Company registration number:
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COMPANY INFORMATION
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CONTENTS
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DIRECTORS' REPORT
FOR THE YEAR ENDED 1 MARCH 2024
The directors present their report and the financial statements for the year ended 1 March 2024.
The directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.
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 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 who served during the year were:
W R Kellegrew JR (resigned 17 March 2023)
W W Loh (resigned 17 March 2023) N L Olmstead was appointed as director post year end on 11 December 2024.
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 1 MARCH 2024
The auditor, Menzies LLP, were appointed on 18th April 2024. Under section 487(2) of the Companies Act 2006, Menzies LLP will be deemed to have been reappointed as auditors 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.
In preparing this report, the directors have taken advantage of the small companies exemptions provided by section 415A of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF STRATUS TECHNOLOGIES SYSTEMS LIMITED
We have audited the financial statements of Stratus Technologies Systems Limited for the period ended 1 March 2024, which comprise the Statement of Income and Retained Earnings, the Statement of Financial Position and notes to the financial statements, 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).
Stratus Technologies Systems Limited has not accounted for its operating leases in accordance with the requirements of FRS 102 Section 20, which states that operating lease payments should be recognised as an expense on a straight-line basis over the lease term. Instead, the company has capitalised its operating leases.
As a result, the company has incorrectly recognised the following:
∙Right-of-use assets amounting to £114,030.
∙Lease liabilities of £52,415 due within one year and £62,515 due after one year.
Depreciation on the right-of-use asset and an interest charge on the lease liability have been recognised and presented as a single lease expense within administrative expenses, amounting to £72,810. In line with the requirements of FRS 102, rental expenses of £72,810 should have been recognised within administrative expenses instead.
Furthermore, the company has not complied with the disclosure requirements of FRS 102 and the Companies Act 2006 in relation to leases. The required missing disclosures should be made which are the minimum operating lease payments. 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 Auditors' 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 qualified opinion.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF STRATUS TECHNOLOGIES SYSTEMS LIMITED (CONTINUED)
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.
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' 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 Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Directors' Report has been prepared in accordance with applicable legal requirements.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF STRATUS TECHNOLOGIES SYSTEMS LIMITED (CONTINUED)
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 Directors' Report.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF STRATUS TECHNOLOGIES SYSTEMS LIMITED (CONTINUED)
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 Auditors' 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. 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:
• The Company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation. We determined that the following laws and regulations were most significant including UK Companies Act, employment law and tax legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
• We understood how the Company is complying with those legal and regulatory frameworks by making inquiries to management and those responsible for legal and compliance procedures.
• The engagement partner assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations. The assessment did not identify any issues in this area.
• We assessed the susceptibility of the Company's financial statements to material misstatement, including how fraud might occur. Audit procedures performed by the engagement team included:
° Identifying and assessing the design effectiveness of controls management has in place to prevent and detect
fraud;
° Understanding how those charged with governance considered and addressed the potential for override of
controls or other inappropriate influence over the financial reporting process; and
° Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations.
• As a result of the above procedures, we considered the opportunities and incentives that may exist within the organisation
for fraud and identified the greatest potential for fraud in the following areas:
° Posting of unusual journals and complex transactions;
° Risk of fictitious employees; and
° Risk of fraud in revenue recognition through manipulation of journals.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
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 Auditors' Report.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF STRATUS TECHNOLOGIES SYSTEMS LIMITED (CONTINUED)
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 Auditors' 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
Chartered Accountants
Statutory Auditor
Magna House
18-32 London Road
TW18 4BP
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STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 1 MARCH 2024
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STATEMENT OF FINANCIAL POSITION
AS AT 1 MARCH 2024
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 10 to 19 form part of these financial statements.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 1 MARCH 2024
Stratus Technologies Systems Limited is a private company, limited by shares, registered in England and
Wales. The company's registered number, registered office address and principle place of business can be found on the Company Information page.
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 FRS 102 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland' and the requirements of the Companies Act 2006. The disclosure requirements of Section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.
The company operates on a 51 to 53 week fiscal year that ends on the Sunday closest to the last day of February. The financial statements herein are for the year ended 1 March 2024.
The following principal accounting policies have been applied:
The directors have assessed the financial performance of the Company at the date when the financial statements were authorised for issue.
