REGISTERED NUMBER: |
STRATEGIC REPORT, DIRECTORS' REPORT AND |
FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
FOR |
NEXTHINK LIMITED |
REGISTERED NUMBER: |
STRATEGIC REPORT, DIRECTORS' REPORT AND |
FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
FOR |
NEXTHINK LIMITED |
NEXTHINK LIMITED (REGISTERED NUMBER: 09268999) |
CONTENTS OF THE FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
Page |
Company Information | 1 |
Strategic Report | 2 |
Directors' Report | 3 |
Independent Auditors' Report | 5 |
Statement of Comprehensive Income | 8 |
Balance Sheet | 9 |
Statement of Changes in Equity | 10 |
Cash Flow Statement | 11 |
Notes to the Cash Flow Statement | 12 |
Notes to the Financial Statements | 13 |
NEXTHINK LIMITED |
COMPANY INFORMATION |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
Directors: |
Registered office: |
Registered number: |
Independent auditors: |
Chartered Accountants and Statutory Auditors |
40 Clarendon Road |
Watford |
Hertfordshire |
WD17 1JJ |
NEXTHINK LIMITED (REGISTERED NUMBER: 09268999) |
STRATEGIC REPORT |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
The directors present their strategic report for the year ended 31 December 2023. |
Business review and future developments |
Nexthink SA Group (the "Group") is the leader in digital employee experience (DEX) management software. The Group provides the most complete digital experience management platform to IT teams to discover, monitor and proactively improve the digital services they provide to their employees. |
The Group is close to 1040 employees and plans to remain in the same range in 2024. During 2023, the Group has continued its hypergrowth crossing the $207M ARR (Annual Recurring Revenue). |
The Group continued its migration to Cloud, initiated in 2020. From an innovation standpoint, the Group launched Application Experience and continued to lead the DEX market (Digital Employee Experience). |
Nexthink Limited (the "Company") is a subsidiary of the Group and focuses on delivering day-to-day operations in the United Kingdom. Revenue for the sale of Nexthink products for this region is generated by the Group only, not the Company. The Company has a cost plus agreement with the Group and revenue is recognised in accordance with the terms of this agreement. |
Principal risks and uncertainties |
The Company monitors and retains sufficient cash levels to ensure it has funds available for its operations. In order to maintain cash, the Company has launched multiple cost savings initiatives to reduce net cash burn, including multi-tenancy and investments in low-cost territories. |
Macro economy |
The COVID-19 pandemic has significantly increased the importance of being a digital, data-driven organization. The pandemic expedited the embrace of new ways to work and exerted an enormous amount of pressure on organizations of all kinds to deliver better experiences and outcomes, and to enable entirely new offerings and business models. |
The Company expects to continue to grow in 2024. |
Financial key performance indicators |
The Company's key financial performance indicators during the year were as follows: |
2023: 68 2022: 64 people |
2023 | 2022 |
£ | £ |
Revenues | 14,965,402 | 14,480,639 |
Total expenses (including tax) | 14,260,751 | 13,502,042 |
Approved by the board and signed on its behalf by: |
NEXTHINK LIMITED (REGISTERED NUMBER: 09268999) |
DIRECTORS' REPORT |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
The directors present their report with the financial statements of the company for the year ended 31 December 2023. |
Principal activity |
The principal activity of the company in the year under review was that of the provision of sales support to the parent company. |
Dividends |
No dividends will be distributed for the year ended 31 December 2023. |
Post balance sheet events |
In January 2024 the Company acquired Applearn International Limited and its subsidiaries, a UK business which specialises in tailored learning and digital adoption guidance for employees within applications, enhancing individual and organisational digital dexterity. The Company acquired 100% of the voting rights through the acquisition. |
Directors |
The directors shown below have held office during the whole of the period from 1 January 2023 to the date of this report. |
Other changes in directors holding office are as follows: |
Matters covered in the strategic report |
The Company has chosen, in accordance with Companies Act 2006 s.414C(11), to set out in the strategic report information required by The Large and Medium-sizes Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of future developments, risk and uncertainties and financial risk management objectives and policies. |
Going concern |
The Company continues to have guarantee of continued financial support from its parent Company, Nexthink SA, for at least 12 months from the issue date of the financial statements. |
The directors of Nexthink SA have a reasonable expectation that the Group has adequate resources to continue in operational existence based on forecasts and receiving future funding. |
