Registered number: 12922835
FOR THE YEAR ENDED 31 DECEMBER 2024
SAXON TOPCO LIMITED
COMPANY INFORMATION
SAXON TOPCO LIMITED
CONTENTS
SAXON TOPCO LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The Directors submit their Strategic Report of Saxon Topco Limited (the "Company") and its subsidiaries (the "Group") for the year ended 31 December 2024.
During the year, the Group continued to focus on the sale and delivery of compliance and contact centre solutions to enterprise customers whilst increasing recurring revenue from cloud-based products and associated support services. The acceleration in the market-wide shift from up front on-premise perpetual licences to SaaS based delivery led to a decline in total revenue to £18.2m (2023: £19.0m). Recurring revenue remained relatively stable at 71% (2023: 72%) of total revenue.
Gross margins increased slightly generating a gross profit of £9.9m (2023: £8.5m) for the year.
Operating expenses include distribution costs and administrative overheads, of which the predominant expenses are staff resources, back office costs and corporate overhead. Administrative overheads also include costs incurred in streamlining operations, systems and processes to increasingly deliver and support SaaS based products and services.
The Group continued to significantly invest in further developing its proprietary cloud-based Wordwatch platform. The related development costs are capitalised as appropriate.
The Group is well funded, with a combination of shareholder loan notes and bank debt, which is partially amortising.
Gross margins increased slightly generating a gross profit of £9.9m (2023: £8.5m) for the year.
Operating expenses include distribution costs and administrative overheads, of which the predominant expenses are staff resources, back office costs and corporate overhead. Administrative overheads also include costs incurred in streamlining operations, systems and processes to increasingly deliver and support SaaS based products and services.
The Group continued to significantly invest in further developing its proprietary cloud-based Wordwatch platform. The related development costs are capitalised as appropriate.
The Group is well funded, with a combination of shareholder loan notes and bank debt, which is partially amortising.
The Directors formally review, on a regular basis, the Group's activities and the markets in which it operates to identify and plan for potential threats to the business and to takes steps to minimise any associated disruption to the business and its customers. In particular, the Group has a key focus on cyber-crime, data security and information security risk areas, with extensive cyber controls in place which meet ISO 27000 standards.
Liquidity is monitored closely by the Board with the accelerating shift from perpetual license to subscription based revenue model impacting short term cash flows.
The Group maintains good relationships with its lenders and has complied with its loan covenants to date. It is also, based on current forecasts, expected to continue to comply with the covenants for the current financial year and the 12 months from the date of signing the financial statements.
Liquidity is monitored closely by the Board with the accelerating shift from perpetual license to subscription based revenue model impacting short term cash flows.
The Group maintains good relationships with its lenders and has complied with its loan covenants to date. It is also, based on current forecasts, expected to continue to comply with the covenants for the current financial year and the 12 months from the date of signing the financial statements.
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SAXON TOPCO LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
The Group's key activities are focused on the growth in, and retention of, its customer base through enhanced vendor product service provision and management, in conjunction with the promotion of its own Wordwatch product. The following are the key indicators used by the Directors to measure the success of these activities:
£'000 Revenue Gross Recurring Recurring
profit turnover turnover %
2024: £18,232 £9,884 £12,942 71%
2023: £19,028 £8,489 £13,887 72%
£'000 Revenue Gross Recurring Recurring
profit turnover turnover %
2024: £18,232 £9,884 £12,942 71%
2023: £19,028 £8,489 £13,887 72%
Future developments
The Directors expect to further increase sales activity in the Group's core vendor products and proprietary Wordwatch platform with a continuing trend towards subscription licencing and managed service models as clients move away from on-premise solutions to cloud-based products.
The demand for Wordwatch is expected to increase as the compliance market continues to be more complex, with this likely to impact both text and video-based communications. This will lead to continued investment in the platform to take advantage of the market opportunity as well as to deliver enhancements based on customer requirements. The addition of new vendor products and services into the product portfolio will further strengthen the Group's position as a comprehensive provider of monitoring and compliance services to highly regulated businesses.
