Digital River UK Limited - Limited company accounts 23.2

REGISTERED NUMBER: 05788465 (England and Wales)

REPORT OF THE DIRECTOR AND

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021

FOR

DIGITAL RIVER UK LIMITED

Page

Company Information

1

Report of the Director

2

Report of the Independent Auditors

4

Income Statement

7

Balance Sheet

8

Notes to the Financial Statements

9

DIRECTOR:

Mr Ryan Douglas

SECRETARY:

TMF Corporate Administration Services Ltd

REGISTERED OFFICE:

13th Floor

One Angel Court

London

EC2R 7HJ

REGISTERED NUMBER:

05788465 (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 report with the financial statements of the company for the year ended 31 December 2021.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of global e-commerce solutions for software consumer technology.

DIRECTOR

Mr Kristopher T Schmidt held office from 1 January 2021 until after 31 December 2021 but prior to the date of this report.

Mr Ryan Douglas was appointed as a director after 31 December 2021 but prior to the date of this report.

PRINCIPAL RISKS AND UNCERTAINTIES

The director considers that the following to be the principal risk factors that could materially and adversely affect the Company's future operating profits or financial position:

Since the 31st December 2019, the spread of Covid-19 has severely impacted many economies around the world. The recovery from Covid-19 has been uneven globally and is presenting a variety of challenges and risks from economic uncertainty. In some regards the company has benefitted from the pandemic as online shopping accelerated because spending patterns shifted towards consumption at home. However, in addition to this Covid-19 has given rise to a number of challenges such as disrupted supply chains, staff shortages and new hybrid working patterns. The Company endeavours to deliver our services with minimised disruption and to the best of our ability. Above all we will take all necessary steps and precautions to protect the health and well-being of our workforce.

The Company has a long and successful track record of managing these risks. The director is confident that he has put in place a strong management team and suite of products capable of dealing with the above issues as they arise.

GOING CONCERN AND FUTURE FINANCING

The Company's financial statements have been prepared assuming that the Company will continue as a going concern. As of June 1, 2023, the parent company Digital River, Inc has reclassified into current liabilities the debt obligation of approximately US$102 million owed to the lender, Cerberus, which matures on June 1, 2024. Additionally, Digital River UK Limited has intercompany receivables due from Digital River, Inc and Digital River Ireland totalling approximately £5.9 million, the collectibility of which is contingent upon the continuing liquidity of the Group including meeting the terms of the Group debt arrangement. Management has initiated discussions with the lender with the intention of extending the maturity date and amending other terms of the agreement prior to the debt becoming due in June 2024.

STATEMENT OF DIRECTOR'S RESPONSIBILITIES

The director is responsible for preparing 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.

This report has been prepared in accordance with the provisions of Part 15 of the Companies Act 2006 relating to small companies.

ON BEHALF OF THE BOARD:

Mr Ryan Douglas - Director

30 October 2023

Opinion

We have audited the financial statements of Digital River UK Limited (the 'company') for the year ended 31 December 2021 which comprise the Income Statement, Balance Sheet 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 December 2021 and of its profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the 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 directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

The Company's financial statements have been prepared assuming that the Company will continue as a going concern. As of June 1, 2023, the parent company Digital River, Inc has reclassified into current liabilities the debt obligation of approximately US$102 million owed to the lender, Cerberus, which matures on June 1, 2024. Additionally, Digital River UK Limited has intercompany receivables due from Digital River, Inc and Digital River Ireland totalling approximately £5.9 million, the collectibility of which is contingent upon the continuing liquidity of the Group including meeting the terms of the Group debt arrangement. Management has initiated discussions with the lender with the intention of extending the maturity date and amending other terms of the agreement prior to the debt becoming due in June 2024.

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 other than the matter noted above.

Our responsibilities and the responsibilities of the directors 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 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 Report of the Director for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Report of the Director has 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 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; or

-	the director was not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemption from the requirement to prepare a Strategic Report or in preparing the Report of the Director.

Responsibilities of director

As explained more fully in the Statement of Director's Responsibilities set out on page two, 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.

Based on our understanding of the company and group, we identified that the principal risks of non-compliance with laws and regulations related to Digital River UK, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006.

