Certain information contained
within this Announcement is deemed by the Company to constitute
inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 ("MAR") as applied in the United Kingdom. Upon
publication of this Announcement, this information is now
considered to be in the public domain.
29
January 2024
Smarttech247 Group
PLC
("Smarttech247", the "Group" or the "Company")
Final
Results
Smarttech247 (AIM: S247), a
multi-award-winning provider of AI-enhanced cybersecurity services
providing automated managed detection and response for a portfolio
of international clients, is pleased to announce its audited final
results for the 12 months ended 31 July 2023.
Operational highlights
·
Admitted to trading on AIM in December 2022,
raising £3.7 million via a placing of new ordinary
shares
·
A number of new contracts have been won during
the period, and since the period end, spearheaded by the Group's
Managed Detection and Response (MDR) platform, VisionX
·
In April 2023 the Company announced its
participation in Managed Security Service Provider Program by its
partner, Forcepoint, a global security leader
·
Named as Cybersecurity Company of the Year by
Chambers of Ireland InBusiness Recognition Awards in May
2023
·
In July 2023 Smarttech247 partnered with
SentinelOne, a cybersecurity platform company, to deliver
cybersecurity solutions
·
The Group has expanded, with headcount increased
significantly, to be positioned to deliver growth and develop new
products
·
Continued development of new products, including
new VisionX features with further development of ThreatHub and
NoPhish
Post-period end
·
Listing of VisionX on the Amazon Web Services
(AWS) Marketplace in August 2023
·
Strategic partnership with Abnormal Security, a
leading behavioural AI-based email security platform in August
2023
·
In October 2023 Smarttech247 announced a
strategic partnership with Splunk, a cybersecurity platform
company, to deliver automation-driven and human-led MDR
capabilities to global clients
·
Won a tender contract from an existing Government
of Ireland department client and secured a contract renewal with
AutoNation, the largest automotive retailer in the United States,
in October 2023
·
New three-year contract secured with a global
pharmaceutical solutions organisation in November 2023
·
Ranked as a Deloitte Fast 50 Technology Company
and won the 'Email Security Solution of the Year' at The Computing
Security Award 2023 for the Company's NoPhish product
·
Announced the launch of Aio, a new AI Assistant
and the launch of the Company's Mid-Market MDR solution for its
VisionX platform in January 2024
Financial highlights
·
Revenue increased by 19.3% to €12.18 million (31
July 2022: €10.21 million)
·
Gross profit increased by 22.7% to €6.81 million
(31 July 2022: €5.55 million)
·
Adjusted EBITDA increased by 36% to €2.70 million
(31 July 2022: €1.98 million)
·
Adjusted operating profit of €2.15 million (31
July 2022: €1.76 million)
·
Cash of €6.06 million at the period end (31 July
2022: €2.36 million)
Raluca Saceanu, CEO of Smarttech247,
commented:
"I am pleased to announce our first,
full-year results as an AIM-quoted company, marking a major
milestone for Smarttech247. We have entered into several new
contracts during the period, and since the period end, with large,
international organisations, and hope to continue this momentum
with our larger sales capacity to further increase our revenue and
profit growth going forward.
"The year under review, and the
period to date, has been marked by significant strides in our
Research and Development as well as forming strategic partnerships
with top companies like Forcepoint, SentinelOne, Abnormal Security,
and Splunk. These synergies have empowered us to offer our clients
a comprehensive security ecosystem, one that is not only robust,
but also dynamically tailored to meet the evolving demands of their
unique business landscapes.
"Smarttech247 now has the platform
in place to support and accelerate its growth in the cybersecurity
sector. We are confident as we enter 2024 and look forward to
updating the market on our further progress in due
course."
- Ends -
The Annual Report and
Accounts for the financial year ended 31 July 2023 will be
available to download from the Group's website via:
https://www.smarttech247.com/aim-rule-26/
For further information please contact:
Smarttech247 Group PLC
|
Tel:
+353 21 206 6033
|
Ronan Murphy, Executive
Chairman
Raluca Saceanu, Chief Executive
Officer
Nicholas Lee, Finance
Director
|
|
SPARK Advisory Partners Limited - Nominated
Adviser
|
Tel: +
44 (0) 20 3368 3550
|
Mark Brady / Adam Dawes
|
|
Shard Capital - Joint Broker
|
Tel: +44
(0) 20 7186 9900
|
Damon Heath
|
|
Fortified Securities - Joint Broker
|
Tel: +44
7493 989014
|
Guy Wheatley, CFA
|
|
Yellow Jersey PR
Sarah Hollins / Annabelle Wills /
Bessie Elliot
|
Tel: +44
(0) 20 3004 9512
|
About Smarttech247
Smarttech247 is a multi-award
winning automated MDR (Managed Detection & Response) company.
Its platform is trusted by international organisations and provides
threat intelligence with managed detection and response to provide
actionable insights, 24/7 threat detection, investigation and
response.
The Group's services are geared
towards proactive prevention and it achieves this by utilising the
latest in cloud, big data analytics and machine learning, along
with an experienced incident response team. In recognition of its
innovative technology, Smarttech247 was named by Chambers Ireland
InBusiness Recognition Awards as Cyber Security Company of the Year
2023.
Smarttech247's offices are located
in Ireland, United Kingdom, Romania, Poland and the USA. The
Company was admitted to trading on AIM on 15 December
2022.
For further information please
visit www.smarttech247.com
Chairman's statement
Introduction
Smarttech247 Group plc (the
"Company") is a public limited company whose shares are quoted on
the AIM market of the London Stock Exchange. The Company is a
multi-award-winning provider of AI-enhanced cybersecurity services
providing automated managed detection and response for a portfolio
of international clients. It has four directly and indirectly owned
subsidiaries, Zefone Limited, Smart Systems Security Limited,
Smarttech 247 Cyber Security Sarl incorporated and Smarttech Sp
z.o.o. (together "Smarttech247" or the "Group").
We are pleased to report our
results for the year to 31 July 2023.
Highlights
The key highlights for the year
are as follows:
Year ended
|
31 July
2023
Audited
|
31 July
2022
Unaudited
|
Change
|
|
€000
|
€000
|
%
|
Revenue
|
12,180
|
10,206
|
+19.3
|
Gross profit
|
6,806
|
5,545
|
+22.7
|
Gross profit margin
|
55.9%
|
54.3%
|
|
|
|
|
|
Operating costs
|
6,981
|
3,850
|
|
|
|
|
|
Adjusted EBITDA (Note
6)*
|
2,698
|
1,984
|
+36.0%
|
|
|
|
|
Operating profit
|
303
|
1,756
|
|
|
|
|
|
Profit before tax
|
204
|
1,534
|
|
|
|
|
|
As at
|
|
|
|
Cash
|
6,062
|
2,358
|
|
Net assets
|
11,483
|
4,533
|
|
* Adjusted EBITDA is a non-IFRS
measure and has been reconciled to the underlying IFRS numbers in
Note 6
·
Listing achieved on the London Stock Exchange,
raising £3.7 million
·
Revenue and profits continue to grow
strongly
· A number of new
contracts have been won during the period, spearheaded by the
Group's Managed Detection and Response
("MDR") VisionX
·
A number of significant partnerships have been
entered into with leading players in the industry
·
The platform has been expanded and headcount
increased in order to be in a position to deliver growth and
develop new products
·
New sales capacity established to increase the
rate of revenue growth
· New products are
being developed including a new VisionX product with further
development of ThreatHub and NoPhish
Review of the year
2023 has had a transformational
year for the Group with a listing being achieved on the London
Stock Exchange in December 2022 and funds successfully raised from
new investors. At the same time, the business has continued
to grow significantly, building out its platform and headcount to
service demand.
The Group now has the platform in
place to support and accelerate its revenue growth. We have also
launched new products and won multiple new contracts with major
global companies and institutions. These contracts are
important as they provide clear validation of the service that we
provide and clear reference points for new customers. We are
often competing with global companies to win new business and
succeeding, more details on which will be covered in the Chief
Executive Officer's ("CEO") Statement.
We firmly believe that our listing
will give Smarttech247 greater visibility and credibility in
overseas geographies, including the USA and Europe, and will
support our growth plans in the short and long term. I am
extremely proud of the team that we now have in place and would
like to thank them for their hard work and dedication in getting
the Group to its current position. I would also like to welcome our
new investors.
Outlook and strategy
Cyber-attacks continue to increase
with serious implications for the companies concerned. There
is no simple solution to defend an organisation against everything
that it can be exposed to but our combination of managed detection
and response capabilities can help to significantly reduce the
impact of an attack and manage the situation. We therefore see
clear opportunities for future growth.
We have started FY2024 well with
more contracts being won and a number of existing contracts being
renewed so we are very much looking forward to continuing this
progress in FY2024.
Ronan Murphy
Executive Chairman
26 January 2024
Chief Executive Officer's
statement
During
the year under review, the Group made notable progress on a number
of fronts. It has focused on building out its platform and
launching new products and is now extremely well-placed to grow
revenue. As we embark on a new era at Smarttech247, we are pleased
with the Group's prospects and the strategic advances that we are
making.
Products
To
support its extensive capabilities for Managed Detection and
Response ("MDR"), the Group launched its VisionX technology during
the year. This technology, together with our award-winning
capabilities and expertise, provides 24/7 proactive threat detection and
response, using cloud data analytics, machine learning and an
incident response capability.
This
AI-enabled platform is used in tandem with human-led monitoring
from Smarttech247's expert team, empowering organisations to
leverage AI and intelligent automation to enhance their security
operations.
During
the year, we have also embarked on the development of a new version
of the VisionX product. This offers a very different functionality in
that it is multi-tenancy and has a completely new User Interface -
this is a very important element of the VisionX platform as it is
heavily relied upon by product users to enable them to assess the
effectiveness of their security operations in real time.
This new design offers
users an intuitive approach that simplifies complex security
operations. With
improved functionality, advanced analytics, threat hunting and
customisable dashboards, customers will gain unprecedented insights
into their organisation's security posture.
Post
period end in August 2023, the Group also announced that its
VisionX platform is available on the Amazon Web Services ("AWS") Marketplace.
AWS's well-established, trusted platform allows us to showcase
VisionX to a wider range of customers, demonstrating our commitment
to delivering leading security solutions to a global
audience.
The Group
is continuing to develop its threat and vulnerability software
called Threathub. Threathub has attack surface intelligence
management features which allow organisations to manage their risk
continuously by providing them with automated threat modelling and
dynamic risk governance capabilities based on their internal and
external attack surface.
We are
progressing with the revamping of our Managed Phishing Response
Platform, NoPhish, underscoring our steadfast commitment to
addressing the dynamic landscape of cybersecurity threats. The
latest developments represent a pivotal advancement, facilitating
expeditious responses to phishing incidents through a streamlined
and intuitive user experience. This enhancement is poised to
significantly contribute to the efficacy of our platform by
minimising response times and optimising operational
agility.
Contracts
Smarttech247 holds a strong position within the
cybersecurity market, and we are pleased to be able to deliver
revenue and adjusted EBITDA growth. Just prior to joining AIM, the
Group won a three-year contract with a total sales value of
US$800,000 with a Fortune 150 leading automotive retailer in the
USA with annual revenues of over US$20 billion. This was followed
by a three-year agreement with a large US tech company
headquartered in Massachusetts and a two-year agreement with a
prestigious university in Ireland worth circa US$400,000 and
US$450,000 respectively over the length of the
contracts.
All these contracts are centred on the Group's MDR platform,
VisionX.
In July
2023, the Group announced that it had received an order from
an existing client, a global, automotive technology company, worth
in total circa US$3 million over three years. This order
includes the provision and implementation of the Group's
cutting-edge security intelligence technology, VisionX to provide
enhanced visibility and threat detection. Once integrated, it
provides a unified and proactive security solution by combining
real-time threat monitoring, rapid incident response and advanced
analytics. This will enable the digital resilience of the client's
assets to be strengthened thereby safeguarding them more
effectively.
Post
period end in August 2023, as part of Smarttech247's partnership
with Abnormal Security a multi-year contract worth
nearly €400k, over two years, was won with a global
organisation within the aviation industry sector.
In
October 2023, the Group won a tender contract from an
existing Government of
Ireland department client, worth circa
€400,000 over two years.
This deal will see
Smarttech247 leverage its strategic partnership with IBM to provide
its IBM QRadar Security Information and Event Management ("SIEM")
solution. The technology is designed to provide security teams with
centralised visibility into enterprise-wide security data. This
resource empowers Smarttech247 clients with actionable insight into
the most critical threats, enabling more effective threat
management, near real-time visibility and the production of
detailed data access and user activity
reports.
Smarttech247's client, and the largest automotive retailer
in the United States, AutoNation, has recently
extended its existing partnership for a further three years. This
will allow Smarttech247 to continue supporting this Fortune 150
global enterprise in its cybersecurity solutions and is a testament
to the success of the ongoing partnership.