The Directors have considered the impact on the business from both the on-going conflict in Ukraine and in the Middle East as well as the changes in inflation and interest rates. The Directors are satisfied that, at present, these do not represent a significant risk to the business.
Going concern
The Group's business activities, together with the factors likely to affect its future developments and its financial position, are described in the strategic report.
Financial forecasts for the period to 30 September 2026 have been prepared and submitted to members of the board for review, setting out in detail the extent and diversity of the Group’s expected and contracted revenues; the risk protections inherent in those contracts; the current available liquidity of the Company; the levels of committed cash outflows; and ability of the Group to mitigate reductions in cash inflows. The forecasts have been stress tested so as to reasonably project downside risk, as well as the significant upside from successful execution of the board’s growth strategy. The Group has access to additional funding should the need arise, including a revolving credit facility to mitigate short-term adverse working capital movements.
The Company is the ultimate parent of a Group that contains both investor and bank debt. Investor debt is non-amortising with interest payable on an exit event. The controlling investor is well funded and has provided a letter of support for the Group. The Group is in compliance with its bank loan financial covenants and is forecast to remain as such for the foreseeable future.
Based on the information contained in these forecasts and, after making due enquiries, the Directors have at the time of approving the financial statements, a reasonable expectation that the Company has adequate resources to continue in operational existence for the forecast period.
As a result, the Directors continue to adopt the going concern basis in preparing the financial statements.
The Directors expect to further increase sales activity in the Group's core vendor products and proprietary Wordwatch platform with a continuing trend towards subscription licencing and managed service models as clients move away from on-premise solutions to cloud-based products.
The demand for Wordwatch is expected to increase as the compliance market continues to be more complex, with this likely to impact both text and video-based communications. This will lead to continued investment in the platform to take advantage of the market opportunity as well as to deliver enhancements based on customer requirements. The addition of new vendor products and services into the product portfolio will further strengthen the Group's position as a comprehensive provider of monitoring and compliance services to highly regulated businesses.
The Directors have considered the impact on the business from both the on-going conflict in Ukraine and in the Middle East as well as the changes in inflation and interest rates. The Directors are satisfied that, at present, these do not represent a significant risk to the business.
Going concern
The Group's business activities, together with the factors likely to affect its future developments and its financial position, are described in the strategic report.
Financial forecasts for the period to 30 September 2026 have been prepared and submitted to members of the board for review, setting out in detail the extent and diversity of the Group’s expected and contracted revenues; the risk protections inherent in those contracts; the current available liquidity of the Company; the levels of committed cash outflows; and ability of the Group to mitigate reductions in cash inflows. The forecasts have been stress tested so as to reasonably project downside risk, as well as the significant upside from successful execution of the board’s growth strategy. The Group has access to additional funding should the need arise, including a revolving credit facility to mitigate short-term adverse working capital movements.
The Company is the ultimate parent of a Group that contains both investor and bank debt. Investor debt is non-amortising with interest payable on an exit event. The controlling investor is well funded and has provided a letter of support for the Group. The Group is in compliance with its bank loan financial covenants and is forecast to remain as such for the foreseeable future.
Based on the information contained in these forecasts and, after making due enquiries, the Directors have at the time of approving the financial statements, a reasonable expectation that the Company has adequate resources to continue in operational existence for the forecast period.
As a result, the Directors continue to adopt the going concern basis in preparing the financial statements.
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SAXON TOPCO LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
This report was approved by the Board and signed on its behalf.
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SAXON TOPCO LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The Directors present their Report and the financial statements for the year ended 31 December 2024.
The Directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the Directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent; and
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The loss for the year, after taxation, amounted to £5,727,239 (2023: £4,123,551).
No dividends were declared or paid in the year (2023: £Nil).
