REG - Shearwater Group PLC - Results for the 15-month period ended 30 June 2025
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RNS Number : 9593G Shearwater Group PLC 11 November 2025
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EU Regulation 596/2014 (as amended), which forms part of domestic UK law
pursuant to the European Union (Withdrawal) Act 2018. Upon publication of this
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11 November 2025
Shearwater Group plc
("Shearwater", or the "Group")
Results for the 15-month period ended 30 June 2025
Significant growth in revenue and adjusted EBITDA
Shearwater Group plc, the cybersecurity, advisory and managed security
services group, announces its audited final results for the 15-month period
ended 30 June 2025.
Financial Highlights
· Revenue of £39.5m (FY24 (restated): £24.4m(1)), representing
annualised growth of 29% (£41.4m prior to application of revised revenue
recognition policy*)
o Underpinned by strong growth in the Group's Services division
· Adjusted EBITDA(2) of £2.2m (FY24 (restated): £0.9m(1)), up 91%
on an annualised basis
· Adjusted profit before tax(3) of £0.6m (FY24: loss of £0.6m(1))
· Adjusted EPS of 3.0p per share (FY24 (restated): 0.5p)
· Strong financial position, with closing cash of £5.1m (FY24:
£5.0m) and no debt
· One off exceptional costs of £11.3m (FY24: £0.5m), comprising
of:
o Non-cash impairment charge to goodwill and intangibles: £11.1m
o Restructuring and other costs: £0.2m
*Prior year adjustment applied to reflect revised revenue recognition policy
in respect of provision of third-party cloud hosted cyber security solutions
and third party support and maintenance contracts. The revised policy moves
from recognition at the point of delivery to recognition over the duration of
the contract. Without this revised policy, revenue for the 15-month period
would have been £41.4m and Adjusted EBITDA would have been £2.3m, both
slightly ahead of market expectations. Further detail in respect of this
adjustment is provided in the Financial Review.
Operational Highlights
· Strong growth in the Services division, with revenue rising to
£37.0m (annualised growth of 34%(1)), driven by a combination of repeat
business from long-standing, blue-chip, customers and new client acquisitions
· A number of contract wins including:
o $12.8m five-year contract with leading global telco (new client) with
development and security of 5G network
o £8.4m contract renewal with leading telco (long-standing client) for
provision of assurance solutions across technology domains
· Awarded supplier status onto the Government's G-Cloud 14
framework, opening up more public sector opportunities
· Investment in proprietary AI tools to enhance quality of client
solutions and ability to respond to tenders in efficient and scalable manner;
Brookcourt Solutions became one of the first UK organisations to achieve
prestigious ISO 42001 certification for responsible and effective management
of AI systems
· Delivered a number of feature enhancements to proprietary
Multi-Factor Authentications solutions, with objective of returning Software
segment of the business to growth in FY26
Outlook
· Increasing frequency, complexity and scale of cyber-security
threats expected to drive continued growth in the sector
· While procurement cycles can still be elongated, budgets are now
being unlocked in line with the trend towards organisations committing to
essential cybersecurity spend
· Group well placed to capitalise as a result of:
o The deep knowledge and trusted reputation of each of its constituent
companies
o Its particular expertise in valuable and highly-regulated Telco and
Financial Services Sectors
o Ability to service expected increase in public sector investment in cyber
security
o Its strong balance sheet as a platform for growth
· Growing pipeline of opportunities provides confidence in the
ongoing delivery of growth in both revenue and EBITDA in FY26
Phil Higgins, CEO of Shearwater Group, commented: "The past 15 months have
been a period of significant progress for Shearwater. We have delivered strong
revenue and EBITDA growth, maintained a robust balance sheet, and broadened
our client base. This growth reflects the investment we have made in the
quality of our solutions, our people and the high regard in which each of the
Shearwater Group companies is held.
"The cybersecurity landscape continues to evolve rapidly, with threats
becoming more frequent, more complex, and more damaging. Against this
backdrop, organisations are recognising the need to commit to investment in
their defences. This will create further opportunity for Shearwater Group
and we look forward to FY26 and beyond with optimism."
Investor Presentation
Shearwater Group's CEO, Phil Higgins and CFO, Jonathan Hall, will provide a
live investor presentation relating to the results via the Investor Meet
Company platform on 12 November 2025 at 1:30pm.
Investors can sign up to Investor Meet Company for free and add to
meet Shearwater
Group via: https://www.investormeetcompany.com/shearwater-group-plc/register-investor
(https://www.investormeetcompany.com/shearwater-group-plc/register-investor)
A video interview with Phil Higgins, CEO, and Jonathan Hall, CFO, is available
to view here:
https://www.voxmarkets.co.uk/articles/interview-with-shearwater-group-651e8d7
(https://www.voxmarkets.co.uk/articles/interview-with-shearwater-group-651e8d7)
1 - FY24 Income Statement comparatives reflect 12 month period to 31 March
2024. Annualised growth rates have been calculated by multiplying FY25
results by 12/15 to create an annual equivalent and comparing this to the FY24
value
2 - Adjusted EBITDA is defined as profit before tax, before one off
exceptional items, share based payment charges, finance charges, impairment of
intangible assets, depreciation and amortisation.
3 - Adjusted Loss Before Tax defined as net profit before tax, exceptional
items, share based payments and amortisation of acquired goodwill
Enquiries:
Shearwater Group plc www.shearwatergroup.com
David Williams, Chairman c/o Alma
Phil Higgins, CEO
Jonathan Hall, CFO
Cavendish Securities plc +44 (0) 20 7397 8900
Adrian Hadden / Ben Jeynes/ Elysia Bough - Corporate Finance
Dale Bellis / Michael Johnson - Broking/ Sales
Alma shearwater@almastrategic.com (mailto:shearwater@almastrategic.com)
Justine James / Joe Pederzolli / Emma Thompson +44 (0) 20 3405 0205
About Shearwater Group plc
Shearwater Group plc is an award-winning group providing cyber security,
managed security and professional advisory solutions to create a safer online
environment for organisations and their end users.
The Group's differentiated full service offering spans identity and access
management and data security, cybersecurity solutions and managed security
services, and security governance, risk and compliance. Its growth strategy is
focused on building a scalable group that caters to the entire spectrum of
cyber security and managed security needs, through a focused buy and build
approach.
The Group is headquartered in the UK, serving customers globally across a
broad spectrum of industries.
Shearwater shares are listed on the London Stock Exchange's AIM under the
ticker "SWG". For more information, please visit www.shearwatergroup.com
(http://www.shearwatergroup.com) .
Chairman's statement
I am delighted to report on a period of excellent progress for Shearwater
Group, during which we delivered significant growth in both revenue and
Adjusted EBITDA profitability. This strong performance reflects the success of
our strategy, the quality of our people and the growing relevance of our
services in a complex and fast-moving cybersecurity landscape.
Cybersecurity: a strategic imperative
Cybersecurity is now a key strategic issue for almost every organisation. The
threat environment is becoming increasingly sophisticated, with cyber risks
escalating in scale, frequency and impact. Over recent months, the cost of
failure has never been more visible - reinforcing the critical importance of
cyber resilience as a Board-level priority.
This context places Shearwater Group in a position of strength. Our portfolio
of award-winning businesses, each with a strong reputation in their respective
fields, continues to be trusted by some of the most prestigious companies in
the world. This trust is earned through the consistent quality of our
delivery, the depth of our technical expertise, and the proven value we
provide to our customers in safeguarding their most critical digital assets.
Performance and progress
The Group delivered strong organic growth in the 15 months to 30 June 2025.
Our improved underlying profitability demonstrates the benefits of our
strategic positioning and our commitment to driving long-term value for all
stakeholders.
We have continued to invest in innovation, in our people, and in broadening
the scope of our services, ensuring we remain ahead of emerging threats while
supporting clients in navigating increasingly complex regulatory and
technological environments.
Our people and stakeholders
None of this would be possible without the exceptional people across our
Group. I would like to extend my sincere thanks to our executive team and our
talented colleagues throughout the business, whose commitment, professionalism
and deep domain expertise are central to our success.
I would also like to thank our Non-executive Directors and members of our
Advisory Panel for their insight and guidance, and to express our appreciation
to our customers and shareholders for their continued loyalty and trust in
Shearwater Group.
Looking ahead
Cybersecurity will remain a defining challenge for organisations globally and
with that comes opportunity. With a strong reputation, trusted client
relationships and a clear strategic direction, Shearwater Group is well
positioned to continue delivering sustainable growth and value. We have a
strong balance sheet, with significant net cash. As we look to the future, we
do so with confidence.
On behalf of the Board, thank you for your continued support.
David Williams
Chairman
10 November 2025
Chief Executive's review
The period to 30 June 2025 was one of significant financial and operational
progress for Shearwater Group as we strengthened our position as a trusted
partner for cutting-edge cybersecurity solutions. Building on a streamlined
corporate structure, we have enhanced our Services division, reflected in the
increase in larger contract wins and we continue invest in innovation to
improve delivery and resilience.
Revenue of £39.5 million represented annualised year-on-year growth of 29%
(FY24: £24.4 million (restated)), while Adjusted EBITDA of £2.2 million
represented growth of 91% (FY24: £0.9 million (restated)).
We maintain a robust balance sheet, closing the period with £5.1 million in
cash (FY24: £5.0 million) and no debt. This position was strengthened further
by a £1.75 million customer receipt in the week following the period end.
Our strong financial foundation, combined with a growing customer base, a
well-established reputation, and the increasing imperative for organisations
to invest in cybersecurity, positions Shearwater well for continued profitable
growth as we look ahead to FY26.
Group operational review
The 15-month period to 30 June 2025 coincided with an increasingly complex
cybersecurity landscape. The frequency and sophistication of threats facing
businesses continued to grow, ranging from opportunistic attacks by
individuals to highly co-ordinated efforts by nation states targeting critical
infrastructure and financial systems. The tools available to those with
malicious intent are also evolving rapidly, driven in no small part by the
advancement of artificial intelligence. At the same time, organisations are
navigating increasingly decentralised working practices, introducing new
vulnerabilities that require continuous monitoring and mitigation.
While the existence of these threats is not new, our performance in FY23 and
FY24 was impacted by extended decision-making cycles, which in turn delayed
expected revenues. Such critical investment decisions, however, cannot be
deferred indefinitely. We are now seeing a positive shift. While procurement
processes remain complex, there is a growing trend towards organisations
committing to essential cybersecurity spend, influenced by the increasingly
visible consequences of inaction, both in terms of business disruption and
regulatory penalties over the past year.
The Group operates through two divisions:
Services - which delivers cybersecurity solutions through third-party software
and hardware, engineering services, advisory capabilities and penetration
testing; and
Software - focused on our proprietary identity verification and access
management solutions.
These two divisions experienced differing fortunes during the period. Our
Services division, which now accounts for 94% of Group revenue (up from 90% in
FY24 (restated)), delivered significant growth. In contrast, trading
conditions were more challenging within our Software division, which
represented 6% of revenue in the period (down from 10% in FY24 (restated)). We
have been working to mitigate the challenges that the Software division has
experienced, which we believe will result in stronger financial performance in
FY26 and beyond.
Further detail on each division's performance is provided in their respective
sections of this report.
During FY24, we initiated a process to streamline the Group's corporate
structure. This included integrating our Xcina Consulting business into
Brookcourt and the GeoLang software into SecurEnvoy. This rationalisation was
completed in FY25, supporting our ambition to drive greater operational
efficiency as we move forward, enabling us to focus spend on new product
development and driving revenue growth.
