Results for the 15-month period ended 30 June 2025

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 (as amended), which forms part of domestic UK law pursuant to the European Union (Withdrawal) Act 2018. Upon publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

11 November 2025

Shearwater Group plc

("Shearwater", or the "Group")

Results for the 15-month period ended 30 June 2025

Significant growth in revenue and adjusted EBITDA

Shearwater Group plc, the cybersecurity, advisory and managed security services group, announces its audited final results for the 15-month period ended 30 June 2025.

Financial Highlights

· Revenue of £39.5m (FY24 (restated): £24.4m1), representing annualised growth of 29% (£41.4m prior to application of revised revenue recognition policy*)

o  Underpinned by strong growth in the Group's Services division

· Adjusted EBITDA2 of £2.2m (FY24 (restated): £0.9m1), up 91% on an annualised basis

· Adjusted profit before tax3 of £0.6m (FY24: loss of £0.6m1)

· Adjusted EPS of 3.0p per share (FY24 (restated): 0.5p)

· Strong financial position, with closing cash of £5.1m (FY24: £5.0m) and no debt

· One off exceptional costs of £11.3m (FY24: £0.5m), comprising of:

o  Non-cash impairment charge to goodwill and intangibles: £11.1m

o  Restructuring and other costs: £0.2m

*Prior year adjustment applied to reflect revised revenue recognition policy in respect of provision of third-party cloud hosted cyber security solutions and third party support and maintenance contracts. The revised policy moves from recognition at the point of delivery to recognition over the duration of the contract. Without this revised policy, revenue for the 15-month period would have been £41.4m and Adjusted EBITDA would have been £2.3m, both slightly ahead of market expectations. Further detail in respect of this adjustment is provided in the Financial Review.

Operational Highlights

· Strong growth in the Services division, with revenue rising to £37.0m (annualised growth of 34%1), driven by a combination of repeat business from long-standing, blue-chip, customers and new client acquisitions

· A number of contract wins including:

o  $12.8m five-year contract with leading global telco (new client) with development and security of 5G network

o  £8.4m contract renewal with leading telco (long-standing client) for provision of assurance solutions across technology domains

· Awarded supplier status onto the Government's G-Cloud 14 framework, opening up more public sector opportunities

· Investment in proprietary AI tools to enhance quality of client solutions and ability to respond to tenders in efficient and scalable manner; Brookcourt Solutions became one of the first UK organisations to achieve prestigious ISO 42001 certification for responsible and effective management of AI systems

· Delivered a number of feature enhancements to proprietary Multi-Factor Authentications solutions, with objective of returning Software segment of the business to growth in FY26

Outlook

· Increasing frequency, complexity and scale of cyber-security threats expected to drive continued growth in the sector

· While procurement cycles can still be elongated, budgets are now being unlocked in line with the trend towards organisations committing to essential cybersecurity spend

· Group well placed to capitalise as a result of:

o  The deep knowledge and trusted reputation of each of its constituent companies

o  Its particular expertise in valuable and highly-regulated Telco and Financial Services Sectors

o  Ability to service expected increase in public sector investment in cyber security

o  Its strong balance sheet as a platform for growth

· Growing pipeline of opportunities provides confidence in the ongoing delivery of growth in both revenue and EBITDA in FY26

Phil Higgins, CEO of Shearwater Group, commented: "The past 15 months have been a period of significant progress for Shearwater. We have delivered strong revenue and EBITDA growth, maintained a robust balance sheet, and broadened our client base. This growth reflects the investment we have made in the quality of our solutions, our people and the high regard in which each of the Shearwater Group companies is held.

"The cybersecurity landscape continues to evolve rapidly, with threats becoming more frequent, more complex, and more damaging. Against this backdrop, organisations are recognising the need to commit to investment in their defences. This will create further opportunity for Shearwater Group and we look forward to FY26 and beyond with optimism."

Investor Presentation

Shearwater Group's CEO, Phil Higgins and CFO, Jonathan Hall, will provide a live investor presentation relating to the results via the Investor Meet Company platform on 12 November 2025 at 1:30pm.

Investors can sign up to Investor Meet Company for free and add to meet Shearwater Group via: https://www.investormeetcompany.com/shearwater-group-plc/register-investor

A video interview with Phil Higgins, CEO, and Jonathan Hall, CFO, is available to view here: https://www.voxmarkets.co.uk/articles/interview-with-shearwater-group-651e8d7

1 - FY24 Income Statement comparatives reflect 12 month period to 31 March 2024. Annualised growth rates have been calculated by multiplying FY25 results by 12/15 to create an annual equivalent and comparing this to the FY24 value

2 - Adjusted EBITDA is defined as profit before tax, before one off exceptional items, share based payment charges, finance charges, impairment of intangible assets, depreciation and amortisation.

3 - Adjusted Loss Before Tax defined as net profit before tax, exceptional items, share based payments and amortisation of acquired goodwill

Enquiries:

About Shearwater Group plc

Shearwater Group plc is an award-winning group providing cyber security, managed security and professional advisory solutions to create a safer online environment for organisations and their end users. 

The Group's differentiated full service offering spans identity and access management and data security, cybersecurity solutions and managed security services, and security governance, risk and compliance. Its growth strategy is focused on building a scalable group that caters to the entire spectrum of cyber security and managed security needs, through a focused buy and build approach.

The Group is headquartered in the UK, serving customers globally across a broad spectrum of industries.

Shearwater shares are listed on the London Stock Exchange's AIM under the ticker "SWG". For more information, please visit www.shearwatergroup.com.

Chairman's statement

I am delighted to report on a period of excellent progress for Shearwater Group, during which we delivered significant growth in both revenue and Adjusted EBITDA profitability. This strong performance reflects the success of our strategy, the quality of our people and the growing relevance of our services in a complex and fast-moving cybersecurity landscape.

Cybersecurity: a strategic imperative

Cybersecurity is now a key strategic issue for almost every organisation. The threat environment is becoming increasingly sophisticated, with cyber risks escalating in scale, frequency and impact. Over recent months, the cost of failure has never been more visible - reinforcing the critical importance of cyber resilience as a Board-level priority.

This context places Shearwater Group in a position of strength. Our portfolio of award-winning businesses, each with a strong reputation in their respective fields, continues to be trusted by some of the most prestigious companies in the world. This trust is earned through the consistent quality of our delivery, the depth of our technical expertise, and the proven value we provide to our customers in safeguarding their most critical digital assets.

Performance and progress

The Group delivered strong organic growth in the 15 months to 30 June 2025. Our improved underlying profitability demonstrates the benefits of our strategic positioning and our commitment to driving long-term value for all stakeholders.

We have continued to invest in innovation, in our people, and in broadening the scope of our services, ensuring we remain ahead of emerging threats while supporting clients in navigating increasingly complex regulatory and technological environments.

