DIRECTORS' REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2023 |
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COMPANY INFORMATION
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CONTENTS
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STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The principal activity of the Company has continued to be that of the provision of a security integration platform until 31 January 2023. The Company's operations have been integrated into fellow group subsidiary, Everbridge Europe Limited, on 31 January 2023, through a hive up of its trade and assets at this date.
The Company as well as Everbridge Europe Limited are owned by Everbridge Inc., a company incorporated in the United States of America. The results of the group are included in the consolidated financial statements of Everbridge Inc. which are available from 25 Corporate Drive, 4th Floor, Burlington, MA 01803. Following the post year-end acquisition by Thoma Bravo, LP, a new ultimate parent company has been put in place, Everbridge Parent, LP. Everbridge is a global software company that empowers resilience by leveraging intelligent automation technology to enable customers to anticipate, mitigate, respond to, and recover from critical events to keep people safe and organizations running. Boston Consulting Group defines resilience as ‘a company’s capacity to absorb stress, recover critical functionality, and thrive in altered circumstances.’ During public safety threats including severe weather conditions, active shooter situations, terrorist attacks or a pandemic, as well as critical business events such as Information Technology outages, cyber-attacks, product recalls or supply-chain interruptions, over 6,500 global customers rely on our Critical Event Management platform to empower their resilience and to quickly and reliably aggregate and assess threat data, locate people at risk and responders able to assist, automate the execution of pre-defined communications processes through the secure delivery to a comprehensive range of different communication channels and devices, and track progress on executing response plans.
There are a number of potential risks and uncertainties that could have a material impact on the performance of the company. The directors and management team regularly identify, monitor and ensure appropriate processes are put in place to mitigate potential risks and uncertainties. These risks include but are not limited to the supply chain, employees, supplier price increases, market competition and general economic conditions. The directors and management team regularly review the financial requirements of the company and the risks associated therewith.
The company closely monitors its access to bank and other credit facilities in comparison to its outstanding commitments to ensure it has sufficient funds to meet its obligations as they fall due. The group finance function produces regular forecasts which estimate the cash inflows and outflows, month by month, as well as short and long term profit forecasts, so that management can ensure that sufficient financing is in place as it is required.
There is always the possibility that an economic downturn will negatively impact the results of the business. The directors and management team regularly identify, monitor and ensure appropriate processes are in place to mitigate risks and uncertainties and the effect of economic downturns on the business.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
As a leading company in this industry, there is a threat of competition from other companies. The directors regularly identify, monitor and ensure appropriate processes are in place to mitigate potential risks and uncertainties.
Future Developments The Company’s operations were integrated into fellow subsidiary undertaking, Everbridge Europe Limited, on 31 January 2023 with a hive-up of the trade and assets of the Company carried out on 31 January 2023. This plan is part of a wider group structure simplification in Everbridge. The group directors intended to keep CNL activities and operations as they are, but to be integrated into the larger group entity, which is also based in the UK. The same intention applied to the activities of the UAE element of CNL Software, which was integrated into the newly created UAE branch of Everbridge Europe Limited. Following the completion of the integration, the directors intend to dissolve this Company and to also dissolve CNL Software, Inc, the wholly owned subsidiary undertaking. As disclosed in note 2.3 of these financial statements, the directors do not consider the Company to be a going concern and these financial statements have been prepared on a basis other than going concern. Financial and other key performance indicators 2023 2022 Variance Revenue £224,431 £4,351,752 (95%) Bookings £671,540 £4,141,745 36% Headcount 6 51 (88%) The revenue decreased by 95% year on year between 2022 and 2023 as one month of activity was performed before the hive up in 2023. Similarly, the bookings reflect only the month of January 2023. A comparison month to month is not significant due to the nature of the movements and the miles-stone type of implementations that are not spread equally through the months. Revenue and bookings movements are not always in alignment due to the timing of the provision of the services under each booking. Headcount decreased by 88% overall, owing to the transfer of employees over to Everbridge Europe as of 31 January 2023 and a completion in progress during the date of hive-up due to delays in the UAE part of the contract transfer. This was completed by the time we file the accounts with no employees on the company payroll and the directors the only remaining officers.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
This section forms our Section 172 disclosure, describing how, the directors considered the matters set out in section 172(1)(a) to (f) of the Companies Act 2006. The directors also took into account the views and interests of a wider set of stakeholders, including regulators.
