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Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2024
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RINGCENTRAL UK LTD
CONTENTS
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RINGCENTRAL UK LTD
COMPANY INFORMATION
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RINGCENTRAL UK LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The directors present their strategic report on the company for the year ended 31 December 2024. The principal activity of the company during the year continued to be that of providing telecommunications services and the sale of related equipment.
The results for the year and the financial position at the year end were as anticipated by the directors.
The company has continued its expansion during 2024. The directors are confident that the benefits of the investments made in 2024 will be seen in 2025 and beyond.
The company is still in its growth phase therefore the directors consider turnover, employee numbers and expense as the key performance indicators of the company.
Turnover has increased from £102,315,374 in 2023 to £124,462,924 in 2024. The increase was primarily a combination of the acquisition of new customers and upsells of seats and additional offerings to our existing customer base from our RingEX (formerly RingCentral MVP) and Contact Center Solutions, and an increase in recurring license and other fees, derived from sales through our direct and indirect sales channels, including resellers and distributors, strategic partners and global service providers. Employee numbers, including directors, have decreased from an average of 232 during 2023 to an average of 204 during 2024. The total employee cost has decreased from £37,604,724 for the year ended 31 December 2023 to £35,244,858 for the year ended 31 December 2024. Profit before taxation for the year ended 31 December 2024 was £9,795,599 (2023: £6,000,875). The company has a cash balance of £6,320,475 at 31 December 2024 (2023: £10,558,665).
The principal risks and uncertainties facing the business are people risk, business environment and market risks.
People risk Employees are the company's key asset. The company's success relies on recruiting, retaining and motivating talented employees. The company has appropriate remuneration and staff engagement/development policies to mitigate this risk. Business environment and market risks The company's revenues are concentrated in the telecommunications industry, which is highly competitive and undergoing change. Significant technological changes in the industry or customer requirements, or the emergence of competitive products with new capabilities or technologies could adversely affect the company's operations. The group continues to invest in its service provision to mitigate their risks.
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RINGCENTRAL UK LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
The directors are committed to promoting health, safety and welfare of their staff and continue to ensure appropriate measures are undertaken in this regard.
The directors are mindful of environmental issues and have sought to minimise the impact of the company's activities on the environment.
The directors of the company are aware of their duty under section 172(1) of the Companies Act 2006 to act in the way which they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole to have regard (amongst other matters) to:
a) the likely consequences of any decision in the long term; b) the interests of the company's employees; c) the need to foster the company's business relationships with suppliers, customers and others; d) the impact of the company's operations on the community and the environment; e) the desirability of the company maintaining a reputation for high standards of business conduct; and f) the need to act fairly as between members of the company. As a wholly owned subsidiary of RingCentral, Inc. (the "parent", and together with its subsidiaries, including the company, "RingCentral" or the "group"), the directors of the company do not consider the factor set out in section 172(1)(f) (the need to act fairly between members of the company) to be relevant to the proper discharge of their duty under section' 172(1). All interactions with other RingCentral entities are governed by established intercompany arrangements. In fulfilling their duty to promote the interests of the company under section 172(1) of the Companies Act 2006, the directors of the company have regard to the following factors and stakeholder interests, as described below. Long term consequences of business decisions and maintaining reputation for high standards of business conduct The company is run for the benefit of its sole shareholder, the parent, but the company recognises that the long-term success of its business is dependent on maintaining relationships with its other stakeholders and on the external impact of the company's activities. The directors have regard to how the likely long-term consequences of any decision will impact the company's key stakeholders. The company is committed to managing its business ethically and with integrity. The group’s Code of Business Conduct and Ethics sets out its expectations for conduct among its employees and directors. The company encourages reporting of breaches of the Code or any unethical or inappropriate conduct to the General Counsel or other designated Legal Department contact. Reports made are elevated and investigated until they are resolved, and updates are provided to the Audit Committee. The directors are apprised of RingCentral's ethics and compliance program by the Chief Privacy Officer, including highlights of the previous year and their ethics responsibilities as directors of the entity.