At Shearwater, we are proud to operate at the forefront of technological
innovation. In June 2025, we were delighted to announce that Brookcourt
Solutions became one of the first organisations in the UK to achieve ISO 42001
certification, the pioneering international standard for Artificial
Intelligence Management Systems (AIMS). This milestone not only reinforces our
commitment to ethical and responsible AI practices but also reflects the deep
expertise within our Group in setting industry standards for cybersecurity and
digital governance. As AI continues to transform business, we are dedicated to
ensuring it is deployed in a secure, transparent and human-centric manner.
Services
FY25 was a year of strong growth for the Services segment, with revenue
reaching £37.0 million, representing a 34% increase on an annualised basis
compared to FY24 (restated). We continue to deliver high-calibre, specialist
cyber-security solutions for clients across a broad range of industries in
both the public and private sectors, once again however, our revenues were
underpinned by our sustained strength in the Telecoms and Financial Services
sectors.
We continue to invest in new client acquisition, to drive a broader and more
diversified client base. During FY25, this resulted in four clients who each
contributed over £2 million in revenue during the period, compared to two in
FY24, providing a stronger platform for growth and building greater resilience
to our revenues.
Alongside our work with blue-chip businesses in the private sector, we
continue to see a significant opportunity in the public sector and have made
good progress in capitalising on this. A notable milestone during H1 FY25 was
our acceptance onto the UK Government's G-Cloud 14 procurement framework,
which is already generating a pipeline of new and scalable prospects.
In line with our commitment to innovation and service excellence, during FY25
we invested in the development of a proprietary AI tool aimed at enhancing
both the quality of our solutions and the efficiency with which we respond to
client tenders and technical requests. This investment is expected to support
future revenue growth in a scalable and cost-effective manner. As a further
testament to our leadership in the application of emerging technologies, we
were proud that Group company Brookcourt Solutions became one of the first
organisations globally to achieve the prestigious ISO 42001 certification for
the responsible and effective management of AI systems.
While FY25 was overall a very positive year for the Services segment of the
business, growth within this segment was not uniform across all Group
companies. During FY24, our penetration testing business, Pentest Limited, had
delivered a record performance, supported by a major fixed-term project with a
US-based software provider. This project concluded at the end of Q1 FY25.
Although our penetration testing team continued to deliver high-quality work
across a broad client base during FY25 and the pipeline of opportunities
across the year has remained strong, this business has suffered from delays in
client decision making and speed of mobilisation throughout the period. As a
result it hasn't been able to replace certain major projects that have
culminated in the period with others of the same scale. Consequently revenue
from the Pentest business was significantly lower than in the previous year.
While the Board continues to believe strongly in the long-term prospects of
the Pentest business, underpinned by the strength of its brand and a
high-calibre team, the reduced revenue in FY25 prompted a reassessment of the
carrying value of goodwill and intangible assets dating back to the original
acquisition of the business in 2019. Accordingly, an exceptional non-cash
impairment charge has been recognised in the period. Further detail on this is
provided in the financial review.
2025 2025 annualised 2024 Variance (annualised)
15 months (restated)
£m £m £m %
Revenue 37.0 29.6 22.0 34.5%
Gross profit 8.0 6.4 5.5 17.1%
Gross margin % 21.6% 21.6% 24.8%
Overheads 4.7 3.7 3.9 (4.1%)
Adjusted EBITDA(1) 3.3 2.7 1.6 70.2%
Adjusted EBITDA margin % 9% 9% 7%
(1) Adjusted EBITDA above is prior to Group costs as set out in Note 3.
Software
During FY25 we continued to invest in development of our proprietary
software. Multi-factor authentication tools are becoming an ever more vital
tool in the defence against cyber-attacks and the enhancements we have made
throughout the period continue to differentiate our product from others on the
market. Key development achievements during the period include:
· Enhanced Security: The V5 R3 release provides additional
security metrics coupled with our AI detection, reduces false positives and
the overhead and time of investigation is key to being secure.
· Advanced Management for Windows Logon Agent: Deploy 1,000's of
agents seamlessly, with zero touch. Automatically configure and update from a
single console, protect console and remote desktop environments with
SecurEnvoy MFA.
· True Location: Detect impossible travel between user sessions
and force logout when detecting abnormal user behaviour. New Mobile
application bringing true location, login from a declared safe zone or
location deviation.
· Credential Reset: Self-service, to reduce helpdesk calls
regarding issues with passwords or MFA options, users can recover and keep
operational with no helpdesk support.
· RESTful API: Providing ability for third party systems and code
developers to integrate and utilise SecurEnvoy administration and
authentication.
Our multi-factor authentication tools are deployed across more than 750
clients around the world, sold and marketed through our comprehensive global
network of distributors and re-sellers. In May 2025, our route to market was
further strengthened, with the product becoming directly available through
Amazon Marketplace for the first time.
Despite these strengths, trading remained challenging through FY25. Revenue
of £2.6 million represented a decline of 14% year-on-year on an annualised
basis (FY24 (restated): £2.4 million), influenced by competitive pressures,
notably the wide availability of the Microsoft Authenticator product, which
many organisations receive at no extra cost as part of their broader Microsoft
subscription. The additional features added through FY25 extend the degree of
differentiation that our product enjoys, in particular for those clients
looking for an on-premise solution.
As we enter FY26, we retain a strong belief in the size of the opportunity for
multi-factor authentication software and the quality and the extent of the
differentiation in our product. We believe this will enable our software
business to return to growth in the year ahead. Notwithstanding this
confidence, in the context of the reduction in revenue seen over the past
three years, Directors have reviewed the appropriateness of the value of
goodwill and intangible assets held on the Group balance sheet in respect of
the SecurEnvoy business. The results of this review are contained within the
financial review.
2025 2024
15 months 2025 annualised (restated) Variance (annualised)
£m £m £m %
Revenue 2.6 2.0 2.4 (14.9%)
Gross profit 1.6 1.3 1.7 (25.2%)
Gross margin % 62% 62% 71%
Overheads 1.0 0.8 0.8 (4.6%)
Adjusted EBITDA(1) 0.6 0.5 0.9 (51.6%)
Adjusted EBITDA margin % 21% 21% 38%
(1) Adjusted EBITDA above is prior to Group costs as set out in Note 3.
Growth strategy
Becoming a cybersecurity leader
Our vision is clear: to drive growth and shareholder value by becoming the UK
provider of choice, delivering premium, next-generation cyber technology,
professional advisory and advanced cyber security services.
Strengthening organic growth: fuelling our momentum
Over recent years market conditions have necessitated a focus on delivering
organic growth in revenue and underlying profitability. In the near term, we
will continue to seek to build on the strong foundations we have created to
increase revenue and profits in our existing Group businesses. M&A remains
a strategic pillar, however, and where opportunities exist to bring
complementary businesses into the Group at valuations that represent good
value for our shareholders then we will look to do so.
A differentiated offering
Our Services division carries preferred partner status for a client base
comprising blue-chip organisations, for all things security, offering
comprehensive managed solutions, penetration testing and insightful advisory
services. We provide a seamless, end-to-end experience that empowers our
clients.
Our Software division is developing a revolutionary next-generation platform
that converges access management and data discovery. Leveraging our zero-trust
access solution, our platform safeguards users, devices, and data - anywhere,
anytime.
Delivering sustainable growth
Our medium-term strategy prioritises achieving consistent, sustainable revenue
and profit growth. With a deep commitment to innovation and an unwavering
focus on customer success, we are confident in delivering value for our
stakeholders in the years to come.
Market opportunity
Businesses globally are experiencing significant growth in the number and
complexity of cybersecurity challenges that they face, requiring the
implementation of controls and technology solutions to build and embed
resilience, meet regulatory mandates and reduce overall risk.
This trend is only likely to continue. The World Economic Forum noted in its
Cyber Security Outlook report in 2024 that "Fewer than one in ten respondents
believe that in the next two years generative AI will give the advantage to
defenders over attackers 1 (#_ftn1) ."
This is driving a rapid increase in the size of the cybersecurity market.
Fortune Business Insights valued this global market at $219 billion in 2025,
estimating it will growth to $563 billion by 2032 at a CAGR of 14.4% 2
(#_ftn2) .
Mordor Intelligence places the UK cybersecurity market at US$ 12.88 billion in
2025, forecasted to grow to US$ 21.51 billion by 2030, at a CAGR of 10.8% for
2025-2030 3 (#_ftn3) .
All this means a growing need for the services which Shearwater Group offers,
driving significant opportunities for the business. Shearwater's offering is
well placed to cater to the need for businesses' proactive approach to
cybersecurity measures, offering access to a differentiated full-service cyber
security in a rapidly expanding market. Further to supportive market trends,
our growth strategy, stronger financial position, prestigious customer base,
industry recognition and talented team, we are poised to capitalise on
opportunities and deliver substantial returns on investment.
Board update
In August 2024, we were pleased to welcome Jonathan Hall to the Group as our
new Chief Financial Officer. Jonathan was formally appointed to the Board on
25 September 2024 following our Annual General Meeting. Adam Hurst, our
Interim Chief Financial Officer, completed his contract and left the Company
on that date, following a successful handover period. I'd like to extend my
thanks to Adam for his valuable support during the interim period as we
managed the transition to a new permanent Chief Financial Officer.
Current trading and outlook
In the early months of FY26 trading has remained in line with expectations.
The level of interest in services of all companies within the Shearwater Group
has remained high, as businesses increasingly recognise the need for robust
cybersecurity investment. We are encouraged by the level of customer
engagement that we are seeing and while we are cognisant that we continue to
operate in a competitive marketplace, we are confident that the calibre of our
team and our products, our proven track record and our strong network of
client relationships, place us at a competitive advantage. We therefore look
forward to the remainder of FY26 and beyond with optimism.
Philip Higgins
Chief Executive Officer
10 November 2025
Financial review
I am pleased to report a period of strong growth for the 15 months to 30 June
2025, with significant improvements in both revenue and underlying
profitability. Revenue reached £39.5 million, representing annualised
year-on-year growth of 29% (FY24 (restated): £24.4 million (restated) for the
12 months to 31 March 2024).
Adjusted EBITDA rose to £2.2 million, an increase of 91% on the same basis
(FY24 (restated): £0.9 million), while adjusted profit before tax improved to
£0.6 million compared with a loss of £0.6 million in FY24. The statutory
loss before tax of £13.4 million (FY24 (restated): £3.2 million) was
impacted by exceptional costs of £11.3 million, principally relating to a
non-cash impairment charge against the carrying value of goodwill and
intangibles in certain subsidiaries, which is outlined in further detail in
the exceptional costs section below.
We maintained a robust balance sheet, closing the period with £5.1 million in
cash (FY24: £5.0 million) and no debt; a position further strengthened by a
£1.75 million receipt from one customer in the week following the period end.
A summary of the Group's financial performance for the year is set out below:
2025 2024
15 months 12 months
(restated)
£m £m
Revenue 39.5 24.4
Gross profit 9.6 6.9
Administrative expenses (underlying)(1) (7.4) (6.0)
Adjusted EBITDA 2.2 0.9
Adjusted EBITDA margin 6% 4%
Net finance charges 0.1 (0.1)
Depreciation (0.2) (0.2)
Amortisation of intangible assets - computer software (1.5) (1.2)
Adjusted profit/ (loss) before tax 0.6 (0.6)
Amortisation of acquired intangible assets (2.6) (2.1)
Impairment of intangible assets (11.1) -
Other exceptional items (0.3) (0.6)
Loss before tax (13.4) (3.3)
Taxation credit 1.4 1.1
Loss after tax (12.0) (2.2)
( )
(1) Administrative expenses (underlying) excludes items that are not included
within Adjusted EBITDA such as finance charges, depreciation, amortisation,
impairment, share-based payment charges and exceptional items.