The Directors who served during the year were:
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SAXON TOPCO LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
The investment in research and development during this year has been significant and is focused on transformative cloud-based business applications which address the current and future requirements of markets in which the Group already trades.
The Directors regard the investment made in research and development as integral to the continuing success of the Group and will continue to make further investments going forward.
The Directors regard the investment made in research and development as integral to the continuing success of the Group and will continue to make further investments going forward.
The Group has chosen in accordance with section 414C(11) of the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 to set out in the Group's Strategic Report information required by the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 Schedule 7 to be contained in the Directors' Report.
Cooper Parry Group Limited was appointed auditor to the Company during the year. In accordance with section 485 of the Companies Act 2006, a resoluton proposing that it be re-appointed will be put at a General Meeting. This report was approved by the board and signed on its behalf.
This report was approved by the Board and signed on its behalf.
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SAXON TOPCO LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SAXON TOPCO LIMITED
We have audited the financial statements of Saxon Topco Limited (the 'Company') and its subsidiaries (the 'Group') for the year ended 31 December 2024, which comprise the consolidated profit and loss account, the consolidated and Company balance sheets, the consolidated and Company statement of changes in equity, the consolidated statement of cash flow and the related 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 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 Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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.
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 or the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
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SAXON TOPCO LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SAXON TOPCO LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The Directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
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.
In our opinion, based on the work undertaken in the course of the audit:
∙The information given in the Group 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 Group 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 Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
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SAXON TOPCO LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SAXON TOPCO LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. 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.
Our assessment focused on key laws and regulations the Group and Company have to comply with and areas of the financial statements we assessed as being more susceptible to misstatement. These key laws and regulations included but were not limited to compliance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice and relevant tax legislation.
Our assessment focused on key laws and regulations the Group and Company have to comply with and areas of the financial statements we assessed as being more susceptible to misstatement. These key laws and regulations included but were not limited to compliance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice and relevant tax legislation.
We are not responsible for preventing irregularities. Our approach to detecting irregularities included, but was not limited to, the following:
∙Obtaining an understanding of the legal and regulatory framework applicable to the entity and how the entity is complying with that framework;
∙Obtaining an understanding of the entity policies and procedures and how the entity has compiled with these, through discussions and sample testing of controls;
∙Obtaining an understanding of the entity’s risk assessment process, including the risk of fraud;
∙Designing our audit procedures to respond to our risk assessment
∙Performing audit testing over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business; and
∙Reviewing accounting estimates for bias, particularly over the capitalisation of development costs and the recognition of deferred tax assets.
Whilst considering how our audit work addressed the detection of irregularities, we also consider the likelihood of detection based on our approach. Irregularities arising from fraud are inherently more difficult to detect than those arising from error.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. 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 for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.
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SAXON TOPCO LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SAXON TOPCO LIMITED (CONTINUED)
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 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 Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Statutory Auditor
New Derwent House
New Derwent House
69-73 Theobalds Road
London
WC1X 8TA
Date:
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SAXON TOPCO LIMITED
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2024
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SAXON TOPCO LIMITED
REGISTERED NUMBER: 12922835
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2024
* Refer to note 26.
The financial statements were approved and authorised for issue by the Board and were signed on its behalf by:
The financial statements were approved and authorised for issue by the Board and were signed on its behalf by:
The notes on pages 15 to 38 form part of these financial statements.
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SAXON TOPCO LIMITED
REGISTERED NUMBER: 12922835
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2024
The financial statements were approved and authorised for issue by the Board and were signed on its behalf by:
The notes on pages 15 to 38 form part of these financial statements.
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SAXON TOPCO LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
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SAXON TOPCO LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2024
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SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Saxon Topco Limited ("the Company") is a private company limited by shares and is registered and incorporated in England and Wales. The registered office is Techspace, London, 140 Goswell Road, London, England, EC1V 7DY.
The Group consists of Saxon Topco Limited and all of its consolidated subsidiaries.
The Company's and the Group's principal activities and nature of operations are disclosed in the Director's Report.
