identity-centric value proposition, strong leadership and commitment to sustainability, ensure we are ready to drive growth and deliver value for our customers in 2024 and beyond.
Ms Sherry Vaswani
Director
12 March 2025
PCARBON TOPCO LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 3 -
The directors present their annual report and audited consolidated financial statements for the period ended 31 December 2023.
Incorporation
The company was incorporated on 22 September 2022 in England and Wales. Share capital of 100 ordinary shares of £0.01 each was issued on this date for a total consideration of £1. The accounting reference date has been amended to 31 December and these financial statements have been prepared for the extended accounting period from the date of incorporation to 31 December 2023.
Details of subsequent share issues in the period can be found in note 24.
Results and dividends
The results for the period are set out on page 10.
The loss for the period, after taxation, amounted to £10,001,000.
No ordinary dividends were paid. The directors do not recommend payment of a dividend.
Directors
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
Ms Sherry Vaswani
(Appointed 7 October 2022)
Mr Scott Silver
(Appointed 11 August 2023)
Mr Jacques Marine
(Appointed 11 August 2023)
Mr Andrew Goldwater
(Appointed 7 October 2022)
Mr Scott Fairlie
(Appointed 22 September 2022 and resigned 4 October 2024)
Mr Steven Daniëls
(Appointed 13 December 2023)
Mr Mark Cooke
(Appointed 7 October 2022)
Mr Simon Church
(Appointed 23 February 2023)
Mr Marc-Antoine Andreoli
(Appointed 22 September 2022)
Ms Elizabeth Griskova
(Appointed 9 October 2024)
Qualifying third party indemnity provisions
The company has made qualifying third party indemnity provisions for the benefit of its directors during the period. These provisions remain in force at the reporting date.
Principal risks
The group’s and company’s exposure to financial risks and risk management policies are disclosed in note 20. The business risks are covered in the strategic report. There are no other principal risks.
s172 Statement - engagement with employees, suppliers, customers and others
Engaging with stakeholders is fundamental to how the company and the group do business, and the directors believe that considering stakeholders in key business decisions is not only the right thing to do but is vital to the company’s and the group's ability to drive value creation over the longer term.
The board of directors confirm that during the period under review, it has acted to promote the long-term success of the company for the benefit of the shareholders, while having due regard to matters set out in section 172(1)(a) to (f) of the Companies Act 2006.
The board of Pcarbon Topco Limited (the “group board”) have overarching decision making authority for the group. These include setting the group’s strategy and values, as well as reviewing and approving the group’s operating plans, policies, processes and management structures, amongst others.
PCARBON TOPCO LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 4 -
The directors of the company have considered the likely consequences of decisions in the long term, and the need to maintain a reputation for high standards of business conduct in formulating their strategy, policies and standards. Further detail on the group’s strategy and how it is implemented is contained in the Strategic Report.
The directors’ key decisions during the period related to executing the acquisitions of Xalient Holdings Limited and its then subsidiaries in October 2022 and subsequently in 2023 of Integral Partners LLC and Grabowsky BV. as decided upon by the Group Board. The directors consider that these acquisitions were aligned with the group’s long-term strategy, particularly in allowing us to offer comprehensive, integrated security-led solutions to the marketplace, and wider opportunities to our employees and suppliers. The directors have considered the potential for these significant acquisitions to bring short-term disruption to the company and have taken steps to ensure the smooth integration of the new businesses.
The group's employees are core to the business and fundamental to its operational success. Significant efforts are made to ensure that the group remains a responsible employer from pay and benefits to health, safety and the workplace environment. The directors engage regularly with the group’s employees through keeping in touch events and other channels.
Xalient was acknowledged to be among the top 10 best employers in the ‘medium-sized’ category of The Sunday Times Best Places to Work Awards, informed by an independent employee survey across all the company’s global employees. Xalient achieved an average overall workplace engagement score of 93% against an industry average across the technology sector of 70%. Additionally, Xalient scored 94% confidence in management against an industry average across the technology sector of 69%, underlining our commitment to creating an engaged and talented global workforce.
Strong and mutually beneficial relationships with its customers, partners and suppliers are fundamental pillars for Xalient’s operational success. The group seeks the promotion and application of certain general principles in such relationships. The ability to promote these principles effectively is an important factor in the decision to enter or remain in such relationships. Xalient’s customer Net Promoter Score (NPS) is measured throughout 2023 and has remained at or above +80 during the period, reflecting adherence to rigorous customer review processes, senior management engagement in all customer programs, and results-focused service delivery.
An external ESG review by EcoVadis, the globally trusted provider of business sustainability ratings, conducted in 2023, positioned the group in the top 16% of companies in the IT sector following an assessment of our Ethical Trading, Labour and Human Rights, Environment and Sustainable procurement processes and policies. The group continues to make use of external accreditations to drive continuous improvement across all aspects of stakeholder management.
Research and development
The group continues to invest in research and development to create innovative solutions that deliver improved services to customers. This includes a muti-year investment into Xalient’s proprietary AiOps solution, MARTINA. This unique solution draws real-time data from disparate identity, security and networking systems, then uses Ai/ML to analyse patterns, identity anomalies and predict potential cyber-attacks or network failures before they occur. The total spend on the research and development activities in the period amounted to £1,960,000.
Subsequent events
Subsequent events affecting the group and company financial statements are disclosed in note 29.
Future developments
Likely future developments in the business of the group are discussed in the strategic report.
Auditors
Rawlinson & Hunter Audit LLP were appointed as auditors to the company in accordance with section 485 of the Companies Act 2006 and are deemed to be reappointed in accordance with section 487(2) of the same Act.
PCARBON TOPCO LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 5 -
Energy and carbon report
The group's UK energy consumption in the year ended 31 December 2023, when this reporting became mandatory for the group, was as follows:
2023
Energy consumption
kWh
Aggregate of energy consumption in the year
- Electricity purchased
70,388
- Fuel consumed for transport
37,374
107,762
2023
Emissions of CO2 equivalent
metric tonnes
Scope 1 - direct emissions
- Gas combustion
-
- Fuel consumed for owned transport
-
-
Scope 2 - indirect emissions
- Electricity purchased
14.58
Scope 3 - other indirect emissions
- Fuel consumed for transport not owned by the group
8.60
Total gross emissions
23.18
Intensity ratio
Tonnes of CO2e per £1 million of revenue
0.653
Quantification and reporting methodology
The methodology used to calculate the above figures is to take actual UK energy usage and convert to metric tonnes CO2e and KwH equivalent as per the 2019 HM Government Environmental Reporting Guidelines. The group has also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Company Reporting.
Intensity measurement
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2 per £1 million of revenue, the recommended ratio for the sector.
Measures taken to improve energy efficiency
The group has encouraged increased energy efficiency in the year through sourcing its electricity from 100% green energy, allowing home working and providing an electric vehicle leasing scheme to employees.
Comparative information
As this is the group's first mandatory reporting period, figures for previous years have not been presented.
PCARBON TOPCO LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 6 -
Statement of directors' responsibilities
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 period. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and UK-adopted International Accounting Standards. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether they have been prepared in accordance with UK-adopted International Accounting Standards as issued by the International Accounting Standards Board (IASB) subject to any material departures disclosed and explained in the and
prepare the 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.
Statement of disclosure to auditors
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 auditors of the company are 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 auditors of the company are aware of that information.
