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Registered number: 14006063
TALON MIDCO 3 LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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COMPANY INFORMATION
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CONTENTS
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Directors' Responsibilities Statement
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Independent Auditor's Report
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Statement of Comprehensive Income
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Statement of Changes in Equity
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Notes to the Financial Statements
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STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The Company's principal activity is an intermediate holding company within the Talon Topco Limited Group.
As an intermediate holding company of the Talon Group, the directors do not review the Company's performance in isolation but together with the results of the trading companies. For a fair review of the Group's business including the result of the Company see the Strategy Report within Talon Topco Ltd's consolidated accounts which are available from Companies House. Where relevant, the disclosures provided in this Strategic report provide information in the context of the group as a whole, rather than in relation to the Company.
The Tufin and AKiP entities develop, market and sell software-based solutions that help organisations visualise, define and enforce a unified security policy across complex, heterogeneous network environments. Tufin's solutions automate security policy management and allow organisations to gain visibility and control over their IT and cloud environments. Substantially all of the Tufin's sales of products and services worldwide are made through a global network of distributors and resellers, which sell the products and services to their end-user customers.
The Talon Group of companies was acquired by Turn River Capital on 25 August 2022, a US based investment firm. As of 31 December 2024, The Talon Group comprised: Talon Topco Limited, Talon Midco 1 Limited, Talon Midco 2 Limited, Talon Midco 3 Limited, Tufin Software Technologies LTD, Tufin Software Australia PTY LTD, Tufin Software Europe Limited, Tufin Software North America Inc, Tufin Software France SARL, Tufin Software SRL, Tufin Software Germany GMBH, Talon AKiPS Holding Pty Ltd, AKIPS Holdings Pty Ltd, AKiPS Pty Limited and Tufin Software Technologies India Private Limited (the "Group").
The main trading entities of the Group are the Tufin entities and AKiPS Pty Limited.
Principal risks and uncertainties
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The Company is part of the Talon Group whose main trading components are the Tufin and AKiPS entities. The Directors do not review the Company's performance in isolation but together with the results of the other companies within these components. The risks and uncertainties impacting the Talon Group may have an impact on all companies within the Group and are explained below:
Credit Risk
The Group has policies and procedures to ensure appropriate credit checks for potential and existing customers. The trade receivables of Tufin are mainly derived from sales to a diverse set of customers located primarily in the United States, Europe and Asia. Concentration of credit risk with respect to trade receivables is limited by credit limits, ongoing credit evaluation and account monitoring procedures.
Operational and Business Risk
Tufin faces competition in the security policy management market. Some of Tufin's competitors are large companies that have the technical and financial resources and broad customer bases and already have existing relationships as a trusted vendor for other products. Such companies may use these advantages to offer products and services that are perceived to be as effective as Tufin's at a lower price or for free as part of a larger product package or solely in consideration for maintenance and professional services fees. As the security policy management market grows, Tufin expects competition to increase in the future from both existing competitors and new companies that may enter our markets. Some of Tufin's competitors may develop different products that compete with our current solutions and respond more quickly and effectively than we do to new or changing opportunities, technologies, standards or client requirements, including in cloud-native environments.
AKiPS operates in the highly competitive network monitoring market. There are numerous established enterprises offering similar solutions. AKIPS faces the risk of losing market share if competitors develop more advanced or cost-effective products. The integration of Tufin and AKIPS may mitigate this risk for both parties by expanding their reach and capabilities.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Talon Group's senior management constantly monitor, assess and respond to the implications of the risks mentioned above.
Interest Rate Risk
The Group has borrowings in the form of a loan. The Group is exposed to interest rate risk, as changes in market interest rates may impact the fair value and cash flows of its outstanding loan.
Changes in market interest rates, may impact also impact the fair value and cash flows of the Group other financial liabilities.
Key performance indicators
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The Directors oversee the operation of the Talon Group at Talon Topco Ltd level. KPIs of the Group on a consolidated basis can be found in the consolidated financial statements of Talon Topco Ltd at Companies House. The Directors do not believe the use of key performance indicators are appropriate for assessing the position or performance of the Company as it is not a trading entity.
