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Registered number: 13838629 (England and Wales) SMARSH UK HOLDCO LIMITED ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
SMARSH UK HOLDCO LIMITED
COMPANY INFORMATION
Director | K Goodman
Registered number | 13838629
Registered office | Birchin Court
| 5th Floor
| 19-25 Birchin Lane
| London
| United Kingdom
| EC3V 9DU
Independent auditors | ZEDRA Corporate Reporting Services (UK) Limited
SMARSH UK HOLDCO LIMITED
CONTENTS
| Page
Group Strategic Report | 1 - 2
Director's Report | 3 - 4
Independent Auditors' Report | 5 - 8
Consolidated Statement of Comprehensive Income | 9
Consolidated Balance Sheet | 10 - 11
Company Balance Sheet | 12
Consolidated Statement of Changes in Equity | 13
Company Statement of Changes in Equity | 14
Consolidated Statement of Cash Flows | 15
Notes to the Financial Statements | 16 - 35
SMARSH UK HOLDCO LIMITED
GROUP STRATEGIC REPORT FOR THE YEAR ENDED 31 DECEMBER 2024
Introduction
The director presents the Strategic Report and audited consolidated financial statements of Smarsh UK Holdco Limited ("the Company") and its subsidiary (the "Group") for the year ended 31 December 2024.
Business review
The Company is a member of a group of companies headed by Skywalker Intermediate Holdings, Inc., trading under the name "Smarsh". The Smarsh group through its global subsidiaries, including the Company and its subsidiary (Smarsh Software UK Limited), provides data capture, archiving and supervision solutions for enterprise customers. These solutions work across the entire range of digital communications including email, social media, websites, instant messaging, mobile messaging and telecommunications. The Company holds 100% of the shares in Smarsh Software UK Limited, which forms the Group. Future developments No significant change is expected in the Group’s activities in the next 12 months from the date of signing of this report. Section 172 statement The director of the Group has had regard to the matters set out in section 172(1) of the Companies Act 2006 when performing her duty to promote the success of the Group. In particular, she has considered the long-term consequences of decisions, engaged with employees and customers, and maintained ethical standards. The Board considered these matters regularly in its decision-making and continues to monitor stakeholder feedback as part of its governance process. Examples of stakeholder initiatives include: regular employee town halls, an annual employee engagement survey and development of employee training programmes; engagement with customers on strategic direction; and senior management participation in industry diversity events.
Principal risks and uncertainties
The principal risks facing the Company and the Group are broadly categorized as competition, financial, economic and cybersecurity risks. Competition The communications capture, archiving and supervision industry in which the Group and Smarsh operate is highly competitive with new competitors and technologies coming to market regularly. The ability of the Group to acquire new business and retain existing customers will depend on continued investment in R&D to develop value add products and solutions at competitive market pricing. Smarsh’s reputation, market leading position and the resources which it is investing in new technologies means it is well placed to meet future competitive challenges. Financial The Group is exposed to price risk as a result of the activities of competitors, and the impact of foreign exchange rate fluctuations which can reduce profit margins. Neither the Company or Group uses derivative contracts. Credit risk is a risk that the Group will not be able to collect monies owed by customers. Smarsh has implemented policies that require credit checks on potential customers before sales are made. Customer collections are continually reviewed and any change in payment behaviour would result in actions being taken to mitigate the credit risk. Page 1
SMARSH UK HOLDCO LIMITED
GROUP STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2024 Liquidity risk is the risk that the Company and the Group would not be able to meet obligations associated with financial liabilities. Management review the Group obligations regularly, and liaise with the parent company to ensure the settlement of intercompany balances as necessary to meet these obligations. Smarsh, through its term loans, available credit facilities and support from investors, is sufficiently capitalized to settle debts owed to the Group for the next 12 months. Economic Economic risks arise from changes in the economic environment such as recession, increased interest rates, inflation and supply chain disruption. Management believe that the Group and Smarsh with its market leader position, broad customer base, robust operational plans and long-term financing arrangements, are well positioned such that these factors are not expected to have a significant impact on the future activities of the Group. Cybersecurity The risk of a data breach that results in a loss of Company and/or Customer data leading to operational difficulties and long term reputational damage. This is a key priority for the Smarsh group, and our security team leverage industry leading certification, technical and organizational controls, monitoring and testing to protect our data and communications. Non-financial key performance indicators Employee turnover was 8% with a reduction in the workforce in 2024 from 50 to 46.
Financial key performance indicators
The key performance indicators for the Group are revenue, operating profit (loss) and net profit (loss). Revenue for the Group for the year to 31 December 2024 was £45,105,755 (2023: £44,864,439) including revenue earned from other group companies for the licencing of intellectual property. Operating profit for the period was £11,611,059 (2023: £8,189,303). Net profit for the Group after interest and other finance charges, for the period was £1,946,153 (2023: £249,619). The Group has performed in line with expectations, with no significant developments in the year. Net assets of the Group have increased to £1,064,521 at 31 December 2024 versus net liabilities of £881,632 at 31 December 2023. This report was approved by the board and signed on its behalf.
