REG - Beeks Fin Cloud Grp - Final Results
07/10/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20241007:nRSG0853Ha&default-theme=true
RNS Number : 0853H Beeks Financial Cloud Group PLC 07 October 2024
Beeks Financial Cloud Group plc
("Beeks" or the "Company")
Final Results for the year ended 30 June 2024
7 October 2024: Beeks Financial Cloud Group plc (AIM: BKS), a cloud
computing and connectivity provider for financial markets, is pleased to
announce its final results for the year ended 30 June 2024.
Financial highlights
· Revenues(1) increased 27% to £28.5m (2023: £22.4m)
· Annualised Committed Monthly Recurring Revenue (ACMRR) up 18% to £28.0m
(2023: £23.8m) increasing further to £28.5m by the end of August 2024
following a strong start to the new financial year
· Gross profit up 24% to £11.3m (2023: £9.1m)
· Underlying(2) EBITDA increased 27% to £10.7m (2023: £8.4m)
· Underlying profit before tax(3) increased 68% to £3.9m (2023: £2.3m)
· Underlying diluted EPS(4) 6.36p (2023: 3.96p)
· Positive operational free cash flow position, with Net cash(5) as at 30 June
2024 of £6.6m (30 June 2023: £4.4m) notwithstanding continued investment in
Beeks' product offering
(1) Revenue referenced throughout the accounts excludes grant income and
rental income
(2) Underlying EBITDA is defined as profit for the year before amortisation,
depreciation, finance costs, taxation, acquisition costs, share based
payments, exchange rate gains/losses on statement of financial position
translation and exceptional non-recurring costs
(3) Underlying profit before tax is defined as profit before tax excluding
amortisation on acquired intangibles, acquisition costs, share based payments,
exchange rate gains/losses on statement of financial position translation and
exceptional non-recurring costs
(4) Underlying diluted EPS is defined as profit for the year excluding
amortisation on acquired intangibles, acquisition costs, share based payments,
exchange rate gains/losses on statement of financial position translation and
exceptional non-recurring costs divided by the number of shares including any
dilutive share options
(5) Net cash is defined as closing cash less closing asset financing loans and
bank loans.
Statutory Equivalents
The above highlights are based on underlying results. Reconciliations between
underlying and statutory results are contained within these financial
statements. The statutory equivalents of the above results are as follows:
· Profit before tax was £1.46m (2023: Loss before tax £0.65m)
· Basic (LPS)/EPS was 3.33p (2023: Loss per share 0.14p)
Operational highlights
Significant growth of Tier 1 customer base and expansion with existing
customers:
· Post-period multi-year Exchange Cloud contract with one of the largest
exchange groups globally received regulatory approval, as announced in
February. Beeks remains under a Non-Disclosure Agreement (NDA) with the
exchange until the product's launch, which remains on track
· Further significant extensions of the JSE contract, including the launch of
JSE's Colo 2.0 offering in September 23 and the addition of a second data
centre location, as announced in August 24
· Significant Proximity Cloud wins including £5m contract with one of the
world's largest banking Groups, and a $3.6m (c£2.7m) contract in aggregate
over a five-year period with a Tier 1 investment manager
· Private Cloud Contracts to a value of $4m (c£3m) signed in July, including a
significant win, via a partner, with one of the UK's largest banks
· Further expansion potential remains across the vast majority of existing
customers
Investment in enhanced security and continued product innovation:
· Completed industry-leading SOC 2 Type 1 security compliance for Proximity and
Exchange Cloud Products, as announced in March, and successfully achieved ISO
22301 the Global standard for Business Continuity Management
· Strategic partnership with Securities & Trading Technology (STT) to meet
the evolving needs of global financial markets, and a collaboration with
BlueVoyant, to enhance security protection
· Investment and implementation of new layered security defences &
mitigations including; Privileged Access Management (PAM), External Attack
Surface Management (EASM), and the Security Awareness Training Platform.
· Major Analytics releases providing new features, with ongoing investment into
Artificial Intelligence in Beeks Analytics, implementing the next version of
AI capability
· Investment in inventory, team and sales and marketing, to deliver on the
growth opportunity:
· Strengthened our team with the appointment of key personnel in strategic
regions, including a Head of APAC and a Technical Pre-Sales Specialist.
· Increased brand awareness through participation in key industry conferences,
including events in Istanbul, London, Chicago, New York, Boca Raton, and
Johannesburg.
· Further investment into inventory, ensuring the Group is capable of delivering
against all contracts either signed or in the immediate pipeline.
Outlook
· Material growth in sales pipeline for Exchange Cloud, with several major
international exchanges entering the final stages of contracting, and others
at earlier points in the sales funnel
· Significant opportunity to scale Exchange Cloud through expansion with
existing customers, the JSE contract serving as an example of the expansion
potential once a customer has signed
· Favourable market trends as the financial services sector continues to shift
to cloud computing
· Even at this early stage of the year, the Board is confident in achieving
results for FY25 in line with its expectations, underpinned by high levels of
recurring revenue, a strong pipeline, an established, international reputation
and a significant market opportunity
Gordon McArthur, CEO of Beeks, commented: "This has been another year of
strong trading with double-digit growth across the board. Demand for our
product is stronger than ever, fuelling a regular flow of new contract wins
and extensions that offer long-term, recurring revenues. The expansion of our
customer base is a testament to the value of our offering becoming
increasingly recognised by the market and has resulted in a record sales
pipeline. Exchange Cloud continues to offer the most exciting opportunity with
a pipeline comprising of some of the world's largest exchanges.
Supported by favourable market trends and our increasingly recognised
international reputation, we are confident in driving this momentum into the
next financial year and beyond."
For further information please contact:
Beeks Financial Cloud Group plc
Gordon McArthur, CEO via Alma
Fraser McDonald, CFO
Canaccord Genuity +44 (0)20 7523 8000
Adam James / George Grainger
Alma Strategic Communications +44(0)20 3405 0205
Caroline Forde / Joe Pederzolli / Emma Thompson
About Beeks:
Cloud computing is crucial to Capital Markets and finance.
Beeks Group is a leading managed cloud provider exclusively within this
fast-moving sector. Our Infrastructure-as-a-Service model is optimised for
low-latency private cloud compute, connectivity and analytics, providing the
flexibility to deploy and connect to exchanges, trading venues and public
cloud for a true hybrid cloud experience.
ISO 27001 certified, we provide world-class security aligned to global
security requirements.
Founded in 2011, Beeks Group is listed on the London Stock Exchange (LSE: BKS)
and has enjoyed continued growth each year. Beeks Group now employs over 100
team members across the globe with the majority based at our Renfrew HQ.
Find out more at beeksgroup.com
Chairman's Statement
Beeks has yet again proven its leading position and reputation in providing
advanced technology solutions the capital markets, catering to the needs of
the largest financial organisations globally. Revenues to the 30 June 2024
increased by 27% to £28.5m (2023: £22.4m), and underlying EBITDA by 27% to
£10.7m (2023: £8.4m). The Group delivered an exit ACMRR of £28.0m (2023:
£23.8m), up 18% in the year, providing a strong basis for continued growth in
FY24.