We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls). Audit procedures performed by the engagement team included:

- Discussions with management, including consideration of known or suspected instances of non-compliance with laws and regulations and fraud;

- Identifying and testing journal entries, in particular those journal entries posted with unusual account combinations that represent a risk of material misstatement due to fraud; and

- Testing a sample of nominal ledger entries made to ensure they have appropriate commercial substance.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, 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 or intentional misrepresentations, or through 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 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

31 October 2023

TURNOVER

3,551,078

2,587,604

Cost of sales

727,906

-

GROSS PROFIT

2,823,172

2,587,604

Administrative expenses

2,593,526

2,401,503

OPERATING PROFIT

229,646

186,101

Interest receivable and similar income

13

35

PROFIT BEFORE TAXATION

229,659

186,136

Tax on profit

65,632

34,015

PROFIT FOR THE FINANCIAL YEAR

164,027

152,121

FIXED ASSETS

Tangible assets

4

9,488

21,234

CURRENT ASSETS

Debtors

5

6,983,905

2,876,735

Cash at bank and in hand

548,456

594,413

7,532,361

3,471,148

CREDITORS

Amounts falling due within one year

6

4,328,194

439,215

NET CURRENT ASSETS

3,204,167

3,031,933

TOTAL ASSETS LESS CURRENT LIABILITIES

3,213,655

3,053,167

PROVISIONS FOR LIABILITIES

2,128

5,667

NET ASSETS

3,211,527

3,047,500

CAPITAL AND RESERVES

Called up share capital

8

1,000

Retained earnings

3,210,527

3,046,500

SHAREHOLDERS' FUNDS

3,211,527

3,047,500

The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the director and authorised for issue on 30 October 2023 and were signed by:

Mr Ryan Douglas - Director

1.	STATUTORY INFORMATION

Digital River UK 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.

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" including the provisions of Section 1A "Small Entities" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Related party exemption

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Tangible fixed assets

Tangible fixed assets are measured at cost less accumulative depreciation and any accumulative impairment losses. Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost, less estimated residual value, of each asset over its expected useful life, as follows:

Plant and machinery: at variable rates on a reducing balance basis

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, 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.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Hire purchase and leasing commitments

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

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

Going concern

The Company's financial statements have been prepared assuming that the Company will continue as a going concern. As of June 1, 2023, the parent company Digital River, Inc has reclassified into current liabilities the debt obligation of approximately US$102 million owed to the lender, Cerberus, which matures on June 1, 2024. Additionally, Digital River UK Limited has intercompany receivables due from Digital River, Inc and Digital River Ireland totalling approximately £5.9 million, the collectibility of which is contingent upon the continuing liquidity of the Group including meeting the terms of the Group debt arrangement. Management has initiated discussions with the lender with the intention of extending the maturity date and amending other terms of the agreement prior to the debt becoming due in June 2024.

3.	EMPLOYEES AND DIRECTORS

The average number of employees during the year was 26 (2020 - 22 ) .

4.	TANGIBLE FIXED ASSETS

Plant and

machinery

etc

£

COST

At 1 January 2021

39,096

Disposals

(5,726

)

At 31 December 2021

33,370

DEPRECIATION

At 1 January 2021

17,862

Charge for year

10,007

Eliminated on disposal

(3,987

)

At 31 December 2021

23,882

NET BOOK VALUE

At 31 December 2021

9,488

At 31 December 2020

21,234

5.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

31/12/21

31/12/20

£

Trade debtors

761,248

-

Amounts owed by group undertakings

5,905,832

2,807,265

Other debtors

316,825

69,470

6,983,905

2,876,735

6.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

31/12/21

31/12/20

£

Bank loans and overdrafts

-

217

Trade creditors

47,435

44,292

Amounts owed to group undertakings

-

12,662

Taxation and social security

4,063,355

31,322

Other creditors

217,404

350,722

4,328,194

439,215

7.	FINANCIAL INSTRUMENTS

The company has no financial assets or liabilities measured at fair value through profit or loss.

Financial assets by category:

Loans and receivables:

31/12/2021

31/12/2020

£

Trade and other receivables excluding prepayments

6,667,080

2,794,603

Cash and cash equivalents

548,455

594,413

--------------

7,215,535

3,389,016

=========

None of the above financial assets are impaired or past due and they are considered to be of good credit quality. The credit risk for cash and cash equivalents is considered negligible, since the main counterparty is a reputable bank with a high quality external credit rating.

8.	CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:

Number:

Class:

Nominal

31/12/21

31/12/20

value:

£

1,000

Ordinary

£1

1,000

9.	ULTIMATE CONTROLLING PARTY

The Company is a subsidiary undertaking of Digital River Ireland, Ltd. The ultimate parent company is Danube Private Holdings II, LLC.

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 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.

10.	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.