Prior year adjustment
As part of our continued review of accounting policies to ensure alignment
with IFRS 15 Revenue from Contracts with Customers, the Group has reassessed
the timing of revenue recognition in respect of certain cloud-hosted software
solutions and associated third-party support within the Services segment of
the business.
Historically, revenue from these products and services was recognised at a
point in time when the software was delivered to the customer. This treatment
was considered appropriate given that, in prior years, the majority of the
Group's software offerings were delivered as relatively finished, on-premise
products, with limited ongoing updates or enhancements after delivery. As the
provider of an integrated solution, Shearwater's role was also largely
completed on delivery of this solution, with the responsibility for ongoing
hosting and updates primarily being the responsibility of the underlying
software provider.
As the nature of cyber threats has evolved, however, so too has the Group's
product suite. A number of key offerings are now delivered as cloud-hosted
Software as a Service ("SaaS") solutions. These products are continually
updated and enhanced throughout the contract term to ensure customers benefit
from the most current protection and latest functionality. Under IFRS 15, such
arrangements are considered to provide a continuous service over time, and
accordingly, it is now deemed more appropriate to recognise the revenue
related to these types of services over the duration of the contract, rather
than at the point of initial delivery.
Revenue from on-premise software licences will continue to be recognised at a
point in time, consistent with when control of the licence transfers to the
customer. Where such contracts include distinct support, maintenance, or
servicing components, these elements will be recognised over time, reflecting
the ongoing nature of the service provided across the contract period.
The decision that it is more appropriate to recognise revenue relating to
cloud-hosted services and support agreements over a period of time, has
resulted in the identification of an error in the prior year. As such, the
application of IFRS 15 as outlined above has been applied retrospectively and
has resulted in a prior year adjustment to restate comparative information.
Further details of the financial impact are provided in note 1a to the
consolidated financial statements.
The impact of applying this change in FY25 was to slightly reduce both revenue
and Adjusted EBITDA. Had the Group retained its previous accounting policy,
revenue for the 15-month period to 30 June 2025 would have been £41.4 million
(FY24 (restated): £22.6 million), representing annualised growth of 46%.
Adjusted EBITDA on the same basis as shown in the 2024 year-end financial
statements would have been £2.3 million (FY24 (pre-restatement): £0.9
million), representing growth of 113%.
Following this change in policy, as of 30 June 2025 the Group had £15.4
million (FY24 (restated): £11.8 million) of work that was contracted but the
revenue for which had not yet been recognised. Of this, it is expected that
£10.7 million (FY24 (restated): £9.2 million) will be recognised in the 12
months following the balance sheet date.
Revenue and gross profit
Revenue for the 15-month period ended 30 June 2025 of £39.5 million
represented 29% growth on the prior year on an annualised basis (2024
(restated): £24.4 million).
The table below provides a breakdown of revenues for the current year:
2025 2025 2024
15 months annualised restated
£m £m £m
Services
Managed services & warranties 9.9 7.9 9.8
Security solutions 21.6 17.4 6.9
Advisory & engineering 5.4 4.3 5.3
Software
Software licenses 2.6 2.0 2.4
Total revenue 39.5 31.6 24.4
The Services division delivered strong growth during the period, with
increased revenue principally driven by an increased demand for managed
service solutions provided by Brookcourt. While procurement cycles across the
industry remain extended, a trend that has impacted the past two financial
years, there has been encouraging movement towards companies committing to the
necessary investment in their cybersecurity defences. This shift has
particularly benefited Brookcourt, which continues to strengthen its position
as a trusted partner for blue-chip clients.
Growth within the Services division was, however, not uniform across all
subsidiaries. Pentest recorded record revenues in FY24, driven by a material
fixed-term contract with a major US software provider. This contract concluded
at the end of Q1 FY25. Although Pentest remains a highly regarded brand within
the penetration testing market and secured 50 new client engagements during
the year, these were typically of a smaller scale and it was not possible to
fully replace the revenue associated with this contract. As a result, Pentest
revenues declined by 26% on an annualised basis compared with FY24.
Management retains confidence in the long-term prospects of Pentest; however,
given the lower level of revenue expected in the short-term, the Board
considered it appropriate to reduce the carrying value of goodwill associated
with the original acquisition of Pentest. Accordingly, the goodwill balance
was reduced from £2.8 million to £1.1 million, giving rise to a one-off
non-cash impairment charge of £1.7 million in the period.
Revenue from the Software division declined by 14% on an annualised basis to
£2.6 million (FY24: £2.4 million). During the period, a number of important
performance upgrades were delivered, further enhancing the functionality of
our proprietary platforms. Aligned to a clear understanding of where our holds
a competitive advantage in the market and the opening of new channels to
market, Directors are confident that this segment is well positioned to return
to growth in FY26. Nonetheless, given the reduced level of revenue, the
Board has reassessed the carrying value of goodwill and intangible assets
associated with the Software business, resulting in a one-off non-cash
impairment charge of £9.3 million in the period.
The value-in-use calculations applied to determine the impairment to goodwill
and intangible assets in the consolidated statement of financial position were
also used to assess the carrying value of investments in the Company statement
of financial position. This resulted in an impairment of £13.4 million being
applied to this investment value. This was the principal contributor to an
overall loss for the Company of £14.6 million in the period.
Gross margin
The gross margin reduced from 28% in FY24 to 24% in FY25. This principally
reflected a shift in the sales mix, with an increase in the proportion of
revenues coming from the Solutions segment of the business and a reduction in
revenue from the higher margin Software segment.
Even within the Services segment, there was a reduction in the gross margin
from 25% to 21%, which reflected an increased proportion of sales of
integrated cybersecurity solutions, including elements of third-party software
and hardware and a reduced proportion of penetration testing services, which
typically deliver a higher gross margin, but which have a higher associated
fixed cost.
A reduction in gross margin from 71% to 62% in the Software segment of the
business reflected the reduced revenue, with cost of sales in this segment
primarily relating to sales staff and sales promotion expenditure, which
doesn't automatically reduce if revenues drop.
Administrative expenses
Underlying administrative expenses reduced by 2% on an annualised basis to
£7.4 million (FY24: £6.0 million) as the Group continues to tightly manage
its fixed cost base.
Adjusted EBITDA
The net impact of the factors outlined above was that the Group delivered a
91% annualised improvement in Adjusted EBITDA to £2.2 million for FY25 (FY24
(restated): £0.9 million).
The table below provides a breakdown of the Group's adjusted EBITDA:
2025 2025 2024
15 months annualised restated
£m £m £m
Services and Software 3.9 3.1 2.3
Central administrative expenses (1.7) (1.3) (1.4)
Adjusted EBITDA 2.2 1.8 0.9
Adjusted EBITDA margin % 6% 6% 4%
Finance charges
The Group earned net finance income of £0.1 million in the period (FY24: net
cost of £0.1 million). Having retained a healthy cash position through the
period, the Group used short-term deposits to earn interest on cash balances,
while retaining the flexibility to appropriately manage its working capital
requirements.
Depreciation
Depreciation of £0.2 million (2024: £0.2 million) was in line with the level
in the prior period and mainly comprises depreciation of right-of-use assets.
Amortisation of intangible assets
Amortisation of computer software of £1.5 million, equated to £1.2 million
on an annualised basis, in line with the prior year (FY24: £1.2 million).
This relates to the amortisation of development expenditure incurred since
acquisition on the Group's proprietary software solutions.
Adjusted profit/ (loss) before tax
The Group made an adjusted profit before tax of £0.6 million, (£0.5 million
on an annualised basis). This compared to an adjusted loss before tax for
the prior year of £0.6 million. The improvement reflected the increased
revenue, coupled with ongoing tight control of underlying administrative
expenses.
Amortisation of acquired intangible assets
Amortisation of acquired intangible assets was £2.6 million, equating to
£2.1 million on an annualised basis, exactly in line with the prior year
(FY24: £2.1 million).
Share-based payments
Share-based payment charges were less than £0.1 million in the period (2024:
£0.0 million) notwithstanding the issue of a further tranche of options under
the Group's ESOP scheme in January. Full details on the calculation of the
Group's share-based payment charge are included within note 17.
Exceptional items
Exceptional items of £11.3 million (FY24: £0.5 million) included:
· Impairment of goodwill and intangible assets: £11.1 million (FY24:
£nil); primarily relating to a reduction in the carrying value of goodwill
and acquired intangible items from the acquisitions of SecurEnvoy Limited and
Pentest Limited; and
· Restructuring costs: £0.1 million (FY24: £0.4 million): relating
to the completion of an exercise to rationalise the group structure and reduce
the number of group entities and also right-sizing of the cost base in Pentest
Limited.
· Other costs: £0.2 million (FY24: £0.2 million): including
completion of a one-off strategic project from FY24 and forex losses and legal
costs from one foreign exchange provider breaching the terms of an agreed
forward contract.
Reported loss before tax
The reported loss before tax of £13.4 million (2024: £3.2 million) reflected
the improved underlying operating performance of the business, offset by the
amortisation of acquired intangibles and the one-off exceptional items
impacting the period.
Taxation
The income tax credit for the year of £1.4 million (FY24: £1.1 million), was
primarily driven by a reduction of £1.3 million in the deferred tax liability
during the period. This in turn was split between a £0.7 million reduction
relating to the amortisation intangible assets and a £0.6 million credit
resulting from the exceptional impairment charge in the period.
The Group received £0.3 million in cash in the period in respect of R&D
tax claims up to and including the period to 31 March 2023. Further claims
will be prepared in respect of the FY24 and FY25 financial years, however, no
assets have been recognised in respect of these until the Group has greater
visibility on the likely value to be received in respect of these periods.
Statement of financial position
Intangible assets
Intangible assets decreased in the year by £13.8 million to £28.9 million
at 30 June 2025 (2024: £42.7 million). This movement incorporates £1.3
million of investment into continued development of the Group's software
assets (2024: £1.0 million), less the exceptional impairment charge of £11.1
million (prior to offsetting impact of deferred tax) and £4.1 million of
amortisation, of which £2.6 million relates to acquired intangibles and £1.5
million to internally developed computer software.
Property, plant and equipment
Property, plant and equipment decreased slightly in the
year by £0.2 million to £0.3 million at 30 June 2025
(2024: £0.5 million), reflecting depreciation in the year exceeding the
value of new fixed asset additions.
Trade and other receivables
Trade and other receivables at 30 June 2025 totalled £17.6 million, an
increase of 6% on the restated total at the end of the prior period (FY24
(restated): £16.6 million). This shift is primarily the result of timing
differences around key contracts, with a higher volume of activity in FY25
than in the prior year, with revenues weighted towards H2. The Group
continues to have no material issues with bad debts.
The revised accounting policy in respect of revenue recognition is typically
expected to result in an increase in prepayments, as certain payments to
suppliers, which are typically made at the start of each year of a contract
will now be spread over the contract duration. Conversely, accrued income
will typically be lower than under the previous policy, as uninvoiced revenue
from future years of multi-year agreements will not be recognised at the
outset of a contract on cloud-hosted software solutions and third-party
servicing agreements.
Trade and other payables (falling due within one year)
Trade and other payables reduced from £16.4 million (restated) and the end of
FY24 to £15.8m at the end of FY25. As with receivables, this principally
simply reflected the timing of supplier billing under key contracts.
It is expected that accruals will typically be lower than under the previous
accounting policy, with future year supplier obligations under multi-year
cloud-hosting and third-party servicing contracts no longer accrued at the
outset. Conversely, deferred revenue is expected to increase, as invoiced
revenue on these contracts is deferred over the contract duration.