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RINGCENTRAL UK LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
The company also seeks to identify and mitigate risks that could lead to potential legal and/or regulatory violations. The Global Anti-Corruption and Anti-Bribery Policy requires RingCentral employees and contractors to abide by global anti-corruption and anti-bribery laws. As part of the presentation on ethics and compliance, the Chief Compliance Officer updates the directors with an overview of RingCentral’s Anti-Corruption program and the status of each oversight issue under this program. The directors also provide their comments. The group provides regular training on compliance with this policy, in addition to conducting regular and ongoing risk assessments. A copy of RingCentral's practices and policies, which includes the Global Anti-Corruption and Anti-Bribery Policy and Code of Business Conduct and Ethics, has been translated into numerous languages and remains available to all employees throughout their employment. Other areas of focus include commitments to compliance with human rights legislation, such as the UK Modern Slavery Act. In addition, RingCentral generally supports the principles set forth by the International Labour Organization and the United Nations’ Universal Declaration on Human Rights, and specifically supports those principles relating to labor and employment rights and prohibitions of modern slavery.
Stakeholder Identification and Engagement The company recognises the importance of fostering strong relationships with its stakeholders in order to create sustainable long-term value. In addition to its shareholder and other companies in the group, the company's other stakeholders include its suppliers, employees and customers. Suppliers The group has a procurement group to manage external supplier relationships and ensure that these stakeholders are treated fairly. The company builds and develops relationships with suppliers by maintaining communication and good practice by adhering to the group's Code of Business Conduct and Ethics, the Vendor Code of Conduct, Supplier Terms & Conditions and other relevant policies that help guide its supplier business relationships. These guidelines cover legal and regulatory compliance, business practices and ethics, labor practices and human rights, health and safety, environmental regulations, and protections. Employees Employees are regularly informed and consulted during the year through quarterly group-wide and quarterly company-wide "Town Halls," which include a Q&A component for any questions employees may have. In addition, UK- based leaders are able to share updates for their teams in a quarterly session. The directors monitor employee satisfaction by receiving updates on the UK employee landscape and having discussions with the leaders involved to improve employee engagement. The company moved into a new office space and among other updates on this new building, the directors were informed about and had discussions on the impact of this move on employees, including employee reactions to the change and efforts to transition the employees to the new space. All employees are given access to the Employee Handbook, which includes the Anti-Harassment and Bullying Policy and Diversity, Equity and Inclusion Policy (amongst other policies) which applies to the full life cycle of an employee - including recruitment, training, promotion and all other aspects of employment. The group also aims to help its employees and their dependents maintain their health and wellbeing via medical plan coverage with Vitality. Vitality offers an ‘engaged’ employee program where rewards are offered for ‘healthy lifestyle living’ through a points system as well as a separate Personal Health Fund. Vitality also offers a “Vitality Wellbeing Calendar”, which includes i. Interviews and panels with leading experts encouraging employees to make healthier choices; ii. Mindfulness and movement sessions, encouraging employees to get physical; and iii. Interactive workshops to enhance health and promote better work-life balance. The group also provides various employee resources, such as: 24/7 access to online resources, phone consultations and five one-on-one visits with a licensed professional for a variety of personal issues through our Employee Assistance Program. The company is also proud to have been recognized by the Living Wage Foundation for its demonstration and commitment to paying its staff according to the cost of living.