On behalf of the board
Ms Sherry Vaswani
Director
12 March 2025
PCARBON TOPCO LIMITED
INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF PCARBON TOPCO LIMITED
- 7 -
Opinion
We have audited the consolidated financial statements of Pcarbon Topco Limited (the “parent company”) and its subsidiaries (the “group”) for the period from incorporation on 22 September 2022 to 31 December 2023 which comprise the consolidated statement of comprehensive income, the consolidated statement of financial position, the company statement of financial position, the consolidated statement of changes in equity, the company statement of changes in equity, the consolidated statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted International Accounting Standards and as regards the parent company financial statements, as applied in accordance with the Companies Act 2006.
In our opinion the financial statements:
give a true and fair view of the state of the group's and the parent company's affairs as at 31 December 2023 and of the group's loss for the period then ended;
the group financial statements have been properly prepared in accordance with UK-adopted International Accounting Standards;
the parent company financial statements 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 Auditors' 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
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the Annual Report and Financial Statements other than the financial statements and our Auditors' report thereon. The directors are responsible for the other information contained within the Annual Report and Financial Statements. 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.
PCARBON TOPCO LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF PCARBON TOPCO LIMITED
- 8 -
Opinions on other matters prescribed by the Companies Act 2006true
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.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.
We have nothing to report in respect of the following matters where 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.
Responsibilities of directors
As explained more fully in the statement of directors' responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditors' 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 Auditors' 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. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of UK, US & Benelux regulations. We considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to inflate revenue of the group and parent company, and management bias in accounting estimates and judgemental areas of the financial statements, such as revenue recognition, valuation of intangibles and provisions. Audit procedures performed by us included:
PCARBON TOPCO LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF PCARBON TOPCO LIMITED
- 9 -
discussions with the chief financial officer and management involved in the risk and compliance functions including consideration of known or suspected instances of non-compliance with laws and regulations and fraud;
reviewing correspondence and contracts between the group and its customers, and discussing with management in relation to their compliance with laws and regulations;
reviewing board minutes as well as relevant meeting minutes;
challenging assumptions made by management in arriving at accounting estimates and judgements, in particular in relation to recognition of revenue, the fair value recognition of intangibles on business combinations and the amortisation of intangibles;
identifying and testing journal entries, in particular, any journal entries posted with unusual account combinations, such as a credit to revenue and a debit to the statement of financial position (other than to expected accounts), which may be indicative of overstatement or manipulation of revenue; and
designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing.
Because of the inherent limitations of an audit and the audit procedures described above, there is an unavoidable risk that we will not have detected all irregularities, including some leading to material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remains a higher risk of non-detection of irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
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 Auditors' report.
This report is made solely to the parent 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 parent company’s members those matters we are required to state to them in an Auditors' 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 parent company and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Kulwarn Nagra
(Senior Statutory Auditor)
For and on behalf of Rawlinson & Hunter Audit LLP
Chartered Accountants and Statutory Auditors
London
12 March 2025
PCARBON TOPCO LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 10 -
Period
ended
31 December
2023
Notes
£'000
Revenue from contracts with customers
3
61,489
Cost of sales
(32,377)
Gross profit
29,112
Administrative expenses
(28,292)
Other operating income
315
Exceptional items
4
(4,066)
Operating loss
5
(2,931)
Adjusted EBITDA*
5,028
- Depreciation of property, plant and equipment
5
(149)
- Depreciation of right of use assets
5
(124)
- Amortisation of intangible assets
5
(3,645)
- Amortisation of government grants
25
- Exceptional items
4
(4,066)
Operating loss
(2,931)
Finance income
9
11
Finance costs
10
(7,337)
Loss before taxation
(10,257)
Tax on loss
11
256
Loss for the financial period
(10,001)
Other comprehensive expense
Items that may be reclassified subsequently to profit or loss:
Exchange movements arising on translation to reporting currency
(482)
Total comprehensive expense for the period
(10,483)
*Adjusted Earnings Before Interest, Tax, Depreciation and Amortisation (‘Adjusted EBITDA') is calculated on a consolidated basis as operating loss for the year excluding depreciation, amortisation, exceptional items and other non-cash items.
Loss for the financial period and total comprehensive expense for the period are entirely attributable to the owners of the parent company.
The consolidated statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
The notes on pages 18 - 50 are an integral part of these financial statements.
PCARBON TOPCO LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 11 -
2023
Notes
£'000
Non-current assets
Intangible assets
12
106,268
Property, plant and equipment
13
550
Right of use assets
14
1,794
Trade and other receivables
17
5,809
Deferred taxation
23
2
114,423
Current assets
Trade and other receivables
17
43,032
Income tax receivable
311
Cash and cash equivalents
8,376
51,719
Total assets
166,142
Current liabilities
Trade and other payables
18
(41,406)
Income tax payable
(794)
Borrowings
19
(611)
Lease liabilities
14
(397)
Deferred consideration
25
(48)
Provisions
22
(1,387)
(44,643)
Non-current liabilities
Trade and other payables
18
(5,456)
Borrowings
19
(112,974)
Lease liabilities
14
(1,594)
Deferred consideration
25
(1,437)
Government grants
21
(81)
Provisions
22
(68)
Deferred tax liabilities
23
(7,201)
(128,811)
Total liabilities
(173,454)
Net liabilities
(7,312)
PCARBON TOPCO LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2023
2023
Notes
£'000
- 12 -
Equity attributable to owners of the parent
Share capital
24
9
Share premium account
24
3,162
Currency translation reserve
24
(482)
Retained deficit
24
(10,001)
Total equity
(7,312)
The notes on pages 18 - 50 are an integral part of these financial statements.
The financial statements were approved by the board of directors and authorised for issue on 12 March 2025 and are signed on its behalf by:
Ms Sherry Vaswani
Director
PCARBON TOPCO LIMITED
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 13 -
2023
Notes
£'000
Non-current assets
Investments
15,16
43,686
Trade and other receivables
17
18,205
61,891
Current assets
Trade and other receivables
17
30,382
Cash and cash equivalents
30,382
Total assets
92,273
Current liabilities
Trade and other payables
18
(42)
(42)
Non-current liabilities
Borrowings
19
(90,258)
(90,258)
Total liabilities
(90,300)
Net assets
1,973
PCARBON TOPCO LIMITED
COMPANY STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2023
- 14 -
2023
Notes
£'000
Equity attributable to owners of the parent
Share capital
24
9
Share premium account
24
3,162
Retained deficit
24
(1,198)
Total equity
1,973
As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company’s loss for the period was £1,198,000.
The notes on pages 18 - 50 are an integral part of these financial statements.
The financial statements were approved by the board of directors and authorised for issue on 12 March 2025 and are signed on its behalf by:
Ms Sherry Vaswani
Director
Company Registration No. 14370324
PCARBON TOPCO LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 15 -
Share capital
Share premium account
Currency translation reserve
Retained deficit
Total equity
Notes
£'000
£'000
£'000
£'000
£'000
Balance at 22 September 2022
-
Period ended 31 December 2023:
Loss for the period
-
-
-
(10,001)
(10,001)
Other comprehensive expense:
Exchange movements on translation to reporting currency
-
-
(482)
-
(482)
Total comprehensive expense for the period
-
-
(482)
(10,001)
(10,483)
Issue of share capital
24
9
3,162
-
-
3,171
Balance at 31 December 2023
9
3,162
(482)
(10,001)
(7,312)
The notes on pages 18 - 50 are an integral part of these financial statements.
