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Registered number: 09010620









NETSKOPE UK LTD









ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 JANUARY 2024

 
NETSKOPE UK LTD
 
 
COMPANY INFORMATION


Directors
J T Bushnell 
E Stuart-Cayot 
J Chin 




Registered number
09010620



Registered office
Suite 4
7th Floor

50 Broadway

London

SW1H 0DB




Independent auditor
Nortons Assurance Limited
Chartered Accountants and Statutory Auditor

Second Floor

NOW Building

Thames Valley Park

Reading

Berkshire

RG6 1RB





 
NETSKOPE UK LTD
 

CONTENTS



Page
Strategic Report
1 - 4
Directors' Report
5 - 6
Independent Auditor's Report
7 - 10
Profit and Loss Account
11
Balance Sheet
12
Statement of Changes in Equity
13
Statement of Cash Flows
14
Analysis of Net Debt
15
Notes to the Financial Statements
16 - 31


 
NETSKOPE UK LTD
 
 
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JANUARY 2024

Introduction
 
The directors present their strategic report for the Company for the year ended 31 January 2024.

Business review
 
Netskope, Inc. (“We, Us, The Company”), parent of the Netskope UK operates as a cost-plus, was incorporated in Delaware in October 2012. The Company is headquartered in Santa Clara, California, and conducts business worldwide, including North America, South America, Europe, and Asia. 
We are a provider of cloud security services that help accelerate the digital transformation journeys of businesses with a proven security platform that is data-centric, cloud-smart, and fast. Through our proprietary Netskope Cloud Security Platform, we offer cloud-native solutions to businesses for data protection and defense against threats in cloud applications, cloud infrastructure, and the web and provide context-aware governance of all cloud usage in the enterprise in real time, regardless of location. In addition, Netskope’s Security Cloud platform enables secure, fast access to applications and data to wherever the user is located.
We deliver our solutions using a software-as-a-service (SaaS) business model and sell subscriptions to customers to access our cloud platform, together with related support services. Our customer base includes financial services and insurance, government, healthcare, life sciences, high-technology, manufacturing, retail, and hospitality.  As of January 31, 2024, we have more than 2,965 employees worldwide.  
The Company has raised approximately $1.0 billion through the issuance of Series A, B, C, D, E, F, G, and H preferred shares. As of January 31, 2024, the company had a reported net book value of equity of $317 million and a current valuation of $7 billion in business enterprise value at the consolidated level. The Company also recently secured Convertible Senior Notes of $401M in December 2022 and $75M in September 2024. 
Our customer base continues to grow. As of January 31, 2024, we had about 4,500+ customers worldwide, up from about 3,300 as of January 31, 2023.
Netskope has been named a Leader in the 2024 Gartner Magic Quadrant for Security Service Edge (SSE).    
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Page 1

 
NETSKOPE UK LTD
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024


Netskope UK Overview and Plans
As noted above, Netskope UK operates as a cost-plus model with Netskope, Inc. Netskope Inc. will continue to fund all of Netskope UK’s operations. Netskope Inc. has sufficient cash and liquidity resources to support the growth of the UK entity. Netskope, Inc. will provide all operational funding, including loans and any financing arrangements, making Netskope UK a truly operating entity (cost-plus). 
Our sales activities in EMEA have sharply increased. Our sales in EMEA are growing at 30%+ YoY while maintaining our operating expenses and headcount hire. This strategy ensures that our revenue at 30%+ YoY outpaces the operating spend to be cash flow positive at the consolidated level.  
The most significant operating expenses for Netskope, UK, are employee salary and benefits. We will continue to monitor and tighten our hiring needs, mainly sales-related hires, which is further evidence that we continue to invest in our growth in the EMEA region.  Over the last three years, employee salary and benefits expenses have remained relatively flat at approximately $10M from FY22-YTD 24 annually. 
We do not anticipate liquidity and credit risks with our Netskope UK entity as described in the above reasons.
 
We currently do not anticipate any recording of customers' revenue in the UK entity, therefore reducing any customer’s credit risks. Netskope UK Overview and Plans.