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RINGCENTRAL UK LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Inclusion Inside RingCentral
The success of RingCentral’s culture depends on the ability to work together; hence, the management is intentional about fostering a sense of inclusivity within all teams. This is especially important as the company becomes larger and more diverse in terms of identities, locations, languages, roles, professional backgrounds, preferred ways of working, among other factors. To improve the culture of inclusion and belonging, employees are required to take a diversity and inclusion training annually, and the company offers inclusive benefits, including gender-inclusive parental leave, family- forming support for employees regardless of marital status, gender, or sexual orientation, and supports the group's growing employee resource group program around the world. Customers The group provides software-as-a-service ("SaaS") solutions that enable businesses to communicate, collaborate and connect. The company serves the group's UK customers. The company's ability to compete effectively depends upon many factors both within and beyond the company's control, including macroeconomic conditions and the ability to provide customers with a valued service and product. The company has specialist teams that promote and develop long-term relationships with customers. Impact on the environment and the community RingCentral strives to minimize the environmental impact of its global operations and contribute to global carbon reduction through its virtual product offerings. In addition, it has several programs for office sustainability including recycling and composting options, electric vehicle charging stations at select office locations, ridesharing and carpooling benefits, and locally sourced foods in its office cafes. The company moved into a new office space in London. When choosing a new space, the company considered the environmental impact of the space as one of its criteria. This new building has been certified with a “Good” rating for the BREEAM In-Use Certification. In addition, it received an “Exceptional” rating during its last ISO14001 Environmental Management audit. The site also currently procures 100% renewable energy sources, with zero waste currently being sent to landfill. The directors were advised of and had a discussion on the lease.
For further information on RingCentral’s corporate responsibility initiatives, please visit www.ringcentral.com and visit the “Corporate Responsibility” page.
This report was approved by the board and signed on its behalf.
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RINGCENTRAL UK LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The directors present their report and the financial statements for the year ended 31 December 2024.
The profit for the year, after taxation, amounted to £5,476,502 (2023 - £10,394,130).
No dividend has been declared in the year (2023 : £nil)
The directors who served during the year were:
T Arora P Zeni
The company's greenhouse gas emissions and energy consumption are as follows:
2024 2023 Emissions from combustion of gas (Scope 1) 15 tCO2e 0 tCO2e
Emissions from purchased electricity (Scope 2) 60 tCO 2e20 tCO2e
Emissions from business travel in rental cars or employee-owned vehicles 44 tCO2e 59 tCO2e
where company is responsible for purchasing fuel (Scope 3)
Total energy consumption 562,111kWh 347,103 kWh
Total gross emissions 119 tCO2e 79 tCO2e
Emissions per £m turnover 0.96 tCO2e 0.77 tCO2e
Total Gross Scope 1, Scope 2 (market based) & Scope 3 emissions (tCO2e) 65 tCO2e 59 tCO2e
Methodology
We report our emissions with reference to the latest Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (GHG Protocol). In accordance with the 2018 Regulations, the energy use and associated greenhouse gas emissions are for those within the UK only that come under the operational control boundary. Therefore, energy use and emissions are aligned with financial reporting for the UK subsidiaries and exclude the non-UK based subsidiaries that would not qualify under the 2018 Regulations in their own right. The 2021 UK Government GHG Conversion Factors for Company Reporting published by the UK Department for Environment Food & Rural Affairs (DEFRA) are used to convert energy use in our operations to emissions of CO2e. Carbon emission factors for purchased electricity calculated according to the ‘location-based grid average’ method. This reflects the average emission of the grid where the energy consumption occurs. Data sources include billing, invoices and the Group’s internal systems. We purchase 100% renewable electricity, and we have included an additional net emissions figure calculated using market-based factors to account for this in our report above. At the time of reporting, only total consumption figures for electricity were available which covered months outside of the reporting period, therefore estimations had to be made for how much was consumed within the reporting period. For transport data where actual usage data (e.g. litres) was unavailable conversions were made using average fuel consumption factors to estimate the usage.
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RINGCENTRAL UK LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Intensity ratio
We have chosen to report our gross emissions against £m turnover. The value for the intensity ratio was 0.96 tCO2e per £m turnover (2023: 0.8 tCO2e per £m turnover) Primary energy efficiency measures implemented No energy efficiency actions taken during the reporting period.
As permitted by s414c(11) of the Companies Act 2006, the directors have elected to disclose information, required to be in the directors' report by Schedule 7 of the 'Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008', in the strategic report.
This report was approved by the board and signed on its behalf.
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RINGCENTRAL UK LTD
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2024
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.