Strong progress has been made against our financial and strategic objectives
in FY24, exemplified by another set of impressive financial results,
representing a period of significant growth. We are delighted to have now
moved into a more profitable and operationally cash-generative position, yet
again delivering double-digit increases in revenue, EBITDA, PBT and ACMRR,
driven by a strong performance across Beeks' Private, Proximity and Exchange
Cloud offerings.
I am particularly pleased with the strategic progress made during the year.
Notwithstanding the strong performance across our Private and Proximity Cloud
products, we continue to be highly optimistic about Exchange Cloud's
transformational prospects for Beeks. With three exchanges now signed up to
the offering and clear traction gained during the period under review, we look
forward to capitalising on the offering's steadily increasing momentum.
I would like to take this opportunity to extend my thanks to the team at
Beeks, without whom such a pleasing performance would not have been possible.
It is clear that we have a solid foundation on which to grow, bolstered by
increasing levels of revenue visibility for FY25 and beyond. The conversion of
our new customer sales pipeline remains a core focus moving forwards, and the
current period has started very encouragingly, with significant new contracts
already secured, providing confidence in the delivery of FY25 financial
results in line with the Board's expectations.
Mark Cubitt
Chairman
4 October 2024
Strategic Report
Market Overview
"Cloud has become essentially indispensable. However, the tables are turning:
business outcomes are now shaping cloud models, rather than the other way
around."
Sid Nag, Vice President Analyst at Gartner
Growth in Cloud Adoption
As cloud computing continues to drive digital transformation, its role in
financial markets and payments is evolving. What was once a tool to enable
innovation is now being shaped by the specific needs of financial
institutions. The global IaaS market is forecast to grow significantly, but
the focus is shifting from basic infrastructure provision to solving complex
business challenges like regulatory compliance, cybersecurity, sustainability,
and operational efficiency.
Regulatory Compliance and Data Sovereignty
As regulations grow more stringent, particularly in the EU and US, cloud
providers must ensure robust compliance frameworks. Financial institutions
need cloud solutions that can address data residency requirements while
maintaining operational efficiency. Beeks, with its SOC2 certification and
extensive experience in regulated markets, is well-positioned to meet this
demand.
Cybersecurity
As cyber threats become more sophisticated, financial institutions are
prioritising security above all else. They require cloud infrastructure that
not only offers low-latency and scalability but also protects sensitive
financial data. Beeks' partnership with BlueVoyant and our in-house
cybersecurity measures give us a competitive edge in this rapidly growing area
of concern.
Sustainability and Green Finance:
Cloud infrastructure is increasingly seen as a tool to help financial firms
meet their sustainability goals. By migrating to cloud environments,
institutions can reduce their carbon footprint compared to traditional
on-premise data centres. Beeks' global network of energy-efficient data
centres aligns with the sustainability objectives of financial institutions,
making us a valuable partner for firms focused on green finance initiatives.
Real-time Data and Analytics
In financial markets, real-time data is critical for decision-making. Cloud
solutions that deliver ultra-low latency and high-performance analytics are in
high demand. Beeks' infrastructure is designed to handle the real-time data
needs of financial institutions, enabling clients to make quicker, more
informed decisions in fast-moving markets.
Payment Modernisation
The payments industry is evolving rapidly, with new technologies like
real-time payments and Central Bank Digital Currencies (CBDCs) becoming
mainstream. Financial institutions need scalable cloud solutions that can
adapt to these innovations. Beeks' flexible infrastructure supports the
complex requirements of modern payment systems, positioning us at the
forefront of this transformation.
AI in Risk Management
Artificial Intelligence is increasingly being used to manage risk and detect
fraud in financial services. Institutions require cloud environments that can
support complex AI models and provide the computational power needed for
real-time risk analysis. Beeks offers the infrastructure to meet these growing
demands, allowing financial firms to deploy AI solutions at scale.
Positioning for the Future
With an addressable market that includes over 21,000 banks and hundreds of
global exchanges, Beeks is uniquely positioned to capitalise on the continued
growth of cloud adoption in financial services. As the demand for real-time
data processing increases, particularly for high-frequency trading and risk
management, Beeks' ultra-low latency infrastructure ensures our clients remain
competitive in fast-paced markets.
Our cloud solutions are also built to support the growing integration of
artificial intelligence (AI) in financial services, particularly in areas such
as risk management, fraud detection, and automated trading strategies. As AI
adoption scales, financial institutions will rely on cloud providers like
Beeks to handle the complex computational workloads required to deliver
real-time insights and improve decision-making.
As more financial organisations adopt cloud-first IT strategies, there's a
growing trend towards outsourcing functions that demand hands-on
infrastructure expertise, especially for performance-sensitive front-office
operations. Beeks is well positioned to provide these specialised services and
seize this opportunity.
As firms seek cloud solutions that address not just scalability, but also
complex regulatory, security, and sustainability challenges, Beeks is ready to
deliver innovative and secure infrastructure that ensures operational
resilience and growth for financial institutions worldwide.
Business Model
#PoweredbyBeeks
For over thirteen years, Beeks has been a trusted partner for financial
markets and payments, providing cloud compute and infrastructure solutions
tailored to the unique demands of this fast-paced, high-stakes sector. Our
mission is to deliver ultra-low latency, secure, and high-performance cloud
infrastructure that optimises operations in capital markets, financial
services, and payments.
Beeks is strategically positioned as the market leader in cloud solutions for
financial markets and payments, offering cloud deployment options across a
global network of financial data centres. Whether it's on-premise or
cloud-based, we support clients in building robust, scalable cloud strategies.
Our on-demand services ensure that financial firms maintain peak operational
performance while lowering costs and mitigating risks.
As cloud adoption accelerates within financial services, Beeks leads the way
in delivering cutting-edge infrastructure and analytics. We are one of the few
companies globally that can provide a fully integrated solution that combines
low-latency compute, secure connectivity, and real-time analytics to optimise
the performance of financial trading environments.
Innovations and Solutions
One of our core offerings, Proximity Cloud®, is a fully configured and
pre-installed physical trading environment tailored to the needs of global
exchanges. This secure, private cloud solution offers a seamless and rapid
deployment, reducing time to market and operational complexities for clients.
Following the success of Proximity Cloud®, we introduced Exchange Cloud®.
Designed specifically for financial exchanges and Electronic Communication
Networks, Exchange Cloud® is a multi-tenant iteration of Proximity Cloud®,
empowering exchanges to act as cloud service providers. This solution enhances
scalability, security, and compliance while enabling exchanges to offer their
clients customisable, co-located cloud services.
We've also enhanced our market-leading analytics capabilities through Beeks
Analytics. Our product delivers packet-level monitoring and deep insights into
network traffic, helping clients to optimise their trading infrastructure.