Our people and stakeholders

None of this would be possible without the exceptional people across our Group. I would like to extend my sincere thanks to our executive team and our talented colleagues throughout the business, whose commitment, professionalism and deep domain expertise are central to our success.

I would also like to thank our Non-executive Directors and members of our Advisory Panel for their insight and guidance, and to express our appreciation to our customers and shareholders for their continued loyalty and trust in Shearwater Group.

Looking ahead

Cybersecurity will remain a defining challenge for organisations globally and with that comes opportunity. With a strong reputation, trusted client relationships and a clear strategic direction, Shearwater Group is well positioned to continue delivering sustainable growth and value. We have a strong balance sheet, with significant net cash. As we look to the future, we do so with confidence.

On behalf of the Board, thank you for your continued support.

David Williams

Chairman

10 November 2025

Chief Executive's review

The period to 30 June 2025 was one of significant financial and operational progress for Shearwater Group as we strengthened our position as a trusted partner for cutting-edge cybersecurity solutions. Building on a streamlined corporate structure, we have enhanced our Services division, reflected in the increase in larger contract wins and we continue invest in innovation to improve delivery and resilience.

Revenue of £39.5 million represented annualised year-on-year growth of 29% (FY24: £24.4 million (restated)), while Adjusted EBITDA of £2.2 million represented growth of 91% (FY24: £0.9 million (restated)).

We maintain a robust balance sheet, closing the period with £5.1 million in cash (FY24: £5.0 million) and no debt. This position was strengthened further by a £1.75 million customer receipt in the week following the period end.

Our strong financial foundation, combined with a growing customer base, a well-established reputation, and the increasing imperative for organisations to invest in cybersecurity, positions Shearwater well for continued profitable growth as we look ahead to FY26.

Group operational review

The 15-month period to 30 June 2025 coincided with an increasingly complex cybersecurity landscape. The frequency and sophistication of threats facing businesses continued to grow, ranging from opportunistic attacks by individuals to highly co-ordinated efforts by nation states targeting critical infrastructure and financial systems. The tools available to those with malicious intent are also evolving rapidly, driven in no small part by the advancement of artificial intelligence. At the same time, organisations are navigating increasingly decentralised working practices, introducing new vulnerabilities that require continuous monitoring and mitigation.

While the existence of these threats is not new, our performance in FY23 and FY24 was impacted by extended decision-making cycles, which in turn delayed expected revenues. Such critical investment decisions, however, cannot be deferred indefinitely. We are now seeing a positive shift. While procurement processes remain complex, there is a growing trend towards organisations committing to essential cybersecurity spend, influenced by the increasingly visible consequences of inaction, both in terms of business disruption and regulatory penalties over the past year.

The Group operates through two divisions:

Services - which delivers cybersecurity solutions through third-party software and hardware, engineering services, advisory capabilities and penetration testing; and

Software - focused on our proprietary identity verification and access management solutions.

These two divisions experienced differing fortunes during the period. Our Services division, which now accounts for 94% of Group revenue (up from 90% in FY24 (restated)), delivered significant growth. In contrast, trading conditions were more challenging within our Software division, which represented 6% of revenue in the period (down from 10% in FY24 (restated)). We have been working to mitigate the challenges that the Software division has experienced, which we believe will result in stronger financial performance in FY26 and beyond. 

Further detail on each division's performance is provided in their respective sections of this report.

During FY24, we initiated a process to streamline the Group's corporate structure. This included integrating our Xcina Consulting business into Brookcourt and the GeoLang software into SecurEnvoy. This rationalisation was completed in FY25, supporting our ambition to drive greater operational efficiency as we move forward, enabling us to focus spend on new product development and driving revenue growth.

At Shearwater, we are proud to operate at the forefront of technological innovation. In June 2025, we were delighted to announce that Brookcourt Solutions became one of the first organisations in the UK to achieve ISO 42001 certification, the pioneering international standard for Artificial Intelligence Management Systems (AIMS). This milestone not only reinforces our commitment to ethical and responsible AI practices but also reflects the deep expertise within our Group in setting industry standards for cybersecurity and digital governance. As AI continues to transform business, we are dedicated to ensuring it is deployed in a secure, transparent and human-centric manner.

Services

FY25 was a year of strong growth for the Services segment, with revenue reaching £37.0 million, representing a 34% increase on an annualised basis compared to FY24 (restated). We continue to deliver high-calibre, specialist cyber-security solutions for clients across a broad range of industries in both the public and private sectors, once again however, our revenues were underpinned by our sustained strength in the Telecoms and Financial Services sectors.

We continue to invest in new client acquisition, to drive a broader and more diversified client base. During FY25, this resulted in four clients who each contributed over £2 million in revenue during the period, compared to two in FY24, providing a stronger platform for growth and building greater resilience to our revenues.

Alongside our work with blue-chip businesses in the private sector, we continue to see a significant opportunity in the public sector and have made good progress in capitalising on this. A notable milestone during H1 FY25 was our acceptance onto the UK Government's G-Cloud 14 procurement framework, which is already generating a pipeline of new and scalable prospects.

In line with our commitment to innovation and service excellence, during FY25 we invested in the development of a proprietary AI tool aimed at enhancing both the quality of our solutions and the efficiency with which we respond to client tenders and technical requests. This investment is expected to support future revenue growth in a scalable and cost-effective manner. As a further testament to our leadership in the application of emerging technologies, we were proud that Group company Brookcourt Solutions became one of the first organisations globally to achieve the prestigious ISO 42001 certification for the responsible and effective management of AI systems.

While FY25 was overall a very positive year for the Services segment of the business, growth within this segment was not uniform across all Group companies. During FY24, our penetration testing business, Pentest Limited, had delivered a record performance, supported by a major fixed-term project with a US-based software provider. This project concluded at the end of Q1 FY25.

Although our penetration testing team continued to deliver high-quality work across a broad client base during FY25 and the pipeline of opportunities across the year has remained strong, this business has suffered from delays in client decision making and speed of mobilisation throughout the period. As a result it hasn't been able to replace certain major projects that have culminated in the period with others of the same scale. Consequently revenue from the Pentest business was significantly lower than in the previous year.

While the Board continues to believe strongly in the long-term prospects of the Pentest business, underpinned by the strength of its brand and a high-calibre team, the reduced revenue in FY25 prompted a reassessment of the carrying value of goodwill and intangible assets dating back to the original acquisition of the business in 2019. Accordingly, an exceptional non-cash impairment charge has been recognised in the period. Further detail on this is provided in the financial review.

1 Adjusted EBITDA above is prior to Group costs as set out in Note 3.

Software

During FY25 we continued to invest in development of our proprietary software. Multi-factor authentication tools are becoming an ever more vital tool in the defence against cyber-attacks and the enhancements we have made throughout the period continue to differentiate our product from others on the market. Key development achievements during the period include:

· Enhanced Security: The V5 R3 release provides additional security metrics coupled with our AI detection, reduces false positives and the overhead and time of investigation is key to being secure.