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RINGCENTRAL UK LTD
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF RINGCENTRAL UK LTD
FOR THE YEAR ENDED 31 DECEMBER 2024
We have audited the financial statements of RingCentral UK Ltd (the 'company') for the year ended 31 December 2024, which comprise the profit and loss account, the balance sheet, the statement of changes in equity and the 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 auditor's 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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RINGCENTRAL UK LTD
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF RINGCENTRAL UK LTD (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
The other information comprises the information included in the annual report other than the financial statements and our auditor's 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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RINGCENTRAL UK LTD
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF RINGCENTRAL UK LTD (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
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 auditor's 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:
∙the engagement partner 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 of the company;
∙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, taxation legislation and data protection, anti-bribery, employment, environmental and health and safety 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 a sample of 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
∙making enquiries with management regarding any correspondence with HMRC and relevant regulators.
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
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RINGCENTRAL UK LTD
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF RINGCENTRAL UK LTD (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
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 auditor's 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 auditor's 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
Statutory Auditor
16 Great Queen Street
Covent Garden
WC2B 5AH
Date:
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RINGCENTRAL UK LTD
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2024
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RINGCENTRAL UK LTD
BALANCE SHEET
AS AT 31 DECEMBER 2024
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 16 to 34 form part of these financial statements.
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RINGCENTRAL UK LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
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RINGCENTRAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
RingCentral UK Limited provides telecommunications services and sells related products.
The company is a private company limited by shares incorporated in England and Wales. The address of its principal place of business and registered office is Level 3, 5 Aldermanbury Square, London, EC2V 7HR. The financial statements are presented in Sterling (£), which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
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.
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 company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102
∙Section 3 Financial Statement Presentation paragraph 3.17(d) (inclusion of statement of cash flows);
∙Section 7 Statement of Cash Flows (inclusion of statement of cash flows);
∙Section 11 Financial Instruments paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv),11.48(b) and 11.48(c) (disclosures relating to financial instruments);
∙Section 26 Share based payments (disclosure of share based payments);
∙Section 33 Related Party Disclosures paragraph 33.7 (disclosures of key management personnel compensation).
The company is included in the consolidated financial statements of RingCentral, Inc. for the year ended 31 December 2024 and these financial statements may be obtained from https://ir.ringcentral .com/home/default .aspx
The following principal accounting policies have been applied:
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RINGCENTRAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
Businesses in the telecommunications/SaaS industry expanding internationally are often funded by their parent company to build out a strong foundation for growth and stability. The UK company continues to expand its operations year on year experiencing growth of 22% in 2024 (20% in 2023). Revenue for the company and RingCentral Inc (parent company) comprises approximately 96% (95% in 2023) attributed as monthly recurring revenue under committed contracts with our customers. This, in conjunction with growth rates stated above, ensures our strong positive P&L trend in years to come and our long-term sustainability as a business in UK and Europe.
The company is continuing to make significant investment in the region to ensure we offer the best in class experience and a long-term partnership to all our customers. Over the course of five years the company has established client relationships with well-known corporate brand names. Growing the size of our UK business is paramount and hence the continued investment in talent and spend in marketing. As the company gains experience and matures, the expectation is the P&L and balance sheet will move in the same positive direction and we expect to incur incremental sales and marketing expenses to support our growth while driving cost efficiencies by further optimizing our go-to-market strategies. RingCentral Inc has invested in the success of the company and will continue to support the goals and objectives locally. It is listed on NYSE with market cap of approximately $2.8bn. For RingCentral Inc to continue to achieve its growth ambitions and expansion, global investment as demonstrated in the company is a core part of the strategy. The financial statements have been prepared on a going concern basis and the directors consider this basis to be appropriate as the company has sufficient facilities to fund its working capital requirements, for a period of at least twelve months from the date these financial statements were approved.
