The directors are pleased to present the strategic report for Xalient Holdings Limited and its subsidiaries for the year ended 31 December 2024.

Xalient Holdings Limited ("the company") and its subsidiaries ("Xalient" or "the group") provide advisory and managed IT services, specialising in identity and access management, cybersecurity and networking. Xalient delivers services into more than 50 countries with strategic hubs in the UK, USA, APAC, and mainland Europe. The group helps some of the world’s most ambitious companies stay secure, connected, and ready for the future, with a combination of capabilities, experience and specialism that sets Xalient apart in the marketplace.

Integration Success and an Elevated Market Proposition

Xalient’s revised market positioning capitalises on its 2023 acquisitions and centres on being the trusted partner for identity-driven security - integrating cybersecurity, identity, and network services to help global enterprises thrive in an increasingly complex digital world. The group’s evolved narrative reflects our belief that identity is now the frontline of cyber defence, and that digital transformation demands security and networking in harmony to be successful. This clear and focused message has resonated strongly with both new and existing customers, enabling us to extend our market offering with a proposition that positions us uniquely in our industry.

As a result, 2024 marked another year of transformative growth for Xalient, characterised by global expansion, successful acquisition integration, and further innovative solutions development. While macroeconomic uncertainty led to delays in the customer decision-making process, demand for Xalient’s offering remained resilient and supported robust booking performance. The group delivered strong customer growth, renewed major long-term customer contracts, launched new global capabilities and partnerships, and expanded our geographic footprint and specialist capabilities.

• Reported revenues increased 63% to £85.0 million (2023: £52.2 million), with adjusted EBITDA increasing 47% year-on-year to £5.9 million.

• 71% of global revenues came from outside the UK.

• US revenues were up 60% year-on-year, now representing 45% of the global total.

• Global services revenues increased by 44%, largely reflecting contributions from the high value consulting and advisory businesses acquired in 2023.

• Xalient was once again recognised by the employee-led Sunday Times Best Places to Work and the Global Inspiring Workplaces Awards, for its employee programmes and company leadership in 2024.

2024 saw intensified pressure on enterprise security and resilience, driven by escalating cyber threats, regulatory shifts like NIS2 and DORA, and the disruptive potential of AI technologies. Customers continue to seek integrated, scalable, and trusted service providers who can bring clarity and confidence across critical domains of digital infrastructure. Xalient’s global scale, customer-first ethos, and deep domain expertise put us in a strong position to capitalise on these trends.

Xalient will continue to build on its core strengths in identity-centric security and intelligent network services, while investing in its AiOps platform, MARTINA, now evolving into a powerful predictive insights and customer engagement solution that sits at the forefront of all Xalient’s services. This positions us to deliver greater value and transparency to customers, and to differentiate our proposition through innovation, insight, and customer experience. Expanding automation, enhancing service delivery, growing our managed services business exponentially in managed identity and security, and scaling global capabilities remain strategic priorities.

Xalient operates a robust governance framework, adhering to stringent policies on supplier management, ethical conduct, data security and Environmental, Social and Governance ("ESG") matters, as well as ensuring high levels of cyber awareness and adherence within our workforce. Despite global economic challenges, demand for our services and solutions remains robust. Our financial planning and risk management strategies ensure that Xalient is well-prepared for future growth.

With strategy, team and leadership aligned, and investments delivering results, we enter 2025 with momentum and ambition. We are committed to scaling responsibly, deepening our customer relationships, and continuing to challenge conventional thinking in security and networking, helping customers stay secure, agile, and future-ready.

As we close 2024, the Directors therefore believe Xalient is well-positioned for success, at the forefront of identity-driven security, helping global enterprises navigate the growing complexities and evolving cyber threat landscape of the digital age.

On behalf of the board

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

The results for the year are set out on page 10.

The loss for the year, after taxation, amounted to £1,554,000 (2023: £151,000 - profit).

No ordinary dividends were paid (2023: £nil). The directors do not recommend payment of a dividend.

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

The company has made qualifying third party indemnity provisions for the benefit of its directors during the year. These provisions remain in force at the reporting date.

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.

Engaging with stakeholders is fundamental to how Xalient does 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 ability to drive value creation over the longer term.

The board of directors confirm that during the year 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 company is part of the group headed by Pcarbon Topco Limited. Consequently, 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. The directors of the company ensure that they give due care and consideration to discharging their duties in s.172 by adopting and adhering to the group’s internal governance arrangements as set by the Group Board.

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 by ensuring that the Group Board’s strategy, policies and standards are adopted and supported by the company. Further detail on the group’s strategy and how it is implemented is contained in the Strategic Report.

The directors’ key decisions during the year related to integrating the acquisitions of Integral Partners LLC and Grabowsky BV. as decided upon by the Group Board. 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.

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.