PCARBON TOPCO LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 16 -
Share capital
Share premium account
Retained deficit
Total equity
Notes
£'000
£'000
£'000
£'000
Balance at 22 September 2022
-
Year ended 31 December 2023:
Loss and total comprehensive expense for the period
-
-
(1,198)
(1,198)
Issue of share capital
24
9
3,162
-
3,171
Balance at 31 December 2023
9
3,162
(1,198)
1,973
The notes on pages 18 - 50 are an integral part of these financial statements.
PCARBON TOPCO LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 17 -
2023
Notes
£'000
£'000
Cash flows from operating activities
Cash absorbed by operations
26
(2,981)
Interest paid
(719)
Income taxes refunded
81
Net cash outflow from operating activities
(3,619)
Investing activities
Acquisition of subsidiaries, net of cash acquired
25
(61,572)
Purchase of intangible assets
12
(709)
Purchase of property, plant and equipment
13
(117)
Interest received
11
Net cash used in investing activities
(62,387)
Financing activities
Proceeds from issue of shares
24
1,991
Proceeds from issue of preference shares
24
53,920
Proceeds from borrowings, net of issue costs
19
22,732
Repayment of borrowings
19
(4,191)
Lease payments
14
(133)
Receipt of government grants
63
Net cash generated from financing activities
74,382
Net increase in cash and cash equivalents
8,376
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
8,376
Cash and cash equivalents at the end of the year comprise cash at bank and in hand.
The notes on pages 18 - 50 are an integral part of these financial statements.
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 18 -
1
Accounting policies
General information
Pcarbon Topco Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 3rd Floor, 1 Ashley Road, Altrincham, Cheshire, United Kingdom, WA14 2DT.
The group consists of Pcarbon Topco Limited (“the company”) and all of its subsidiaries (“the group” or “Xalient”).
1.1
Basis of preparation
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to the years presented, unless otherwise stated.
The group's consolidated financial statements have been prepared on a going concern basis under the historical cost convention and in accordance with UK-adopted International Accounting Standards and in accordance with the Companies Act 2006.
The company's individual financial statements have been prepared on a going concern basis under the historical cost convention and in accordance with Financial Reporting Standard 101 'Reduced Disclosure Framework' (FRS 101) and 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 £'000.
Disclosure exemptions - parent company individual financial statements
In preparing its individual financial statements under FRS 101, the company has taken advantage of the following disclosure exemptions permitted by FRS 101:
IAS 7, 'Statement of cash flows'; and
The requirements in IAS 24, 'Related party disclosures' to disclose related party transactions entered into between two or more members of a group.
As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company’s loss for the period was £1,198,000.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group's and company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 2.
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 if the revision only affects that period, or in the period of revision and future periods if the revision affects both current and future periods.
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 19 -
1.2
Going concern
These accounts have been prepared on a going concern basis notwithstanding the net liability position shown in the consolidation statement of financial position. Having made appropriate enquiries, including regarding the current status of discussions with the lenders in respect of covenants relating to the bank loans disclosed in note 19, in relation to which the directors are confident that a revision of the covenants with sufficient headroom levels will be concluded in the near future, and based on the strength of the current customer base combined with the size and nature of the multi-year contracts in place and the already committed pipeline for 2024-25, the directors consider it reasonable to assume that the company and the group will have adequate resources to continue in operation for the foreseeable future and at least the next 12 months.
1.3
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the company and enterprises controlled by the company (and its subsidiaries) made up to 31 December each year.
Control is achieved where the company has power over the investee: exposure, or rights, to variable returns from its involvement with the investee; and the ability to use its power· over the investee to affect the amount of the investor's returns.
The acquisition of subsidiaries is accounted for using the purchase method. On acquisition, the identifiable assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values on the date of acquisition. The interest of non-controlling shareholders is stated at the non-controlling shareholders proportion of the fair values of the identifiable assets, liabilities and contingent liabilities recognised. Consideration payable on acquisition is measured at fair value.
lntercompany transactions and balances between group enterprises are eliminated on consolidation.
1.4
Reporting period
The company was incorporated on 22 September 2022. The accounting reference date has been amended to 31 December and these financial statements have been prepared for the extended accounting period from the date of incorporation to 31 December 2023.
1.5
Revenue
Revenue represents the fair value of consideration to which the group expects to be entitled to under the terms of a contract with a customer, net of discounts and value added taxes.
Revenue is derived from a variety of areas, including solution fees (hardware and software), subscription fees for software services, licences and professional and managed services.
Revenue is recognised when all performance obligations are satisfied and when the customer obtains control of the transferred product or services. If performance obligations are satisfied over time, revenue is also recognised over time when one of the following criteria is met:
the customer simultaneously receives and consumes the benefits provided by the 's performance;
the 's performance creates or enhances an asset that the customer controls; or
the 's performance does not create an asset with an alternative use to the customer and the group has an enforceable right to payment for performance completed to date.
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 20 -
1.6
Intangible fixed assets - goodwill
All business combinations are accounted for by applying the acquisition method. Goodwill acquired represents the excess of the fair value of the consideration over the fair value of the identifiable net assets acquired.
Goodwill recognised in these consolidated financial statements arose on the acquisition of subsidiaries.
After initial recognition, positive goodwill is measured at cost less any accumulated impairment losses. At the date of acquisition, the goodwill is allocated to cash generating units, usually at business segment level or statutory group level as the case may be, for the purpose of impairment testing and is tested at least annually for impairment. On subsequent disposal or termination of a business acquired, the profit or loss on termination is calculated after charging the carrying value of any related goodwill.
Negative goodwill is taken straight to the consolidated statement of comprehensive income as it arises.
1.7
Intangible fixed assets other than goodwill
Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives.
Intangible assets recognised on acquisition of the trade and assets of an existing business are recognised if they are separable or give rise to other contractual or legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques.
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
4 years straight line
IP and trademarks
4 years straight line
Customer contracts
10-14 years straight line
1.8
Property, plant and equipment
Property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs.
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:
Leasehold improvements
over the term of the lease
Office equipment
4 years straight line
Computer equipment
4 years straight line
1.9
Investments
Investments in subsidiaries are measured at cost less accumulated impairment.
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 21 -
1.10
Impairment of non-current assets
At each reporting 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 group 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.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. A reversal of an impairment loss is recognised immediately in profit or loss.
1.11
Cash and cash equivalents
Cash and cash equivalents comprise cash, short term deposits and investments in money market funds. Short term deposits comprise deposits made for varying periods of between one day and three months.
1.12
Financial instruments
The group only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other receivables and payables, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivables and payables, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade receivables and payables, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.
Investments in non-derivative instruments that are equity to the issuer are measured:
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the profit or loss.
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 22 -
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the company would receive for the asset if it were to be sold at the balance sheet date.
Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is an 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.
1.13
Equity instruments
Financial instruments issued by the company are treated as equity only to the extent that they do not meet the definition of a financial liability. Ordinary shares are classified as equity and are recorded at the proceeds received, net of direct issue costs.
Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.14
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the 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
Deferred tax liabilities are generally recognised for all temporary 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 temporary 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.
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 23 -
1.15
Provisions
A provision is recognised when the group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the group expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the income statement net of any reimbursement.
1.16
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 non-current 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 group is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.17
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.18
Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the group will comply with all attached conditions.
Government grants relating to the software research and development included in non-current liabilities as deferred income are credited to profit or loss on a straight-line basis over the expected lives of the related assets.
1.19
Foreign exchange
Functional and presentation currency
The company's functional and presentational currency is sterling.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
On consolidation, the results of overseas operations are translated into sterling at the average exchange rates for the year. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the result of overseas operations at actual rate are recognised in other comprehensive income.