Furthermore,
AutoNation's Vice President and CISO, Chip Regan, recently explained in a recent
case study why Smarttech247 was the obvious choice when it came to
its cybersecurity needs and specifically how partnering with
Smarttech247 has allowed AutoNation to achieve a granular level of
security and monitoring on a scale that suits such a large, global
enterprise.
In
November 2023, the Group announced that it had signed a new deal
with a global pharmaceutical solutions organisation, based in
the USA,
worth approximately €900,000 over
three years, deploying its AI-enhanced VisionX
platform.
Combining
the VisionX MDR platform with the managed services offering creates
competitive differentiation for the Group. Major new customers have
highlighted factors like this as the reason for selecting
Smarttech247.
Smarttech247 currently has multiple contracts
with leading global organisations. The majority of these contracts are multi-year
thereby providing greater certainty of revenue. Also, with
contracts now in place with such prestigious organisations, this
represents an excellent source of reference for new
business.
Partnerships
In the
dynamic field of cybersecurity, our strategic technology alliances
play a pivotal role in providing best-of-breed solutions to our
clients. These collaborations and integrations with our platform
VisionX represent a proactive approach to addressing evolving
threats, incorporating cutting-edge technologies such as Secure
Access Service Edge ("SASE"), Data Loss Prevention ("DLP"),
autonomous security, and AI-driven email protection.
In
April 2023, the Group announced its participation in the newly
released Managed Security Service Provider Program ("MSSP") by its
partner, Forcepoint, a global security leader. The program is centred on Forcepoint ONE SSE
cloud-native and Forcepoint enterprise data security
solutions. As a partner of Forcepoint, Smarttech247 will be
able to quickly incorporate Secure Access Service Edge ("SASE") and
DLP managed services into its offerings through the MSSP
program. Partners of this service can also benefit from
flexible consumption of Forcepoint converged, cloud-delivered
security solutions, update customer configurations and offer
multi-tenant services, all with a few clicks.
With the
Group's hosted and managed services centred on Forcepoint ONE SSE
cloud-native and Forcepoint enterprise data security solutions,
this will allow today's enterprises to manage risk holistically and
simplify security operations. This is a potential game-changer when
adversaries are constantly finding new ways to steal confidential
data.
In July
2023, the Group announced that it had joined forces with
SentinelOne (NYSE: S), the autonomous cybersecurity platform
company, to deliver comprehensive cybersecurity solutions to
businesses of all sizes.
SentinelOne, a recognised leader in protecting
endpoints, cloud, networks and identities in an intelligent,
holistic way. Its technology is at the forefront of the industry
and combined with Smattech247's expertise in cybersecurity
consulting and MDR services, businesses can be provided with a
complete security solution that can adapt and scale with their
changing needs.
The
partnership combines Smarttech247's expertise in cybersecurity
consulting, MDR services and threat intelligence with SentinelOne's
market-leading autonomous security technology to provide a
comprehensive security solution that protects against cyber
threats.
Smarttech247 will maximise the benefits and
value of SentinelOne's leading technology for its customers with
specialist-managed endpoint protection and response services,
whilst SentinelOne will provide Smarttech247 with access to its
latest threat intelligence and research.
Post period end, in August 2023, the Group
announced a strategic partnership agreement
with Abnormal
Security, a leading
behavioural AI-based email security platform.
Unlike traditional secure
email gateways, Abnormal Security takes a different approach to
stopping email attacks. The cloud-native API architecture ingests
thousands of signals across multiple platforms to build a baseline
of the known-good behaviour of every employee and vendor in an
organisation based on communication patterns, sign-in events and
thousands of other attributes. It then applies advanced AI models
including natural language processing ("NLP") and behavioural
analytics to detect abnormalities in email behaviour that indicate
a potential threat and prevent attacks from reaching end
users.
Abnormal
Security will be integrated into Smarttech247's comprehensive MDR service,
VisionX, to provide a unified and proactive security
solution.
In
October 2023, the Group announced a strategic partnership agreement
with Splunk Inc. Splunk Inc. (NASDAQ: SPLK), a cybersecurity
and observability leader, helps make organisations more digitally
resilient. Businesses use Splunk's unified security and
observability platform to keep digital systems secure and reliable.
This partnership brings together Smarttech247's automation-driven
and human-led VisionX MDR capabilities and Splunk's powerful SIEM
technology solutions.
The Group
also works with a number of other leading industry players whose
products can be incorporated within its MDR platform as required.
Such partners include Microsoft, IBM and Crowdstrike among many
others.
People and platform
During
FY2023, the Group has increased its headcount significantly in
order to provide the capacity for future revenue growth. This in
itself is a significant achievement given the demand for suitably
qualified high-quality personnel. This has also been implemented
against the background of tight control over costs to maintain
existing margins.
During
FY2023, one key area of focus was to build out the Group's sales
capability and operations. Investment has now been made in this
area and progress achieved which will support the Group's revenue
growth going forward.
Also, during the period Paul Garvey was
appointed to the Group's Advisory Board. Paul Garvey
is currently Vice President and Head of Global
Accounts at Check Point Software Technologies Ltd, a leading
provider of cyber security solutions to over 100,000 global
customers, where he oversees the entire Go To Market capability for
Check Point's largest customers. Subsequently, and post period end,
Sascha Maier was also appointed to the Group's Advisory
Board. Sascha is currently the Group Chief Information and
Security Officer at SV Group, a leading hospitality and catering group
in Europe. In this role, he oversees the Cyber Resilience
strategy for the entire group, including all brands, subsidiaries,
and the foundation.
Awards and profile
On
9 March
2023, the
Group hosted its annual Zero Day Con conference at
the Dublin Convention Centre, bringing together leading
technology firms, industry experts and government officials to
allow business leaders to learn more about the latest cybersecurity
trends. This year, over 500 international cybersecurity industry
leaders attended, and speakers included senior professionals from
the FBI, the Government of Ireland, and top cybersecurity and medical
companies.
In
May 2023, the Group was named Cyber Security
Company of the Year by Chambers Ireland InBusiness
Recognition Awards 2023. This is a prestigious award and an
important recognition for Smarttech247 to receive in its first year
as a publicly quoted organisation.
The
Group has once again been nominated as a Deloitte Fast 50 Technology Company for
2023. Deloitte Fast 50
is one of Ireland's foremost technology award programs, each year
highlighting the 50 fastest-growing technology companies
across Ireland.
The Group
also secured the 'Email Security Solution of the Year' title at The
Computing Security Awards 2023 for its product 'NoPhish'. This
cutting-edge solution operates in real-time, detecting and
responding to phishing attempts. By analysing reported emails and
identifying malicious elements, such as attachments or URLs,
NoPhish enables organisations to stay ahead of cyber threats.
Phishing remains a critical concern for companies globally and
NoPhish offers clients a defence through its proactive approach and
intelligence. The 'Email Security Solution of the Year' award
signifies Smarttech247's commitment to innovation and the security
of its clients.
Furthermore, Smarttech247 has been recognised as
a finalist for the 'Scale Up of the Year' award at the
prestigious Tech
Industry Alliance Awards and has also received a nomination for
the 'Cyber Security Solution Provider of the Year' award at the
2023 EU Cyber Awards. Smarttech247 was also shortlisted for the 'Best
Newcomer' Award at the AIM Awards 2023, for seven awards at the
Computing Security Awards 2023 (these include New Product/Solution
of the Year, One to Watch Security and Data Protection as a Service
Provider of the Year) and for Tech Scale up of the Year award at
the Tech Industry Alliance Awards in October
2023.
Financial commentary
In terms
of financial performance, the revenue of the Group increased by
around 20% over the prior year as a result of winning several new
contracts during FY2023. Gross profit margins improved
slightly leading to a gross profit increase of around
23%.
Operating
costs increased significantly, principally as a result of the costs
of the Company's Initial Public Offering on AIM ("IPO") and other
costs incurred during the year. Underlying operating costs, after
adjusting for IPO related and other costs increased during the
period reflecting the increase in the scale of operations and the
commencement of amortisation of certain of the Group's new
products.
Underlying adjusted EBITDA (as reconciled in
Note 6), after adjusting for certain costs and
amortisation/depreciation, grew by over 36% during the
period. The Group's underlying cash generation was strong,
providing cash to deploy in the development of new products which
is fundamental to a business like Smarttech247.
The
Group's financial position also improved significantly over the
period as a result of the conversion of the convertible loan note
and the funds raised at IPO. Consequently, the Group is very well
positioned to fund future growth.
FY2024
has started well with both new contracts being won and a number of
existing clients renewing their contracts.
Raluca Saceanu
CEO
26
January 2024
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
For the year ended 31 July 2023
|
Note
|
2023
€'000
|
2022
€'000
Unaudited
|
Continuing
operations
|
|
|
|
Revenue
|
4
|
12,180
|
10,206
|
Cost of sales
|
5
|
(5,374)
|
(4,661)
|
Gross
profit
|
|
6,806
|
5,545
|
Administrative expenses
|
6
|
(6,981)
|
(3,850)
|
Other operating income
|
7
|
478
|
61
|
Operating
profit
|
|
303
|
1,756
|
Investment income
|
10
|
-
|
2
|
Other gains and losses
|
11
|
1
|
(8)
|
Finance costs
|
12
|
(100)
|
(216)
|
Profit before
taxation
|
|
204
|
1,534
|
Income tax
|
13
|
(371)
|
(156)
|
Profit for the year from
continuing operations
|
|
(167)
|
1,378
|
Total profit for the year
attributable to equity holders of the parent
|
|
|
|
Other
comprehensive income
|
|
-
|
(1)
|
Total comprehensive profit
for the year attributable to equity holders of the
parent
|
|
(167)
|
1,377
|
|
|
|
|
Basic
earnings per share - € cents
|
14
|
(0.1662)
|
1.5749
|
STATEMENT OF FINANCIAL POSITION
As
at 31 July 2023
GROUP
|
Note
|
2023
€'000
|
2022
€'000
Unaudited
|
Non-current
assets
|
|
|
|
Intangible assets
|
15
|
3,934
|
1,739
|
Property,
plant and equipment
|
16
|
153
|
97
|
Right-of-use asset
|
21
|
331
|
64
|
Financial
assets
|
17
|
1,162
|
1,161
|
Total non-current
assets
|
|
5,580
|
3,061
|
Current
assets
|
|
|
|
Trade and
other receivables
|
19
|
6,423
|
6,153
|
Cash and
cash equivalents
|
20
|
6,062
|
2,358
|
Total current
assets
|
|
12,485
|
8,511
|
TOTAL
ASSETS
|
|
18,065
|
11,572
|
Equity attributable to
owners of the parent
|
|
|
|
Called up
share capital
|
22
|
1,436
|
-
|
Share
premium
|
22
|
6,365
|
-
|
Share
based payment reserve
|
23
|
554
|
-
|
Other
reserves
|
24
|
(1,215)
|
23
|
Foreign
exchange reserve
|
|
34
|
34
|
Retained
earnings
|
|
4,309
|
4,476
|
Total
equity
|
|
11,483
|
4,533
|
Non-current
liabilities
|
|
|
|
Borrowings
|
26
|
-
|
2,342
|
Lease
liability
|
21
|
260
|
4
|
Total non-current
liabilities
|
|
260
|
2,346
|
Current
liabilities
|
|
|
|
Trade and other payables
|
27
|
6,231
|
4,629
|
Lease liability
|
21
|
91
|
64
|
Total current
liabilities
|
|
6,322
|
4,693
|
Total
liabilities
|
|
6,582
|
7,039
|
TOTAL EQUITY AND
LIABILITIES
|
|
18,065
|
11,572
|
These Financial Statements were
approved by the Board of Directors on 26 January 2024 and were
signed on its behalf by:
Raluca Saceanu
Director
Company number: 14385467
COMPANY
|
Note
|
2023
€'000
|
|
Non-current
assets
|
|
|
|
Investments
|
18
|
1,116
|
|
Total non-current
assets
|
|
1,116
|
|
Current
assets
|
|
|
|
Intercompany receivable
|
|
3,166
|
|
Trade and
other receivables
|
19
|
184
|
|
Cash and
cash equivalents
|
20
|
2,949
|
|
Total current
assets
|
|
6,299
|
|
TOTAL
ASSETS
|
|
7,415
|
|
Equity attributable to
owners of the parent
|
|
|
|
Called up
share capital
|
22
|
1,436
|
|
Share
premium
|
22
|
6,365
|
|
Share
based payment reserve
|
23
|
554
|
|
Foreign
exchange reserve
|
|
22
|
|
Retained
earnings
|
|
(1,016)
|
|
Total
equity
|
|
7,361
|
|
Current
liabilities
|
|
|
|
Trade and other payables
|
27
|
54
|
|
Total current
liabilities
|
|
54
|
|
Total
liabilities
|
|
54
|
|
TOTAL EQUITY AND
LIABILITIES
|
|
7,415
|
|
Under section 408 of the Companies
Act 2006, the Company is exempt from the requirement to present its
own income statement or statement of comprehensive income. The
Company's loss for the year was €1,016K.