K Goodman Director
Date: 30 September 2025
Page 2
SMARSH UK HOLDCO LIMITED
DIRECTOR'S REPORT FOR THE YEAR ENDED 31 DECEMBER 2024 The director presents her report and the financial statements for the year ended 31 December 2024. In accordance with s414c(11) of the Companies Act 2006, certain information that is required to be included in the Directors' Report has been otherwise included in the Strategic Report.
Principal activity
The Company's principal activity was that of holding an investment in Smarsh Software UK Limited. The Group's principal activities are providing cloud-based archiving and compliance solutions for companies in regulated and litigious industries.
Director
The directors who served during the year were:
K Goodman
M D Cagle (resigned 23 January 2025)
The following changes in directorship took place after the year end but before the approval of these financial statements: D P Brolsma (appointed 23 January 2025, resigned 12 September 2025)
Results and dividends
The profit for the year, after taxation, amounted to £1,946,153 (2023 - £249,619). An ordinary dividend amounting to £13,623,222 (2023: £12,263,312) was paid during the year, from Smarsh Software UK Limited to Smarsh UK Holdco Limited. Streamlined energy and carbon reporting As the Company has not consumed more than 40,000 kWh of energy in this reporting period. It qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
Future developments and going concern
The Company is in a net asset position of £12,633,772 at the year end, which includes an intercompany balance due to the parent company, Smarsh Inc., of £36,384,501. This amount which is due to Smarsh Inc. relates to an interest bearing loan with the principal repayable in 6 equal annual instalments commencing in 2023 and ending in 2028. The Group is in a net asset position of £1,064,521 at the year end, which includes an intercompany balance due to the parent company, Smarsh Inc., of £24,236,647. Smarsh Inc. has indicated its willingness to continue to provide financial support, as necessary, for a period of at least 12 months from the date of signing these financial statements. The business activities of the Company are not expected to change significantly over the next 12 months. The Company does expect revenue, in the form of licence fees relating to the Company’s Digital Safe intellectual property earned from other group companies, to reduce over time as customers transition to other Smarsh technologies. This decrease is expected to be gradual over the next several years. The Company expects to generate a similar level of operating profit over the next 12 months. Page 3
SMARSH UK HOLDCO LIMITED DIRECTOR'S REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2024 For the reasons stated above, the director continues to adopt the going concern basis in preparing the financial statements.
Director's responsibilities statement
The director is responsible for preparing the Group Strategic Report, the Director's Report and the consolidated financial statements in accordance with applicable law and regulations. Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless she is satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period. In preparing these financial statements, the director is required to: ∙select suitable accounting policies for the Group's financial statements and then apply them consistently; ∙make judgements and accounting estimates that are reasonable and prudent; and ∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business. The director is 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 the Group and to enable her to ensure that the financial statements comply with the Companies Act 2006. She is also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Disclosure of information to auditors
The director at the time when this Director's Report is approved has confirmed that: ∙so far as the director is aware, there is no relevant audit information of which the Company and the Group's auditors are 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 and the Group's auditors are aware of that information.
Post balance sheet events
There have been no significant events other than those noted in note 25 affecting the Company since the year end. This report was approved by the board and signed on its behalf.
K Goodman Director
Date: 30 September 2025
Page 4
SMARSH UK HOLDCO LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SMARSH UK HOLDCO LIMITED
Opinion
We have audited the financial statements of Smarsh UK HoldCo Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2024, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Company Balance Sheet, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity 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). In our opinion the financial statements: ∙give a true and fair view of the state of the Group's and of the parent Company's affairs as at 31 December 2024 and of the Group's 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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group 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 director's 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 Group's or the parent 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 director with respect to going concern are described in the relevant sections of this report. Page 5
SMARSH UK HOLDCO LIMITED INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SMARSH UK HOLDCO LIMITED (CONTINUED)
Other information
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The director is 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.
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 Group Strategic Report and the Director's Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and ∙the Group Strategic Report and the Director's 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 Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Director's 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 by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or ∙the parent Company financial statements are not in agreement with the accounting records and returns; or ∙certain disclosures of director's remuneration specified by law are not made; or ∙we have not received all the information and explanations we require for our audit. Page 6
SMARSH UK HOLDCO LIMITED INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SMARSH UK HOLDCO LIMITED (CONTINUED)
Responsibilities of directors
As explained more fully in the Director's Responsibilities Statement set out on page 4, the director is 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 director determines 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 director is responsible for assessing the Group's and the parent 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 director either intends to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
Auditors' 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 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 Group 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. 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 responsible individual 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 management, and from our commercial knowledge and experience; ∙we focused 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 and taxation legislation; ∙we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and ∙identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit. We assessed the susceptibility of the Company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by: ∙making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and ∙considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations. We identified that fraud risk in relation to revenue recognition is a significant risk in line with ISA 240 and designed and implemented appropriate audit procedures in this area. Audit procedures included but were not limited to obtaining confirmations directly from customers and performing appropriate year end cut off testing. Page 7
SMARSH UK HOLDCO LIMITED INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SMARSH UK HOLDCO LIMITED (CONTINUED) To address the risk of fraud through management bias and override of controls, we: ∙performed analytical procedures to identify any unusual or unexpected relationships; ∙tested journal entries to identify unusual transactions; ∙assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and ∙investigated the rationale behind significant or unusual transactions. 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; ∙enquiring of management as to actual and potential litigation and claims; and ∙reviewing correspondence with HMRC. 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 director and other management and the inspection of regulatory and legal correspondence, if any. Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion. 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.