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 24 -
1.20
In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research is recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight line basis over their useful economic lives.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
1.21
Leases
The group accounts for a contract, or a portion of a contract, as a lease when it conveys the right to use an asset for a period of time in exchange for consideration. Leases are those contracts that satisfy the following criteria:
There is an identified asset;
The roup obtains substantially all the economic benefits from use of the asset; and,
The roup has the right to direct use of the asset.
The group considers whether the supplier has substantive substitution rights. If the supplier does have those rights, the contract is not identified as giving rise to a lease. In determining whether the group obtains substantially all the economic benefits from use of the asset, the group considers only the economic benefits that arise from use of the asset. In determining whether the group has the right to direct use of the asset, the group considers whether it directs how and for what purpose the asset is used throughout the period of use. If the contract or portion of a contract does not satisfy these criteria, the group applies other applicable IFRSs rather than IFRS 16.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless this is not readily determinable, in which case the group’s incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.
On initial recognition, the carrying value of the lease liability also includes:
Amounts expected to be payable under any residual value guarantee;
The exercise price of any purchase option granted in favour of the roup if it is reasonably certain to assess that option; and,
Any penalties payable for terminating the lease, if the term of the lease has been estimated based on termination option being exercised.
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 25 -
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:
Lease payments made at or before commencement
Initial direct costs incurred; and,
The amount of any provision recognised where the roup is contractually required to dismantle, remove or restore the leased asset.
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease.
When the group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted using a revised discount rate. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised, except the discount rate remains unchanged. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term. If the carrying amount of the right-of-use asset is adjusted to zero, any further reduction is recognised in profit or loss.
1.22
New accounting standards and interpretations
A number of new standards and amendments to standards are effective for annual periods beginning on or after 1 January 2024 and earlier application is permitted; however, the group has not early adopted the new or amended standards in preparing these financial statements. None of these new or amended standards are expected to have a significant impact on the group and the company financial statements.
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 26 -
2
Judgements and key sources of estimation uncertainty
The group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows:
Impairment of goodwill
The group is required to test, on an annual basis, whether goodwill has suffered any impairment. The recoverable amount is determined on value in use calculations. The use of this method requires the estimation of future cash flows and the determination of a discount rate in order to calculate the present value of the cash flows.
Useful economic lives of tangible and intangible non-current assets
Tangible and intangible non-current assets are depreciated/amortised over their useful economic lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.
Revenue recognition
The group accounts for its revenue from professional services depending on the contract-specific facts and circumstances, and it can be either on a percentage of completion basis or at a point in time. Use of the percentage of completion method requires the group to estimate the services performed to date as a proportion of the total services to be provided. When carrying out the assessment various factors are considered including time and material spent, milestones achieved and schedules of completed works.
Fair value of deferred consideration
The fair value of the deferred consideration paid is determined by the future US tax benefits arising from the annual amortisation of goodwill originating on the acquisition of Integral Partners LLC (note 25). The group has used its judgement to estimate the future profitability and tax position of its US operations in making these calculations.
Acquisitions and fair value of assets and liabilities acquired
The fair value of customer contract assets acquired through business combinations is calculated by identifying key acquired contracts, estimating the expected EBITDA in those contracts, applying a multiple relevant to the acquisition and then discounting for the expected retention rate of the identified contracts.
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 27 -
3
Revenue from contracts with customers
2023
UK
USA
Rest of
Total
the world
£'000
£'000
£'000
£'000
Managed services
16,976
2,969
293
20,238
Professional services
8,070
9,356
436
17,862
Hardware and software
4,618
5,377
686
10,681
Transport - Network services
1,518
4,622
-
6,140
Cloud based service
1,258
4,733
454
6,445
Other miscellaneous revenue
86
8
29
123
32,526
27,065
1,898
61,489
Contract assets and liabilities
Contract assets arise when the group has right to consideration in exchange for product or services that it has transferred to a customer but not yet invoiced. They arise primarily from professional services and software contracts that can take several months or over a year to complete.
Contract liabilities arise when a customer pays consideration in advance before the product or service is transferred to the customer.
When contract assets and liabilities fall in periods longer than one year their present values are separated and included in non-current assets and liabilities respectively.
The group's contract assets are disclosed in note 17.
The group's contract liabilities are disclosed in note 18.
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 28 -
4
Exceptional items
2023
£'000
Transaction costs
4,066
The group incurred expenses in the course of running its business which were irregular in nature.
It is the opinion of management that these costs, which relate to corporate acquisitions and financing, need to be separately disclosed in the financial statements in order to provide greater clarity.
5
Operating loss
2023
£'000
Operating loss for the period is stated after charging:
Exchange losses
45
Depreciation of owned property, plant and equipment
149
Depreciation of right of use assets
124
Amortisation of intangible assets
3,645
Operating lease charges
35
6
Auditors' remuneration
2023
Fees payable to the company's auditors:
£'000
For audit services
Audit of the financial statements of the group and company
150
7
Employees
The average monthly number of persons (including directors) employed by the group during the period was:
2023
Number
Sales
33
Operations and administration
188
Total
221
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
7
Employees
(Continued)
- 29 -
The aggregate costs of these employees (including directors) charged to the consolidated statement of comprehensive income during the period was:
2023
£'000
Wages and salaries
19,221
Social security costs
1,658
Defined contribution pension costs
232
21,111
During the period the group capitalised £570,000 of staff time in relation to software development. The numbers presented in this note are shown net of the capitalisation.
Defined contribution pension schemes are operated for all qualifying employees. The assets of the schemes are held separately from those of the group in independently administered funds.
8
Directors' remuneration
2023
£'000
Remuneration for qualifying services
1,265
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2023
£'000
Remuneration for qualifying services
495
Refer to note 27 for key management personnel and their remuneration payable by the group.
9
Finance income
2023
£'000
Interest income on short-term bank deposits
11
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 30 -
10
Finance costs
2023
Notes
£'000
Interest on loans and borrowings
976
Preference dividends accrued
19
6,424
Interest on invoice finance arrangements
24
Interest on overdraft
57
Interest on leases
14
88
Gain on currency forward contracts
(103)
Exchange gain on financing transactions
(132)
Unwinding of discount on dilapidation provision
22
3
7,337
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 31 -
11
Taxation
2023
Notes
£'000
Current tax
UK corporation tax on profits for the current period
17
Total UK current tax
17
Foreign current tax on profits for the current period
61
Adjustments in foreign tax in respect of prior periods
12
Total current tax
90
Deferred tax
Origination and reversal of timing differences
23
(346)
Total tax credit
(256)
With effect from 1 April 2023, the UK corporation tax rate increased from 19.00% to 25.00%. The blended rate for the period is 22.54%.
The actual credit for the period can be reconciled to the expected credit for the period based on the profit or loss and the standard rate of tax as follows:
2023
£'000
Loss before taxation
(10,257)
Expected tax credit based on the standard rate of corporation tax in the UK of 22.54%
(2,312)
Tax effect of expenses that are not deductible in determining taxable profit
2,164
Tax effect of income not taxable in determining taxable profit
(55)
Adjustments in respect of prior years
(110)
Effect of change in corporation tax rate
5
Research and development credit
11
Effect of overseas tax
7
Fixed assets differences
(124)
Deferred tax not recognised
161
Amounts not recognised
(3)
Taxation credit
(256)
Factors affecting future tax charge
There are no factors affecting the future tax charge other than deferred tax (refer note 23).