Cybersecurity Industry Outlook
The global cloud security market is expected to grow from $40.8 billion in 2021 to $77.5 billion by 2026, at a compound annual growth rate (“CAGR”) of 13.7 percent from 2021 to 2026. 
According to Forbes, it is estimated that 83% of enterprise workload would be stored on by cloud by 2020. The demand for cloud-based services has soared due to the outbreak of COVID-19. In addition, the outbreak of COVID-19 forced enterprises to adopt cloud services due to remote working worldwide. The major factors fuelling the cloud security market include the growing number of cybercrimes, new generations, and sophisticated cyberattacks. 
According to a comprehensive research report by Market Research Future (“MRFR”), the global secure access services edge market is growing rapidly. Rising demand for secure access services edge (“SASE”) solutions to address growing data security needs and networking drives the market growth.
Future Developments  
We continue to experience significant growth amidst the outbreak of COVID-19. We continue to grow our ARR (Annual Recurring Revenue) by 35% YoY and revenue by 37%. In addition, our GRR (Gross Retention Rate) and Net Retention Rate (NRR) continue to grow by 90% and 115%, respectively, through continuously improving quality and up-selling expanded portfolio over the last eight quarters.  
 
We continue to invest in building platforms organically and inorganically aggressively. We have expanded our GTM (Go-to-Market) plans, including increasing our sales presence in EMEA, LTAM, and APAC. As a result, we continue to achieve all the Company’s key financial metrics.
As noted above, the Company has raised approximately $1.0 billion and has a solid financial cash and investments position to execute on the Company’s future growth.




 
Page 2

 
NETSKOPE UK LTD
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024


Financial Position 
Our financial position at year-end is solid. 
• Our cash position as of our recent fiscal year-end, January 31, 2024, was $163 million
• Revenue north of $407 Million for the fiscal year 2024
• Total consolidated assets of $773 million
• Our cash position is solid to sustain the operations in the next 24 months

Principal risks and uncertainties
 
The directors consider there are minimal risks and uncertainties with the Company's activities as they relate to services provided to the group.
Liquidity Risk
The Company monitors and retains sufficient cash levels to ensure it has funds available for its operations. All cash investments are reviewed to ensure liquidity is maintained.
Currency Risk
The Company has transaction currency exposures which arise from purchases in currencies other than its functional currency. Management monitors foreign currency balances and ensure the balances are cleared down regularly to minimise the risk over time.
Credit risk
Credit risk in respect of trade receivables is limited because a significant proportion of debt due to the Company relates to amounts owed by group undertakings.

Financial key performance indicators
 
The directors and officers of Netskope, Inc. oversee the operations of the group on a business sector basis. The directors of the Company do not believe the use of KPI’s are appropriate for assessing the performance or position of the Company.

Page 3

 
NETSKOPE UK LTD
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024

Directors' statement of compliance with duty to promote the success of the Company
 
The directors have acted in a way they considered, in good faith, to be the most likely to promote the success of the Company for the benefit of its stakeholders. Section 172 requires the directors to have regard amongst other matter to the:
a) Likely consequences of any decisions in the long-term
b) Interests of the Company's employees
c) Need to foster the Company's business relationships with suppliers, customers, and others
d) Impact of the Company's operations on the community and the environment
e) Desirability of the Company maintaining a reputation for high standards of business conduct, and
f) Need to act fairly as between members of the Company
Similar to many large organisations much of the group strategy is set at Corporate level. The Company delegates authority for day-to-day management to the Company executives. Management are responsible for overseeing the execution of the group strategy and adhering to policies set by the group.
Senior executives hold meetings with the regional management team regularly to ensure feedback from employees, customers and our suppliers base are heard and reported back in a timely manner.
Netskope’s commitment to ensuring the company's success is outlined in the Company's key policies: the Business Code of Conduct, Employee Handbook, Supplier Code of Conduct, and Labor Policy. 
Netskope requires every employee to adhere to these policies and are designed maintain the highest standards of ethical conduct. These policies apply to all directors, officers and employees (who, unless otherwise specified, will be referred to jointly as “employees”) of Netskope, Inc. (together with any subsidiaries, collectively the “Company”), as well as Company contractors, consultants and agents. This Code serves as a guide, and the Company expects employees to use good judgment and adhere to the high ethical standards to which the Company is committed. 


This report was approved by the board and signed on its behalf.



................................................
J Chin
Director

Date: 4 November 2024

Page 4

 
NETSKOPE UK LTD
 
 
 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 JANUARY 2024

The directors present their report and the financial statements for the year ended 31 January 2024.

Directors' responsibilities statement

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 judgments 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 2006They 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.

Results and dividends

The profit for the year, after taxation, amounted to £1,279,541 (2023 - £1,742,318).