These Financial Statements were
approved by the board of Directors on 26 January 2024 and were
signed on its behalf by:
Raluca Saceanu
Director
STATEMENT OF
CASHFLOW
For
the year ended 31 July 2023
GROUP
|
Notes
|
2023
€'000
|
2022
€'000
Unaudited
|
Cash flow from operating
activities
|
|
|
|
(Loss) / profit for the financial year
|
|
(167)
|
1,378
|
Adjustments
for:
|
|
|
|
Interest
payable
|
|
64
|
1
|
Finance
costs
|
|
36
|
215
|
Impact of
foreign exchange
|
|
(9)
|
(270)
|
Taxation
|
|
371
|
156
|
Share
based payments
|
|
554
|
-
|
IPO costs
in shares
|
|
608
|
-
|
Depreciation and amortisation
|
|
549
|
228
|
Taxation
paid
|
|
(148)
|
-
|
Fair
value loss / (gain) on investments
|
|
(1)
|
8
|
Changes in working
capital:
|
|
|
|
Decrease
/ (increase) in trade and other receivables
|
|
(241)
|
(1,622)
|
(Decrease) / increase in trade and other payables
|
|
1,532
|
611
|
Net cash
inflow from operating activities
|
|
3,148
|
705
|
Cash flow from investing
activities
|
|
|
|
Cash
acquired on acquisition
|
|
7
|
13
|
Purchase
of intangible fixed assets
|
|
(2,625)
|
(1,434)
|
Purchase
of tangible fixed assets
|
|
(112)
|
(38)
|
Sale /
(purchase) of financial assets
|
|
-
|
(2)
|
Net cash
inflow / (outflow) from investing activities
|
|
(2,730)
|
(1,461)
|
Cash flows from financing
activities
|
|
|
|
Net
proceeds from the issue of shares
|
|
3,373
|
-
|
Repayment
of lease liabilities
|
21
|
(76)
|
(101)
|
Other
finance costs
|
|
(7)
|
-
|
Net cash
inflow from financing activities
|
|
3,290
|
(101)
|
Net increase / (decrease) in
cash and cash equivalents
|
|
3,708
|
(857)
|
Cash and
cash equivalents at beginning of period
|
|
2,358
|
3,215
|
Foreign
exchange impact on cash
|
|
(4)
|
-
|
Cash and cash equivalents at
the end of the period
|
20
|
6,062
|
2,358
|
Significant non-cash
transactions
The only
significant non-cash transactions that are included in the cash
flow were the issue of shares and share options as detailed in
Notes 22 and 23.
COMPANY
|
Notes
|
2023
€'000
|
|
Cash flow from operating
activities
|
|
|
|
(Loss) / profit for the financial year
|
|
(1,016)
|
|
Adjustments
for:
|
|
|
|
Share
based payments
|
|
450
|
|
IPO costs
in shares
|
|
608
|
|
Changes in working
capital:
|
|
|
|
(Increase) / decrease in trade and other
receivables
|
|
(521)
|
|
Increase
/ (decrease) in trade and other payables
|
|
55
|
|
Net cash
outflow from operating activities
|
|
(424)
|
|
Cash flows from financing
activities
|
|
|
|
Net
proceeds from the issue of shares
|
|
3,373
|
|
Net cash
inflow from financing activities
|
|
3,373
|
|
Net increase / (decrease) in
cash and cash equivalents
|
|
2,949
|
|
Cash and
cash equivalents at beginning of period
|
|
-
|
|
Foreign
exchange impact on cash
|
|
-
|
|
Cash and cash equivalents at
the end of the period
|
20
|
2,949
|
|
Significant non-cash
transactions
The only
significant non-cash transactions that are included in the cash
flow were the issue of shares and share options as detailed in
Notes 22 and 23.
STATEMENT OF CHANGE IN
EQUITY
As
at 31 July 2023
GROUP
|
Share
Capital
|
Share
Premium
|
SBP
Reserve
|
Merger
Reserve
|
Foreign Exchange
Reserve
|
Retained
Earnings
|
|
Total
Equity
|
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
|
€'000
|
|
|
|
|
|
|
|
|
|
At 1 August
2021
|
-
|
-
|
-
|
-
|
35
|
3,098
|
|
3,133
|
Profit
for the year
|
-
|
-
|
-
|
-
|
-
|
1,378
|
|
1,378
|
Other
comprehensive income
|
-
|
-
|
-
|
-
|
(1)
|
-
|
|
(1)
|
Total
comprehensive income for the year
|
-
|
-
|
-
|
-
|
(1)
|
1,378
|
|
1,377
|
Acquisition of Smarttech Poland
|
-
|
-
|
-
|
23
|
-
|
-
|
|
23
|
Total
transaction with owners
|
-
|
-
|
-
|
23
|
-
|
-
|
|
23
|
Balance at 31 July 2022
(unaudited)
|
-
|
-
|
-
|
23
|
34
|
4,476
|
|
4,533
|
Loss for
the year
|
-
|
-
|
-
|
-
|
-
|
(167)
|
|
(167)
|
Other
comprehensive income
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
Total comprehensive income
for the year
|
-
|
-
|
-
|
-
|
-
|
(167)
|
|
(167)
|
Capital
reorganisation
|
1,012
|
-
|
-
|
(1,012)
|
-
|
-
|
|
-
|
Issue of
shares to settle acquired CLN
|
159
|
2,577
|
-
|
-
|
-
|
-
|
|
2,736
|
Issue of
shares
|
265
|
4,108
|
-
|
-
|
-
|
-
|
|
4,373
|
Acquisition of Smart Securities
|
-
|
-
|
-
|
(226)
|
-
|
-
|
|
(226)
|
Share
based payments
|
-
|
-
|
554
|
-
|
-
|
-
|
|
554
|
Share
issue costs
|
-
|
(320)
|
-
|
-
|
-
|
-
|
|
(320)
|
Total
transaction with owners
|
1,436
|
6,365
|
554
|
(1,238)
|
-
|
-
|
|
7,117
|
Balance at 31 July
2023
|
1,436
|
6,365
|
554
|
(1,215)
|
34
|
4,309
|
|
11,483
|
COMPANY
|
Share
Capital
|
Share
Premium
|
SBP
Reserve
|
Foreign Exchange
Reserve
|
Retained
Earnings
|
|
Total
Equity
|
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
|
€'000
|
|
|
|
|
|
|
|
|
Loss for
the year
|
-
|
-
|
-
|
-
|
(1,016)
|
|
(1,016)
|
Other
comprehensive income
|
-
|
-
|
-
|
22
|
-
|
|
22
|
Total
comprehensive income for the year
|
-
|
-
|
-
|
22
|
(1,016)
|
|
(994)
|
Issue of
shares as part of capital reorganisation
|
1,012
|
-
|
-
|
-
|
-
|
|
1,012
|
Issue of
shares to settle acquired CLN
|
159
|
2,577
|
-
|
-
|
-
|
|
2,736
|
Issue of
shares
|
265
|
4,108
|
-
|
-
|
-
|
|
4,373
|
Share
based payments
|
-
|
-
|
554
|
-
|
-
|
|
554
|
Share
issue costs
|
-
|
(320)
|
-
|
-
|
-
|
|
(320)
|
Total
transaction with owners
|
1,436
|
6,365
|
554
|
-
|
-
|
|
8,355
|
Balance at 31 July
2023
|
1,436
|
6,365
|
554
|
22
|
(1,016)
|
|
7,361
|
NOTES TO THE FINANCIAL
INFORMATION
For the year ended 31 July
2023
1
GENERAL INFORMATION
Smartech247 Group plc
("Smartech247") is a public limited company incorporated and
registered in England and Wales with its registered office at 165
Fleet Street, London, EC4A 2DY. The Company's registered number is
14385467. The Company has four direct and indirectly 100% owned
subsidiaries, Zefone Limited incorporated and registered in
Ireland, Smart Systems Security Limited, incorporated and
registered in England and Wales, Smarttech 247 Cyber Security Sarl
incorporated and registered in Romania and Smartech Sp z.o.o.
incorporated and registered in Poland (together "the
Group").
The Group's principal activities
consist of providing Managed Detection and Response capabilities to
global organisations, and associated services including penetration
testing, governance risk and compliance and cyber
consultancy.
The consolidated Financial
Statements were approved for issue by the Board of Directors on 26
January 2024.
2
ACCOUNTING POLICIES
IAS 8 requires that management
shall use its judgement in developing and applying accounting
policies that result in information which is relevant to the
economic decision-making needs of users, that are reliable, free
from bias, prudent, complete and represent faithfully the financial
position, financial performance and cash flows of the
entity.
2.1
Basis of preparation
The financial statements for the
period ended 31 July 2023 have been prepared in accordance with
UK-adopted International Accounting Standards ('IFRS') and in
accordance with the requirements of the Companies Act 2006 with the
principal accounting policies applied in the preparation of the
Financial Statements as set out below. These policies have been
consistently applied to the period presented, unless otherwise
stated.
On 18 November 2022, Smarttech247
Group plc which had never traded, acquired 100% of Zefone
Limited. The Group has used merger accounting to account for
this acquisition as there was no change in the shareholders or
holdings, and therefore it is accounted for as a common control
transaction with no change in the book values of assets and
liabilities and no fair value accounting applied. No goodwill
arises as a result. Consequently, FY2023 incorporates the full year
results for Zefone Limited and its subsidiaries as well as the
trading of the parent Company from incorporation on 29 September
2022 to 31 July 2023, prepared under IFRS. See Note 2.6 for further
information.
The comparative financial
information for the year ended 31 July 2022 has been derived from
the unaudited IFRS financial information included in the Group's
regulatory news service announcement of 4 April 2023. This
comprises the results of Zefone Limited which is the Group's
principal trading subsidiary and its other subsidiaries.
Zefone Limited's Irish GAAP financial statements were audited
during this period whilst any necessary IFRS adjustments made and
the consolidation with its subsidiaries were subject to a formal
review by Group's auditors.
The preparation of financial
statements in conformity with UK IFRS requires management to make
judgements, estimates and assumptions that affect the application
of policies and reported amounts in the financial statements. The
areas involving a higher degree of judgement or complexity, or
areas where assumptions or estimates are significant to the
Financial Statements, are disclosed in Note 2.23.
The principal accounting policies
are set out below and have, unless otherwise stated, been applied
consistently in the Financial Statements.
The consolidated financial
statements are presented in Euros (€) unless otherwise stated,
which is Zefone's functional currency and the Group and Company's
presentational currency, and presented to the nearest
€'000.
2.2 New
standards, amendments and interpretations
The Group and Company have adopted
all of the new and amended standards and interpretations issued by
the International Accounting Standards Board that are relevant to
its operations and effective for accounting periods commencing on
or after 1 July 2021.
No Standards or Interpretations
that came into effect for the first time for the financial year
beginning 1 July 2021 have had an impact on the Group or
Company.
2.3 New
standards and interpretations not yet adopted
Standards and amendments to
standards that have been issued that are applicable to the Group
but are not effective for 2023 and have not been early adopted
are:
Standard
|
Impact on initial application
|
Effective date
|
Annual Improvements
|
2018-2020 Cycle
|
1 January 2023
|
IFRS 17
|
Insurance Contracts
|
1 January 2023
|
IAS 1
|
Classification of liabilities as
Current or Non-current
|
1 January 2023
|
IAS 8
|
Accounting estimates
|
1 January 2023
|
IAS 12
|
Deferred tax arising from a single
transaction
|
1 January 2023
|
IFRS 16
|
Amendments to IFRS 16
|
1 January 2024
|
IAS 1
|
Amendments to IAS 1
|
1 January 2024
|
The
effect of these new and amended Standards and Interpretations which
are in issue but not yet mandatorily effective is not expected to
be material.
The
directors are evaluating the impact that these standards may have
on the financial statements of Group.
2.4
Going concern
Management has prepared the Financial Statements
on a going concern basis. The Directors are satisfied that adequate
resources are held by the Group, taking into consideration the
successful AIM listing, and associated fundraise, during the year,
and consequently they have no reason to believe that any material
uncertainty exists that would cast a doubt about the ability of the
Group and Company to continue as a going concern.
In making
this judgement management considered the Group's budgets and cash
flow forecasts for a period of at least twelve months from the date
of approval of the financial information and the level of existing
cash resources which demonstrates that the Group will be in a
position to meet its liabilities as they fall due.
The Group
and Company have therefore adopted the going concern basis in
preparing the Financial Statements.