An external ESG review by EcoVadis, the globally trusted provider of business sustainability ratings, conducted in 2023, positioned the company 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 company continues to make use of external accreditations to drive continuous improvement across all aspects of stakeholder management.

Xalient’s employees are core to the business and fundamental to its operational success. Significant efforts are made to ensure that Xalient 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.

The group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.

Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.

The involvement of employees in the company's performance is encouraged through employee share and growth incentive schemes.

The group continues to invest in research and development to create innovative solutions that deliver improved services to customers as well as market differentiation. 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, identify anomalies and predict potential cyber-attacks or network failures before they occur. The total spend on the research and development activities in the year amounted to £1,500,000 (2023: £1,592,000).

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the group continues and that the appropriate training is arranged. It is the policy of the group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

Subsequent events affecting the group and company financial statements are disclosed in note 30.

Likely future developments in the business of the group are discussed in the strategic report.

The auditors, Rawlinson & Hunter Audit LLP, are deemed to be reappointed under section 487(2) of the Companies Act 2006.

The group's UK energy consumption in the years ended 31 December 2024 and 2023 was as follows:

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.

The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2 per £1 million of revenue, the recommended ratio for the sector.

The group has encouraged increased energy efficiency in the year through sourcing its electricity from 100% green energy, allowing home working and provided an electric vehicle leasing scheme to employees.

The directors are responsible for preparing the Annual Report including Strategic Report and Directors Report and the group and company 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 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 subject to any material departures disclosed and explained in the financial statements; 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.

So far as each person who is 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.

We have audited the consolidated financial statements of Xalient Holdings Limited (the “parent company”) and its subsidiaries (the “group”) for the year ended 31 December 2024 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 2024 and of the group's loss for the year 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.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under those standards are further described in the 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.

Other information

The other information comprises the information included in the Annual Report and Consolidated 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 Consolidated 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.

Opinions on other matters prescribed by the Companies Act 2006

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

• •    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.

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.

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.

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, Indian and Canadian 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:

• 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.

Use of our 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

The consolidated statement of comprehensive income has been prepared on the basis that all operations are continuing operations.

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 year was £2,905,000 (2023: £1,314,000 - profit).

Xalient Holdings 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 Xalient Holdings Limited ("the company") and all of its subsidiaries ("the group" or "Xalient").

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 year was £2,905,000 (2023: £1,314,000 - profit).

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.

These accounts have been prepared on a going concern basis. The directors reviewed the group’s cash flow forecast for the period to 31 December 2026 and they believe that, taking account of global economic and geopolitical challenges as well as reasonably possible changes in projected profitability, contracted revenue, available liquid resources, scheduled repayment of borrowings and loan covenant headroom levels, the company and group has adequate resources to continue in operational existence for the foreseeable future and at least the next 12 months from the date of signing the financial statements.true

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. ­

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.

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.

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:

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:

Investments in subsidiaries are measured at cost less accumulated impairment.

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.

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.

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:

• at fair value with changes recognised in the if the shares are publicly traded or their fair value can otherwise be measured reliably;

• at cost less impairment for all other investments.

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.

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 group 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.

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.

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

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

Deferred tax liabilities are generally recognised for all 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.

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.

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.

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

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.

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.

Research and development

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.

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.

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.

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 2025 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.

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.

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

The group 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.

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.

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.

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 in 2023 (refer to note 26). The group has used its judgement to estimate the future profitability and tax position of its US operations in making these calculations.

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.

The group derives revenue from the transfer of product and services either over time or at a point in time in the following major product lines and geographical regions:

The analysis of revenue and employee numbers has been re-presented to better reflect how the group board manages the business as an integrated advisory and managed IT services provider.

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 and company's contract assets are disclosed in note 17.

The group's and company's contract liabilities are disclosed in note 18.

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 refinancing, need to be separately disclosed in the financial statements in order to provide greater clarity.

Fees payable to the group's auditor for the audit of the group's annual financial statements above includes £80,000 (2023: £80,000) for the audit of the company.

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

Their aggregate costs of these employees (including directors) charged to the consolidated statement of comprehensive income during the year was:

During the year the group capitalised £456,000 (2023: £456,000) of staff time in relation to software development. The numbers presented in this note are shown net of the capitalisation.

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

Directors’ remuneration is borne by the company’s immediate parent, Pcarbon Bidco Limited.

Refer to note 28 for key management personnel and their remuneration payable by the group.

With effect from 1 April 2023, the UK corporation tax rate increased from 19.00% to 25.00%. The blended rate for the comparative year was 23.52%.

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

Factors affecting future tax charges

There are no factors affecting future tax charges, other than the deferred tax (note 24).

The group tests whether goodwill has suffered any impairment on an annual basis. For the 2024 and 2023 reporting years, 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.