Creditors: amounts falling due after more than one year
Creditors due after more than one year reduced from £4.9 million (restated)
at the end of FY24 to £3.7 million at the end of FY25. This was almost
exclusively driven by a £1.4 million reduction in the deferred tax liability
in the period, resulting from a combination of ongoing amortisation and the
one-off exceptional impairment charge in the period.
Statement of cash flows
The Group generated cash inflows in the year of £0.1 million (2024: £1.0
million). Cash flows related to working capital generation are always subject
to some variation relating to the timing of payments under material contracts
within the Services segment of the business. In the first week following the
year end the Group received one major receipt for £1.75 million from a
project sold and implemented during FY25. Had this been received one week
earlier, it would have made a material difference to the cash flow shown for
the period. Over the medium term, however, the impact of such fluctuations
will even out and Directors believe that if the business continues to deliver
on its targeted adjusted EBITDA profitability this will drive positive cash
flows for the business.
This is driven largely by the return to positive adjusted EBITDA and positive
working capital generation, particularly in the second half of the year.
Working capital benefited in the year from the profile of long term deals
concluded in previous years. The Group continued to invest in the Software
division, with £1.0 million invested into internally developed software, the
latest of which, SecurEnvoy's Access Management v.4.0 R2, went live in May
2024. The Group continued to collect cash effectively, with minimal bad
debt.
The table below provides a summary of cash flows in the year:
2025 2024
£m £m
Adjusted EBITDA 2.2 0.9
Movements in working capital (1.0) 1.1
Cash generated from operations 1.2 2.0
Adjusted cash generated from operations 1.5 2.4
Exceptional items (cash impact) (0.3) (0.4)
Net cash generated from operating activities 1.2 2.0
Capital expenditure (net of disposal proceeds) (1.4) (1.1)
Tax received 0.3 0.3
Net finance costs received/ (paid) 0.1 (0.1)
Payments of lease liabilities (0.2) (0.2)
Movement in cash 0.1 1.0
Opening cash and cash equivalents 5.0 4.0
Closing cash and cash equivalents 5.1 5.0
The above cashflow is extracted from the statutory presentation and adjusted
to show exceptional items on a like-for-like basis as this is the basis
reviewed by the Directors.
Capital expenditure
Capital expenditure of £1.4 million (2024: £1.1 million) in the year
primarily includes capitalisation of external and internal software costs for
developing our software business's product sets. On an annualised basis, this
level of expenditure remains consistent year-on-year. Expenditure on property,
plant and machinery remains minimal.
Financing activities
Expenditure on lease liabilities of £0.2 million (£0.2 million on an
annualised basis) remained in line with the prior year (2024: £0.2 million).
The Group earned net finance income of £0.1 million in the period (FY24: net
cost of £0.1 million) through the use of short-term deposits to earn interest
on cash balances (2024: net finance costs paid of £0.1 million).
Key performance indicators
The Board believes that revenue, adjusted EBITDA and adjusted profit before
tax are key metrics to monitor the performance of the Group, as they provide
a good basis to judge underlying performance and are recognised by the Group's
shareholders.
Alternative performance measures
The Group uses alternative performance measures alongside statutory measures
to manage the performance of the business. In the opinion of the Directors,
alternative performance measures can provide additional relevant information
on past and future performance to the reader in assessing the underlying
performance of the business. The table within note 2 of the consolidated
financial statements details definitions of adjusted EBITDA and adjusted
(loss)/profit before tax measures. Note 8 details the definition of adjusted
EPS.
Movement of the balance sheet date
During FY25 Directors elected to change the Group's financial year end from 31
March to 30 June, to better align the Group's financial year with its customer
procurement cycle. Historically, material contracts have frequently been
concluded around the old March year end. This presented challenges in
providing accurate and timely guidance to investors. The Board believes the
revised year-end will enable greater clarity and consistency in the Group's
reporting.
Jonathan Hall
Chief Financial Officer
10 November 2025
Consolidated statement of comprehensive income
for the 15-month period ended 30 June 2025
2025 2024
Note 15 months 12 months
(restated)
Note 1a
£000 £000
Revenue 3 39,549 24,435
Cost of sales (29,983) (17,520)
Gross profit 9,566 6,915
Administrative expenses (18,719) (6,548)
Depreciation and amortisation (4,345) (3,531)
Total operating costs (23,064) (10,079)
Operating loss (13,498) (3,164)
Adjusted EBITDA 2,214 926
Depreciation and amortisation (4,345) (3,531)
Impairment of goodwill and intangible assets 9 (11,058) -
Other exceptional items 4 (287) (533)
Share-based payments (22) (26)
Operating loss (13,498) (3,16)
Net finance cost 6 126 (67)
Loss before taxation (13,372) (3,231)
Income tax credit 7 1,405 1,123
Loss for the year and attributable to equity holders of the Company (11,967) (2,108)
Other comprehensive loss
Exchange differences on translation of foreign operations (4) (3)
Total comprehensive loss for the year (11,971) (2,111)
Earnings/(loss) per ordinary share attributable to the owners of the parent
Basic and diluted (pence per share) 8 (50.2) (8.8)
Adjusted basic and diluted (pence per share) 8 3.0 0.5
Adjusted EBITDA and Adjusted basic and diluted earnings/(loss) per share are
non-GAAP Group-specific measures which are considered to be key performance
indicators of the Group's financial performance. See note 2 for the definition
of Adjusted EBITDA and note 8 for the definition of Adjusted based and diluted
earnings/(loss) per share.
The results above are derived from continuing operations.
Consolidated statement of financial position
As at 30 June 2025
2025 2024
(restated)
note 1a
Note £000 £000
Assets
Non-current assets
Intangible assets 9 28,854 42,684
Property, plant and equipment 10 337 481
Deferred tax asset 14 1,109 1,016
Trade and other receivables 11 229 1,268
Total non-current assets 30,529 45,449
Current assets
Trade and other receivables 11 17,638 16,582
Cash and cash equivalents 5,062 4,974
Total current assets 22,700 21,556
Total assets 53,229 67,005
Liabilities
Current liabilities
Trade and other payables 12 15,772 16,424
Total current liabilities 15,772 16,424
Non-current liabilities
Creditors: amounts falling due after more than one year 13 3,727 4,902
Total non-current liabilities 3,727 4,902
Total liabilities 19,499 21,326
Net assets 33,730 45,679
Capital and reserves
Share capital 16 22,278 22,278
Share premium 34,581 34,581
Other reserves 23,108 23,086
Translation reserve 23 27
Accumulated losses (46,260) (34,293)
Equity attributable to owners of the Company 33,730 45,679
Total equity and liabilities 53,229 67,005
Philip Higgins
Chief Executive Officer
Registered number: 05059457
Consolidated statement of changes in equity
for the 15-month period ended 30 June 2025
Share Share Other Translation Accumulated Total
capital premium reserves reserve losses equity
£000 £000 £000 £000 £000 £000
At 1 April 2023 (as originally stated) 22,278 34,581 23,442 30 (32,208) 48,123
Adjustment in respect of prior period - (359) (359)
At 1 April 2023 (restated) 22,278 34,581 23,442 30 (32,567) 47,764
Loss for the year - - - (2,108) (2,108)
Other comprehensive income for the year - - - (3) - (3)
Total comprehensive loss for the year 0 0 0 (3) (2,108) (2,111)
Contributions by and distributions to owners:
Expiry of share options - - (382) - 382 -
Share-based payments - - 26 - 26
At 31 March 2024 (as originally stated) 22,278 34,581 23,086 27 (33,996) 45,976
Adjustment in respect of prior period - - - - (297) (297)
At 31 March 2024 22,278 34,581 23,086 27 (34,293) 45,679
Loss for the period - - - (11,967) (11,967)
Other comprehensive loss for the period - - - (4) - (4)
Total comprehensive loss for the year 0 0 0 (4) (11,967) (11,971)
Contributions by and 0
distributions to owners
Share based payments - - 22 - - 22
At 30 June 2025 22,278 34,581 23,108 23 (46,260) 33,730
Consolidated cash flow statement
for the 15-month period ended 30 June 2025
Note 2025
15 months 2024
12 months
(restated)
£000 note 1a
£000
Cash flows from operating activities
Loss for the period (11,967) (2,108)
Adjustments for:
Amortisation of intangible assets 4 4,115 3,287
Depreciation of right-of-use assets 4 169 197
Depreciation of property, plant and equipment 4 61 47
Share-based payment charge 4 22 26
Exceptional items:
Impairment of goodwill and intangible assets 9 11,059 -
Corporate restructuring costs 116 359
Other one-off costs 171 174
Net finance cost (126) 67
Income tax (1,405) (1,123)
Cash flow from operating activities before changes in working capital 2,215 926
(Increase)/decrease in trade and other receivables (7,352) 14,241
Increase/(decrease) in trade and other payables 6,285 (12,591)
Cash generated from operations 1,148 2,576
Net foreign exchange movements 364 3
Net finance cost paid 126 (47)
Tax received 291 301
Net cash generated from operating activities before exceptional items 1,929 2,833
Net cash flows on exceptional items (287) (533)
Net cash generated from operating activities 1,642 2,300
Investing activities
Purchase of property, plant and machinery 10 (26) (42)
Purchase of intangibles 9 (1,343) (1,032)
Net cash used in investing activities (1,369) (1,074)
Financing activities
Repayment of lease liabilities 15 (185) (216)
Net cash used in financing activities (185) (216)
Net increase in cash and cash equivalents 88 1,010
Cash and cash equivalents at the beginning of the period 4,974 3,964
Cash and cash equivalents at the end of the period 5,062 4,974
Notes to the consolidated financial statements
for the 15-month period ended 30 June 2025
General information
The Group is a public limited company incorporated and domiciled in the UK.
The address of its registered office is 22 Great James Street, London, WC1N
3ES.
The Parent Company is listed on the AIM market of the London Stock Exchange.
The Group provides cyber security, managed security and professional advisory
solutions to help create a safer online environment for organisations and
their end users.
1. Statement of accounting policies
The material accounting policies applied in preparing the financial statements
are outlined below. These policies have been consistently applied for all the
years presented, unless otherwise stated.
Basis of preparation
The consolidated financial statements have been prepared in accordance with UK
adopted International Accounting Standards ('IFRS') and with those parts of
the Companies Act 2006 applicable to companies reported under IFRS.
The consolidated financial statements have been prepared under the historic
cost convention. The consolidated financial statements are presented in
sterling, the functional currency of Shearwater Group plc, the Parent Company.
All values are rounded to the nearest thousand pounds (£000) except where
otherwise indicated.
Change of accounting period end date
During FY25 the Directors elected to change the date of the Group's financial
year end from 31 March to 30 June, to better align the Group's financial year
with its customer procurement cycle. Historically, material contracts have
frequently been concluded immediately prior to, or very shortly following the
previous year end date of 31 March. This created volatility in performance and
presented challenges in providing accurate and timely guidance to investors.
The Board believes the revised year end will enable greater clarity and
consistency in the Group's reporting.
As a result, data contained with the financial statements is not directly
comparable. Where comparative analysis, including year-on-year variances,
have been presented within the strategic report, data in respect of FY25 has
been annualised, by multiplying the result for the 15-month period to June
2025 by 12/15.
Going concern
Having made enquiries, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence for at least
twelve months from the date of signing these financial statements.
Accordingly, they continue to adopt the going concern basis in preparing these
consolidated financial statements.
