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Company Information
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Contents
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Directors' report
For the year ended 31 January 2023
The directors present their annual report and the financial statements of Khoros London Limited ('the company') for the year ended 31 January 2023.
Principal activity The principal activity of the company is the provision of services to its parent on a cost plus basis to assist the group in providing specialised software developed to allow its clients to deliver data-focused social marketing campaigns.
The loss for the year, after taxation, amounted to £47,264 (2022 -profit £1,339,192).
The directors did not recommend or pay dividends during the year (2022 - £nil).
The directors who served during the year were:
The directors are responsible for preparing the Strategic report, the Directors' report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the company's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors do not consider there to be any material future developments.
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Directors' report (continued)
For the year ended 31 January 2023
on income from Khoros, LLC, which has a material uncertainty related to going concern in its most recent audited financial statements related to ongoing negotiations in the refinancing of loans. The directors have concluded that the circumstances mentioned above represent a material uncertainty which may cast significant doubt over the company's ability to continue as a going concern. As of September 1, 2023, Khoros, LLC and Zeus Jointco Holdco, LLC have successfully finalized the groups recapitalization efforts. This included an amendment to its existing debt facility and securing additional equity funding. These subsequent events are expected to enhance the Company's financial flexibility and support its go-forward strategic objectives. After considering the uncertainties and factors described above, the directors have a reasonable expectation that the company will have adequate resources available to continue to meet their obligations as they fall due and continue in operational existence for a period of at least 12 months from the date of signing these financial statements. For these reasons the directors continue to adopt the going concern basis of accounting in preparing these annual financial statements.
There have been no significant events affecting the company since the year end.
This report was approved by the board on
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Strategic report
For the year ended 31 January 2023
The Directors present their strategic report for Khoros London Limited ('the company') for the year ended 31
January 2023.
As directors of the company, we have closely reviewed the company's performance for the financial year 2023. It is important to highlight that the comprehensive review of our business performance, risk assessment, and strategic decisions takes place at the Khoros, LLC level. This structure ensures efficient resource allocation and informed decision-making across the entire group.
Operating as a subsidiary of Khoros, LLC, we benefit from the strategic guidance, support services, and consolidated resources provided by the parent entity. This enables us to focus on our core competencies while leveraging synergies within the group. The strategic alignment with Khoros, LLC empowers us to achieve operational excellence and support global strategic initiatives. Our strategic outlook is closely linked to the overall direction set by Khoros, LLC. Key areas of focus include: Leveraging Group Synergies: the company's operations are strategically integrated within the group, allowing us to optimize resources and capabilities. The centralized expertise of Khoros, LLC enhances our operational efficiency and competitive advantage. Market Expansion: The strategic expansion into new markets and customer segments is guided by the insights and expertise of Khoros, LLC. This approach enables us to capitalize on emerging opportunities while minimizing risks. Risk Management: Collaborating with Khoros, LLC allows us to access specialized risk management strategies that address potential challenges, including foreign currency exchange fluctuations and other global uncertainties. Alignment with Khoros, LLC Strategy: Our strategic initiatives align with the broader objectives set by Khoros, LLC, ensuring cohesive efforts towards sustainable growth and value creation. The company maintains a robust strategic relationship with Khoros, LLC, leveraging its guidance, support, and expertise for our operational success. Our collaborative approach positions us well to navigate challenges and seize opportunities in an evolving business landscape.
The assessment of risks and uncertainties associated with our operations is a collaborative effort between the company and Khoros, LLC. While our day-to-day operational risks are addressed within the company, the overarching risk management strategy, including currency exchange risk and other macroeconomic uncertainties, are managed by Khoros, LLC's for the consolidated group. This approach ensures a comprehensive and coordinated response to mitigate potential risks and seize opportunities.
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Strategic report (continued)
For the year ended 31 January 2023
Given the overall structure and The Company's relation therewithin, the directors believe that a direct analysis of KPIs is not essential for stakeholders to grasp the development, performance, or position of the company. It's not that these metrics are irrelevant, but rather, in the context of our operations, they may not provide the most meaningful or comprehensive snapshot of our state and direction.