· Advanced Management for Windows Logon Agent: Deploy 1,000's of agents seamlessly, with zero touch. Automatically configure and update from a single console, protect console and remote desktop environments with SecurEnvoy MFA.

· True Location: Detect impossible travel between user sessions and force logout when detecting abnormal user behaviour. New Mobile application bringing true location, login from a declared safe zone or location deviation.

· Credential Reset: Self-service, to reduce helpdesk calls regarding issues with passwords or MFA options, users can recover and keep operational with no helpdesk support.

· RESTful API: Providing ability for third party systems and code developers to integrate and utilise SecurEnvoy administration and authentication.

Our multi-factor authentication tools are deployed across more than 750 clients around the world, sold and marketed through our comprehensive global network of distributors and re-sellers. In May 2025, our route to market was further strengthened, with the product becoming directly available through Amazon Marketplace for the first time.

Despite these strengths, trading remained challenging through FY25. Revenue of £2.6 million represented a decline of 14% year-on-year on an annualised basis (FY24 (restated): £2.4 million), influenced by competitive pressures, notably the wide availability of the Microsoft Authenticator product, which many organisations receive at no extra cost as part of their broader Microsoft subscription. The additional features added through FY25 extend the degree of differentiation that our product enjoys, in particular for those clients looking for an on-premise solution.

As we enter FY26, we retain a strong belief in the size of the opportunity for multi-factor authentication software and the quality and the extent of the differentiation in our product. We believe this will enable our software business to return to growth in the year ahead. Notwithstanding this confidence, in the context of the reduction in revenue seen over the past three years, Directors have reviewed the appropriateness of the value of goodwill and intangible assets held on the Group balance sheet in respect of the SecurEnvoy business. The results of this review are contained within the financial review.

1 Adjusted EBITDA above is prior to Group costs as set out in Note 3.

Growth strategy

Becoming a cybersecurity leader

Our vision is clear: to drive growth and shareholder value by becoming the UK provider of choice, delivering premium, next-generation cyber technology, professional advisory and advanced cyber security services.

Strengthening organic growth: fuelling our momentum

Over recent years market conditions have necessitated a focus on delivering organic growth in revenue and underlying profitability. In the near term, we will continue to seek to build on the strong foundations we have created to increase revenue and profits in our existing Group businesses. M&A remains a strategic pillar, however, and where opportunities exist to bring complementary businesses into the Group at valuations that represent good value for our shareholders then we will look to do so.

A differentiated offering

Our Services division carries preferred partner status for a client base comprising blue-chip organisations, for all things security, offering comprehensive managed solutions, penetration testing and insightful advisory services. We provide a seamless, end-to-end experience that empowers our clients.

Our Software division is developing a revolutionary next-generation platform that converges access management and data discovery. Leveraging our zero-trust access solution, our platform safeguards users, devices, and data - anywhere, anytime.

Delivering sustainable growth

Our medium-term strategy prioritises achieving consistent, sustainable revenue and profit growth. With a deep commitment to innovation and an unwavering focus on customer success, we are confident in delivering value for our stakeholders in the years to come.

Market opportunity

Businesses globally are experiencing significant growth in the number and complexity of cybersecurity challenges that they face, requiring the implementation of controls and technology solutions to build and embed resilience, meet regulatory mandates and reduce overall risk.

This trend is only likely to continue. The World Economic Forum noted in its Cyber Security Outlook report in 2024 that "Fewer than one in ten respondents believe that in the next two years generative AI will give the advantage to defenders over attackers[1]."

This is driving a rapid increase in the size of the cybersecurity market. Fortune Business Insights valued this global market at $219 billion in 2025, estimating it will growth to $563 billion by 2032 at a CAGR of 14.4%[2]. 

Mordor Intelligence places the UK cybersecurity market at US$ 12.88 billion in 2025, forecasted to grow to US$ 21.51 billion by 2030, at a CAGR of 10.8% for 2025-2030[3].

All this means a growing need for the services which Shearwater Group offers, driving significant opportunities for the business. Shearwater's offering is well placed to cater to the need for businesses' proactive approach to cybersecurity measures, offering access to a differentiated full-service cyber security in a rapidly expanding market. Further to supportive market trends, our growth strategy, stronger financial position, prestigious customer base, industry recognition and talented team, we are poised to capitalise on opportunities and deliver substantial returns on investment.

Board update

In August 2024, we were pleased to welcome Jonathan Hall to the Group as our new Chief Financial Officer. Jonathan was formally appointed to the Board on 25 September 2024 following our Annual General Meeting. Adam Hurst, our Interim Chief Financial Officer, completed his contract and left the Company on that date, following a successful handover period. I'd like to extend my thanks to Adam for his valuable support during the interim period as we managed the transition to a new permanent Chief Financial Officer.

Current trading and outlook

In the early months of FY26 trading has remained in line with expectations. The level of interest in services of all companies within the Shearwater Group has remained high, as businesses increasingly recognise the need for robust cybersecurity investment. We are encouraged by the level of customer engagement that we are seeing and while we are cognisant that we continue to operate in a competitive marketplace, we are confident that the calibre of our team and our products, our proven track record and our strong network of client relationships, place us at a competitive advantage. We therefore look forward to the remainder of FY26 and beyond with optimism.

Philip Higgins

Chief Executive Officer

10 November 2025

Financial review

I am pleased to report a period of strong growth for the 15 months to 30 June 2025, with significant improvements in both revenue and underlying profitability. Revenue reached £39.5 million, representing annualised year-on-year growth of 29% (FY24 (restated): £24.4 million (restated) for the 12 months to 31 March 2024).

Adjusted EBITDA rose to £2.2 million, an increase of 91% on the same basis (FY24 (restated): £0.9 million), while adjusted profit before tax improved to £0.6 million compared with a loss of £0.6 million in FY24. The statutory loss before tax of £13.4 million (FY24 (restated): £3.2 million) was impacted by exceptional costs of £11.3 million, principally relating to a non-cash impairment charge against the carrying value of goodwill and intangibles in certain subsidiaries, which is outlined in further detail in the exceptional costs section below.

We maintained a robust balance sheet, closing the period with £5.1 million in cash (FY24: £5.0 million) and no debt; a position further strengthened by a £1.75 million receipt from one customer in the week following the period end.

A summary of the Group's financial performance for the year is set out below:

1 Administrative expenses (underlying) excludes items that are not included within Adjusted EBITDA such as finance charges, depreciation, amortisation, impairment, share-based payment charges and exceptional items.

Prior year adjustment

As part of our continued review of accounting policies to ensure alignment with IFRS 15 Revenue from Contracts with Customers, the Group has reassessed the timing of revenue recognition in respect of certain cloud-hosted software solutions and associated third-party support within the Services segment of the business.