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RINGCENTRAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
The company determines revenue recognition through the following steps: The company recognizes revenues as follows: Subscriptions revenue Subscriptions revenue is generated from fees that provide customers access to one or more of the company’s software applications and related services. These arrangements have contractual terms typically ranging from one month to five years and include recurring fixed plan subscription fees, variable usage-based fees for usage in excess of plan limits, one-time fees, recurring license and other fees, derived from sales through our direct and indirect sales channels, including resellers and distributors, strategic partners and global service providers. The company generally bills its subscription fees in advance. Arrangements with customers do not provide the customer with the right to take possession of the company’s software at any time. Instead, customers are granted continuous access to the services over the contractual period. The company transfers control evenly over the contractual period by providing stand-ready service. Accordingly, the fixed consideration related to subscription is recognized over time on a straight-line basis over the contract term beginning on the date the company’s service is made available to the customer. The company may offer its customer services for no consideration during the initial months. Such discounts are recognized ratably over the term of the contract. Fees for additional minutes of usage in excess of plan limits are deemed to be variable consideration that meet the allocation exception for variable consideration as they are specific to the month that the usage occurs. The company’s subscription contracts typically allow the customers to terminate their services within the first 30 to 60 days and receive a refund for any amounts paid for the remaining contract period. After the end of the termination period, the contract is non-cancellable and the customer is obligated to pay for the remaining term of the contract. Accordingly, the company considers the non-cancellable term of the contract to begin after the expiration of the termination period. The company records reductions to revenue for estimated sales returns and customer credits at the time the related revenue is recognized. Sales returns and customer credits are estimated based on the company’s historical experience, current trends and the company’s expectations regarding future experience. The company monitors the accuracy of its sales reserve estimates by reviewing actual returns and credits and adjusts them for its future expectations to determine the adequacy of its current and future reserve needs. If actual future returns and credits differ from past experience, additional reserves may be required.
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RINGCENTRAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
Other revenue primarily includes revenue generated from sale of pre-configured phones and professional implementation services. Phone revenue is recognized upon transfer of control to the customer which is generally upon shipment from the company’s or its designated agents’ warehouse. The company offers professional services to support implementation and deployment of its subscription services. Professional services do not result in significant customization of the product and are generally short-term in duration. The majority of the company’s professional services contracts are on a fixed price basis and revenue is recognized as and when services are delivered.
On 30 September 2024, the company entered into two intercompany agreements with its parent company, RingCentral, Inc.: (i) an Intellectual Property (IP) License Agreement and (ii) a Limited Risk Distribution Agreement. These agreements resulted in a change in the company’s role from a full-risk distributor to a limited-risk distributor, effective from 1 January 2024.
IP License Agreement The company owns certain valuable intangible assets which relate to the marketing and sale of RingCentral products in the UK and other markets outside of the US that the licensor operates in. The company granted RingCentral, Inc., the licensee, an exclusive license to use certain intellectual property rights in connection with the sale and marketing of RingCentral products. In consideration for the license, the company is entitled to receive royalties based upon applicable third-party net revenue received by the company with the schedules and annual caps as defined in the agreement. On the effective date, a portion of the total royalty payments was prepaid by RingCentral, Inc. through the settlement of an intercompany receivable. This prepayment has been recognized as deferred royalty income and is being amortized to the income statement over the five-year term of the license. Limited Risk Distribution Agreement From 1 January 2024, the company began operating as a limited-risk distributor for RingCentral, Inc. under an intercompany distribution agreement. Under this arrangement, the company earns a fixed margin of 2% on net revenue generated from its distribution activities.
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RINGCENTRAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
Cost of subscriptions revenue primarily consists of costs of network capacity purchased from third-party telecommunications providers, network operations, costs to build out and maintain data centers, including co-location fees for the right to place the Company’s servers in data centers owned by third parties, depreciation of the servers and equipment, along with related utilities and maintenance costs, amortization of acquired technology related intangible assets, personnel costs associated with customer care and support of the functionality of the Company’s platform and data center operations, including share-based compensation expenses, and allocated costs of facilities and information technology. Cost of subscriptions revenue is expensed as incurred.
Cost of other revenue is comprised primarily of the cost associated with purchased phones, personnel costs for employees and contractors, including share-based compensation expenses, shipping costs, costs of professional services, and allocated costs of facilities and information technology related to the procurement, management and shipment of phones. Cost of other revenue is expensed in the period product is delivered to the customer.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
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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RINGCENTRAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
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RINGCENTRAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
The company has elected to apply Sections 11 and 12 of FRS 102 in respect of financial instruments.