Directors' statement of compliance with duty to promote the success of the Company
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The Directors consider their main duty in promoting the success of the Group, of which the Company is part, is in supporting the directors of the main trading companies, together with those in the intermediate holding companies to manage the businesses and take appropriate decisions to ensure that its strategic goals are achieved.
The Directors note that the long term success of the Group, of which the Company is part, since its incorporation has been underpinned by its relationships with its employees, its customers, its supply chain and other stakeholders. The Directors note that the nature of many of these relationships have been long term.
The Directors consider it important to create a working environment where employees want to work and remain as part of the overall strategy of the Group. The Directors have agreed company objectives relating to employees' performance and engagement. These objectives are reviewed on a quarterly basis to monitor employees' engagement and retention.
Section 172 statement
The Company is a parent company to a group of subsidiary entities that develop, market and sell software-based solutions that automate security policy management, and allow customers to gain visibility and control over their IT and cloud environments. The Company is dependent on the ability of its subsidiaries to generate and preserve value. The following disclosures are therefore reflective of the Group as a whole.
Section 172 of the Companies Act 2006 requires all directors of a group to perform in the interests of the Group to promote the success of the Group for the benefit of all its shareholders. In order to fulfil these obligations, the directors are required to consider:
- The likely consequences of any decisions in the long-term;
- The interests of the Group's employees;
- The need to foster the Group's business relationships with suppliers, customers and others;
- The impact of the broader financial markets, including interest rates
- The impact of the Group's operations on the community and environment;
- The desirability of the Group maintaining a reputation for high standards of business conduct;
- Increased competition that may impact the Group; and
- The need to act fairly as between shareholders of the Group.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
The following paragraphs summarise how the Directors fulfil these duties:
During the year the Board of Directors met several times to review the Group's operating performance and discuss the long-term strategy. The directors are supplied with the relevant working files which highlight relevant stakeholders' considerations and other factors considered relevant to the matter under consideration. The directors are in close contact with the senior management team allowing good communication and feedback in a timely manner.
The Group's policies on a wide range of business and ethics related practices are regularly reviewed and updated as necessary to ensure compliance with legal and regulatory requirements. The Board of Directors monitor the Group's policies in the ordinary course of business.
Engaging our employees
The Group has over 400 employees and the directors are fully committed to promoting diversity and inclusion in the workplace and to ensure that employees are a fair reflection of the communities in which the Group operates. Our focus is on developing each of our employees to perform to the best of their abilities and to promote continued learning and development.
We engage with our employees so that our combined goals are achieved. We are investing in dynamic and engaging work environment that fosters professional growth and employee satisfaction. As a software company we embrace innovative culture providing employees with the opportunity to work on challenging and groundbreaking projects. The Group recognizes the importance of continuous learning and development. The Group invests in its employees by providing access to training programs, workshops, and opportunities for skill enhancement. The group fosters a collaborative work culture, emphasizing teamwork and communication. The Group values input from all its employees, regardless of their position, encouraging an open exchange of ideas.
Engaging with suppliers, customers and others
We ensure that the views of our other stakeholders (suppliers, customers and the wider community) are considered through reports and information from senior management who have regular contact with these groups to ensure that the Board reacts to changing demands and circumstances as they impact on the operations of the Group. Moreover, we maintain strong and collaborative relationships with our lenders recognising their critical role in the group's financial stability and growth. We emphasise open and transparent communication. Regular updates, financial reports, and strategic plans are shared to ensure that lenders are well-informed about the Group's performance and prospects. We are actively reviewing our risk management strategies. By identifying and addressing risks early on, we demonstrate a proactive approach to safeguarding the interests of our lenders. In addition, we are committed to timely and transparent financial reporting. Regularly providing lenders with accurate and comprehensive financial statements, along with updates on key performance indicators, ensures that lenders have the information they need to assess the Group's financial health.
Corporate governance
We embrace the principles of good governance and act in a way that ensures that the business is operated in a collaborative way. We also ensure that we comply the any relevant laws in the countries in which we operate for the benefit of the business and all its wider stakeholders.
Streamlined energy and carbon reporting
The Company did not consume more than 40,000kWh of energy in the period and as such qualifies as a low energy user and are exempt from further Streamlined Energy and Carbon reporting issues.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Future developments
The Company will continue in its role as a holding company.
