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Registration number: 08733316

Safetonet Limited

Annual Report and Consolidated Financial Statements

for the Year Ended 31 December 2023

 

Safetonet Limited

Contents

Company Information

1

Strategic Report

2

Directors' Report

3

Statement of Directors' Responsibilities

4

Independent Auditor's Report

5 to 8

Consolidated Profit and Loss Account

9

Consolidated Statement of Comprehensive Income

10

Consolidated Balance Sheet

11

Balance Sheet

12

Consolidated Statement of Changes in Equity

13

Consolidated Statement of Cash Flows

14

Notes to the Financial Statements

15 to 31

 

Safetonet Limited

Company Information

Directors

R M Pursey

J C Revell

F E Fox

G Werner

Registered office

Quadrant House
Broad Street Mall
Reading
RG1 7QE

Auditors

UHY Ross Brooke
Chartered Accountants and Registered Auditors
2 Old Bath Road
Newbury
Berkshire
RG14 1QL

 

Safetonet Limited

Strategic Report for the Year Ended 31 December 2023

The directors present their strategic report for the year ended 31 December 2023.

Principal Activity

Our principal activity remains keeping children safe online.

We do this in a variety of ways -
• By developing and selling software that protects children and young people against threats such as bullying, abuse, sexual predation and exposure to harmful content. Our software uses a mixture of artificial intelligence, natural language processing and device management technologies,
• Advising Governments, law enforcement agencies and other child protection organisations on how to best to use technology to keep children safe and to promote legislation and policies that reenforce child safety,
• Through the SafeToNet Foundation, a registered UK charity that helps child welfare groups, carers and charities better understand and deal with the wellbeing issues associated with online harms.
 

Fair review of the business

Our principal solutions during the year were
• SafeToWatch - filtering harmful content in live-stream video, including nudity and violence
• Net Nanny - enabling parental control over a child's use of devices and internet access
In addition , we continue to hold 75% of the shares in Safetonet Family Store GmbH , which operates a large mobile phone retail business across Germany.
We were pleased with our performance during 2023, which showed an increase in turnover over 2022 and especially with the increase in group EBITDA , which was some £2.2m better than the previous year.

Since the year end,we have invested in our new range of solutions - HarmBlock.

Principal risks and uncertainties

We face the same challenges as any rapidly growing technology company :
• Reliance on key personnel
• Under-capitalisation , cash shortages and limited resources
• Improving and expanding our software ahead of existing and new competition
• Changes in market demands and regulatory requirements
We address these risks primarily by having a very experienced Board of Directors and senior management team. Equally importantly , we seek to become EBITDA and cash flow positive as soon as possible, which is the primary defence against many of the risks we face.

Approved and authorised by the Board on 16 April 2025 and signed on its behalf by:
 

.........................................
R M Pursey
Director

 

Safetonet Limited

Directors' Report for the Year Ended 31 December 2023

The directors present their report and the for the year ended 31 December 2023.

Directors of the group

The directors who held office during the year were as follows:

R M Pursey

J C Revell

F E Fox

T G A Farrell (ceased 4 April 2023)

G Werner

M F D Burns (ceased 20 March 2024)

Principal activity

The principal activity of the group is keeping children safe online.

Going concern

The financial statements have been prepared on a going concern basis with a material uncertainty surrounding this. The directors have assessed the company’s ability to continue as a going concern and are confident that the company has adequate resources and access to additional funding to continue in operational existence for the foreseeable future.

Disclosure of information to the auditor

Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditor is unaware.

The Board of Safetonet Limited are disappointed that the auditors appointed by Safetonet Family Store GmbH and System-Repair Center GmbH have not started their audit work or provided our own auditors with the information they need to conclude the audit of the group numbers, especially as the audit work has been completed for our UK, US and Canadian companies.

Approved and authorised by the Board on 16 April 2025 and signed on its behalf by:
 

.........................................
R M Pursey
Director

 

Safetonet Limited

Statement of Directors' Responsibilities

The directors acknowledge their responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and the 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 apply them consistently;

make judgements and accounting estimates that are reasonable and prudent;

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

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

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

 

Safetonet Limited

Independent Auditor's Report to the Members of Safetonet Limited

Disclaimer of Opinion

We were engaged to audit the financial statements of Safetonet Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023, which comprise the Consolidated Profit and Loss Account, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Balance Sheet, Consolidated Statement of Changes in Equity, Consolidated Statement of Cash Flows, and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

We do not express an opinion on the accompanying financial statements of the group. Because of the significance of the matter described in the basis for disclaimer of opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.