Historically, revenue from these products and services was recognised at a point in time when the software was delivered to the customer. This treatment was considered appropriate given that, in prior years, the majority of the Group's software offerings were delivered as relatively finished, on-premise products, with limited ongoing updates or enhancements after delivery. As the provider of an integrated solution, Shearwater's role was also largely completed on delivery of this solution, with the responsibility for ongoing hosting and updates primarily being the responsibility of the underlying software provider.

As the nature of cyber threats has evolved, however, so too has the Group's product suite. A number of key offerings are now delivered as cloud-hosted Software as a Service ("SaaS") solutions. These products are continually updated and enhanced throughout the contract term to ensure customers benefit from the most current protection and latest functionality. Under IFRS 15, such arrangements are considered to provide a continuous service over time, and accordingly, it is now deemed more appropriate to recognise the revenue related to these types of services over the duration of the contract, rather than at the point of initial delivery.

Revenue from on-premise software licences will continue to be recognised at a point in time, consistent with when control of the licence transfers to the customer. Where such contracts include distinct support, maintenance, or servicing components, these elements will be recognised over time, reflecting the ongoing nature of the service provided across the contract period.

The decision that it is more appropriate to recognise revenue relating to cloud-hosted services and support agreements over a period of time, has resulted in the identification of an error in the prior year. As such, the application of IFRS 15 as outlined above has been applied retrospectively and has resulted in a prior year adjustment to restate comparative information. Further details of the financial impact are provided in note 1a to the consolidated financial statements.

The impact of applying this change in FY25 was to slightly reduce both revenue and Adjusted EBITDA. Had the Group retained its previous accounting policy, revenue for the 15-month period to 30 June 2025 would have been £41.4 million (FY24 (restated): £22.6 million), representing annualised growth of 46%. Adjusted EBITDA on the same basis as shown in the 2024 year-end financial statements would have been £2.3 million (FY24 (pre-restatement): £0.9 million), representing growth of 113%.

Following this change in policy, as of 30 June 2025 the Group had £15.4 million (FY24 (restated): £11.8 million) of work that was contracted but the revenue for which had not yet been recognised. Of this, it is expected that £10.7 million (FY24 (restated): £9.2 million) will be recognised in the 12 months following the balance sheet date.

Revenue and gross profit

Revenue for the 15-month period ended 30 June 2025 of £39.5 million represented 29% growth on the prior year on an annualised basis (2024 (restated): £24.4 million).

The table below provides a breakdown of revenues for the current year:

The Services division delivered strong growth during the period, with increased revenue principally driven by an increased demand for managed service solutions provided by Brookcourt. While procurement cycles across the industry remain extended, a trend that has impacted the past two financial years, there has been encouraging movement towards companies committing to the necessary investment in their cybersecurity defences. This shift has particularly benefited Brookcourt, which continues to strengthen its position as a trusted partner for blue-chip clients.

Growth within the Services division was, however, not uniform across all subsidiaries. Pentest recorded record revenues in FY24, driven by a material fixed-term contract with a major US software provider. This contract concluded at the end of Q1 FY25. Although Pentest remains a highly regarded brand within the penetration testing market and secured 50 new client engagements during the year, these were typically of a smaller scale and it was not possible to fully replace the revenue associated with this contract. As a result, Pentest revenues declined by 26% on an annualised basis compared with FY24.

Management retains confidence in the long-term prospects of Pentest; however, given the lower level of revenue expected in the short-term, the Board considered it appropriate to reduce the carrying value of goodwill associated with the original acquisition of Pentest. Accordingly, the goodwill balance was reduced from £2.8 million to £1.1 million, giving rise to a one-off non-cash impairment charge of £1.7 million in the period.

Revenue from the Software division declined by 14% on an annualised basis to £2.6 million (FY24: £2.4 million). During the period, a number of important performance upgrades were delivered, further enhancing the functionality of our proprietary platforms. Aligned to a clear understanding of where our holds a competitive advantage in the market and the opening of new channels to market, Directors are confident that this segment is well positioned to return to growth in FY26. Nonetheless, given the reduced level of revenue, the Board has reassessed the carrying value of goodwill and intangible assets associated with the Software business, resulting in a one-off non-cash impairment charge of £9.3 million in the period.

The value-in-use calculations applied to determine the impairment to goodwill and intangible assets in the consolidated statement of financial position were also used to assess the carrying value of investments in the Company statement of financial position. This resulted in an impairment of £13.4 million being applied to this investment value. This was the principal contributor to an overall loss for the Company of £14.6 million in the period.

Gross margin

The gross margin reduced from 28% in FY24 to 24% in FY25. This principally reflected a shift in the sales mix, with an increase in the proportion of revenues coming from the Solutions segment of the business and a reduction in revenue from the higher margin Software segment. 

Even within the Services segment, there was a reduction in the gross margin from 25% to 21%, which reflected an increased proportion of sales of integrated cybersecurity solutions, including elements of third-party software and hardware and a reduced proportion of penetration testing services, which typically deliver a higher gross margin, but which have a higher associated fixed cost.

A reduction in gross margin from 71% to 62% in the Software segment of the business reflected the reduced revenue, with cost of sales in this segment primarily relating to sales staff and sales promotion expenditure, which doesn't automatically reduce if revenues drop.

Administrative expenses

Underlying administrative expenses reduced by 2% on an annualised basis to £7.4 million (FY24: £6.0 million) as the Group continues to tightly manage its fixed cost base.

Adjusted EBITDA

The net impact of the factors outlined above was that the Group delivered a 91% annualised improvement in Adjusted EBITDA to £2.2 million for FY25 (FY24 (restated): £0.9 million).  

The table below provides a breakdown of the Group's adjusted EBITDA:

Finance charges

The Group earned net finance income of £0.1 million in the period (FY24: net cost of £0.1 million). Having retained a healthy cash position through the period, the Group used short-term deposits to earn interest on cash balances, while retaining the flexibility to appropriately manage its working capital requirements.

Depreciation

Depreciation of £0.2 million (2024: £0.2 million) was in line with the level in the prior period and mainly comprises depreciation of right-of-use assets.

Amortisation of intangible assets

Amortisation of computer software of £1.5 million, equated to £1.2 million on an annualised basis, in line with the prior year (FY24: £1.2 million). This relates to the amortisation of development expenditure incurred since acquisition on the Group's proprietary software solutions.

Adjusted profit/ (loss) before tax

The Group made an adjusted profit before tax of £0.6 million, (£0.5 million on an annualised basis). This compared to an adjusted loss before tax for the prior year of £0.6 million. The improvement reflected the increased revenue, coupled with ongoing tight control of underlying administrative expenses.

Amortisation of acquired intangible assets

Amortisation of acquired intangible assets was £2.6 million, equating to £2.1 million on an annualised basis, exactly in line with the prior year (FY24: £2.1 million).