Beeks Analytics now features flexible, user-friendly dashboards powered by
Grafana, offering intuitive visualisations and integration options for
financial enterprises. The modularity of Beeks Analytics ensures that clients
can scale the solution to fit their needs, whether it's just the VMX-Capture
layer or the full analytics suite.
What We Provide
As the market leader in cloud infrastructure for financial markets and
payments, Beeks offers a comprehensive range of cloud compute, private cloud,
connectivity, and analytics solutions, tailored specifically to meet the
demands of this fast-moving industry:
· Compute on Demand: High-performance virtual and dedicated servers,
delivering ultra-low latency compute power in key financial hubs. Our
infrastructure supports real-time trading, with the flexibility to scale up or
down based on market demand.
· Private Cloud: Through Proximity Cloud® and Exchange Cloud®, we
provide secure, pre-configured environments for capital markets. These private
cloud solutions enable operational resilience, enhanced security, and reduced
latency, giving financial institutions the control and agility they need to
respond to market shifts efficiently.
· Low-Latency Connectivity: Our global connectivity services, including
WAN, private networks, and cross-connects, ensure reliable, ultra-low latency
connections. These are optimised for high-frequency trading and other
time-sensitive financial operations, helping our clients maintain a
competitive edge.
· Beeks Analytics: Our real-time performance monitoring and analytics
platform empowers clients with full transparency and control over their
trading infrastructure. By capturing and analysing network traffic, clients
can optimise performance, enhance decision-making, and improve operational
efficiency.
Our solutions are designed with flexibility and scalability in mind, enabling
clients to manage their resources efficiently and adapt to changing market
conditions. By combining industry-leading infrastructure, managed cloud
services, advanced analytics, and low-latency connectivity, Beeks continues to
set the standard as the trusted partner for financial institutions worldwide.
Strategy
At Beeks, our purpose is to deliver secure, scalable, and rapid deployment
cloud solutions for financial enterprises of all sizes. Our vision is to
enable our clients to operate with speed, agility, and resilience in a rapidly
changing market.
Our core strategic goal is to continue expanding our customer base across
public, private, and hybrid cloud deployments, along with our advanced
analytics solutions. We will achieve this by continuously innovating, building
on the success of our products like Proximity Cloud® and Exchange Cloud®,
and refining our offerings to meet the evolving demands of financial
institutions.
To support our growth and meet increasing demand, we will continue to enhance
our product development roadmap, introducing new features and capabilities
that address industry challenges such as regulatory compliance, cybersecurity,
and sustainability. Additionally, we aim to broaden our reach into new asset
classes and geographies, leveraging the significant opportunities we have
identified in these markets.
By maintaining our focus on innovation, scalability, and client success, Beeks
is well-positioned to continue leading the way in cloud infrastructure for
financial markets and payments.
Sales and Marketing
In 2024, our marketing strategy has evolved to reflect Beeks' commitment to
becoming the market leader in financial markets and payments infrastructure.
We've focused on strengthening our brand positioning, aligning our messaging
to clearly communicate our unique value in low-latency cloud infrastructure
for financial services.
Our focus this year has been on solidifying Beeks' position within both
institutional and retail markets. We've enhanced our participation in
high-impact industry events such as Finacle Conclave, FIA Boca, and JSE Trade
Connect. These engagements have allowed us to showcase how Beeks' low-latency
compute solutions address the critical needs of financial institutions,
capital markets, and trading firms.
A critical part of our strategy is targeting regional markets with tailored
messaging. We embarked on an Asia Roadshow, attending events such as FISD
AsiaFIC and the FIX Trading Community AsiaPac Trading Summit, demonstrating
our solutions to key players in growth markets. This focus on region-specific
engagement supports our efforts to build stronger relationships with
institutional clients and ensures our offerings are aligned with local market
demands.
Looking ahead, the upcoming World Federation of Exchanges event in November is
a prime opportunity for Beeks to highlight Exchange Cloud® as the go-to
infrastructure solution for exchanges and trading venues. This will further
bolster our brand presence, positioning us as the leader in cloud
infrastructure for financial markets, while reinforcing our expertise in
high-performance, low-latency solutions.
To support this strategic growth, we've placed a renewed emphasis on brand
positioning and thought leadership. By focusing on low-latency technology and
the critical role it plays in financial trading and payments processing, we
continue to differentiate Beeks from larger cloud providers. Our memberships
with STAC and FIA strengthen our standing in the industry, providing platforms
to showcase our expertise and engage with key decision-makers.
As we continue to grow, our strategy is to enhance Beeks' thought leadership
and brand visibility in the financial markets space. By leveraging data-driven
marketing initiatives and focusing on targeted campaigns, we are
well-positioned to further solidify our leadership in low-latency cloud
infrastructure. This strategic focus is designed to meet the unique needs of
institutional financial clients, driving growth and cementing Beeks' role as
the trusted provider of cutting-edge infrastructure for financial markets and
payments.
Chief Executive's Review
FY24 has been another year of strong progress for Beeks. Our impressive
financial performance, driven by the conversion of our sales pipeline into
significant new customer wins, represents yet another period of double-digit
top and bottom line growth. Our consistent growth rate since becoming a listed
business now leaves us in a more profitable and operationally cash-generative
position, providing a strong basis for the continued delivery of accelerated
growth.
We now have an established profile in the global financial services industry.
Customers clearly recognise the value of our offering, with the benefits for
the customer and their clients alike increasingly understood in the sector.
The significant new contracts signed demonstrate the demand for our solutions
and serves as material proof of the financial services sector shifting to
cloud computing. With our increasingly established and international profile,
we are confident in our ability to seize the opportunity ahead of us.
Our confidence in the ability of our Exchange Cloud offering to transform the
financial status of our business continues to grow. The contract with the
Johannesburg Stock Exchange (JSE) is an example of how an Exchange Cloud
contract can rapidly expand following adoption. Since the launch with JSE in
September 2023, two further expansions have been secured, due to the huge
demand from JSE customers. We anticipate each Exchange Cloud contract will
materially expand over multiple years, providing a sustained runway of growth.
Our sales pipeline for the offering has developed materially in the year, with
several of the world's leading exchanges entering the final stages of
contracting, and others at earlier points in the sales funnel.
We have also continued to demonstrate a strong performance across our Private
and Proximity Cloud products, further executing against our land and expand
strategy.
With our increasingly established and international profile, we are confident
in our ability to seize the opportunity ahead of us.
Financial performance
Revenue in the period grew by 27% to £28.5m (2023: £22.4m), resulting in an
increase in underlying EBITDA of 27% to £10.7m (2023: £8.4m). Significantly,
this year we have successfully improved operating profit margins with
underlying profit before tax growth of 68% to £3.9m (FY23: £2.3m), as well
as a positive operational free cash flow position, with net cash increasing to
£6.6m at 30 June 2024 (2023: £4.4m) notwithstanding continued investment in
Beeks' product offering.