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 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. Edward Wallis ACA (Senior Statutory Auditor) for and on behalf of ZEDRA Corporate Reporting Services (UK) Limited Chartered Accountants and Statutory Auditors Birchin Court 5th Floor 19-25 Birchin Lane London United Kingdom EC3V 9DU 30 September 2025 Page 8
SMARSH UK HOLDCO LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2024
| 2024 | 2023
Note | £ | £
Turnover | 4 | 45,105,755 | 44,864,439
Cost of sales |  | (11,286,945) | (14,051,185)
Gross profit |  | 33,818,810 | 30,813,254
Administrative expenses |  | (22,207,751) | (22,623,951)
Operating profit | 5 | 11,611,059 | 8,189,303
Interest receivable and similar income |  | 2,118 | -
Interest payable and similar expenses | 8 | (4,944,164) | (5,902,574)
Profit before taxation |  | 6,669,013 | 2,286,729
Tax on profit | 9 | (4,722,860) | (2,037,110)
Profit for the financial year |  | 1,946,153 | 249,619
Profit for the year attributable to: |  |  |
Owners of the parent Company |  | 1,946,153 | 249,619
|  | 1,946,153 | 249,619
There was no other comprehensive income for 2024 (2023: £NIL).
The notes on pages 16 to 35 form part of these financial statements.
Page 9
SMARSH UK HOLDCO LIMITED REGISTERED NUMBER:13838629
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2024
|  |  |  | As restated
|  | 2024 |  | 2023
Note |  | £ |  | £
Fixed assets |  |  |  |  |
Intangible fixed assets | 10 |  | 20,271,898 |  | 35,275,706
Tangible fixed assets | 11 |  | 129,618 |  | 194,072
|  |  | 20,401,516 |  | 35,469,778
Current assets |  |  |  |  |
Debtors: amounts falling due within one year | 13 | 31,607,435 |  | 22,765,629 |
Bank and cash balances |  | 83,357 |  | 123,038 |
|  | 31,690,792 |  | 22,888,667 |
Creditors: amounts falling due within one year | 14 | (20,935,286) |  | (19,948,528) |
Net current assets |  |  | 10,755,506 |  | 2,940,139
Total assets less current liabilities |  |  | 31,157,022 |  | 38,409,917
Creditors: amounts falling due after more than one year | 15 |  | (23,918,486) |  | (31,397,160)
Provisions for liabilities |  |  |  |  |
Deferred tax | 17 | (2,712,765) |  | (3,882,581) |
Provisions | 18 | (3,461,250) |  | (4,011,808) |
|  |  | (6,174,015) |  | (7,894,389)
Net assets/(liabilities) |  |  | 1,064,521 |  | (881,632)
Page 10
SMARSH UK HOLDCO LIMITED REGISTERED NUMBER:13838629
CONSOLIDATED BALANCE SHEET (CONTINUED) AS AT 31 DECEMBER 2024
|  | 2024 |  | 2023
Note |  | £ |  | £
Capital and reserves |  |  |  |  |
Called up share capital | 19 |  | 24,714,244 |  | 24,714,244
Capital contribution reserve | 21 |  | 283,936 |  | 283,936
Profit and loss account | 20 |  | (23,933,659) |  | (25,879,812)
Equity attributable to owners of the parent Company |  |  | 1,064,521 |  | (881,632)
|  |  | 1,064,521 |  | (881,632)
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
K Goodman
Director
Date: 30 September 2025
The notes on pages 16 to 35 form part of these financial statements. Page 11
SMARSH UK HOLDCO LIMITED REGISTERED NUMBER:13838629
COMPANY BALANCE SHEET AS AT 31 DECEMBER 2024
|  | 2024 |  | 2023
Note |  | £ |  | £
Fixed assets |  |  |  |  |
Investments | 12 |  | 49,099,088 |  | 49,099,088
|  |  | 49,099,088 |  | 49,099,088
Creditors: amounts falling due within one year | 14 | (12,546,830) |  | (13,343,415) |
Net current liabilities |  |  | (12,546,830) |  | (13,343,415)
Total assets less current liabilities |  |  | 36,552,258 |  | 35,755,673
Creditors: amounts falling due after more than one year | 15 |  | (23,918,486) |  | (31,397,160)
Net assets |  |  | 12,633,772 |  | 4,358,513
Capital and reserves |  |  |  |  |
Called up share capital | 19 |  | 24,714,244 |  | 24,714,244
Profit and loss account | 20 |  | (12,080,472) |  | (20,355,731)
|  |  | 12,633,772 |  | 4,358,513
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
K Goodman
Director
Date: 30 September 2025
The notes on pages 16 to 35 form part of these financial statements. Page 12
SMARSH UK HOLDCO LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2024
| Called up share capital | Capital contribution reserve | Profit and loss account | Total equity
| £ | £ | £ | £
At 1 January 2023 (as previously stated) | 1 | - | (22,163,181) | (22,163,180)
Prior year adjustment | - | - | (3,966,250) | (3,966,250)
At 1 January 2023 (as restated) | 1 | - | (26,129,431) | (26,129,430)
Profit for the year | - | - | 249,619 | 249,619
Shares issued during the year | 24,714,243 | - | - | 24,714,243
Share based payment expense | - | 283,936 | - | 283,936
At 1 January 2024 | 24,714,244 | 283,936 | (25,879,812) | (881,632)
Profit for the year | - | - | 1,946,153 | 1,946,153
