 Marcel TopCo GmbHMünchenBefreiender Konzernabschluss zum Geschäftsjahr vom 01.11.2023 bis zum 31.10.2024SUSE S.A.LuxemburgAnnual Report of SUSE S.A and its subsidiaries For the year ended 31 October 2024 R.C.S. Luxembourg B 279240 Contents Consolidated Management Report Consolidated Financial Statements and Notes: - Consolidated statement of profit or loss and comprehensive income - Consolidated statement of financial position - Consolidation statement of changes in equity - Consolidated statement of cash flows - Notes to the consolidated financial statements Additional information: Glossary Independent auditor's report (Réviseur d'Entreprises Agréé) Consolidated Management Report A. Introduction SUSE S.A. (société anonyme) (previously Marcel New Lux IV S.A.) is incorporated and existing under the laws of the Grand Duchy of Luxembourg, with its registered office at 11-13 Boulevard de la Foire, L-1528 Luxembourg and registered with the Luxembourg Register of Commerce and Companies under number B279240 (the "Company"). SUSE S.A. (société anonyme) was incorporated and existed under the laws of the Grand Duchy of Luxembourg, with its registered office at 11-13 Boulevard de la Foire, L-1528 Luxembourg and registered with the Luxembourg Register of Commerce and Companies under number B225816 ("Old SUSE"). On 13 November 2023, Old SUSE ceased to exist when it merged with Marcel New Lux IV S.A. (now SUSE S.A.). It was delisted from the Frankfurt Stock Exchange on the same date. Since the above-mentioned transaction falls within the definition of a common control transaction, the financial information included for the twelve-month period ended 31 October 2023 is in respect of Old SUSE, which has ceased to exist, and its subsidiaries (the "SUSE Group"). The Annual Report for twelve-month period ended 31 October 2023 were prepared in the name of SUSE S.A. (previously Marcel New Lux IV S.A.) and approved by the Management Board of SUSE S.A (previously Marcel New Lux IV S.A.). B. Governance Management Board of SUSE S.A.
Supervisory Board of SUSE S.A.
Leadership Team of SUSE S.A.1
1
Represents 'Key management personnel' of the Group as defined by IAS24.9. C. Events since the reporting date Details of subsequent events are set out in Note 31 to the Consolidated Financial Statements. D. Results for the year (i) Results for the year - IFRS The Consolidated Financial Statements are shown on pages 10 to 85 and show the performance of the Group on a statutory basis. Key highlights are as follows: Revenue and gross profit Revenue for the year ended 31 October 2024 is $724.2 million (2023: $679.0 million) and gross profit is $663.5 million (2023: $624.2 million). Gross profit margin is broadly consistent, being 91.6% compared to 91.9% in the prior year. Operating profit before depreciation and amortization Operating profit before depreciation and amortization for the year ended 31 October 2024 is $192.4 million (2023: profit $150.3 million). Amortization and depreciation Amortization and depreciation of $103.4 million for the year ended 31 October 2024 (2023: $147.6 million) includes $91.6 million of amortization of intangible assets, $5.7 million of depreciation on property, plant and equipment and depreciation of right-of-use assets of $6.2 million. A large portion of amortization of intangible assets is attributable to assets acquired as part of previous business combinations. The decrease in amortization and depreciation compared to the prior year is primarily due to intangibles acquired in previous years being fully amortized. Further details are set out in Notes 12, 13 and 21 to the Consolidated Financial Statements. Net finance costs Net finance costs were $119.0 million for the year ended 31 October 2024 (2023: $67.4 million). The increase in costs compared with the prior year is primarily due to the €500 million loan facility drawn at the end of the prior year. Finance income of $4.7 million for the year ended 31 October 2024 (2023: $5.8 million) was earned on amounts placed on deposit in accounts with preferential interest rates. Further details are set out in Notes 9 and 26 to the Consolidated Financial Statements. Taxation Taxation for the year is an expense of $27.2 million (2023: $6.9 million credit) in respect of the loss before tax of $31.4 million, primarily driven by a non-cash accounting write-down of a deferred tax asset in the period. Further details are set out in Note 10 to the Consolidated Financial Statements. (ii) Results for the year - Alternative Performance Measures The Alternative Performance Measures ("APMs") shown below have been calculated with the express purpose of showing the underlying trading of the business including ACV bookings and profitability. The Management Board believes APMs provide a clearer view of the underlying trading of the business and its progress. The reconciliation of the Adjusted Earnings before Interest, Tax, Depreciation and Amortization to IFRS operating loss are shown within this report so the reader can understand the adjustments made. SUSE presents APMs because they are used by management in monitoring, evaluating and managing its business, and management believes these measures provide an enhanced understanding of SUSE's underlying results and related trends. Some of these measures are derived from the IFRS accounts of SUSE, and others from management reporting. The Key APM results for FY24 are:
Note 1 - for a full definition of all APMs, please refer to the Glossary of Alternative Performance Measures. Annual Contract Value (ACV) ACV measures the first 12 months of a contract. It is applied as a measure as it normalizes for multi-year contracts across a single year, because the total booking value can distort performance and growth metrics. Total ACV for FY24 is $616.9 million, vs. $534.0 million in the prior year, representing an increase of 16%. Foreign exchange rate movements have a small impact on total growth. Adjusted EBITDA Adjusted EBITDA represents earnings before net finance costs, loss on associate (which is not part of SUSE trading operations and is described more fully in Note 15 to the Consolidated Financial Statements), tax, depreciation and amortization of intangible assets. It is adjusted for share-based payments, contract liabilities haircut, specific non-recurring items and net unrealized foreign exchange movements. Realized foreign exchange movements are included and represent a gain or loss when an asset or liability is settled at an exchange rate which is different from the transaction date rate. SUSE management reports Adjusted EBITDA to reflect the underlying trading performance of SUSE, excluding non-recurring items and non-cash accounting items. Total Adjusted EBITDA for FY24 is $230.9 million and 32% margin, vs. $228.3 million and 34% margin in the prior year, representing a 1% increase. The increase in Adjusted EBITDA is due to the Adjusted Revenue growth of 6% (IFRS Revenue growth is 7%, due to lower contract liability haircut in FY24 compared to the prior year) offset by cost increases of 9%. The cost increases are due to SUSE investing for future growth in headcount, primarily within Sales and Marketing functions, salary inflation across the business in line with wider market conditions, marketing investments, and increased demand for customer facing travel. The table below reconciles the IFRS operating profit to the Adjusted EBITDA: IFRS operating profit to Adjusted EBITDA
E. Risks and uncertainties The Group's business model, future performance, solvency, liquidity and reputation are exposed to a variety of risks and uncertainties. The risks identified below are those that the Management Board and the Executive Leadership Team consider to be the most relevant to the Group in relation to their potential impact on the achievement of its strategic objectives. All of the risks set out on these pages could materially affect the Group, its business, future operations and financial condition and could cause actual results to differ materially from expected or historical results. These risks are not the only ones that the Group will face. Some risks are not yet known, and some currently not deemed to be material could become so.
F. Other matters Share capital At 31 October 2024, the subscribed share capital of SUSE S.A. ("the Company") was US$17,249,591 (2023: US$17,101,905) as represented by 172,495,911 (2023: 171,019,047) shares without nominal value. Research and development The Group remains committed to research and development in both existing product lines and a range of new products. We focus and adapt our research and development activities based on our business strategy, the needs of our customers and changes in the marketplace. Our development activities focus on adding new or improved functionality desired by customers to our portfolio of products and software solutions. Financial Risk Management A description of the financial risk management of the Group is set out in Note 26 of the Consolidated Financial Statements which details management's consideration of market risk, credit risk and liquidity risk. Related party transactions All transactions with related parties are conducted on an arm's-length basis and in accordance with normal business terms. Transactions between related parties that are Group subsidiaries are eliminated on consolidation. Further details are included in Note 29. Outlook SUSE delivered solid growth in FY24 under its new management team. Strategic initiatives including the reorganisation of its sales force completed in FY24 and launch of SUSE Multi-Linux Support underpinned this performance and will continue to support growth in future years. Emerging product growth, including SUSE Rancher Prime, continues to increase supported by improved product differentiation versus the free version. In FY24 SUSE acquired Stackstate to enhance its cloud-native monitoring and observability capabilities. Stackstate's technology is being integrated into Rancher Prime and is expected to drive a further increase in Rancher growth by supporting retention of existing customers and by increasing free-to-paid conversion. Earlier in FY24, before the benefits of this acquisition, one of the leading analyst firms in the world, Gartner, designated our Enterprise Container Management business as a leader in its Magic Quadrant. This is an important recognition within the industry. During the year SUSE also launched SUSE Al to capitalise on its strong reputation for reliability, flexibility and security across the industry. SUSE Al is an open, secure and enterprise-grade generative Al platform, built on SUSE's open-source software and aims to address challenges in implementing Al, such as risks related to compliance, uncontrolled usage, vendor dependence and high costs. In June, SUSE launched its One Cloud Elevate Program, a new way for SUSE partners to sell SUSE's open-source solutions, including bundling it for use in hybrid scenarios through cloud marketplaces, an area of rapid growth. Partners can expand their business by tapping into their enterprise customers' significant committed spend in the cloud. Finally, SUSE continues to evolve its Edge product set to capture market share in the fast-growing Edge markets. During the year SUSE launched Edge 3.1, optimized to run in resource-constrained, remote locations with intermittent internet connectivity, making it ideal for embedded devices. In FY25, given the growth outlooks for SUSE's markets, competitive positioning enhanced by strategic initiatives, and disciplined approach to investments, SUSE expects to deliver an acceleration in revenue growth with continued high profit margins and strong cash conversion.
22 January 2025 SUSE S.A. Dirk-Peter van Leeuwen, Member of the Management Board Ian Halifax, Member of the Management Board Andrew McDonald, Member of the Management Board Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 31 October 2024
The accompanying notes are an integral part of these Consolidated Financial Statements. For the year ended 31 October 2024
The accompanying notes are an integral part of these Consolidated Financial Statements. Consolidated Statement of Financial Position As at 31 October 2024
The accompanying notes are an integral part of these Consolidated Financial Statements. Consolidated Statement of Changes in Equity For the year ended 31 October 2024
The accompanying notes are an integral part of these Consolidated Financial Statements.