No dividends have been paid in the current or prior year.

Directors

The directors who served during the year were:

J T Bushnell 
E Stuart-Cayot 
J Chin 


Matters covered in the Strategic Report

As permitted by Section 414c(11) of the Companies Act 2006, the directors have elected to disclose information required to be disclosed in the director's report by Schedule 7 of the 'Large and Medium sized Companies and Groups (Accounts and Reports) Regulations 2008', in the strategic report.

Page 5

 
NETSKOPE UK LTD
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024

Disclosure of information to auditor

Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company's auditor is unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

Post balance sheet events

There have been no significant events affecting the Company since the year end.

Auditor

The auditor, Nortons Assurance Limitedwill be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

This report was approved by the board and signed on its behalf.
 



................................................
J Chin
Director

Date: 4 November 2024

Page 6

 
NETSKOPE UK LTD
 
 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF NETSKOPE UK LTD
 

Opinion


We have audited the financial statements of Netskope UK Ltd (the 'Company') for the year ended 31 January 2024, which comprise the Profit and Loss Account, the Balance Sheet, the Statement of Cash Flows, the Statement of Changes in Equity and the related notes, including a summary of significant accounting policiesThe 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).


In our opinion the financial statements:


give a true and fair view of the state of the Company's affairs as at 31 January 2024 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


Basis for opinion


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.


Conclusions relating to going concern


In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.


Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.


Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.


Page 7

 
NETSKOPE UK LTD
 
 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF NETSKOPE UK LTD (CONTINUED)


Other information


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 ReportOur 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.


Opinion on other matters prescribed by the Companies Act 2006
 

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.


Matters on which we are required to report by exception
 

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.


Responsibilities of directors
 

As explained more fully in the Directors' Responsibilities Statement set out on page 5, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.


In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.


Page 8

 
NETSKOPE UK LTD
 
 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF NETSKOPE UK LTD (CONTINUED)


Auditor's responsibilities for the audit of the financial statements
 

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:

We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined that the most significant frameworks which are directly relevant to specific assertions in the financial statements are those that relate to the reporting framework including the Companies Act 2006 and the relevant tax compliance regulations in the UK.
We understood how the Company is complying with those frameworks by making enquiries of management and those responsible for legal and compliance procedures.
We evaluated the director's and management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to posting manual journal entries to manipulate financial performance, management bias through judgments and assumptions in significant accounting estimates and significant one-off or unusual transactions.
We considered the controls that the Company has established to address risks identified, or that otherwise prevent, deter and detect fraud; and how senior management monitors those programmes and controls. Where the risk was considered to be higher, we performed audit procedures to address each identified fraud risk. 
Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations identified in the paragraphs above. Our procedures involved journal entry testing, with a focus on journals indicating large or unusual transactions based on our understanding of the business, enquiries of Company management and focused testing. In addition, we completed procedures to conclude on the compliance of the disclosures in the Annual Report and Accounts with the requirements of the relevant accounting standards and UK legislation. 
There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.


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.


Page 9

 
NETSKOPE UK LTD
 
 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF NETSKOPE UK LTD (CONTINUED)


Use of our 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 2006Our 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.





Anthony Campbell (Senior Statutory Auditor)
  
for and on behalf of
Nortons Assurance Limited
 
Chartered Accountants and Statutory Auditor
  
Second Floor
NOW Building
Thames Valley Park
Reading
Berkshire
RG6 1RB

4 November 2024
Page 10

 
NETSKOPE UK LTD
 
 
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 JANUARY 2024

2024
2023
Note
£
£

  

Turnover
 4 
36,592,436
35,190,874

Cost of sales
  
(4,476,245)
(2,763,968)

Gross profit
  
32,116,191
32,426,906

Administrative expenses
  
(30,173,858)
(30,144,927)

Operating profit
 5 
1,942,333
2,281,979

Interest receivable and similar income
 8 
31,617
12,262

Interest payable and similar expenses
 9 
(680)
-

Profit before tax
  
1,973,270
2,294,241

Tax on profit
 10 
(693,729)
(551,923)

Profit for the financial year
  
1,279,541
1,742,318

There are no items of other comprehensive income for 2024 or 2023 other than the profit for the yearAs a result, no separate Statement of Comprehensive Income has been presented.

The notes on pages 16 to 31 form part of these financial statements.