The Group consists of a portfolio of brands, each highly regarded within its
own specific segment of the cybersecurity industry. This industry as a whole
is growing rapidly, as organisations seek to navigate an increasingly complex
threat environment, with the costs of failure ever more apparent. The Group
delivered strong growth in FY25, resulting in an adjusted EBITDA profit for
the period of £2.2 million and the Directors believe that this growth will
continue into FY26. The Group also maintains a robust financial position.
At 30 June 2025 the Group was well capitalised, with £5.1 million of cash and
no debt.
The Directors have reviewed detailed budget cash flow forecasts for the period
to 31 December 2026 and have challenged the assumptions used to create these
budgets. The budget figures are carefully monitored against actual outcomes
each month and variances are highlighted and discussed at Board level on a
quarterly basis as a minimum.
The Board is pleased to report that trading in the current year has started
solidly and for the first quarter ended 30 September 2025 is broadly in line
with management's expectations.
The Directors have reviewed and challenged a reverse stress test scenario on
the Group up to December 2026. The purpose of the reverse stress test for the
Group is to test the impact on the Group's cash if the assumptions in the
budget are altered.
The reverse stress test assumes significant adjustments to the Group's budget
which include the scaling back of revenues across all business lines, for the
year ended 30 June 2026, by around 25%, with no further growth into the
following year. Under this scenario, limited adjustments were made to direct
costs and to future planned recruitment. Even without a more material cost
restructuring, or a scaling back of product development expenditure the result
of this stress test was that the Group retained sufficient cash reserves to
meet its liabilities throughout the review period.
In the unlikely event that the performance of the Group fell short of this
plausible worst-case scenario, actions that could be taken by Directors would
include, a further restructuring of employment costs, or a scaling back of new
product development. Additionally, the Directors could seek to access other
sources of finance to mitigate the impact on cash.
Overall, the Directors consider that the strong balance sheet position,
coupled with the outcome of the sensitised cash flow projections support their
belief that the Group will be able to pay its debts as they fall due for the
period to at least 31 December 2026 and therefore they do not believe there
are any material uncertainties to disclose regarding going concern. The
Directors are therefore satisfied that the financial statements should
be prepared on the going concern basis.
Material accounting judgements, estimates and assumptions
The preparation of financial statements requires management to make
judgements, estimates and assumptions that affect the amounts reported for
income and expenses during the year and that affect the amounts reported for
assets and liabilities at the reporting date.
Revenue recognition of material contracts
Management make judgements, estimates and assumptions in determining the
revenue recognition of material contracts sold by the Group's Services
division. The Group works with large enterprise clients, providing services
and solutions to support the clients' needs. In many cases, a third-party's
products or services will be provided as part of a solution. Management
consider the implications around timing of recognition, with factors such as
determining the nature of the solution provided, the point control passes to
the client and the subsequent fulfilment of the Group's performance
obligations. In addition to this, management consider if it is acting as
agent or principal. Further details of how the Group determines revenue
recognition and if it is acting as agent or principal can be found within the
relevant notes within this section.
Impairment of goodwill, intangible assets and investment in subsidiaries
The Group tests goodwill and intangible assets for impairment at least
annually or more frequently if there are indicators that their carrying value
may not be recoverable. The assessment requires management to estimate the
value in use of each cash-generating unit (CGU), which involves preparing
forecasts of future revenues, costs and cash flows for each CGU based on the
Group's business plans and market expectations. These forecasts are then
discounted using an appropriate pre-tax discount rate, which reflects the time
value of money and the specific risks associated with each CGU. Management
also makes an assessment of an appropriate terminal growth rate to apply
beyond the forecast period. Because these calculations are sensitive to
changes in assumptions, management performs sensitivity analyses to assess the
potential impact of reasonably possible changes in key variables such as
revenue growth, operating margins, discount rates and terminal growth rates.
Any reduction in the estimated recoverable amount could result in an
impairment charge being recognised in the income statement.
Further information on the variables applied in judgements made can be found
in note 9.
Capitalisation of internally generated software
In applying the Group's accounting policy for the capitalisation of intangible
assets in accordance with IAS 38 Intangible Assets, management is required to
exercise significant judgement in determining which costs meet the criteria
for recognition as an asset. This includes assessing whether expenditure
relates to the development of a discrete product or project, as opposed to
ongoing maintenance or enhancement of existing assets. In making this
assessment, the Directors consider the nature of the activities undertaken,
the stage of completion of each project, and the extent to which internal
staff time and external spend are directly attributable to the creation of
identifiable and separable intangible assets. Capitalisation is only
undertaken where management has a reasonable belief, at the time the
expenditure is incurred, that the development will generate probable future
economic benefits through future cash inflows to the Group.
Deferred tax asset recognition
The recognition of deferred tax assets in respect of carried forward tax
losses and other temporary differences requires management to exercise
judgement as to whether it is probable that future taxable profits will be
available against which the losses or temporary differences can be utilised.
In forming this view, the Directors consider the Group's latest business plans
and forecasts, the nature and timing of future taxable income, the expiry
dates of any tax losses, and the availability of tax planning opportunities.
The assessment inherently involves estimates regarding the Group's future
profitability, which are subject to risks and uncertainties, including market
conditions and changes in tax legislation.
Share-based payments
The Group measures the fair value of share options granted to employees and
Directors at the grant date using the Black-Scholes option pricing model. The
use of this model involves several key assumptions which require judgement,
including the risk-free interest rate, the expected volatility of the Group's
share price, the proportion of options expected to vest, and the average
period until vesting. The risk-free rate is based on the rate of interest for
ten-year UK Gilts. Expected volatility is based on the historical share
price of the Company. The estimate of the number of options likely to vest is
updated at each reporting date based on current expectations of employee
retention and performance.
Revenue
The Group recognises revenue in accordance with IFRS 15: Revenue from
Contracts with Customers. Revenue with customers is evaluated based on the
five-step model under IFRS 15: Revenue from Contracts with Customers:
(1) identify the contract with the customer; (2) identify the performance
obligations in the contract; (3) determine the transaction price; (4)
allocate the transaction price to separate performance obligations; and (5)
recognise revenues when (or as) each performance obligation is satisfied.
Revenue recognised in the statement of comprehensive income but not yet
invoiced is held on the statement of financial position within accrued income.
Revenue invoiced but not yet recognised in the statement of comprehensive
income is held on the statement of financial position within deferred revenue.
Revenue is measured at the fair value of the consideration received or
receivable, excluding value-added tax and rebates.
The Group's revenues are comprised of a number of different products and
services across our two divisions, details of how revenue recognition is now
applied in respect of these are provided below. It is noted that in the case
of revenue from cloud-based software and third-party support/ warranties, this
had historically been recognised at a point in time when the respective
solution was delivered to the client. The correction of this treatment and
move to recognise this revenue over time has resulted in a prior year
adjustment in these financial statements:
Services
Sales of integrated cyber-security solutions, which could include some or all
of: third-party hardware, third-party software, third-party support/
warranties and internal support/ engineering are split into their respective
performance obligations:
· Revenue relating to the provision of third-party hardware, or
on-premise software is recognised in full at a point in time upon delivery of
the product to the end client. This delivery will either be in the form of
the physical delivery of a product or the emailing of access codes to the
client for them to download third‑party software
· Revenue in respect of cloud-based software solutions and
third-party support/ warranties, where these are separately identifiable from
the main software license, are spread over the duration of the contract.
· Revenue in respect of Shearwater Group's services is spread over
time, as the respective performance obligations are discharged. As this
relates to engineering services, this will typically be spread evenly across
the duration of a contract, unless the contract stipulates specific services
to be performed at a particular point during the contract, in which case,
recognition will take place once those services have been performed. Where
this relates to the value-add service that Shearwater Group provides to
identify, procure and integrate a solution and to ensure delivery from the
respective partners, this will be calculated by applying a 1.5% mark-up to the
cost of sales relating to the cost of third-party support or cloud-hosted
software. The balance of any contract price is considered to reflect the
value-add service provided by Brookcourt. 90% of this value-add component
will be recognised on delivery of the solution, reflecting the front-loaded
nature of the service provided, including the design, procurement, integration
and implementation of a solution, with the balancing 10% being spread over the
contract value.
Sales of consultancy services are usually based on a number of consultancy
days that make up the contracted consideration. Consultancy days generally
comprise field work and (where required) report writing and delivery which are
considered to be of equal value to the client. Revenue is recognised
over time based on the number of consultancy days provided within the period
compared to the total in the contract.
Software
· Software licences whereby the customer buys software that it sets
up and maintains on its premises is recognised fully at the point the licence
key/access has been granted to the client. The Group sells the majority of its
services through channels and distributors who are responsible for providing
first and second line support to the client.
· Software licences for the new 'Authentication as a Service' product
whereby the customer accesses the product via a cloud environment maintained
by the Company is recognised in two parts, whereby part of the subscription is
recognised at the point that the licence key is provided to the customer,
with the remaining part recognised evenly over the length of the contract.
This deferred proportion represents the obligation to maintain and support
the platform that the software runs on.
Principal versus agent considerations
In instances where the Group is involving another party in providing goods or
services to a customer, the Group considers whether the nature of its promise
is a performance obligation to provide the specified goods or services itself
or to arrange for those goods or services to be provided by the other party to
determine whether it is a principal or an agent. The business will firstly
identify the specific goods and/or services to be supplied to the customer.
In determining whether the business is acting as agent or principal, the
business assesses whether it controls each specified good or service before
that good is transferred to the customer. It will consider:
· Who is responsible for fulfilling the promise to provide
the specific product or service.
· If the business is carrying a liability risk for the specific good
or service prior to it being supplied to the customer.
· If the business has discretion over pricing.
In addition to the points noted above, the business also considers the
following unique selling points:
· Pre-sales process:
In some cases, the business invests heavily in working with the customer to
understand their requirements, before designing/recommending a solution that
integrates various third-party products or services to meet the customers'
requirements.
· Levels of ongoing services:
In some cases, whilst not always contracted, the business will continue to
support the customer as needed to ensure that their solution is working.
This may include co-ordination of the maintenance and support with third
parties and provision of engineers to remove and send back faulty products.
Where the Group is a principal, revenues are recognised on a gross basis in
the statement of comprehensive income. Where the Group is an agent revenues
are recognised on a net basis in the statement of comprehensive income.
Directors believe that the standard structure of Shearwater Group's contract
and the nature of the services provided mean that it is typically considered a
principal.
1a. Prior year adjustment
During the period, the Group reassessed the timing of revenue recognition in
respect of certain cloud-hosted software solutions and associated third-party
support within the Services segment of the business to ensure alignment with
IFRS 15 Revenue from Contracts with Customers.
The conclusion of this review was that under IFRS 15 certain revenues relating
to the provision of third-party, cloud-hosted software solutions and support
and maintenance contracts should be recognised over time, rather than at a
point in time when the solution was initially delivered.
This decision has resulted in the identification of an error in the prior
year. As such, the application of IFRS 15 as outlined above has been applied
retrospectively and has resulted in a prior year adjustment to restate
comparative information. The impact of this change is as outlined below:
Increase/(decrease) in equity:
2024 as originally stated Adjustment 2024 restated
£000
£000
£000
Accrued income - non-current 679 (679) -
Prepayments and other receivables - non-current - 1,268 1,268
Accrued income current 2,889 (2,382) 507
Prepayments and other receivable - current 310 6,572 6,882
Total assets 62,226 4,780 67,006
Accruals other payables - non-current (385) (1,256) (1,641)
Accruals and other payables (3,529) 2,944 (585)
Deferred income (137) (6,764) (6,901)
Total liabilities (16,250) (5,076) 21,326
Accumulated loss at 1 April 2023 (32 208) (359) (32 567)
Net impact on profit in the year - 63 -
Accumulated loss at 31 March 2024 (33,996) (296) (34,292)
Increase/ (decrease) in profit:
2024 as originally stated Prior year adjustment 2024 as restated
£000 £000
Revenue 22,643 1,792 24,435
Cost of sales (15,790) (1,729) (17,519)
Net impact on profit for the year 6,853 63 6,916
2024
£000
Earnings/(loss) per ordinary share attributable to the owners of the parent:
Basic and diluted (pence per share) 0.3
Adjusted basic and diluted (pence per share) 0.3
The change did not have an impact on the Group's operating, investing or
financing cash flows.
