Digital River UK Holdings I Ltd - Limited company accounts 20.1

REGISTERED NUMBER: 09524884 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTOR AND

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2021

FOR

DIGITAL RIVER UK HOLDINGS I LTD

Page

Company Information

1

Strategic Report

2

Report of the Director

3

Report of the Independent Auditors

4

Statement of Comprehensive Income

6

Balance Sheet

7

Statement of Changes in Equity

8

Notes to the Financial Statements

9

DIRECTOR:

Kristopher T Schmidt

SECRETARY:

TMF Corporate Administration Services Ltd

REGISTERED OFFICE:

8th Floor

20 Farringdon Street

London

EC4A 4AB

REGISTERED NUMBER:

09524884 (England and Wales)

AUDITORS:

Durrants, Chartered Accountants

Chartered Accountants & Statutory Auditor

24 Wellington Business Park

Dukes Ride

Crowthorne

Berkshire

RG45 6LS

The director presents his strategic report of Digital River UK Holdings I Limited ("the Company") for the year ended 31 March 2021.

BUSINESS ENVIRONMENT

The Digital River group provides e-commerce site development and hosting, site merchandising, order management, digital and physical product fulfilment, multi-lingual customer service, email marketing, advanced reporting and analytics, along with a wide range of strategic marketing services.

GOING CONCERN

Digital River UK Holdings I Limited is a direct subsidiary of Digital River Inc, which is incorporated in the United States of America, and is in turn a direct subsidiary of Danube Private Holdings II, LLC, the ultimate group Parent company. The purpose of the Company is to carry on the business of holding investments in three subsidiaries, Digital River Technology Limited, Digital River Holding GmbH and FatFoogoo GmbH ( FatFoogoo GMBH is now liquidated).

Directors have performed a going concern assessment of the company comprising of a review of the company's financial position, future operations and forecasts, and Group level debt covenant compliance.

Digital River Inc has a credit agreement (the "Credit Agreement") in place for Group level general corporate purposes which is used primarily to support ongoing and normal course working capital requirements.

Digital River Inc. is required to comply with certain covenants included in the Credit Agreement. On 26 August 2022, Digital River Inc. amended the Credit Agreement to 1) increase its revolving credit commitment available for borrowing; 2) modify its financial covenants to better align with its forward-looking EBITDA as defined in the Credit Agreement; 3) altered the payment terms to optimize cash flow; and 4) received an infusion of additional equity from its primary investor to further enhance availability of cash.

Digital River, Inc. believes that it is adequately capitalized and has available cash and borrowing facilities to meet its ongoing needs for the next 12 months, from the date of financial statement sign off. Based on operating and cash forecasts, the directors are satisfied that the Group will be in a position to comply with its financial covenants.

Digital River Inc will continue to provide the required financial support to the Company to enable the Company to meet its financial obligations as they fall due.

The Group also announced and implemented cost reduction programmes in April and July 2022.

Based on all information currently available, the directors consider it appropriate to prepare the financial statements on a going concern basis. The financial statements do not include any adjustment that would result from the basis of preparation being inappropriate.

PRINCIPAL RISKS AND UNCERTAINTIES

The directors consider that the principal risk factor that could materially and adversely affect the Company's future operating profits or financial position is the cost of compliance with rules and regulations relating to the business, including the potential effect of new laws, rules and regulations, or interpretations of existing laws, rules and regulations, that affect the business operations. The directors are confident that they have put in place a strong management team capable of dealing with the above issues as they arise.

Since 31 December 2019, the spread of COVID-19 has severely impacted many economies around the world. Measures taken by many countries to contain the spread of the virus, including travel bans, quarantines, social distancing, and closures of non-essential services, has triggered significant disruption to businesses worldwide, resulting in an economic slow-down. Management has thus far not made any documented changes to its expectations. As of today, no major impact on the financial statements are visible and it is currently not possible to assess whether there will be any effects and whether the positive effects will outweigh the negative or vice versa.This is a non-adjusting event and an estimate of the financial effects cannot be made at this time, as the situation remains rapidly evolving.

ON BEHALF OF THE BOARD:

Kristopher T Schmidt - Director

10 November 2022

The director presents his report with the financial statements of the Company for the year ended 31 March 2021

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of a holding company.

DIVIDENDS

No dividends will be distributed for the year ended 31 March 2021.

EVENTS SINCE THE END OF THE YEAR

Information relating to events since the end of the year is given in the notes to the financial statements.