2.5
Basis of consolidation
Subsidiaries are all entities (including
structured entities) over which the Group has control. The
Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated
from the date that control ceases.
Inter-company transactions, balances and
unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated.
The Group
has used merger accounting as described in more detail below in
note 2.6 for the combination of Smarttech247 Group plc and its
direct and indirectly held subsidiaries.
2.6
Merger accounting
The
Company was incorporated on 29 September 2022 with one £0.01
ordinary share and on 18 November 2022, became the parent company
of the Group when it issued 87,499,999 £0.01 ordinary shares in
exchange for 100% of the ordinary shares in Zefone Limited as part
of a share for share exchange.
This
transaction is not considered to be a business combination within
the scope of IFRS3 as the transaction was between entities under
common control. This is a key judgement, and as a transaction where
there was no change in the shareholders or holdings, is accordingly
accounted for using merger accounting with no change in the book
values of assets and liabilities and no fair value accounting
applied.
As
permitted, the Group has applied 'predecessor' accounting and
although the consolidated financial statements have been issued in
the name of Smarttech247 Group plc, the legal parent, it represents
a continuation of the financial information of the legal
subsidiary. As such, the comparative information presented for the
year ended 31 July 2022 is that of the Company's subsidiary which
has been derived from the unaudited IFRS financial information
included in the Group's regulatory news service announcement of 4
April 2023.
Further
information on the transaction is included in Note 24.
Merger
accounting was applied in relation to the acquisition of Smart
Systems Security Limited andSmarttech247 so. z o.o. These
transactions have not been presented as a continuation of trade and
the subsidiary's net assets and trading results have been included
in the consolidation at their book value from the date of
acquisition.
2.7
Foreign currency translation
(i)
Functional and presentation currency
Items
included in the financial information for each of the Group's
entities are measured using the currency of the primary economic
environment in which the entity operates ('the functional
currency'). The consolidated financial information is presented in
€ Euro, which is the Group's presentation and functional currency.
The individual financial statements of each of the Company's wholly
owned subsidiaries are prepared in the currency of the primary
economic environment in which it operates (its functional
currency). IAS 21 The Effects of Changes in Foreign Exchange Rates
requires that assets and liabilities be translated using the
exchange rate at period end, and income, expenses and cash flow
items are translated using the rate that approximates the exchange
rates at the dates of the transactions (i.e. the average rate for
the period). The foreign exchange differences on translation is
recognised in other comprehensive income (loss).
(ii)
Transactions and balances
Transactions denominated in a foreign currency
are translated into the functional currency at the exchange rate at
the date of the transaction. Assets and liabilities in foreign
currencies are translated to the functional currency at rates of
exchange ruling at statement of financial position date. Gains or
losses arising from settlement of transactions and from translation
at period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the statement
of comprehensive income for the period.
(iii) Group
companies
The
results and financial position of all the Group entities that have
a functional currency different from the presentation currency are
translated into the presentation currency as follows:
- assets and liabilities for each statement
of financial position presented are translated at the closing rate
at the date of the statement of financial position;
- income and expenses for each statement of
comprehensive income are translated at the average exchange rate;
and
- all resulting exchange differences are
recognised as a separate component of equity.
On
consolidation, exchange differences arising from the translation of
the net investment in foreign operations are taken to shareholders'
equity. When a foreign operation is partially disposed or sold,
exchange differences that were recorded in equity are recognised in
the statement of comprehensive income as part of the gain or loss
on sale.
2.8
Segment reporting
Operating
segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker. The chief
operating decision maker, who is responsible for allocating
resources and assessing performance of the operating segments, has
been identified as the Executive Board of Directors.
2.9
Impairment of non-financial assets
Non-financial assets and intangible assets not
subject to amortisation are tested annually for impairment at each
reporting date and whenever events or changes in circumstances
indicate that the carrying amount may not be
recoverable.
An
impairment review is based on discounted future cash flows. If the
expected discounted future cash flow from the use of the assets and
their eventual disposal is less than the carrying amount of the
assets, an impairment loss is recognised in profit or loss and not
subsequently reversed.
For the
purposes of assessing impairment, assets are grouped at the lowest
levels for which there are largely independent cash flows (cash
generating units or 'CGUs').
2.10
Cash and cash equivalents
Cash and
cash equivalents comprise cash at bank and in hand, and demand
deposits with banks and other financial institutions and bank
overdrafts.
2.11
Fair value measurement
Fair
value measurement IFRS 13 establishes a single source of guidance
for all fair value measurements. IFRS 13 does not change when an
entity is required to use fair value, but rather provides guidance
on how to measure fair value under IFRS when fair value is required
or permitted. The resulting calculations under IFRS 13 affected the
principles that the Company uses to assess the fair value, but the
assessment of fair value under IFRS 13 has not materially changed
the fair values recognised or disclosed. Further information is set
out at Note 2.12 (c).
IFRS 13
mainly impacts the disclosures of the Company. It requires specific
disclosures about fair value measurements and disclosures of fair
values, some of which replace existing disclosure requirements in
other standards.
2.12
Financial instruments
IFRS 9
requires an entity to address the classification, measurement and
recognition of financial assets and liabilities.
a) Classification
The Group
classifies its financial assets in the following measurement
categories:
- those to be measured at amortised
cost;
- At fair value through profit or
loss.
The
classification depends on the Group's business
model for managing the financial assets and the
contractual terms of the cash flows.
The Group
classifies financial assets as at amortised cost only if both of
the following criteria are met:
- the asset is held within a business model
whose objective is to collect contractual cash flows;
and
- the contractual terms give rise to cash
flows that are solely payment of principal and interest.
b) Recognition
Purchases
and sales of financial assets are recognised on trade date
(that is, the date on which the Group commits to purchase or sell
the asset). Financial assets are derecognised when the rights
to receive cash flows from the financial assets have expired
or have been transferred and the Group has transferred
substantially all the risks and rewards of
ownership.
c) Measurement
At
initial recognition, the Group measures a financial asset at its
fair value plus, in the case of a financial asset not at fair value
through profit or loss (FVPL), transaction costs that are directly
attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at
FVPL are expensed in profit or loss.
Debt
instruments
Amortised
cost: Assets that are held for collection of contractual cash
flows, where those cash flows represent solely payments of
principal and interest, are measured at amortised cost.
Interest income from these financial assets is included in
finance income using the effective interest rate method. Any gain
or loss arising on derecognition is recognised directly in profit
or loss and presented in other gains/(losses) together with foreign
exchange gains and losses. Impairment losses are presented as a
separate line item in the statement of comprehensive
income.
Financial
investments
Listed
investments are valued at closing bid price on 31 July of each
year. Unlisted investments that are not publicly traded and whose
fair value cannot be measured reliably, are measured at fair value
through profit and loss. For details of the key assumptions used
and the impact of changes to these assumptions, see note
17.
Fair
value measurement
Fair
value is the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value measurement is
based on the presumption that the transaction to sell the asset or
transfer the liability takes place either:
- In the principal market for the asset or
liability; or
- In the absence of a principal market, in
the most advantageous market for the asset or liability
The
principal or the most advantageous market must be accessible by the
Group.
The fair
value of an asset or a liability is measured using the assumptions
that market participants would use when pricing the asset or
liability, assuming that market participants act in their economic
best interest.
A fair
value measurement of a non-financial asset takes into account a
market participant's ability to generate economic benefits by using
the asset in its highest and best use or by selling it to another
market participant that would use the asset in its highest and best
use.
The
Company uses valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to
measure fair value, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs. All assets
and liabilities for which fair value is measured or disclosed in
the financial statements are categorised within the fair value
hierarchy, described as follows, based on the lowest level input
that is significant to the fair value measurement as a
whole:
- Level 1 - Quoted (unadjusted) market
prices in active markets for identical assets or
liabilities
- Level 2 - Valuation techniques for which
the lowest level input that is significant to the fair value
measurement is directly or indirectly observable
- Level 3 - Valuation techniques for which
the lowest level input that is significant to the fair value
measurement is unobservable
For
assets and liabilities that are recognised in the Financial
Statements on a recurring basis, the Group determines whether
transfers have occurred between levels in the hierarchy by
re-assessing categorisation (based on the lowest level input that
is significant to the fair value measurement as a whole) at the end
of each reporting period.
For the
purpose of fair value disclosures, the Group has determined classes
of assets and liabilities on the basis of the nature,
characteristics and risks of the asset or liability and the level
of the fair value hierarchy, as explained above.
d) Impairment
The Group
assesses, on a forward looking basis, the expected credit losses
associated with any debt instruments carried at amortised
cost. The impairment methodology applied depends on
whether there has been a significant increase in credit
risk.
In
response to increased risk of credit losses due to Covid, the Group
has included the following procedures:
- Performing credit checks on existing, new
or prospective customers
- Maintaining regular dialogue with senior
staff of existing customers to discuss payments of
invoices
For trade
receivables, the Group applies the simplified approach permitted by
IFRS 9, which requires expected lifetime losses to be recognised
from initial recognition of the receivables. The Group's most
significant clients are public or regulated industry entities which
generally have high credit ratings or are of a high credit quality
due to the nature of the client.
Expected
credit losses are assessed on an individual customer basis, based
on the historical payment profiles of the customers, the current
and historic relationship with the customer, and the industry in
which the customer operates. There have been no impairments of
trade receivables in the periods.
2.13
Leases
Leases
are recognised as a right-of-use asset and a corresponding lease
liability at the date at which the leased asset is available for
use by the Group.
Assets
and liabilities arising from a lease are initially measured on a
present value basis. Lease liabilities include the net present
value of the following lease payments:
- Fixed payments (including in-substance
fixed payments), less any lease incentives receivable;
- Variable lease payments that are based on
an index or a rate, initially measured using the index or rate as
at the commencement date;
- Amounts expected to be payable by the
Group under residual value guarantees;
- The exercise price of a purchase option if
the Group is reasonably certain to exercise that option;
and
- Payments of penalties for terminating the
lease, if the lease term reflects the Group exercising that
option.
Lease
payments to be made under reasonably certain extension options are
also included in the measurement of the liability.
The lease
payments are discounted using the interest rate implicit in the
lease. If that rate cannot be readily determined, which is
generally the case for leases in the Group, the lessee's
incremental borrowing rate is used, being the rate that the
individual lessee would have to pay to borrow the funds necessary
to obtain an asset of similar value to the right-of-use asset in a
similar economic environment with similar terms, security and
conditions. In all instances the leases were discounted using the
incremental borrowing rate.
Lease
payments are allocated between principal and finance cost. The
finance cost is charged to profit or loss over the lease period.
Right-of-use assets are measured at cost which comprises the
following:
- The amount of the initial measurement of
the lease liability;
- Any lease payments made at or before the
commencement date less any lease incentives received;
- Any initial direct costs; and
- Restoration costs.
Right-of-use assets are depreciated over the
shorter of the asset's useful life and the lease term on a straight
line basis. If the Group is reasonably certain to exercise a
purchase option, the right-of-use asset is depreciated over the
underlying asset's useful life.
Payments
associated with short-term leases (term less than 12 months) and
all leases of low-value assets (generally less than €5k) are
recognised on a straight-line basis as an expense in profit or
loss.
2.14
Equity
Share
capital is determined using the nominal value of shares that have
been issued.
Share
premium account includes any premiums received on the initial
issuing of the share capital. Any transaction costs associated with
the issuing of shares are deducted from the Share premium account,
net of any related income tax benefits.
Retained
losses includes all current and prior period results as disclosed
in the statement of comprehensive income.
2.15
Share based payments
The Group
has made awards of warrants and options on its unissued share
capital to certain parties in return for services provided to the
Group. Under IFRS 2, these share based payments are either valued
at the value of the services provided or where this data is not
available a fair value should be calculated using the Black Scholes
Option Pricing model and/or the Monte Carlo valuation model which
is how they have been valued in this case The valuation of
these warrants and options involve making a number of critical
estimates relating to price volatility, future dividend yields,
expected life of the options and interest rates. These assumptions
have been integrated into the Black Scholes Option Pricing model
and the Monte Carlo valuation model to derive a value for these
share-based payments. These assumptions are described in more
detail in Note 23.
2.16
Revenue
Under
IFRS 15, Revenue from Contracts with Customers, five key points to
recognise revenue have been assessed:
Step 1:
Identify the contract(s) with a customer;
Step 2:
Identify the performance obligations in the contract;
Step 3:
Determine the transaction price;
Step 4:
Allocate the transaction price to the performance obligations in
the contract; and
Step 5:
Recognise revenue when (or as) a Group entity satisfies a
performance obligation.
The Group
recognises revenue when the amount of revenue can be reliably
measured, it is probable that future economic benefits will flow to
the Group, and specific criteria have been met for each of the
Group's activities, as described below.