The accompanying notes are an integral part of these Consolidated Financial Statements. Consolidated Statement of Cash Flows For the year ended 31 October 2024
The accompanying notes are an integral part of these Consolidated Financial Statements. Notes to the Consolidated Financial Statements 1. General information SUSE S.A. (société anonyme) (previously Marcel New Lux IV S.A.) is incorporated and existing under the laws of the Grand Duchy of Luxembourg, with its registered office at 11-13 Boulevard de la Foire, L-1528 Luxembourg and registered with the Luxembourg Register of Commerce and Companies under number B279240 (the "Company"). SUSE S.A. (société anonyme) was incorporated and existed under the laws of the Grand Duchy of Luxembourg, with its registered office at 11-13 Boulevard de la Foire, L-1528 Luxembourg and registered with the Luxembourg Register of Commerce and Companies under number B225816 ("Old SUSE"). On 13 November 2023, Old SUSE ceased to exist when it merged with Marcel New Lux IV S.A. (now SUSE S.A.). It was delisted from the Frankfurt Stock Exchange on the same date. Since this transaction falls within the definition of a common control transaction, the financial information included for the twelve-month period ended 31 October 2023 is in respect of Old SUSE, which has ceased to exist, and its subsidiaries. The Annual Report for twelve-month period ended 31 October 2023 was prepared in the name of SUSE S.A. (previously Marcel New Lux IV S.A.) and approved by the Management Board of SUSE S.A (previously Marcel New Lux IV S.A.). The principal activity of the Group is that of an enterprise software company. The Group is a global leader in innovative, reliable and secure open and interoperable enterprise-grade solutions, specializing in Business-critical Linux, Enterprise Container Management and Edge computing solutions. The Company together with its wholly owned subsidiaries (the "Group" or the "SUSE Group") collectively represent the operations of SUSE. These Consolidated Financial Statements of the Group are as at and for the year ended 31 October 2024. These Consolidated Financial Statements present the results of the Group as a whole. Details of the annual accounts of the Company can be obtained at their registered office and at the Luxembourg Register of Commerce and Companies. These Consolidated Financial Statements were authorized for issuance on 22January 2025. Information presented in the notes to these Consolidated Financial Statements have been presented in a systematic manner and typically following the order of the line items in the Consolidated Statement of Comprehensive Income and the Consolidated Statement of Financial Position. 2. Basis of preparation A. Basis of measurement The Consolidated Financial Statements have been prepared in accordance with IFRS accounting standards as adopted by the European Union ("EU IFRS" or "IFRS"). The Consolidated Financial Statements have been prepared under the historical cost basis except for the following items:
The preparation of these Consolidated Financial Statements in conformity with IFRS accounting standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the Consolidated Financial Statements are disclosed below in Note 3'Critical judgments and sources of estimation uncertainty'. The principal accounting policies adopted by the Group in the preparation of the Consolidated Financial Statements are set out below in Note 4 'Significant accounting policies'. B. Basis of Consolidation The Consolidated Financial Statements include the Company and its subsidiary undertakings together with the Group's share of the results and net assets of equity-accounted investments. Subsidiaries Subsidiaries are entities controlled by the Group. The Group has control over an entity where the Group is exposed to, or has rights to, variable returns from its involvement within the entity and it has the power over the entity to affect those returns. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing control. Control is presumed to exist when the Group owns more than half of the voting rights (which does not always equal percentage ownership) unless it can be demonstrated that ownership does not constitute control. The results of subsidiaries are consolidated from the date on which control passes to the Group. The results of disposed subsidiaries are consolidated up to the date on which control passes from the Group. Inter-company transactions and balances on transactions between Group companies are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Associates An associate is an entity that is neither a subsidiary nor a joint venture, over whose operating and financial policies the Group exercises significant influence. Significant influence is presumed to exist where the Group has between 20% and 50% of the voting rights but can also arise where the Group holds less than 20% if it has the power to be actively involved and influential in operating and financial policy decisions affecting the entity. Associates are accounted for under the equity method, where the Consolidated Statement of Comprehensive Income and the Consolidated Statement of Financial Position includes the Group's share of their profits and losses and net assets less any dividends received, less any impairment in value. Associates recorded as a result of an acquisition are recorded initially at cost. Unrealized gains arising from transactions between the Group and its associates are eliminated to the extent of the Group's interests in the associates. Unrealized losses are eliminated in the same way as unrealized gains but only to the extent there is no evidence of impairment. Other investments Investments in unlisted shares where the Group does not exert influence or control on the investee are accounted for as financial instruments and recorded within "Investments" in the Consolidated Statement of Financial Position. Unlisted shares are initially measured at fair value less a transaction price associated with acquiring the shares and are subsequently remeasured at their fair value through profit and loss ("FVTPL") at each reporting date. C. Going concern The directors consider that the Company and its subsidiaries have adequate resources to continue in operational existence for a period of at least 12 months from the date of approval of these Consolidated Financial Statements. The directors evaluated the Group's funding position, liquidity and financial covenant profile to ensure it had sufficient access to liquidity and covenant headroom for the Group to meet its obligations as they fall due for a period of at least 12 months from the date of signing the Group's Consolidated Financial Statements. The going concern assessment period is from date of signing the financial statements to 31 January 2026 (the "Assessment Period"). Furthermore, and in accordance with best practice guidance the directors considered events or conditions that may cast significant doubt on the Group's ability to continue as a going concern in the period beyond the Assessment Period. The directors concluded that the disclosures contained herein sufficiently address relevant events and conditions in both the Assessment Period and the period beyond. In evaluating whether the going concern assumption is appropriate, the directors reviewed the Group's forecast cash flows, liquidity, covenant compliance and borrowing requirements over the Assessment Period. In addition, the directors also considered the following factors in their going concern assessment:
The directors concluded, after evaluating relevant, available information, that there are no other events or conditions, that may cast significant doubt upon the Group's ability to continue as a going concern during the Assessment Period that require disclosure in the Group's Consolidated Financial Statements for the year ended 31 October 2024. The directors also evaluated potential events and conditions during the period beyond the Assessment Period that may cast significant doubt on the going concern assessment, concluding that there were no other such events or conditions. Based on this comprehensive assessment, the directors concluded that the continued use of the going concern basis of accounting in preparing the Group's Consolidated Financial Statements for the year ended 31 October 2024 remains appropriate. Accordingly, these accounts do not include any adjustments to the carrying amount or classification of assets and liabilities that would result if the Group were unable to continue as a going concern. D. Functional and presentational currency The Consolidated Financial Statements are presented in thousands of US dollars (denoted as "US$"), which is the functional currency of the Company in addition to several principal subsidiaries of the Group. E. Adoption of new and revised IFRS Accounting Standards (i) The following amendments were applied by the Group for the first time in the year ended 31 October 2024 but did not result in material changes to the Consolidated Financial Statements.
(ii) Amendments to current standards and interpretations available for early adoption or not yet endorsed by the EU which the Group did not apply were as follows:
Management does not believe that the future impact of the amendments and interpretations to existing standards listed above will have a material impact on the Consolidated Financial Statements.
*
Required to be applied for annual periods after 1 January 2024 3. Critical judgements and sources of estimation uncertainty The preparation of these Consolidated Financial Statements in conformity with IFRS accounting standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. The Group regularly reviews these estimates and updates them as required. Revisions to estimates are recognized prospectively. The following estimates are those which management view as critical and therefore could result in a material adjustment to the carrying amount of assets and liabilities in the next financial year should actual results differ: A. Potential impairment of goodwill and intangible assets Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm's length, for similar assets or observable market prices less incremental costs of disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from board approved budgets and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the performance of the assets of the Group being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash inflows and the growth rate used for extrapolation purposes. These estimated parameters have the highest impact on the calculation of the value in use for the entire SUSE Group. The key assumptions used to determine the recoverable amount, including a sensitivity analysis, are as disclosed in the notes to the financial statements. B. Identification and measurement of assets and liabilities acquired in a business combination Goodwill and other intangible assets such as intellectual property and customer relationships are subject to allocation adjustments under the acquisition method accounting for business combinations. Management evaluates the best available evidence for the allocation and measurement of intangible assets. Similarly, there is estimation uncertainty involved in the measurement of liabilities identified as part of a business combination. The recognition of acquired contract liabilities involved a step-down adjustment to reflect its fair value based on the cost to deliver the related service ("the haircut" to contract liabilities). The process involved a 'bottom-up' approach where the costs needed to fulfil the performance obligation are added to an appropriate profit margin. The costs to fulfil are reflective of those that market participants would incur to fulfil the service and do not include costs such as marketing, recruiting, and training, which are incurred prior to the business combination. C. Uncertain tax positions The Group is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes including structuring activities undertaken by the Group and the application of complex transfer pricing rules. The Group recognizes liabilities for anticipated settlement of tax issues based on judgments of whether additional taxes will be due. Significant issues may take several periods to resolve. In making judgments on the probability and amount of any tax charge, management considers:
The ultimate tax liability may differ from the amount provided depending on interpretations of tax law, settlement negotiations or changes in legislation. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the financial statements in the period in which such determination is made. A large proportion of the Group's uncertain tax positions are inherited as part of a business combination and therefore, are subject to indemnification. The recoverability of related indemnification assets is itself a judgment. D. Recoverability of deferred tax assets The recoverability of deferred tax assets recognized by the Group is dependent on the future generation of taxable profits. Management is satisfied that tax losses generated in prior periods are substantially as a result of one-off transactions including the SUSE acquisition, the IPO, and the Rancher and NeuVector acquisitions. The Group forecasts sustained taxable profits in future periods, allowing for recoverability of recognized deferred tax assets. 4. Significant accounting policies Set out below are the significant accounting policies of the Group to 31 October 2024 which have been applied consistently in the current year and prior year. A. Revenue recognition The Group derives its revenues primarily from subscription license services it offers to its customers under various software solutions. Customer subscriptions are usually 12, 24, 36 or 60 months in term and are typically billed in advance. Occasionally income is derived from fees collected retrospectively for service already provided. The Group also generates ancillary revenues from training and consulting contracts. Revenue is recognized when benefits arising from contractual performance obligations are transferred to a customer for an amount that reflects the consideration the Group expects to receive from a customer contract. IFRS 15 Revenue from Contracts with Customers establishes a five-step model of recognizing revenue from customer contracts that requires revenue to be recognized when control over goods and services is transferred to the customer. The Group applies five steps in recognizing revenue as follows: 1. Identify the contract with a customer The Group determines that it has a contract with a customer when the contract is approved, the party's rights regarding the products and services to be transferred can be identified, the payment terms for the products and services are identified, the customer's ability to pay can be determined and the contract has commercial substance. Judgment is used to assess the customer's ability and intent to pay, which is based upon factors including the customer's historical payment experience or credit and financial information pertaining to the customer. 2. Identify the performance obligations in the contract The Group's performance obligations are identified based on the products and services that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract. They consist of subscriptions including technical support and consulting services. Subscriptions and technical support are combined into one single performance obligation as both are rarely sold independent of one another and customers expect to receive both when purchasing a subscription. Performance obligations in relation to consulting are distinct and depend on the terms and conditions of the specific customer contract. 3. Determine the transaction price The Group determines the transaction price based on the consideration expected to be received in exchange for transferring performance obligations to the customer. Rebates paid to resellers as part of a contracted program are accounted for as a reduction to the transaction price. Rebates are measured in accordance with the contractual terms as agreed with the customer and are variable on account of sales volume within a period. The Group's contracts do not contain significant financing components. The Group does not typically extend customer payment terms beyond a standard 30-day term. Rebates paid to partners as part of a contracted program are netted against revenue where the rebate paid is based on the achievement of sales targets made by the partner. 4. Allocate the transaction price to performance obligations in the contract When a contract contains a single performance obligation, the entire transaction price is allocated to that one performance obligation. The majority of revenue earned is delivered as part of a single performance obligation Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price ("SSP"). The Group determines the SSP based on the observable price when the Group sells the subscriptions or consulting services separately. 5. Recognize revenue when or as the performance obligation is satisfied Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised subscription and service offerings to a customer. For each performance obligation, a determination is made as to whether the control is transferred over time or at a point in time. For performance obligations satisfied over time, a method to measure progress towards complete satisfaction is selected, based upon the most faithful depiction of performance. The selected method for each performance obligation type is applied consistently to similar contracts. Subscription license revenues are provided evenly over a defined term, such that revenue is deferred and recognized on a straight-line basis, over the contractual period of performance, ("over time"). For subscription license revenue where performance obligations are already provided, the revenue is recognized immediately as there are no future performance obligations ("point in time"). The Group recognizes certain professional services revenue as services are rendered and recognizes costs as they are incurred. The Group recognizes other revenue from fixed-price professional services contracts as work progresses over the contract period on a proportional performance basis, as determined by the percentage of labor costs incurred to date compared to the total estimated labor costs of a contract. The Group accounts for costs incurred and rebates offered related to acquiring revenue contracts as follows:
The Group presents deferred revenue as a contract liability. Rights to consideration from customers are only presented as accounts receivable if the rights are unconditional. Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods. B. Cost of sales Cost of sales includes costs of consulting and helpline support. C. Pension obligations and long-term pension assets (i) Defined contribution plans A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognized as an employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available. (ii) Defined benefit plans A defined benefit plan is a pension plan that is not a defined contribution plan. Typically, defined benefit plans define an amount of pension benefit that an employee will receive on retirement. This is usually dependent on one or more factors such as age, years of service and compensation. The liability recognized in the Consolidated Statement of Financial Position in respect of defined benefit pension plans is the present value of the obligation at the end of the reporting period less the fair value of pledged plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that have terms to maturity approximating to the terms of the related pension obligation. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. Pastservice costs are recognized immediately in the Consolidated Statement of Comprehensive Income. The current service cost is recognized in the Consolidated Statement of Comprehensive Income as an employee benefit and reflects the increase in the defined benefit obligation resulting from employee service in the current year, benefit changes, curtailments and settlements. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the Consolidated Statement of Comprehensive Income. Long-term pension assets relate to the reimbursement right under insurance policies held in the Group with guaranteed interest rates that do not meet the definition of a qualifying insurance policy as they have not been pledged to the plan and are subject to the creditors of the Group. Such reimbursement rights assets are recorded in the Consolidated Statement of Financial Position as long-term pension assets. These contractual arrangements are measured at fair value through other comprehensive income ("FVOCI"). Fair value of the reimbursement right asset is deemed to be the present value of the related obligation because the right to reimbursement exactly matches the amounts of benefits payable. D. Share-based payments (i) Long-term Incentive Plans The Long-term Incentive Plans ("LTIP") comprise an equity-settled plan with a cash-settled option, and some limited cash-settled, share-based payment arrangements which allow employees to a pro-rata economic participation in the future value increase of the Group. The LTIP comprises one Restricted Stock Unit ("RSU") Program and a Stock Option Program for Senior Executives. (a) Restricted Stock Units ("RSUs") Following the IPO on 19 May 2021, the Group established an Annual RSU Award. Participants are granted a Conditional Share Award by the Group which comprises a number of RSUs. The Annual RSUs vest in three equal annual tranches after the date of grant. 100% of RSUs granted are subject to a service condition and follow a graded vesting pattern over the contractual period. The fair value includes a true up at each reporting date to take into account leavers in that period. An attrition rate is also applied to account for future leavers, where unvested awards will be forfeited. This percentage is based on observed attrition rates adjusting for the fact actual leaver awards have already been removed. The exercise price of all awards is US$ nil. The RSU Awards are equity-settled apart from in a small number of cases where the Board has approved for the awards to be cash-settled due to legal complexities in some countries. Following the delisting of SUSE S.A in FY24, a cashcancellation option was included in the equity-settled plan. (a)(i) Awards where employee has a choice of settlement As the employee has the choice of settlement, the entity has granted a compound financial instrument that includes a liability and equity component. At each measurement date, the fair value of the compound instrument is the sum of the values of the liability component and the equity component. The liability component is measured first. It equals the fair value of the liability under the cash alternative. All of the fair value of the grant will be recognised as a liability if the employee would have to surrender the cash settlement right and receive the equity alternative with the same fair value. Next, the fair value of the equity component is measured. The fair value of the equity component takes into account that the employee forfeits their right to the cash alternative to receive the equity instruments. The incremental value of the equity component is zero unless the employee receives a discount for choosing the equity alternative. Subsequent to initial recognition, the liability component is measured at the fair value of the liability. The equity component is not remeasured. (a)(ii) Cash-settled Where the awards are to be cash-settled, participants have been granted a Cash Conditional Share Award which comprises a number of notional shares. Each notional share is a promise to a cash payment equivalent to the market value of one share of SUSE S.A. stock at the end of the vesting period of the award. A liability is recognized for the fair value of cash-settled transactions. The fair value is measured initially at the date of grant and at each reporting date up to and including the settlement date, with changes in fair value recognized as an employee expense. The fair value is expensed over the period until the vesting date with recognition of a corresponding liability. The approach used to account for modifications and cancellations when measuring equity-settled transactions also applies to cash-settled transactions. (b) Annual Option Award Members of the Management Board and senior employees of SUSE were eligible for the grant of an Annual Option Award, with an exercise price equal to the grant date share price. Annual Option Awards vested in two equal tranches on the second and third anniversaries of the date of grant. The options became exercisable on the respective vesting date of each tranche and will expire on the tenth anniversary, if not exercised. 100% of the Annual Options granted are subject to a service condition and follow a graded vesting pattern over the contractual period. The fair value of the Options was measured using the Black-Scholes Option model taking into account the terms and conditions upon which the options were granted. The risk-free interest rate was based on prices and yields of listed federal securities for zero coupon bonds, listed on the Frankfurt Stock Exchange. The future volatility for the life of the options was estimated based on the median volatility of peer groups/competitors used by Thompson One and other financial analysts. No new Annual Option awards were granted during the year. (ii) Management Investment Participation Program The Management Investment Participation Program ("MIPP") is an equity-settled Group share-based payment arrangement under which certain members of management and Supervisory Board have rights (subject to a cash investment) to subscribe for ordinary and preference shares of an intermediary parent company as a means of profit participation in return for services rendered to the Group. As the characteristics of the shares are similar to an option, the grant date fair value of shares issued is determined using a Black-Scholes-Merton valuation model. (iii) Virtual Share Option Program The Virtual Share Option Program ("VSOP") is a cash-settled Group share-based payment arrangement under which certain employees can participate in the future share appreciation rights of the Group's equity until an exit event (nonmarket condition). At the point it is more likely than not that the non-market condition will be achieved, a liability is recognized for the fair value of cash-settled transactions. The fair value is subsequently measured at each reporting date up to and including the settlement date, with changes in fair value recognized as an employee expense. The fair value is expensed over the period until the vesting date with recognition of a corresponding liability. The approach used to account for modifications and cancellations when measuring equity-settled transactions also applies to cash-settled transactions. E. Foreign currency (i) Functional and presentation currency The presentation currency of the Group is US dollars (denoted as "US$'000s"). Items included in the financial statements of each of the Group's entities are measured in the functional currency of each entity. (ii) Transaction balances Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the dates of the transactions. Gains and losses resulting from settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the Consolidated Statement of Comprehensive Income. (iii) Group companies The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
(iv) Exchange rates The most significant foreign currencies for the Group are the euro ("€") and pound sterling ("£"). The exchange rates used as at 31 October 2024 ("Closing") and for the 12-month period then ended ("Average") are as follows:
F. Business combinations and goodwill Business combinations are accounted for using the acquisition method when the assets acquired, and liabilities assumed constitute a business and control is transferred to the Group. The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at acquisition date fair value, and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition-related costs, not related to the issuance of debt, are expensed as incurred and included in administrative expenses. A business consists of inputs and processes applied to those inputs that have the ability to contribute to the creation of outputs. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests and any previous interest held over the fair value of net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognized at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognized in profit or loss. When the initial accounting for a business combination is determined provisionally, any adjustments to the provisional values are made within the measurement period, a period of no more than one year from the acquisition date. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to a cash-generating unit ("CGU") or group of CGUs within the Group being the lowest level of independently functioning components capable of generating cash flow. Where goodwill has been allocated to a CGU as part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained. G. Intangible assets (i) Purchased software including cloud arrangements Software contracts including cloud arrangements which contain a lease in the scope of IFRS 16 Leases can also be accounted for under IAS 38 Intangible Assets, should the underlying software or arrangement meet the definition of an 'intangible asset' through demonstration of ability to control that asset. The definition of an intangible asset is assumed to be met if the software is either located on-premises, or, in the case of a cloud arrangement, is highly customized regarding its application architecture, and the software is fully integrated into the Group's IT environment, as control is demonstrable. Software contracts are amortized over the contract term from the date the software is ready for its intended use. In cases where cloud arrangements involve customization of applicable architecture that is not deemed to be of a level sufficient to demonstrate control of an asset, the related arrangement is treated as a service contract with the service costs recognized rateably over the service period and any advance payments recognized as prepaid assets. (ii) Capitalized development costs The Group capitalizes directly attributable costs that meet the definition of 'development expenditure' under the standard in preparing software for its intended use as it expects to obtain the future economic benefit from the underlying resource developed. Development costs are amortized over a period of 10 years relating to the expected useful life of the related IT systems developed. (iii) Other intangible assets Other intangible assets include customer relationships, intellectual property and non-compete agreements as a result of acquisitions and are stated at cost less accumulated amortization and accumulated impairment losses. Amortization is charged to the Consolidated Statement of Comprehensive Income on a straight-line basis over the estimated useful life of each intangible assets, details of which are set out in the notes to the financial statements. Such intangible assets are amortized from the date they are available for use. Amortization is calculated using the straight-line method to write off the cost of each asset to its residual value over its estimated useful life as follows:
H. Property, plant and equipment Property, plant and equipment is stated at historical cost less accumulated depreciation and accumulated impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance expenditures are charged to the Consolidated Statement of Comprehensive Income during the financial year in which they are incurred. Depreciation is calculated using the straight-line method to write off the cost of each asset to its residual value over its estimated useful life as follows:
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount and are included in the Consolidated Statement of Comprehensive Income. I. Impairment of non-financial assets Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets that have an indefinite useful life, such as goodwill, are not subject to amortization and are tested annually for impairment. An impairment loss is recognized if an asset's carrying value exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash flows, being cash-generating units ("CGUs"). For annual impairment testing purposes, assets with indefinite useful lives are allocated to a group of two geographical-based CGUs being the EMEA and Non-EMEA operations. Impairment is determined for goodwill by assessing the recoverable amount of the group of CGUs to which the goodwill relates. Management monitors goodwill only at a segment level as the Group currently operates as a single Operating Segment as defined by IFRS 8 Operating Segments. In calculating value in use, the estimated future cash flows are discounted to their present value using the pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. The Group bases its impairment calculation on its most recent budgets and forecast calculations. These budgets and forecast calculations generally cover a period of three years. A two-year projection phase is applied to extend the forecast period to five years before the terminal period. A long-term growth rate is calculated and applied to project future cash flows after the fifth year. In determining fair value less costs of disposal, recent market transactions are considered. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators. When the recoverable amount of a CGU or group of CGUs is less than it's carrying amount, an impairment loss is recognized. This is allocated first to goodwill and then pro-rata to other assets. An impairment loss in respect of Goodwill is not reversed. J. Trade receivables Trade receivables are initially recognized at the transaction price and subsequently measured at amortized cost less impairment losses based upon an expected credit loss methodology. The Group applies the IFRS 9 Financial Instruments simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance for all trade receivables. The Group assumes that the credit risk of a financial asset has increased if it is more than 30 days past due and considers a financial asset to be in default when the financial asset is more than 90 days past due. Loss rates applied are based on forecasted credit loss for individual customers based on observed patterns of trading history as adjusted for specific risk applied based on country of operation. The Group uses an allowance matrix to measure the expected credit losses of trade receivables from individual customers. The expected loss rates are based on the historical credit loss experience. These historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors. The Group considers economic factors prevailing at the measurement date and country-specific risks to be the most relevant factors and has adjusted the historical loss rates based on expected changes in these factors. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses ("ECLs"), the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group's historical experience and informed credit assessment, that includes forward-looking information. K. Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the Consolidated Statement of Financial Position. L. Borrowings Borrowings are recognized initially at fair value, net of transaction costs incurred. Subsequent to initial recognition, interest-bearing borrowings are stated at amortized cost using the Effective Interest Method ("EIR") with the interest expense recognized in the Consolidated Statement of Comprehensive Income. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimate future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transactions costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortized cost of a financial liability. A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability using a new EIR. When a financial liability is extinguished or transferred, the difference between the carrying amount of the transferred financial liability and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in the Consolidated Statement of Comprehensive Income. Where the net present value of the cash flows under the new terms is less than 10% different from the discounted present value of the remaining cash flows of the original debt instrument and the new terms of the liability are not substantially different, such modification does not result in extinguishment of the liability. The amortized cost of the financial liability should be recalculated by computing the present value of estimated future contractual cash flows that are discounted at the financial instrument's original EIR. The difference in the respective carrying amounts is recognized in the Consolidated Statement of Comprehensive Income. M. Leases The Group assesses at contract inception whether a contract is or contains a lease under IFRS 16 Leases and to establish if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. As a lessee, the Group applies a single recognition and measurement approach for all leases and recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. The Group recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use); for lease contracts acquired in a business combination the acquirer recognizes a right-of-use asset and a lease liability. The lease liability is measured at the present value of the remaining lease payments. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date and an estimate of costs to dismantle and remove the underlying asset or to restore the site on which it is located, less any lease incentives received. In addition, the right-of-use asset is periodically reduced by impairment losses. Where an office building is sub-let, if the sub-lease is for a major part of the useful life of the right-of-use asset, as intermediate lessor it is classified as a finance lease. The related right-of-use asset is derecognized, and a new asset representing the Net investment in the sub-lease is reported within 'Other receivables'. For lease receivable, the cash flows used for determining the expected credit losses is consistent with the cash flows used in measuring the lease receivable in accordance with IFRS 16. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:
At the commencement date of the lease, the Group recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments and variable lease payments that depend on an index or a rate. In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date where the interest rate implicit in the lease is not readily determinable. The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and make certain adjustments to reflect the terms of the lease and the type of asset leased. Lease liabilities are increased to reflect the accretion of interest and reduced for the lease payments made. The carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term or a change in the lease payments. N. Taxation Income tax expense comprises current and deferred tax. It is recognised in the profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in OCI. The Group has determined that interest and penalties related to income taxes, including uncertain tax treatments, do not meet the definition of income taxes, and have therefore accounted for them under IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The Group recognizes accruals for tax liabilities in respect of uncertain tax positions when it has a present obligation as a result of a past event and Management judges that it is probable that there will be a future outflow of economic benefits to settle the obligation. The Group recognizes indemnity assets in respect of acquired accruals for tax liabilities only, where the liability in question is recoverable under contractual obligation by the vendor and when the asset is deemed recoverable. (i) Current tax Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustments to the tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantially enacted at the reporting date. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. Current tax also includes tax arising from dividends. (ii) Deferred tax Deferred tax is the tax expected to be payable or recoverable in the future arising from temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences, and deferred tax assets are recognized to the extent that it is probable that temporary differences or taxable profits will be available against which deductible temporary differences can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves. Deferred tax liabilities are not recognized to the extent they arise from the initial recognition of non-tax-deductible goodwill. Deferred tax liabilities are recognized for taxable temporary differences arising on investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realized, based on tax rates that have been enacted or substantively enacted by the reporting period date. Tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same tax authority on either the same taxable entity or on different taxable entities, which intend to settle the tax assets and liabilities on a net basis. O. Share capital, share premium and dividend distribution Incremental costs not forming part of an acquisition and directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. Income tax relating to transaction costs of an equity transaction is accounted for in accordance with IAS 12. Dividend distributions to the Company's shareholders are recognized as a liability in the Group's financial statements in the period in which the dividends are approved by the Company's shareholders. Interim dividends are recognized when the entity has an obligation to make the payment and the amount to be paid can be determined reliably. P. Financial instruments Financial assets and liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following to the change in the business model. (i) Financial assets measured at amortized cost A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as fair value through profit or loss: it is held within a business model whose objective is to hold assets to collect contractual cash flows and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. In assessing whether the contractual cash flows are solely payment of principal and interest on the principal outstanding ("SPPI"), the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers:
A prepayment feature is consistent with the SPPI criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable compensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or premium that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant on initial recognition. The Group had no financial assets held outside trading business models that failed the SPPI assessment. (ii) Financial assets at fair value through profit or loss or through other comprehensive income On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment's fair value in OCI. This election is made on an investment-by-investment basis. All financial assets not classified as measured at amortized cost of FVOCI are measured at fair value through profit or loss. Financial assets at fair value through profit or loss are carried in the Consolidated Statement of Financial Position at fair value with net changes in fair value recognized in the Consolidated Statement of Comprehensive Income. (iii) Write-offs The gross carrying amount of a financial asset is written off when the Group has no reasonable expectation of recovering a financial asset. Financial assets that are written off could still be subject to enforcement activities to comply with the Group's procedures for recovery of amounts due. (iv) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as 'held for trading' if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments (including separated embedded derivatives) entered into by the Group that are not designated as hedging instruments. Gains or losses on liabilities held for trading are recognized in the statement of profit or loss. Financial liabilities designated upon initial recognition as 'fair value through profit or loss' ("FVTPL") are designated at the initial date of recognition, and only if the criteria in IFRS 9 Financial Instruments are satisfied. A derivative embedded in a host contract is separated if (i) the economic characteristics and risks are not closely related to the host, (ii) a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative and (iii) the hybrid contract itself is not measured at FVTPL. Embedded derivatives are measured at FVTPL. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss category. (v) Derivative financial instruments and hedge accounting The Group uses interest rate swaps to hedge its interest rate risk. The derivative financial instrument is initially recognized at fair value on the date on which a derivative contract is entered into and is subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. R. Cash flow hedge The Group uses an interest rate swap to hedge its exposure to interest rate risk in a floating rate borrowing agreement. The effective portion of the gain or loss on the hedging instrument is recognized in other comprehensive income ("OCI") in the cash flow hedge reserve, while any ineffective portion is recognized immediately in the statement of profit or loss as finance income or expense. The cash flow hedge reserve is adjusted to the lower of the cumulative gain or loss on the hedging instrument and the cumulative change in fair value of the hedged item. If cash flow hedge accounting is discontinued, the amount that has been accumulated in OCI remains in accumulated OCI if the hedged future cash flows are still expected to occur. Otherwise, the amount will be immediately reclassified to profit or loss as a reclassification adjustment. After discontinuation, once the hedged cash flow occurs, any amount remaining in accumulated OCI must be accounted for depending on the nature of the underlying transaction. At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which it wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined). A hedging relationship qualifies for hedge accounting if (i) there is an 'economic relationship' between the hedged item and the hedging instrument; and (ii) the effect of credit risk does not 'dominate the value changes' that result from that economic relationship. The ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge. S. Provisions Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as an interest expense. 5. Financial risk factors Refer to Note 26 Financial Risk Management for details of financial risk factors. 6. Revenue Subscription revenue is recognized as a single performance obligation over the contractual term of a contract. In determining the transaction price, the Group considers the effects of reseller rebates to be the main source of variable consideration where certain customers are entitled to rebates on the basis of volume of unit sales generated within a period. (a) Analysis of revenue from contracts with customers
The following table shows the impact of the acquisition accounting adjustment of the contract liability haircut on recognized revenues:
(b) Revenue by route to market
(c) Revenue by geographical location
7. Operating costs by nature The Group classifies costs in the Statement of Comprehensive Income 'by function'. Operating profits of US$ 89.0 million (2023: US$2.7 million) for the year are recorded after charging/(crediting) the following costs as classified 'by nature' set out below:
8. Auditor's remuneration
9. Net finance costs
Net finance costs were $119.0 million for the year ended 31 October 2024 (2023: $67.4 million). The increase in costs compared with the prior year is primarily due to the €500 million loan facility drawn at the end of the prior year which resulted in higher interest costs in the year ended 31 October 2024. Finance income of $4.7 million for the year ended 31 October 2024 (2023: $5.8 million) was earned on amounts placed on deposit in accounts with preferential interest rates. (a) Finance costs
In September 2022, the Group entered into three interest rate swap agreements to hedge the full exposure to variable interest on its three external loan facilities (B1, B2 and Sidecar). On November 14, 2023, as part of SUSE's external debt restructuring, the interest rate swap relating to the Sidecar facility was terminated and the remaining two interest rate swaps were restructured resulting in two swaps which hedge two thirds of the Group's debt (B3 and B4) until 2026. These interest rate swaps are deemed to be effective and the fair value of US$5.4million (2023: US$12.4 million) has been recognized in other comprehensive income. (b) Finance income
Interest income of US$4.7 million for the year ended 31 October 2024 was earned on amounts placed on deposit in accounts with higher interest rates. 10. Taxation (a) Income tax expense / (credit)
(b) Tax charged to other comprehensive income
(c) Tax charged directly to equity
(d) Factors affecting income tax for the year The Group's total tax expense for the year of US$27.2 million (2023: US$6.9 million credit) represents an effective tax rate of (86.6%) (2023: 10.4%). Differences between the expected tax charge/(credit), and the total tax charge/(credit) are explained as:
The reconciling rate has been reduced from 28% to 26% due to changes in the Group's transfer pricing model which came into effect during the period, the result of which is that the Group's main operating jurisdictions are now considered to be the UK and the US (previously the UK, US and Germany). This has resulted in a reconciling item related to changes in tax rates of US$4.2m as the temporary difference relating to contract-related assets has been tax effected at the lower rate. 1 The Group has revised its transfer pricing model, which has resulted in a change to the geographical split of profits across the Group. This change, along with the impact of increased finance costs, means US$23.4m of previously recognised deferred tax assets specific to Germany (in relation to interest restrictions) have been derecognised, as Management no longer consider it probable that there will be sufficient future taxable profits in Germany against which these can be utilised. 2 A further US$12.8m, related to current year interest restrictions in Germany have been treated as temporary differences not expected to reverse. (e) Factors affecting the income tax charge / (credit) in future years The Group's future tax charge and effective tax rate could be affected by several factors including challenges by tax authorities to the Group's transfer pricing arrangements and the pricing of intra-group transactions, tax legislation developments in countries around the world, including reforms related to the taxation of multinationals, the digital economy, and future acquisitions. In December 2021, the Organisation for Economic Co-operation and Development published Tax Challenges Arising from the Digitalisation of the Economy - Global Anti-Base Erosion Model Rules (Pillar Two): Inclusive Framework on BEPS. The Pillar Two rules are designed to ensure that large multinational enterprises within the scope of the rules pay a minimum level of tax in each jurisdiction where they operate. Pillar Two legislation has been enacted or substantially enacted in many of the jurisdictions in which the Group operates. However, this legislation does not apply to the Group as its consolidated revenue is lower than the €750m applicable threshold. (f) Recognition of acquired accruals for tax liabilities and tax indemnity asset The Group maintains accruals for tax liabilities in respect of certain potential tax risks in legal entities acquired as part of prior period business combinations which have been indemnified by the vendor of the business. Current tax liabilities include US$7.1 million (2023: US$7.1 million) related to such potential risks with a corresponding indemnity asset recorded in other current receivables. The Group also maintains an accrual for non-current tax liabilities in respect of uncertain tax positions in respect of the post-acquisition period, largely relating to the Group's transfer pricing arrangements. As at 31 October 2024 this provision was $3.1 million (2023: US$1.7m). (g) Deferred taxes
Deferred tax assets are reviewed at each reporting date and are recognized to the extent that it is probable that temporary differences or taxable profits will be available against which deductible temporary differences can be utilized. Recognized deferred tax assets are mainly in respect of German and US subsidiaries. Deferred tax assets in Germany of US$26.0 million (2023:US$32.1 million) are recognized on the basis that they are fully offset by deferred tax liabilities in the same legal entity or tax group. Further deferred tax assets of US$13 million are recognized on the basis of a deferred tax asset reversal calculation, based on Management's projections of future profitability. These calculations are consistent with forecasts used for other relevant assessments across the business. US$23.4m of previously recognised deferred tax assets in Germany have been written off as management no longer consider it probable that there will be sufficient future taxable profits against which these can be utilised following changes to the Group's transfer pricing model and increased finance costs Deferred tax assets in the US of US$21.5 million (2023: US$:24.2 million) are fully offset by deferred tax liabilities with a further US$112.1 million (2023: US$99.9 million) of deferred tax assets being recognized on the basis of a deferred tax asset reversal calculation as noted above. As at 31 October 2024, the Group has unrecognized deferred tax assets in respect of gross temporary differences relating to US foreign tax credits, German interest restrictions and other group tax losses as follows:
As at 31 October 2024, the Group's recognized deferred tax liabilities are as follows:
11. Business combinations A. Acquisition of Stackstate B.V. (17 June 2024) Pursuant to the terms of the "Sale and purchase agreement" ("the Agreement") dated 17 June 2024, and with the completion date of 17 June 2024, the Group acquired 100% of the assets and liabilities of (Stackstate B.V. ("Stackstate")). The acquired entity is a non-listed entity headquartered in Hilversum, Netherlands. (a) Transaction overview The completion date of 17 June 2024 was established as the contractual date of control transfer owing to the fulfilment of certain obligations by the Group being met on this date under the Agreement. Stackstate offers a comprehensive Full Stack Observability Platform that ensures the reliability of complex IT environments and distributed systems. The platform integrates with various monitoring systems to minimize downtime and prevent potential outages. The purpose of the acquisition and integration of Stackstate is to increase revenue and consequently shareholder value through integrated sales with other Group products. Assets and liabilities acquired as set out below are identified with reference to the books and records as at 17 June 2024. For convenience, the Group designated an acquisition date at the end of the month (30 June 2024) rather than the actual acquisition date during the month. No events between the 'convenience date' of 30 June 2024 and the actual acquisition date resulted in material changes in the amounts recognized. Since its consolidation as of 17 June 2024, Stackstate has contributed US$1.1 million to consolidated revenue and US$1.2 million to the consolidated loss for the period. If the transaction had occurred on 1 November 2023, Management estimates that consolidated revenue for the SUSE Group for the year to 31 October 2024 would be US$726.8 million and consolidated losses for this period would be US$59.7 million. (b) Purchase consideration Per the Agreement, total consideration of US$34.7 million was satisfied in cash, the transfer of shares in SUSE S.A. and a transfer of certain liabilities payable by the acquirer.
The consideration transferred in the acquisition is measured at fair value. Total shares in SUSE S.A. comprised 1,204,051 ordinary shares and measured at the fair value of US$17.17 (equivalent to €16 converted at a rate of 1:1.073) per ordinary share. Per the terms of the completion of the Agreement, on behalf of the former shareholders of Stackstate, the Group settled the fair value of certain employee related (US$1.0 million) and third party (US$0.1 million) liabilities identified at the date of acquisition totalling US$1.1 million. Total consideration excludes transaction costs of US$1.1 million which have been expensed to the Consolidated Statement of Profit or Loss in accordance with IFRS 3 Business Combinations. The analysis of cash flows on acquisition (included in cash flows from investing activities) is as follows:
(c) Identification of net assets acquired The fair values of the identified assets and liabilities of Stackstate as at the date of acquisition are as follows:
The above fair values of net identifiable assets acquired are provisional and will be finalized within the 12-month timeframe from date of acquisition, as permitted by IFRS 3 Business Combinations. (i) Intangible assets Separately identifiable intangible assets of US$18.4 million meeting the definition of IAS 38 Intangible Assets within the transaction consist of intellectual property (US$11.9 million) and customer relationships (US$6.5 million). The fair value of the intellectual property (including software) was determined using the 'Relief from royalty method'. Under this method the cash flows generated by an intangible asset are approximated to the royalties which the owner of the asset would save, in comparison to the alternative of licensing an equivalent asset. The fair value of the customer relationships was determined by a qualified specialist in applying an income approach method under IFRS 13, specifically using the 'multi-period excess earnings method' (ii) Property, plant and equipment The Group identified property, plant and equipment of US$117 thousand as part of the analysis of the transaction which primarily consist of IT equipment and office furnishings, the fair value of which was deemed to approximate the previous carrying value. (iii) Other working capital assets Other working capital assets are stated at their book value at the date of acquisition with equates to their fair value. Included within trade and other receivables are trade receivables which amount to US$17 thousand. There were no fair value adjustments required to trade receivables. (iv) Contract liabilities The group acquired contract liabilities of US$2.9 million which are stated at their fair value at the date of acquisition. There were no fair value adjustments required to contract liabilities. (v) Deferred tax liabilities Deferred tax liabilities of US$4.8 million were acquired. (d) Goodwill
Goodwill represents the excess of the aggregate of the consideration transferred over the net identifiable assets acquired and liabilities assumed and is considered provisional as at the date of approval of these Consolidated Financial Statements and will be finalised within 12 months of the date of acquisition, as permitted under IFRS 3. Goodwill is mainly attributable to the value of future new customers and new software generations, and forms part of the Group's single operating segment. The amount of goodwill arising from the acquisition that is expected to be tax deductible is US$ nil. Prior year There were no acquisitions in the prior year. 12. Goodwill and intangible assets Intangible assets are amortized on a straight-line basis over their estimated useful lives as set out in Note 4G. The remaining useful life as at 31 October 2024 is set out below.