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 32 -
12
Intangible assets
Group
Goodwill
Software development
IP and trademarks
Customer contracts
Total
£'000
£'000
£'000
£'000
£'000
Cost
At 22 September 2022
Additions
708
708
Additions – business combinations (note 25)
69,119
3,352
2
36,732
109,205
At 31 December 2023
69,119
4,060
2
36,732
109,913
Amortisation
At 22 September 2022
Amortisation charged for the period
1,040
2,605
3,645
At 31 December 2023
1,040
2,605
3,645
Net book value
At 31 December 2023
69,119
3,020
2
34,127
106,268
The group tests whether goodwill has suffered any impairment on an annual basis. For the reporting period, the recoverable amount of the cash-generating units was determined based on value-in-use calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using 3% growth rates.
The company had no intangible fixed assets at 31 December 2023.
13
Property, plant and equipment
Group
Leasehold improvements
Office equipment
Computer equipment
Total
£'000
£'000
£'000
£'000
Cost
At 22 September 2022
Additions
7
110
117
Additions – business combinations (note 25)
162
211
209
582
At 31 December 2023
162
218
319
699
Depreciation
At 22 September 2022
Depreciation charged in the period
18
8
123
149
At 31 December 2023
18
8
123
149
Net book value
At 31 December 2023
144
210
196
550
The company had no property, plant and equipment at 31 December 2023.
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 33 -
14
Leases
Group
Office space
Equipment
Total
Notes
£'000
£'000
£'000
Right of use assets
At 22 September 2022
-
-
-
Additions through business combinations
25
1,677
281
1,958
Change in assumptions
22
(40)
-
(40)
Depreciation
(115)
(9)
(124)
At 31 December 2023
1,522
272
1,794
Group
Office space
Equipment
Total
Notes
£'000
£'000
£'000
Lease liabilities
At 22 September 2022
-
-
-
Additions through business combinations
25
(1,846)
(284)
(2,130)
Effect of changes in exchange rates
5
1
6
Lease payments made
209
12
221
Interest accrued
10
(88)
-
(88)
At 31 December 2023
(1,720)
(271)
(1,991)
Current
(283)
(114)
(397)
Non-current
(1,437)
(157)
(1,594)
(1,720)
(271)
(1,991)
15
Investments
Group
Company
2023
2023
Notes
£'000
£'000
Investments in subsidiaries
16
43,686
During the year the company invested £43,686,000 into its wholly owned subsidiary Pcarbon Bidco Limited which used the funds to finance the acquisitions of Xalient Holdings Limited, Integral Partners LLC and Grabowsky group (note 25).
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
15
Investments
(Continued)
- 34 -
Movements in non-current investments
Company
Shares in subsidiaries
£'000
Cost or valuation
At 22 September 2022
-
Additions
43,686
At 31 December 2023
43,686
Carrying amount
At 31 December 2023
43,686
16
Subsidiaries and related undertakings
Details of the company's subsidiaries at 31 December 2023 are as follows:
Name
Place of
Registered
Principal
Class
% Held
incorporation
address
activity
Direct
Indirect
Pcarbon Bidco Limited
UK
1 Ashley Road, Altrincham, Cheshire WA14 2DT
Holding company
Ordinary shares of £1 each
100
Xalient Holdings Limited
UK
1 Ashley Road, Altrincham, Cheshire WA14 2DT
Consulting and systems integration
Ordinary shares of £0.01 each
100
Xalient Limited
UK
1 Ashley Road, Altrincham, Cheshire WA14 2DT
Dormant company
Ordinary shares of £1 each
100
XalientGlobal Limited
UK
1 Ashley Road, Altrincham, Cheshire WA14 2DT
Dormant company
Ordinary shares of £0.01 each
100
Xalient Inc.
USA
2711 Centerville Road, Suite 400, Wilmington, Delaware, 19808
Consulting and systems integration
Ordinary shares of US$0.01 each
100
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
16
Subsidiaries and related undertakings
(Continued)
- 35 -
Name
Place of
Registered
Principal
Class
% Held
incorporation
address
activity
Direct
Indirect
Xalient India Private Limited
India
Workafella Biz Centre, 150/1 Infantry Rd Cor Div No 72, Civil Station, Bailhongal Bangalore KA 56001 India
Consulting and systems integration
Ordinary shares of ₹10 each
99.999
Xalient B.V.
Netherlands
Zijdelaan 20, 2594 BV, The Hague
Holding company
Ordinary shares of €1 each
100
Integral Partners LLC
USA
1434 Spruce St., Ste. 100, Boulder, Colorado CO 80302
Consulting and systems integration
Class A Units of USD$0.1 each
100
Grabowsky Daniëls International B.V. ("GDI")
Netherlands
Waalsdorperweg 76, 2597 JD, The Hague
Holding company
Ordinary shares of €0.01 each
100
Cask23 B.V.
Netherlands
Zijdelaan 20, 2594 BV, The Hague
Holding company
Ordinary shares of €1 each
100
Grabowsky B.V.
Netherlands
Zijdelaan 20, 2594 BV, The Hague
Identity Access Management
Ordinary shares of €45.38 each
100
Adinsec B.V.
Belgium
Gemeenteplein 13, 1730 Asse
Identity Access Management
Ordinary shares of €100 each
100
Grabowsky Luxembourg S.à.r.l.
Luxembourg
Rue de l'Industrie 18, L-8399 Windhof
Identity Access Management
Ordinary shares of €120 each
100
During the period the company incorporated a wholly owned subsidiary, Pcarbon Bidco Limited which acquired 100% of the equity of Xalient Holdings Limited, refer to note 25.
During the period Xalient Inc., a wholly owned subsidiary of Xalient Holdings Limited, acquired 100% of the equity of Integral Partners LLC, refer to note 25.
During the period Xalient Holdings Limited incorporated a wholly owned subsidiary, Xalient B.V. which acquired 100% of the equity of the Grabowsky group, comprising GDI, Cask 23, Grabowsky B.V., Adinsec and Grabowsky Lux., refer to note 25.
On 1 March 2024, the group incorporated a new subsidiary, Xalient Secure Networks Inc., in Ontario, Canada. Its principal activity will be provision of consulting and systems integration services (note 29).
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 36 -
17
Trade and other receivables
Group
Company
2023
2023
Notes
£'000
£'000
Amounts falling due within one year:
Trade receivables
14,902
Amounts owed by group undertakings
30,382
Other receivables
408
Prepayments
10,109
Contract assets
3
17,613
-
43,032
30,382
Amounts falling due after more than one year:
Amounts owed by group undertakings
18,205
Contract assets
3
5,809
-
5,809
18,205
Of the amounts owed by group undertakings to the company falling due within one year £30,281,000 is unsecured, repayable on demand and comprises the original loan of £26,951,000 bearing an annual interest rate of 10% and accrued interest of £3,330,000 which is accruing no further interest. The remaining amount of £101,000 is unsecured, interest free and repayable on demand.
The amount owed by group undertakings to the company falling due in more than one year is unsecured and repayable on 7 October 2031. It comprises the original loan of £16,203,000 bearing an annual interest rate of 10% and accrued interest of £2,002,000 which is accruing no further interest.
18
Trade and other payables
Group
Company
2023
2023
Notes
£'000
£'000
Amounts falling due within one year:
Trade payables
10,730
Amounts owed to group undertakings
42
Other taxation and social security
2,423
-
Contract liabilities
3
14,925
-
Other payables
451
-
Accruals
12,877
41,406
42
Amounts falling due after more than one year:
Contract liabilities
3
5,456
-
Amounts owed to group undertakings are unsecured, interest free and repayable on demand.