Page 11

 
NETSKOPE UK LTD
REGISTERED NUMBER: 09010620

BALANCE SHEET
AS AT 31 JANUARY 2024

As restated
2024
2023
Note
£
£

Fixed assets
  

Tangible assets
 11 
4,478,190
6,859,916

Investments
 12 
196
196

  
4,478,386
6,860,112

Current assets
  

Debtors: amounts falling due after more than one year
 13 
-
102,559

Debtors: amounts falling due within one year
 13 
5,833,388
1,808,230

Cash at bank and in hand
 14 
498,515
267,840

  
6,331,903
2,178,629

Creditors: amounts falling due within one year
 15 
(3,848,332)
(3,050,716)

Net current assets/(liabilities)
  
 
 
2,483,571
 
 
(872,087)

Total assets less current liabilities
  
6,961,957
5,988,025

Creditors: amounts falling due after more than one year
 16 
-
(6,901)

Provisions for liabilities
  

Deferred tax
 17 
(151,903)
(450,611)

Net assets
  
6,810,054
5,530,513


Capital and reserves
  

Called up share capital 
 18 
1
1

Profit and loss account
 19 
6,810,053
5,530,512

  
6,810,054
5,530,513


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 


................................................
J Chin
Director

Date: 4 November 2024

The notes on pages 16 to 31 form part of these financial statements.

Page 12

 
NETSKOPE UK LTD
 

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JANUARY 2024


Called up share capital
Profit and loss account
Total equity

£
£
£


At 1 February 2022
1
3,788,194
3,788,195


Comprehensive income for the year

Profit for the year
-
1,742,318
1,742,318
Total comprehensive income for the year
-
1,742,318
1,742,318



At 1 February 2023
1
5,530,512
5,530,513


Comprehensive income for the year

Profit for the year
-
1,279,541
1,279,541
Total comprehensive income for the year
-
1,279,541
1,279,541


At 31 January 2024
1
6,810,053
6,810,054


The notes on pages 16 to 31 form part of these financial statements.

Page 13

 
NETSKOPE UK LTD
 

STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JANUARY 2024

As restated
2024
2023
£
£

Cash flows from operating activities

Profit for the financial year
1,279,541
1,742,318

Adjustments for:

Transfer of fixed assets
281,887
-

Depreciation of tangible assets
2,626,632
2,128,543

Interest paid
680
-

Interest received
(31,617)
(12,262)

Taxation charge
693,728
551,923

(Increase) in debtors
(267,706)
(18,240)

(Increase) in amounts owed by groups
(4,445,067)
(458,598)

Increase in creditors
127,363
624,021

Increase/(decrease)) in amounts owed to groups
-
(3,279,530)

Corporation tax received/(paid)
461,090
(78,000)

Net cash generated from operating activities

726,531
1,200,175


Cash flows from investing activities

Purchase of tangible fixed assets
(526,793)
(1,629,377)

Interest received
31,617
12,262

Net cash from investing activities
(495,176)
(1,617,115)

Interest paid
(680)
-

Net cash used in financing activities
(680)
-

Net increase/(decrease) in cash and cash equivalents
230,675
(416,940)

Cash and cash equivalents at beginning of year
267,840
684,780

Cash and cash equivalents at the end of year
498,515
267,840


Cash and cash equivalents at the end of year comprise:

Cash at bank and in hand
498,515
267,840


The notes on pages 16 to 31 form part of these financial statements.

Page 14

 
NETSKOPE UK LTD
 

ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 JANUARY 2024




At 1 February 2023
Cash flows
At 31 January 2024
£

£

£

Cash at bank and in hand

267,840

230,675

498,515


The notes on pages 16 to 31 form part of these financial statements.

Page 15

 
NETSKOPE UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

1.


General information

Netskope UK Limited (The Company) is incorporated in the United Kingdom under the Companies Act. 
The Company is a private company limited by shares and is registered in England and Wales. The address of the Company's registered office is Suite 4, 7th Floor, 50 Broadway, London, SW1H 0DB.
The principal activity of the Company in the period under review was that of providing sales, marketing and R&D services for its parent company. 

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).

The following principal accounting policies have been applied:

 
2.2

Going concern

The directors have received a guarantee of continued financial support from the Company's ultimate parent company, Netskope, Inc., thus the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future and continue to adopt the going concern basis of accounting in preparing the annual financial statements.