The directors have acted in a way that they considered, in good faith, to be most likely to promote the success of the company and its group for the benefit of its stakeholders, and in doing so had regard, amongst other matters, to: • the likely consequences of any decision in the long term; • the need to foster business relationships with suppliers, customers and others; • the impact of the group's operations on the community and the environment; • the desirability of the group maintaining a reputation for high standards of business conduct; and • the need to act fairly as between members of the company. The board of directors has identified the following key stakeholders to be considered in their decisions during the year. Shareholders The Company's ultimate parent corporation is Everbridge, Inc. based in Burlington, Massachusetts and formerly listed on the NASDAQ prior to the acquisition by Thoma Bravo in July 2024. The Board works closely with the board of Everbridge, Inc. in meeting the goals of the group as a whole, along with those of the company and its group. Employees The board encourages employee engagement through forums on site and internationally, surveys, briefings and grant awards to employees to drive staff decisions directly impacting the working environment. Employee safety has been and remains of paramount importance in ensuring appropriate measures have been put into place as a result of the COVID-19 pandemic. Suppliers Suppliers are a critical link in the overall supply chain for the company, providing a source of value, consistency of quality and service and opportunity for innovation to meet the group's business needs. The Company uses regular reviews for two-way engagement for performance improvement or development of the group's products. Customers Engagement with customers drives alignment with their values, strategies and priorities and strategic partnerships to help ensure business sustainability and growth. The Company has regular communication and review meetings to agree short, medium and long term goals to develop relationships and ensure continuous improvement. Regulatory bodies - Government The Group's products are playing a major role in the Government's regulatory bodies' intentions for business resilience and perseverance in their day-to-day operations as well - with this the group makes sure to be up to date with the latest data security and anti-fraud policies to make sure data management regarding all the
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Group's products is impeccable.
With this the Company aims to enhance business knowledge and compliance. The Company is also working closely together with the government of certain countries to ensure compliance with R&D activity policies as the company received contributions from those countries to help maintain and improve our valuable R&D processes. Community To be engaged in the community is recognised as important both by employees and the board members. Employees of the group are granted additional days-off for community work or any kind of charitable activity based on their preferences.
This report was approved by the board and signed on its behalf.
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The directors present their report and the financial statements for the year ended 31 December 2023.
The directors are responsible for preparing the Strategic report, the Directors' report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The loss for the year, after taxation, amounted to £269,316 (2022 - loss £3,039,198).
The Company did not declare or pay a dividend in the year (2022 - £nil).
The directors who served during the year were:
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CNL SOFTWARE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Post balance sheet events
In February 2024, the ultimate parent company, Everbridge Inc. announced it would be taken private in an all-cash purchase by Thoma Bravo, LP. The acquisition was finalised on 02 July 2024. There have been no further significant events affecting the Company since the year end.
This report was approved by the board and signed on its behalf.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CNL SOFTWARE LIMITED
We have audited the financial statements of CNL Software Limited (the 'Company') for the year ended 31 December 2023, which comprise the Statement of comprehensive income, the Balance sheet, the Statement of changes in equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We draw attention to Note 2.3 of the financial statements, which explains that the financial statements have not been prepared on a going concern basis for the reasons set out in that note. Our opinion is not modified in respect of this matter.
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The directors are responsible for the other information contained within the Annual Report. opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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CNL SOFTWARE LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CNL SOFTWARE LIMITED (CONTINUED)
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors' report.
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CNL SOFTWARE LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CNL SOFTWARE LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Company financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: We obtained a general understanding of the Company’s legal and regulatory framework through enquiry of management concerning their understanding of relevant laws and regulations, the entity’s policies and procedures regarding compliance, and how they identify, evaluate and account for litigation claims. We also drew on our existing understanding of the Company’s industry and regulation. We understand that the Company complies with the framework through:
∙Outsourcing payroll, accounts preparation and tax compliance to external experts.
∙Subscribing to relevant updates from external experts, and making changes to internal procedures and controls as necessary.
In the context of the audit, we considered those laws and regulations which determine the form and content of the financial statements, which are central to the company’s ability to conduct its business, and/or where there is a risk that failure to comply could result in material penalties. We identified the following laws and regulations as being of significance in the context of the Company:
∙The Companies Act 2006 and FRS 102 in respect of the preparation and presentation of the financial statements.
∙Relevant UK taxation laws
The senior statutory auditor led a discussion with senior members of the engagement team regarding the susceptibility of the entity’s financial statements to material misstatement, including how fraud might occur. The areas identified in this discussion were:
∙Manipulation of the financial statements, especially revenue, via fraudulent journal entries, particularly as the size of the Company means that there is little opportunity for segregation of duties.
The procedures we carried out to gain evidence in the above areas included:
∙Testing journal entries, focusing particularly on postings to unexpected or unusual accounts and those posted at unusual times.
Overall, the senior statutory auditor was satisfied that the engagement team collectively had the appropriate competence and capabilities to identify or recognise irregularities.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' report.
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CNL SOFTWARE LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CNL SOFTWARE LIMITED (CONTINUED)
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Statutory Auditor
Chartered Accountants
Level 1 Brockbourne House
77 Mount Ephraim
TN4 8BS
Date:
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STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
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BALANCE SHEET
AS AT 31 DECEMBER 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 14 to 31 form part of these financial statements.