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 37 -
19
Borrowings
Group
Company
2023
2023
£'000
£'000
Bank loans
22,950
Preference shares
90,258
90,258
Other loans
377
113,585
90,258
Payable within one year
611
Payable within two to five years
22,716
-
Payable after five years
90,258
90,258
113,585
90,258
Bank loans
On 21 July 2023, the group entered into a Senior Facilities Agreement (SFA) for a committed debt facilities provided by the Bank of Ireland and Investec Bank Plc. The facilities comprise a US dollar 5-year term loan of US$11,392,000 (Facility B), a pound sterling 5-year term loan of £5,000,000 (Facility C), a 5-year multicurrency Revolving Credit Facility of £4,000,000, a pound sterling 5-year First Incremental Facility of £1,620,000 and a euro 5-year Second Incremental Facility of €10,200,000. The loans are secured by fixed and floating debentures granted over the assets of the company and a number of other group undertakings.
The term loan facilities and incremental facilities are repayable in full on their maturity and bear an annual interest of SONIA (or similar indices) + 5.00%.
The Revolving Credit Facility is for a 5-year term and it bears an annual interest of SONIA (or similar indices) + 4.50%.
The facilities B and C were fully drawn down in August 2023 and were used to finance the acquisition of Integral Partners LLC (refer to note 25) and the repayment of an existing Coronavirus Business Interruption Loan with HSBC.
The First and Second Incremental Facilities were fully drawn down in December 2023 and were used to finance the acquisition of the Grabowsky group, refer to note 25.
At 31 December 2023 the loan facilities comprised £24,397,000 principal and £234,000 accrued interest and are stated net of unamortised arrangement fees of £1,681,000.
On 31 July 2020, Xalient Holdings Limited entered into a Coronavirus Business Interruption Loan Agreement with HSBC bank for a £4 million loan facility which was fully drawn down. The loan was for a 6 year term, unsecured and repayable quarterly in equal instalments. It bore interest rate of 3.99% + Bank of England base rate. The loan was repaid in full in August 2023.
Preference shares
During the period the company issued 51,783,668 £0.01 A Class redeemable preference shares for £1 each and 32,050,385 £0.01 B Class redeemable preference share for £1 each, refer to note 24, which accrued a preferential dividend of 10% annually and are redeemable on 7 October 2031. At the balance sheet date £83,834,000 of the amount outstanding related to the subscription amount of these shares and £6,424,000 related to the accrued preference dividends for the period to 31 December 2023.
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
19
Borrowings
(Continued)
- 38 -
Other loans
Other loans comprise various loan agreements with Hewlett Packard entered into by Xalient Holdings Limited prior to it being acquired by the company. The loans were used to finance acquisition of certain equipment. They are repayable quarterly in equal instalments and bear interest rate at 6%-10% per annum.
Movements in borrowings
Group
Company
2023
2023
Notes
£'000
£'000
At 22 September 2022
-
-
Loans acquired through business combination
25
4,695
-
New loans in the period, net of issue costs
22,732
-
Preference shares issued in the period
24
83,834
83,834
Loans repaid in the period
(4,191)
-
Preference dividends accrued
10
6,424
6,424
Interest accrued
962
-
Interest repaid
(638)
-
Exchange gains
(233)
-
At 31 December
113,585
90,258
20
Financial instruments and financial risk management
The group’s and company’s activities expose them to a variety of financial risks. The main financial risks managed by the group and company, under policies approved by the board, are credit risk, cash flow interest rate risk, foreign currency risk and liquidity risk.
The group has put in place a risk management programme that seeks to limit the adverse effects on the financial performance of the group and company by monitoring levels of the receivables and payables and maintaining a balanced currency portfolio.
Principal financial instruments
The group’s principal financial instruments, from which financial instrument risk arises, comprise cash and cash equivalents, trade and other receivables, trade and other payables and borrowings, which arise directly from its operations.
The table below shows the carrying value of the group's and company's financial assets and financial liabilities.
Group
Company
2023
2023
£'000
£'000
Financial assets
Trade and other receivables
38,732
48,587
Cash and cash equivalents
8,376
-
47,108
48,587
Financial liabilities
Measured at amortised cost
142,574
90,300
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
20
Financial instruments and financial risk management
(Continued)
- 39 -
The group and company do not have financial instruments measured at fair values other than cash and cash equivalents. Financial instruments not measured at fair values include trade and other receivables, trade and other payables and borrowings.
The carrying values of the group's and company's financial instruments approximate their fair values.
No collateral is held as security for group's and company's financial assets.
Credit risk
Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The group is mainly exposed to credit risk from credit sales. It is a group policy to assess the credit risk of new customers before entering contracts. Each new customer is analysed individually for creditworthiness before the group's standard payment and delivery terms and conditions are offered. The group's review includes external ratings and purchase limits are established for each customer.
Concentrations of credit risk are determined by monitoring the creditworthiness rating of existing customers and through a regular review of the trade receivables' ageing analysis.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with minimum rating "A" are accepted.
At the reporting date there were trade receivables of £201,000 which were past due but not impaired.
Cash flow interest rate risk
The group's cash flow interest rate risk arises from its long-term borrowings. Borrowings issued at variable rates expose the group to cash flow interest rate risk which is partially offset by cash held at variable rates. Borrowings issued at fixed rates expose the group to fair value interest rate risk. The group's borrowings at variable rates are denominated in pound sterling, US dollar and Euro.
The group analyses its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the group calculates the impact on profit and loss of defined interest rate shift. For each simulation, the same interest rate shift is used for all currencies. The scenarios run only for liabilities that represent the major interest-bearing positions.
Based on the simulations performed, the calculated impact on post tax profit of a 1% shift would be a maximum increase of £246,000 or decrease of £246,000 respectively.
Currency exchange risk
The group's activities expose it to financial risks associated with changes in foreign currency exchange rates. The group and company maximise the matching of foreign currency receipts and payments wherever possible to further minimise foreign exchange risk.
The group’s primary exposure is to the exchange rate movements of US dollar and Euro. 10% fluctuation in pound sterling against US dollar and Euro will have the following impact on the group's operating results:
10% strengthening of pound sterling against US dollar will increase the group's operating results by £51,000;
10% strengthening of pound sterling against Euro will increase the group's operating results by £371,000;
10% weakening of pound sterling against US dollar will decrease the group's operating results by £62,000;
10% weakening of pound sterling against Euro will decrease the group's operating results by £454,000.
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
20
Financial instruments and financial risk management
(Continued)
- 40 -
Liquidity risk
The group’s policy is to ensure that it has sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, it seeks to maintain cash balances to meet expected requirements for a period of at least 60 days. The group further reduces its liquidity risk where possible by fixing interest rates on its borrowings. Cash flow forecasts identifying the group’s funding and liquidity requirements are reviewed regularly by management on a 12-month rolling basis.