Growth was largely driven by the significant Exchange and Proximity Cloud
contracts with Tier 1 customers as Beeks continues to achieve new wins and
scale with existing customers, our ACMRR growing 18% to £28.0m at 30 June
2024 (2023: £23.8m). Our customer retention remains high, and we continue to
have a strong recurring revenue profile, with 84% of revenue in the year
recurring (2023: 91%).
Operational Expansion
We made some key hires during the year however headcount remained broadly in
line with the previous period. Headcount as at 30 June 2024 increased to 105
from 103 as at 30 June 2023, with the marginal increase representing a number
of senior hires focussed on specific growth areas of the business. Senior
hires included a new Head of Software Development, Head of Site Reliability
Engineering and Head of APAC sales.
We now have a right sized sales team led by personnel with valuable experience
in financial markets, providing confidence in ongoing momentum moving forward.
We have also made a strategic senior hire with experience in AI to support the
new developments in artificial intelligence within our Analytics offering, an
area that has had continued focus this year.
We have continued to increase our data centre presence in the year both in
existing locations and expanding in areas driven by customer demand. We will
continue to evaluate new locations in line with our sales pipeline.
Product roadmap
We remain focused on evolving the functionality of our product offerings and
during the year we continued to enhance our product set.
We have continued investing into the security of our products this year and
were delighted to achieve the Service Organization Control 2 (SOC 2)
compliance for our Proximity Cloud and Exchange Cloud products, as announced
in March. SOC 2 compliance, the widely respected and recognised standard
developed by the American Institute of Certified Public Accountants (AICPA),
demonstrates Beeks' commitment to ensuring the security of customer data and
strengthens Beeks' reputation as a trusted partner in the financial services
sector, assuring clients that their core business functions are supported by a
secure infrastructure.
In April we were also pleased to announce a strategic partnership with
Securities & Trading Technology (STT), a leader in trading, clearing, and
surveillance technology. This collaboration introduces a service-based
solution that combines Beeks' financial cloud infrastructure with STT's
trading and clearing systems to meet the evolving needs of global financial
markets; streamlining operation, reducing costs, and enhancing market
competitiveness by covering all aspects of exchange trading. The partnership
enhances Beeks' solutions and demonstrates our dedication to innovation and
value-creation for the financial markets.
This comes following continued investment into cybersecurity measures, such as
the significant partnership with cybersecurity company BlueVoyant that was
announced in January, enhancing Beeks' cybersecurity defences with their
award-winning Managed Extended Detection and Response offering.
We have increased investment into Artificial Intelligence in the year. We
believe that the latency and client experience insights that our analytics
product provides can become an essential part of the capital markets
front-office trading workflow. The open architecture and transparent
commercial model of Beeks Analytics offers us a unique position to exploit
this opportunity. During the year we implemented the next version of AI
capability. Our Analytics product serves as an additional revenue stream as it
is a stand-alone supplementary software that customers can access.
Sales and Marketing
Having made strategic hires during the year, gaining senior personnel with
extensive industry experience and connections to enhance our sales and
marketing strategies, we feel confident in our ability to delivering on our
growth opportunity, particularly on scaling Exchange Cloud to reach new
customers.
Our professional memberships serve as a valuable platform for Beeks to engage
and establish connections with industry experts. These connections can
potentially result in business opportunities, partnerships, and collaborations
as well as offer access to valuable competitor insights. Furthermore, they set
us apart from large-scale cloud service providers.
Customers
Beeks continues to support a diverse clientele, including banks, brokers,
hedge funds, cryptocurrency traders and exchanges as well as insurance
companies, financial technology firms, payment providers, and Independent
Software Vendors (ISVs).
During the year we made material leaps in our sales pipeline for Exchange
Cloud, a multi-home, fully configured and pre-installed physical trading
environment fully optimised for global exchanges to offer cloud solutions to
their end users. Significant Exchange Cloud wins include:
· The launch of the Johannesburg Stock Exchange's (JSE) Colo 2.0 offering in
September 2023, providing JSE customers with leading edge innovative hosting
and connectivity solutions.
· Significant extension of the JSE contract, announced in March, to meet
stronger than anticipated customer demand for the solution, with the contract
expanded again in August 2024, post period end, to a second data centre
location, to meet the needs of large banks' regulatory requirements for dual
location disaster recovery.
· Post-period multi-year Exchange Cloud contract with one of the largest
exchange groups globally received regulatory approval, as announced in
February. Beeks remains under an NDA with the exchange until the product's
launch, which remains on track.
We have also continued to demonstrate a strong performance across our Private
and Proximity Cloud products, further executing against our land and expand
strategy.
Notable wins during the year include:
· Private Cloud Contracts to a value of $4 million (c£3 million) signed in
July, including a significant win, via a partner, with one of the UK's largest
banks.
· $1.3 million (c£1 million) Proximity Cloud contract win with a Tier 1
investment manager, announced in November. Subsequent expansion of this
initial $1.3 million (c£1 million) Proximity Cloud contract to a value of
$3.6 million (c£2.7 million) in aggregate over a five-year period, as
announced in February.
· £5 million contract with one of the world's largest banks, announced in
March.
As demonstrated in the year, there is considerable potential for further
expansion with existing customers across each of our product offerings. We
have made strong progress with our Land and Expand strategy, with these
extensions driving additional revenue from deals that grow in size since being
signed.
Future Growth and Outlook
Looking ahead, we see a significant opportunity to scale with Exchange Cloud.
Our sales pipeline for the offering has developed materially in the year, with
several of the world's leading exchanges entering the final stages of
contracting, and others at earlier points in the sales funnel.
We remain in a very strong position to continue our growth trajectory, boosted
by high levels of recurring revenue, an established, international reputation
and a significant market opportunity. Even at this early stage of the year, we
are confident in our ability to achieve results for FY25 in line with the
Board's expectations.
Gordon McArthur
CEO
4 October 2024
Financial Review
Key Performance Indicator Review
FY24 FY23 Growth
Revenue(1) (£m) £28.49 £22.36 27%
ACMRR(2) (£m) £28.00 £23.80 18%
Gross Profit (£m) £11.34 £9.12 24%
Gross Profit margin(3) 39.8% 40.8% (1%)
Underlying EBITDA(4) (£m) £10.73 £8.42 27%
Underlying EBITDA margin(5) 37.7% 37.7% -
Underlying Profit before tax(6)(£m) £3.90 £2.32 68%
Underlying Profit before tax margin(7) 13.7% 10.4% 3.3%
Profit / (loss) before tax (£m) £1.46 (£0.65) 325%
Underlying EPS(8) (pence) £7.01 £4.31 63%
(1)Revenue excludes grant income and rental income
(2)ACMRR is Annualised Committed Monthly Recurring Revenue
(3)Gross profit margin is statutory gross profit divided by Revenue
(4)Underlying EBITDA is defined as profit for the year excluding amortisation,
depreciation, finance costs, taxation, acquisition costs, share based
payments, exchange rate gains/losses on statement of financial position
translation and exceptional non-recurring costs
(5)Underlying EBITDA margin is defined as Underlying EBITDA divided by Revenue
(6)Underlying profit before tax is defined as profit before tax excluding
amortisation on acquired intangibles, acquisition costs, share based payments,
exchange rate gains/losses on statement of financial position translation and
exceptional non-recurring costs
(7)Underlying profit before tax margin is defined as Underlying profit before
tax divided by Revenue
(8)Underlying EPS is defined as profit for the year excluding amortisation on
acquired intangibles, acquisition costs, share based payments, exchange rate
gains/losses on statement of financial position translation and exceptional
non-recurring costs divided by the number of shares
I am pleased to report on another year of strong financial performance, with
good revenue growth reflecting a positive response by both new and existing
customers to our growing cloud offering. Recurring revenues remain high as a %
of revenue, with high customer retention across our portfolio. Steady margins,
high levels of recurring revenues, strong cash generation and a well-funded
balance sheet provides us a solid foundation as we look to the year ahead.