Intellectual property is amortized over the period in which the Group expects to derive benefit on the basis of technical obsolescence. Customer relationships are amortized on the basis of average contract duration reflecting the approximate mix of acquired customer contracts. (a) Roll-forward of goodwill
(b) Roll-forward of intangible assets
(c) Carrying value assessment The annual impairment test of goodwill is performed during the fourth quarter of each fiscal year, or more frequently, if events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. The impairment test is performed at a single Group operating segment level, as the EBITDA of the Group is reviewed at this level. This represents the Group as a whole, being a single operating segment under IFRS 8 Operating Segments, which is the lowest level within the Group at which the goodwill is monitored for internal management purposes. The Group performed its annual impairment test as of 30 September 2024 when the carrying amount of the goodwill allocated to the Group as a whole was $2,706.3 million. The Group considers its operating performance in relation to the Board-approved budgets to be the key contributor, when reviewing for indicators of impairment. The recoverable amount has been determined based on a 'value in use' calculation using cash flow projections built on the latest financial budgets approved by the Board. The pre-tax discount rate applied to the cash flow projections is 11.8% (2023: 12.9%). The post-tax discount rate applied to the cash flow projections is 9.8% (2023: 10.5%). Cash flows beyond a five-year forecast period are extrapolated using a 3.7% growth rate (2023: 3.5%). This growth rate is in line with the long-term average growth rate on a weighted average basis for the geographical markets in which the Group is operating. As a result of this analysis, Management has recognized no impairment in the current year (2023: US$ nil). Key assumptions used in value in use assumptions and sensitivity to changes in assumptions Management views a reasonably possible change to the key assumptions which would result in an impairment for the financial year ended 31 October 2024 to be unlikely. The assumptions used in the impairment testing reflect past experience of the Group. The sensitivity analysis for the key assumptions reflects the existence of sufficient headroom between the recoverable amount and the carrying value of the Group's long-term assets. As shown below the headroom remains positive even in case of hypothetical adverse changes of the key assumptions. The calculation of 'value in use' for the Group is most sensitive to the following key assumptions:
Revenue growth rate - an increase in revenue growth in FY25 when compared to FY24, rising to mid-teens percentage growth per annum in the initial five-year forecast period. The growth in revenue is a direct result of the growth in ACV which is resulting from the change in SUSE's Go-To-Market strategy, which is putting SUSE closer to customers and reducing barriers to sales. Alongside a simpler sales process, SUSE is hiring more sales executives and working to improve the sales team's productivity. SUSE's markets are growing, and SUSE expects to deliver ACV growth ahead of market growth in the coming years. While the Group can maintain high growth rates for extended periods, for the purposes of a perpetual valuation, it is assumed that the Group will approach a "steady state" with stable growth rates at some point in time. This implies that once the steady state is reached, the terminal growth rate should not exceed, for example, the nominal GDP rate in the countries, in which the business operates. Hence, a terminal revenue increase of 3.7% has been applied from FY30 onwards. The growth rate used to extrapolate cash flows beyond the forecast period is based on a weighted average of the geographical markets in which the Group operates. AEBITDA margins - FY25 AEBITDA margins are similar to FY24, gradually increasing over the initial five-year forecast period, but remaining within the 30-40% margin range throughout. Whilst SUSE will continue to invest in future growth, primarily across R&D and S&M functions, the company is focussed on driving operating leverage to expand margins over time. Discount rates - Discount rates represent the current market risk of the Group and its weighted average cost of capital ("WACC") which considers both debt and equity. The cost of equity is derived starting with a risk-free return, adding a relevant inflation spread and adjusting for country risk and market risk premia (adjusted for peer group beta factors). The cost of debt is estimated with reference to a basket of debt issued by other technology companies. The cost of debt has no impact on the results as there is no weighting related to debt from peers. Sensitivity analysis for the key assumptions in the terminal period is presented in the table below:
The sensitivity analysis shows that for the terminal growth rate, even if this reduces to 3.0%, the headroom remains positive ($2,305.7m). Similarly, for AEBITDA margin, even if the AEBITDA margin is reduced to 36.4%, the headroom remains positive ($2,480.4m). For WACC, even with a significantly higher WACC of 12.5%, the headroom remains positive ($2,253.0m). Management further analyzed key assumptions and how they would need to change individually (that is, without changing other key assumptions) for the recoverable amount to be equal to the carrying amount. This is set out below:
Management have considered these possibilities and have determined there is a very low risk of these scenarios occurring. 13. Property, plant and equipment
No impairment was recognised during the year ended 31 October 2024 (31 October 2023: nil). 14. Subsidiary undertakings Details of subsidiaries of the Company as at 31 October 2024 are provided below. The principal activities of subsidiary undertakings are (A) Software sales and support functions, (B) Development of software, (C) Investment holding, (D) Intellectual property licensing and (E) dormant.
1
The ordinary share capital of the subsidiaries, unless otherwise indicated, are wholly
owned by subsidiary undertakings of the Company. 15. Investments (a) Investment in associate Open Invention Network LLC ("OIN") is a strategic partnership of software corporations that licenses global patent pools in exchange for a pledge of non-aggression by its participants. The initiative encourages freedom of action in the use of 'Linux' and the sharing of new ideas and inventions. At 31 October 2024 the Group's 12.5% (2023: 12.5%) interest was carried at US$8.5 million (2023: US$10.0 million) after recording its share of losses for the year of US$1.5 million (2023: US$1.8 million) as detailed below:
The investment is accounted for under the equity method of accounting. The accounting year-end date of the associate investment is 31 December, and results are reported on a quarterly basis. The Group records an adjustment to align the reporting period of the associate and the basis for measurement of the Group. Assets, liabilities, and equity of the investment in the current year and prior year and the results for the year ended 31 October 2024 as adjusted were as follows:
There are no significant restrictions on the ability of the associate investment to transfer returns to the Group. There are no contingent liabilities to the Group's interest in associate investments (2023: US$ nil). (b) Other investment Pursuant to the terms of the "Series Seed Preferred Stock Purchase Agreement" dated 15 June 2022, the Group purchased 222,222 shares in Acorn Labs Inc. for cash consideration of US$0.5 million. The Group does not exert influence or control on Acorn Labs Inc. and the investment is accounted for as a financial instrument at fair value through profit or loss, recorded within "Investments in associate" in the Consolidated Statement of Financial Position. As at 31 October 2024, the Groups interest was carried at US$0.5 million (2023: US$0.5 million) as detailed below:
16. Trade and other receivables
At 31 October 2024, the carrying amount of trade and other receivables approximates their fair value due to their shortterm nature. Included within 'Other receivables' at 31 October 2024 was US$12.8 million (2023: US$10.6 million) in respect of accrued income resulting from completed performance obligations that are yet to be invoiced as at the reporting date. Accrued income is reclassified to trade receivables upon invoicing. The following tables provide information about the ageing and the expected credit losses for trade receivables from individual customers. The loss rates presented below have considered country-specific risks.
The loss allowance for receivables has been disclosed separately in the Consolidated Statement of Comprehensive Income. Amounts charged in the allowance account are generally written off when there is no expectation of recovering additional cash. The movement in the loss allowance in the year is as follows:
Further details relating to the credit risk of financial instruments are disclosed in Note 26. 17. Contract-related assets
Contract-related assets are costs related to obtaining a customer contract which are capitalized when they are deemed to be incremental and expected to be recovered. The Group incurs directly attributable costs relating to obtaining a contract in respect of consideration payable to customers (reseller funds), and employees and third-party providers (sales commissions). Sales commissions paid for new customer contracts are amortized on a straight-line basis over an expected customer life, which averages 96 months based on analysis of transactions and which considers expected renewal frequency. Sales commissions paid for customer contract renewals are not commensurate with new contracts and are amortized over 40 months, except where the renewal is less than one year, in which case the costs are expensed when incurred. Sales commissions paid to partners are amortized over the contract term. The Group incurred and capitalized sales commission costs of US$53.7 million (2023: US$38.6 million) during the year with related amortization of US$27.0 million (2023: US$21.4 million) expensed to the Statement of Comprehensive Income as a sales and marketing cost. The current portion of contract-related assets includes the amortization expected in the following financial year on sales commission assets of US$28.9 million (2023: US$22.7m), reseller rebates of US$5.4 million (2023: $5.9m) and accrued commission assets of US$14.4 million (2023: $9.4m). Commissions are settled in arrears and are capitalized when realized. The accrued commission asset represents the amortized asset value based on the closing commission accrual. Reseller rebates are amortized over the estimated duration of the related revenue contract term. The Group incurred and capitalized reseller rebates of US$3.1 million (2023: US$3.5 million) during the year with related amortization of US$3.6 million (2023: US$3.2 million) expensed in the Statement of Comprehensive Income net of revenue recognized under the principles of IFRS 15 Revenue from Contracts with Customers. There was no impairment charge on contract-related assets as at 31 October 2024 (31 October 2023: nil). 18. Cash and cash equivalents
Included in cash and cash equivalents at 31 October 2024 was US$0.7 million (2023: US$0.6 million) which is restricted for the purposes of lease deposits covered by actual cash deposits. Further details relating to the credit risk of financial institutions at which cash is deposited are disclosed in Note 26. 19. Trade and other payables
At 31 October 2024, the carrying amount approximates to the fair value. Further information regarding the Group's exposure to foreign currency and liquidity risk is set out in Note 26. 20. Borrowings (a) Amounts outstanding at the reporting date
Total arrangement fees of US$36.0 million (2023: US$46.8 million) are included in the calculation of the amortized cost using the effective interest method. On 26 September 2023, the Group entered into a new Senior Facility Agreement for EUR500 million and the full amount was drawn on 29 September 2023. On 9 November 2023, this facility was syndicated, resulting in a final denomination of EUR250 million and US$264 million. On the same date, SUSE refinanced its existing debt structure and extended its existing term loans to 2030, resulting in two facilities of US$675 million ('B3') and €550 million ('B4'). SUSE also reduced its Revolving Credit Facility (RCF) from US$169 million to US$145 million and extended the RCF term to 2027. Following the refinancing, the modification of the expected cash flows resulted in the application of a new EIR and the acceleration of the amortization of the loan related capitalized arrangement fees. In May 2024 a repricing of the Group's debt took place which resulted in a 0.5% reduction of the fixed margin on both facilities from 4.5% to 4.0%. The two facilities were also renamed the B5 (US$675 million) and B6 (EUR550 million). The repricing had no impact on the interest rate swaps in place. On 12 November 2024 there was a further reduction in the fixed margin on both facilities. The margin on the B5 facility was reduced by 0.5% from 4.0% to 3.50% and is now named the B7 facility. The margin on the B6 facility was reduced by 0.25% from 4.0% to 3.75% and is now named the B8 facility. (b) Reconciliation of movement in Consolidated Net Leverage
Other payables relate to unpaid software liabilities of US$5.2 million (31 October 2023: US$5.1 million). US$3.9 million (31 October 2023: US$3.1 million) is included in current other payables and US$1.3 million (31 October 2023: US$2.0 million) in non-current other payables. These amounts are included in the movement in other payables in the Statement of Cash Flows. (c) Reconciliation of movements of liabilities to cash flows used in financing activities
During 2024, the Group repaid US$3.4 million (31 October 2023: Bl - US$3.6 million) of the B3 loan note. Lease payments for the year ended 31 October 2024 were US$8.1 million (31 October 2023: US$8.4 million). Further details are set out in Note 21. Receipts in respect of interest rate swap arrangements amounted to US9.8 million (31 October 2023: US$2.0 million receipts). Further details are set out in Note 26(d). 21. Leases
The majority of the Group's contracted lease value are office buildings. The relevant lease population was ascertained following a review of all major supplier contracts to the Group to identify implied or embedded lease terms. The remaining term of the lease contracts varies between one month and eight years. While extension options are available on some contracts, Management does not consider an exercise of the options reasonably certain and therefore they have not been included in the lease term. Modifications in the current year include the derecognition of a right-of-use asset in office buildings related to sub-let space, and instead the recognition of a Net Investment in sub-lease of US$0.1 million (2023: US$0.8 million) reported in other receivables. The Group recognized lease liabilities of US$12.4 million (2023: US$16.7 million) and right-of-use assets of US$11.6 million (2023: US$14.6 million) as at 31 October 2024. Management has performed a review of all leased assets at the financial reporting date and is satisfied that no further impairments to right-of-use assets exist as of 31 October 2024. The present value of lease liabilities at the balance sheet date was as follows:
Lease liabilities are discounted at the incremental borrowing rate at the lease commencement date. In order to calculate the incremental borrowing rate, the interbank offering rates in the country of the respective leased asset for the corresponding duration were taken as the reference rate and a spread of the Group's cost of debt was added as a risk premium. The weighted average discount rate applied during the year was 7.16% (2023: 6.62%). The maturity profile of the Group's lease portfolio at the balance sheet date was as follows:
The total cash outflow for leases for the year was US$8.1 million (2023: US$8.4 million). The interest expense on liabilities for the year was US$0.8 million (2023: US$1.0 million). 22. Provisions
Dilapidation provisions relate to leased office buildings with contractual obligations to restore the premises to their original condition on lease expiration. The provision is expected to be fully utilized within 7 years. Legal provisions of US$0.7m million (2023: US$1.9 million) include Management's best estimate of the likely outflow of economic benefits associated with legal matters. 23. Retirement benefit obligations (a) Defined contribution schemes The Group has a number of defined contribution pension schemes. The principal defined contribution schemes are located in the US, UK and Germany. Pension costs for defined contribution schemes as expensed during the year were US$11.4 million (2023: US$9.5 million) of which US$2.4 million (2023: US$1.9 million) remained outstanding at the balance sheet date and forms part of payroll-related accruals. (b) Defined benefit schemes There are defined benefit schemes in SUSE Software Solutions Germany GmbH and SUSE Software Solutions Schweiz AG, two wholly owned subsidiaries of the Group. The schemes are 'final salary' pension plans, which provide benefits to members in the form of a guaranteed level of pension payable for life in the case of retirement, disability and death. Benefits provided depend on the final salary, member's length of service, social security ceilings and other factors. Pension entitlements are calculated by an independent actuary. There is no requirement for the appointment of Trustees. The schemes are administered locally with the assistance of pension experts. The German plan is closed for new membership. The schemes are comprised of long-term pension assets and retirement benefit obligations as set forth below. (i) Long-term pension assets Long-term pension assets relate to the contractual arrangement under insurance policies held by SUSE Software Solutions Germany GmbH with guaranteed interest rates. The assets have not been pledged to a plan and are recorded in the Consolidated Statement of Financial Position as long-term pension assets. These contractual arrangements are treated as financial assets held at fair value since there is not a matching amount of benefits payable under the defined benefit plan. Movements in fair value of long-term pension assets are included in the Consolidated Statement of Comprehensive Income. The movement on the long-term pension asset for the year is as follows:
Long-term pension assets are Level 3 assets under the fair value hierarchy. These assets have been valued by applying a discount rate to the future cash flows and considering the fixed interest rate, mortality rates and term of the insurance contract. There have been no transfers between levels for the year ended 31 October 2024 (2023: None). (ii) Retirement benefit obligations The following amounts have been included in the Consolidated Statement of Comprehensive Income for defined benefit schemes:
The following amounts have been recognized as movements in the Consolidated Statement of Other Comprehensive Income:
The key assumptions used in the actuarial valuation of the schemes as at the reporting date were:
The net liability included in the Consolidated Statement of Financial Position arising from obligations in respect of defined benefit schemes is as follows:
The defined benefit obligation has moved as follows during the year:
As a result of a plan amendment during the prior year, the Group's defined benefit obligation increased by $0.1 million in the prior year. A corresponding past service cost of $0.1 million was recognised in the Consolidated Statement of Profit or Loss during the prior year. There were no plan amendments during the current year. The expected contributions for the next annual reporting period are US$0.2 million (2023: US$0.2 million) in respect of the Germany scheme and US$0.4 million (2023: US$0.3 million) in respect of the Swiss scheme. The major categories of the plan assets are as follows:
The majority of the re-insurance contracts have guaranteed interest rates of 4.0%, with the remaining at 3.25% or 2.75%. None of the plan assets are represented by financial instruments of the Group. None of the plan assets are occupied or used by the Group. Through its defined benefit schemes the Group is exposed to a number of risks, the most significant of which are detailed below: Life expectancy - the majority of the plan obligations are to provide benefits over the life of the member, so increases in life expectancy will result in an increase in the plan liabilities as benefits would be paid over a longer period; and Inflation - some of the Group pension obligations are linked to inflation, and higher inflation will lead to higher liabilities. The majority of the plan assets are either unaffected by or loosely correlated with inflation, meaning an increase in inflation will also increase the deficit. The table below provides information on the sensitivity of the defined benefit obligation to changes to the most significant actuarial assumptions. The table shows the impact of changes to each assumption in isolation, although, in practice, changes to assumptions may occur at the same time and can either offset or compound the overall impact on the defined benefit obligation. These sensitivities have been calculated using the same methodology as used for the main calculations:
An increase of one year in the assumed life expectancy for both males and females would increase the defined benefit obligations by 1.6% as at 31 October 2024 (2023:1.4%). 24. Share-based payments The Group incurred a share-based payment expense of US$19.0 million (2023: US$41.0 million) in respect of the sharebased payment schemes. An expense of US$3.1 million (2022: US$0.5 million) was incurred in the year in respect of employer taxes on these share-based payment schemes.