Basis for disclaimer of opinion on financial statements

We do not express an opinion on the group financial statements because we were unable to obtain sufficient appropriate audit evidence over a substantial proportion of the balances and disclosures within the financial statements.

The limitation on our work is in relation to the audit of Safetonet Deutschland GmbH, Safetonet Family Store GmbH and System-Repair Center GmbH, whose results comprise a significant part of the group accounts. The Directors of Safetonet Family Store GmbH and System-Repair Center GmbH, which are not wholly owned by Safetonet Limited, have appointed component auditors, but those auditors have not started their audit work nor provided us with access to information pertinent to the audit. Therefore the information within the group accounts in relation to the German subsidiaries is that which has been provided to us from management and no audit work has been able to be carried out over a significant element of the group figures.

The filing deadline for the financial statements for the year ended 31 December 2023 has now passed and, due to this deadline and the lack of response from the German subsidiaries, the Directors have concluded that there is no reasonable prospect of receiving this information and as a result, it is in the best interest of the group and its shareholders to file the financial statements at their earliest convenience, notwithstanding the fact that the audit is incomplete.

As a result of this limitation placed upon the scope of our audit work, we have been unable to obtain sufficient appropriate audit evidence concerning items included in the Consolidated Profit and Loss Account, the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Balance Sheet, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows, and notes to the financial statements. In addition, we have been unable to complete our audit procedures in respect of the appropriateness of the going concern basis of the group. The possible effects of any undetected misstatements could be both material and pervasive to the financial statements.

Nonetheless, we draw attention to the disclosures in note 2 to the accounts regarding going concern, detailing the group's reliance on external funding to ensure that it can continue to operate. If funds are not raised in the near future there are doubts over the group's ability to continue as a going concern.

 

Safetonet Limited

Independent Auditor's Report to the Members of Safetonet Limited

Opinion on other matter prescribed by the Companies Act 2006

Because of the significance of the matters described in the basis for disclaimer of opinion section of our report, we have been unable to form an opinion, whether based on the work undertaken in the course of the audit:

the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

Notwithstanding our disclaimer of an opinion on the financial statements, in the light of our knowledge and understanding of the company and its environment obtained in the course of the audit performed subject to the pervasive limitation described above, we have not identified material misstatements in the Strategic Report and the Directors' Report.

Arising from the limitation of our work referred to above:

we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and

we were unable to determine whether adequate accounting records have been kept.

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:

• 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.

Responsibilities of directors

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

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor Responsibilities for the audit of the financial statements

Our responsibility is to conduct an audit of the group's financial statements in accordance with International Standards on Auditing (UK) and to issue an auditor's report.

However, because of the matter described in the basis for disclaimer of opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.

We are independent of the group 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.

 

Safetonet Limited

Independent Auditor's Report to the Members of Safetonet Limited

Detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. As such, we have considered:

• the nature of the industry and sector, control environment and business performance including the group's remuneration policies, bonus levels, and performance targets;
• the group's own assessment, including assessments made by key management, of the risks that irregularities may occur either as a result of fraud or error;
• any matters we identified having reviewed the company's policies and procedures relating to:

- identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
- detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or
alleged fraud; and
- the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;

• the matters discussed amongst the audit engagement team.
 

As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the areas in which management is required to exercise significant judgement, such as the disclosure of adjusting items. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.

We also obtained an understanding of the legal and regulatory framework that the company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context were the Companies Act, tax legislation and regulations concerning importing and exporting to and from the UK.

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

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

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

 

Safetonet Limited

Independent Auditor's Report to the Members of Safetonet Limited

......................................
Emily Ness BFP FCA (Senior Statutory Auditor)
For and on behalf of UHY Ross Brooke, Statutory Auditor

2 Old Bath Road
Newbury
Berkshire
RG14 1QL

16 April 2025

 

Safetonet Limited

Consolidated Profit and Loss Account for the Year Ended 31 December 2023

Note

2023
£


 2022
£

Turnover

3

19,396,718

18,111,743

Cost of sales

 

(4,685,330)

(4,517,722)

Gross profit

 

14,711,388

13,594,021

Administrative expenses

 

