Registered number: 08656087 (England and Wales)
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 Directors present herewith their Strategic Report of Fastly Limited (the "Company") for the year ended 31 December 2023.
The Company, incorporated in the United Kingdom (‘‘UK’’) on 19 August 2013, is a wholly owned subsidiary of Fastly International Technology Limited, incorporated in the UK, which itself is a wholly owned subsidiary of Fastly, Inc. (the ‘‘Ultimate Parent”), incorporated in the state of Delaware, in the United States of America. The Ultimate Parent company provides a content delivery network platform and solutions to customers for the delivery of online content. The principal activity of the Company is to provide marketing, sales support and other services to the Ultimate Parent company.
The post-tax profit for the financial year ended 31 December 2023 was £2.8 million (2022: restated profit £1.6 million). The Company’s net assets as at 31 December 2023 were £17.7 million (2022 restated: £8.9 million). The Company provides support services to the Ultimate Parent company and its turnover, which consist of fees, are guaranteed per an Intercompany Service Agreement established on 17 December 2014 between the Company and Ultimate Parent company. Per the agreement the Company’s fees are 100% reimbursed plus an 8% margin on all operating costs of the Company.
Based on 2024 & 2025 estimated projections, the Company expects to grow in their operations as headcount increases from 94 in January 2023 to 99 by January 2024 for a 5.3% increase year over year. As headcount is the primary factor driving operating expenses, the Company expects turnover to increase proportionately.
The Company's principal risks and uncertainties are integrated with the principal risks of the Ultimate Parent company and are not managed separately. The principal risks and uncertainties of the Ultimate Parent company are discussed in the 2023 annual report Form 10-K, which does not form part of this report. This may be obtained from investors.fastly.com/financials/sec-filings.
As long as the Ultimate Parent company continues to need the Company to provide marketing, sales support and other services for the UK, fees will continue to be generated to cover operating costs.
The Company's directors monitor progress and strategy by reference to the following KPIs:
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
The Company’s profit after tax for the financial period was £2.8m (2022: restated profit £1.6m) and as of 31 December 2023 the Company had net assets of £17.7m (2022 restated: £8.9m). The directors have received confirmation from the Ultimate Parent company, which has agreed to provide adequate financial support for a period of at least twelve months following the date of the Independent Auditor’s Report for the Company‘s year ended 31 December 2023 to the extent necessary to enable the Company to meet its continuing operating liabilities, as well as, any known liabilities on the Company’s balance sheet as at 31 December 2023, as and when they fall due. 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. As permitted by s414c (11) of the Companies Act 2006, certain information that is required to be included in the Directors' Report has otherwise been provided in the Strategic Report.
The directors who served during the year were:
The profit for the year, after taxation, amounted to £2,765,699 (as restated 2022 - £1,583,092).
No dividends were declared, paid or payable during the reporting period (2022: £Nil)
The directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
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;
∙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.
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
There have been no 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 FASTLY LIMITED
We have audited the financial statements of Fastly 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. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the 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.
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.
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.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FASTLY LIMITED (CONTINUED)
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. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. 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 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.
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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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FASTLY 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 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.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
∙the responsible individual ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
∙we identified the laws and regulations applicable to the Company through discussions with directors and other management, and from our commercial knowledge and experience;
∙we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the Company, including the Companies Act 2006 and taxation legislation;
∙we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
∙identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the Company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
∙making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
∙considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
∙performed analytical procedures to identify any unusual or unexpected relationships;
∙tested journal entries to identify unusual transactions;
∙assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and
∙investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
∙agreeing financial statement disclosures to underlying supporting documentation;
∙enquiring of management as to actual and potential litigation and claims; and
∙reviewing correspondence with HMRC.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FASTLY LIMITED (CONTINUED)
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in 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
Chartered Accountants and Statutory Auditors
Birchin Court
5th Floor
19-25 Birchin Lane
London
EC3V 9DU
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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 12 to 20 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
1.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.
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.
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 Fastly, Inc. as at 31 December 2023 and these financial statements may be obtained from investors.fastly.com/financials/sec-filings.
Fastly Limited is in a net asset position supported primarily by an intercompany receivable of £17,772,365 due from its ultimate parent company.
The Company has received written confirmation from its Ultimate Parent company that it will continue to provide support for a period of at least 12 months from the date of signing these financial statements. Furthermore, the directors have assessed the ability of the parent company to provide this support based upon their cashflow forecasts and have concluded that the parent will have sufficient working capital to provide necessary support. For this reason, the directors continue to adopt the going concern basis in preparing the financial statements.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
1.Accounting policies (continued)
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
1.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
1.Accounting policies (continued)
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 profit or loss over the remaining vesting period. Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
The remuneration earned by directors in respect of the services performed in their capacity as directors of Fastly Limited was negligible and paid by other group entities.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
On 24 May 2021, Finance Bill 2021 was substantively enacted. The result of this is that the main rate of corporation tax for the UK has increased to 25% from 1 April 2023. The deferred tax asset has been calculated on this basis.
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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
9.Deferred taxation (continued)
Certain employees of the Company have been granted restricted stock units (''RSUs'') in the Company’s parent. The RSUs are granted at fair value and vest as follows:
• 25% one year after the date of grant, followed by 1/36 each month for the following three years • 25% one year after the date of grant, followed by 1/16 quarterly for the following three years • 25% on each anniversary for four years • 1/48 each month for four years An expense equivalent to the fair value of the RSUs on the date of grant, over the vesting period, is recognised in the Statement of Comprehensive Income with the corresponding entry to the capital contribution reserve.
A prior year adjustment has been made to include the issue of bonus RSUs to employees which related to services provided in 2022. The effects of this adjustment are as follows:
∙increase of the capital contribution reserve by £722,616, with the corresponding increase to administrative expenditure of the same amount;
∙increase in the intercompany receivable of £780,425, with the corresponding increase to intercompany revenue of the same amount; and
∙a net increase to the profit and loss reserve brought forward of £57,809.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Fastly, Inc. is the parent of the smallest group for which consolidated financial statements are drawn up of which the Company is a member. The registered office of the parent company is PO Box 78266, San Francisco, CA 94107, USA.
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