At 31 December 2024 | 24,714,244 | 283,936 | (23,933,659) | 1,064,521
Page 13
SMARSH UK HOLDCO LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2024
| Called up share capital | Profit and loss account | Total equity
| £ | £ | £
At 1 January 2023 | 1 | (17,886,423) | (17,886,422)
Loss for the year (as restated) | - | (2,469,308) | (2,469,308)
Shares issued during the year | 24,714,243 | - | 24,714,243
At 1 January 2024 | 24,714,244 | (20,355,731) | 4,358,513
Profit for the year | - | 8,275,259 | 8,275,259
At 31 December 2024 | 24,714,244 | (12,080,472) | 12,633,772
| An ordinary dividend amounting to £13,623,222 (2023: £12,263,312) was paid during the year, from Smarsh Software UK Limited to Smarsh UK Holdco Limited.
Page 14
SMARSH UK HOLDCO LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2024
|  |  |  | 2024 | 2023
|  |  | Note | £ | £
Cash flows from operating activities |  |  |
Profit for the financial year |  | 1,946,153 | 249,619
Adjustments for: |  |  |
Amortisation of intangible assets | 10 | 15,003,808 | 15,003,807
Depreciation of tangible assets | 11 | 64,454 | 42,018
Impairment of goodwill | 10 | - | 3,292,032
Interest paid | 8 | 4,944,164 | 5,902,574
Interest received |  | (2,118) | -
Taxation charge | 9 | 4,722,860 | 2,033,197
Decrease/(increase) in debtors | 13 | 14,622 | (4,824,645)
(Increase)/decrease in amounts owed by groups |  | (8,372,323) | -
Increase/(decrease) in creditors | 14,15 | 183,860 | (3,582,093)
(Decrease) in provisions | 18 | (550,558) | (1,252,500)
Corporation tax paid | 9 | (5,573,883) | (3,328,000)
Share based payments | 21 | - | 283,936
Net cash generated from operating activities |  | 12,381,039 | 13,819,945
Cash flows from investing activities |  |  |
Interest received |  | 2,118 | -
Net cash from investing activities |  | 2,118 | -
Cash flows from financing activities |  |  |
Issue of ordinary shares | 19 | - | 24,714,243
Repayment of other loans | 16 | (7,478,674) | (33,545,656)
Interest paid | 8 | (4,944,164) | (5,902,574)
Net cash used in financing activities |  | (12,422,838) | (14,733,987)
Net (decrease) in cash and cash equivalents |  | (39,681) | (914,042)
Cash and cash equivalents at beginning of year |  | 123,038 | 1,037,080
Cash at bank and in hand |  | 83,357 | 123,038
The notes on pages 16 to 35 form part of these financial statements.
Page 15
SMARSH UK HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
1. | General information
Smarsh UK Holdco Limited is a private company limited by shares incorporated in the United Kingdom and registered in England and Wales. The registered office is Birchin Court 5th Floor, 19-25 Birchin Lane, London, United Kingdom, EC3V 9DU. The principal activity of the Company is that of a holding 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 Group management to exercise judgement in applying the Group's accounting policies (see note 3). The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The following principal accounting policies have been applied:
| 2.2 | Basis of consolidation
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full. The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance Sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases. Page 16
SMARSH UK HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 2.Accounting policies (continued)
| 2.3 | Going concern
The Company is in a net asset position of £12,633,772 at the year end, which includes an intercompany balance due to the parent company, Smarsh Inc., of £36,384,501. This amount which is due to Smarsh Inc. relates to an interest bearing loan with the principal repayable in 6 equal annual instalments commencing in 2023 and ending in 2028. The Group is in a net asset position of £1,064,521 at the year end, which include an intercompany balance due to the parent company, Smarsh Inc., of £24,236,647. Smarsh Inc. has indicated its willingness to continue to provide financial support, as necessary, for a period of at least 12 months from the date of signing these financial statements. The business activities of the Company are not expected to change significantly over the next 12 months. The Company does expect revenue, in the form of licence fees relating to the Company’s Digital Safe intellectual property earned from other group companies, to reduce over time as customers transition to other Smarsh technologies. This decrease is expected to be gradual over the next several years. The Company expects to generate a similar level of operating profit over the next 12 months. For the reasons stated above, the director continues to adopt the going concern basis in preparing the financial statements.