(19,478,521)

(20,465,163)

Other operating income

489,307

290,578

Operating loss

4

(4,277,826)

(6,580,564)

Other interest receivable and similar income

14,081

1,108

Interest payable and similar expenses

5

(751,708)

(442,705)

   

(737,627)

(441,597)

Loss before tax

 

(5,015,453)

(7,022,161)

Tax on loss

9

22,263

238,327

Loss for the financial year

 

(4,993,190)

(6,783,834)

Profit/(loss) attributable to:

 

Owners of the company

 

(4,976,535)

(6,778,127)

Minority interests

 

(16,655)

(5,707)

 

(4,993,190)

(6,783,834)

 

Safetonet Limited

Consolidated Statement of Comprehensive Income for the Year Ended 31 December 2023

2023
£


 2022
£

Loss for the year

(4,993,190)

(6,783,834)

Foreign currency translation gains/losses

51,123

(284,545)

Other reserves - other movement

-

501,138

51,123

216,593

Total comprehensive income for the year

(4,942,067)

(6,567,241)

Total comprehensive income attributable to:

Owners of the company

(4,925,412)

(6,561,534)

Minority interests

(16,655)

(5,707)

(4,942,067)

(6,567,241)

 

Safetonet Limited

(Registration number: 08733316)
Consolidated Balance Sheet as at 31 December 2023

Note

2023
£

(As restated)

 2022
£

Fixed assets

 

Intangible assets

10

19,768,600

22,610,786

Tangible assets

11

512,727

437,013

 

20,281,327

23,047,799

Current assets

 

Stocks

13

374,312

380,280

Debtors

14

3,872,365

4,241,997

Cash at bank and in hand

 

612,659

584,304

 

4,859,336

5,206,581

Creditors: Amounts falling due within one year

16

(10,965,605)

(9,956,669)

Net current liabilities

 

(6,106,269)

(4,750,088)

Total assets less current liabilities

 

14,175,058

18,297,711

Creditors: Amounts falling due after more than one year

16

(4,093,550)

(3,909,085)

Provisions for liabilities

17

(104,053)

-

Net assets

 

9,977,455

14,388,626

Capital and reserves

 

Called up share capital

19

25,960

25,829

Share premium reserve

39,641,523

39,110,758

Other reserves

10,299,016

10,299,016

Retained earnings

(40,035,240)

(35,109,828)

Equity attributable to owners of the company

 

9,931,259

14,325,775

Minority interests

 

46,196

62,851

Shareholders' funds

 

9,977,455

14,388,626

Approved and authorised by the Board on 16 April 2025 and signed on its behalf by:
 

.........................................
R M Pursey
Director

 

Safetonet Limited

(Registration number: 08733316)
Balance Sheet as at 31 December 2023

Note

2023
£

(As restated)

2022
£

Fixed assets

 

Tangible assets

11

14,813

14,189

Investments

12

3,888,247

5,069,829

 

3,903,060

5,084,018

Current assets

 

Debtors

14

421,323

7,044,143

Cash at bank and in hand

 

28,692

82,062

 

450,015

7,126,205

Creditors: Amounts falling due within one year

16

(5,213,572)

(4,205,231)

Net current (liabilities)/assets

 

(4,763,557)

2,920,974

Total assets less current liabilities

 

(860,497)

8,004,992

Creditors: Amounts falling due after more than one year

16

(3,782,899)

(3,372,654)

Net (liabilities)/assets

 

(4,643,396)

4,632,338

Capital and reserves

 

Called up share capital

19

25,960

25,829

Share premium reserve

39,641,523

39,110,758

Other reserves

10,299,016

10,299,016

Retained earnings

(54,609,895)

(44,803,265)

Shareholders' (deficit)/funds

 

(4,643,396)

4,632,338

The company made a loss after tax for the financial year of £9,806,630 (2022 - loss of £2,944,361).