Revenue
is measured at the fair value of the consideration received or
receivable and represents amounts receivable for services provided
in the normal course of business, net of discounts, VAT and other
sales related taxes.
The Group
bases its estimates on all available information including
historical results and experience taking into consideration the
type of customer, the type of transaction and the specifics of each
arrangement. Where the Group makes sales relating to a future
financial period, these are deferred and recognised under 'accrued
expenses and deferred income' in the Statement of Financial
Position.
The Group
derives revenue from the provision of managed detection and
response and other cyber security services, whereby revenue from a
contract to provide services is recognised in the period in which
the services are provided in accordance with the stage of
completion of the contract when all of the following conditions are
satisfied:
- the amount of revenue can be measured
reliably;
- it is probable that the Company will
receive the consideration due under the contract;
- the stage of completion of the contract at
the end of the reporting period can be measured reliably;
and
- the costs incurred and the costs to
complete the contract can be measured reliably.
In
arrangements where fees are invoiced ahead of revenue being
recognised, deferred income is recorded.
2.17
Government grants
Capital
grants received and receivable are treated as deferred income and
amortised to the Income Statement annually over the useful economic
life of the asset to which it relates. Revenue grants are credited
to the Income Statement when received.
2.18
Taxation
The
taxation expense for the year comprises current and deferred tax
and is recognised in the statement of comprehensive income except
to the extent that it relates to items recognised in other
comprehensive income, or directly in equity, in which case the tax
expense is also recognised in other comprehensive income or
directly in equity.
Current
tax represents the amount expected to be paid or recovered in
respect of taxable profits for the financial year and is calculated
using the tax rates and laws that have been enacted or
substantially enacted at the Statement of Financial Position
date.
Deferred
tax arises from timing differences that are differences between the
taxable profits and total comprehensive income as stated in the
financial statements. The timing differences arise from the
inclusion of income and expenses in tax assessments in periods
different from those in which they are recognised in the financial
statements.
Deferred
tax is proved in full on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in
the financial statement. Deferred tax is determined using tax rates
(and laws) that have been enacted or substantively enacted by the
balance sheet date and are expected to apply when the related
deferred income tax asset is realised of the deferred tax liability
is settled.
Deferred
tax assets are recognised to the extent that it is probable that
future taxable profits will be available against which temporary
differences can be utilised. Current or deferred taxation assets
and liabilities are not discounted.
2.19
Property, plant and equipment
Property,
plant and equipment are recorded at historical cost or deemed cost,
less accumulated depreciation and impairment losses.
Depreciation is provided on all tangible fixed
assets at rates calculated to write off the cost of fixed assets,
less their estimated residual value, over their estimated useful
lives as follows:
Plant and
machinery -
12.5% straight line
Fixtures
and fittings
-
12.5% straight line
The
Group's policy is to review the remaining useful economic lives and
residual values of property, plant and equipment on an on-going
basis and to adjust the depreciation charge to reflect the
remaining estimated useful economic useful life and residual
value.
Fully
depreciated property, plant and equipment are retained in the cost
of property, plant & equipment and related accumulated
depreciation until they are removed from service. In the case of
disposals, assets and related depreciation are removed from the
financial statements and the net amounts, less proceeds from
disposal, is charges or credited to the income
statement.
2.20
Intangible assets
Intangible asset impairment reviews are
undertaken annually, or more frequently if events or changes in
circumstances indicate a potential impairment. The method and
useful lives of finite life intangible assets, or assets not yet
available for use, are reviewed annually. Changes in the
expected pattern of consumption or useful life are accounted for
prospectively by changing the amortisation method or
period.
Research and development
expenditure
Development expenditure is written off in the
same period unless the directors are satisfied as to the technical,
commercial and financial viability of individual projects. In this
situation, the expenditure is capitalised and amortised over the
period from which the Group is expected to benefit.
Amortisation is provided on all intangible
assets so as to write off the cost of an asset over its estimated
useful life as follows:
Development
costs
-
20-33.3% straight line
Software license
Software
licenses are valued at cost less accumulated
amortisation
Website
and software licenses
-
33.3% straight line or over the term of the licence
2.21
Convertible loan notes, borrowings and borrowing
costs
Convertible loan notes are assessed for whether
they are a compound financial instrument. In the current year, the
convertible loan notes were classified as financial liabilities and
recognised initially at fair value, net of transaction costs. After
initial recognition, loans are subsequently carried at amortised
cost. Any difference between the proceeds (net of transaction
costs) and the redemption value is recognised in the statement of
comprehensive income over the period of the borrowings using the
effective interest method. Fees paid on the establishment of loan
facilities are capitalised as a prepayment for liquidity services
and amortised over the period of the loan to which it
relates.
Borrowings are classified as current liabilities
unless the Group has an unconditional right to defer settlement of
the liability or at least 12 months after the end of the reporting
period.
Further
details on the convertible loan notes and borrowings are set out in
Note 26.
2.22
Employee benefits
Short-term benefits
Short-term benefits, including holiday pay and
other similar non-monetary benefits are recognised as an expense in
the period in which the employee's entitlement to the benefit
accrues.
Defined contribution pension
plan
The Group
makes contribution to a defined contribution plan. A defined
contribution plan is a pension plan under which the company pays
fixed contributions into a separate fund. Under defined
contribution plans, the Group has no legal or constructive
obligations to pay further contributions if the fund does not hold
sufficient assets to pay all employees the benefits relating to
employee services in the current and prior periods.
For
defined contribution plans, the Group pays contributions to
privately administered pension plans on a contractual or voluntary
basis. The Group has no further payment obligations once the
contributions have been paid. The contributions are recognised as
employee benefit expense when they are due. Prepaid contributions
are recognised as an asset to the extent that a cash refund or
reduction in the future payments is available.
2.23
Non-current investments
Investments made in subsidiaries by the Company
are carried at the cost of investment less any provision for
impairment within the Company's balance sheet. The carrying values
are reviewed at each period end to determine whether there is any
indication that these investments have suffered an impairment
loss.
2.24
Critical accounting judgements and key sources of estimation
uncertainty
The
preparation of these Financial Statements requires management to
make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and
liabilities, income and expenses.
Judgements and estimates are continually
evaluated and are based on historical experiences and other
factors, including expectations of future events that are believed
to be reasonable under the circumstances.
The Group
makes estimates and assumptions concerning the future. The
resulting accounting estimates will, by definition, seldom equal
the related actual results. The estimates and assumptions that have
a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are discussed below.
Basis of acquisition
accounting
The Group
has applied the merger accounting method to account for the
acquisitions within the Group. With this method, assets and
liabilities of the acquired entity are recognised at their book
value and any difference between the consideration paid and net
assets is recognised in the merger reserve. Merger accounting has
been applied as the entities are considered to be commonly
controlled which is a key judgement in the preparation of the
Financial Statements.
Establishing useful economic lives for
depreciation purposes of property, plant and
equipment
Long-lived assets, consisting primarily of
property, plant and equipment, comprise a significant portion of
the total assets. The annual depreciation charge depends primarily
on the estimated useful economic lives of each type of asset and
estimates of residual values. The directors regularly review these
asset useful economic lives and change them as necessary to reflect
current thinking on remaining lives in light of prospective
economic utilisation and physical condition of the assets
concerned. Changes in asset useful lives can have a significant
impact on depreciation and amortisation charges for the period.
Detail of the useful economic lives is included in the accounting
policies.
Providing for doubtful
debts
The Group
makes an estimate of the recoverable value of trade and other
receivables. The Group uses estimates based on historical
experience in determining the level of debts, which the Company
believes, will not be collected. These estimates include such
factors as the current credit rating of the debtor, the ageing
profile of receivables and historical experience. Any significant
reduction in the level of customers that default on payments or
other significant improvements that resulted in a reduction in the
level of bad debt provision would have a positive impact on the
operating results. The level of provision required is reviewed on
an ongoing basis.
Amortisation of Intangible
Assets
The
annual amortisation of intangible assets depends primarily on the
estimated useful lives of assets and estimates of residual value.
The directors regular review these assets useful lives and change
them as necessary to reflect current thinking on remaining lives in
light of prospective economic utilisation. Changes in asset useful
lives can have a significant impact on amortisation charges for the
period. Detail of the useful life is included in the accounting
policy.
Carrying Value of Intangible
Assets
In
determining whether impairment of the Group's intangible assets is
required, the factors taken into consideration in reaching such a
decision include the economic viability and expected future
financial performance of the asset and where it is a component of a
larger cash-generating unit, the viability and expected future
performance of that unit. The Directors are satisfied that the
carrying value of the Group's intangible assets are at least equal
to their recoverable amounts.
Valuation of unlisted
investments
The fair
value of financial instruments that are not traded in an active
market is determined using valuation techniques. The company uses
its judgement to select a variety of methods and make assumptions
that are mainly based on market conditions existing at the end of
each reporting period. For details of the key assumptions used and
the impact of changes to these assumptions, see Note 17.
Share based payments
The Group
has made awards of warrants and options on its unissued share
capital to certain parties in return for services provided to the
Group. Under IFRS 2, these share based payments are either valued
at the value of the services provided or where this data is not
available a fair value should be estimated using a model such as
the Black Scholes Option Pricing model and/or the Monte Carlo
valuation model which is how they have been valued in this
case The valuation of these warrants and options involve
making a number of critical estimates relating to price volatility,
future dividend yields, expected life of the options and interest
rates. These assumptions have been integrated into the Black
Scholes Option Pricing model and the Monte Carlo valuation model to
derive a value for these share-based payments. These assumptions
are described in more detail in Note 23.
3.
SEGMENT REPORTING
The
following information is given about the Group's reportable
segments:
The Chief
Operating Decision Maker is the Executive Board of Directors. The
Board reviews the Group's internal reporting in order to assess
performance of the Group. Management has determined the operating
segment based on the reports reviewed by the Board.
The Board
considers that during the years ended 31 July 2022 and 31 July 2023
the Group operated in the single business segment of Managed
Detection and Response capabilities to global
organisations.
4.
REVENUE
|
|
2023
€,000
|
2022
€,000
|
Revenue
|
|
12,180
|
10,206
|
|
|
|
|
The vast
majority of the Group's revenue is recognised in the Republic of
Ireland and is derived from the principal activity of providing
Managed Detection and Response capabilities to global organisation,
and associated services including penetration testing, governance
risk and compliance and cyber consultancy.
The Group
recognises revenue both at the point of sale and over time.
The following table sets out the amount of revenue that is
recognised at a point in time and the revenue that is recognised
over time.
|
|
2023
€'000
|
2022
€'000
|
Revenue recognised at a point in
time
|
|
5,720
|
5,908
|
Revenue recognised over
time
|
|
6,460
|
4,298
|
|
|
12,180
|
10,206
|
In 2023,
the Group had two customers that represented 37% of total
revenue. In 2022, the Group had one customer that represented
31% of total revenue.
5.
COST OF SALES
|
|
2023
€'000
|
2022
€'000
|
Cost sales - purchases
|
|
5,374
|
4,622
|
Cost sales - direct
costs
|
|
-
|
39
|
|
|
5,374
|
4,661
|
6.
ADMINISTRATIVE EXPENSES
|
|
2023
€'000
|
2022
€'000
|
Wages and salaries (including
directors)
|
|
3,186
|
3,154
|
Consultancy and professional
fees
|
|
395
|
286
|
Overhead expenses
|
|
924
|
322
|
Amortisation of intangible fixed
assets
|
|
430
|
113
|
Depreciation of right-of-use
assets
|
|
63
|
80
|
Depreciation of tangible fixed
assets
|
|
56
|
35
|
IPO related costs
|
|
977
|
-
|
CLN settlement costs
|
|
315
|
-
|
Share based payments
|
|
554
|
-
|
(Profit)/loss on foreign
currencies
|
|
(9)
|
(272)
|
Other expenses
|
|
90
|
132
|
|
|
6,981
|
3,850
|
Included
above within Administrative Expenses are certain costs that
principally relate to IPO costs, the issue of share
options/warrants and the CLN settlement costs, as
follows:
|
|
2023
€'000
|
2022
€'000
|
IPO related costs
|
|
977
|
-
|
Share based payments
|
|
554
|
-
|
CLN settlement costs
|
|
315
|
-
|
Total
|
|
1,846
|
-
|
Operating profit
|
|
303
|
1,756
|
Adjusted operating
profit
|
|
2,149
|
1,756
|
Add back depreciation and
amortisation
|
|
549
|
228
|
Adjusted EBITDA
|
|
2,698
|
1,984
|
The
following auditors' fees are included in Administrative
Expenses:
|
|
2023
€'000
|
2022
€'000
|
Audit of Group and
Company
|
|
50
|
-
|
For audit work in relation to
subsidiary companies
|
|
25
|
-
|
For audit related
services
|
|
33
|
-
|
For non-audit services
|
|
85
|
-
|
Total
|
|
193
|
-
|
7.