The Group consists of Saxon Topco Limited and all of its consolidated subsidiaries.
The Company's and the Group's principal activities and nature of operations are disclosed in the Director's Report.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own statement of comprehensive income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Group as if they form a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated profit and loss account from the date on which control is obtained. They are deconsolidated from the date control ceases. .
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated profit and loss account from the date on which control is obtained. They are deconsolidated from the date control ceases. .
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SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
The Group's business activities, together with the factors likely to affect its future developements and its financial position, are described in the Strategic Report.
Financial forecasts have been prepared for the period to 30 September 2026 and submitted to members of the Board for review, setting out in detail the extent and diversity of the Group's expected and contracted revenue; the risk protections inherent in those contracts; the current available liquidity of the Group; the levels of committed cash outflows; and ability of the Group to mitigate reductions in cash inflows. The forecasts have been stress tested through flexing growth rate, margin and products mix assumptions, so as to reasonably project downside risk, as well as the significant upside from successful execution of the Board's growth strategy.
The Group contains both investor and bank debt. Investor debt is non-amortising with interest payable on an exit event. The controlling investor is well funded and has provided a letter of support for the Group. The Group is in compliance with it's bank loan financial covenants and is forecast to remain as such for the forecast period.
Based on the information contained in these forecasts and, after making due enquiries, the Directors have at the time of approving the financial statements, a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.
As a result, the Directors continue to adopt the going concern basis in preparing the consolidated financial statements.
Financial forecasts have been prepared for the period to 30 September 2026 and submitted to members of the Board for review, setting out in detail the extent and diversity of the Group's expected and contracted revenue; the risk protections inherent in those contracts; the current available liquidity of the Group; the levels of committed cash outflows; and ability of the Group to mitigate reductions in cash inflows. The forecasts have been stress tested through flexing growth rate, margin and products mix assumptions, so as to reasonably project downside risk, as well as the significant upside from successful execution of the Board's growth strategy.
The Group contains both investor and bank debt. Investor debt is non-amortising with interest payable on an exit event. The controlling investor is well funded and has provided a letter of support for the Group. The Group is in compliance with it's bank loan financial covenants and is forecast to remain as such for the forecast period.
Based on the information contained in these forecasts and, after making due enquiries, the Directors have at the time of approving the financial statements, a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.
As a result, the Directors continue to adopt the going concern basis in preparing the consolidated financial statements.
Functional and presentation currency
Transactions and balances
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SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
Revenue is recognised at the fair value of the consideration received or receivable for goods and services to external customers in the ordinary nature of the business. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates. Revenue is shown net of Value Added Tax.
Revenue relating to installation contracts is ascertained in a manner appropriate to the stage of completion of the contract. On receipt of the customer purchase order 10% is recognised. Following this progress is recognised on a monthly basis as it is made. To the extent that fees rendered on account exceed relevant revenue, the excess is included in "Accruals and deferred income".
Cloud subscriptions and support charges receivable are included in revenue in equal instalments over the duration of the agreements in accordance with the timing of the actual service provided.
Interest income
Interest income is accrued on a time-apportioned basis, by reference to the principal outstanding at the effective interest date.
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.
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SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
The cost of short terms employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as pert of the stock of fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee's services are rendered.
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SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
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SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
Goodwill
Other intangible assets
Development costs that are incurred and can be specifically attributed to the project's development are capitalised only if the expenditure can be measured reliably, future economic benefits are probable, and the Company intends to and has sufficient resources to complete the project.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the consolidated profit and loss account.
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SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
The Group has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.
Financial instruments are recognised in the Group balance sheet when the Group becomes party to the contractual provisions of the instrument.