Approved and authorised by the Board on 16 April 2025 and signed on its behalf by:
 

.........................................
R M Pursey
Director

 

Safetonet Limited

Consolidated Statement of Changes in Equity for the Year Ended 31 December 2023
Equity attributable to the parent company

Share capital
£

Share premium
£

Other reserves
£

Retained earnings
£

Total
£

Non- controlling interests
£

Total equity
£

At 1 January 2022

25,822

39,241,543

9,797,878

(28,291,963)

20,773,280

68,558

20,841,838

Loss for the period

-

-

-

(6,778,127)

(6,778,127)

(5,707)

(6,783,834)

Other comprehensive income

-

-

501,138

(284,545)

216,593

-

216,593

Total comprehensive income

-

-

501,138

(7,062,672)

(6,561,534)

(5,707)

(6,567,241)

New share capital subscribed

7

43,593

-

-

43,600

-

43,600

Share issue costs

-

(174,378)

-

-

(174,378)

-

(174,378)

Share based payment transactions

-

-

-

244,807

244,807

-

244,807

At 31 December 2022

25,829

39,110,758

10,299,016

(35,109,828)

14,325,775

62,851

14,388,626

Share capital
£

Share premium
£

Other reserves
£

Retained earnings
£

Total
£

Non- controlling interests
£

Total equity
£

At 1 January 2023

25,829

39,110,758

10,299,016

(35,109,828)

14,325,775

62,851

14,388,626

Loss for the year

-

-

-

(4,976,535)

(4,976,535)

(16,655)

(4,993,190)

Other comprehensive income

-

-

-

51,123

51,123

-

51,123

Total comprehensive income

-

-

-

(4,925,412)

(4,925,412)

(16,655)

(4,942,067)

New share capital subscribed

131

530,765

-

-

530,896

-

530,896

At 31 December 2023

25,960

39,641,523

10,299,016

(40,035,240)

9,931,259

46,196

9,977,455

 

Safetonet Limited

Consolidated Statement of Cash Flows for the Year Ended 31 December 2023

Note

2023
£

(As restated)
2022
£

Cash flows from operating activities

Loss for the year

 

(4,993,190)

(6,783,834)

Adjustments to cash flows from non-cash items

 

Depreciation and amortisation

4

3,031,919

3,139,468

Financial instrument net gains through profit and loss

 

-

257,887

Finance costs

677,195

411,385

Share based payment transactions

 

-

(138,304)

Income tax expense

9

(22,263)

(238,327)

 

(1,306,339)

(3,351,725)

Working capital adjustments

 

Decrease in stocks

13

5,968

38,471

Decrease/(increase) in debtors

14

126,019

(1,491,017)

Increase in creditors

16

1,421,814

1,057,318

Increase in provisions

17

104,051

-

Cash generated from operations

 

351,513

(3,746,953)

Income taxes received

9

109,530

684,300

Net cash flow from operating activities

 

461,043

(3,062,653)

Cash flows from investing activities

 

Acquisitions of tangible assets

(88,553)

(345,515)

Acquisition of intangible assets

10

(176,894)

(72,360)

Net cash flows from investing activities

 

(265,447)

(417,875)

Cash flows from financing activities

 

Interest paid

(174,633)

(221,116)

Proceeds from issue of ordinary shares, net of issue costs

 

530,897

(130,779)

Proceeds from bank borrowing draw downs

 

39,175

4,899,316

Repayment of bank borrowing

 

(615,180)

(1,204,960)

Foreign Exchange Movements

52,500

187,240

Net cash flows from financing activities

 

(167,241)

3,529,701

Net increase in cash and cash equivalents

 

28,355

49,173

Cash and cash equivalents at 1 January

 

584,304

535,131

Cash and cash equivalents at 31 December

 

612,659

584,304

 

Safetonet Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

1

General information

The company is a private company limited by share capital, incorporated in England and Wales.

The address of its registered office is:
Quadrant House
Broad Street Mall
Reading
RG1 7QE
England

2

Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland and the Companies Act 2006'.

Basis of preparation

These financial statements have been prepared using the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value.

The financial statements are prepared in sterling (£), which is the functional currency of the company and rounded to the nearest pound.

Basis of consolidation

The consolidated financial statements consolidate the financial statements of the company and its subsidiary undertakings drawn up to 31 December 2023.

 

Safetonet Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

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

The results of subsidiaries acquired or disposed of during the year are included in the Profit and Loss Account from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the group.

The purchase method of accounting is used to account for business combinations that result in the acquisition of subsidiaries by the group. The cost of a business combination is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the business combination. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Any excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised is recorded as goodwill.

Inter-company transactions, balances and unrealised gains on transactions between the company and its subsidiaries, which are related parties, are eliminated in full.