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

On 1 March 2024, the group incorporated a new subsidiary, Xalient Secure Networks Inc., in Ontario, Canada. Its principal activity is provision of consulting and systems integration services.

Amounts owed by controlling parties are unsecured, interest free and repayable on demand.

Amounts owed by group undertakings are unsecured and repayable on demand. £527,0000 (2023: £430,000) of the amount is interest free and the remaining amounts bear interest rate between SONIA + 4.75% and SONIA + 5.25.

The group's contract assets of £6,508,000 (2023: £5,809,000) which are receivable in more than one year are presented as non-current contract assets in the consolidated statement of financial position.

The company's contract assets of £824,000 (2023: £863,000) which are receivable in more than one year are presented as non-current contract assets in the company statement of financial position.

Amounts owed to group and parent undertakings are unsecured, interest free and repayable on demand.

The group's contract liabilities of £6,612,000 (2023: £5,456,000) which are payable in more than one year are presented as non-current contract liabilities in the consolidated statement of financial position.

The company's contract liabilities of £694,000 (2023: £399,000) which are payable in more than one year are presented as non-current contract liabilities in the company statement of financial position.

Bank loans

Bank of Ireland

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 and 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 (note 26) and the repayment of the existing loans at the time.

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 26.

At 31 December 2024 the loan facilities comprised £26,994,000 (2023: £24,397,000) principal and £279,000 (2023: £234,000) accrued interest, and are stated net of unamortised arrangement fees of £1,313,000 (2023: £1,681,000).

Other loans

In October 2024, the group entered into a loan agreement with Paragon Asset Finance for a total amount of £999,000 to finance acquisition of certain equipment. The loan is repayable monthly in equal instalments within 3 years and bears interest rate at 8.58% per annum.

Between September 2021 and April 2022, the group entered into five loan agreements with Hewlett Packard for a total amount of US$3,304,000 (£2,471,000) to finance acquisition of certain equipment. The loans were repayable quarterly in equal instalments within 3 years and bore interest rate at 6%-10% per annum. The loans were fully repaid by December 2024.

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.

The group and company do not have any 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 the 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 £723,000 (2023: £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 Euros.

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 shifts. For each simulation, the same interest rate shift is used for all currencies. The scenarios are 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 £273,000 (2023: £246,000) or decrease of £273,000 (2023: £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 £256,000

• 10% strengthening of pound sterling against Euro will increase the group's operating results by £283,000

• 10% weakening of pound sterling against US dollar will decrease the group's operating results by £313,000

• 10% weakening of pound sterling against Euro will decrease the group's operating results by £346,000.

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 12-month rolling basis.

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.

The deferred consideration has arisen on acquisition of Integral Partners LLC. Refer to note 26 for further details.

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.

The contingent consideration recognised in 2023 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.

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

Unrecognised deferred tax - group and company

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 2024 there were losses for the group carried forward on which a deferred tax asset has not been recognised of £497,000 (2023: £659,000).

The Ordinary shares 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 group's and company's reserves comprise the following:

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.

Acquisition of Integral Partners LLC

On 11 August 2023 the company's wholly owned subsidiarity Xalient Inc. 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.

The amounts recognised in 2023 in respect of the identifiable assets acquired and liabilities assumed are set out in the table below:

Acquisition related costs of £649,000 were included within exceptional items in administrative expenses for the year ended 31 December 2023.

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. The amount shown in these financial statements on a discounted basis is £1,766,000 (2023: £1,485,000). Refer to note 21 for details of movements on deferred consideration.

The contingent consideration arrangement required 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).

Acquisition of Grabowsky group

On 13 December 2023 the company's wholly owned subsidiary Xalient B.V. acquired 100% of the equity of the Grabowsky group, a Benelux based digital identity advisory and managed services business focused on Identity Access Management.

The amounts recognised in 2023 in respect of the identifiable assets acquired and liabilities assumed are set out in the table below:

Acquisition related costs of £415,000 were included within exceptional items in administrative expenses for the year ended 31 December 2023.

The remuneration of key management personnel paid by the group is as follows.

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.

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.

The company's immediate parent company is Pcarbon Bidco Limited, the company registered and incorporated in England and Wales. Pcarbon Bidco Limited owns 100% of the company's share capital and is itself a wholly owned subsidiary of Pcarbon Topco Limited.

Pcarbon Topco Limited is the company's ultimate parent company. It is registered and incorporated in England and Wales and is based at 207 Sloane Street, London, United Kingdom, SW1X 9QX.

The company's ultimate controlling party is Volpi Capital LLP which is based at 1 Hooper’s Court, London, SW3 1AF.

On 14 March 2025, the group’s ultimate parent company, Pcarbon Topco Limited, raised £6 million through the issue of Priority Preferred Shares to finance ongoing expansion of the group’s business and repay certain bank borrowings of the group.