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SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include trade and other debtors, cash and bank balances, are initially measured at their transaction price (adjusted for transaction costs except in the initial measurement of financial assets that are subsequently measured at fair value through profit and loss) and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Discounting is omitted where the effect of discounting is immaterial. The Group cash and cash equivalents, trade and most other debtors due with the operating cycle fall into this category of financial instruments.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
Impairment of financial assets
At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial assets have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Basic financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other creditors, bank loans, other loans and loans due to fellow Group companies are initially measured at their transaction price (adjusting for transaction costs except in the initial measurement of financial liabilities that are subsequently measured at fair value through profit and loss). When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future payments discounted at
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SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
a market rate of interest, discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade creditors are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade creditors are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Other financial instruments
Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss.
Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Group transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Group will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Group contractual obligations expire or are discharged or cancelled.
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SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.
Capitalisation of development costs
Development costs that are incurred and can be specifically attributed to the project's development are capitalised only if the expenditure can be measured reliably, future economic benefits are probable, and the Company intends to and has sufficient resources to complete the project.The Directors have reviewed and assessed the amounts capitalised as development costs in the year and have concluded that the amounts are appropriate and are recoverable over their useful economic lives.
Impairment of fixed assets
The Directors assesses the impairment of fixed assets subject to depreciation whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
Depreciation and residual values
The Directors have reviewed the asset lives and associated residual values of all fixed asset classes and have concluded that asset lives and residual values are appropriate.
The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In 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.
Recoverability of trade debtors
Trade and other debtors are recognised to the extent that they are judged recoverable. The Directors' reviews are performed to estimate the level of reserves required for irrecoverable debt. Provisions are made specifically against invoices where recoverability is uncertain. The Directors make allowance for doubtful debts based on an assessment of the recoverability of debtors.
Allowances are applied to debtors where events or changes in circumstances indicate that the carrying amounts may not be recoverable. The Directors specifically analyse historical bad debts, customer creditworthiness, current economic trends and changes in customer payment terms when making a judgement to evaluate the adequacy of the provision for doubtful debts. Where the expectation is different from the original estimate, such difference will impact the carrying value of debtors and the charge in the the consolidated profit and loss account.
Leases
The Directors determine whether leases entered into by the Group either as a lessor or lessee are an operating leases or a finance leases. These decisions depend on an assessment of whether the risks and rewards of ownership have been transferred from the lessor to the Group on a lease by lease basis based on an evaluation of the terms and conditions of the arrangements, and accordingly whether the lease requires an asset and liability to be recognised in the balance sheet.
Page 24
SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
3.Judgements in applying accounting policies (continued)
There are many transactions and calculations for which the ultimate tax determination is uncertain. The Group takes professional advice on its tax affairs and recognises liabilities for anticipated tax based on estimates of what taxation is likely to be due.
Management estimation is required to determine the amount of any deferred tax assets that can be recognised, based upon likely timing and level of future taxable profits.
Provisions
A provision is recognised when the Group has a present legal or constructive obligation as a result of a past event for which it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
Whether a present obligation is probable or not requires judgement. The nature and type of risks for these provisions differ and management’s judgement is applied regarding the nature and extent of obligations in deciding if an outflow of resources is probable or not.
Fair value calculations
Management believes the estimates used to establish a fair value for share based payments, using the Black Scholes pricing model is a key source of estimation uncertainty. The inputs to the fair value mode reflect managements best estimate.
Estimates and judgments are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances.
Key sources of estimation uncertainty
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates and assumptions will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing material adjustments to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Revenue recognition is based on management's best estimation of individual projects' percentage of completion. Consequently, these estimations have a significant impact on the revenue, accrued income, and deferred income. Furthermore, direct costs are matched against revenue and therefore revenue recognition estimates have a significant impact on cost of sales, accrued costs and deferred cost of sales.
The recoverable amount of intangible assets is based on value in use which requires estimates in respect of the allocation of the assets to cash generating units and the future cash flows.
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SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Analysis of revenue by country of destination:
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SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
12.Taxation (continued)
There were no factors that may affect future tax charges.
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SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Page 31
SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 32
SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 33
SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Loan notes are accruing interest between 10% and 12.5% per annum and are repayable on 23 December 2029.