Intra-group losses are also eliminated but may indicate an impairment that requires recognition in the consolidated financial statements.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling shareholder’s share of changes in equity since the date of the combination.

Going concern

Due to the disclaimer in the audit report, we have been unable to complete our audit procedures in respect of the going concern basis for the group.

Nonetheless, we draw attention to the fact that the company is reliant on external investors and its largest shareholders providing additional funds in order to remain a going concern.

Reclassification of comparative amounts

The prior year's directors' pensions excluded that which had been accrued based on unpaid salary. The amount has been transferred to staff wages and its associated accounts.

The company was in receipt of grant income in the PY, at which point the expenditure attributable over the life of the grant was not known. During the year, this information became available and as such it was determined that both the accrued and deferred income in relation to the grant had been understated. This has now been adjusted to reflect the increased amounts.

Revenue recognition

Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the company’s activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts. Monthly sales are recognised in turnover in full on the date of receipt. Subscriptions for a longer period are recognised over the life of the subscription.

 

Safetonet Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Foreign currency transactions and balances

Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the respective functional currency of the entity at the rates prevailing on the reporting period date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rate on the date when the fair value is re-measured.

Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.

Tax

The tax expense for the period comprises current tax payable.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the group operates and generates taxable income.

Tangible assets

Tangible assets are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:

Asset class

Depreciation method and rate

Office equipment

33% straight line basis

Business combinations

Business combinations are accounted for using the purchase method. The consideration for each acquisition is measured at the aggregate of the fair values at acquisition date of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquired, plus any costs directly attributable to the business combination. When a business combination agreement provides for an adjustment to the cost of the combination contingent on future events, the group includes the estimated amount of that adjustment in the cost of the combination at the acquisition date if the adjustment is probable and can be measured reliably.

Goodwill

Goodwill arising on the acquisition of an entity represents the excess of the cost of acquisition over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is held in the currency of the parent, translated at the balance sheet date's spot rate as required. Goodwill is amortised over its useful life, which shall not exceed ten years if a reliable estimate of the useful life cannot be made.

Intangible assets

Separately acquired trademarks and licences are shown at historical cost.

Trademarks, licences (including software) and customer-related intangible assets acquired in a business combination are recognised at fair value at the acquisition date.

Trademarks, licences and customer-related intangible assets have a finite useful life and are carried at cost less accumulated amortisation and any accumulated impairment losses.

 

Safetonet Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Amortisation

Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:

Asset class

Amortisation method and rate

Goodwill

Straight line over 7-10 years

Investments

Investments in equity shares which are publicly traded or where the fair value can be measured reliably are initially measured at fair value, with changes in fair value recognised in profit or loss. Investments in equity shares which are not publicly traded and where fair value cannot be measured reliably are measured at cost less impairment.


Interest income on debt securities, where applicable, is recognised in income using the effective interest method. Dividends on equity securities are recognised in income when receivable.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Debtors

Debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business.

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell.

Creditors

Creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers.

Borrowings

Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the Profit and Loss Account over the period of the relevant borrowing.

Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Provisions

Provisions are recognised when the group has an obligation at the reporting date as a result of a past event, it is probable that the group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

Leases

Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.

 

Safetonet Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Share capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

Defined contribution pension obligation

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the group has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

Share based payments

The group operates an equity-settled, share-based compensation plan, under which the entity receives services from employees as consideration for equity instruments (options) of the entity. The fair value of the employee services received is measured by reference to the estimated fair value at the grant date of equity instruments granted and is recognised as an expense over the vesting period. The estimated fair value of the option granted is calculated using the Black Scholes option pricing model. The total amount expensed is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

3

Turnover

The analysis of the group's Turnover for the year from continuing operations is as follows:

2023
£

2022
£

Rendering of services

19,396,718

18,111,743

The analysis of the group's Turnover for the year by market is as follows:

2023
£

2022
£

UK

8,610

119,745

Europe

17,838,560

16,260,426

Rest of world

1,549,548

1,731,572

19,396,718

18,111,743

 

Safetonet Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

4

Operating loss

Arrived at after charging/(crediting)

2023
£

2022
£

Depreciation expense

12,839

147,892

Amortisation expense

2,851,031

2,991,576

Accelerated amortisation

168,049

-

Operating lease expense - property

2,713,116

2,659,017

Auditor's remuneration - The audit of the company's annual accounts

28,000

19,091

5

Interest payable and similar expenses

2023
£

(As restated)
2022
£

Interest on bank overdrafts and borrowings

57,788

62,056

Other loan interest expense

619,407

349,329

Foreign exchange gains/losses

74,513

31,320

751,708

442,705

 