2. Measure of profit/ (loss)
To provide shareholders with a better understanding of the trading performance
of the Group, additional alternative performance measures (APMs) are included;
Adjusted EBITDA and Adjusted loss before tax have been calculated as
profit/loss before tax after adding back the following items, which can
distort the underlying performance of the
Group:
Adjusted profit/(loss) before tax
· Amortisation of acquired intangible assets.
· Share-based payments.
· Impairment of intangible assets.
· Exceptional items.
Adjusted EBITDA
In addition to the adjusting items highlighted above in the adjusted profit/
loss before tax:
· Finance costs.
· Finance income.
· Depreciation (including amortisation of right-of-use assets).
· Amortisation of other intangible assets - computer software
(including in-house software development).
Adjusted EBITDA and adjusted loss before tax reconciles to loss before tax as
follows:
2025 2024
£000 restated
£000
Loss before tax (13,372) (3,231)
Amortisation of acquired intangibles 2,624 2,099
Share-based payments 22 26
Exceptional items:
Impairment of goodwill and intangible assets 11,058 -
Corporate restructuring costs 116 359
Other one-off costs 171 174
Adjusted profit/(loss) before tax 619 (573)
Net finance (income)/costs (126) 67
Depreciation 230 244
Amortisation of other intangible assets - computer software (including 1,491 1,188
in-house software development)
Adjusted EBITDA 2,214 926
3. Segmental information
In accordance with IFRS 8, the Group's operating segments are based on the
operating results reviewed by the Board, which represents the chief operating
decision maker.
The Group is organised into two reportable segments based on the types of
products and services from which each segment derives its revenue - Services
and Software.
Segmental information for the 15 months ended 30 June 2025 is presented below.
The Group's assets and liabilities are not presented by segment as the
Directors do not review assets and liabilities on a segmental basis.
Revenue Profit/(Loss) Revenue Profit/(Loss)
15 months ended
15 months ended
Year ended
Year ended
30 June 2025
30 June 2025
31 March 2024
31 March 2024
15 months
15 months
(restated)
(restated)
£000 £000
£000 £000
Services(1) 36,996 3,323 22,061 1,530
Software(1) 2,553 539 2,374 869
Group revenue /Group trading EBITDA(1) 39,549 3,862 24,435 2,399
Group costs(1) (1,648) (1,472)
Adjusted EBITDA 2,214 927
(1 Figures disclosed in the profit column for Services and Software
profitability is adjusted EBITDA.)
Segmental information by geography
The Group is domiciled in the United Kingdom and currently the majority of its
revenues come from external customers that are transacted in the United
Kingdom. A number of transactions which are transacted from the United Kingdom
represent global framework agreements, meaning our services, whilst transacted
in the United Kingdom, are delivered globally. The geographical analysis of
revenue detailed below is on the basis of country of origin in which the
master agreement is held with the customer (where the sale is transacted).
2025 2024
15 months (restated)
£000 £000
United Kingdom 35,636 19,659
Europe (excluding the UK) 1,047 3,428
North America 1,673 1,050
Rest of the world 1,193 298
39,549 24,435
All of the Group's non-current assets are held within the United Kingdom.
In the 15 months to 30 June 2025 three customers within the Group made up more
than 10% of the Group's revenue. These customers contributed £21.7 million to
the Group's Services division. In the (restated) prior year, two customers
within the Group made up more than 10% of the Group's revenue. These customers
contributed £8.9 million to the Group's Services division.
4. Expenses and auditor's remuneration
Operating loss is stated after charging/(crediting):
2025 2024
£000 (restated)
£000
Depreciation of fixed assets 230 244
Amortisation of intangibles 4,115 3,287
External auditor's remuneration:
- Audit fee for annual audit of the Group and Company financial statements 78 132
- Audit fee for annual audit of the subsidiary financial statements 80 231
Share-based payments 22 26
Exceptional items
Impairment of goodwill and intangible assets 11,058 -
Corporate restructuring costs 116 359
Other one-off costs(1) 171 174
Unrealised (profit)/loss on forward contracts 223 (194)
(1)Other one-off costs include completion of a one-off strategic project from
FY24 and forex losses and legal costs from one foreign exchange provider
breaching the terms of an agreed forward contract.
5. Staff costs
Total staff costs within the Group comprise of all Directors' and employee
costs for the financial year.
2025 2024
£000 £000
Wages and salaries 7,566 6,769
Social security costs 1,015 802
Pension costs 237 200
Share-based payments 22 26
8,840 7,797
The weighted average monthly number of employees, including Directors,
employed by the Group during the year was:
2025 2024
No. No.
Administration 26 21
Production 44 45
Sales and marketing 19 28
89 94
Details of Directors' remuneration can be found within the annual report on
remuneration on pages 45 and 46.
6. Interest receivable/ (payable)
2025 2024
£000 £000
Interest payable on revolving credit facility (1) (61)
Interest payable on lease liabilities (16) (20)
Other interest payments - (1)
(17) (82)
Interest receivable 143 15
126 (67)
7. Taxation
2025 2024
£000
£000
Current tax:
UK corporation tax at current rates on UK loss for the year - -
Under/(over) provision in respect of prior year (49) 109
(49) 109
Foreign tax 3 (20)
Total current tax charge / (credit) (46) 89
Deferred tax movement in the period (1,359) (1,212)
Income tax credit (1,405) (1,123)
Reconciliation of taxation:
Loss before tax (13,372) (3,293)
Loss multiplied by the average rate of corporation tax in the year of 25% (3,343) (823)
(2024: 25%)
Tax effects of:
Expenses not deductible for tax purposes 2,592 333
Adjustments for previous periods (49) 109
Foreign tax rate differences 3 (12)
R&D relief - (423)
Other items (608) (307)
Brought forward losses - -
Income tax credit (1,045) (1,123)
8. Earnings per share
Basic loss per share is calculated by dividing the loss attributable to the
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period.
Diluted loss per share is the same as basic loss per share as the potential
dilutive shares are anti-dilutive for the 15 months ended 30 June 2025 and for
the twelve months ended 31 March 2024. Please see notes 16 and 17 of the
consolidated financial statements for more details.
Adjusted earnings per share has been calculated using adjusted earnings
calculated as loss after taxation but before:
· Amortisation of acquired intangibles after tax.
· Exceptional items after tax.
· Share-based payments.
The calculation of the basic and diluted profit/loss per ordinary share from
total operations attributable to shareholders is based on the following data:
2025 2024
£000 restated
£000
Net loss from total operations
Loss for the purposes of basic and diluted earnings/(loss) per share being net (11,967) (2,108)
profit attributable to shareholders
Add/(remove):
Amortisation of acquired intangibles, net of tax 1,968 1,808
Exceptional costs, net of tax:
Impairment of goodwill and intangibles 10,467 -
Corporate restructuring costs 87 269
Other one-off costs 128 131
Share-based payments 22 26
Adjusted profit for the purposes of adjusted earnings per share 705 126
Number Number
Number of shares
Weighted average number of ordinary shares for the purpose of basic and 23,826,379 23,826,379
adjusted loss per share
Pence Pence
Basic and diluted loss per share (50.2) (8.8)
Adjusted basic and Adjusted diluted profit/(loss) per share 3.0 (0.5)
9. Intangible assets
Goodwill Customer Software Tradenames Licence Total
£000 relationships £000 £000 £000 £000
£000
Cost
At 1 April 2023 36,660 10,838 9,920 6,826 1,005 65,249
Additions - - 1,032 - - 1,032
At 31 March 2024 36,660 10,838 10,952 6,826 1,005 66,281
Additions - - 1,343 - - 1,343
At 30 June 2025 36,660 10,838 12,295 6,826 1,005 67,624
Accumulated amortisation
At 1 April 2023 6,014 4,557 5,691 3,043 1,005 20,310
Amortisation for the year - 934 1,670 683 0 3,287
Impairment - - - - - -
At 31 March 2024 6,014 5,491 7,361 3,726 1,005 23,597
Amortisation for the year - 1,168 2,093 853 0 4,114
Impairment 8,693 2,032 334 - - 11,059
At 30 June 2025 14,707 8,691 9,788 4,579 1,005 38,770
Net book amount
At 30 June 2025 21,953 2,147 2,507 2,247 0 28,854
At 31 March 2024 30,646 5,347 3,591 3,100 0 42,684
At 31 March 2023 30,646 6,281 4,229 3,783 0 44,939
The Group tests goodwill and intangible assets annually for impairment. The
recoverable amount of goodwill and intangible is determined as the higher of
the value-in-use calculation or fair value less cost of disposal for each
cash‑generating unit (CGU). The value-in-use calculations use pre-tax cash
flow projections based on financial budgets and forecasts approved by the
Board covering a five-year period. These pre-tax cash flows beyond the
five-year period are extrapolated using estimated long-term growth rates.
Following a restructuring of the Group during FY24, including the commercial
integration of Xcina Consulting into Brookcourt Solutions and GeoLang into
SecurEnvoy, the Group now has three separate CGUs (FY24: three CGUs). For all
three CGUs a weighted average cost of capital of 13.8% (FY24: 13.0%) and a
terminal value, based on a long-term growth rate of 2% (FY24: 2%) calculated
on year five cash flow, has been used.
The following key assumptions around revenue growth are summarised in the
table below.
Software Brookcourt Pentest
Solutions
Year 1 10% 15% 0%
Year 2 5% 10% 10%
Year 3 5% 10% 8%
Year 4 5% 8% 5%
Year 5 5% 8% 5%
Sensitivity analysis has been performed on each of the Group's CGUs which
incorporates changes in assumed revenue growth rates and profit margin growth
in addition to terminal value revenue growth rate and weighted cost of capital
(WACC).
Outcomes of the following sensitivities are as detailed below:
· Reducing the terminal value from 2% to 1%, would increase the
size of the impairment charge by £0.3 million.
· Increasing the weighted average cost of capital by 1%, from 13.8%
to 14.8% would increase the size of the impairment charge by £0.4 million.
· Reducing anticipated revenue by 5% p.a. across each CGU, without
making any corresponding changes to the cost base of that CGU would increase
the size of the impairment charge by £5.2 million.
Based on the outcome of these value-in-use calculations and related
sensitivity analysis, in the light of reduced revenue in the software and
Pentest businesses in FY25, the Directors considered it prudent to impair the
carrying value of goodwill and intangibles in these businesses as follows:
· Software:
o Goodwill reduced by £7.0 million from £7.0 million to £nil
o Intangible assets reduced by £2.4 million from £4.7 million to £2.3
million
· Pentest:
o Goodwill reduced by £1.7 million from £2.8 million to £1.1 million
The licence relates to a right to gold exploration dating back to before 2017
when the Group was known as Aurum Mining plc whose principal activity was
mining and exploration.