Statement of directors' responsibilities |
The directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulation. |
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland", and applicable law). |
Under company law, 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 the financial statements, the directors are required to: |
- | select suitable accounting policies and then apply them consistently; |
- | state whether applicable United Kingdom Accounting Standards, comprising FRS 102 have been followed, subject to any material departures disclosed and explained in the financial statements; |
- | make judgements and accounting estimates that are reasonable and prudent; and |
- | 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 safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. |
The directors are also responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. |
NEXTHINK LIMITED (REGISTERED NUMBER: 09268999) |
DIRECTORS' REPORT |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
Statement of directors' responsibilities - continued |
Directors' confirmations |
In the case of each director in office at the date the directors' report is approved: |
- | so far as the director is aware, there is no relevant audit information of which the company's auditors are unaware; and |
- | they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditors are aware of that information. |
Statement as to disclosure of information to auditors |
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information. |
Auditors |
The independent auditors, PricewaterhouseCoopers LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting. |
Approved by the board and signed on its behalf by: |
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF |
NEXTHINK LIMITED |
Report on the audit of the financial statements |
Opinion |
In our opinion, Nexthink Limited's financial statements: |
- | give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its profit and cash flows for the year then ended; |
- | have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland", and applicable law); and |
- | have been prepared in accordance with the requirements of the Companies Act 2006. |
We have audited the financial statements, included within the Strategic Report, Directors' report and Financial Statements (the "Annual Report"), which comprise: the Balance Sheet as at 31 December 2023; the Statement of Comprehensive Income, the Statement of of Changes in Equity and the Cash Flow Statement for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies. |
Basis for opinion |
We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. |
Independence |
We remained independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. |
Conclusions relating to going concern |
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. |
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. |
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the company's ability to continue as a going concern. |
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. |
Reporting on other information |
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors' report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon. |
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. 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 based on these responsibilities. |
With respect to the Strategic report and Directors' Report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included. |
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below. |
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF |
NEXTHINK LIMITED |
Strategic report and Directors' Report |
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors' Report for the year ended 31 December 2023 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements. |
In light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic report and Directors' Report. |
Responsibilities for the financial statements and the audit |
Responsibilities of the directors for the financial statements |
As explained more fully in the Statement of directors' responsibility, the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. |
In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so. |
Auditors' responsibilities for the audit of the financial statements |
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue 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 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. |
Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to UK tax legislation and the Companies Act 2006, and we considered the extent to which non-compliance might have a material effect on the financial statements. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting of unusual journals outside the normal course of business and potential management bias in the selection and application of significant accounting judgements and estimates in order to manipulate the company's financial performance. Audit procedures performed by the engagement team included: |
- | Obtaining an understanding of the legal and regulatory framework applicable to the Company and how the Company is complying with that framework; |