 
2.3

Foreign currency translation

Functional and presentation currency

The Company's functional and presentational currency is GBP rounded to the nearest whole £.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

 
2.4

Revenue

Revenue is derived via the sales,marketing and R&D services arrangement in place with the parent company Netskope, Inc., whereby applicable costs are recharged on a cost plus basis.

Page 16

 
NETSKOPE UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

2.Accounting policies (continued)

 
2.5

Operating leases: the Company as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

 
2.6

Interest income

Interest income is recognised in profit or loss using the effective interest method.

 
2.7

Finance costs

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

 
2.8

Pensions

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 Balance Sheet. The assets of the plan are held separately from the Company in independently administered funds.

 
2.9

Share-based payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Company keeping the scheme open or the employee maintaining any contributions required by the scheme).
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.
Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.

Page 17

 
NETSKOPE UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

2.Accounting policies (continued)

 
2.10

Current and deferred taxation

The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

 
2.11

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

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.

The estimated useful lives range as follows:

Computer equipment
-
3 - 5 years

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.

 
2.12

Valuation of investments

Investments in unlisted Company shares, whose market value can be reliably determined, are remeasured to market value at each balance sheet date. Gains and losses on remeasurement are recognised in the Profit and Loss Account for the period. Where market value cannot be reliably determined, such investments are stated at historic cost less impairment.

Page 18

 
NETSKOPE UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

2.Accounting policies (continued)

 
2.13

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

 
2.14

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

In the Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Company's cash management.

 
2.15

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

 
2.16

Provisions for liabilities

Provisions are recognised when an event has taken place that gives rise to a legal or constructive obligation, a transfer of economic benefits is probable and a reliable estimate can be made.
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
 
Increases in provisions are generally charged as an expense to profit or loss.

 
2.17

Financial instruments

The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the Company's Balance Sheet when the Company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.

Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash
Page 19

 
NETSKOPE UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

2.Accounting policies (continued)


2.17
Financial instruments (continued)

equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.

Other financial assets

Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.

Financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities.

Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.

Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.

Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.


3.


Judgments in applying accounting policies and key sources of estimation uncertainty

In the application of the Company's accounting policies the directors are required to make judgments, estimates and assumptions about the carrying value of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. 
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Management makes estimates in respect of share based payments. The expense relating to share based payments is estimated at the grant date based on the fair value of the equity and based on awards that are ultimately expected to vest. 

Page 20

 
NETSKOPE UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

4.


Turnover

The whole of the turnover is attributable to sales, marketing and R&D services for the parent company in the USA.


5.


Operating profit

The operating profit is stated after charging:

2024
2023
£
£

Exchange differences
166,491
(489,854)

Other operating lease rentals
556,499
512,914

Share-based payment
1,589,553
2,156,702


6.


Auditor's remuneration

2024
2023
£
£

Fees payable to the Company's auditor for the audit of the Company's financial statements
20,300
19,000

Page 21

 
NETSKOPE UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

7.


Employees

2024
2023
£
£

Wages and salaries
17,407,222
16,759,236

Social security costs
2,679,734
2,782,894

Cost of defined contribution scheme
578,804
370,519

20,665,760
19,912,649


The average monthly number of employees, including the directors, during the year was as follows:


        2024
        2023
            No.
            No.







Customer experience and support
25
19



General and administrative
12
9



Research and development
9
11



Sales and marketing
68
74

114
113

All directors' emoluments have been borne by the parent company, Netskope, Inc.. The directors' services to the Company do not occupy a significant amount of their time. As such these directors do not consider that they have received any remuneration for their incidental services to the Company for the year ended 31 January 2024 and the year ended 31 January 2023.


8.


Interest receivable

2024
2023
£
£


Other interest receivable
31,617
12,262


9.


Interest payable and similar expenses

2024
2023
£
£


Other interest payable
680
-

Page 22

 
NETSKOPE UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

10.