This report was approved by the board and signed on its behalf.
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The directors present their report and the financial statements for the year ended 31 December 2024.
Principal activity
The principal activity of the Company in the year under review was that of holding company.
Dividends
No dividends will be distributed for the year ended 31 December 2024 (2023 : Nil).
The loss for the year, after taxation, amounted to $29.7 million (2023: loss $27.8 million).
The directors shown below have held office during the whole of the period from 1 January 2024 to the date of this report.
Mr L Allen (appointed 12 August 2024, resigned 9 July 2025)
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Mr N J H Lowe (resigned 12 August 2024)
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Director changes after the year end
Mr A Wright (appointed 9 July 2025)
Going concern
For the year ended 31 December 2024, the Company recorded a loss after tax of $29.7 million (2023: loss after tax of $27.8 million) and had net assets of $305.2 million (2023: $334.9 million). The going concern consideration of the Directors of the Company is reliant on the trading subsidiaries being profitable and cash generative and therefore their assessment is dependent on the Group’s going concern conclusion. The Company operates as a holding company with investment in the sub-groups. As a result, no expenditure is paid directly by this Company and is settled by subsidiaries in the Group and recharged via intercompany, which is expected to continue. The information below has been prepared from Talon Group’s perspective, which consolidates this Company and includes the subsidiary trading entities. These trading entities are wholly owned subsidiaries and repayment of the intercompany balance is not anticipated until trading profits are formally distributed up the Group.
The Group is considered a market leader in the network security policy market. Part of the acquisition was financed with an external loan of $200 million, due to mature in 2028. This loan has certain covenants relating to the Group's financing, including a minimum cash balance requirement, which are tested on a quarterly basis. The Borrower, and all entities party to the covenants, were in compliance with all covenants under the terms of the loan in 2023 and 2024 and all subsequent periods in 2025.
Management has prepared a detailed multi-year financial model and has analysed the expected performance of the business, including its cash flow forecasts, through 31 December 2026. Based on this analysis, the Group believes that it will be EBITDA positive for this assessment period and generate sufficient cash flows to meet its debts as they fall due.
In fiscal year 2024, the Group experienced ACV Bookings growth of close to 18% and Adjusted EBITDA of 29%. Both were considerably higher than fiscal year 2023. In addition, the Group was profitable in every quarter. This is a continued trend that started in Q3 2023.
Growth has continued in the first half of 2025. The Group is expecting to achieve year-over-year growth of close to 11%. Growth in the business coupled with cost containment has allowed the Group to pace to Adjusted EBITDA margins of 16% in the first half of 2025, which is consistent with prior year.
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
After making appropriate enquiries, the Directors have a reasonable expectation that the Group and Company has adequate resources to continue in operational existence for at least one year from the approval of these financial statements. The Directors have concluded that there are no material uncertainties that lead to significant doubt upon the Group's or Company's ability to continue as a going concern. Accordingly, the Directors have adopted the going concern basis in preparation of these financial statements.
Qualifying third-party indemnity provision
The Group maintained liability insurance for its directors and officers during the period under review and up to the date of signing the financial statements. This is a qualifying third-party indemnity provision for the purposes of the Companies Act 2006.
Disclosure in the strategic report
The Company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the Company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of engagement with employees, suppliers, customers and others, future developments, and risk management.
Disclosure of information to auditors
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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 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's auditors are aware of that information.
The auditors, BDO LLP, will be proposed for reappointment at the forthcoming Annual General Meeting in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2024
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 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.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF TALON MIDCO 3 LIMITED
Opinion on the financial statements
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In our opinion the financial statements:
∙give a true and fair view of the state of the Company’s affairs as at 31 December 2024 and of its loss for the year then ended;
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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.
We have audited the financial statements of Talon Midco 3 Limited (“the Company”) for the year ended 31 December 2024 which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity 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).
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Conclusions relating to going concern
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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.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF TALON MIDCO 3 LIMITED (CONTINUED)
The Directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our auditor’s report thereon. 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.
Other Companies Act 2006 reporting
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In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic report and the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
∙adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
∙the financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of Directors’ remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
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As explained more fully in the Directors' Responsibilities Statement, 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.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF TALON MIDCO 3 LIMITED (CONTINUED)
Auditor's responsibilities for the audit of the financial statements
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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.