- | Inquiring of management in respect of potential non-compliance with laws and regulations; |
- | Reviewing minutes of meetings of those charged with governance; |
- | Identifying and testing the validity of journal entries, in particular certain journal entries posted with unusual account combinations; |
- | Challenging assumptions made by management in the selection and application of significant accounting judgements and estimates; and |
- | Designing audit procedures to incorporate unpredictability around the nature, timing and extent of our testing. |
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. |
A further description of our responsibilities for the audit of the financial statements is located on the FRC's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors' report. |
Use of this report |
This report, including the opinions, has been prepared for and only for the company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. |
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF |
NEXTHINK LIMITED |
Other required reporting |
Companies Act 2006 exception reporting |
Under the Companies Act 2006 we are required to report to you if, in our opinion: |
- | we have not obtained all the information and explanations we require for our audit; or |
- | adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or |
- | certain disclosures of directors' remuneration specified by law are not made; or |
- | the financial statements are not in agreement with the accounting records and returns. |
We have no exceptions to report arising from this responsibility. |
for and on behalf of |
Chartered Accountants and Statutory Auditors |
40 Clarendon Road |
Watford |
Hertfordshire |
WD17 1JJ |
NEXTHINK LIMITED (REGISTERED NUMBER: 09268999) |
STATEMENT OF COMPREHENSIVE |
INCOME |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
31/12/23 | 31/12/22 |
Notes | £ | £ |
TURNOVER | 4 |
Administrative expenses | ( |
) | ( |
) |
OPERATING PROFIT | 7 |
Interest receivable and similar income | 9 |
PROFIT BEFORE TAXATION |
Tax on profit | 10 |
PROFIT FOR THE FINANCIAL YEAR |
OTHER COMPREHENSIVE INCOME | - | - |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
NEXTHINK LIMITED (REGISTERED NUMBER: 09268999) |
BALANCE SHEET |
31 DECEMBER 2023 |
31/12/23 | 31/12/22 |
Notes | £ | £ |
FIXED ASSETS |
Tangible assets | 11 |
Investments | 12 |
CURRENT ASSETS |
Debtors | 13 |
Cash at bank |
CREDITORS |
Amounts falling due within one year | 14 | ( |
) | ( |
) |
NET CURRENT ASSETS |
TOTAL ASSETS LESS CURRENT LIABILITIES |
CAPITAL AND RESERVES |
Called up share capital | 16 |
Retained earnings | 17 |
SHAREHOLDERS' FUNDS |
The financial statements were approved by the Board of Directors and authorised for issue on |
NEXTHINK LIMITED (REGISTERED NUMBER: 09268999) |
STATEMENT OF CHANGES IN EQUITY |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
Called up |
share | Retained | Total |
capital | earnings | equity |
£ | £ | £ |
Balance at 1 January 2022 |
Changes in equity |
Total comprehensive income | - |
Share based payments | - | 508,475 | 508,475 |
Balance at 31 December 2022 |
Changes in equity |
Total comprehensive income | - |
Share based payments | - | 572,671 | 572,671 |
Balance at 31 December 2023 |
NEXTHINK LIMITED (REGISTERED NUMBER: 09268999) |
CASH FLOW STATEMENT |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
31/12/23 | 31/12/22 |
Notes | £ | £ |
Cash flows from operating activities |
Cash generated from operations | 1 | ( |
) |
Net cash from operating activities | ( |
) |
Cash flows from investing activities |
Purchase of tangible fixed assets | ( |
) | ( |
) |
Purchase of fixed asset investments | - | (10 | ) |
Sale of tangible fixed assets |
Interest received |
Net cash from investing activities | ( |
) | ( |
) |
(Decrease)/increase in cash and cash equivalents | ( |
) |
Cash and cash equivalents at beginning of year | 2 | 544,812 |
Cash and cash equivalents at end of year | 2 | 427,142 | 1,117,472 |
NEXTHINK LIMITED (REGISTERED NUMBER: 09268999) |
NOTES TO THE CASH FLOW STATEMENT |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
1. | RECONCILIATION OF PROFIT FOR THE FINANCIAL YEAR TO CASH GENERATED FROM OPERATIONS |
31/12/23 | 31/12/22 |
£ | £ |
Profit for the financial year |
Depreciation charges |
Movement in amounts owed to groups | (14,977,514 | ) | 1,556,184 |
Movement in amounts owed by groups | 13,983,222 | (1,928,901 | ) |
Share based payment contribution | 572,671 | 508,475 |
Finance income | - | (745 | ) |
Taxation | ( |
) |
320,772 | 553,874 |
Increase in trade and other debtors | ( |
) | ( |
) |
Increase in trade and other creditors |
Cash generated from operations | ( |
) |
2. | CASH AND CASH EQUIVALENTS |
The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts: |
Year ended 31 December 2023 |
31/12/23 | 1/1/23 |
£ | £ |
Cash and cash equivalents | 427,142 | 1,117,472 |
Year ended 31 December 2022 |
31/12/22 | 1/1/22 |
£ | £ |
Cash and cash equivalents | 1,117,472 | 544,812 |
3. | ANALYSIS OF CHANGES IN NET FUNDS |
At 1/1/23 | Cash flow | At 31/12/23 |
£ | £ | £ |
Net cash |
Cash at bank | 1,117,472 | (690,330 | ) | 427,142 |