Amounts included above which fall due after five years and are payable other than by installments are £17,574,367 (2023: £15,644,975).
Amounts included above which fall due after five years and are payable other than by installments are £17,574,367 (2023: £15,644,975).
Page 34
SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Page 35
SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Profit and loss account
Page 36
SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Overhead costs
During the year, management identified that certain overhead costs amounting to £2,307,867 had been wrongly presented within cost of sales in the prior year. In accordance with the Group’s accounting policy, these costs should have been classified as operating expenses in the consolidated profit and loss account.
As a result, the comparative information for the prior year has been restated to reclassify these amounts from cost of sales to operating expenses. There is no impact on the reported loss, net assets, or cash flows for the prior year.
The effect of this reclassification on prior year figures is summarised below:
Management has concluded that this reclassification provides more relevant presentation of the nature of expenses, consistent with the Group's accounting policies.
Revenue
During the year, management identified that revenue in the prior year had been overstated by £374,901. In accordance with the Group’s revenue recognition policy, this amount should have been recognised as revenue over the contract term from April 2023 to March 2028. As such, the recognition of the full amount in the prior year was incorrect.
This effect of this restatetment or prior year figures is summarised below:
Management has concluded that restating the prior year ensures compliance with the Group's revenue recognition policy and provides more reliable and relevant information to users of the financial statements.
Exceptional costs
During the year, management reclassified cetrain operating costs of £319,850 in the prior year as exceptionals to improve the consistency of financial information presented. This reclassification had no effect on the total loss for the financial year or net assets of the Company for the prior period.
During the year, management identified that certain overhead costs amounting to £2,307,867 had been wrongly presented within cost of sales in the prior year. In accordance with the Group’s accounting policy, these costs should have been classified as operating expenses in the consolidated profit and loss account.
As a result, the comparative information for the prior year has been restated to reclassify these amounts from cost of sales to operating expenses. There is no impact on the reported loss, net assets, or cash flows for the prior year.
The effect of this reclassification on prior year figures is summarised below:
Management has concluded that this reclassification provides more relevant presentation of the nature of expenses, consistent with the Group's accounting policies.
Revenue
During the year, management identified that revenue in the prior year had been overstated by £374,901. In accordance with the Group’s revenue recognition policy, this amount should have been recognised as revenue over the contract term from April 2023 to March 2028. As such, the recognition of the full amount in the prior year was incorrect.
This effect of this restatetment or prior year figures is summarised below:
Management has concluded that restating the prior year ensures compliance with the Group's revenue recognition policy and provides more reliable and relevant information to users of the financial statements.
Exceptional costs
During the year, management reclassified cetrain operating costs of £319,850 in the prior year as exceptionals to improve the consistency of financial information presented. This reclassification had no effect on the total loss for the financial year or net assets of the Company for the prior period.
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 fund. Included within other creditors at the year end is £54,761 (2023: £40,196) in respect of pension contributions owed by the Group.
Page 37
SAXON TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
29.Finance lease commitments
A cross guarantee exists in favour of HSBC between Wordwatch Limited (formely Opex Hosting Limited), Saxon Bidco Limited, Saxon Finco Limited, Business Systems (UK) Limited and Acrinax Limited. The outstanding balance in relation to this bank facility is £9,726,875 (2023: £8,763,875), net of arrangement fees of £275,310 (2023: £381,641). This facility is secured by a fixed and floating charge over the subsidiaries assets.
In accordance with Section 479C of the Companies Act 2006, Saxon Topco Limited has provided a guarantee over the liabilities of certain members of the Group. Further details are given in note 15 to the financial statements.
In accordance with Section 479C of the Companies Act 2006, Saxon Topco Limited has provided a guarantee over the liabilities of certain members of the Group. Further details are given in note 15 to the financial statements.
The ultimate controlling party of the Company and the Group is August Equity Partners V General Partner LLP.
Page 38