OTHER OPERATING
INCOME
|
|
2023
€'000
|
2022
€'000
|
Government grant income
|
|
478
|
61
|
|
|
478
|
61
|
During
the year, the Group received:
(i)
Market Discovery Fund grant of €34,900 from Enterprise Ireland
(2022: €nil).
(ii)
GradStart grant of €28,327 from Enterprise Ireland (2022:
€nil).
(iii)
Research and Development grant of €414,572 from Enterprise Ireland
(2022: €14,500).
(iv)
R&D tax rebate of €nil (2022: €46,187).
8.
EMPLOYEES
Staff
costs (inclusive of director's salaries) comprise:
|
|
2023
€'000
|
2022
€'000
|
Wages and salaries
|
|
2,838
|
2,952
|
Pension costs
|
|
75
|
13
|
Share based payments
|
|
443
|
-
|
Other costs and taxes
|
|
272
|
189
|
|
|
3,628
|
3,154
|
The
average monthly number of employees, including the Directors,
during the year was 135 (2022: 67)
9.
DIRECTORS'
REMUNERATION
|
|
2023
€'000
|
2022
€'000
|
Directors' remuneration
|
|
313
|
132
|
Pension costs
|
|
18
|
10
|
Share based payments
|
|
296
|
-
|
Other costs and taxes
|
|
11
|
-
|
|
|
638
|
142
|
During
the year retirement benefits accruing to Directors were €nil (2022:
€nil) in respect of defined contribution pension
schemes.
The
highest paid Director received remuneration of €157K (2022:
€132K).
During
the year, R Saceanu received an additional €32K from Zefone
Limited, although she was not a director of that
company.
The value
of the Group's contributions paid to a defined contribution pension
scheme in respect of the highest paid Director amounted to
€14K (2022:
€10K).
10.
INCOME FROM
INVESTMENTS
|
|
2023
€'000
|
2022
€'000
|
Investment income - dividends
received
|
|
-
|
2
|
|
|
-
|
2
|
11.
OTHER GAINS AND
LOSSES
|
|
2023
€'000
|
2022
€'000
|
Unrealised (loss) / gain on
investments in shares
|
|
1
|
(8)
|
|
|
1
|
(8)
|
12.
FINANCE
COSTS
|
|
2023
€'000
|
2022
€'000
|
Interest
|
|
64
|
205
|
Lease liability finance charges
(Note 21)
|
|
29
|
11
|
Other finance costs
|
|
7
|
-
|
|
|
100
|
216
|
13.
TAXATION
|
|
2023
€'000
|
2022
€'000
|
The charge for year is made up as
follows:
|
|
|
|
Corporation tax
|
|
|
|
Corporation taxation on the
results for the year
|
|
371
|
156
|
|
|
371
|
156
|
Deferred tax
|
|
|
|
Deferred tax
|
|
-
|
-
|
|
|
-
|
-
|
Taxation charge on profits on ordinary
activities
|
|
371
|
156
|
In the previous period to 31 Jul
2022, prior to 1 April 2022, the main rate of UK corporation tax
was 19%. The headline rate of UK corporation tax for the year
ended 31 July 2023 is 25%, however, within the onset of the UK's
marginal Relief Rules from 1 April 2023. This rate applies
broadly where a company has augmented profits in excess of
£250K.
Factors affecting tax change for the year
|
|
2023
€'000
|
2022
€'000
|
Profit on ordinary activities
before tax
|
|
204
|
1,534
|
Tax calculated at domestic tax
rates applicable to profits in the respective
countries
|
|
37
|
191
|
|
|
|
|
Effects of:
|
|
|
|
Expenses not deductible for tax
purposes
|
|
365
|
-
|
Group relief
surrendered/(claimed)
|
|
(3)
|
-
|
Foreign tax - other
|
|
3
|
-
|
Remeasurement of deferred tax for
changes in tax rate
|
|
(2)
|
|
Adjustments in respect of prior
year
|
|
30
|
1
|
Difference in overseas tax
rates
|
|
(109)
|
-
|
Other movements
|
|
50
|
(38)
|
Income tax on medical
insurances
|
|
-
|
4
|
Taxation charge on profits on ordinary
activities
|
|
371
|
156
|
The weighted average applicable
tax rate was 18% (2021:
12%). The increase is caused by the change in group
structure and introduction of the loss making parent company and
subsidiaries.
14.
EARNINGS PER
SHARE
The calculation of the basic and
diluted earnings per share is calculated by dividing the profit or
loss for the year by the weighted average number of ordinary shares
in issue during the year.
|
2023
|
2022
|
(Loss) / profit for the year from
continuing operations - €
|
(167,000)
|
1,378,000
|
Weighted number of ordinary shares
in issue
|
100,500,026
|
87,500,000
|
Basic earnings per share
from continuing operations - € cents
|
(0.1662)
|
1.5749
|
The weighted average number of
ordinary shares in issue for the prior year has been used as the
total number of shares swapped for the purchase of Zefone Limited
as if those shares were in issue during the prior year. No diluted
earnings per share is calculated in 2022 as it is assumed that
there were no dilutive instruments.
15.
INTANGIBLE
ASSETS
Group
|
Website & software
licenses
€'000
|
Development costs
€'000
|
|
Total
€'000
|
Cost
|
|
|
|
|
At 1 August 2021
|
947
|
377
|
|
1,324
|
Additions
|
280
|
1,156
|
|
1,436
|
At 31 July 2022
|
1,227
|
1,533
|
|
2,760
|
Additions
|
-
|
2,625
|
|
2,625
|
At 31 July 2023
|
1,227
|
4,158
|
|
5,385
|
Amortisation
|
|
|
|
|
At 31 July 2021
|
805
|
103
|
|
908
|
Charge for the year
|
107
|
6
|
|
113
|
At 31 July 2022
|
912
|
109
|
|
1,021
|
Charge for the year
|
241
|
189
|
|
430
|
At 31 July 2023
|
1,153
|
298
|
|
1,451
|
Net book value
|
|
|
|
|
31 July 2022
|
315
|
1,333
|
|
1,739
|
31 July 2023
|
74
|
3,860
|
|
3,934
|
The Directors have considered the
carrying value of these balances in order to determine whether any
impairment of the Group's intangible assets is required. This has
included considering the economic viability and expected future
financial performance of the products relating to these assets by
modelling the expected net future cash flows expected to be
generated. The Directors are satisfied that the carrying
value of the Group's intangible assets are at least equal to their
recoverable amounts.
16.
PROPERTY, PLANT
AND EQUIPMENT
Group
|
Plant &
machinery
€'000
|
Fixtures &
fittings
€'000
|
|
Total
€'000
|
Cost
|
|
|
|
|
At 1 August 2021
|
27
|
164
|
|
191
|
Additions
|
8
|
30
|
|
38
|
Disposals
|
-
|
-
|
|
-
|
At 31 July 2022
|
35
|
194
|
|
229
|
Additions
|
20
|
92
|
|
112
|
At 31 July 2023
|
55
|
286
|
|
341
|
Depreciation
|
|
|
|
|
At 1 August 2021
|
13
|
84
|
|
97
|
Charge for the year
|
13
|
22
|
|
35
|
At 31 July 2022
|
26
|
106
|
|
132
|
Charge for the year
|
11
|
45
|
|
56
|
At 31 July 2023
|
37
|
151
|
|
188
|
|
|
|
|
|
Net book value
|
|
|
|
|
At 31 July 2022
|
9
|
88
|
|
97
|
At 31 July 2023
|
18
|
135
|
|
153
|
17.
FINANCIAL FIXED
ASSETS
Group
|
|
Level 3- Unlisted
investments €'000
|
Level 1- Listed
investments
€'000
|
|
Total
€'000
|
Investment
|
|
|
|
|
|
Cost of valuation
|
|
|
|
|
|
At 1 August 2021
|
|
1,039
|
130
|
|
1,169
|
Additions
|
|
-
|
-
|
|
-
|
Revaluations
|
|
-
|
(8)
|
|
(8)
|
At 31 July 2022
|
|
1,039
|
122
|
|
1,161
|
Additions
|
|
-
|
-
|
|
-
|
Revaluations
|
|
-
|
1
|
|
1
|
At 31 July 2023
|
|
-
|
123
|
|
123
|
|
|
|
|
|
|
Carrying amount
|
|
|
|
|
|
At 31 July 2022
|
|
1,039
|
122
|
|
1,161
|
At 31 July 2023
|
|
1,039
|
123
|
|
1,162
|
IFRS 13 valuation hierarchy:
Level 1
represents those assets, which are measured using unadjusted quoted
prices for identical assets.
Level 2
applies inputs other than quoted prices that are observable for the
assets either directly (as prices) or indirectly (derived from
prices).
Level 3
applies inputs, which are not based on observable market
data.
Unlisted investments comprise the
investment in Visibility Blockchain Limited of 35,940 B Preference
Shares. These shares do not give rights to receive notice of any
general meeting of Visibility Blockchain Limited, or to attend or
vote on any resolution at a general meeting. Unlisted investments
are valued using level 3 inputs under the IFRS 13 Fair Value
Hierarchy. These include the value at which the most recent funding
round involving third party investors took place where over €10
million in new equity was raised, together with management's view
of the likely proceeds from the sale of this company based on
indications received to date and growth in revenue. As a result of
the above analysis, the revaluation during the year is €nil (2022:
€nil).
Listed investments relate to a
portfolio investment comprising of various equities, bonds and
alternative financial instruments. These are valued using the
share price at each reporting date, which is a level 1 input under
the IFRS 13 Fair Value Hierarchy.
18.
INVESTMENTS
Company
|
|
2023
€000
|
Acquisition of Zefone
Limited
|
|
1,012
|
Further investments in
subsidiaries
|
|
104
|
|
|
1,116
|
Company subsidiary undertakings
The Group includes interests in
the following subsidiary undertakings, which are included in the
consolidated financial statements. Zefone Limited is owned
directly by the Company whilst the other companies are owned
indirectly through Zefone Limited.
Name
|
Business
Activity
|
Country of
Incorporation
|
Registered
Address
|
Percentage
Holding
|
Zefone Limited
|
Provision of cybersecurity products and services
|
Ireland
|
Unit
17A,
Building 4700
Cork
Airport Business Park, Cork
|
100%
|
Smart Systems Security
Limited
|
Provision of cybersecurity products and services
|
England
and Wales
|
85
Great Portland Street, London W1W 7LT
|
100%
|
Smartech 247 sp. z.o.o.
|
Provision of cybersecurity products and services
|
Poland
|
Krakovie Przy ul., Podole 60,
30-394
Krakov
|
100%
|
Smartech247 Cyber Security
SRL
|
Provision of cybersecurity products and services
|
Romania
|
Bd Iancu de Hunedoara 54 B,
Etaj 2, Bucuresti - Sectorul 1
|
99%
|
19.
TRADE AND OTHER
RECEIVABLES
Group
|
|
2023
€'000
|
2022
€'000
|
Trade receivables
|
|
5,194
|
5,237
|
Accrued revenue
|
|
53
|
54
|
Tax and other
receivables
|
|
278
|
517
|
Director's current
account
|
|
57
|
53
|
Prepayments
|
|
841
|
292
|
|
|
6,423
|
6,153
|
Company
|
|
2023
€'000
|
|
Other receivables
|
|
167
|
|
Prepayments
|
|
17
|
|
|
|
184
|
|
Other receivables principally
comprise amounts due from the EBT and other tax
recoverable.
In terms of trade receivables, the
majority of the amounts receivable are in Euros and USD, and are
current in terms of age profile with the majority of the balance
having now been received post year end.
|
|
2023
€'000
|
2022
€'000
|
Due in less than 30
days
|
|
2,103
|
3,266
|
Due between 30 and 60
|
|
2,333
|
970
|
Due between 60 and 90
days
|
|
341
|
527
|
Over 90 days
|
|
417
|
474
|
|
|
5,194
|
5,237
|
Further details with regard to the
Directors current account are set out in Note 32.
|
|
2023
€'000
|
2022
€'000
|
Currency of receivables
|
|
|
|
Euro
|
|
1,726
|
1.869
|
USD
|
|
3,340
|
2,787
|
GBP
|
|
128
|
581
|
|
|
5,194
|
5,237
|
20.
CASH AND CASH
EQUIVALENTS
Cash and cash equivalents consist
of cash on hand and short term deposits held with banks with a A-1+
rating. The carrying value of these approximates to their fair
value. Cash and cash equivalents included in the cash flow
statement comprise the following statement of financial position
amounts.