1,117,472 | ( |
) | 427,142 |
Total | 1,117,472 | (690,330 | ) | 427,142 |
NEXTHINK LIMITED (REGISTERED NUMBER: 09268999) |
NOTES TO THE FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
1. | GENERAL INFORMATION |
Nexthink Limited is a private company, limited by shares, incorporated and registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page. |
The Company's functional and presentational currency is pound sterling (GBP) and the financial statements have been rounded to the nearest pound (£). |
2. | ACCOUNTING POLICIES |
Basis of preparing the financial statements |
These financial statements have been prepared on a going concern bases in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention. |
The preparation of financial statements in compliance with FRS 102 requires the use if 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 polices have been applied consistently throughout the year: |
Turnover |
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. |
Revenue represents amounts charged to the Company's parent under a transfer pricing agreement for sales and customer support provided, excluding value added tax. The Company also recognises a percentage of total operating margin of all UK sales made by the Group. Revenue is recognised when chargeable costs are incurred. |
Tangible fixed assets |
Tangible assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. |
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: |
Leasehold Improvements | - Over the life of the lease |
Fixtures and fittings | - 5 years straight line |
Computer equipment | - 3 years straight line |
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 the Statement of Comprehensive Income. |
NEXTHINK LIMITED (REGISTERED NUMBER: 09268999) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2. | ACCOUNTING POLICIES - continued |
Financial instruments |
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 ordinary shares. |
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan. |
Current and deferred taxation |
The tax expense for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively. |
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the Balance Sheet date in the countries where the Company operates and generates income. |
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Balance Sheet date, except that: |
- The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and |
- Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met. |
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the Balance Sheet date. |
Foreign currency translation |
Functional and presentation currency |
The Company's functional and presentational currency is GBP, rounded to the nearest whole £. |
Transactions and balances |
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions. |
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined. |
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income except when deferred in other comprehensive income as qualifying cash flow hedges. |
Operating leases: the company as lessee |
Rentals paid under operating leases are charged to the Statement of Comprehensive Income on a straight line basis over the lease term. |
NEXTHINK LIMITED (REGISTERED NUMBER: 09268999) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2. | ACCOUNTING POLICIES - continued |
Interest income |
Interest income is recognised in the Statement of Comprehensive Income using the effective interest method. |
Pensions |
Defined contribution pension plan |
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations. |
The contributions are recognised as an expense in the Statement of Comprehensive Income when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Company in independently administered funds. |
Investments in associates |
Investment in associates are recognised at cost less any provision for impairment. |
Share based payments |
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the Statement of Comprehensive Income 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. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition. |
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Company keeping the scheme open or the employee maintaining any contributions required by the scheme). |
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 the Statement of Comprehensive Income over the remaining vesting period. |
Where equity instruments are granted to persons other than employees, the Statement of Comprehensive Income is charged with fair value of goods and services received. |
Cash and cash equivalents |
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value. |
In the Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Company's cash management. |
Debtors |
Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment. |
Creditors |
Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method. |
NEXTHINK LIMITED (REGISTERED NUMBER: 09268999) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2. | ACCOUNTING POLICIES - continued |
Provisions for liabilities |
Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation. |