Financial assets and financial liabilities are recognised when the company becomes party to the contractual provisions of the instrument. Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. The company’s policies for its major classes of financial assets and financial liabilities are set out below. Financial assets Basic financial assets, including trade and other debtors and cash and bank balances, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest for a similar debt instrument. Financing transactions are those in which payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate. Such assets are subsequently carried at amortised cost using the effective interest method, less any impairment. Financial liabilities Basic financial liabilities, including trade and other creditors and loans from fellow group companies, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Financing transactions are those in which payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate. Debt instruments are subsequently carried at amortised cost, using the effective interest rate method. Impairment of financial assets Financial assets measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the profit and loss account. For financial assets measured at cost less impairment, the impairment loss is measured as the difference between the asset's carrying amount and the best estimate of the amount the company would receive for the asset if it were to be sold at the reporting date. For financial assets measured at amortised cost, the impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If the financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
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RINGCENTRAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets and financial liabilities Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) despite having retained some significant risks and rewards of ownership, control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions. Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires. Offsetting of financial assets and financial liabilities Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Functional and presentation currency
Transactions and balances
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the profit and loss account within 'interest receivable and similar income' or 'interest payable and similar expenses'. All other foreign exchange gains and losses are presented in the profit and loss account within 'administrative expenses'.
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RINGCENTRAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
The company did not grant any options or PSUs with market conditions in the UK.
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RINGCENTRAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
The tax expense for the year comprises current and deferred tax. Tax is recognised in the profit and loss account, 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.
Current tax is the amount of income tax payable in respect of taxable profit for the year or prior years. 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 arises from timing differences that are differences between taxable profits and total comprehensive income as stated in the financial statements. These timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements. 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. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
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RINGCENTRAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Share based payments The company participates in an equity settled share based payment arrangement in which share options in its parent undertaking are issued to employees of the company. The fair value determined at the grant date is expensed on a straight line basis over the vesting period. The fair value is calculated using the appropriate fair value model with the estimated level of vesting being reviewed annually by management. Deferral of sales commissions Certain employees receive commissions dependent on the level of new sales contracts won. As no guidance on the accounting treatment for such costs is provided by UK accounting standards (FRS 102), the company has utilised Sections 10.4 and 10.6 of FRS 102 which state that management are allowed to consider the guidance in EU adopted IFRS in determining the accounting policy for such costs. The costs are considered to meet the criteria set out in IFRS 15 "Revenue recognition" for recognition of an asset from the costs incurred to fulfil a contract and as such have been deferred and are released to the profit and loss account over the estimated life of the sales contracts. Management have estimated the average length of sales contracts to be 5 years. The level of deferred commissions included in other debtors at the year-end was £18,548,060 (2023: £19,267,590). Similarly, certain other costs are deferred and are released to the profit and loss account over the estimated life of the sales contracts. The level of deferred costs included in other debtors at the year-end was £450,382 (2023: £924,058). Deferred tax asset The company has tax losses carries forward. Assessments as to whether or not to recognise deferred tax assets involved forecasts of future taxable profits. These forecasts involve a series of complex judgements about future events and can rely heavily on estimates and assumptions. Actual outcomes could be different to the estimates and assumptions used in determining the forecasts. The carrying value of the deferred tax asset at the year end is £2,886,539 (2023: £5,304,716).
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RINGCENTRAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Analysis of turnover by country of destination:
Page 27
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RINGCENTRAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 28
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RINGCENTRAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 29
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RINGCENTRAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
11.Taxation (continued)
There are no factors that may affect future tax charges.
Page 30
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RINGCENTRAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 31
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RINGCENTRAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 32
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RINGCENTRAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 33
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RINGCENTRAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Profit & loss account
https://ir.ringcentral .com/home/default .aspx The ultimate parent company is RingCentral Inc., a company incorporated in the United States of America. In the opinion of the directors there is no ultimate controlling party.
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