| 2.4 | Foreign currency translation
Functional and presentation currency The Company's functional and presentational currency is GBP. 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. Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Page 17
SMARSH UK HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 2.Accounting policies (continued)
| 2.5 | Turnover
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised: Rendering of services Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied: ∙the amount of revenue can be measured reliably; ∙it is probable that the Group 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 is also generated through intercompany recharges from group companies utilising the Digital Safe developed technology that is owned by Smarsh Software UK Limited.
| 2.6 | Operating leases: the Group as lessee
Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
| 2.7 | Interest income
Interest income is recognised in profit or loss using the effective interest method.
| 2.8 | 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.
| 2.9 | Pensions
Defined contribution pension plan The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group 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 Group in independently administered funds. Page 18
SMARSH UK HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 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 and the Group operate and generate 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; ∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and ∙Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future. 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. Page 19
SMARSH UK HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 2.Accounting policies (continued)
| 2.11 | Intangible assets
Goodwill Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of the Group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight-line basis to the Consolidated Statement of Comprehensive Income over its useful economic life. Other intangible assets Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses. All intangible assets are considered to have a finite useful life (3 - 5 years). Amortisation 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:
|  |  |  | Trade name | - | 3 | years
|  |  |  | Developed technology | - | 5 | years
|  |  |  | Goodwill | - | 5 | years
| 2.12 | 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. Depreciation is provided on the following basis:
|  |  |  | Computer equipment | - | 3 years
|  |  |  | Data centre equipment | - | 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. Page 20
SMARSH UK HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 2.Accounting policies (continued)
| 2.13 | Impairment
Assets that are subject to depreciation or amortisation are assessed at each balance sheet date to determine whether there is any indication that the assets are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. Non-financial assets that have been previously impaired are reviewed at each balance sheet date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased.
| 2.14 | Valuation of investments
Investments in subsidiaries are measured at cost less accumulated impairment.
| 2.15 | Debtors
Short-term debtors are measured at transaction price, less any impairment. Amounts owed by group undertakings are intercompany loans measured at cost. These loans are unsecured, interest free and repayable on demand.
| 2.16 | Cash and cash equivalents
Cash is represented by cash in hand and deposits with financial institutions.
| 2.17 | Creditors
Short-term creditors are measured at the transaction price. Amounts owed to group undertakings are intercompany loans measured at cost. Other than mentioned below, these loans are unsecured, interest free and repayable on demand. Certain amounts owed to group undertakings are measured initially at transaction price and subsequently at amortised cost. These are unsecured and repayable in six equal annual instalments commencing in 2023 and ending in 2028. Interest is being charged at an annual interest rate of 6.6% plus the Secured Overnight Financing Rate (note 16).
| 2.18 | 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.
| 2.19 | Dividends
Dividend distribution to the Company's shareholders is recognised as a liability in the financial statements in the reporting period in which the dividends are declared. Page 21
SMARSH UK HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 2.Accounting policies (continued)
| 2.20 | Financial instruments
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments. 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 debtors, cash and bank balances, are initially measured at their transaction price (adjusted for transaction costs except in the initial measurement of financial assets that are subsequently measured at fair value through profit and loss) 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 Group's cash and cash equivalents, trade and most other debtors due with the operating cycle fall into this category of financial instruments. Impairment of financial assets Financial assets are assessed for indicators of impairment at each reporting date. Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate. If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss. Financial liabilities Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities. Basic financial liabilities, which include trade and other creditors, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price (adjusting for transaction costs except in the initial measurement of financial liabilities that are subsequently measured at fair value through profit and loss). 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. Page 22
SMARSH UK HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 2.Accounting policies (continued)
| 2.20 | Financial instruments (continued)
Trade creditors are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade creditors 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. | Judgements in applying accounting policies and key sources of estimation uncertainty
The preparation of financial statements in conformity with FRS 102 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities are addressed below. Amortisation and impairment of goodwill and intangible assets Included within these financial statements is Goodwill and other intangible assets arising on the acquisition of Smarsh Software UK Limited. In accordance with FRS 102, the director is required to make an assessment of the useful economic life of intangible assets, together with an annual review for impairment. The director has deemed the useful life of goodwill and developed technology to be 5 years, in line with the expected discounted cash flows, using a discount rate of 11.1% based on the weighted average cost of capital ("WACC") of the group as a whole. The discounted cash flows anticipate that revenue will fall away after five years as customers are migrated onto the existing Smarsh platform. Impairment of investments The director reviews fixed asset investments annually for any indication of impairment based on available financial and performance information in relation to the unlisted investments. The assessment has used the same information as the review of intangible assets and as a result, the assumptions are the same as stated above. Dilapidation provision Management have provided for dilapidation repairs to the rented property based on a report prepared by an expert which estimates the cost to restore the premises in accordance with their lease. The application of this judgement may have a material impact on these financial statements. Onerous lease Management have recognised an onerous lease provision in relation their rental premises that ceased to be used in October 2022. The provision represents the present obligation under the lease contract, valued by an expert initially at £3,966,250. During the year, £1,252,500 of this was released. Page 23
SMARSH UK HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 3.Judgements in applying accounting policies (continued) Share based payments Management have elected to not recognise any expense in relation to the performance, non-market, and quantitative conditions which are issued to employees as an incentive based unit. Management have stated that performance, non-market, and quantitative conditions are only recognised when there is reasonable expectation of vesting based on the requirement for a liquidity event. The application of this judgement may have a material impact on these financial statements.