Provisions are charged as an expense to the Statement of Comprehensive Income in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the Balance Sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. |
When payments are eventually made, they are charged to the provision carried in the Balance Sheet. |
3. | CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY |
The preparation of financial statements in conformity with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies. |
The key assumptions concerning the future, and other key sources of estimation uncertainty, that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: |
i. Share Based Payments exercised |
We recognise share based payments expense for grants under our employee stock purchase plan. We account for all stock based awards granted to employees at their fair value and recognise compensation expense over the vesting period of the award. Determining the amount of share based payments to be recorded requires us to develop estimates of fair values of stock options as of the grant date. We calculate the grant date fair value of stock options using the Black-Scholes valuation model, which requires the input of subjective assumptions, including but not limited to expected stock price volatility over the terms of the awards and the expected term of stock options. |
ii. Transfer pricing methodology and rate used |
Judgement is applied in recognising the appropriate transfer pricing revenue and the mark-up rate used. This revenue is derived from cost plus recharges to other group entities. Cost plus recharges are related to sales of Nexthink products. |
4. | TURNOVER |
The turnover and profit before taxation are attributable to the one principal activity of the company. |
An analysis of turnover by class of business is given below: |
31/12/23 | 31/12/22 |
£ | £ |
An analysis of turnover by geographical market is given below: |
31/12/23 | 31/12/22 |
£ | £ |
United Kingdom |
NEXTHINK LIMITED (REGISTERED NUMBER: 09268999) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
5. | EMPLOYEES AND DIRECTORS |
31/12/23 | 31/12/22 |
£ | £ |
Wages and salaries |
Social security costs |
Other pension costs |
The average number of employees during the year was as follows: |
31/12/23 | 31/12/22 |
Employees |
6. | DIRECTORS' REMUNERATION |
The directors are paid by another Group company. The directors do not consider it practicable to accurately allocate remuneration paid for qualifying services in respect of the company and remuneration for qualifying services provided to the other Group company and therefore no recharges are made between the Group in respect of these services. |
7. | OPERATING PROFIT |
The operating profit is stated after charging/(crediting): |
31/12/23 | 31/12/22 |
£ | £ |
Other operating leases |
Depreciation - owned assets |
Foreign exchange differences | ( |
) |
Share based payments |
8. | AUDITORS' REMUNERATION |
31/12/23 | 31/12/22 |
£ | £ |
Fees payable to the company's auditors for the audit of the company's financial statements |
48,600 |
46,525 |
The directors have agreed with the company's auditors that the auditor's liability to damages for breach of duty in relation to the audit of the company's financial statements for the year to 31 December 2023 will be limited to the greater of £5m or 5 times the auditor's fees for the statutory audit, and that, in any event, the auditor's liability for damages will be limited to that part of any loss suffered by the company as is just and equitable having regard to the extent to which the auditor, the company and any third parties are responsible for the loss in question. The shareholders of the company approved this liability limitation agreement, as required by the Companies Act 2006, by a resolution dated on 20 September 2024. |
9. | INTEREST RECEIVABLE AND SIMILAR INCOME |
31/12/23 | 31/12/22 |
£ | £ |
Other interest receivable |
NEXTHINK LIMITED (REGISTERED NUMBER: 09268999) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
10. | TAXATION |
Analysis of the tax credit |
The tax credit on the profit for the year was as follows: |
31/12/23 | 31/12/22 |
£ | £ |
Current tax: |
Adjustment to prior year tax | - | (158,585 | ) |
Deferred tax |
Tax on profit | ( |
) |
Reconciliation of total tax credit included in profit and loss |
The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below: |
31/12/23 | 31/12/22 |
£ | £ |
Profit before tax |
Profit multiplied by the standard rate of corporation tax in the UK of |
Effects of: |
Capital allowances in excess of depreciation | ( |
) | ( |
) |
Utilisation of tax losses | ( |
) | ( |
) |
Adjustments to tax charge in respect of previous periods | ( |
) |
Other timing differences leading to an increase in taxation | - | 135,403 |
Tax deduction arising from exercise of employee options | 3,215 | (38,793 | ) |
Permanent differences | 11,584 | 1,433 |
Deferred taxation movement | - | 63,476 |
Total tax credit | - | (95,109 | ) |
Factors that may affect future tax charges |