10. Property, plant and equipment
Right-of-use Office Total
assets equipment £000
£000 £000
Cost
At 1 April 2023 877 428 1,305
Additions 250 42 292
Disposals (436) - (436)
At 31 March 2024 691 470 1,161
Additions 57 26 83
Disposals - (1) (1)
At 30 June 2025 748 495 1,243
Accumulated depreciation
At 1 April 2023 560 312 872
Charge for the year 197 47 244
Disposals (436) - (436)
At 31 March 2024 321 359 680
Charge for the year 169 61 230
Disposals - (4) (4)
At 30 June 2025 490 416 906
Net book amount
At 30 June 2025 258 79 337
At 31 March 2024 370 111 481
At 31 March 2023 317 116 433
Depreciation of property, plant and equipment is charged to depreciation and
amortisation expenses within the statement of comprehensive income.
11. Trade and other receivables
Non-current 2025 2024
restated
£000 £000
Prepayments and other receivables 229 1,268
Accrued income - -
229 1,268
Current 2025 2024
(restated)
£000 £000
Trade receivables 5,005 8,948
Prepayments and other receivables 7,759 6,882
Accrued income 4,874 507
Corporation tax asset - 245
17,638 16,582
The movement for the provision in expected credit losses is stated below:
2025 2024
(restated)
£'000 £'000
At the start of the period 19 30
Movement in expected credit loss provision (11) (11)
At the end of the period 8 19
12. Trade and other payables
2025 2024
(restated)
£000 £000
Trade payables 2,851 7,320
Accruals and other payables 3,706 585
Deferred income 7,282 6,901
Amounts owed by Group undertakings 0 0
Other taxation and social security 1,504 1,275
Forward contract 276 213
Lease liabilities 160 127
Deferred consideration (7) -
Corporation tax - 3
15,772 16,424
13. Creditors: amounts falling due after more than one year
2025 2024
(restated)
£000 £000
Deferred tax 1,745 3,010
Forward contract 160 -
Lease liabilities 107 251
Accruals and other payables 1,715 1,641
3,727 4,902
14. Deferred tax
2025 2024
£000 £000
Non-current liabilities
Liability at 1 April 3,010 3,602
Deferred tax credit in the statement of comprehensive income (1,265) (592)
Total deferred tax 1,745 3,010
Deferred tax balance at 30 June 2025 includes a £1.7 million (2024: £2.5
million) deferred tax liability for acquired intangible assets including
software and trademarks. The remainder represents timing differences arising
on the difference between the net book value and tax written down value of
internally generated software and office equipment.
2025 2024
£000 £000
Non-current assets
At 1 April 1,016 742
Credit to statement of comprehensive income 93 274
Total deferred tax asset 1,109 1,016
The Group has tax losses of £4.4 million (2024: £4.1 million) across its
Parent Company Shearwater Group plc and four subsidiaries that are available
for offset against future taxable profits of the entity. A deferred tax asset
has been recognised in respect of tax losses brought forward and in the
current year which will be used to offset future taxable profits.
15. Lease liabilities
Lease liabilities at 30 June 2025, which include the extension of some
existing office leases, are detailed below:
Lease liabilities Property
£000
At 1 April 2023 321
Additions 253
Interest expense 20
Payments to lease creditors (216)
At 31 March 2024 378
Additions 57
Interest expense 16
Payments to lease creditors (185)
At 30 June 2025 266
The maturity analysis of lease liabilities is detailed below:
Lease liabilities - (contractual undiscounted cash flows) 2025 2024
£000 £000
Less than one year 170 140
One to five years 110 265
Total undiscounted lease liabilities as at 30 June 2025 280 405
There are no leases with a term of more than five years.
Lease liabilities included in the statement of financial position at 30 June 2025 2024
2025
£000 £000
Current 160 127
Non-current 107 251
Amounts recognised in the statement of comprehensive income 2025 2024
£000 £000
Interest on lease liabilities 16 20
Expenses related to short‑term leases 0 6
Depreciation of right of use assets (note 10) 169 197
Amounts recognised in the statement of cash flows 2025
£000 2024
£000
Payment of principal 185 216
Payment of interest 16 20
Total cash outflows 201 236
16. Share capital
The table below details movements within the year:
Ordinary shares
Number of shares (in thousands of shares) 2025 2024
In issue at the start of the period 23,826 23,826
In issue at the end of the period 23,826 23,826
Allotted, called up and fully paid 2025 2024
£000 £000
Ordinary shares of £0.10 each (2024: £0.10 each) 2,382 2,382
Deferred shares of £0.90 each (2024: £0.90 each) 19,896 19,896
Total 22,278 22,278
Deferred shares for all practical purposes are valueless and it is the Board's
intention to repurchase, cancel or seek to surrender these deferred shares
using lawful means as the Board may at such time in the future decide.
No shares were issued in either the 15-month period ended 30 June 2025 or in
the twelve-month period ended 31 March 2024.
Other reserves included:
Share premium
This comprises of the amount subscribed for share capital in excess of the
nominal value less any transaction costs incurred in raising equity.
Other reserves
These comprise of amounts expensed in relation to the share options, share
incentive scheme (see note 17) and merger relief from shares issued as
consideration to acquisitions and equity placings (net of costs).
Movements in the 15-month period ended 30 June 2025 include a share-based
payments charge for the period of £22,000, as outlined in note 17.
Accumulated loss reserve
Accumulated loss reserves for the Group are made up of cumulative profits and
losses net of dividends and other adjustments.
17. Share-based payments
2025 2024
£000 £000
Share options - (CSOP) 11 22
Share options - (ESOP) 11 4
Save As You Earn (SAYE) - -
22 26
Share options - (CSOP)
The following options over ordinary shares remained outstanding at 30 June
2025:
Options at Options Options Options Options at Exercise Date of First date Final date
1 April issued lapsed exercised 30 June price grant of exercise of exercise
2024 during during during 2025
the period the period the period
Employees:
Employees 80,276 - 80,276 - - £0.95 10/02/2022 10/02/2023 10/02/2027
Employees 6,249 - 6,249 - - £0.95 10/02/2022 30/09/2023 10/02/2027
Employees 241,064 - 241,064 - - £0.95 10/02/2022 10/02/2025 10/02/2027
Total 327,589 - 327,589 - -
The following options over ordinary shares remained outstanding at 31 March
2024:
Options at Options Options Options Options at Exercise Date of First date Final date
1 April issued lapsed exercised 31 March price grant of exercise of exercise
2023 during during during 2024
the year the year the year
Directors:
P McFadden(1) 25,000 - 25,000 - - £0.95 10/02/2022 10/02/2025 10/02/2027
Employees:
Employees 87,220 - 6,944 - 80,276 £0.95 10/02/2022 10/02/2023 10/02/2027
Employees 11,112 - 4,863 - 6,249 £0.95 10/02/2022 30/09/2023 10/02/2027
Employees 432,064 - 191,000 - 241,064 £0.95 10/02/2022 10/02/2025 10/02/2027
Total 555,396 - 227,807 - 327,589
1. P McFadden resigned on 20 November 2023.
The following illustrates the number and weighted average exercise price
(WAEP) of, and movements in, share options during the year.
2025 2024
Number WAEP Number WAEP
£ £
Outstanding at the beginning of the period 327,589 0.95 555,396 0.95
Issued - - - -
Lapsed during the period 327,589 0.95 227,807 0.95
Exercised during the period - - - -
Outstanding at 30 June 2025 - - 327,589 0.95
Exercisable at 30 June 2025 - - 86,525 0.95
The share-based payment charge for options granted to employees and Directors
has been calculated using the Black‑Scholes model and using the following
parameters:
Share price at grant date £0.95
Exercise price £0.95
Expected option life (year) 5 years
Expected volatility (%) 43.4%
Expected dividends 0%
Risk-free interest rate (%) 1.54%
Option fair value £0.38
The calculation includes an estimated leaver provision of 55% (2024: 55%).
Volatility was determined with reference to the average monthly volatility in
the Group's share price over the 24 months immediately prior to the date of
grant.
No options remained outstanding under the CSOP scheme at the end of the
period. In the prior year, the weighted average remaining contractual life of
options outstanding at the end of the year was two years and ten months.
Share options - (ESOP)
The following options over ordinary shares remained outstanding at 30 June
2025:
Options at Options Options Options Options at Exercise Date of First date Final date
1 April issued lapsed exercised 30 June price grant of exercise of exercise
2024 during during during 2025
the period the period the period
Directors:
J Hall - 250,000 - - 250,000 £0.35 29/01/2025 31/10/2025 29/01/2035
Employees:
Employees 233 - 233 - - £1.60 01/03/2019 01/03/2020 01/07/2024
Employees 5,000 - 5,000 - - £2.00 01/10/2019 01/10/2020 30/09/2023
Employees 27,936 - 27,936 - - £0.95 10/02/2022 10/02/2025 10/02/2027
Employees - 977,000 - - 977,000 £0.35 29/01/2025 31/10/2025 29/01/2035
Total 33,169 1,227,000 33,169 - 1,227,000
The following options over ordinary shares remained outstanding at 31 March
2024:
Options at Options Options Options Options at Exercise Date of First date Final date
1 April issued lapsed exercised 31 March price grant of exercise of exercise
2023 during during during 2024
the year the year the year
Directors 1:
P McFadden 7,875 - 7,875 - - £4.00 07/05/2018 07/05/2019 30/09/2023
Employees:
Employees 5,250 - 5,250 - - £4.00 13/11/2017 13/11/2018 30/09/2023
Employees 454 - 454 - - £4.00 01/03/2018 01/03/2019 28/02/2023
Employees 5,313 - 5,313 - - £4.00 04/04/2018 04/04/2019 03/04/2023
Employees 524 - 291 - 233 £1.60 01/03/2019 01/03/2020 01/07/2024
Employees 3,000 - 3,000 - - £4.00 01/06/2019 01/06/2020 30/09/2023
Employees 7,500 - 2,500 - 5,000 £2.00 01/10/2019 01/10/2020 30/09/2023
Employees 27,936 - - - 27,936 £0.95 10/02/2022 10/02/2025 10/02/2027
Total 57,852 - 24,683 - 33,169
1. P McFadden resigned on 20 November 2023
The following illustrates the number and weighted average exercise price
(WAEP) of, and movements in, share options during the year.
2025 2024
Number WAEP Number WAEP
£ £
Outstanding at the beginning of the year 33,169 1.1 57,852 3.7
Issued 1,227,000 0.4 - -
Lapsed during the year 33,169 1.1 24,683 3.8
Exercised during the period - - - -
Outstanding at 30 June 1,227,000 0.4 33,169 1.1
Exercisable at 30 June - - 2,500 2.0
No options were exercised in the year or during the prior year.
The share-based payment charge for options granted to employees and Directors
has been calculated using the Black‑Scholes model and using the following
parameters:
Share price at grant date £0.33
Exercise price £0.35
Expected option life (year) 1 year to 3 years
Expected volatility (%) 14.9%
Expected dividends 0%
Risk-free interest rate (%) 4.6%
Option fair value £0.33
The calculation includes an estimated leaver provision of 0% (2024: 31%).
The weighted average remaining contractual life of options outstanding at the
end of the year was 9 years 7 months (2024: 11 months).
Share options - (SAYE)
The following options over ordinary shares remained outstanding at 30 June
2025:
Options at Options Options Options Options at Exercise Date of First date Final date
1 April issued lapsed exercised 30 June price grant of exercise of exercise
2024 during during during 2025
the period the period the period
Employees:
Employees 33,264 - 33,264 - - £1.515 25/01/2021 01/03/2024 30/09/2024
Total 33,264 - 33,264 - -
The following options over ordinary shares remained outstanding at 31 March
2024:
Options at Options Options Options Options at Exercise Date of First date Final date
1 April issued lapsed exercised 31 March price grant of exercise of exercise
2023 during during during 2024
the year the year the year
Employees:
Employees 117,614 - (84,350) - 33,264 £1.515 25/01/2021 01/03/2024 30/09/2024
Total 117,614 - (84,350) - 33,264
The following illustrates the number and weighted average exercise price
(WAEP) of, and movements in, share options during the year.