Safetonet Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

6

Staff costs

The aggregate payroll costs (including directors' remuneration) were as follows:

2023
£

(As restated)
2022
£

Wages and salaries

8,883,287

9,395,143

Social security costs

1,484,369

1,664,301

Pension costs, defined contribution scheme

77,709

188,298

Share-based payment expenses

-

106,503

Other employee expense

187,919

188,497

10,633,284

11,542,742

The average number of persons employed by the group (including directors) during the year, analysed by category was as follows:

2023
No.

2022
No.

Executive

18

17

Commercial

156

180

Products and Technology

3

13

Marketing and Impact

3

6

Operations

41

46

221

262

7

Directors' remuneration

The directors' remuneration for the year was as follows:

2023
£

(As restated)
2022
£

Remuneration

697,802

601,161

Contributions paid to money purchase pension schemes

46,775

48,087

744,577

649,248

8

Auditors' remuneration

2023
£

2022
£

Audit of these financial statements

28,000

19,091


 

 

Safetonet Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

9

Taxation

Tax charged/(credited) in the consolidated profit and loss account

2023
£

2022
£

Current taxation

UK corporation tax

(85,723)

(238,327)

Foreign tax

63,460

-

Tax receipt in the income statement

(22,263)

(238,327)

The tax on profit before tax for the year is the same as the standard rate of corporation tax in the UK (2022 - the same as the standard rate of corporation tax in the UK) of 23.5% (2022 - 19%).

The differences are reconciled below:

2023
£

2022
£

Loss before tax

(5,015,453)

(7,022,161)

Corporation tax at standard rate

(1,178,631)

(1,334,211)

Effect of tax losses

1,174,105

857,557

Tax decrease arising from overseas tax suffered/expensed

(65,879)

(5,286)

Tax increase from effect of adjustment in research and development tax credit

48,142

243,613

Total tax credit

(22,263)

(238,327)

 

Safetonet Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

10

Intangible assets

Group

Goodwill
 £

Trademarks, patents and licenses
 £

Other intangible assets
 £

Total
£

Cost or valuation

At 1 January 2023

27,522,578

72,360

679,969

28,274,907

Additions

-

-

176,894

176,894

At 31 December 2023

27,522,578

72,360

856,863

28,451,801

Amortisation

At 1 January 2023

5,378,697

27,091

258,333

5,664,121

Amortisation charge

2,815,095

27,091

8,845

2,851,031

Accelerated amortisation

-

-

168,049

168,049

At 31 December 2023

8,193,792

54,182

435,227

8,683,201

Carrying amount

At 31 December 2023

19,328,786

18,178

421,636

19,768,600

At 31 December 2022

22,143,881

45,269

421,636

22,610,786

 

Safetonet Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Company

Other intangible assets
 £

Total
£

Cost or valuation

Additions

176,894

176,894

At 31 December 2023

176,894

176,894

Amortisation

Amortisation charge

8,845

8,845

Impairment

168,049

168,049

At 31 December 2023

176,894

176,894

Carrying amount

At 31 December 2023

-

-

11

Tangible assets

Group

Furniture, fittings and equipment
 £

Total
£

Cost or valuation

At 1 January 2023

815,672

815,672

Additions

88,553

88,553

Disposals

(178,586)

(178,586)

At 31 December 2023

725,639

725,639

Depreciation

At 1 January 2023

378,659

378,659

Charge for the year

12,839

12,839

Eliminated on disposal

(178,586)

(178,586)

At 31 December 2023

212,912

212,912

Carrying amount

At 31 December 2023

512,727

512,727

At 31 December 2022

437,013

437,013

 

Safetonet Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Company

Furniture, fittings and equipment
 £

Total
£

Cost or valuation

At 1 January 2023

118,723

118,723

Additions

13,463

13,463

At 31 December 2023

132,186

132,186

Depreciation

At 1 January 2023

104,534

104,534

Charge for the year

12,839

12,839

At 31 December 2023

117,373

117,373

Carrying amount

At 31 December 2023

14,813

14,813

At 31 December 2022

14,189

14,189

12

Investments

Company

2023
£

2022
£

Investments in subsidiaries

3,888,247

5,069,829

Subsidiaries

£

Cost or valuation

At 1 January 2023

5,069,829

Revaluation

(1,181,582)