Group
|
|
2023
€'000
|
2022
€'000
|
Cash and cash
equivalents
|
|
6,062
|
2,358
|
|
|
6,062
|
2,358
|
Company
|
|
2023
€'000
|
|
Cash and cash
equivalents
|
|
2,949
|
|
|
|
2,949
|
|
The table below shows the currency
profiles of cash and cash equivalents:
Group
|
|
2023
€'000
|
2022
€'000
|
|
|
|
|
Euro
|
|
289
|
778
|
USD
|
|
2,714
|
1,440
|
GBP
|
|
3,002
|
113
|
Polish
Zloty
|
|
49
|
13
|
Romanian
Leu
|
|
8
|
14
|
|
|
6,062
|
2,358
|
Company
|
|
2023
€'000
|
|
|
|
GBP
|
|
2,949
|
|
|
2,949
|
21.
LEASES
The Group had the following right
of use assets and lease liabilities:
Group
|
|
2023
€'000
|
2022
€'000
|
Right-of-use assets
|
|
|
|
Properties
|
|
331
|
64
|
|
|
331
|
64
|
Lease liabilities
|
|
|
|
Current
|
|
91
|
64
|
Non-current
|
|
260
|
4
|
|
|
351
|
68
|
|
|
2023
€'000
|
2022
€'000
|
Maturity on the lease liabilities
are as follows:
|
|
|
|
Current
|
|
91
|
64
|
Due between 1-2 years
|
|
68
|
4
|
Due between 2-5 years
|
|
105
|
-
|
Due beyond 5 years
|
|
87
|
-
|
|
|
351
|
68
|
Right of use assets
A reconciliation of the carrying
amount of the right-of-use asset is as follows:
|
|
2023
€'000
|
2022
€'000
|
Properties
|
|
|
|
Opening balance
|
|
64
|
43
|
Additions on acquisition of
subsidiary
|
|
-
|
5
|
Additions
|
|
330
|
96
|
Depreciation
|
|
(63)
|
(80)
|
|
|
331
|
64
|
Lease liabilities
A reconciliation of the carrying
amount of the lease liabilities is as follows:
|
|
2023
€'000
|
2022
€'000
|
Opening balance
|
|
68
|
58
|
Additions on acquisition of
subsidiary
|
|
-
|
4
|
Additions
|
|
330
|
96
|
Payment made
|
|
(76)
|
(101)
|
Finance charge (Note
12)
|
|
29
|
11
|
|
|
351
|
68
|
The Group leases captured under
IFRS 16 relate predominant to the office premises in both Ireland
and Romania, with an office lease in Poland coming to an end in
2023, which was extended on a short-term basis.
The Group also incurred the
following expenses during the year of €nil (2022: €nil) which
related to leases that were either short term in nature (12 months
of less) or of low value in nature, thus being excluded from
treatment under IFRS 16: Leases.
22.
SHARE
CAPITAL
|
|
Number of £0.01
shares
|
Share
Capital
|
Share
premium
|
|
|
|
€'000
|
€'000
|
One £0.01 share issued on
incorporation
|
|
1
|
-
|
-
|
Shares issued on exchange for
Zefone Limited shares 1
|
|
87,499,999
|
1,012
|
-
|
Shares issued on conversion of
convertible loan note at £0.1732 2
|
|
13,646,441
|
158
|
2,577
|
Shares subscribed for by EBT
3
|
|
10,546,713
|
122
|
-
|
Placing shares issued at
£0.2966
|
|
12,385,828
|
144
|
4,108
|
Share issue costs
|
|
-
|
-
|
(320)
|
|
|
124,078,982
|
1,436
|
6,365
|
1 The issue of shares with a nominal value of €1,012,000
(£875,000) in exchange for the 2 £1 shares in Zefone Limited with a
nominal value of £2 results on elimination of the difference in a
credit to a merger reserve (within other reserves) of €1,012,000
(£875,000) in accordance with the merger accounting principles as
set out in note 2.
2 The issue price for the issue of shares to convert the
convertible loan notes was based on the conversion terms which
specified a particular valuation at which the conversion should
take place. The liability to be settled amounted to
€2,683,562 and the number of shares issued amounted to 13,646,441
which therefore gave an effective issue price of
£0.1732.
3 During the period, the Company
established an Employee Benefit Trust ("EBT") and issued 10,546,713
shares to the EBT at nominal value. The subscription of these
shares was funded through a loan provided by the Group to the
EBT.
During the period certain costs
associated with the IPO amounting to €868K were also settled by the
issue of new shares, of which €260k was included in share issue
costs.
The number of shares authorised to
be issued at the time of Admission was 66.8 million, although this
authority has now lapsed, and a new authority will be put in place
at the Company's next AGM.
23.
SHARE BASED
PAYMENT RESERVE
|
|
2023
€'000
|
2022
€'000
|
Advisor warrants issued
1
|
|
107
|
-
|
Employee options issued 2,
3
|
|
447
|
-
|
|
|
554
|
-
|
1 On 15 December 2023, 863,115 warrants were issued to advisors
and have been fair valued in accordance with IFRS 2. The warrants
have an exercise price of £0.2966 and a time to expiry of 4 years
from grant.
2 On 30 November 2022, 4,541,290 employee options were granted
under the Group's LTIP. These options have different vesting
conditions based on performance milestones that can be viewed
below.
3 On 28 April 2023 and 23 May 2023 2,425,291 and 177,195
employee options were granted under the Group's LTIP. These options
have different vesting conditions based on performance milestones
as outlined below.
Share based payments valuation
The following tables summarise the
valuation techniques and inputs used to calculate the values of
share based payments in the period:
Warrants
Grant date
|
Number
|
Share
price
£
|
Exercise
price
£
|
Volatility
%
|
RF Rate
%
|
Technique
|
15 Dec
2022
|
863,115
|
0.2966
|
0.2966
|
41.0
|
3.00
|
Black
Scholes
|
Options
On 30
November 2022, 28 April 2023 and 23 May 2023 4,541,290,
1,446,735 and
147,589 employee options
were granted under the Group's LTIP respectively. The option
vesting details are listed below:
Vesting
Event
|
Trigger for
Vesting
|
Number of options vested on
date of vesting
|
1
|
- First anniversary date of the date
of Admission
|
50%
|
2
|
- Second anniversary date of date of
Admission; and
- The date if any on which the
placing price has increased by 200%
|
25%
|
3
|
- Third anniversary date of date of
Admission; and
- The date if any on which the
placing price has increased by 200%
|
25%
|
On 28
April 2023 and 23 May 2023 978,556
and 29,606
employee options were granted under the
Group's LTIP respectively. The option vesting details are listed
below:
Vesting
Event
|
Trigger for
Vesting
|
Number of options vested on
date of vesting
|
1
|
- First anniversary date of the date
of Admission
|
50%
|
2
|
- Second anniversary date of date of
Admission; and
- The date if any on which the
placing price has increased by 200%
|
50%
|
All of the options issued subject
to vesting condition 1 were valued using the Black Scholes
methodology, whilst the options issued subject to vesting
conditions 2 and 3 were value using the Monte Carlo
technique. Additionally, a non-marketable
discount rate of 7.94% has been applied across all of the employee
warrants when calculating their value.
Vesting Condition
1
Grant date
|
Number
|
Share
price
£
|
Exercise
price
£
|
Volatility
%
|
RF Rate
%
|
Technique
|
30 Nov
2022
|
2,270,645
|
0.2966
|
0.2966
|
48.5
|
3.24
|
Black
Scholes
|
28 Apr
2023
|
1,212,645
|
0.3600
|
0.2966
|
48.6
|
3.72
|
Black
Scholes
|
23 May
2023
|
88,597
|
0.3600
|
0.2966
|
48.6
|
4.38
|
Black
Scholes
|
Vesting Condition
2
Grant date
|
Number
|
Share
price
£
|
Exercise
price
£
|
Volatility
%
|
RF Rate
%
|
Technique
|
30 Nov
2022
|
1,135,323
|
0.2966
|
0.2966
|
48.5
|
3.24
|
Monte
Carlo
|
28 Apr
2023
|
850,962
|
0.3600
|
0.2966
|
48.6
|
3.72
|
Monte
Carlo
|
23 May
2023
|
51,700
|
0.3600
|
0.2966
|
48.6
|
4.38
|
Monte
Carlo
|
Vesting Condition
3
Grant date
|
Number
|
Share
price
£
|
Exercise
price
£
|
Volatility
%
|
RF Rate
%
|
Technique
|
30 Nov
2022
|
1,135,323
|
0.2966
|
0.2966
|
48.5
|
3.24
|
Monte
Carlo
|
28 Apr
2023
|
361,684
|
0.3600
|
0.2966
|
48.6
|
3.80
|
Monte
Carlo
|
23 May
2023
|
36,897
|
0.3600
|
0.2966
|
48.6
|
4.38
|
Monte
Carlo
|
The
number and average exercise price of share options and warrants as
follows:
|
|
2023
|
|
|
Weighted average exercise
price
|
Number of options/
warrants
|
Granted during the year
(options)
|
|
£0.2966
|
863,115
|
Granted during the year
(warrants)
|
|
£0.2966
|
7,143,776
|
Outstanding at the end of the
year
|
|
£0.2966
|
8,006,891
|
Exercisable at the end of the
year
|
|
£0.2966
|
863,115
|
Share options and warrants
outstanding at 31 July 2023 had a weighted average exercise price
of £0.2966 and a weighted average contractual life of 3.48 years.
To date no share options and warrants have been
exercised.
There are no market based vesting
conditions attaching to any of the warrants.
24.
MERGER
RESERVE
|
|
2023
€'000
|
2022
€'000
|
Merger reserve
|
|
(1,215)
|
23
|
|
|
(1,215)
|
23
|
As referred to in Note 2, on 18
November 2022, the Company became the parent company of the Group
when it issued 87,499,999 £0.01 ordinary shares in exchange for
100% of the ordinary shares in Zefone Limited. Zefone Limited has
been shown as the continuing entity and its comparative financial
information shown for 2022. Intercompany transactions and balances
between Group companies are therefore eliminated in full. The
equity presented is that of the Company with the difference on
elimination of Zefone Limited's capital of €1,012,000 (£875,000)
being shown as a merger reserve.
In the current year, Zefone
acquired Smart Systems Security Limited
for €1,190 (£1,000) with the total identifiable net liabilities
acquired being €225,000, resulting in €226,000 being recorded to
the merger reserve.
In the prior year, Zefone acquired
Smarttech247 sp. z o.o. for €2,112 (10,000 Polish Zloty) with the
total identifiable net assets acquire being €26,000, resulting in
the €23,000 being recorded to the merger reserve.
25.
OTHER
RESERVES
Foreign exchange reserve
Foreign exchange differences
arising on translating into the reporting currency.
Share based payment reserve
Cumulative charge recognised under
IFRS 2 in respect of share based payment awards.
Retained earnings
Retained earnings represents
cumulative profits and losses net of dividends and other
adjustments.
26.
BORROWINGS
Group
|
|
2023
€'000
|
2022
€'000
|
Non-current
|
|
|
|
Convertible secured loan
notes
|
|
-
|
2,342
|
|
|
-
|
2,342
|
Refer to note 30 for movements in
borrowings.
Analysis of maturity of loans is
given below:
|
|
2023
€'000
|
2022
€'000
|
Amounts falling due 1-2
years
|
|
|
|
Other loans
|
|
-
|
2,342
|
|
|
-
|
2,342
|
Convertible Secured Loan Notes
The convertible secured loan notes
were issued by Zefone Limited in May 2021 to provide the company
with additional funding for the development of its business. They
carried an interest rate at 5% per annum with a requirement to
redeem the outstanding loan notes on 7 May 2024 unless converted or
repaid prior to that date.
The holders of the convertible
secured loan notes had the right to convert the loan notes into
ordinary shares in the event of a sale or listing. The holder could
also elect to convert the loan notes into ordinary shares prior to
any such event based on a conversion rate.
The convertible secured loan notes
were secured by a debenture incorporating fixed and floating
charges over the Group's assets both present and future.
During the year, at the time of
the acquisition of Zefone Limited by the Company and subsequent
IPO, the convertible loan notes and associated interest was
assigned to the Company as it was intended that the loan notes
would be settled through the issue of new shares in the Company. On
the listing of the Group, the convertible loan notes and accrued
interest were converted by the issue of 13,646,441 new shares in the Company. Further details are set
out in in note 22.
27.