2025 2024
Number WAEP Number WAEP
£ £
Outstanding at the beginning of the year 33,264 1.515 117,614 1.515
Issued - - - -
Lapsed during the year 33,264 1.515 84,350 1.515
Exercised during the year ended 31 March - - - -
Outstanding at 31 March - - 33,264 1.515
Exercisable at 31 March - - 33,264 1.515
The share-based payment charge for options granted to employees and Directors
has been calculated using the Black‑Scholes model and using the following
parameters:
Share price at grant date 1.420
Exercise price 1.515
Expected option life (year) 3 years 7 months
Expected volatility (%) 40.0%
Expected dividends 0%
Risk-free interest rate (%) 0.13%
Option fair value £0.394
The calculation includes an estimated leaver provision of 33% (2024: 33%).
There were no options outstanding under the SAYE scheme at the end of the
period. The weighted average remaining contractual life of options
outstanding at the end of the prior year was six months.
18. Financial instruments
The Group uses financial instruments, other than derivatives, comprising cash
at bank and various items such as trade and other receivables and trade and
other payables that arise directly from its operations. The main purpose of
these financial instruments is to raise finance for the Group's operations.
The Group's financial assets and liabilities at 30 June 2025, as defined under
IFRS 9, are as follows. The fair values of financial assets and liabilities
recorded at amortised cost are considered to approximate their book value.
Amortised cost
(loans and receivables)
2025 2024
£000 £000
Financial assets
Cash and cash equivalents 5,062 4,974
Trade and other receivables 9,879 9,455
Total financial assets 14,941 14,429
Trade and other receivables
Trade receivables 5,005 8,948
Accrued income 4,874 507
9,879 9,455
Amortised cost Fair value through profit or loss (FVPL)
(payables)
2025 2024 2025 2024
£000 £000 £000 £000
Financial liabilities
Trade and other payables 8,271 9,546 - -
Lease liabilities 266 378 - -
Forward contracts - - 436 213
Total financial liabilities 8,537 9,924 436 213
Trade and other payables
Trade payables 2,851 7,320
Accruals 5,420 2,226
Other creditors - -
8,271 9,546
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group's risk
management objectives and policies and, whilst retaining ultimate
responsibility for them, it has delegated the authority for designing and
operating processes that ensure the effective implementation of the objectives
and policies to the Group's Finance function. The overall objective of the
Board is to set policies that seek to reduce risk as far as possible without
unduly affecting the Group's competitiveness and flexibility.
The Group is exposed to financial risks in respect of:
· capital risk;
· foreign currency;
· interest rates;
· credit risk; and
· liquidity risk.
A description of each risk, together with the policy for managing risk, is
given below.
Capital risk
The Group manages its capital to ensure that the Group and its subsidiaries
will be able to continue as going concerns while maximising the return to
stakeholders through the optimisation of equity and debt balances.
The capital structure of the Group consists of cash and cash equivalents,
borrowings and equity. Equity comprises issued capital, reserves and
accumulated losses as disclosed in the consolidated statement of changes in
equity on page 58.
The Board of Directors reviews the capital structure on a regular basis. As
part of this review, the Board considers the cost of capital and the risks
associated with each class of capital, against the purpose for which it is
intended.
The Group's three-year £4.0 million revolving credit facility with Barclays
Bank plc expired on 23 March 2024. Directors elected not to renew this
facility, on account of the strong balance sheet position and with no
expectation of utilising it in the near term. This requirement is
continually reviewed and Directors remain in discussions with Barclays should
the need arise to put in place a similar facility in the future.
Market risk
Market risk arises from the Group's use of interest‑bearing, tradable and
foreign currency financial instruments. It is the risk that the fair value or
future cash flows of a financial instrument will fluctuate because of changes
in foreign exchange rates (currency risk), interest rates (interest rate
risk), or other market factors (other price risk).
Foreign currency risk
The Group is exposed to foreign currency risk on sales and purchases which are
denominated in a currency other than sterling. Exposures to exchange rates are
predominantly denominated in US dollars and euros. The Group seeks to reduce
foreign exchange exposures arising from transactions in various currencies
through a policy of matching, as far as possible, receipts and payments across
the Group in each individual currency. The Group uses derivatives where there
is a material surplus or deficit of non-sterling receipts and payments.
The following forward contracts were entered into in order to mitigate the
risk of fluctuations in the value of sterling against US dollar.
Currency Amount (000) Maturity date Foreign exchange rate
US dollar 1,840 10 July 2025 1.322
US dollar 1,700 21 August 2025 1.287
US dollar 3,000 5 June 2026 1.331
US dollar 1,000 15 June 2026 1.317
US dollar 1,750 15 June 2026 1.349
US dollar 2,100 21 August 2026 1.280
US dollar 1,000 15 June 2027 1.310
US dollar 500 15 June 2027 1.347
The above derivatives are remeasured at fair value at each reporting date.
This gives rise to a gain or loss, the entire amount of which is recognised in
the statement of comprehensive income within administrative expenses.
As of 30 June the Group's net exposure to foreign exchange risk was as
follows:
USD EUR
Net foreign currency financial assets/(liabilities) 2025 2024 2025 2024
(restated) (restated) (restated) (restated)
£000 £000 £000 £000
Trade receivables 100 369 44 160
Other receivables 7 85 1 0
Trade payables (1,343) (7,747) (8) (27)
Other payables (8,048) (67) 3 0
Cash and cash equivalents 421 2,572 190 176
Total net exposure before excluding forward contracts (8,863) (4,788) 230 309
Forward contracts 9,800 4,000 0 0
Total net exposure 937 (788) 230 309
The effect of a 10% strengthening of the US dollar against sterling at the
reporting date on the US dollar-denominated trade and other receivables, trade
and other payables, forward contracts and cash and cash equivalents carried at
that date would, all other variables held constant, have resulted in a
decrease of the pre-tax loss in the year and an increase in net assets of
£0.1 million. A 10% weakening in the exchange rate would, on the same basis,
have increased the pre-tax loss in the year and decreased net assets by
£0.1 million.
The effect of a 10% strengthening of the euro against sterling at the
reporting date on the euro-denominated trade receivables, payables and cash
and cash equivalents carried at that date would, all other variables held
constant, have resulted in a decrease of the pre-tax loss in the year and an
increase in net assets of £0.03 million. A 10% weakening in the exchange rate
would, on the same basis, have increased the pre-tax loss in the year and
decreased net assets by £0.02 million.
Interest rate risk
The Group has minimal cash flow interest rate risk as it has no external
borrowings at variable interest rates.
Liquidity risk
The Group manages liquidity risk by maintaining adequate cash reserves and
credit facilities, by continuously monitoring forecast and actual cash flows,
and by matching the maturity profiles of financial assets and liabilities
wherever possible.
There has been no change to the Group's exposure to liquidity risks or the
manner in which these risks are managed and measured during the year. Further
details are provided in the strategic report.
The liquidity risk of each Group entity is managed centrally by the Group's
Finance function. Each entity has a predefined facility based on the budget
which is set and approved by the Board in advance, which provides detail of
each entity's cash requirements. Any material additional expenditure over
budget requires sign off by the Board. A quarterly reforecast which includes a
cash flow forecast is reviewed by management and approved by the Board.
The Group has just over £0.1 million of credit available on corporate credit
cards which are settled in full on a monthly basis.
The maturity profile of the financial assets and liabilities is summarised
below. The table has been drawn up based on the undiscounted cash flows of
financial liabilities based on the earliest date on which the Group can be
required to pay.
Up to Between Between Between Over 5 years
3 months 3 and 12 months 1 and 2 years 2 and 5 years £'000
£'000 £'000 £'000 £'000
Financial assets
As at 30 June 2025
Trade and other receivables 15,398 2,240 229 - -
As at 31 March 2024 (restated)
Trade and other receivables 14,593 1,929 1,082 246 -
Financial liabilities Up to Between Between Between Over 5 years
3 months 3 and 12 months 1 and 2 years 2 and 5 years £'000
£'000 £'000 £'000 £'000
As at 30 June 2025
Trade and other payables 13,091 2,244 3,461 - -
Forward contracts 142 134 160 - -
Lease liabilities 40 121 106 - -
Total 13,273 2,499 3,727 - -
Financial liabilities
As at 31 March 2024 (restated)
Trade and other payables 13,170 3,194 4,119 252 -
Forward contracts 161 52 0 -
Lease liabilities 32 95 131 120 -
Total 13,363 3,341 4,250 372 -
Credit risk
The Group's principal financial assets are trade receivables and bank
balances. The Group is consequently exposed to the risk that its customers
cannot meet their obligations as they fall due. The Group assess the
creditworthiness and financial strength of customers at inception and on an
ongoing basis using credit agencies and publicly available financial
information together with trade knowledge and experience. The Board considers
the overall exposure to credit risk to be low given these processes, the
long-standing trading relationship Group has with a high proportion of these
entities and the blue-chip nature of the Group's client base. This is borne
out by a historically very low level of bad debts.
The Group also reviews the credit rating of its banks and financial
institutions and believes exposure to credit risk in this area to be limited
due to the use of counterparties with strong credit ratings.
Further detail is provided within note 1 and note 11.
19. Related party transactions
The Directors of the Group and their immediate relatives have an interest of
19% (2024: 19%) of the voting shares of the Group. The shareholdings of
Directors and changes during the year are shown in the Directors' report on
page 47.
No dividends were made to the Company in either year by subsidiary
undertakings.
There were no other related party transactions for the Group during the
period.
20. Bank loans
The Group's £4.0 million credit facility with Barclays Bank plc expired on 23
March 2024. No facility was in place throughout the 15-month period to 30
June 2025. Directors do not currently believe that such a facility is
required. They remain, however, in ongoing communications with Barclays and a
charge held by Barclays remains registered on Shearwater Group plc as this
will simplify the process for putting in place a replacement facility should
Directors decide that this is desirable.
21. Notes to support cash flow
Cash and cash equivalents, which are available on demand, comprise:
2025 2024
£000 £000
Net increase in cash and cash equivalents 88 1,010
Cash and cash equivalents at the beginning of the year 4,974 3,964
Cash and cash equivalents at the end of the year 5,062 4,974
Cash and cash equivalents are held in the following currencies:
2025 2024
£000 £000
Sterling 4,451 2,774
US dollar 421 2,049
Euro 190 151
5,062 4,974
Reconciliation of liabilities from financing activities:
Non-cash changes
2024 Cash Loan Right-of-use 2025
£'000 outflows interest asset £'000
£'000 £'000 additions
£'000
Payment of principal on lease liabilities 378 (185) 16 57 266
Total 378 (185) 16 57 266
Non-cash changes
2023 Cash Loan Right-of-use 2024
£'000 outflows interest asset £'000
£'000 £'000 additions
£'000
Revolving credit facility interest payable - (47) 47 - -
Payment of principal on lease liabilities 321 (216) 20 253 378
Total 321 (263) 67 253 378
22. Events after the reporting period
There are no material events after the reporting period to disclose.
1 (#_ftnref1) Source: World Economic Forum: WEF Global Cyber Security
Outlook 2024
2 (#_ftnref2) Source: Fortune Business Insights - Cybersecurity Market
Analysis - 2032
3 (#_ftnref3) Source: Mordor Intelligence UK Cybersecurity Market Size &
Share Analysis - Growth Trends & Forecasts (2025 - 2030)
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