Revenue
FY24 was another good year in terms of revenue growth. Group revenues grew by
27% to £28.5m (2023: £22.4m) driven by both Proximity, Exchange Cloud as
well as our core Private Cloud offering across both existing and new
customers. It has been pleasing to see growth within both these areas.
Proximity and Exchange Cloud revenues grew by £3.0m and Private Cloud grew by
£3.1m when compared to FY23. Refer to note 3 for a further breakdown of the
Group's revenues. 84% of revenues (2023: 91%) were recurring with Tier 1
customers now representing 58% of delivered revenue (2023: 45%) and a high
proportion of our recurring revenue on multi-year contracts. Historically we
have always had high percentage levels of recurring revenue. The different
revenue recognition principles of Proximity and Exchange Cloud, where a
significant proportion is recognised upfront, will mean more fluctuations in
our percentage of recurring revenue each year depending on the mix of
Private/Public/Proximity and Exchange Cloud sales. It is pleasing to see
another strong year of growth in contracted recurring revenue as represented
by our ACMRR growth of 18% to £28.0m (2023: £23.8m).
Gross Profit
Statutory gross profit earned, which is calculated by deducting from revenue
variable cost of sales such as data centre costs, software licencing,
connectivity charges and depreciation and amortisation on our server estate
and internally developed software, increased 24% to £11.3m (2023: £9.1m),
with gross margin relatively stable, albeit reduced by one percent due largely
to increased software licencing costs. These additional licencing costs are
not expected to recur into FY25 as we have transitioned our server licence
estate from VMWare to OpenNebula which has a lower software licencing charge.
The investment in both Proximity Cloud and Exchange Cloud including
Analytics during the year has continued as we seek to enhance the customer
experience. We have incurred internal gross capitalised development costs at a
similar level to the previous year of £2.8m (2023: £2.9m). This is largely
made up of our internal software team which is now well established.
With a strong pipeline of Proximity and Exchange Cloud deals and with
investment expected to be at a lower quantum when compared to sales growth, we
anticipate gross margins to increase as these deals are converted into FY25.
Underlying Administrative Expenses
Underlying administrative expenses, which are defined as administrative
expenses less share based payments and non-recurring costs, have increased by
5% from £7.0m to £7.4m primarily as a result of increases in staff costs. In
line with our strategy, we maintained similar staffing levels from FY23 with
an average headcount of 105 throughout the year (2023: 103) therefore these
costs are largely as a result of inflationary pay increases. Other overhead
costs have remained relatively flat during the year as we have worked hard to
maintain margins. Hires will be continue to be made in value add areas but we
anticipate the trend of incremental headcount increases in support areas
moving forward as deals are converted and we look to deliver better operating
margins.
Earnings before interest, tax, depreciation, amortisation and exceptional
non-recurring costs ("Underlying EBITDA") increased by 27% to £10.7m (2023:
£8.4m). The growth in Underlying EBITDA has been driven by continued organic
revenue growth.
Underlying EBITDA, underlying profit before tax and underlying earnings per
share are alternative performance measures, considered by the Board to be a
better reflection of true business performance than statutory measures only.
The key adjusting items are share based payments, amortisation, grant income
and unrealised exchange rate gains and losses.
Underlying Profit before tax** increased to £3.9m (2023: £2.3m) as a result
of the changes in the key financial metrics discussed above.
Statutory Profit before tax increased to a profit of £1.5m (2023: Loss of
£0.7m). The other reconciling differences are shown on the table below:
Year ended 30 June 2024 Year ended 30 June 2023
£'000 £'000
Statutory Profit / (Loss) Before Tax 1,459 (650)
Add back:
Share Based Payments 2,326 2,291
Other Non-recurring costs* 29 136
Amortisation of acquired intangibles 304 489
Deduct:
Grant Income (275) (267)
Exchange rate gains on intercompany translation 60 325
Underlying Profit before tax for the year 3,903 2,324
Year ended 30 June 2024 Year ended 30 June 2023
£'000 £'000
EBITDA(***) 10,940 8,362
Deduct:
Grant Income (275) (267)
Exchange rate losses on intercompany translation 60 325
Underlying EBITDA 10,725 8,420
*Other non-recurring costs in the year relates exceptional costs in relation
to one off staff termination payments, and other one off property costs. Prior
year non-recurring costs were incurred due to refinancing and one off property
costs. All of these costs are not expected to recur and are therefore
disclosed separately to trading results.
**Underlying profit before tax is defined as profit before tax excluding
amortisation on acquired intangibles, acquisition costs, share based payments,
exchange rate gains/losses on statement of financial position translation and
exceptional non-recurring costs
***EBITDA is defined as earnings before depreciation, amortisation,
acquisition costs, share based payments and non-recurring costs
Taxation
The effective tax rate ('ETR') for the period was (50.3%), (2023: 86.3%).
The overall effective tax rate has benefitted from the UK Super-deduction on
plant and machinery assets, deferred tax on share options and prior year
adjustments for R&D claims.
See tax notes 9 and 12 for further details.
Earnings per Share
Underlying earnings per share increased 63% to 7.01p (2023: 4.31p). Underlying
diluted earnings per share increased to 6.36p (2023: 3.96p). The increase in
underlying EPS is largely as a result of the increased underlying
profitability in FY24. See note 24 for further details.
Basic earnings per share increased to 3.33p (2023: loss per share of 0.14p).
The increase in basic EPS is as a result of the statutory profit in the
period. Diluted earnings per share has also increased to 3.11p (2023: loss per
share 0.13p).
Statement of Financial Position and Cash flows
The statement of financial position shows an increase in total assets to
£49.5m (2023: £47.4m) with operating cash flows before movement in working
capital during the year increased by 23% to £11.0m (2023. £9.0m). Our
strategy is to always have sufficient infrastructure capacity both across our
global data centre network and to hold a sufficient level of IT inventory at
our Glasgow Head Office. As such, a proportion of our capital spend during the
year is spent to satisfy the growing pipeline demand for the year ahead.