The Company has obtained the financial support letter from Penguin Solutions Inc (formerly SMART Global Holdings Inc. ("SGH")) the ultimate parent company and a listed company on NASDAQ, for 12 months from the date of the financial statements approval as forecasts are not prepared at Stratus Technologies Systems Limited level. Forecasts are prepared on a segmental basis with EMEA forecasts where Stratus Technology Systems Limited is included, demonstrating sufficient profit to support Stratus Technologies Systems Limited. The letter confirms that the ultimate parent company will provide where needed the necessary financial support so that the Company can meet its commitments and continue its business under normal conditions. The directors have satisfied themselves that the parent company is able to provide the financial support needed for the 12 months from when the financial statements were authorised for issue to enable it to continue to trade. As a result, the directors believe the company has adequate resources to enable it to continue as a going concern. The financial statements have been prepared on a going concern basis which the directors consider to be appropriate for the reason that the Company has support from its ultimate parent company Penguin Solutions Inc (formerly SMART Global Holdings Inc. ("SGH")) so that the Company can meet its commitments and continue its business under normal conditions. Based on the above information, the directors do not consider there to be any material uncertainty relating to the Company’s ability to continue as a going concern and have prepared the financial statements on a going concern basis.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 1 MARCH 2024
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
Revenue from the sale of goods is recognised when all of the following conditions are satisfied: - the company has transferred the significant risks and rewards of ownership to the buyer; - the company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; - the amount of revenue can be measured reliably; - it is probable that the company will receive the consideration due under the transaction; and - the costs incurred or to be incurred in respect of the transaction can be measured reliably. Revenue from a contract to provide services is recognised in the period in which the services are provided when all of the following conditions are satisfied: - the amount of revenue can be measured reliably; - it is probable that the company will receive the consideration due under the contract; - the stage of completion of the contract at the end of the reporting period can be measured reliably; and - the costs incurred and the costs to complete the contract can be measured reliably. Revenue attributable to transfer pricing is accounted for at arms length in line with the transfer pricing agreement.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 1 MARCH 2024
2.Accounting policies (continued)
The Company has adopted section ASC 842 of US GAAP in relation to the accounting treatment of operating leases. The financial impact of adopting section ASC 842 of USA GAAP has been disclosed in the notes to the financial statements.
In determining the lease term, the Company assesses whether it is reasonably certain that the Company will exercise options to renew or terminate a lease and when or whether the Company would exercise an option to purchase the right-of-use asset. Measuring the present value of the initial lease liability requires exercising judgment to determine the discount rate, which was based on interest rates for similar borrowings issued by entities with credit ratings similar to ours. The Company recognizes right-of use assets and corresponding lease liabilities for leases with an initial term of more than 12 months and do not separate lease and non-lease components. Recognized leases are included in operating lease right-of-use assets and corresponding lease liabilities are included in other current liabilities or non current operating lease liabilities. For operating leases of buildings, the Company accounts for non-lease components, such as common area maintenance, as a component of the lease and include the components in the initial measurement of our right-of-use assets and corresponding liabilities. Operating lease assets are amortised on a straight-line basis over the lease term.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 1 MARCH 2024
2.Accounting policies (continued)
Penguin Solutions Inc (formerly SMART Global Holdings, Inc. ("SGH")) a listed parent undertaking offers an Employee Share Purchase Plan (ESPP) to substantially all group employees, which permits eligible employees to purchase ordinary shares through payroll deductions of up to 15% of their eligible remuneration, subject to certain limitations. The purchase price of shares under the ESPP equals 85% of the lower of the fair market value of the parent company ordinary shares on either the first or last day of each offering period, which is generally six months. The share based payment expense is calculated as the fair value of the employees' purchase rights using the Black-scholes option valuation model and is recognised over the offering period. The parent undertaking recharges the expense to the company. Share Inducement Plan (Restricted Security Units) Penguin Solutions Inc (formerly SMART Global Holdings, Inc. ("SGH")) a listed parent undertaking offers Restricted Security Units to certain group employees to motivate them to contribute to, and enable them to share in any long-term growth and financial success of the group. They are granted with service conditions with restrictions that generally lapse after a three to four year service period. The expense is based on the share price at the date of grant. The parent undertaking recharges the expense to the company.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 1 MARCH 2024
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.
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
The company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 1 MARCH 2024
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 1 MARCH 2024
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 1 MARCH 2024
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 1 MARCH 2024
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 1 MARCH 2024
The immediate parent undertaking is
The Company's ultimate controlling party is Penguin Solutions Inc (formerly SMART Global Holdings, Inc. ("SGH")), a company incorporated in the Cayman Islands. The results of the company are consolidated into the results of Penguin Solutions Inc (formerly SMART Global Holdings, Inc. ("SGH")). The consolidated financial statements of Penguin Solutions Inc (formerly SMART Global Holdings, Inc. ("SGH")) are publicly available.
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