It is important to highlight that The Company operates under a broader corporate structure, and is a part of a larger group. At the Khoros, LLC/Zeus Jointco Holdco, LLC level, a suite of KPIs is indeed employed to evaluate and monitor overall performance. These KPIs encompass various dimensions of the business, including: Software and Service Bookings: A measure of the demand and commitment from our customers for our products and services. Renewals: An indicator of customer loyalty and satisfaction, as it tracks the renewal rates of our service contracts. Customer Health: Evaluates the overall well-being of our customer relationships, encompassing factors like product usage, satisfaction scores, and potential for growth or upsell. Employee Satisfaction: An essential metric for any organization, as content and motivated employees often translate to better business performance and customer satisfaction. Financial Performance: Traditional financial metrics that gauge the financial health, profitability, and sustainability of the business. While these KPIs are monitored at the parent level, they provide valuable overarching insights that indirectly influence our strategies and operations. Stakeholders can access insights and reports on these KPIs from the Khoros, LLC/Zeus Jointco Holdco, LLC level for a broader perspective on performance metrics.
This report was approved by the board on 29 September 2023 and signed on its behalf by:
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Independent auditor's report to the members of Khoros London Limited
For the year ended 31 January 2023
We have audited the financial statements of Khoros London Limited (the 'company') for the year ended 31 January 2023, which comprise the Statement of income and retained earnings, the Statement of financial position, the Statement of cash flows and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We draw attention to note 2.2 in the financial statements, which indicates that the company is dependent on another entity in the group for income, and this entity has a material uncertainty related to going concern. As stated in note 2.2, these conditions indicate that a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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Independent auditor's report to the members of Khoros London Limited (continued)
For the year ended 31 January 2023
The other information comprises the information included in the Annual Report other than the financial statements and our Auditor's report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
∙adequate accounting records have not been kept, or returns adequate for our audit have not been received from
branches not visited by us; or
∙the financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of directors' remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit; or
∙the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemptions in preparing the Directors' Report and from the requirement to prepare a Strategic Report.
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Independent auditor's report to the members of Khoros London Limited (continued)
For the year ended 31 January 2023
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
How the audit was considered capable of detecting irregularities including fraud
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud
and non-compliance with laws and regulations, was as follows:
∙the Senior Statutory Auditor ensured that the engagement team collectively had the appropriate competence,
capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
∙we identified the laws and regulations applicable to the company through discussions with directors and other
management, and from our commercial knowledge and experience of the company;
∙the audit team held a discussion to identify any particular areas that were considered to be susceptible to
misstatement, including with respect to fraud and non-compliance with laws and regulations; and
∙we focused our planned audit work on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company including the Companies Act 2006, employment legislation, and taxation legislation.
We assessed the extent of compliance with the laws and regulations identified above through:
∙making enquiries of management;
∙reviewing legal expenditure throughout the year for any potential litigation or claims; and
∙considering the internal controls in place that are designed to mitigate risks of fraud and non-compliance with laws
and regulations.
To address the risk of fraud through management bias and override of controls, we:
∙determined the susceptibility of the company to management override of controls by checking the implementation of controls and enquiring of individuals involved in the financial reporting process;
∙tested journal entries throughout the year to identify unusual transactions;
∙performed analytical procedures to identify any large, unusual or unexpected transactions and investigated any large variances from the prior period;
∙recalculated income based on the agreement in place;
∙reviewed accounting estimates and evaluated where judgements or decisions made by management indicated bias
on the part of the company's management; and
∙carried out substantive testing to check the occurrence and cut-off of income and expenditure.