Investment in property, plant and equipment, hardware and infrastructure was
again significant with £3.6m (2023: £4.1m) of additions (excluding Property
and new leases in accordance with IFRS 16) throughout our expanding global
network and supporting the client and revenue growth made during the year. We
hold a stock supply of circa £1.5m in IT infrastructure which is capable of
delivering against the immediate FY25 sales pipeline. As global supply chain
issues are easing, we will not require these levels of stock which should
assist working capital requirements going forward.
During the year we took advantage of preferential pricing with a supplier with
additional borrowings via asset finance of £0.2m We repaid total debt of
£1.8m against our borrowing facilities. Our net cash at the end of the year
is £6.6m (30 June 2023: net cash £4.4m) and gross borrowings at £1.1m
remain at 0.1x Underlying EBITDA of £10.7m which we believe is a very
comfortable level of debt to carry given the recurring revenue business model
and strong cash generation. We note the increases to the cost of borrowing
and will look to maintain or reduce our interest rate cover as we move
forward.
At 30 June 2024 net assets were £37.5m compared to net assets of £32.8m at
30 June 2023.
Fraser McDonald
Chief Financial Officer
4 October 2024
Consolidated Statement of Comprehensive Income
2024 2023
Note £000 £000
Revenue 2 28,487 22,357
Other Income 2 371 361
Cost of sales (17,516) (13,602)
Gross profit 11,342 9,116
Administrative expenses (9,759) (9,447)
Operating profit / (loss) 3 1,583 (331)
Analysed as
Earnings before depreciation, amortisation, acquisition costs, share based 10,940 8,362
payments and non-recurring costs:
Depreciation 10 (5,085) (4,550)
Amortisation - acquired intangible assets 9 (326) (489)
Amortisation - other intangible assets 9 (1,591) (1,227)
Share based payments 20 (2,326) (2,291)
Other non-recurring costs 3 (29) (136)
Operating profit / (loss) 1,583 (331)
Finance income 5 250 101
Finance costs 4 (374) (420)
Profit / (Loss) before taxation 1,459 (650)
Taxation 8 734 561
Profit / (Loss) after taxation for the year attributable to the owners of 2,193 (89)
Beeks Financial Cloud Group PLC
Other comprehensive income
Amounts which may be reclassified to profit and loss
Currency translation differences 8 77
Total comprehensive income/(loss) for the year attributable to the owners of 2,201 (12)
Beeks Financial Cloud Group PLC
Pence Pence
Basic earnings/(loss) per share 23 3.33 (0.14)
Diluted earnings/(loss) per share 23 3.11 (0.13)
The above income statement should be read in conjunction with the accompanying
notes
Consolidated Statement of Financial Position
2024 2023 (Restated)
Note £000 £000
Non-current assets
Intangible assets 9 9,368 8,106
Trade and other receivables 13 3,287 1,891
Property, plant and equipment 10 16,739 17,952
Deferred tax 11 6,726 5,398
36,120 33,347
Current assets
Trade and other receivables 13 4,171 4,500
Inventories 12 1,506 1,767
Cash and cash equivalents 14 7,701 7,829
13,378 14,096
Total assets 49,498 47,443
Liabilities
Non-current liabilities
Trade and other payables 17 136 531
Lease liabilities 16 1,283 2,047
Deferred tax 13 4,196 3,884
Total non-current liabilities 5,615 6,462
Current liabilities
Trade and other payables 17 4,777 4,421
Lease liabilities 18 1,611 1,960
Borrowings 16 - 1,814
Total current liabilities 6,388 8,195
Total liabilities 12,003 14,657
Net assets 37,495 32,786
Equity
Issued capital 19 83 82
Share premium 21 23,775 23,775
Reserves 21 6,297 4,879
Retained earnings 7,340 4,050
Total equity 37,495 32,786
These financial statements were approved by the Board of Directors on 4th
October 2024 and were signed on its behalf by:
Gordon McArthur, Chief Executive Officer,
Beeks Financial Cloud Group Plc,
Company number: SC521839
The above statement of financial position should be read in conjunction with
the accompanying notes
Consolidated Statement of Changes in Equity
Issued capital Foreign currency reserve Merger reserve Other reserve Share based payments Share premium Retained earnings Total equity
£000 £000 £000 £000 £000 £000 £000 £000
Balance at 1 July 2022 82 (7) 705 (315) 2,274 23,775 4,245 30,759
Profit after income tax expense for the year - - - - - - (89) (89)
Currency translation difference - 77 - - - - - 77
Total comprehensive income - 77 - - - - (89) (12)
Deferred tax - - - - - - (252) (252)
Share based payments - - - - 2,291 - - 2,291
Exercise of share options - - - - (146) - 146 -
Total transaction with owners - - - - 2,145 - (106) 2,039
Balance at 30 June 2023 82 70 705 (315) 4,419 23,775 4,050 32,786
Profit after income tax expense for the year - - - - - - 2,193 2,193
Currency translation difference - 8 - - - - - 8
Total comprehensive income - 8 - - - - 2,193 2,201
Deferred tax - - - - - - 181 181
Issue of share capital 1 - - - - - - 1
Share based payments - - - - 2,326 - - 2,326
Exercise of share options - - - - (916) - 916 -
Total transaction with owners 1 - - - 1,410 - 1,097 2,508
Balance at 30 June 2024 83 78 705 (315) 5,829 23,775 7,340 37,495
The above statement of changes in equity should be read in conjunction with
the accompanying notes.
Consolidated Cash Flow Statement
2024 2023
Note £'000 £'000
Cash flows from operating activities
Profit / (Loss) for the year before tax 1,459 (650)
Adjustments for:
Depreciation of tangible fixed assets 11 5,085 4,737
Amortisation of intangible assets 10 1,917 1,698
Interest payable on bank loans 5 85 140
Lease liability interest 5 163 165
Share based payment charge 7 2,326 2,291
Proceeds from grant income - 609
Operating cash flows 11,035 8,990
(Increase) in receivables 14 (1,343) (1,667)
Increase in inventories 13 997 311
(Decrease) in payables 18 (171) (696)
Operating cash flows after movement in working capital 10,518 6,938
Corporation tax received/(paid) 33 (6)
Net cash generated from operating activities 10,551 6,932
Cash flows from investing activities
Purchase of property, plant and equipment 11 (3,882) (4,329)
Capitalised development costs 10 (2,909) (2,822)
Net cash used in investing activities (6,791) (7,151)
Cash flows from financing activities
Repayment of existing loan borrowings 17 (1,814) (618)
Repayment of lease liabilities 17 (2,065) (1,267)
Interest on lease liabilities 19 (163) (165)
Interest payable on bank loans 5 (85) (140)
Proceeds from asset finance 17 229 -
Net cash generated from financing activities (3,898) (2,190)
Net (decrease) in cash and cash equivalents (138) (2,409)
Effects of exchange rates on cash and cash equivalents 10 78
Cash and cash equivalents at beginning of year 15 7,829 10,160
Cash and cash equivalents at end of year 15 7,701 7,829
The above cash flow statement should be read in conjunction with the
accompanying notes.