Changes to the UK Corporation Tax rates were substantively enacted as part of Finance Act 2021 (published on 24 May 2021, with royal assent received on 10 June 2021). This confirmed an increase to the corporation tax rate to 25% with effect from 1 April 2023. Deferred taxes at the Balance Sheet date have been calculated based on the corporation tax rate of 25% that is enacted at the reporting date. |
Deferred Taxation |
There is an unrecognised deferred tax asset of £15,931 (2022: £205,333) related to tax losses and £289,706 (2022: £289,706) relating to share options which have not been recognised, as the directors do not consider there are sufficient future taxable profits available. |
NEXTHINK LIMITED (REGISTERED NUMBER: 09268999) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
11. | TANGIBLE FIXED ASSETS |
Fixtures |
Leasehold | and | Computer |
improvements | fittings | equipment | Totals |
£ | £ | £ | £ |
Cost |
At 1 January 2023 |
Additions |
Disposals | ( |
) | ( |
) |
At 31 December 2023 |
Depreciation |
At 1 January 2023 |
Charge for year |
At 31 December 2023 |
Net book value |
At 31 December 2023 |
At 31 December 2022 |
12. | FIXED ASSET INVESTMENTS |
Unlisted |
investments |
£ |
Cost |
At 1 January 2023 |
and 31 December 2023 |
Net book value |
At 31 December 2023 |
At 31 December 2022 |
Country of registration |
No. of shares held |
Class of share |
Proportion held |
Nexthink India Digital Experience Private Ltd | India | 100 | Ordinary | 1% |
13. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
31/12/23 | 31/12/22 |
£ | £ |
Amounts owed by group undertakings |
Other debtors |
Tax |
Amounts owed by group undertakings are unsecured, interest free and repayable on demand. |
NEXTHINK LIMITED (REGISTERED NUMBER: 09268999) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
14. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
31/12/23 | 31/12/22 |
£ | £ |
Trade creditors |
Amounts owed to group undertakings |
Taxation and social security |
Other creditors |
Accruals and deferred income |
Amounts owed to group undertakings are unsecured, interest free and repayable on demand. |
15. | LEASING AGREEMENTS |
Minimum lease payments under non-cancellable operating leases fall due as follows: |
31/12/23 | 31/12/22 |
£ | £ |
Within one year |
Between one and five years |
16. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 31/12/23 | 31/12/22 |
value: | £ | £ |
Ordinary | 1 | 1,000 | 1,000 |
17. | RESERVES |
Retained |
earnings |
£ |
At 1 January 2023 |
Profit for the year |
Share based payments | 572,671 |
At 31 December 2023 |
18. | PENSION COMMITMENTS |
The Company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £381,371 (2022: £350,352). No contributions remain payable to the fund as at the Balance Sheet date. |
19. | ULTIMATE PARENT COMPANY |
Nexthink SA (incorporated in Switzerland) is regarded by the directors as being the Company's immediate and ultimate parent company whose address is Centre Malley-Lumieres, Chemin du Viaduc 1, 1008 Prilly, Switzerland. Nexthink SA is the largest and smallest undertaking to consolidate these financial statements as at 31 December 2023. |
NEXTHINK LIMITED (REGISTERED NUMBER: 09268999) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
20. | RELATED PARTY DISCLOSURES |
The Company is exempt from disclosing other related party transactions as they are with other companies that are wholly owned within the Group. |
21. | POST BALANCE SHEET EVENTS |
In January 2024 the Company acquired Applearn International Limited and its subsidiaries, a UK business which specialises in tailored learning and digital adoption guidance for employees within applications, enhancing individual and organisational digital dexterity. The Company acquired 100% of the voting rights through the acquisition. |
22. | SHARE BASED PAYMENTS |
In 2015, the Company adopted the "Nexthink Limited EM/ 2015 Share Option Plan" under which eligible employees can receive share options of the common stock in Nexthink SA. Under the plan 25% of the options granted vest on the 1st anniversary of vesting commencement date. After this date options vest at a rate of 6.25% every 3 months until the 4th anniversary of the vesting commencement date. |
At 31 December 2023, 68 (2022: 64) employees benefited from the plan. A summary of the plan since 1 January 2022 is shown below: |
Weighted average exercise price | Weighted average exercise price |
(pence | ) | Number | (pence | ) | Number |
2023 | 2023 | 2022 | 2022 |
Outstanding at the beginning of the year | 375 | 1,251,477 | 335 | 1,143,009 |
Granted during the year | 1054 | 148,460 | 919 | 132,533 |
Forfeited during the year | 926 | (3,976 | ) | 584 | (85,061 | ) |
Exercised during the year | 229 | (451,847 | ) | 0 | 0 |
Expired during the year | 857 | (3,585 | ) | 390 | (4,374 | ) |
Transferred during the year | 0 | 0 | 246 | 65,370 |
Outstanding at the end of the year | 534 | 940,529 | 375 | 1,251,477 |
2023 | 2022 |
Option pricing model used | Black Scholes | Black Scholes |
Weighted average share price (USD) | $13.12 | $12.50 |
Exercise Price (USD) | $0.66 to $13.08 | $0.66 to $11.46 |
Weighted average contractual life (years) | 3.4 - 4.1 | 3.7 - 3.9 |
Expected volatility | 50% - 55% | 55% |
Dividend growth rate | 0% | 0% |
Risk-free interest rate | (0.94%) - (1.24%) | (0.33%) - (0.77%) |