TRADE AND OTHER
PAYABLES
Group
|
|
2023
€'000
|
2022
€'000
|
Trade creditors
|
|
3,183
|
1,880
|
Corporation tax
|
|
220
|
50
|
Other taxation and social
security
|
|
753
|
633
|
Accruals
|
|
56
|
658
|
Deferred income
|
|
1,869
|
1,333
|
Other payables
|
|
150
|
75
|
|
|
6,231
|
4,629
|
Company
|
|
2023
€'000
|
|
Trade creditors
|
|
7
|
|
Other taxation and social
security
|
|
5
|
|
Accruals
|
|
10
|
|
Intercompany payable
|
|
32
|
|
|
|
54
|
|
The table below sets out the
maturity profile of the trade payables at 31 July 2023:
|
|
2023
€'000
|
2022
€'000
|
Due in less than 30
days
|
|
2,201
|
185
|
Due in between 30 and 60
days
|
|
772
|
1,608
|
Due in more than 60
days
|
|
210
|
87
|
|
|
3,183
|
1,880
|
The table below sets out the
maturity profile of the deferred income balance at 31 July
2023:
|
|
2023
€'000
|
2022
€'000
|
Due within 1 year
|
|
1,449
|
1,015
|
Due after 1 year
|
|
420
|
318
|
|
|
1,869
|
1,333
|
28.
FINANCIAL
INSTRUMENTS AND RISK MANAGEMENT
Capital Risk Management
The Company manages its capital to
ensure that entities in the Group will be able to continue as a
going concern while maximising the return to stakeholders. The
overall strategy of the Company and the Group is to minimise costs
and liquidity risk.
The capital structure of the Group
consists of equity attributable to equity holders of the parent,
comprising issued share capital, foreign exchange reserves and
retained earnings as disclosed in the Consolidated Statement of
Changes of Equity.
The Group is exposed to a number
of risks through its normal operations, the most significant of
which are interest, credit, foreign exchange, and liquidity risks.
The management of these risks is vested to the Board of
Directors.
Credit Risk
Credit risk arises on financial
instruments such as trade receivables, short-term bank
deposits.
Policies and procedures exist to
ensure that customers have an appropriate credit history. The
Group's most significant clients are public or regulated industry
entities which generally have high credit ratings or are of a high
credit quality due to the nature of the client.
Counterparty exposure positions
are monitored regularly so that credit exposures to any one
counterparty are within acceptable limits.
At the balance sheet date there
were no significant concentrations of credit risk.
Trade and other receivables and
contract assets included in the balance sheet are stated net of
expected credit loss (ECL) provisions which have been estimated on
a customer-by-customer basis, based on the relationship with the
customer and its historical payment profile. There are no
provisions held against trade receivables at the balance sheet
date.
The Group's maximum exposure to
credit by class of individual financial instrument is shown in the
table below:
|
2023
Carrying
Value
|
2023
Maximum
Exposure
|
2022
Carrying
Value
|
2022
Maximum
Exposure
|
|
€'000
|
€'000
|
€'000
|
€'000
|
Cash and cash
equivalents
|
6,062
|
6,062
|
2,358
|
2,358
|
Trade receivables
|
5,194
|
5,194
|
5,237
|
5,237
|
|
11,256
|
11,256
|
7,595
|
7,595
|
|
|
|
|
|
Currency Risk
The Group operates in a global
market with income and costs possibly arising in a number of
currencies and is exposed to foreign currency risk primarily in
respect of entities within the Group entering into commercial
transactions arising from sales or purchases in currencies other
than the Companies' functional currency. Currency exposures are
reviewed regularly.
The Group has a limited level of
exposure to foreign exchange risk through their foreign currency
denominated cash balances and a portion of the Group's costs being
incurred in Euro, Polish Zloty and Romanian Leu. Accordingly,
movements in the Euro exchange rate against these currencies could
have a detrimental effect on the Group's results and financial
condition. Such changes are not considered likely to have a
material effect on the Group's financial position at 31 July
2023.
Currency risk is managed by
maintaining some cash deposits in currencies other than Sterling.
The table below shows the currency profiles of cash and cash
equivalents:
|
|
2023
€'000
|
2022
€'000
|
Cash and cash
equivalents
|
|
|
|
Euro
|
|
289
|
778
|
USD
|
|
2,714
|
1,440
|
GBP
|
|
3,002
|
113
|
Polish
Zloty
|
|
49
|
13
|
Romanian
Leu
|
|
8
|
14
|
|
|
6,062
|
2,358
|
Liquidity Risk
Liquidity risk is the risk that
the Group will encounter difficulty in meeting the obligations
associated with its financial liabilities that are settled by
delivering cash or another financial asset. The Group's approach to
managing liquidity is to ensure, as far as possible, that it will
have sufficient liquidity to meet its liabilities when they are
due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group's
reputation.
The Group seeks to manage
liquidity risk by regularly reviewing cash flow budgets and
forecasts to ensure that sufficient liquidity is available to meet
foreseeable needs and to invest cash assets safely and profitably.
The Group deems there is sufficient liquidity for the foreseeable
future.
The Group had cash and cash
equivalents at year end as below:
|
|
2023
€'000
|
2022
€'000
|
Cash and cash
equivalents
|
|
6,062
|
2,358
|
|
|
6,062
|
2,358
|
Interest Rate Risk
The Group is exposed to interest
rate risk whereby the risk can be a reduction of interest received
on cash surpluses held and an increase in interest on borrowings
the Group may have. The maximum exposure to interest rate risk at
the reporting date by class of financial asset was:
|
|
2023
€'000
|
2022
€'000
|
Bank balances
|
|
6,062
|
2,358
|
|
|
6,062
|
2,358
|
29.
FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Group
2023
|
|
|
Financial assets at
amortised cost
|
Financial liabilities at
amortised cost
|
Total
|
Financial assets / liabilities
|
|
|
€'000
|
€'000
|
€'000
|
Trade and other receivables
1
|
|
|
5,582
|
-
|
5,582
|
Cash and cash
equivalents
|
|
|
6,062
|
-
|
6,062
|
Trade and other payables
2
|
|
|
-
|
(6,175)
|
(6,175)
|
Lease liabilities (current and
non-current)
|
|
|
-
|
(351)
|
(351)
|
|
|
|
11,644
|
(6,526)
|
5,118
|
1 Trade and other receivables
excludes prepayments
2 Trade and other payables
excludes accruals
Group
2022
|
|
|
Financial assets at
amortised cost
|
Financial liabilities at
amortised cost
|
Total
|
Financial assets / liabilities
|
|
|
€'000
|
€'000
|
€'000
|
Trade and other receivables
1
|
|
|
5,861
|
-
|
5,861
|
Cash and cash
equivalents
|
|
|
2,358
|
-
|
2,358
|
Trade and other payables
2
|
|
|
-
|
(3,971)
|
(3,971)
|
Lease liabilities (current and
non-current)
|
|
|
-
|
(68)
|
(68)
|
Borrowings
|
|
|
-
|
(2,342)
|
(2,342)
|
|
|
|
8,219
|
(6,381)
|
(1,838)
|
1 Trade and other receivables
excludes prepayments.
2 Trade and other payables
excludes accruals.
Company
2023
|
|
|
Financial assets at
amortised cost
|
Financial liabilities at
amortised cost
|
Total
|
Financial assets / liabilities
|
|
|
€'000
|
€'000
|
€'000
|
Trade and other receivables
1
|
|
|
167
|
-
|
167
|
Cash and cash
equivalents
|
|
|
2,949
|
-
|
2,949
|
Trade and other payables
2
|
|
|
-
|
(8)
|
(8)
|
|
|
|
3,116
|
(8)
|
3,108
|
1 Trade and other receivables
excludes prepayments.
2 Trade and other payables
excludes accruals.
30.
RECONCILIATION
OF MOVEMENT IN NET DEBT
2023
|
At 1 August
2022
|
Non-cash
changes
|
Cashflow
|
At 31 July
2023
|
|
€'000
|
€'000
|
€'000
|
€'000
|
Cash at bank
|
2,358
|
(4)
|
3,708
|
6,062
|
Borrowings -
non-current
|
(2,342)
|
2,342
|
-
|
-
|
Lease liabilities - current &
non-current
|
(68)
|
(359)
|
76
|
(351)
|
Net Debt
|
(52)
|
1,979
|
3,784
|
5,711
|
2022
|
At 1 August
2021
|
Non-cash
changes
|
Cashflow
|
At 31 July
2022
|
|
€'000
|
€'000
|
€'000
|
€'000
|
Cash at bank
|
3,215
|
-
|
(857)
|
2,358
|
Borrowings -
non-current
|
(2,263)
|
(79)
|
-
|
(2,342)
|
Lease liabilities - current &
non-current
|
(58)
|
(111)
|
101
|
(68)
|
Net Debt
|
894
|
(190)
|
(756)
|
(52)
|
*Non-cash movements in cash
related to the foreign exchange impact on non € denominated cash
balances, whilst on the lease liabilities relates to the finance
charges incurred on the lease liabilities plus additional leases
executed during the year.
The non-cash movements on
borrowings principally relate to the conversion of the CLN which
took place during the year.
31.
MERGER
ACQUISITIONS
Smart Systems Security Limited
On 18 November 2022, Zefone
acquired Smart Systems Security Limited for €1,190 (£1,000). The
book value of the assets acquired and liabilities assumed of
Smarttech Systems Security Limited at the date of acquisition based
upon the balance sheet at 18 November 2022 are as
follows:
|
|
|
€'000
|
Cash
|
|
|
1
|
Total consideration
|
|
|
1
|
Recognised amounts of assets and
liabilities acquired:
|
|
|
|
Trade and other
receivables
|
|
|
5
|
Cash
|
|
|
8
|
Trade and other
liabilities
|
|
|
(241)
|
Total identifiable net assets
|
|
|
(226)
|
Net difference taken to merger reserve
|
|
|
(225)
|
Zefone Limited
On 18 November 2022, through the
Share Exchange Agreement, Smarttech247 Group plc acquired 100% of
the shares of Zefone Limited.
On 18 November 2022, the
convertible loan notes described in Note 26 were novated up to
Smarttech247 Group plc under the Deed of Novation, conditional on
the share for share exchange noted above and admission to the AIM
market.
For more detail, please refer to
note 24 and note 2.6 for information on the presentation of the
Financial Statements.
32.
RELATED PARTY
TRANSACTIONS
The Group's investments in
subsidiaries have been disclosed in Note 18 and details of
directors' emoluments are set out in the directors remuneration
report beginning on page [x].
Ronan Murphy, who is a director of
the Group, is also a director of and has a significant indirect
interest in Visibility Blockchain Limited of 21.4%. Consequently,
Visibility Blockchain Limited is regarded as a related party by
virtue of Ronan Murphy's ability to exert significant influence
over Visibility Blockchain Limited.
The following amounts are
receivable at the financial year end:
|
|
2023
€'000
|
2022
€'000
|
Visibility Blockchain
Limited
|
|
89
|
26
|
|
|
89
|
246
|
The following amounts are due to
related parties:
|
|
2023
€'000
|
2022
€'000
|
Visibility Blockchain
Limited
|
|
441
|
296
|
|
|
441
|
296
|
Net balance with related
parties:
|
|
2023
€'000
|
2022
€'000
|
Visibility Blockchain
Limited`
|
|
(352)
|
(269)
|
|
|
(352)
|
(50)
|
Certain revenue is recognised
between Zefone Limited and Visibility Blockchain Limited under a
reseller agreement. During the year the total amount of services
charged under a reseller agreement by Visibility Blockchain Limited
to Zefone Limited amounted to €446,789 (2022: €503,174).
Certain operating expenses are
allocated 40%/60% based on an intercompany overhead agreement.
During the year the total amount of expenses allocated to
Visibility Blockchain Limited by Zefone Limited amounted to
€365,475 (2022: €150,570).In the opinion of the Directors, these
amounts arise in the ordinary course of business and the terms of
the amounts due are in accordance with the terms ordinarily offered
by the Group.
On 18 November 2022, Amplified Technologies Limited,
which is 100% owned by Ronan Murphy, a director of the Company,
sold its 100% shareholding in Zefone Limited to the Company in
return for new shares in the Company, effectively exchanging 100%
ownership of Zefone Limited for 100% ownership of the Company as a
precursor to the IPO of the Company.
Nicholas Lee, who is a director of
the Group, is also a director of RiverFort Global Opportunities plc
which has a 6.16% shareholding in the Group.
Ronan Murphy has a loan
outstanding with the Group amounting to €57,000. This loan is
unsecured, interest free and is repayable on demand.
33.
PENSION
COMMITMENTS
The Group operates a defined
contribution scheme. The assets of the scheme are held separately
from those of the Group in an independently administered fund. The
pension cost charge represents contributions payable by the Group
to the fund and amounted to €75,307 (2022:
€12,553). €10,480 (2022: € nil) was payable to the fund at the
statement of financial position date and is included with
creditors.
34.
CAPITAL
COMMITMENTS
There were no capital commitments
as at 31 July 2023 or 31 July 2022.
35.
CONTINGENT
LIABILITIES
There were no contingent
liabilities at 31 July 2023 or 31 July 2022.
36.
EVENTS
SUBSEQUENT TO PERIOD END
There have been no further events
subsequent to period end.
37.
CONTROL
In the opinion of the Directors as
at the year end and the date of the financial statements, Ronan
Murphy is the ultimate controlling party.