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STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
CNL Software Limited is a private company limited by shares incorporated in England and Wales. The registered office and principal place of business is 100 Avebury Boulevard, Milton Keynes, Buckinghamshire, MK9 1FH.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
Monetary amounts in these financial statements are stated in pounds Sterling and are rounded to the nearest whole £1, except where otherwise stated.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
∙the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
∙the requirements of Section 26 Share-based Payment paragraphs 26.18(b), 26.19 to 26.21 and 26.23;
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Everbridge, Inc. as at 31 December 2023 and these financial statements may be obtained from 25 Corporate Drive, 4th Floor, Burlington, MA01803.
Following the hive up of the Company's trade and assets on 31 January 2023, into Everbridge Europe Limited, a fellow group undertaking, the directors intend to strike off the Company after a planned capital reduction. The directors do not therefore consider the Company to be a going concern and these financial statements have been prepared on a basis other than going concern. There are no material adjustments as a result of applying a basis other than going concern.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
Revenue for licenses and critical driver development is recognised when the software is delivered to the customer (i.e. once the licenses reach "beneficial use" as expected in the context of the arrangement). Revenue for professional services is recognised upon delivery of the services, using an estimate of the percentage of completion based on the number hours incurred delivering the service against the total estimate hours expected to complete the service. Revenue for support and maintenace is recognised on a straight line basis over the fixed term of the contract.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Defined benefit pension plan
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
All share options and other equity based compensation schemes are settled in the equity of the ultimate parent company, Everbridge, Inc., and a capital contribution is recognised in line with the amounts charged to profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period. Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the the remaining vesting period is recognised immediately. Shares withheld to meet employee's tax liabilities (resulting in a net share settlement of share award) are accounted for as cash settled share based payments.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in oridinary shares.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods. The following judgements and estimates have had the most significant effect on amounts recognised in the financial statements: Bad debt provision The Company makes an estimate of the recoverable value of trade and other debtors. When assessing the impairment of trade and other debtors, management considers factors including the current credit rating of the debtor, the ageing profile of debtors, whether the debtor is covered by insurance and historical experience. Share based payments The directors assess the estimated forfeiture rate of equity awards granted to employees based on historical and forecasted data relating to the likelihood of achieving any performance related targets as well as employee retention rates. Revenue recognition Due to the nature of contract timescales it is routinely necessary to estimate contract costs to complete and future revenues. These are based on all information available to management including the position of contracts at the financial year end and at contract completion and latest correspondence with customers and suppliers, drawing on the experience and opinions of contract managers. Defined benefit plans The estimate of the present value of obligations under defined benefit plans relies on actuarial assumptions made by the directors, including the future salary increases and expected service length of employees in the plan. The directors have made these estimates based on their historical experience of employment practices within the Company and the wider group.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Analysis of turnover by country of destination:
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
10.Taxation (continued)
As at 31 December 2023, the Company has tax losses of £7,722 (2022 as restated - £2,191,259).
Tax losses of £2,666,103 were transferred to a fellow group company as part of the hive up of the trade and assets in the year.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Share premium account
Other reserves
Profit and loss account
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Bad debts provision
Following a hive-up of assets and trade to fellow subsidiary, Everbridge Europe Limited, in January 2023 the directors have identified that the amount recoverable on trade debtors was overstated in the prior year. The directors have restated the 2022 results to provide for the bad debts, subsequently trade debtors have been decreased by £658,178, and bad debts expense, included within administrative expenses, increased by £658,178.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
The Company operates a Defined benefit pension scheme.
Under Article 51 of the Federal Decree Law no. 33 of 2021, known as the "UAE labour law" non-UAE nationals are entitled to a gratuity payment upon their resignation. This is considered to represent a defined benefit plan. This plan is unfunded and the full obligation is payable upon the resignation of the employee.
No independent actuarial valuation has been carried in relation to this plan and all actuarial assumptions applied have been made by the directors.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
The Company is a wholly owned subsidiary of Everbridge Holdings Limited, a company incorporated in the United Kingdom. Everbridge Holdings Limited in turn is a wholly owned subsidiary of Everbridge, Inc. a company incorporated in the United States of America. The results of the group are included in the consolidated financial statements of Everbridge, Inc. which are available from 25 Corporate Drive, 4th Floor, Burlington, MA01803.
Following the post year-end acquisition by Thoma Bravo, LP a new ultimate parent company has been put in place, Everbridge Parent, LP and the ultimate controlling party became Thoma Bravo, LP.
On 31 January 2023, the Company's trade and assets were hived-across into fellow subsidiary, Everbridge Europe Limited, at net book value.
In February 2024, the ultimate parent Company, Everbridge Inc., announced it would be taken private in an all-cash purchase by Thoma Bravo, LP. The acquisition was finalised on 02 July 2024.
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