Taxation


2024
2023
£
£

Corporation tax


Current tax on profits for the year
983,352
-

Adjustments in respect of previous periods
9,085
(478)


Total current tax
992,437
(478)

Deferred tax


Origination and reversal of timing differences
(298,708)
552,401

Total deferred tax
(298,708)
552,401


Taxation on profit on ordinary activities
693,729
551,923

Factors affecting tax charge for the year

The tax assessed for the year is higher than (2023 - higher than) the standard rate of corporation tax in the UK of 24% (2023 - 19%). The differences are explained below:

2024
2023
£
£


Profit on ordinary activities before tax
1,973,270
2,294,241


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 24% (2023 - 19%)
473,693
435,906

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
237,761
35,069

Capital allowance adjustments
-
(92,874)

Utilisation of tax losses
(218,523)
-

Adjustments to tax charge in respect of prior periods
9,085
(478)

Effect of share based payments
194,920
41,725

Corporation Tax Rate change for Deferred Tax
(3,207)
132,575

Total tax charge for the year
693,729
551,923

Page 23

 
NETSKOPE UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
 
10.Taxation (continued)


Factors that may affect future tax charges

In the Spring budget 2021, the UK Government announced that from 1 April 2023 the corporation tax rate would increase to 25% from the 19% rate that was previously enacted. This new law was enacted on 24 May 2021. For the financial year neded 31 January 2024, the current weighted average tax rate was 24%.


11.


Tangible fixed assets





Computer equipment

£



Cost or valuation


At 1 February 2023
13,961,032


Additions
526,793


Transfers intra group
(569,793)



At 31 January 2024

13,918,032



Depreciation


At 1 February 2023
7,101,116


Charge for the year on owned assets
2,626,632


Transfers intra group
(287,906)



At 31 January 2024

9,439,842



Net book value



At 31 January 2024
4,478,190



At 31 January 2023
6,859,916

Page 24

 
NETSKOPE UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

12.


Fixed asset investments





Unlisted investments

£



Cost or valuation


At 1 February 2023
196



At 31 January 2024
196




Unlisted investments represent a 1% holding in Netskope Cloud Security Do Brasil LTDA which is measured at cost.


13.


Debtors

2024
2023
£
£

Due after more than one year

Other debtors
-
102,559


As restated
2024
2023
£
£

Due within one year

Amounts owed by group undertakings
4,903,665
458,598

Other debtors
323,898
957,597

Prepayments and accrued income
605,825
392,035

5,833,388
1,808,230



14.


Cash and cash equivalents

2024
2023
£
£

Cash at bank and in hand
498,515
267,840


Page 25

 
NETSKOPE UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

15.


Creditors: Amounts falling due within one year

As restated
2024
2023
£
£

Trade creditors
82,389
713,888

Corporation tax
663,352
-

Other taxation and social security
943,561
658,818

Other creditors
-
35,800

Accruals and deferred income
2,159,030
1,642,210

3,848,332
3,050,716



16.


Creditors: Amounts falling due after more than one year

2024
2023
£
£

Other creditors
-
6,901


Page 26

 
NETSKOPE UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

17.


Deferred taxation




2024
2023


£

£






At beginning of year
(450,611)
101,790


Charged to profit or loss
298,708
(552,401)



At end of year
(151,903)
(450,611)

The provision for deferred taxation is made up as follows:

2024
2023
£
£


Accelerated capital allowances
(321,586)
(671,384)

Share based payments
157,277
170,702

Losses carried forward
-
50,071

Other
12,406
-

(151,903)
(450,611)


Due to available losses the net deferred tax expected to reverse in the next 12 months is nil. 


18.


Share capital

2024
2023
£
£
Allotted, called up and fully paid



1 (2023 - 1) Ordinary share of £1.00
1
1

There is a single class of ordinary shares, without restrictions.



19.


Reserves

Profit and loss account

The profit and loss reserve represents cumulative profits or losses.

Page 27

 
NETSKOPE UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

20.