Notes to the Consolidated Financial Statements
Summary of significant accounting policies
Corporate information
Beeks Financial Cloud Group PLC is a public limited company which is listed on
the AIM Market of the London Stock Exchange and is incorporated in Scotland.
The address of its registered office is Riverside Building, 2 Kings Inch Way,
Renfrew, Renfrewshire, PA4 8YU. The principal activity of the Group is the
provision of information technology services and products. The registered
number of the Company is SC521839.
The principal accounting policies adopted in the preparation of the financial
statements are set out below. These policies have been consistently applied to
all the years presented, unless otherwise stated.
Basis of preparation
These financial statements have been prepared in accordance with UK-adopted
International Financial Reporting Standards (IFRS) and with the requirements
of the Companies Act 2006. The financial statements are prepared in pounds
sterling because that is the currency of the primary economic environment in
which the Group operates.
The financial statements have been prepared on the historical cost basis
except for the valuation of certain financial instruments that are measured at
fair values at each reporting period, as explained in the accounting policies
below.
The measurement bases and principal accounting policies of the group are set
out below and are consistently applied to all years presented unless otherwise
stated.
New and revised IFRSs in issue but not yet effective and have not been adopted
by the Group
New and revised IFRSs in issue but not yet effective and have not been adopted
by the Group. At the date of authorisation of these financial statements, the
following standards, interpretations and amendments have been issued but are
not yet effective and have no material impact on the Group's financial
statements:
· Amendment to IAS 1 - Classification of liabilities as Current or
Non-Current
· Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangements
· Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture
· Amendments to IAS 1: Non-current Liabilities with Covenants
None of these have been adopted early and the Directors do not expect that the
adoption of the Standards listed above will have a material impact on the
financial statements of the Group in future periods.
Adoption of new and revised Standards - amendments to IFRS that are
mandatorily effective for the current year
In the current year, the group has applied a number of amendments to IFRS
Accounting Standards issued by the International Accounting Standards Board
(IASB) that are mandatorily effective for an accounting period that begins on
or after 1 January 2023. Their adoption has not had any material impact on the
disclosures or on the amounts reported in these financial statements:
· Amendments to IAS 1 Presentation of Financial Statements and IFRS
Practice Statement 2 Making Materiality Judgements-Disclosure of Accounting
Policies
· Amendments to IAS 12 Income Taxes-Deferred Tax related to Assets and
Liabilities arising from a Single Transaction
· Amendments to IAS 8 Accounting Polices, Changes in Accounting
Estimates and Errors-Definition of Accounting Estimates
There are no new accounting policies applied in the year ended 30 June 2024
which have had a material effect on these accounts.
Going concern
The key factors considered by the Directors were:
· Historic and current trading and profitability of the Group
· The rate of growth in sales both historically and forecast
· The competitive environment in which the group operates
· The current level of cash reserves
· The finance facilities available to the Group, including the
availability of any short term funding required through the use of the
Revolving Credit Facility
The financial position of the Group, its cash flows and liquidity position are
described in the Chief Financial Officer's Report.
The directors take comfort from the resilience of our business model. The
level of customer churn across our business has remained low and cash
collection has been in line with our typical profile. We do however remain
vigilant to the economic impact the ongoing macro-economic environment may
create, particularly on the SME segment of the market.
Note 16 to the financial statements includes the Group's objectives,
policies and processes for managing its capital; its financial risk management
objectives; details of its financial instruments and hedging activities; and
its exposures to credit risk and liquidity risk.
The directors are of the opinion that the Group can operate within their
current levels of cash reserves including further financing facilities
available. At the end of the financial year, the Group had net cash of £6.58m
(2023: Net cash £4.41m) a level which the Board is comfortable with given the
strong cash generation of the Group and low level of debt to EBITDA ratio. The
Group has a diverse portfolio of customers and suppliers with long‐term
contracts across different geographic areas. As a consequence, the directors
believe that the Group is well placed to manage its business risks.
The directors have considered the Group budgets and the cash flow forecasts to
December 2025, and associated risks including the risk of climate change and
the impact on our data centre estate, useful economic life of assets, and the
availability of bank and leasing facilities. We have run appropriate scenario
and stress tests applying reasonable downside sensitivities in respect of
profitability and associated cash flow generation and are confident we have
the resources to meet our liabilities as they fall due for a period of at
least 12 months from the date of these financial statements.
After making enquiries, the directors have a reasonable expectation that the
Group will be able to meet its financial obligations and has adequate
resources to continue in operational existence for the foreseeable future. For
this reason they continue to adopt the going concern basis in preparing the
financial statements.
Accordingly, the Directors have adopted the going concern basis in preparing
the Report for the year ended 30 June 2024.
Principles of consolidation
Subsidiaries are all entities over which the Group has control. The Group
controls an entity when the Group is exposed to, or has rights to, variable
returns from its involvement with the subsidiary and has the ability to affect
those returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group. They
are deconsolidated from the date that control ceases. The Group applies the
acquisition method to account for business combinations. The consideration
transferred for the acquisition of a subsidiary or a business is the fair
values of the assets transferred, the liabilities incurred to former owners of
the acquiree and the equity interests issued to the Group.
The consideration transferred includes the fair values of any asset or
liability resulting from a contingent consideration arrangement. Identifiable
assets acquired and liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair values on the
acquisition date.
Acquisition related costs are expensed as incurred. As each of the
subsidiaries are 100% wholly owned the Group has full control over each of its
investees. Intercompany transactions, unrealised gains and losses on
intragroup transactions and balances between group companies are eliminated on
consolidation.
Foreign currency transactions
In line with IAS 21 foreign currency transactions are translated into pound
sterling using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at financial year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss. Foreign exchange gains and losses resulting from
the retranslation of inter-company balances are recognised in profit or loss.
Non-monetary assets are translated at the historical rate.
Foreign operations
The assets and liabilities of foreign operations are translated into pound
sterling using the exchange rates at the reporting date. The revenues and
expenses of foreign operations are translated into Pound sterling using the
average exchange rates, which approximate the rates at the dates of the
transactions, for the period. All resulting foreign exchange differences are
recognised in other comprehensive income through the foreign currency reserve
in equity.
Business Combinations
Acquisitions of subsidiaries are accounted for using the acquisition method.
The acquisition method involves the recognition at fair value of all
identifiable assets and liabilities, including contingent liabilities of the
subsidiary, at the acquisition date, regardless of whether or not they were
recorded in the financial statements of the subsidiary prior to acquisition.
On initial recognition, the assets and liabilities of the subsidiary are
included in the statement of financial position at their fair values, which
are also used as the bases for subsequent measurement in accordance with the
Group accounting policies.