4. | Turnover
| An analysis of turnover by class of business is as follows:
|  |  |  |  | 2024 | 2023
|  |  |  |  | £ | £
| Software subscription fees | 18,151,943 | 16,724,410
| Intercompany recharges | 26,953,812 | 28,140,029
|  | 45,105,755 | 44,864,439
|  |  |  |  | 2024 | 2023
|  |  |  |  | £ | £
| United Kingdom | 18,151,943 | 16,724,410
| Rest of the world | 26,953,812 | 28,140,029
|  | 45,105,755 | 44,864,439
5. | Operating profit
| The operating profit is stated after charging/(crediting):
|  |  |  |  | 2024 | 2023
|  |  |  |  | £ | £
| Depreciation of tangible fixed assets | 64,455 | 42,018
| Amortisation of intangible fixed assets | 15,003,808 | 15,003,807
| Exchange differences | 259,933 | (2,121,784)
| Operating lease rentals | - | 228,673
| Intercompany recharges | 9,654,011 | 12,478,814
| Auditors' remuneration for the audit of the group financial statements | 27,800 | 26,750
| Onerous lease credit | (1,252,500) | (1,252,500)
| Impairment of goodwill | - | 3,292,032
| Share-based payment | - | 283,936
Page 24
SMARSH UK HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
6. | Employees
| Staff costs were as follows:
|  | Group 2024 | Group 2023
|  | £ | £
| Wages and salaries | 4,099,887 | 4,274,413
| Social security costs | 506,515 | 518,265
| Cost of defined contribution scheme | 254,395 | 240,439
|  | 4,860,797 | 5,033,117
| The average monthly number of employees was as follows:
|  | 31 December 2024 | 31 December 2023
|  | No. | No.
| Employees | 46 | 50
|  | 46 | 50
| The directors were remunerated for their services by other group companies and no recharge has been made to account for their salaries. Management determine that the share of remuneration relevant to the services performed in their capacity as directors of Smarsh UK Holdco Limited to be insignificant to the business.
7. | Parent company profit for the year
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The profit after tax of the parent Company for the year was £8,275,259 (2023 - loss £2,469,308 as restated). The parent Company loss has been restated to correctly reflect the dividends received in the prior year. These dividends were previously shown in equity only, and as such there are no changes to the retained earnings position. Page 25
SMARSH UK HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
8. | Interest payable and similar expenses
|  |  |  |  | 2024 | 2023
|  |  |  |  | £ | £
| HMRC interest payable | 4,138 | -
| Interest payable to group undertakings | 4,940,026 | 5,902,574
|  | 4,944,164 | 5,902,574
9. | Taxation
|  |  |  |  | 2024 | 2023
|  |  |  |  | £ | £
| Corporation tax |  |
| Current tax on profits for the year | 5,893,176 | 3,136,738
|  | 5,893,176 | 3,136,738
| Total current tax | 5,893,176 | 3,136,738
| Deferred tax |  |
| Origination and reversal of timing differences | (1,170,316) | (1,099,628)
| Total deferred tax | (1,170,316) | (1,099,628)
| Taxation on profit on ordinary activities | 4,722,860 | 2,037,110
Page 26
SMARSH UK HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 9.Taxation (continued)
| 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 25% (2023 - 23.52%). The differences are explained below:
|  |  |  |  | 2024 | 2023
|  |  |  |  | £ | £
| Profit on ordinary activities before tax | 6,669,013 | 2,286,729
| Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2023 - 23.52%) | 1,667,253 | 537,839
| Effects of: |  |
| Non-tax deductible amortisation of goodwill and impairment | 2,581,135 | 2,671,714
| Expenses not deductible for tax purposes | 181,193 | 240,665
| Movement in deferred tax not recognised | 10,358 | (963,377)
| Corporate interest relief | - | (597,590)
| Change in corporation tax rates | 282,921 | 147,859
| Total tax charge for the year | 4,722,860 | 2,037,110
Page 27
SMARSH UK HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
10. | Intangible assets
| Group and Company
|  | Trade name | Developed Technology | Goodwill | Total
|  | £ | £ | £ | £
| Cost |  |  |  |
| At 1 January 2024 | 311,426 | 22,877,301 | 51,622,697 | 74,811,424
| At 31 December 2024 | 311,426 | 22,877,301 | 51,622,697 | 74,811,424
| Amortisation |  |  |  |
| At 1 January 2024 | 198,968 | 8,769,630 | 30,567,120 | 39,535,718
| Charge for the year on owned assets | 103,807 | 4,575,462 | 10,324,539 | 15,003,808
| At 31 December 2024 | 302,775 | 13,345,092 | 40,891,659 | 54,539,526
| Net book value |  |  |  |
| At 31 December 2024 | 8,651 | 9,532,209 | 10,731,038 | 20,271,898
| At 31 December 2023 | 112,458 | 14,107,671 | 21,055,576 | 35,275,705
| Goodwill arose on the acquisition the net assets of Digital Safe business in 2022. Development technology was identified on acquisition as the product offering developed prior to the acquisition.