The contractual maturities of the group's and company's financial liabilities (which are all carried at amortised cost) are shown in the table below:
Group
Carrying
Contractual
6 months
6 to 12
Over 12
2023
amount
cash flows
or less
months
months
£'000
£'000
£'000
£'000
£'000
Current financial liabilities
Trade and other payables
24,058
24,058
24,058
-
-
Borrowings
611
722
639
83
-
Leases
397
462
231
231
-
Provision
1,387
1,387
1,387
-
-
Deferred consideration
48
53
-
53
-
26,501
26,682
26,315
367
-
Non-current financial liabilities
Borrowings
112,974
222,171
927
1,160
220,084
Leases
1,594
1,956
-
-
1,956
Provisions
68
81
-
-
81
Deferred consideration
1,437
2,080
-
-
2,080
116,073
226,288
927
1,160
224,201
142,574
252,970
27,242
1,527
224,201
Company
Carrying
Contractual
6 months
6 to 12
Over 12
2023
amount
cash flows
or less
months
months
£'000
£'000
£'000
£'000
£'000
Current financial liabilities
Trade and other payables
42
42
42
-
-
42
42
42
-
-
Non-current financial liabilities
Borrowings
90,258
189,121
-
-
189,121
90,258
189,121
-
-
189,121
90,300
189,163
42
-
189,121
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
20
Financial instruments and financial risk management
(Continued)
- 41 -
Capital management
The group's and company's objectives when managing its capital which comprises of all components of equity (i.e. share capital, share premium, retained earnings and currency translation reserve) are:
to safeguard entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders; and
to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.
The group sets the amount of capital it requires in proportion to risk. The group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.
21
Government grants
Group
Company
2023
2023
£'000
£'000
Arising from government grants
81
-
Government grants relate to software research and development . They are disclosed within non-current liabilities and are credited to the statement of comprehensive income on a straight line basis over the expected useful lives of the related assets.
22
Provisions for liabilities
Group
2023
£'000
Contingent consideration
1,387
Dilapidation provision
68
1,455
Due within one year or less
1,387
Due after more than one year
68
1,455
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
22
Provisions for liabilities
(Continued)
- 42 -
Movements on provisions:
Contingent consideration
Dilapidation provision
Total
Group
£'000
£'000
£'000
At 22 September 2022
-
-
-
Arising on acquisition of Integral Partners LLC (note 25)
1,396
-
1,396
Arising on acquisition of Xalient Holdings Limited (note 25)
-
105
105
Unwinding of discount (note 10)
-
3
3
Adjustment for changes in assumptions (note 14)
-
(40)
(40)
Exchange difference
(9)
(9)
At 31 December 2023
1,387
68
1,455
The contingent consideration relates to acquisition of Integral Partners LLC and was settled in full in February 2024.
The dilapidation provision relates to the estimated cost of returning a right of use asset to its original state at the end of the lease in accordance with the lease terms. The cost is recognised as depreciation of the right of use asset over the remaining term of the lease.
23
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
Liabilities
Assets
2023
2023
Group
£'000
£'000
Accelerated capital allowances
(346)
-
Tax losses
-
2
Arising on acquisition of subsidiaries
(6,855)
-
(7,201)
2
The company has no deferred tax assets or liabilities.
Group
Liabilities
Assets
Movements in the period:
Notes
£'000
£'000
At 22 September 2022
-
-
Credit to profit or loss
11
346
2
Arising on acquisition of subsidiaries
25
(7,557)
-
Effect of currency exchange
10
-
At 31 December 2023
(7,201)
2
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
23
Deferred taxation
(Continued)
- 43 -
Unrecognised deferred tax
Deferred tax assets are recognised for tax losses carry-forwards to the extent that the realisation of the related tax benefits through future taxable profits is probable. At 31 December 2023 there were losses carried forward on which a deferred tax asset has not been recognised of £659,000.
24
Share capital and reserves
Group and company
2023
2023
Ordinary share capital
Number
£'000
Issued and fully paid
'A' Class ordinary shares of £0.01 each
520,540
5
'B' Class ordinary shares of £0.01 each
258,984
2
'C' Class ordinary shares of £0.01 each
86,427
1
'D' Class ordinary shares of £0.01 each
64,263
1
930,214
9
2023
2023
Preference share capital
Number
£'000
Issued and fully paid
'A' Class redeemable preference shares of £0.01 each
51,783,668
51,784
'B' Class redeemable preference shares of £0.01 each
32,050,385
32,050
83,834,053
83,834
Preference shares classified as liabilities issued at £1 per share (note 19)
83,834
Incorporation
On incorporation on 22 September 2022, the company issued 100 ordinary shares of £0.01 each. These were subsequently redesignated to A Class ordinary shares on 7 October 2022.
Equity instruments and preference shares issued for acquisition of business
On 7 October 2022 the company issued 159,572 B Class ordinary shares, 33,750 C Class ordinary shares and 15,966,721 B Class preference shares as part of the consideration for the acquisition of Xalient Holdings Limited (refer to note 25).
On 11 August 2022 the company issued 78,040 B Class ordinary shares and 7,828,752 B Class preference shares as part of the consideration for the acquisition of Integral Partners LLC (refer to note 25).
On 13 December 2023 the company issued 64,263 D Class ordinary shares and 6,118,437 B Class preference shares as part of the consideration for the acquisition of Grabowsky group (refer to note 25).
The above ordinary share issuances were made at a total premium of £ 1,177,000 to the par value of the shares.
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
24
Share capital and reserves
(Continued)
- 44 -
Equity instruments and preference shares issued for cash
In addition to the share issued disclosed above, the company made further share issues during the period as follows:
520,440 A Class ordinary shares for the total consideration of £1,782,000;
21,372 B Class ordinary shares for the total consideration of £44,000;
52,677 C Class ordinary shares for the total consideration of £165,000;
51,783,668 A Class redeemable preference shares for the total consideration of £51,784,000;
2,136,475 B Class redeemable preference shares for the total consideration of £2,136,000.
The above ordinary share issuances were made at a total premium of £ 1,985,000 to the par value of the shares.
Classes of equity instruments and preference shares
A, B, C and D Class ordinary shares have a par value of £0.01 per share, are non-redeemable, hold full rights in respect of voting and dividends, and entitle the holder to full participation in respect of equity and in the event of a winding up of the company.
The A Class ordinary shares have certain additional voting rights in the event of a failure to properly redeem the A Class or B Class preference shares, or another material financial default by the group.
There is a ratchet mechanism in place meaning that on a sale, listing or disposal of the company, and subject to certain targets being met, a number of the A Class ordinary shares may be converted to Deferred shares, and the proportion of any proceeds allocated to the holders of the B, C and D Class ordinary shares be increased.
A Class and B Class redeemable preference shares have a par value of £0.01 per share, accrue a preferential dividend at 10% which is rolled up annually, and are redeemable on 7 October 2031 or on the sale, disposal or listing of the company, whichever is earlier. They are non-voting.
Reserves
The group's and company's reserves comprise the following:
Share capital - nominal value of subscribed shares.
Share premium account - amounts paid on issuance of shares in excess of the nominal value of the shares.
Currency translation reserve - differences arising on the retranslation of foreign subsidiaries.
Retained earnings - all other gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 45 -
25
Acquisition of a business
Acquisition of Xalient Holdings Limited
On 7 October 202207 October 2022 the company's wholly owned subsidiary Pcarbon Bidco Limited acquired 100% of the ordinary shares of Xalient Holdings Limited.