Extent to which the audit was capable of detecting irregularities, including fraud
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:
Non-compliance with laws and regulations
Based on:
∙Our understanding of the Company and the industry in which it operates;
∙Discussion with management and those charged with governance; and
∙Obtaining an understanding of the Company’s policies and procedures regarding compliance with laws and regulations;
we considered the significant laws and regulations to be the Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, the Companies Act 2006 and relevant tax compliance legislation.
The Company is also subject to laws and regulations where the consequence of non-compliance could have a material effect on the amount or disclosures in the financial statements, for example through the imposition of fines or litigations. We identified such laws and regulations to be the Companies Act 2006 and relevant tax legislation, including but not limited to corporate and sales tax legislation.
Our procedures in respect of the above included:
∙Review of minutes of meetings of those charged with governance for any instances of non-compliance with laws and regulations;
∙Review of financial statement disclosures and agreeing to supporting documentation;
∙Involvement of tax specialists and experts in the audit; and
∙Review of legal expenditure accounts to understand the nature of expenditure incurred.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF TALON MIDCO 3 LIMITED (CONTINUED)
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Fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included:
Enquiry with management and those charged with governance regarding any known or suspected instances of fraud;
∙Obtaining an understanding of the Company’s policies and procedures relating to:
°Detecting and responding to the risks of fraud; and
°Internal controls established to mitigate risks related to fraud.
∙Review of minutes of meetings of those charged with governance for any known or suspected instances of fraud;
∙Discussion amongst the engagement team and our forensic accounting experts as to how and where fraud might occur in the financial statements;
∙Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud; and
∙Considering remuneration incentive schemes and performance targets and the related financial statement areas impacted by these.
Based on our risk assessment, we considered the areas most susceptible to fraud to be management override of controls.
Our procedures in respect of the above included:
∙Testing a sample of journal entries throughout the year, which met a defined risk criteria, by agreeing to supporting documentation; and
∙Assessing significant estimates made by management for bias.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
https://www.frc.org.uk /auditorsresponsibilities. This description forms part of our auditor’s report.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF TALON MIDCO 3 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 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.
Christian Bower-Sloane (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
16 December 2025
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
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STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2024
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Interest payable and similar expenses
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Loss for the financial year
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There was no other comprehensive income for 2024 (2023:$NIL).
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The notes on pages 16 to 24 form part of these financial statements.
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TALON MIDCO 3 LIMITED
REGISTERED NUMBER:14006063
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BALANCE SHEET
AS AT 31 DECEMBER 2024
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 16 to 24 form part of these financial statements.
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STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
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Comprehensive income for the year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Shares issued during the year
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Total transactions with owners
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Comprehensive income for the year
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Total comprehensive income for the year
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The notes on pages 16 to 24 form part of these financial statements.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Talon Midco 3 Limited is a private company, limited by shares, registered in England and Wales. The Company's registered number and registered office address can be found on the Company Information page.
The financial statements are prepared in US Dollars (USD), which is the functional and presentational currency of the Company.
Monetary amounts in the financial statements have been rounded to the nearest $1,000.
2.Accounting policies
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Basis of preparation of financial statements
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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:
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Financial Reporting Standard 102 - reduced disclosure exemptions
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The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
- the requirements of Section 7 Statement of Cash Flows;
- the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
- the requirements of Section 11 Basic Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b); and
- the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A; and;
- the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Talon Topco Ltd as at 31 December 2024 and these financial statements may be obtained from Companies House.
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Exemption from preparing consolidated financial statements
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The Company is a parent company that is also a subsidiary included in the consolidated financial statements of a larger group by a parent undertaking established under the law of any part of the United Kingdom and is therefore exempt from the requirement to prepare consolidated financial statements under section 400 of the Companies Act 2006.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
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Investments in subsidiaries
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Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the Company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received.
Debt instruments that are payable in more than one year, including loans, are initially and subsequently measured at the undiscounted amount of the cash expected to be paid.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the statement of comprehensive income.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
Financial assets and liabilities are offset and the net amount reported in the Balance sheet when there is an 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.