Page 28
SMARSH UK HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
11. | Tangible fixed assets
| Group
|  | Computer equipment | Data centre equipment | Total
|  | £ | £ | £
| Cost or valuation |  |  |
| At 1 January 2024 | 138,294 | 439,139 | 577,433
| At 31 December 2024 | 138,294 | 439,139 | 577,433
| Depreciation |  |  |
| At 1 January 2024 | 114,517 | 268,843 | 383,360
| Charge for the year on owned assets | 16,256 | 48,199 | 64,455
| At 31 December 2024 | 130,773 | 317,042 | 447,815
| Net book value |  |  |
| At 31 December 2024 | 7,521 | 122,097 | 129,618
| At 31 December 2023 | 23,776 | 170,296 | 194,072
Page 29
SMARSH UK HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
12. | Fixed asset investments
| Company
|  | Investment in subsidiary
|  | £
| Cost or valuation |
| At 1 January 2024 | 69,014,242
| At 31 December 2024 | 69,014,242
| Impairment |
| At 1 January 2024 | 19,915,154
| Charge for the period | -
| At 31 December 2024 | 19,915,154
| Net book value |
| At 31 December 2024 | 49,099,088
| At 31 December 2023 | 49,099,088
| Subsidiary undertaking
| The following was a subsidiary undertaking of the Company:
| Name | Registered office | Class of shares | Holding
| Smarsh Software UK Limited | Birchin Court 5th Floor, 19-25 Birchin Lane, London, United Kingdom, EC3V 9DU | Ordinary | 100%
| In accordance with Section 479A of the Companies Act 2006, Smarsh Software UK Limited (13684286) was entitled to exemption from an audit of their individual financial statements. The guarantee is made by Smarsh UK Holdco Limited at the date of approval of these financial statements in relation to the year ended 31 December 2024.
Page 30
SMARSH UK HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
13. | Debtors
|  | Group | Group As restated | Company | Company
|  | 2024 | 2023 | 2024 | 2023
|  | £ | £ | £ | £
| Trade debtors | 3,836,463 | 3,848,791 | - | -
| Amounts owed by group undertakings | 27,270,007 | 18,222,317 | - | -
| Prepayments and accrued income | 500,965 | 503,259 | - | -
| Tax recoverable | - | 191,262 | - | -
|  | 31,607,435 | 22,765,629 | - | -
| Amounts owed by group undertakings are unsecured, interest-free and repayable on demand. The comparative corporation tax debtor has been reclassified to be included within debtors due within one year.
14. | Creditors: Amounts falling due within one year
|  | Group | Group As restated | Company | Company
|  | 2024 | 2023 | 2024 | 2023
|  | £ | £ | £ | £
| Trade creditors | 582,418 | 495,393 | - | -
| Amounts owed to group undertakings | 18,570,666 | 17,895,299 | 12,546,830 | 13,343,415
| Corporation tax | 127,531 | - | - | -
| Other taxation and social security | 706,444 | 704,638 | - | -
| Other creditors | 45,286 | 40,244 | - | -
| Accruals and deferred income | 902,941 | 812,954 | - | -
|  | 20,935,286 | 19,948,528 | 12,546,830 | 13,343,415
| Please see note 16 for a breakdown of the amounts owed to group undertakings for which have scheduled repayment dates. The comparative corporation tax debtor has been reclassified to be included within debtors due within one year.
Page 31
SMARSH UK HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
15. | Creditors: Amounts falling due after more than one year
|  | Group | Group | Company | Company
|  | 2024 | 2023 | 2024 | 2023
|  | £ | £ | £ | £
| Amounts owed to group undertakings | 23,918,486 | 31,397,160 | 23,918,486 | 31,397,160
|  | 23,918,486 | 31,397,160 | 23,918,486 | 31,397,160
Please see note 16 for a breakdown of the amounts owed to group undertakings for which have scheduled repayment dates.