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Independent auditor's report to the members of Khoros London Limited (continued)
For the year ended 31 January 2023
Auditor's responsibilities for the audit of the financial statements (continued)
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
∙agreeing financial statement disclosures to underlying supporting documentation;
∙reviewing the minutes of meetings of those charged with governance; and
∙enquiring of management as to actual and potential litigation and claims.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are
from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an Auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Statutory Auditor
130 Wood Street
EC2V 6DL
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Statement of income and retained earnings
For the year ended 31 January 2023
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Statement of financial position
As at
The financial statements were approved and authorised for issue by the board on
The notes on pages 12 to 22 form part of these financial statements.
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Statement of cash flows
For the year ended 31 January 2023
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Notes to the financial statements
For the year ended 31 January 2023
Khoros London Limited is a private company limited by shares and incorporated in England and Wales. The registered office and principal place of business is 5 New Street Square, London, EC4A 3TW. The registered number of the company is 08422419.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' ('FRS102') and the Companies Act 2006.
The following principal accounting policies have been applied:
The financial statements have been prepared on a going concern basis, notwithstanding that the company is dependent on income from Khoros, LLC, which has a material uncertainty related to going concern in its most recent audited financial statements related to ongoing negotiations in the refinancing of loans.
The directors have concluded that the circumstances mentioned above represent a material uncertainty which may cast significant doubt over the company's ability to continue as a going concern. Nevertheless, after considering the uncertainties described above, the directors have a reasonable expectation that the company will have adequate resources available to continue to meet their obligations as they fall due and continue in operational existence for a period of at least 12 months from the date of signing these financial statements. As of September 1, 2023, Khoros, LLC and Zeus Jointco Holdco, LLC have successfully finalized the groups recapitalization efforts. This included an amendment to its existing debt facility and securing additional equity funding. These subsequent events are expected to enhance the Company's financial flexibility and support its go-forward strategic objectives. For these reasons the directors continue to adopt the going concern basis of accounting in preparing these annual financial statements.
Functional and presentation currency
Transactions and balances
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Notes to the financial statements
For the year ended 31 January 2023
2.Accounting policies (continued)
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of income and retained earnings within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.
Defined contribution pension plan
The company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Once the contributions have been paid the company has no further payment obligations. The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of financial position. The assets of the plan are held separately from the company in independently administered funds.
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Notes to the financial statements
For the year ended 31 January 2023
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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Notes to the financial statements
For the year ended 31 January 2023
2.Accounting policies (continued)
The company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.
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Notes to the financial statements
For the year ended 31 January 2023
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Notes to the financial statements
For the year ended 31 January 2023
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Notes to the financial statements
For the year ended 31 January 2023
8.Taxation (continued)
With effect from 1 April 2023 the rate of corporation tax increased, tapering from 19% for businesses with profits of less than £50,000 to 25% for businesses with profits over £250,000.
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Notes to the financial statements
For the year ended 31 January 2023
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Notes to the financial statements
For the year ended 31 January 2023
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Notes to the financial statements
For the year ended 31 January 2023
Profit and loss account
There were no capital commitments at 31 January 2023 and 31 January 2022.
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Notes to the financial statements
For the year ended 31 January 2023
The company operates a defined contribution pension scheme. The assets of the scheme are held separately
from those of the company in an independently administered fund. The pension cost charge for the year represents contributions payable by the company to the fund and amounted to £316,483 (2022 - £286,215). As at the reporting date, £44,906 (2022 - £43,831) was payable in contributions to the fund.
The parent undertaking of the company is Spredfast International Inc.
The ultimate controlling party is Vista Equity Partners Management, LLC, a company incorporated in the United States of America. The registered office of this company is 401 Congress Avenue, Suite 3100, Austin, TX78701. The smallest group of undertakings for which group accounts have been drawn up which include the company is headed by Spredfast International Inc. The registered office of this company is 200 W Cesar Chavez, Suit 600, Austin, Texas 78701, United States of America. The largest group of undertakings for which group accounts have been drawn up which include the company is headed by Khoros, LLC. The registered office of this company is Khoros International, LLC, 7300 Ranch Road 2222, Building 1, Austin, Texas 78730-3204, United States of America.
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