(a) Long-term incentive plans The Long-term Incentive Plans ("LTIP") comprise predominantly equity-settled (including a choice of settlement), and some limited cash-settled, share-based payment arrangements which allow employees, including the Management Board, to a pro-rata economic participation in the future value increase of the Group. The LTIP comprises the following plans:
Restricted Stock Units ("RSU") Following the IPO on 19 May 2021, the Group established an Annual RSU Award. Participants are granted a Conditional Share Award by the Group which comprises a number of RSUs. The Annual RSU Award may be granted to employees on an annual basis and will vest in three equal annual tranches after the date of grant. 100% of RSUs granted are subject to a service condition and follow a graded vesting pattern over the contractual period. The fair value includes a true up at each reporting date to take into account leavers in that period. A 5% annual attrition rate is also applied to account for future leavers, where unvested awards will be forfeited. This percentage is based on observed attrition rates adjusting for the fact actual leaver awards have already been removed. The employee has a choice whether to settle the awards in cash or equity. There are a small number of cases where the Board has approved the awards to be cash-settled due to legal complexities in some countries. Following the delisting this scheme is now closed to new entrants. (a) (i) Awards where an employee has a choice of settlement Participants are granted a Conditional Share Award by the Group which comprises a number of RSUs. At the date of grant, this was a promise to transfer one share of SUSE S.A. stock to a participant at the end of the vesting period. Following the delisting of SUSE S.A. the participants were given a choice of settlement between a notional share of SUSE.S.A stock or cash. The entity is now deemed to have granted a compound financial instrument that includes a liability and equity component. The fair value of the compound financial instrument is the sum of the values of the liability and equity components. On grant, the liability component is measured first, and the fair value was calculated at €16.00 using an appropriate valuation methodology. The fair value of the equity component was US$nil as there was no difference between the fair value of the equity and cash alternative. The liability component is remeasured at each reporting date. The weighted average fair value of the awards at 31 October 2024 is US$17.37 (€16.00). The amount of RSU awards recognized in equity (within "Other reserves") as at 31 October 2024 is US$85.4 million (2023: US$101.2 million). The weighted average remaining contractual life to vesting is 304 days (2023: 456 days). The following movements in RSU units were recorded during the year ended 31 October 2024:
(a) (ii) Cash-settled Where the awards are to be cash-settled, participants have been granted a Cash Conditional Share Award which comprises a number of notional shares. Each notional share is a promise to a cash payment equivalent to the market value of one share of SUSE S.A. stock at the end of the vesting period of the award. A liability is recognized for the fair value of cash-settled transactions. The fair value is measured initially at the date of grant and at each reporting date up to and including the settlement date, with changes in fair value recognized as an employee expense. The fair value is expensed over the period until the vesting date with recognition of a corresponding liability. The fair value of the liability was US$0.7 million as at 31 October 2024 (2023: US$0.3 million), based on the valuation of €16.00 at the reporting date. The weighted average remaining contractual life to vesting is 306 days (2023: 466 days). The following movements in RSU units were recorded during the year ended 31 October 2024:
(a) (iii) Annual Option Award (Equity-settled) Members of the Management Board and senior employees of SUSE are eligible for the grant of an Annual Option Award, with an exercise price equal to the grant date share price. Annual Option Awards will vest in two equal tranches on the second and third anniversaries of the date of grant. The options will become exercisable on the respective vesting date of each tranche and will expire on the 10th anniversary if not exercised. 100% of the Annual Options granted are subject to a service condition and follow a graded vesting pattern over the contractual period. The total expense estimated to be recorded over the life of the scheme, including an obligation to good leavers, is US$2.4 million (2023: US$2.4 million). The amount of the Annual Option Awards recognized in equity (within "Other reserves") as at 31 October 2024 amounted to US$2.4 million (2023: US$2.4 million). The following movements in Annual Option Award units were recorded during the year ended 31 October 2024:
*
Weighted average exercise price The options outstanding at 31 October 2024 had an exercise price in the range of €16.66 to €30.00 (2023: €16.66 to €30.00) and a weighted average remaining contractual life to vesting of 229 days (2023: 372 days). (b) Share Grant Award to members of the Supervisory Board Members of the Supervisory Board (excluding employees of EQT Partners) were awarded a one-off stock grant of €200,000 of shares in SUSE S.A. at the initial listing price of €30.00. In aggregate, a total grant of €1,200,000 was made of which €262,080 was settled in cash and the residual amount of €937,920 was granted in the form of 31,264 SUSE S.A. shares at the initial listing price of €30.00. For share-based payment transactions where the terms of the arrangement provide the choice of whether the award is settled in cash or by issuing equity instruments, the Group shall account for that transaction, or components of that transaction, as a cash-settled share-based payment transaction to the extent that the Group has incurred a liability to be settled in cash or as an equity-settled share-based payment transaction to the extent that no such liability has been incurred. For the cash-settled component, IFRS 2 requires remeasurement at subsequent reporting dates. However, as the portion of the grant settled in cash of €262,080 was determined at the inception of the program and calculated based on the initial listing price it is not impacted or adjusted due to the future valuation of SUSE S.A. shares. The equity-settled component is measured at the grant date (19 May 2021) and assigned a fair value of €30.00, being the initial listing price. The vesting period for the grant is three years from the date of appointment (4 May 2021) to the latest date for the AGM to approve the annual accounts for the year ended 31 October 2023 (30 April 2024). An expense of US$0.2 million was recognized in the current year (2023: US$0.5 million). The total expense estimated to be recorded over the life of the scheme, including an obligation to good leavers, is US$1.5 million (31 October 2023: US$1.5 million). The amount of these awards recognized in equity (within "Other reserves") as at 31 October 2024 amounted to US$1.2 million (31 October 2023: US$1.0 million). (c) Management Investment Participation Program The Management Investment Participation Program ("MIPP") is an equity-settled Group share-based payment arrangement under which certain members of management and the Supervisory Board (subject to a cash investment) have rights to subscribe for ordinary and preference shares of an intermediary parent company as a means of profit participation in return for services rendered to the Group. Members invest through one participation vehicle that owns equity in that intermediary parent company. There are two share categories in the parent company: ordinary shares and preferred shares. MIPP members are primarily invested in the ordinary shares, which result in higher return in the event of a favourable exit scenario. The MIPP agreement includes the call right for the shareholder and the put right for the respective member in the scenario of a leaver event. MIPP members will receive a payment from the intermediary parent company (not the Company or Group) in an exit event. Given that the payment is settled outside of the Group with no obligation on the Group or its subsidiaries, the MIPP is classified as an equity-settled plan. The implicit service condition is that members remain with the Group up to such time that an exit event occurs. In a bad leaver scenario, the investment is repurchased by the intermediary parent company at cost (or at a lower fair value). In a good leaver scenario, the investment is repurchased at the fair value of the shares on the leaving date. The intermediary parent company that administers the scheme has a call option on repurchasing units from members who leave the Group during the period. The share-based payments charge associated with leavers is accelerated and expensed in full at the respective reporting date. (c)(i) Management Investment Participation Program (2019) The original MIPP scheme was established in 2019. On 19 May 2021, the shares of SUSE S.A. started trading on the Frankfurt Stock Exchange. The MIPP was considered to be settled for the majority of participants upon the repurchase as of 19 May 2021. An expense of US$ nil million was recognized in the current year (2023: US$0.2 million). The total expense estimated to be recorded over the life of the scheme, including an obligation to good leavers, is US$6.9 million (31 October 2023: US$6.9 million). The amount of MIPP award recognized in equity (within "Other reserves") as at 31 October 2024 amounted to US$6.9 million (2023: US$6.9 million). The following movements in ordinary share units were recorded during the year ended 31 October 2024:
There is now one remaining participant in the MIPP, holding a total number of 290,985 units. This participant is no longer an employee of SUSE. The vesting period ended in March 2023, no further expense will be recognised. (c)(ii) Management Investment Participation Program (2023) In July 2023, a new MIPP scheme was established and made available to members of the Executive Leadership team and Supervisory Board (subject to a cash investment). Like the previous MIPP, the accounting is in the scope of IFRS 2, identified as a Group share based payment to participating employees and treated as equity settled. The following movements in ordinary share units were recorded during the year ended 31 October 2024:
The key valuation inputs used in estimating the grant date fair value of the instruments issued are set out below:
For value to flow to the members, an exit event (non-market condition) needs to occur. There is an implicit service condition relevant to the employees in that they need to be in situ at the point of exit to benefit from any upside in their shareholding (unless they meet good leaver conditions). In Management's view, at both the grant date and the reporting date, it is not more likely than not that the non-market condition will be achieved and consequently, a share-based payment expense in respect of the new MIPP scheme has not been recognized. (d) Virtual Share Option Program (2024) Following the delisting of SUSE S.A from the Frankfurt Stock Exchange in November 2023, a new Virtual Share Option Program was established. Like the previous VSOP, the accounting is in the scope of IFRS 2, identified as a Group share based payment to participating employees and treated as cash settled. 2,351,537 ordinary share units were granted during the year. For value to flow to the members, an exit event (non-market condition) needs to occur. There is an implicit service condition relevant to the employees in that they need to be in situ at the point of exit to benefit from any upside in their shareholding (unless they meet good leaver conditions). In Management's view, at both the grant date and the reporting date, it is not more likely than not that the non-market condition will be achieved and consequently, a share-based payment expense in respect of the new VSOP scheme has not been recognized. 25. Contract liabilities Revenue billed but not recognized in the Statement of Comprehensive Income is classified as 'contract liabilities - deferred income'. Contract liabilities primarily relate to undelivered subscription services on multi-year billed contracts. A contract liability is an entity's obligation to transfer goods or services to a customer and is recognised in the Statement of Financial Position, when a payment from a customer is invoiced, before a related performance obligation is satisfied. A remaining performance obligation is a promise to transfer goods or services to a customer (with a contract agreed), at a point in the future, but is yet to be invoiced or recognised in the Statement of Financial Position.