Share-based payments

Share-based payment charges were less than £0.1 million in the period (2024: £0.0 million) notwithstanding the issue of a further tranche of options under the Group's ESOP scheme in January. Full details on the calculation of the Group's share-based payment charge are included within note 17.

Exceptional items

Exceptional items of £11.3 million (FY24: £0.5 million) included:

· Impairment of goodwill and intangible assets: £11.1 million (FY24: £nil); primarily relating to a reduction in the carrying value of goodwill and acquired intangible items from the acquisitions of SecurEnvoy Limited and Pentest Limited; and

· Restructuring costs: £0.1 million (FY24: £0.4 million): relating to the completion of an exercise to rationalise the group structure and reduce the number of group entities and also right-sizing of the cost base in Pentest Limited.

· Other costs: £0.2 million (FY24: £0.2 million): including completion of a one-off strategic project from FY24 and forex losses and legal costs from one foreign exchange provider breaching the terms of an agreed forward contract.

Reported loss before tax

The reported loss before tax of £13.4 million (2024: £3.2 million) reflected the improved underlying operating performance of the business, offset by the amortisation of acquired intangibles and the one-off exceptional items impacting the period.

Taxation

The income tax credit for the year of £1.4 million (FY24: £1.1 million), was primarily driven by a reduction of £1.3 million in the deferred tax liability during the period. This in turn was split between a £0.7 million reduction relating to the amortisation intangible assets and a £0.6 million credit resulting from the exceptional impairment charge in the period. 

The Group received £0.3 million in cash in the period in respect of R&D tax claims up to and including the period to 31 March 2023. Further claims will be prepared in respect of the FY24 and FY25 financial years, however, no assets have been recognised in respect of these until the Group has greater visibility on the likely value to be received in respect of these periods.

Statement of financial position

Intangible assets

Intangible assets decreased in the year by £13.8 million to £28.9 million at 30 June 2025 (2024: £42.7 million). This movement incorporates £1.3 million of investment into continued development of the Group's software assets (2024: £1.0 million), less the exceptional impairment charge of £11.1 million (prior to offsetting impact of deferred tax) and £4.1 million of amortisation, of which £2.6 million relates to acquired intangibles and £1.5 million to internally developed computer software.

Property, plant and equipment

Property, plant and equipment decreased slightly in the year by £0.2 million to £0.3 million at 30 June 2025 (2024: £0.5 million), reflecting depreciation in the year exceeding the value of new fixed asset additions.

Trade and other receivables

Trade and other receivables at 30 June 2025 totalled £17.6 million, an increase of 6% on the restated total at the end of the prior period (FY24 (restated): £16.6 million). This shift is primarily the result of timing differences around key contracts, with a higher volume of activity in FY25 than in the prior year, with revenues weighted towards H2. The Group continues to have no material issues with bad debts.

The revised accounting policy in respect of revenue recognition is typically expected to result in an increase in prepayments, as certain payments to suppliers, which are typically made at the start of each year of a contract will now be spread over the contract duration. Conversely, accrued income will typically be lower than under the previous policy, as uninvoiced revenue from future years of multi-year agreements will not be recognised at the outset of a contract on cloud-hosted software solutions and third-party servicing agreements.

Trade and other payables (falling due within one year)

Trade and other payables reduced from £16.4 million (restated) and the end of FY24 to £15.8m at the end of FY25. As with receivables, this principally simply reflected the timing of supplier billing under key contracts. 

It is expected that accruals will typically be lower than under the previous accounting policy, with future year supplier obligations under multi-year cloud-hosting and third-party servicing contracts no longer accrued at the outset. Conversely, deferred revenue is expected to increase, as invoiced revenue on these contracts is deferred over the contract duration.

Creditors: amounts falling due after more than one year

Creditors due after more than one year reduced from £4.9 million (restated) at the end of FY24 to £3.7 million at the end of FY25. This was almost exclusively driven by a £1.4 million reduction in the deferred tax liability in the period, resulting from a combination of ongoing amortisation and the one-off exceptional impairment charge in the period.

Statement of cash flows

The Group generated cash inflows in the year of £0.1 million (2024: £1.0 million). Cash flows related to working capital generation are always subject to some variation relating to the timing of payments under material contracts within the Services segment of the business. In the first week following the year end the Group received one major receipt for £1.75 million from a project sold and implemented during FY25. Had this been received one week earlier, it would have made a material difference to the cash flow shown for the period. Over the medium term, however, the impact of such fluctuations will even out and Directors believe that if the business continues to deliver on its targeted adjusted EBITDA profitability this will drive positive cash flows for the business.

This is driven largely by the return to positive adjusted EBITDA and positive working capital generation, particularly in the second half of the year. Working capital benefited in the year from the profile of long term deals concluded in previous years. The Group continued to invest in the Software division, with £1.0 million invested into internally developed software, the latest of which, SecurEnvoy's Access Management v.4.0 R2, went live in May 2024. The Group continued to collect cash effectively, with minimal bad debt. 

The table below provides a summary of cash flows in the year:

The above cashflow is extracted from the statutory presentation and adjusted to show exceptional items on a like-for-like basis as this is the basis reviewed by the Directors.

Capital expenditure

Capital expenditure of £1.4 million (2024: £1.1 million) in the year primarily includes capitalisation of external and internal software costs for developing our software business's product sets. On an annualised basis, this level of expenditure remains consistent year-on-year. Expenditure on property, plant and machinery remains minimal.

Financing activities

Expenditure on lease liabilities of £0.2 million (£0.2 million on an annualised basis) remained in line with the prior year (2024: £0.2 million).

The Group earned net finance income of £0.1 million in the period (FY24: net cost of £0.1 million) through the use of short-term deposits to earn interest on cash balances (2024: net finance costs paid of £0.1 million).

Key performance indicators

The Board believes that revenue, adjusted EBITDA and adjusted profit before tax are key metrics to monitor the performance of the Group, as they provide a good basis to judge underlying performance and are recognised by the Group's shareholders.

Alternative performance measures

The Group uses alternative performance measures alongside statutory measures to manage the performance of the business. In the opinion of the Directors, alternative performance measures can provide additional relevant information on past and future performance to the reader in assessing the underlying performance of the business. The table within note 2 of the consolidated financial statements details definitions of adjusted EBITDA and adjusted (loss)/profit before tax measures. Note 8 details the definition of adjusted EPS.

Movement of the balance sheet date

During FY25 Directors elected to change the Group's financial year end from 31 March to 30 June, to better align the Group's financial year with its customer procurement cycle. Historically, material contracts have frequently been concluded around the old March year end. This presented challenges in providing accurate and timely guidance to investors. The Board believes the revised year-end will enable greater clarity and consistency in the Group's reporting.