Short-term creditors are measured at the transaction price.
Assets and liabilities in foreign currencies are translated into dollars at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into dollars at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
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.
For the year ended 31 December 2024, the Company recorded a loss after tax of $29.7 million (2023: loss after tax of $27.8 million) and had net assets of $305.2 million (2023: $334.9 million). The going concern consideration of the Directors of the Company is reliant on the trading subsidiaries being profitable and cash generative and therefore their assessment is dependent on the Group’s going concern conclusion. The Company operates as a holding company with investment in the sub-groups. As a result, no expenditure is paid directly by this Company and is settled by subsidiaries in the Group and recharged via intercompany, which is expected to continue. The information below has been prepared from Talon Group’s perspective, which consolidates this Company and includes the subsidiary trading entities. These trading entities are wholly owned subsidiaries and repayment of the intercompany balance is not anticipated until trading profits are formally distributed up the Group.
The Group is considered a market leader in the network security policy market. Part of the acquisition was financed with an external loan of $200 million, due to mature in 2028. This loan has certain covenants relating to the Group's financing, including a minimum cash balance requirement, which are tested on a quarterly basis. The Borrower, and all entities party to the covenants, were in compliance with all covenants under the terms of the loan in 2023 and 2024 and all subsequent periods in 2025.
Management has prepared a detailed multi-year financial model and has analysed the expected performance of the business, including its cash flow forecasts, through 31 December 2026. Based on this analysis, the Group believes that it will be EBITDA positive for this assessment period and generate sufficient cash flows to meet its debts as they fall due.
In fiscal year 2024, the Group experienced ACV Bookings growth of close to 18% and Adjusted EBITDA of 29%. Both were considerably higher than fiscal year 2023. In addition, the Group was profitable in every quarter. This is a continued trend that started in Q3 2023.
Growth has continued in the first half of 2025. The Group is expecting to achieve year-over-year growth of close to 11%. Growth in the business coupled with cost containment has allowed the Group to pace to Adjusted EBITDA margins of 16% in the first half of 2025, which is consistent with prior year.
After making appropriate enquiries, the Directors have a reasonable expectation that the Group and Company has adequate resources to continue in operational existence for at least one year from the approval of these financial statements. The Directors have concluded that there are no material uncertainties that lead to significant doubt upon the Group's or Company's ability to continue as a going concern. Accordingly, the Directors have adopted the going concern basis in preparation of these financial statements.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Judgments in applying accounting policies and key sources of estimation uncertainty
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The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the Balance sheet date and the amounts reported for revenues and expenses during the year. These also include key assumptions concerning the future, and other key sources of estimation uncertainty at the Balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
The nature of estimation means that actual outcomes could differ from those estimates.
The following judgements have had the most significant effect on amounts recognised in the financial statements.
Impairment of investments
Determining whether the investments in subsidiaries are impaired requires a review for indicators of an impairment. As no indicators of an impairment were identified, it has been determined that no impairment is required in the current period. The value of the investments in subsidiaries is shown in the statement of financial position and broken down further in note 8 of the financial statements.
Recoverability of amounts owed by group undertakings
We consider the need for any provision for impairment of the carrying value of amounts owed by group undertakings, based on management's estimate of the prospect of recovering the amounts due. This includes considering the solvency of the counterparties and their future outlook based on budgets and forecasts prepared by management. No such provisions have been made as of 31 December 2024 and 2023, respectively.
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The operating loss is stated after charging:
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None of the Directors receive any remuneration for their services to the Group. The Directors are paid by another entity, any allocation to this Group for their services would be deminimis.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Interest payable and similar expenses
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Interest on intercompany loan
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Analysis of the tax charge
No liability to UK corporation tax arose for the year ended 31 December 2024 nor for the year ended 31 December 2023.