DIRECTOR

Kristopher T Schmidt held office during the whole of the period from 1 April 2020 to the date of this report.

STATEMENT OF DIRECTOR'S RESPONSIBILITIES

The director is responsible for preparing the Strategic Report, the Report of the Director and the 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is 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 director is required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The 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 enable him to ensure that the financial statements comply with the Companies Act 2006. He is 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.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the director is aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Durrants, Chartered Accountants, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

Kristopher T Schmidt - Director

10 November 2022

Opinion

We have audited the financial statements of Digital River UK Holdings I Ltd (the 'company') for the year ended 31 March 2021 which comprise the Statement of Comprehensive Income, Balance Sheet, 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).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 March 2021 and of its loss 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 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. 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 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.

Other information

The director is responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Director, but does not include the financial statements and our Report of the Auditors 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.

In connection with our audit of the financial statements, 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 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.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Strategic Report and the Report of the Director for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Director have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Director.

We have nothing to report in respect of the following matters where 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 director's remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of director

As explained more fully in the Statement of Director's Responsibilities set out on page three, 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 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 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 company or to cease operations, or has 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 a Report of the Auditors 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.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

- We have audited 100% of the transactions on the general ledger.

- There is regular Group reporting and oversight

- There are no significant laws and regulations applying to the company which in themselves could cause a material misstatement in the financial statements

- Our assessment of the risk of fraud , including discussion of this with management , was that this was low and opportunities were minimal and the audit testing performed did not lead to any revision of this assessment. Large and unusual transactions were tested, including journals, and this did not indicate anything to the contra

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 Report of the Auditors.

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 a Report of the Auditors 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.

Ian Bessant ACA (Senior Statutory Auditor)

for and on behalf of Durrants, Chartered Accountants

Chartered Accountants & Statutory Auditor

24 Wellington Business Park

Dukes Ride

Crowthorne

Berkshire

RG45 6LS

10 November 2022

TURNOVER

-

Administrative expenses

(5,500

)

-

OPERATING PROFIT

5,500

-

Amounts written off investments

4

68,789,529

-

LOSS BEFORE TAXATION

(68,784,029

)

-

Tax on loss

5

-

LOSS FOR THE FINANCIAL YEAR

(68,784,029

)

-

OTHER COMPREHENSIVE INCOME

-

TOTAL COMPREHENSIVE LOSS FOR THE YEAR

(68,784,029

)

-

FIXED ASSETS

Investments

6

143,504,705

212,294,234

CREDITORS

Amounts falling due within one year

7

-

5,500

NET CURRENT LIABILITIES

-

(5,500

)

TOTAL ASSETS LESS CURRENT LIABILITIES

143,504,705

212,288,734

CAPITAL AND RESERVES

Called up share capital

8

422

Share premium

9

53,073,452

Other reserves

9

159,220,360

Retained earnings

9

(68,789,529

)

(5,500

)

SHAREHOLDERS' FUNDS

143,504,705

212,288,734

The financial statements were approved by the director and authorised for issue on 10 November 2022 and were signed by:

Kristopher T Schmidt - Director

Called up

share

Retained

Share

Other

Total

capital

earnings

premium

reserves

equity

£

Balance at 1 April 2019

422

(5,500

)

53,073,452

159,220,360

212,288,734

Changes in equity

Balance at 31 March 2020

422

(5,500

)

53,073,452

159,220,360

212,288,734

Changes in equity

Total comprehensive loss

-

(68,784,029

)

-

(68,784,029

)

Balance at 31 March 2021

422

(68,789,529

)

53,073,452

159,220,360

143,504,705

1.	STATUTORY INFORMATION

Digital River UK Holdings I Ltd 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.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirement of paragraph 3.17(d).

Investments in subsidiaries

Investments in subsidiary undertakings are recognised at cost less any related impairment.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Going concern

Digital River Holdings I Limited is a direct subsidiary of Digital River Inc, which is incorporated in the United States of America, and is in turn a direct subsidiary of Danube Private Holdings II, LLC, the ultimate group Parent company.. The purpose of the Company is to carry on the business of holding investments in three subsidiaries, Digital River Technology Limited, Digital River Holding GmbH and FatFoogoo GmbH ( FatFoogoo is now in liquidation).

Directors have performed a going concern assessment of the company comprising of a review of the company's financial position, future operations and forecasts, and Group level debt covenant compliance.

Digital River Inc has a credit agreement (the "Credit Agreement") in place for Group level general corporate purposes which is used primarily to support ongoing and normal course working capital requirements.

