Lsc Communications UK Holdings Limited

Principal activities and business review The principal activity of LSC Communications UK Holdings Limited (the "Company", "LSC Communications UK") and its subsidiaries (the "Group") offer a broad scope of traditional and digital print, print-related services and office products with customers primarily in Mexico and Canada. LSC Communications UK Holdings Limited (“the company” or “UK Holdings”) is a private limited company incorporated in the United Kingdom on 04 August 2023, and is registered in England and Wales under the Companies Act 2006. Its principal place of business is its registered office located at Suite 1, 7th Floor 50 Broadway, London SW1H 0DB. The Company operates as a holding company for LSC’s non-US operations. LSC Communications UK Holdings Limited is an affiliate of LSC Communications LLC, a private equity owned group that offer a broad scope of traditional and digital print, print-related services and office products, along with logistics and postal optimization services. LSC Communications LLC is part of Atlas Holdings LLC ("Atlas"), a private equity firm that owns a portfolio of companies across various industries. The Group financial statements consolidate the financial statements of LSC Communications UK Holdings Limited and its subsidiaries as at 31 December 2024. The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary. All intra-group transactions, balances, income and expenses are eliminated on consolidation. The Group financial statements utilize merger accounting. Merger accounting, also known as "pooling of interests", is not generally permitted under International Financial Reporting Standards (IFRS). Instead, IFRS mandates the use of the "acquisition method" for business combinations, as detailed in IFRS 3 "Business Combinations." However, there is an exception for certain transactions under common control, which are not explicitly addressed by current IFRS standards. Transactions under common control are those in which all the combining entities or businesses are ultimately controlled by the same party or parties before and after the transaction, and that control is not temporary. Because IFRS does not have a specific standard that deals comprehensively with business combinations under common control, entities apply various practices, often by analogy to other standards or using national accounting standards that permit merger accounting for such transactions. Therefore, we look to UK GAAP. Group reconstructions under UK GAAP often involve scenarios where companies within the same group reorganize their structures through transactions such as transfers of businesses, divisions, or subsidiaries from one entity to another within the same group. Under UK GAAP, specifically FRS 102 (the Financial Reporting Standard applicable in the UK and Republic of Ireland), these types of transactions can sometimes be accounted for using merger accounting, provided certain conditions are met. This is particularly relevant for group reconstructions that do not involve the acquisition of a business from an external party but rather represent internal restructurings under common control. Group reconstructions may be accounted for by using the merger accounting method provided: 1) The use of the merger accounting method is not prohibited by company law or other relevant legislation; 2) The ultimate equity holders remain the same, and the rights of each equity holder, relative to the others, are unchanged; and 3) No non-controlling interest in the net assets of the group is altered by the transfer. The first condition is essentially met as the UK Companies Act does not prohibit merger accounting. The second and third conditions are met as there was no change to the ownership of the ultimate parent (ACR III Global LSC Holdings LLC). The results of the Group and Company accounts are for 12 months in 2024 and the comparative period for the Group represents a full-year period, while the prior period accounts for the Company operate from its creation in August 2023 through year-end. The Consolidated Statements of Profit or Loss shows a $10,885K after-tax profit for the 52-week period from 01 January 2024 to 31 December 2024 compared to $15,299K after-tax profit for the 52 week period from 01 January 2023 to 31 December 2023. The decrease in after-tax profit primarily relates to the increase in cost of materials sold for the 52-week period in 2024. After-tax profit/(loss) is considered a key performance indicator for the Group and the Company and is measured on a yearover- year basis. The Group's financial positions are $137,817K and $161,534K for assets in 2024 and 2023, and $49,067K and $67,767K for liabilities in 2024 and 2023. The decrease in assets and liabilities primarily relate to the decrease in right-of-use assets and lease liabilities, and trade receivable assets and trade payable liabilities. Please visit their respective footnotes for further information.