16. | Loans
| Analysis of the maturity of loans is given below:
|  | Group | Group | Company | Company
|  | 2024 | 2023 | 2024 | 2023
|  | £ | £ | £ | £
| Amounts falling due within one year |  |  |  |
| Intercompany loan | 12,466,015 | 13,284,810 | 12,466,015 | 13,284,810
|  | 12,466,015 | 13,284,810 | 12,466,015 | 13,284,810
| Amounts falling due one to two years |  |  |  |
| Intercompany loan | 23,918,486 | 31,397,160 | 23,918,486 | 31,397,160
|  | 23,918,486 | 31,397,160 | 23,918,486 | 31,397,160
|  | 36,384,501 | 44,681,970 | 36,384,501 | 44,681,970
| Intercompany loan relates to amounts loaned to the Company by the parent company, Smarsh, Inc. These amounts are repayable in six equal annual instalments commencing in 2023 and ending in 2028. Interest is being charged at an annual interest rate of 6.6% plus the Secured Overnight Financing Rate.
Page 32
SMARSH UK HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
17. | Deferred taxation
|  | 2024 | 2023
|  | £ | £
| Group |  |
| At beginning of year | (3,882,581) | (4,982,209)
| Charged to profit or loss | 1,169,816 | 1,099,628
| At end of year | (2,712,765) | (3,882,581)
| The deferred taxation balance solely relates to the business combination in 2022.
18. | Provisions
| Group
|  | Dilapidation provision | Onerous lease provision | Total
|  | £ | £ | £
| At 1 January 2024 | 1,298,058 | 2,713,750 | 4,011,808
| Charged/(credited) to profit and loss | 701,942 | (1,252,500) | (550,558)
| At 31 December 2024 | 2,000,000 | 1,461,250 | 3,461,250
| Management have provided for dilapidation repairs to the rented property based on their best estimate of the cost to restore the premises in accordance with their lease. In the year, an amount of £701,942 was charged to the profit and loss. They expect the provision to unwind on exit of the lease in 2026. Management have also recognised an onerous lease provision in relation their rental premises that ceased to be used in October 2022. The provision represents the present obligation under the lease contract, valued initially at £3,966,250. They expect the provision to unwind each year until exit of the lease in 2026. The director does not consider the effect of discounting to be material on this balance.
19. | Share capital
|  |  |  |  | 2024 | 2023
|  |  |  |  | £ | £
|  | Allotted, called up and fully paid |  |
|  | 24,714,244 (2023 - 24,714,244) Ordinary shares of £1.00 each | 24,714,244 | 24,714,244
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SMARSH UK HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
20. | Reserves
Profit and loss account The profit and loss reserve represents accumulated losses.
21. | Capital contribution reserve
| Certain employees of the Company along with other group employees have been granted options over the shares in the parent company, Skywalker Holdings, Inc. The options are granted at an independently determined fair value. Vesting conditions for these options include: 25% of the options vest one year after the vesting commencement date and then 6.25% every three months there after. An expense equivalent to the fair value of the share options granted is recognised evenly over the vesting period with a corresponding amount being recognised as a capital contribution reserve.
|  | Weighted average exercise price (USD) 2024 | Number of options 2024
| Outstanding at the beginning of the year | 5.25 | 801,000
| Granted during the year | 5.25 | 31,000
| Forfeited during the year | 4.68 | (23,000)
| Outstanding at the end of the year | 5.25 | 809,000
|  |  |  |  | Number of options
|  |  |  |  | 2024
| Exercisable at the end of the year | 223,631
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SMARSH UK HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
22. | Commitments under operating leases
| At 31 December 2024 the Group and the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
|  | Group | Group
|  | 2024 | 2023
|  | £ | £
| Not later than one year | 1,252,500 | 1,252,500
| Later than one year and not later than five years | 208,750 | 1,461,250
|  | 1,461,250 | 2,713,750
23. | Controlling party
The ultimate parent company and controlling party is Skywalker Intermediate Holdings, Inc. a company incorporated in the USA. The registered office of the controlling party is 875 Manhattan Beach Blvd., Manhattan Beach, CA 90266.
24. | Assets pledged as security
The Company is one of a number of group companies who entered into a debenture with Blue Owl Capital Corporation (formerly known as Owl Rock Capital Corporation) dated 27 May 2024, in relation to a credit agreement between the parent company, Skywalker Intermediate Holdings, Inc. and Owl Rock Capital Corporation. The debenture provides Owl Rock with a fixed and floating charge over the assets of the Company. A supplemental debenture relating to the above was entered into by the Company on 31st January 2025.
25. | Post balance sheet events
IIn June 2025, Smarsh Software UK Limited, a member of the Smarsh group, had commissioned an assessment of dilapidations liability report to reasonably estimate the costs associated with the restoring the premises to it's original condition. The conditions associated with this were deemed to have existed at the balance sheet date and as such an adjustment was posted to these financial statements. This resulted in an increase in the dilapidation provision of £701,942. This was an adjusting post balance sheet event. There were no other adjusting or non-adjusting events occurring between the end of the reporting period and the date these financial statements were approved.
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