At 31 December 2023

3,888,247

Carrying amount

At 31 December 2023

3,888,247

At 31 December 2022

5,069,829

 

Safetonet Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Details of undertakings

Details of the investments (including principal place of business of unincorporated entities) in which the company holds 20% or more of the nominal value of any class of share capital are as follows:

Undertaking

Registered office

Holding

Proportion of voting rights and shares held

2023

2022

Subsidiary undertakings

Safetonet Deutschland GmbH

Hohenzollernring 72, 50672 Köln, Germany.

Ordinary shares

100%

100%

Safetonet STW Limited

2 Old Bath Road, Newbury, Berkshire, England, RG14 1QL

Ordinary shares

100%

100%

Safetonet UK Limited

2 Old Bath Road, Newbury, Berkshire, England, RG14 1QL

Ordinary shares

100%

100%

Safetonet NA Holdings Inc

Suite 2300, Bentall 5, 550 Burrard Street, Vancouver, BC, V6C 2B5, Canada

Common shares

100%

100%

VISR Inc

51 Breithaupt Street, Kitchener, Ontario N2H 5G5 Canada

Common shares

100%

100%

Safetonet Americas Inc

1209 Orange Street, Wilmington, New Castle County, Delaware 19801, USA

USA

Common stock

100%

100%

Safetonet US Inc

1209 Orange Street, Wilmington, New Castle County, Delaware 19801, USA

USA

Common stock

100%

100%

Safetonet Family Store GmbH

StohrerStrasse 17, 04347 Leipzig , Germany

Ordinary shares

75%

75%

System-RepairCenter GmbH

StohrerStrasse 17, 04347 Leipzig , Germany

Ordinary shares

75%

75%

CW Acquisition Corp

1055 Westlakes Drive, Berwyn, PA 19312, USA

Common stock

100%

100%

Zift Software LLC

1055 Westlakes Drive, Berwyn, PA 19312, USA

Common stock

100%

100%

Safetonet STW Inc

1209 Orange Street, Wilmington, New Castle County, Delaware 19801, USA

USA

Common stock

100%

100%

Safetonet HB Limited

2 Old Bath Road, Newbury, Berkshire, England, RG14 1QL

Ordinary shares

100%

100%

 

Safetonet Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

The principal activity of all subsidiary undertakings is keeping children safe online other than Safetonet Family Stores GmbH which is the sale of mobile phones and airtime contract and System-RepairCentre GmbH which is the repair of mobile phones and other devices.
 

13

Stocks

 

Group

Company

2023
£

2022
£

2023
£

2022
£

Other inventories

374,312

380,280

-

-

14

Debtors

   

Group

Company

Note

2023
£

(As restated)
2022
£

2023
£

(As restated)

2022
£

Trade Debtors

 

2,551,370

3,074,498

28,307

29,186

Amounts owed by related parties

22

-

-

56,891

6,129,128

Other debtors

 

848,838

153,399

5,389

14,348

Prepayments

 

301,506

269,802

160,085

195,090

Accrued income

 

170,651

500,685

170,651

432,778

Income tax asset

9

-

243,613

-

243,613

 

3,872,365

4,241,997

421,323

7,044,143

The amounts owed by related parties on the company's balance sheet are unsecure, interest-free and repayable on demand. However, the company does not intend to recall the debt owed in the next 18 months.

15

Cash and cash equivalents

 

Group

Company

2023
£

2022
£

2023
£

2022
£

Cash at bank and on hand

612,659

576,131

28,692

82,062

Short-term deposits

-

7,513

-

-

Other cash and cash equivalents

-

660

-

-

612,659

584,304

28,692

82,062

 

Safetonet Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

16

Creditors

   

Group

Company

Note

2023
£

(As restated)
2022
£

2023
£

(As restated)

2022
£

Due within one year

 

Loans and borrowings

20

365,450

735,491

324,933

399,438

Trade Creditors

 

2,137,899

2,382,239

352,852

350,693

Amounts due to related parties

22

-

-

1,274,182

639,627

Social security and other taxes

 

20,800

978,724

11,782

27,312

Outstanding defined contribution pension costs

 

15,506

29,223

-

-

Other payables

 

2,849,054

904,081

-

-

Accruals

 