Jonathan Hall

Chief Financial Officer

10 November 2025

Consolidated statement of comprehensive income

for the 15-month period ended 30 June 2025

Adjusted EBITDA and Adjusted basic and diluted earnings/(loss) per share are non-GAAP Group-specific measures which are considered to be key performance indicators of the Group's financial performance. See note 2 for the definition of Adjusted EBITDA and note 8 for the definition of Adjusted based and diluted earnings/(loss) per share.

The results above are derived from continuing operations.

Consolidated statement of financial position

As at 30 June 2025

Philip Higgins

Chief Executive Officer

Registered number: 05059457

Consolidated statement of changes in equity

for the 15-month period ended 30 June 2025

Consolidated cash flow statement

for the 15-month period ended 30 June 2025

Notes to the consolidated financial statements

for the 15-month period ended 30 June 2025

General information

The Group is a public limited company incorporated and domiciled in the UK. The address of its registered office is 22 Great James Street, London, WC1N 3ES.

The Parent Company is listed on the AIM market of the London Stock Exchange. The Group provides cyber security, managed security and professional advisory solutions to help create a safer online environment for organisations and their end users.

1. Statement of accounting policies

The material accounting policies applied in preparing the financial statements are outlined below. These policies have been consistently applied for all the years presented, unless otherwise stated.

Basis of preparation

The consolidated financial statements have been prepared in accordance with UK adopted International Accounting Standards ('IFRS') and with those parts of the Companies Act 2006 applicable to companies reported under IFRS.

The consolidated financial statements have been prepared under the historic cost convention. The consolidated financial statements are presented in sterling, the functional currency of Shearwater Group plc, the Parent Company. All values are rounded to the nearest thousand pounds (£000) except where otherwise indicated.

Change of accounting period end date

During FY25 the Directors elected to change the date of the Group's financial year end from 31 March to 30 June, to better align the Group's financial year with its customer procurement cycle. Historically, material contracts have frequently been concluded immediately prior to, or very shortly following the previous year end date of 31 March. This created volatility in performance and presented challenges in providing accurate and timely guidance to investors. The Board believes the revised year end will enable greater clarity and consistency in the Group's reporting.

As a result, data contained with the financial statements is not directly comparable. Where comparative analysis, including year-on-year variances, have been presented within the strategic report, data in respect of FY25 has been annualised, by multiplying the result for the 15-month period to June 2025 by 12/15.

Going concern

Having made enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for at least twelve months from the date of signing these financial statements. Accordingly, they continue to adopt the going concern basis in preparing these consolidated financial statements.

The Group consists of a portfolio of brands, each highly regarded within its own specific segment of the cybersecurity industry. This industry as a whole is growing rapidly, as organisations seek to navigate an increasingly complex threat environment, with the costs of failure ever more apparent. The Group delivered strong growth in FY25, resulting in an adjusted EBITDA profit for the period of £2.2 million and the Directors believe that this growth will continue into FY26. The Group also maintains a robust financial position. At 30 June 2025 the Group was well capitalised, with £5.1 million of cash and no debt.

The Directors have reviewed detailed budget cash flow forecasts for the period to 31 December 2026 and have challenged the assumptions used to create these budgets. The budget figures are carefully monitored against actual outcomes each month and variances are highlighted and discussed at Board level on a quarterly basis as a minimum.

The Board is pleased to report that trading in the current year has started solidly and for the first quarter ended 30 September 2025 is broadly in line with management's expectations.

The Directors have reviewed and challenged a reverse stress test scenario on the Group up to December 2026. The purpose of the reverse stress test for the Group is to test the impact on the Group's cash if the assumptions in the budget are altered.

The reverse stress test assumes significant adjustments to the Group's budget which include the scaling back of revenues across all business lines, for the year ended 30 June 2026, by around 25%, with no further growth into the following year. Under this scenario, limited adjustments were made to direct costs and to future planned recruitment. Even without a more material cost restructuring, or a scaling back of product development expenditure the result of this stress test was that the Group retained sufficient cash reserves to meet its liabilities throughout the review period.

In the unlikely event that the performance of the Group fell short of this plausible worst-case scenario, actions that could be taken by Directors would include, a further restructuring of employment costs, or a scaling back of new product development. Additionally, the Directors could seek to access other sources of finance to mitigate the impact on cash.

Overall, the Directors consider that the strong balance sheet position, coupled with the outcome of the sensitised cash flow projections support their belief that the Group will be able to pay its debts as they fall due for the period to at least 31 December 2026 and therefore they do not believe there are any material uncertainties to disclose regarding going concern. The Directors are therefore satisfied that the financial statements should be prepared on the going concern basis.

Material accounting judgements, estimates and assumptions

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for income and expenses during the year and that affect the amounts reported for assets and liabilities at the reporting date.

Revenue recognition of material contracts

Management make judgements, estimates and assumptions in determining the revenue recognition of material contracts sold by the Group's Services division. The Group works with large enterprise clients, providing services and solutions to support the clients' needs. In many cases, a third-party's products or services will be provided as part of a solution. Management consider the implications around timing of recognition, with factors such as determining the nature of the solution provided, the point control passes to the client and the subsequent fulfilment of the Group's performance obligations. In addition to this, management consider if it is acting as agent or principal. Further details of how the Group determines revenue recognition and if it is acting as agent or principal can be found within the relevant notes within this section.

Impairment of goodwill, intangible assets and investment in subsidiaries

The Group tests goodwill and intangible assets for impairment at least annually or more frequently if there are indicators that their carrying value may not be recoverable. The assessment requires management to estimate the value in use of each cash-generating unit (CGU), which involves preparing forecasts of future revenues, costs and cash flows for each CGU based on the Group's business plans and market expectations. These forecasts are then discounted using an appropriate pre-tax discount rate, which reflects the time value of money and the specific risks associated with each CGU. Management also makes an assessment of an appropriate terminal growth rate to apply beyond the forecast period. Because these calculations are sensitive to changes in assumptions, management performs sensitivity analyses to assess the potential impact of reasonably possible changes in key variables such as revenue growth, operating margins, discount rates and terminal growth rates. Any reduction in the estimated recoverable amount could result in an impairment charge being recognised in the income statement.

Further information on the variables applied in judgements made can be found in note 9.

Capitalisation of internally generated software

In applying the Group's accounting policy for the capitalisation of intangible assets in accordance with IAS 38 Intangible Assets, management is required to exercise significant judgement in determining which costs meet the criteria for recognition as an asset. This includes assessing whether expenditure relates to the development of a discrete product or project, as opposed to ongoing maintenance or enhancement of existing assets. In making this assessment, the Directors consider the nature of the activities undertaken, the stage of completion of each project, and the extent to which internal staff time and external spend are directly attributable to the creation of identifiable and separable intangible assets. Capitalisation is only undertaken where management has a reasonable belief, at the time the expenditure is incurred, that the development will generate probable future economic benefits through future cash inflows to the Group.