Digital River Inc. is required to comply with certain covenants included in the Credit Agreement. On 26 August 2022, Digital River Inc. amended the Credit Agreement to 1) increase its revolving credit commitment available for borrowing; 2) modify its financial covenants to better align with its forward-looking EBITDA as defined in the Credit Agreement; 3) altered the payment terms to optimize cash flow; and 4) received an infusion of additional equity from its primary investor to further enhance availability of cash.

Digital River, Inc. believes that it is adequately capitalized and has availability to cash and borrowing facilities to meet its ongoing needs for the next 12 months, from the date of financial statement sign off. Based on operating and cash forecasts, the directors are satisfied that the Group will be in a position to comply with its financial covenants.

Digital River Inc will continue to provide the required financial support to the company to enable the company to meet its financial obligations as they fall due.

The Group also announced and implemented cost reduction programmes in April and July 2022.

Based on all information currently available, the directors consider it appropriate to prepare the financial statements on a going concern basis. The financial statements do not include any adjustment that would result from the basis of preparation being inappropriate.

3.	EMPLOYEES AND DIRECTORS

There were no staff costs for the year ended 31 March 2021 nor for the year ended 31 March 2020.

The average number of employees during the year was NIL (2020 - NIL).

31/3/21

31/3/20

£

Director's remuneration

-

4.

AMOUNTS WRITTEN OFF INVESTMENTS

31/3/21

31/3/20

£

Impairment loss

68,789,529

-

5.

TAXATION

Analysis of the tax charge

No liability to UK corporation tax arose for the year ended 31 March 2021 nor for the year ended 31 March 2020.

6.	FIXED ASSET INVESTMENTS

Shares in

group

undertakings

£

COST

At 1 April 2020

212,294,234

Impairments

(68,789,529

)

At 31 March 2021

143,504,705

NET BOOK VALUE

At 31 March 2021

143,504,705

At 31 March 2020

212,294,234

None of the shares of the subsidiary undertaking are listed. In the opinion of the directors the shares in to the Company's subsidiary are worth at least the amounts at which they are stated in the balance sheet.

The Company has the following investments in subsidiary:

Country of incorporation

Registered office

Digital River UK Holdings II Ltd

UK

8th Floor,20 Farringdon Street, London EC4A 4AB

In the audited accounts at 31 March 2021 Digital River UK Holdings II Limited , which is itself a holding company, recognized a £96.8M impairment loss on the basis that its own subsidiary companies had experienced trading losses in recent years and the total net assets of two of the subsidiaries were less than the carrying cost of the investment. It is expected that there will be a further impairment based on the draft audited accounts at 31 December 2021 which show a further decrease in the net asset position of approximately €4.5M euro. Digital River UK Holdings I Limited has reflected an impairment of £68.8M to reflect the position in Digital River UK Holdings II Limited. .

The carrying value of the investment at the end of the period is equal to the cost less impairment. On this basis, the directors are satisfied the value of the subsidiary appropriately stated..The subsidiary is 100% owned by the Company.

7.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

31/3/21

31/3/20

£

Amounts owed to group undertakings

-

5,500

8.	CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:

Number:

Class:

Nominal

31/3/21

31/3/20

value:

£

40,114

Ordinary A

1P

401

2,106

Ordinary B

1P

21

422

9.

RESERVES

The other reserves were created on 13 May 2015 as a result of a reduction in share premium using the Solvency Statement Procedure. This reserve is treated as a distributable reserve and is treated as a realised profit under Part 23 CA 2006.

10.	CONTROLLING PARTY

Danube Private Holdings II, LLC. (incorporated in United States) is regarded by the directors as being the Company's ultimate parent company.

The largest group in which the results of the Company are consolidated is that headed by Danube Private Holdings II, LLC incorporated in the United States of America. No other group financial statements include the results of the Digital River UK Holdings I Limited.

The consolidated financial statements of Danube Private Holdings II, LLC are available to the public at 10380 Bren Road West, Minnetonka, MN 55343-9072 USA.

11.	POST BALANCE SHEET EVENTS

As described in note 6, at 31 December 2021 the draft audited accounts for subsidiaries held by Digital River UK Holdings II Limited indicate that there will be a further impairment of euro 4,500,000 approximately. No adjustment is reflected in these financial statements in respect to this potential impairment.

12.	GUARANTEE AND COLLATERAL AGREEMENT

On 1 June 2021 the Company together with its immediate parents and ultimate parent company entered into a guarantee and collateral agreement in relation to the provision of financing facilities.