4,855,850

3,578,012

3,109,538

2,355,383

Income tax liability

9

18,501

134,083

16,244

-

Deferred income

 

702,545

1,214,816

124,041

432,778

 

10,965,605

9,956,669

5,213,572

4,205,231

Due after one year

 

Loans and borrowings

20

4,067,588

3,647,741

3,756,937

3,340,723

Other non-current financial liabilities

 

25,962

261,344

25,962

31,931

 

4,093,550

3,909,085

3,782,899

3,372,654

17

Provisions for liabilities

Group

Other provisions
£

Total
£

Additional provisions

104,053

104,053

At 31 December 2023

104,053

104,053

 

Safetonet Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

18

Pension and other schemes

Defined contribution pension scheme

The group operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the group to the scheme and amounted to £77,709 (2022 - £188,298).

Contributions totalling £15,506 (2022 - £29,223) were payable to the scheme at the end of the year and are included in creditors.

19

Share capital

Allotted, called up and fully paid shares

2023

2022

No.

£

No.

£

Ordinary A Class of £0.0005 each

51,920,511

25,960

51,657,694

25,829

       

New shares allotted

During the year 262,817 Ordinary A Class shares having a nominal value of £0.0005 were allotted for an aggregate consideration of £530,896.

 

Safetonet Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

20

Loans and borrowings

Non-current loans and borrowings

 

Group

Company

2023
£

2022
£

2023
£

2022
£

Convertible debt

3,756,937

3,340,723

3,756,937

3,340,723

Unsecured debentures

310,651

307,018

-

-

4,067,588

3,647,741

3,756,937

3,340,723

Current loans and borrowings

 

Group

Company

2023
£

2022
£

2023
£

2022
£

Bank borrowings

-

-

-

367,735

Other borrowings

365,450

735,491

324,933

31,703

365,450

735,491

324,933

399,438

The company holds convertible loan notes. The loan notes are interest bearing at 8.00% and repayable May 2027.

Other facilities in place across the group are as follows:

• A Research and Development Tax Credit Loan, interest bearing at 1.99%, repayable on receipt of the RDEC tax credit.
• A Bounce Back Loan, interest bearing at 2.50%, repayable on a monthly basis until January 2027.
• A loan from a related party, interest free and repayable on demand.
• A CEBA loan in Canada, interest bearing at 5%, repayable in December 2026.

21

Obligations under leases and hire purchase contracts

Group

Operating leases

The total of future minimum lease payments is as follows:

2023
£

2022
£

Not later than one year

2,292,628

2,507,251

Later than one year and not later than five years

3,905,022

4,564,405

Later than five years

461,583

626,524

6,659,233

7,698,180

The amount of non-cancellable operating lease payments recognised as an expense during the year was £2,713,116 (2022 - £2,659,017).

 

Safetonet Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

22

Related party transactions

Group

Other transactions with directors

G Werner had a loan account with the company and a subsidiary. At the balance sheet date, the net amount owed to G Werner was £44,757 (2022 - £39,867). This loan is interest free and repayable on demand.

M F D Burns has lent money to a subsidiary company. At the balance sheet date, the amount owing to M Burns was £79,107 (2022 - £83,003).

Included within accruals is an amount totalling £1,698,421 (2022 - £804,115) related to unpaid remuneration due to directors and persons related closely to them. This amount is interest-free and repayable on demand.

The company has a loan with Portridge Capital Ltd, a company which R Pursey is also a director and shareholder. The amount due to Portridge Capital at the balance sheet date was £70,229 (2022 - £21,186).

A subsidiary company rents office space from and is owed monies by Factum Business Development GmbH, a company which G Werner is also a director and shareholder. The amount of rent paid in the year ended 31 December 2023 was £14,483 (2022 - £21,186). The amount due from Factum Business Developments GmbH at the balance sheet date is £31,501 (2022 - £14,403).

During the year, the parent transacted with Eyeora Limited, a company in which R Pursey has a common interest. During the period, the company spent a total of £14,500 (2022 - £Nil) in respect of research and development works. At the balance sheet date, there was a payment on account due back to the company of £2,000 (2022: £Nil). This is currently recognised within prepayments.

Transactions with subsidiaries

The company had a loan with Safetonet Family Stores GmbH. This loan was written off during the year to the sum of £4,736,538 (2022: £Nil).