Contract liabilities as at 31 October 2024 were US$587.9 million (31 October 2023: US$544.7 million). The unamortized fair value reserve relating to contract liabilities acquired as part of a business combination was fully realised during the financial year (31 October 2023: US$0.4 million). The movement in contract liabilities during the financial year is detailed as follows:
The remaining unbilled performance obligations were US$225.9 million as at 31 October 2024 (31 October 2023: US$154.1million). The aging of remaining performance obligations (including contract liabilities) is detailed as follows:
26. Financial risk management The tables below set out the carrying amounts of financial assets and liabilities of the Group as at the reporting date:
The Group does not hold any financial instruments that are classified as level 1 assets or liabilities as at 31 October 2024 (31 October 2023: none). Derivative financial instruments measured at fair value are classified as level 2 in the fair value measurement hierarchy as they have been determined using significant inputs based on observable market data. The fair values of financial derivatives are derived from forward interest rates based on yield curves observable at the reporting date together with the contractual interest rates. Long-term pension assets are measured at fair value and classified as Level 3 in the fair value measurement hierarchy as they have been determined by applying a discount rate to the future cash flows and considering the fixed interest rate, mortality rates and term of the insurance contract. Interest-bearing borrowings are initially measured at fair value, net of transaction costs incurred. Subsequent to initial recognition, they are stated at amortized cost using the Effective Interest Method. Interest-bearing borrowings are classified as level 2 in the fair value measurement hierarchy. Future cash outflows for principal and interest are discounted over the remaining term using market interest rates at the reporting date. For other financial instruments such as trade and other receivables, cash and cash equivalents, trade and other payables, fair values approximate to book values due to the short maturity periods of these financial instruments. For trade and other receivables, allowances are made within book value for credit risk. There were no transfers of assets or liabilities between levels of the fair value hierarchy during the current or prior years. The Group's multi-national operations expose it to a variety of financial risks that include the effects of changes in credit risk, foreign currency risk, interest rate risk and liquidity risk. Risk management is carried out by Group Treasury under the direction of Management. Group Treasury identifies and evaluates financial risks alongside the Group's operating units. The financial risk factors identified by the Group in the preparation of the Consolidated Financial Statements are consistent with those disclosed in Note 26 'Financial Risk Management' in the last al financial statements. (a) Credit risk Credit risk is the risk of financial loss to the Group if a customer or financial institution fails to meet its contractual obligations and arises principally from the Group's receivables from customers and financial institutions. Financial instruments which potentially expose the Group to a concentration of credit risk consist primarily of cash and cash equivalents and trade receivables. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
(i) Impairment of trade receivables The Group provides credit to customers in the normal course of business. Collateral is not required for those receivables, but on-going credit evaluations of customers' financial conditions are performed. The Group maintains a provision for impairment based upon the expected collectability of accounts receivable. During the year a US$0.3 million (2023: US$0.8 million reversal) charge of the loss allowance was recognized in the Statement of Comprehensive Income. The closing provision at 31 October 2024 was US$0.5 million (2023: US$0.2 million). The Group applies the IFRS 9 Financial Instruments simplified approach to measure its expected credit losses which uses a lifetime expected loss allowance for all trade receivables. The Group uses an allowance matrix to measure the expected credit losses of trade receivables from individual customers. The expected loss rates are based on the actual credit loss experience. These historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors. The Group has identified macro-economics and country specific risks, to be the most relevant factors and has adjusted the historical loss rates based on expected changes in these factors. Further details are set out in Note 16. Concentration risk arises when a number of counterparties are engaged in similar business activities, or activities in the same geographical region or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentration risks indicate the relative sensitivity of the Group's performance to developments affecting a particular industry. In order to avoid excessive concentration risk, the Group's policies and procedures include guidelines to focus on the maintenance of a diversified portfolio. Identified concentration credit risk is controlled and managed accordingly. The Group evaluates the concentration risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets. (ii) Impairment of cash and cash equivalents Risk of counterparty default arising on cash and cash equivalents is controlled by banking with high-quality institutions. The Group considers that its cash and cash equivalents have low credit risk based on the external ratings of the counterparties. The Group held cash and cash equivalents of US$202.9 million at 31 October 2024 (2023: US$192.0 million). 99% of the Group's cash and cash equivalents was held with bank and financial institutions counterparties, which are rated A- to AAA, based on Standard and Poors and Fitch ratings. The expected credit loss on cash and cash equivalents was nil in the current and prior year. (b) Market risk Market risk is the risk that changes in market prices will affect the Group's income or value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures. The Group's Treasury function aims to reduce exposures to interest rate, foreign exchange and other capital management risks, to ensure liquidity is available as and when required, and to invest cash assets safely and profitably. The Group does not engage in speculative trading in financial instruments. The Group manages its capital structure and adjusts considering changes in economic conditions and the requirements of the financial covenants associated with borrowings. The Group monitors capital using a debt/equity gearing ratio in accordance with its borrowing agreements. Consolidated Net Leverage, applying the definition in the Group's Senior Facilities Agreement and Second Lien Facility Agreement, comprises the net total of current and non-current interestbearing borrowings, unpaid software liabilities and cash and short-term depositions. No changes were made in the objectives, policies or processes for managing capital during the year. (i) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group's exposure to the risk of changes in market interest rates relates primarily to the Group's long-term debt obligations with floating interest rates. To manage this, the Group entered into interest rate swaps on the Group's external loan facilities, in which it exchanges, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount. The following table demonstrates the sensitivity to a reasonably possible change in interest rates on the unhedged portion of the Group's external loan facility. With all other variables held constant, the Group's profit before tax is affected through the impact on the floating rate of the borrowings, as follows for a range determined by Management to be appropriate:  On November 14, 2023, as part of SUSE's external debt restructuring, the interest rate swap relating to the Sidecar facility agreement was terminated and the remaining two interest rate swaps were restructured resulting in the two remaining swaps being in place to hedge two thirds of the Group's debt until 2026. The fixed rates payable on the USD facility (B7) will be 4.069% per annum on a notional amount of US$446 million, amortizing at 1% per annum. The EUR facility (B8) is fixed at 2.823% per annum on a notional amount of €363 million. On the remaining one third of each facility, the applicable rates per annum, following the re-pricing which took place in May 2024, are SOFR +4% (pre-repricing SOFR +4.5%) on US$229 million and EURIBOR +4% (pre-repricing EURIBOR +4.5%) on €187 million. Settlements are due monthly on the USD facility and quarterly on the EUR facility. (ii) Foreign exchange risk Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations. Foreign exchange risk arises when such transactions, recognized assets and liabilities are denominated in a currency that is not the entity's functional currency. The Group has investments in foreign operations, whose net assets are exposed to foreign currency translation risk. The Consolidated Statement of Comprehensive Income is exposed to currency risk on monetary items that are denominated in currencies other than the functional currency in which they are held. Foreign exchange exposures that give rise to net currency gains and losses are recognized in the Consolidated Statement of Comprehensive Income. Any gains or losses on consolidation are reported in the foreign currency translation reserve in the Consolidated Statement of Changes in Equity. The functional currencies of Group companies are primarily US dollar and euro. The Group is exposed to transactional foreign currency risk to the extent that there is a mismatch between the currencies in which sales, purchases, receivables and borrowings are denominated and the respective functional currencies of the Group companies. The Group's exposure to foreign currency changes for other currencies is not material. The Group manages the foreign exchange exposure from trade receivables by invoicing multi-year contracts up-front and minimizing credit periods granted to customers. Trade payables are primarily denominated in the functional currencies of the Group companies. (iii) Capital management risk The Group's objective when managing its capital structures is to minimize the cost of capital while maintaining adequate capital to protect against volatility in earnings and net asset values. The strategy is designed to maximize shareholder return over the investment cycle. For the purpose of the Group's capital management, capital includes issued capital, share premium and all other equity reserves attributable to the equity shareholders. The primary objective of the Group's capital management is to maximize shareholder value. The Group manages its capital structure and adjusts considering changes in economic conditions and the requirements of the financial covenants associated with borrowings. The Group monitors capital using a debt/equity gearing ratio in accordance with its borrowing agreements. Consolidated net leverage, applying the definition in the Group's Senior Facilities Agreement, comprises the net total of current and non-current interest-bearing borrowings, unpaid software liabilities and cash and short-term depositions. In order to achieve this overall objective, the Group's capital management, among other things, aims to ensure that it meets financial covenants attached to the borrowings. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. The Group's borrowing agreements contain a Consolidated Senior Secured Net Leverage Ratio covenant, which only applies in specific circumstances, in particular if the amount drawn on the Revolving Credit Facility ("RCF") less cash and cash equivalents exceeds US$67.7 million, (being 40% of the total committed RCF). In the event that the US$67.7 million threshold is exceeded, the relevant covenant states that Consolidated Senior Secure Net Leverage (Borrowings and certain other payables less any unsecured debt, of which there is currently none, less cash in proportion to EBITDA as defined by the Senior Facility Agreements) must not exceed 8.09. As at 31 October 2024, the ratio was 4.07 (31 October 2023: 4.8). No changes were made to the objectives, policies or processes for managing capital during the year. The consolidated debt/equity ratio of the Group at 31 October 2023 is as follows:
Following the new debt structure SUSE's debt leverage has increased to 4.07x. This still permits significant headroom vis a vis the springing covenant level of 8.09x. (c) Liquidity risk Liquidity risk is the risk that the Group might have difficulties in meeting its financial obligations. The Group manages this risk by ensuring that it maintains sufficient levels of committed borrowing facilities and cash and cash equivalents to ensure that it can meet its operational cash flow requirements and any maturing financial liabilities, whilst at all times operating within its financial covenants. The level of operational headroom provided by the Group's committed borrowing facilities is regularly reviewed. Where this process indicates a need for additional finance, this is addressed on a timely basis. The table below summarizes the maturity profile of the Group's financial liabilities as at 31 October 2024 based on contractual undiscounted payments. The current year table includes total estimated net finance costs on US$1.2bn of debt with a 2030 maturity date. The prior year was based on debt with a maturity in 2026 (B1 and B2), 2027 (sc) and a 2- year bridging loan (SC 2023).
(i) Cash flow hedges The Group is exposed to certain cash flow risks relating to its ongoing business operations and financing structure. The primary risk managed using derivative instruments is interest rate risk. The fair value of derivative (liability)/asset as at 31 October 2024 was as follows:
(i) Cash flow hedges The amounts relating to items designated as hedging instruments as at 31 October 2024 were as follows:
In September 2022, the Group entered into three interest rate swap agreements to hedge the full exposure to variable interest on its three external loan facilities (B1, B2 and Sidecar). On November 14, 2023, as part of SUSE's external debt restructuring, the interest rate swap relating to the Sidecar agreement was terminated and the remaining two interest rate swaps were restructured resulting in the two remaining swaps being in place to hedge two thirds of the Group's debt (B3 and B4) until 2026.
On the remaining one third of each facility, following the re-pricing, the applicable rates per annum are SOFR + 4% on US$229 million and EURIBOR + 4% on €187 million. Settlements are due monthly on the B3 facility and quarterly on the B4 facility. There is an economic relationship between the hedged items and the hedging instruments as the terms of the interest rate swaps match the critical terms of the fixed rate loans. The Group has established a hedge ratio of 66.7% (2023: 100%) for the hedging relationships as the underlying risk of the interest rate swaps is identical to the hedged risk components. The Group uses the hypothetical derivative method to test effectiveness which compares changes in the fair value of the hedging instrument and hedging item attributable to the hedged risk. Hedge ineffectiveness can arise:
The fair value of US$5.4 million (2023: US$12.4 million) in respect of the hedged instrument is deemed to be wholly effective and has been recognized in other comprehensive income. Premia received of US$9.8 million (2023: US$2.0 million) have been recycled from the cash flow hedge reserve during the year. 27. Capital and reserves (a) Share capital and share premium At 31 October 2024, the subscribed capital of the Company was US$ 17.2 million (31 October 2023: US$17.1 million) as represented by 172,495,911 (31 October 2023: 171,019,047) shares without nominal value. At 31 October 2024, the share premium of the Company amounted to US$2,543.3 million (31 October 2023: US$2,522.8 million). On 13 November 2023, the Company merged into Marcel New Lux IV S.A. The shares of the Company were immediately delisted from the Frankfurt Stock Exchange. Further details are included in Note 31. The movement in share capital and share premium during the year is detailed as follows:
During the year, the share capital of the Company was increased by $147,686 by the creation of 1,476,864 new shares, resulting in an increase to share premium.