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Factors affecting tax charge for the year
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The tax assessed for the year is higher than (2023 - higher than) the standard rate of corporation tax in the UK. The differences are explained below:
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Loss on ordinary activities before tax
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Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2023 - 23.5%)
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Losses surrendered through group relief
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Expenses not deductible for tax purposes
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Movement in deferred tax not recognised
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Total tax charge for the year
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The Company has unrecognised deferred tax assets in relation to gross unrecognised losses of $0.9 million (2023: $0.8 million). The deferred tax is unrecognised on the basis that the directors are of the view that the company is unlikely to have sufficient future taxable profits against which the deferred tax assets could be utilised.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
7.Taxation (continued)
In the Spring Budget 2021, the UK Government announced that from 1 April 2023 the corporation tax rate would increase to 25% (rather than remaining at 19%, as previously enacted). There has been no change to corporation tax rates for the financial year ended 31 December 2024. For the financial year ended 31 December 2024 the weighted average tax rate is 25% (31 December 2023 weighted average tax rate was 23.5%).
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Investments in subsidiary companies
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The following were subsidiary undertakings of the Company:
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Tufin Software Technologies Limited (direct subsidiary)
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5 HaShalom Road, ToHa Tower, Tel Aviv 6789205, Israel
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R&D and operational activities
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Tufin Software North America INC*
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2 Liberty Square, 2nd Floor, Boston, MA 02109, USA
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Resale of Tufin products to North American market
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Tufin Software Australia PTY LTD*
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Suite 902, Level 9, 146 Arthur Street, North Sydney, Australia
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Pre and post sales service to Australia
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8th Floor, Module M22, 3rd District Bd, Corneliu Coposu 6-8, Bucharest, Romania
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Provision of contract R&D services to Tufin Israel
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Tufin Software Europe Limited*
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Suite 4, 7th Floor, 50 Broadway, London, SW1H 0DB
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Pre and post sales services to UK market
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Tufin Software France SARL*
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23/25 Avenue Mac-Mahon - 75017 Paris, France
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Pre and post sales services to France
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Subsidiary undertakings (continued)
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Tufin Software Germany GMBH*
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7 Elsenheimerstr. - c/o RPI Roehm, 80687 Munich, Germany
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Pre and post sales services to Central Europe
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Tufin Software Technologies India Private Limited
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No. 102, 2nd Floor, Gangadhar Chetty Road, Near Ulsoor Lake, Sivan Chetty Gardens, Bangalore North, Karnataka, India, 560042
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Pre and post sales and R&D support to India market
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Suite 902, Level 9, 146 Arthur Street, North Sydney New South Wales 2060
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Sale of software to global market
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Talon AKiPS Holding Pty Ltd (Direct subsidiary)
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Suite 902, Level 9, 146 Arthur Street, North Sydney New South Wales 2060
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Suite 902, Level 9, 146 Arthur Street, North Sydney New South Wales 2060
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Amounts owed by group undertakings
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Amounts owed by group undertakings are interest free, unsecured and repayable on demand.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Accruals and deferred income
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Amounts owed to group undertakings are unsecured and repayable on demand.
Amounts owed to group undertakings comprises of a loan, including interest of $29 million (2023: $28 million) on the loan from Talon Midco 2 Ltd. This loan is repayable on demand or at the maturity date of August 2028, whichever is earlier.
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The Company has a fixed charge against its present and future assets in relation to a loan recorded in the financial statements of its immediate parent Talon Midco 2 Limited.
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Allotted, called up and fully paid
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33,422,116,048 (2023 - 33,422,116,048) Ordinary shares of $0.01 each
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400 (2023 - 400) Ordinary shares of $1.19 each
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The Ordinary Shares rank pari passu. These shares have attached to them full voting, dividend and capital distribution (including on winding up) rights; they do not confer any rights of redemption.
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Share premium account
The share premium account relates to the premium paid over par value of newly issued shares.
Profit and loss account
The profit and loss account includes all current retained profits and losses, less any dividend paid.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Related party transactions
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The Company has taken the exemption provided under FRS 102 not to disclose related party transactions with its group headed by Talon Topco Limited, on the basis that consolidated accounts are prepared. These accounts may be obtained from Suite 1, 7th Floor, 50 Broadway, London, United Kingdom, SW1H 0BL
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The Company's parent company is Talon Midco 2 Limited and the ultimate parent is Talon Topco Limited. Both companies are registered in England and Wales. Talon Topco Limited is the largest and smallest group to prepare consolidated financial statements in which the results of the Company are included. These can be obtained from Companies House.
The ultimate controlling party is Turn/River Management LP, a company incorporated and registered in California, the United States of America.
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