Share-based payments

In 2012, the Group headed by Netskope, Inc. adopted the 2012 Stock Incentive Plan (2012 Plan), under which officers, employees, and consultants may be granted awards of options (which may constitute incentive stock options or non-statutory stock options) and the award or sale of shares. The options generally vest over four years with 25% of the option shares vesting one year from the service begin date and then monthly over the following 36 months, and expire no more than ten years after the date of grant. Stock that is purchased prior to vesting is subject to our right of repurchase at any time following termination of the participant. Certain awards provide for accelerated vesting if there is a Change in Control (as defined in the 2012 Plan).
The Black-Scholes assumptions used to value the employee options at the grant dates are as follows: 
Fair Value of Common Stock As there is no public market for our common stock, the fair value was determined by the Board of Directors with the assistance of a third-party valuation specialist. The common stock fair value at the time of the grant of stock options is determined by considering a number of objective and subjective factors, including the value of recent rounds of financing, market conditions, and performance of comparable publicly traded companies, among other factors. The fair value of the underlying common stock will be determined by our Board of Directors until such time as our common stock commences trading on an established stock exchange or national market system. The fair value of our common stock has been determined in accordance with applicable elements of the practice aid issued by the American Institute of Certified Public Accountants, Valuation of Privately Held Company Equity Securities Issued as Compensation. 
Risk-Free Interest Rate The risk-free interest rate for the expected term of the options was based on the U.S. Treasury yield curve in effect at the time of the grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the option’s expected term. 
Expected Term The expected term of options represents the period that options are expected to be outstanding. Our historical stock option exercise experience does not provide a reasonable basis upon which to estimate an expected term due to a lack of sufficient data. For stock options granted to employees, we estimate the expected term by using the simplified method. The simplified method calculates the expected term as the average of the time-to-vesting and the contractual life of the options. For stock options granted to non-employees, the expected term equals the contractual term of the option. 
Expected Volatility As we do not have a trading history for our common stock, the expected volatility was estimated by taking the average historic price volatility for industry peers, consisting of several public companies in our industry that are either similar in size, stage of life cycle, or financial leverage, over a period equivalent to the expected term of the awards. 







 
Page 28

 
NETSKOPE UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

20.Share-based payments (continued)

Weighted average exercise 
price 
($)
2024
Number
2024
Weighted average exercise 
price
($)
2023
Number
2023

Outstanding at the beginning of the year

7.03

2,395,033

5.4
 
2,328,437
 
Granted during the year

10.43

414,500

12.18
 
598,697
 
Transfers

-

(626,974)

5.69
 
(183,821)
 
Forfeited during the year

8.94

(102,075)

7.56
 
(176,435)
 
Exercised during the year

4.69

(104,389)

1.42
 
(134,383)
 
Expired during the year

8.36

(32,981)

2.35
 
(37,462)
 
Outstanding at the end of the year
7.89

1,943,114

7.37
 
2,395,033
 

2024
2023

Weighted average share price ($)


7.89

7.37
 
Exercise price ($)


10.43

5.85 to 12.18
 
Weighted average contractual life (years)


5.8 to 6.4

5.95 to 6.05
 
Expected volatility (%)


47.87 to 48.14

49.52 to 49.55
 
Risk-free interest rate (%)


3.93 to 4.17

0.80 to 1.02
 



Share based payments
1,589,553
2,156,702

Page 29

 
NETSKOPE UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

.


Share based payments (Cont.)

In October 2022, the group headed by Netskope Inc, adopted the 2022 Stock incentive plan (2022 Plan), under which officers, employees and consultants may be granted options, restricted stock awards, stock appreciation rights, restricted stock units and other stock awards.  Restricted stock units are subject to service-based and performance-based vesting condtions.
In August 2023 and December 2023 certain employees of the Company were issued restricted stock units under the 2022 Plan.
Details of activity under the 2022 Plan are detailed below:

Weighted average price
Number
Weighted average price
Number
        $
      2024
        $
      2023
Issued during the year

10.81

190,545

-
 
-
 
Forfeited during the year

10.80

(5,500)

-
 
-
 
Outstanding at the end of the year

10.81

185,045

-
 
-
 


21.


Prior year adjustment

In the current year the directors have re-assessed the categorisation of amounts owed by group undertakings and have determined that these were misstated in the prior year financial statements. As a result of this re-assessment the prior year amounts owed by group undertakings have been re-stated and decreased by £1,868,921 and amounts owed to group undertakings have also been re-stated and decreased by £1,868,921. There is no impact on prior year retained earnings.


22.


Pension commitments

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 represents contributions payable by the Company  to the fund and amounted to £578,804 (2023 - £370,519). Contributions totalling £94,398 (2023 - £64,350) were payable to the fund at the balance sheet date and are included in creditors.

Page 30

 
NETSKOPE UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

23.


Commitments under operating leases

At 31 January 2024 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:

2024
2023
£
£


Not later than 1 year
201,620
590,485

Later than 1 year and not later than 5 years
225,113
84,170

426,733
674,655


24.


Controlling party

The Company is a wholly owned subsidiary of Netskope, Inc., a company incorporated in the United States of America. The group headed up by Netskope, Inc. is the smallest and largest group for which consolidated financial statements are drawn up, which include the Company. The registered address of the parent company is 2445 Augustine Drive, 3rd Floor, Santa Clara CA 95054, United States of America.

 
Page 31