During the prior year, the share capital of the Company was increased by $165,862 by the creation of 1,658,602 new shares, resulting in a reduction to share premium. (b) Retained losses Retained losses as at 31 October 2024 amounted to US$1,094.9 million (31 October 2023: US$1,040.5 million) and included the Group's loss for the year of US$ 58.6 million and other comprehensive income of US$4.1million. (i) Dividends There were no dividends declared during the year. Prior year:
On 27 September 2023, the Company announced that the Management Board of the Company had decided to declare and to pay an interim dividend from its distributable reserves to all shareholders in the Company equivalent to a gross amount of EUR 3.20 per SUSE share. (c) Other reserve The other reserve comprises the equity component of equity-settled share-based payment awards. Further details are disclosed in Note 24. (d) Cash flow hedging reserve The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments used in cash flow hedges pending subsequent recognition in profit or loss or directly included in the initial cost or other carrying amount of a non-financial asset or non-financial liability. Further details are included in Note 29. (e) Foreign currency translation reserve The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations, as well as the effective portion of any foreign currency differences arising from hedges of a net investment in a foreign operation. (f) Reserve requirements as a matter of Luxembourg company law In accordance with relevant law, the Company is required to transfer a minimum of 5% of its net profit for each financial year to a legal reserve. This requirement ceases to be necessary once the balance on the legal reserve reaches 10% of the issued share capital. The legal reserve is not available for distribution to the shareholders. 28. Employees and key management personnel (a) Employee expenses
(b) Pension expenses
(c) Key management personnel Key management personnel ("Management") are those people having authority and responsibility for planning, directing, and controlling the activities of the Group and comprises the Management Board, Supervisory Board and Executive Leadership Team. There were no advances and loans granted to or commitments/guarantees on behalf of members of Management or members of the Supervisory Board during the current year or prior year. The remuneration of the key management personnel of the Group is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures:
(d) Number of employees as at 31 October
The average number of employees of the Group for the year was 2,500 (2023: 2,352). 29. Related party transactions To enable users of the financial statements to form a view on the effects of related party relationships on the Group, related party relationships are disclosed where control exists, irrespective of whether there have been transactions between related parties. All transactions with related parties are conducted on an arm's-length basis and in accordance with normal business terms. Transactions between related parties that are Group subsidiaries are eliminated on consolidation. (i) Ultimate controlling party The ultimate controlling party of the Group is EQT Fund Management SARL, a limited liability company registered with the Luxembourg Register of Commerce and Companies. (ii) Transactions with subsidiaries All transactions between subsidiaries of the Group are in the normal course of business. Transactions between Group subsidiaries are eliminated on consolidation. Further details of the subsidiaries of the Group are included in Note 14. (iii) Transactions with associate investments All transactions with associate investments are in the normal course of business. There were no transactions with associate investments during the year. Further details are included in Note 15. (iv) Transactions with key management personnel The remuneration of key management personnel is set out in Note 28. (v) Transactions with members of the Supervisory Board The remuneration of the Supervisory Board was set out in Note 28. (vi) Transactions with shareholders There were no transactions with shareholders in the current year. In the prior year (27 September 2023), SUSE S.A declared an interim dividend (Note 27) to be paid to all SUSE shareholders which was to be financed by a combination of existing cash and additional borrowings (Note 20). (vii) Transactions with other related parties Pension contributions to Group schemes are disclosed in Note 23. 30. Commitments and contingencies (i) Director and officer insurance The Group maintains insurance cover for all Directors and officers of Group companies against liabilities which may be incurred by them while acting in that capacity at the Group's request. (ii) External borrowings guarantee The obligations of the obligor members of the Group under the external loan agreements (Senior Facilities Agreement and the related finance documents) are secured (subject to certain agreed security principles) by liens granted by obligor members of the Group over shares in obligor members of the Group, material intercompany receivables and material bank accounts. The Group's guarantees under the external loan agreements include upstream, cross-stream and downstream guarantees by obligor members of the Group to each finance party under such agreements for the punctual performance by each other obligor member of the Group of their obligations under such agreements (subject to jurisdiction-specific guarantee limitations as set out therein). (iii) Litigation From time to time, the Group may become involved in legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. The Group is not party to any litigation or legal proceedings that the Group believes could reasonably be expected to have a material adverse effect on the Group's business, results of operations and financial position. 31. Post balance sheet events The Group has evaluated subsequent events from the balance sheet date through to the date at which these Consolidated Financial Statements were approved. None were identified. Additional information: Glossary Glossary of Alternative Performance Measures This document contains certain alternative performance measures (collectively, "APMs") as defined below that are not required by, or presented in accordance with, IFRS, Luxembourg GAAP or any other generally accepted accounting principles. Certain of these measures are derived from the IFRS accounts of the Company and others are derived from management reporting or the accounting or controlling systems of the Group. SUSE presents APMs because they are used by management in monitoring, evaluating and managing its business, and management believes these measures provide an enhanced understanding of SUSE's underlying results and related trends. The definitions of the APMs may not be comparable to other similarly titled measures of other companies and have limitations as analytical tools and should, therefore, not be considered in isolation or as a substitute for analysis of SUSE's operating results as reported under IFRS or Luxembourg GAAP. SUSE has defined each of its APMs as follows:
REPORT OF THE REVISEUR D’ENTREPRISES AGREEReport on the audit of the consolidated financial statements Opinion We have audited the consolidated financial statements of SUSE S.A. and its subsidiaries (the "Group"), which comprise the consolidated statement of financial position as at 31 October 2024, and the consolidated statement of profit and loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including material accounting policy information and other explanatory information. In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 October 2024, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with IFRS Accounting Standards as adopted by the European Union. Basis for opinion We conducted our audit in accordance with the Law of 23 July 2016 on the audit profession (the "Law of 23 July 2016") and with International Standards on Auditing ("ISAs") as adopted for Luxembourg by the Commission de Surveillance du Secteur Financier ("CSSF"). Our responsibilities under the Law of 23 July 2016 and ISAs as adopted for Luxembourg by the CSSF are further described in the « Responsibilities of "reviseur d'entreprises agréé" for the audit of the consolidated financial statements » section of our report. We are also independent of the Group in accordance with the International Code of Ethics for Professional Accountants, including International Independence Standards, issued by the International Ethics Standards Board for Accountants ("IESBA Code") as adopted for Luxembourg by the CSSF together with the ethical requirements that are relevant to our audit of the consolidated financial statements, and have fulfilled our other ethical responsibilities under those ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other information The Management Board is responsible for the other information. The other information comprises the information stated in the consolidated report including the management report but does not include the consolidated financial statements and our report of the "réviseur d'entreprises agréé" thereon. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. 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 this fact. We have nothing to report in this regard. Responsibilities of the Management Board and Those Charged with Governance for the consolidated financial statements The Management Board is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards as adopted by the European Union, and for such internal control as the Management Board determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, the Management Board is responsible for assessing the Group’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 Management Board either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group’s financial reporting process. Responsibilities of the "reviseur d'entreprises agree" for the audit of the consolidated financial statements The objectives of our audit are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a report of the "réviseur d'entreprises agréé" that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF 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 consolidated financial statements. As part of an audit in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Report on other legal and regulatory requirements The management report is consistent with the consolidated financial statements and has been prepared in accordance with applicable legal requirements.
Luxembourg, 22 January 2025 KPMG Audit S.à r.l. Cabinet de révision agréé Thierry Ravasio |
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aktiv
Rechtsform
GmbH
Marcel TopCo GmbH
Stammdaten
- Rechtsform
- GmbH
- Anschrift
-
Frankenstraße 146
90461 Nürnberg - Handelsregister
- HRB 241715, München
- Eintragungsdatum
- 19. Juni 2018
- Branche
-
Managementtätigkeiten von sonstigen Holdinggesellschaften
Beteiligungsgesellschaften
Managementtätigkeiten von Holdinggesellschaften mit überwiegend finanziellem Anteilsbesitz - Eingetragenes Kapital
- 27.116,00 EUR
- Vertretungsregelung
Ist nur ein Geschäftsführer bestellt, so vertritt er die Gesellschaft allein. Sind mehrere Geschäftsführer bestellt, so wird die Gesellschaft durch zwei Geschäftsführer oder durch einen Geschäftsführer gemeinsam mit einem Prokuristen vertreten.
- Unternehmenszweck
- Erwerb, Halten, Verkauf und Verwaltung von Investitionen in andere Unternehmen, sowohl im Inland als auch international
Finanzen
Mitarbeiter
2024
0
Bilanzsumme
2024
976,72 Mio. €
Jahresergebnis
2024
−15.049 €
Bilanz
2024
Aktivseite
976,72 Mio
- Anlagevermögen 63,1 % 616,52 Mio
- Umlaufvermögen 36,9 % 360,21 Mio
Passivseite
976,72 Mio
- Eigenkapital 100,0 % 976,66 Mio
- Rückstellungen 0,0 % 36,0 k
- Verbindlichkeiten 0,0 % 30,0 k
Bilanzdaten für 4 weitere Geschäftsjahre verfügbar.
Vertretungsberechtigte
-
Abhinav Puri
seit 2026 Geschäftsführer
-
Andrew John McDonald
seit 2022 Geschäftsführer
-
Jochen Rainer Jaser
seit 2025 Geschäftsführer
-
Joshua Daniel Stone
seit 2018 Geschäftsführer
-
Marcus Friedrichs
seit 2018 Geschäftsführer
-
Nicolas Rudolf Braas
seit 2018 Geschäftsführer
Eigentum & Beteiligungen
Gesellschafter
- SUSE Group UK Limited GBR 100,0 % 27k €
Wirtschaftlich Berechtigte (UBOs)
Die wirtschaftlich Berechtigten hinter diesen Beteiligungen konnten nicht eindeutig zugeordnet werden.
Beteiligungen an
- Marcel BidCo GmbH 100,0 %
Historie
- 2026
-
26.08.
Eintritt eines MitgliedsAbhinav Puri · Geschäftsführer
- 2025
-
03.12.
Austritt einer PositionIvo Totev · Geschäftsführer
-
03.12.
Eintritt eines MitgliedsJochen Rainer Jaser · Geschäftsführer
-
22.05.
SatzungsänderungMarcel TopCo GmbH
-
22.05.
Änderung des UnternehmensgegenstandsErwerb, Halten, Verkauf und Verwaltung von Investitionen in andere Unternehmen, sowohl im Inland als auch international
- 2023
-
07.09.
Austritt einer PositionA***** M**** · Geschäftsführer
-
24.05.
Austritt einer PositionM****** R*** · Geschäftsführer
-
24.05.
Austritt einer PositionM***** M****** · Geschäftsführer
Jahresabschlüsse
Veröffentlichte Abschlüsse im Original, nach Geschäftsjahr sortiert.
| Geschäftsjahr | Dokument | Veröffentlicht | Zugriff |
|---|---|---|---|
| 2025 | Konzernabschluss | Veröffentlicht | Über die API |
| 2024 | Konzernabschluss | Veröffentlicht | Volltext lesen |
| 2023 | Konzernabschluss | Veröffentlicht | Über die API |
2024 Konzernabschluss Volltext
Registerdokumente
Originalauszüge und Gesellschaftsdokumente als PDF oder XML in Ihre Anwendung einbinden.
GET
Dokumenten-API ansehen
/v1/fetch-document- Aktueller Auszug (AD) PDF
- Chronologischer Auszug (CD) PDF
- Strukturierte Inhalte (SI, XML) XML
- Gesellschafterliste PDF
- Satzung / Gesellschaftsvertrag PDF
Weitere Unternehmen entdecken
Handelsregister-API · MCP
MCP-Dokumentation
Unternehmensdaten direkt im AI-Chat
Geschäftsführung, Beteiligungen und Geschäftszahlen abfragen – über unseren MCP-Server greift Ihr Assistent auf die Handelsregister-API zu.
Assistent verbinden
- Unter „Connectors“ in Claude einen eigenen Connector hinzufügen.
-
Diese Server-URL eintragen und den Connector hinzufügen:
https://mcp.handelsregister.ai/mcp - Mit Ihrem handelsregister.ai-Konto verbinden und den Connector im Chat über „+“ → „Connectors“ aktivieren.
- In ChatGPT im Browser unter Einstellungen → Apps eine eigene App erstellen. Dafür muss der Entwicklermodus freigeschaltet sein.
-
Als Namen „handelsregister“, als Authentifizierung OAuth und diese Server-URL verwenden:
https://mcp.handelsregister.ai/mcp - Mit Ihrem handelsregister.ai-Konto anmelden, die App erstellen und im Chat aus dem Tools-Menü auswählen.
Einmal im Terminal ausführen:
Terminal
claude mcp add --transport http handelsregister https://mcp.handelsregister.ai/mcp \
--header "X-API-Key: YOUR_API_KEY"YOUR_API_KEY durch Ihren handelsregister.ai API-Key ersetzen.
Diesen MCP-Server als Tool in Ihrer Anwendung einbinden:
Python
from openai import OpenAI
client = OpenAI()
response = client.responses.create(
model="gpt-6-astra",
input="Zeige mir die Geschäftsführung, Gesellschafter und letzten verfügbaren Geschäftszahlen von Marcel TopCo GmbH. Nenne die Geschäftsjahre und Quellen.\n\nentity_id: 32ba50c5a14a13afe3fd910633c231ce",
tools=[{
"type": "mcp",
"server_label": "handelsregister",
"server_url": "https://mcp.handelsregister.ai/mcp",
"headers": {"X-API-Key": "YOUR_API_KEY"},
"require_approval": "never",
}],
)
print(response.output_text)YOUR_API_KEY durch Ihren handelsregister.ai API-Key ersetzen.
Diese Konfiguration in Ihrem MCP-Client hinterlegen:
JSON
{
"mcpServers": {
"handelsregister": {
"url": "https://mcp.handelsregister.ai/mcp",
"headers": { "X-API-Key": "YOUR_API_KEY" }
}
}
}YOUR_API_KEY durch Ihren handelsregister.ai API-Key ersetzen.
Dieses Unternehmen abfragen
Nach dem Verbinden diese Frage im Assistenten stellen:
Zeige mir die Geschäftsführung, Gesellschafter und letzten verfügbaren Geschäftszahlen von Marcel TopCo GmbH. Nenne die Geschäftsjahre und Quellen.
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