Deferred tax asset recognition

The recognition of deferred tax assets in respect of carried forward tax losses and other temporary differences requires management to exercise judgement as to whether it is probable that future taxable profits will be available against which the losses or temporary differences can be utilised. In forming this view, the Directors consider the Group's latest business plans and forecasts, the nature and timing of future taxable income, the expiry dates of any tax losses, and the availability of tax planning opportunities. The assessment inherently involves estimates regarding the Group's future profitability, which are subject to risks and uncertainties, including market conditions and changes in tax legislation.

Share-based payments

The Group measures the fair value of share options granted to employees and Directors at the grant date using the Black-Scholes option pricing model. The use of this model involves several key assumptions which require judgement, including the risk-free interest rate, the expected volatility of the Group's share price, the proportion of options expected to vest, and the average period until vesting. The risk-free rate is based on the rate of interest for ten-year UK Gilts. Expected volatility is based on the historical share price of the Company. The estimate of the number of options likely to vest is updated at each reporting date based on current expectations of employee retention and performance.

Revenue

The Group recognises revenue in accordance with IFRS 15: Revenue from Contracts with Customers. Revenue with customers is evaluated based on the five-step model under IFRS 15: Revenue from Contracts with Customers: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to separate performance obligations; and (5) recognise revenues when (or as) each performance obligation is satisfied.

Revenue recognised in the statement of comprehensive income but not yet invoiced is held on the statement of financial position within accrued income. Revenue invoiced but not yet recognised in the statement of comprehensive income is held on the statement of financial position within deferred revenue. Revenue is measured at the fair value of the consideration received or receivable, excluding value-added tax and rebates.

The Group's revenues are comprised of a number of different products and services across our two divisions, details of how revenue recognition is now applied in respect of these are provided below. It is noted that in the case of revenue from cloud-based software and third-party support/ warranties, this had historically been recognised at a point in time when the respective solution was delivered to the client. The correction of this treatment and move to recognise this revenue over time has resulted in a prior year adjustment in these financial statements:

Services

Sales of integrated cyber-security solutions, which could include some or all of: third-party hardware, third-party software, third-party support/ warranties and internal support/ engineering are split into their respective performance obligations:

· Revenue relating to the provision of third-party hardware, or on-premise software is recognised in full at a point in time upon delivery of the product to the end client. This delivery will either be in the form of the physical delivery of a product or the emailing of access codes to the client for them to download third‑party software

· Revenue in respect of cloud-based software solutions and third-party support/ warranties, where these are separately identifiable from the main software license, are spread over the duration of the contract.

· Revenue in respect of Shearwater Group's services is spread over time, as the respective performance obligations are discharged. As this relates to engineering services, this will typically be spread evenly across the duration of a contract, unless the contract stipulates specific services to be performed at a particular point during the contract, in which case, recognition will take place once those services have been performed. Where this relates to the value-add service that Shearwater Group provides to identify, procure and integrate a solution and to ensure delivery from the respective partners, this will be calculated by applying a 1.5% mark-up to the cost of sales relating to the cost of third-party support or cloud-hosted software. The balance of any contract price is considered to reflect the value-add service provided by Brookcourt. 90% of this value-add component will be recognised on delivery of the solution, reflecting the front-loaded nature of the service provided, including the design, procurement, integration and implementation of a solution, with the balancing 10% being spread over the contract value.

Sales of consultancy services are usually based on a number of consultancy days that make up the contracted consideration. Consultancy days generally comprise field work and (where required) report writing and delivery which are considered to be of equal value to the client. Revenue is recognised over time based on the number of consultancy days provided within the period compared to the total in the contract.

Software

· Software licences whereby the customer buys software that it sets up and maintains on its premises is recognised fully at the point the licence key/access has been granted to the client. The Group sells the majority of its services through channels and distributors who are responsible for providing first and second line support to the client.

· Software licences for the new 'Authentication as a Service' product whereby the customer accesses the product via a cloud environment maintained by the Company is recognised in two parts, whereby part of the subscription is recognised at the point that the licence key is provided to the customer, with the remaining part recognised evenly over the length of the contract. This deferred proportion represents the obligation to maintain and support the platform that the software runs on.

Principal versus agent considerations

In instances where the Group is involving another party in providing goods or services to a customer, the Group considers whether the nature of its promise is a performance obligation to provide the specified goods or services itself or to arrange for those goods or services to be provided by the other party to determine whether it is a principal or an agent. The business will firstly identify the specific goods and/or services to be supplied to the customer.

In determining whether the business is acting as agent or principal, the business assesses whether it controls each specified good or service before that good is transferred to the customer. It will consider:

· Who is responsible for fulfilling the promise to provide the specific product or service.

· If the business is carrying a liability risk for the specific good or service prior to it being supplied to the customer.

· If the business has discretion over pricing.

In addition to the points noted above, the business also considers the following unique selling points:

· Pre-sales process:

In some cases, the business invests heavily in working with the customer to understand their requirements, before designing/recommending a solution that integrates various third-party products or services to meet the customers' requirements.

· Levels of ongoing services:

In some cases, whilst not always contracted, the business will continue to support the customer as needed to ensure that their solution is working. This may include co-ordination of the maintenance and support with third parties and provision of engineers to remove and send back faulty products.

Where the Group is a principal, revenues are recognised on a gross basis in the statement of comprehensive income. Where the Group is an agent revenues are recognised on a net basis in the statement of comprehensive income. Directors believe that the standard structure of Shearwater Group's contract and the nature of the services provided mean that it is typically considered a principal.

1a. Prior year adjustment

During the period, the Group reassessed the timing of revenue recognition in respect of certain cloud-hosted software solutions and associated third-party support within the Services segment of the business to ensure alignment with IFRS 15 Revenue from Contracts with Customers.

The conclusion of this review was that under IFRS 15 certain revenues relating to the provision of third-party, cloud-hosted software solutions and support and maintenance contracts should be recognised over time, rather than at a point in time when the solution was initially delivered.

This decision has resulted in the identification of an error in the prior year. As such, the application of IFRS 15 as outlined above has been applied retrospectively and has resulted in a prior year adjustment to restate comparative information. The impact of this change is as outlined below:

Increase/(decrease) in equity:

Increase/ (decrease) in profit:

The change did not have an impact on the Group's operating, investing or financing cash flows.

2. Measure of profit/ (loss)

To provide shareholders with a better understanding of the trading performance of the Group, additional alternative performance measures (APMs) are included; Adjusted EBITDA and Adjusted loss before tax have been calculated as profit/loss before tax after adding back the following items, which can distort the underlying performance of the Group:

Adjusted profit/(loss) before tax

· Amortisation of acquired intangible assets.

· Share-based payments.

· Impairment of intangible assets.

· Exceptional items.