Xalient Holdings Limited, together with its subsidiaries, is a UK based business providing advisory and managed IT services, specialising in digital identity management, cybersecurity, and enterprise networking.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set out in the table below:
Book Value
Adjustments
Fair Value
Net assets acquired
£'000
£'000
£'000
Identifiable intangible assets
3,811
16,822
20,633
Property, plant and equipment
374
-
374
Right of use assets
555
-
555
Goodwill
681
(681)
-
Trade and other receivables
24,250
-
24,250
Current tax receivable
250
-
250
Cash and cash equivalents
580
-
580
Trade and other payables
(23,261)
-
(23,261)
Current tax payable
(116)
-
(116)
Borrowings
(4,695)
-
(4,695)
Lease liabilties
(727)
-
(727)
Government grants
(44)
-
(44)
Provisions
(105)
-
(105)
Deferred tax
(736)
(4,144)
(4,880)
Total identifiable net assets
817
11,997
12,814
Goodwill
24,955
Total consideration
37,769
The consideration was satisfied by:
£'000
Cash
21,566
Equity instruments and preference shares
16,203
37,769
Contribution by the acquired business, including the subsequent acquisitions of Integral Partners LLC and the Grabowsky Group (see later in this note), for the reporting period included in the group statement of comprehensive income since acquisition:
£'000
Revenue
61,489
Profit after tax
1,297
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
25
Acquisition of a business
(Continued)
- 46 -
The goodwill of £24,955,000 arising from the acquisition consists of certain intangible assets, such as the skilled assembled workforce, which do not qualify for separate recognition. The goodwill recognised will not be deductible for tax purposes.
Acquisition related costs of £1,158,000 are included within exceptional items in administrative expenses.
The equity instruments and preference shares transferred as part of the consideration comprised of 159,572 B Class ordinary shares, 33,750 C Class ordinary shares and 15,966,721 B Class preference shares issued by the company (refer to note 24). The fair value of the shares transferred was determined by reference to the arm’s length price paid by the company's external investors when acquiring additional equity to fund the overall transaction.
Acquisition of Integral Partners LLC
On 11 August 2023 Xalient Inc., the wholly owned subsidiary of Xalient Holdings Limited, acquired 100% of the equity of Integral Partners LLC, an entity incorporated in the United States providing digital identity consulting and advisory services focused on Identity Access Management.
This acquisition is expected to accelerate future growth for Xalient group, in response to the growing demand
for specialist providers who can deliver rapid, customer-centric solutions across the security landscape.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set out in the table below:
Book Value
Adjustments
Fair Value
Net assets acquired
£'000
£'000
£'000
Identifiable intangible assets
-
9,078
9,078
Trade and other receivables
3,664
-
3,664
Cash and cash equivalents
441
-
441
Trade and other payables
(3,428)
-
(3,428)
Total identifiable net assets
677
9,078
9,755
Goodwill
25,001
Total consideration
34,756
The consideration was satisfied by:
£'000
Cash
23,940
Equity instruments and preference shares
7,924
Deferred consideration
1,496
Contingent consideration
1,396
34,756
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
25
Acquisition of a business
(Continued)
- 47 -
Contribution by the acquired business for the reporting period included in the group statement of comprehensive income since acquisition:
£'000
Revenue
6,247
Profit after tax
959
Had Integral Partners LLC been consolidated from 1 January 2023 the consolidated statement of comprehensive income would show pro-forma revenue of £15,929,000 and loss of £633,000.
The goodwill of £25,001,000 arising from the acquisition consists of certain intangible assets, such as the skilled assembled workforce, which do not qualify for separate recognition. The goodwill recognised is expected to be deductible for tax purposes in the United States.
Acquisition related costs of £1,192,000 are included within exceptional items in administrative expenses.
The equity instruments and preference shares issued as part of the consideration comprised 78,040 B Class ordinary shares and 7,828,752 B Class preference shares issued by the company (refer to note 24). The fair value of the shares was determined by reference to the arm’s length price paid by the company's external investors when acquiring additional equity to fund the overall transaction.
The contingent consideration arrangement requires the group to pay, in cash, to the former owners and certain employees of Integral Partners LLC an earn-out of up to a maximum amount of US$3,100,000 pursuant to certain metrics and requirements and calculated based on the Integral Partners LLC's results for the 2023 fiscal year. The contingent consideration was settled in full in February 2024 and amounted to US$1,767,000 (£1,387,000).
The deferred consideration relates to the additional consideration payable in cash to the former owners of Integral Partners LLC based on the realisation by Xalient group of US tax benefit arising from the annual amortisation of goodwill obtained as part of this acquisition. The estimated undiscounted amount which the group is required to pay under this arrangement is US$2,719,000 (£2,133,000) and it is expected to be paid over a period of 6 years.
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
25
Acquisition of a business
(Continued)
- 48 -
Acquisition of Grabowsky group
On 13 December 2023 Xalient B.V., the wholly owned subsidiary of Xalient Holdings Limited, acquired 100% of the equity of the Grabowsky group., a Benelux based digital identity advisory and managed services business focused on Identity Access Management.
As a result of the acquisition, the Xalient group is expected to increase its presence in the region and be able to provide its clients with a comprehensive global identity and access management service.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set out in the table below:
Book Value
Adjustments
Fair Value
Net assets acquired
£'000
£'000
£'000
Identifiable intangible assets
-
10,374
10,374
Property, plant and equipment
207
-
207
Right of use assets
-
1,403
1,403
Goodwill
5,423
(5,423)
-
Trade and other receivables
8,452
-
8,452
Cash and cash equivalents
2,651
-
2,651
Trade and other payables
(10,789)
-
(10,789)
Current tax payable
(676)
-
(676)
Lease liabilities
-
(1,403)
(1,403)
Deferred tax
-
(2,677)
(2,677)
Total identifiable net assets
5,268
2,274
7,542
Goodwill
19,163
Total consideration
26,705
The consideration was satisfied by:
£'000
Cash
19,738
Equity instruments and preference shares
6,967
26,705
Contribution by the acquired business for the reporting period included in the group statement of comprehensive income since acquisition:
£'000
Revenue
838
Profit after tax
57
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
25
Acquisition of a business
(Continued)
- 49 -
Had Grabowsky group been consolidated from 1 January 2023 the consolidated statement of comprehensive income would show pro-forma revenue of £21,267,000 and profit of £2,071,000.
The goodwill of £19,163,000 arising from the acquisition consists of certain intangible assets, such as the skilled assembled workforce, which do not qualify for separate recognition. The goodwill recognised is not deductible for tax purposes.
Acquisition related costs of £1,230,000 are included within exceptional items in administrative expenses.
The equity instruments and preference shares transferred as part of the consideration comprised 64,263 D Class ordinary shares and 6,118,437 B Class preference shares issued by the company (refer to note 24). The fair value of the shares was determined by reference to the arm’s length price paid by the group’s external investors when acquiring additional equity to fund the overall transaction.
26
Cash absorbed by group operations
2023
£'000
Loss for the period after tax
(10,001)
Adjustments for:
Taxation credited
(256)
Finance costs
7,337
Finance income
(11)
Amortisation of intangible assets
3,645
Depreciation of property, plant and equipment
149
Depreciation of right of use assets
124
Amortisation of government grants
(25)
Unrealised foreign exchange movements
(620)
Movements in working capital:
Increase in trade and other receivables
(12,693)
Increase in trade and other payables
9,370
Cash absorbed by operations
(2,981)
PCARBON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 50 -
27
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel paid by the group is as follows.
2023
£'000
Aggregate compensation
1,479
Key management personnel comprise the company's directors, whose remuneration is disclosed in note 8, as well as Chief Culture Officer and senior officers in Integral Partners LLC and the Grabowsky group.
Other information
The group has taken advantage of the exemptions under IFRS not to disclose any transactions with group companies where 100% of the voting rights are controlled by the group.
28
Ultimate controlling party
The company's ultimate controlling party is Volpi Capital LLP which is based at 1 Hooper’s Court, London, SW3 1AF.
29
Events after the reporting date
On 1 March 2024, the group incorporated a new subsidiary, Xalient Secure Networks Inc., in Ontario, Canada. Its principal activity will be provision of consulting and systems integration services (note 16).
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