Adjusted EBITDA

In addition to the adjusting items highlighted above in the adjusted profit/ loss before tax:

· Finance costs.

· Finance income.

· Depreciation (including amortisation of right-of-use assets).

· Amortisation of other intangible assets - computer software (including in-house software development).

Adjusted EBITDA and adjusted loss before tax reconciles to loss before tax as follows:

3. Segmental information

In accordance with IFRS 8, the Group's operating segments are based on the operating results reviewed by the Board, which represents the chief operating decision maker.

The Group is organised into two reportable segments based on the types of products and services from which each segment derives its revenue - Services and Software.

Segmental information for the 15 months ended 30 June 2025 is presented below. The Group's assets and liabilities are not presented by segment as the Directors do not review assets and liabilities on a segmental basis.

1 Figures disclosed in the profit column for Services and Software profitability is adjusted EBITDA.

Segmental information by geography

The Group is domiciled in the United Kingdom and currently the majority of its revenues come from external customers that are transacted in the United Kingdom. A number of transactions which are transacted from the United Kingdom represent global framework agreements, meaning our services, whilst transacted in the United Kingdom, are delivered globally. The geographical analysis of revenue detailed below is on the basis of country of origin in which the master agreement is held with the customer (where the sale is transacted).

All of the Group's non-current assets are held within the United Kingdom.

In the 15 months to 30 June 2025 three customers within the Group made up more than 10% of the Group's revenue. These customers contributed £21.7 million to the Group's Services division. In the (restated) prior year, two customers within the Group made up more than 10% of the Group's revenue. These customers contributed £8.9 million to the Group's Services division.

4. Expenses and auditor's remuneration

Operating loss is stated after charging/(crediting):

1Other one-off costs include completion of a one-off strategic project from FY24 and forex losses and legal costs from one foreign exchange provider breaching the terms of an agreed forward contract.

5. Staff costs

Total staff costs within the Group comprise of all Directors' and employee costs for the financial year.

The weighted average monthly number of employees, including Directors, employed by the Group during the year was:

Details of Directors' remuneration can be found within the annual report on remuneration on pages 45 and 46.

6. Interest receivable/ (payable)

7. Taxation

8. Earnings per share

Basic loss per share is calculated by dividing the loss attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

Diluted loss per share is the same as basic loss per share as the potential dilutive shares are anti-dilutive for the 15 months ended 30 June 2025 and for the twelve months ended 31 March 2024. Please see notes 16 and 17 of the consolidated financial statements for more details.

Adjusted earnings per share has been calculated using adjusted earnings calculated as loss after taxation but before:

· Amortisation of acquired intangibles after tax.

· Exceptional items after tax.

· Share-based payments.

The calculation of the basic and diluted profit/loss per ordinary share from total operations attributable to shareholders is based on the following data:

9. Intangible assets

The Group tests goodwill and intangible assets annually for impairment. The recoverable amount of goodwill and intangible is determined as the higher of the value-in-use calculation or fair value less cost of disposal for each cash‑generating unit (CGU). The value-in-use calculations use pre-tax cash flow projections based on financial budgets and forecasts approved by the Board covering a five-year period. These pre-tax cash flows beyond the five-year period are extrapolated using estimated long-term growth rates.

Following a restructuring of the Group during FY24, including the commercial integration of Xcina Consulting into Brookcourt Solutions and GeoLang into SecurEnvoy, the Group now has three separate CGUs (FY24: three CGUs). For all three CGUs a weighted average cost of capital of 13.8% (FY24: 13.0%) and a terminal value, based on a long-term growth rate of 2% (FY24: 2%) calculated on year five cash flow, has been used.

The following key assumptions around revenue growth are summarised in the table below.

Sensitivity analysis has been performed on each of the Group's CGUs which incorporates changes in assumed revenue growth rates and profit margin growth in addition to terminal value revenue growth rate and weighted cost of capital (WACC).

Outcomes of the following sensitivities are as detailed below:

· Reducing the terminal value from 2% to 1%, would increase the size of the impairment charge by £0.3 million.

· Increasing the weighted average cost of capital by 1%, from 13.8% to 14.8% would increase the size of the impairment charge by £0.4 million.

· Reducing anticipated revenue by 5% p.a. across each CGU, without making any corresponding changes to the cost base of that CGU would increase the size of the impairment charge by £5.2 million. 

Based on the outcome of these value-in-use calculations and related sensitivity analysis, in the light of reduced revenue in the software and Pentest businesses in FY25, the Directors considered it prudent to impair the carrying value of goodwill and intangibles in these businesses as follows:

· Software:

o  Goodwill reduced by £7.0 million from £7.0 million to £nil

o  Intangible assets reduced by £2.4 million from £4.7 million to £2.3 million

· Pentest:

o  Goodwill reduced by £1.7 million from £2.8 million to £1.1 million

The licence relates to a right to gold exploration dating back to before 2017 when the Group was known as Aurum Mining plc whose principal activity was mining and exploration. 

10. Property, plant and equipment

Depreciation of property, plant and equipment is charged to depreciation and amortisation expenses within the statement of comprehensive income.

11. Trade and other receivables

The movement for the provision in expected credit losses is stated below:

12. Trade and other payables

13. Creditors: amounts falling due after more than one year

14. Deferred tax

Deferred tax balance at 30 June 2025 includes a £1.7 million (2024: £2.5 million) deferred tax liability for acquired intangible assets including software and trademarks. The remainder represents timing differences arising on the difference between the net book value and tax written down value of internally generated software and office equipment.

The Group has tax losses of £4.4 million (2024: £4.1 million) across its Parent Company Shearwater Group plc and four subsidiaries that are available for offset against future taxable profits of the entity. A deferred tax asset has been recognised in respect of tax losses brought forward and in the current year which will be used to offset future taxable profits.

15. Lease liabilities

Lease liabilities at 30 June 2025, which include the extension of some existing office leases, are detailed below:

The maturity analysis of lease liabilities is detailed below:

There are no leases with a term of more than five years.

16. Share capital

The table below details movements within the year:

Deferred shares for all practical purposes are valueless and it is the Board's intention to repurchase, cancel or seek to surrender these deferred shares using lawful means as the Board may at such time in the future decide.

No shares were issued in either the 15-month period ended 30 June 2025 or in the twelve-month period ended 31 March 2024.

Other reserves included:

Share premium

This comprises of the amount subscribed for share capital in excess of the nominal value less any transaction costs incurred in raising equity.

Other reserves

These comprise of amounts expensed in relation to the share options, share incentive scheme (see note 17) and merger relief from shares issued as consideration to acquisitions and equity placings (net of costs).

Movements in the 15-month period ended 30 June 2025 include a share-based payments charge for the period of £22,000, as outlined in note 17.

Accumulated loss reserve

Accumulated loss reserves for the Group are made up of cumulative profits and losses net of dividends and other adjustments.

17. Share-based payments