Where the Group's assessment of the net fair value of a subsidiary's
identifiable assets acquired and liabilities assumed is less than the fair
value of the consideration including contingent consideration of the business
combination then the excess is treated as goodwill. Where the Group's
assessment of the net fair value of a subsidiary's net assets and liabilities
exceeds the fair value of the consideration including contingent consideration
of the business combination then the excess is recognised through profit or
loss immediately. Where an acquisition involves a potential payment of
contingent consideration the estimate of any such payment is based on its fair
value. To estimate the fair value an assessment is made as to the amount of
contingent consideration which is likely to be paid having regard to the
criteria on which any sum due will be calculated and is probability based to
reflect the likelihood of different amounts being paid.
Where a change is made to the fair value of contingent consideration within
the initial measurement period as a result of additional information obtained
on facts and circumstances that existed at the acquisition date then this is
accounted for as a change in goodwill. Where changes are made to the fair
value of contingent consideration as a result of events that occurred after
the acquisition date then the adjustment is accounted for as a charge or
credit to profit or loss.
The Group's accounting policy for common control transactions is to recognize
and measure such transactions at carrying amounts, with no gain or loss
recognized in the financial statements. This policy ensures consistency and
comparability in the treatment of transactions within the Group.
Revenue recognition
Revenue arises from the provision of Cloud-based localisation. To determine
whether to recognise revenue, the group follows a five-step process as
follows:
· Identifying the contract with a customer
· Identifying the performance conditions
· Determining the transaction price
· Allocating the transaction price to the performance conditions
· Recognising revenue when/as performance obligation(s) are satisfied.
Revenue is measured at transaction price, stated net of VAT and other sales
related taxes and discounts, if applicable.
The below outlines all the Group's revenue streams and associated accounting
policies:
Infrastructure as a Service (IaaS)
The group's core business provides managed Cloud computing infrastructure and
connectivity. The Group considers the performance obligation to be the
provision of access and use of servers to our clients. As the client receives
and consumes the benefit of this use and access over time, the related revenue
is recognised evenly over the life of the contract.
Monitoring software and maintenance services
The group also provides software products that analyse and monitor IT
infrastructure. Revenue from the provision of software licences is split
between the delivery of the software licence and the ongoing services
associated with the support and maintenance. The supply of the software
licence is recognised on a point in time basis when control of the goods has
transferred, being the delivery of the item to the customer, whilst the
ongoing support and maintenance service is recognised evenly over the period
of the service being rendered on an over time basis. The group applies
judgement to determine the percentage of split between the licence and
maintenance portions, which includes an assessment of the expected cost plus
margin that would be received in a standalone sale of the performance
obligations.
Where an agreement includes a royalty fee as a result of future sales by a
customer to third parties and there is a minimum amount guaranteed, this is
recognised at point in time when the delivery of the item is complete.
Set up fees
Set up fees charged on contracts are reviewed to consider the material rights
of the set-up fee. When a set-up fee is arranged, Beeks will consider the
material rights of the set-up fee, if in substance it constitutes a payment in
advance, the set-up fee will be deemed to be a material right. The accounting
treatment for both material rights and non-material rights set-up fees is as
follows:
· Any set up fees that are material rights are spread over the group's
average contract term
· Set up fees that are not material rights are recognised over the
enforceable right period, i.e. 1 to 3 months depending on the termination
period
Revenue in respect of installation or training, as part of the set-up, is
recognised when delivery and installation of the equipment is completed on a
point in time basis.
Hardware and software sales
Revenue from the supply of hardware is recognised when control of the goods
has transferred. For hardware, this occurs upon delivery and installation of
the item to the customer. For software, control is deemed to pass on provision
of the licence key to the customer being the point in time the customer has
the right to use the software.
The Group has concluded it acts as a principal in each hardware sales
transaction vs an agent. This has been determined by giving consideration to
whether the Group holds inventory risk, has control over the pricing over a
particular service, takes the credit risk, and whether responsibility
ultimately sits within the Group to service the promise of the agreements.
Professional and consultancy services
Revenue from professional and consultancy services are recognised using the
output method as these services are rendered and the performance obligation
satisfied. Any unearned portion of revenue (i.e. amounts invoiced in advance
of the service being provided) is included in payables as a contract
liability.
Proximity and Exchange Cloud Services
Proximity and Exchange Cloud are a fully-managed and configurable compute,
storage and analytics racks built with industry-leading low latency hardware
that allow capital markets and financial services customers to run compute,
storage and analytics on-premise.
Revenue from the sale of proximity and exchange cloud contracts has been
assessed under IFRS 15 and using the five step process, the following
performance obligations have been identified:
· Delivery and installation of the hardware, and provision of the
software licence
· Delivery of maintenance and technical support over the contract
· Delivery of unspecified upgrades and future software releases
· Significant financing components
The delivery and installation of the hardware, and provision of the software
licence are highly interrelated and considered to be one performance
obligation. Management have assessed that the software is the predominant item
within the performance obligation as it is the functionality and use of the
developed software that provides benefit to the customer, furthermore the
purpose of the contract is for provision of the software licence with the
hardware being required to facilitate this. This is recognised on a point in
time basis when the control of the goods have been transferred, being when
delivery of the item is completed and the right to use the software is granted
to the customer. This is further explained in significant judgements.
The maintenance and technical support, as well as the delivery of the
unspecified upgrades and future software releases are recognised evenly on an
over time basis over the period of the contract. The performance obligation
for both is considered to be that of standing ready to provide technical
product support and unspecified updates, optional upgrades and enhancements
when made available over the period of service being rendered.
These contracts include multiple deliverables. The Group applies judgement to
determine the transaction price to be allocated between a) the delivery and
installation of the hardware and provision of the software licence, recognised
on a point in time basis and b) the stand ready services (support,
maintenance, unspecified upgrades) recognised over time. The Group applies the
expected cost plus margin approach to the stand ready services and the
delivery and installation of the hardware and provision of software licence is
estimated using the residual approach, given this is a new product to market
and standalone selling prices are not directly observable.
Where such contracts include a significant financing component, the group also
adjusts the transaction price to reflect the time value of money. Finance
income is recognised as other income in the statement of the comprehensive
income.
Revenue recognised over time and at a point in time is disclosed at note 2 of
the notes to the financial statements.
Government grant income
Grants from Government agencies are recognised where there is reasonable
assurance that the grant will be received, and all attached conditions will be
complied with. When the grant relates to an expense item, it is recognised as
income on a systematic basis over the periods that the related costs, for
which it is intended to compensate, are expensed. When the grant relates to an
asset, it is deducted from carrying amount of the intangible asset over the
expected useful life of the related asset. Note 3 Revenue provides further
information on Government grants.
Rental Income
Rental income from the head office property leased out under operating leases
is recognised in the statement of the comprehensive income as other income as
these services are rendered, as the tenant occupies the space.
Cost of sales
Costs considered to be directly related to revenue are accounted for as cost
of sales. All direct production costs and overheads, including indirect
overheads that can reasonably be allocated as relating to the Group's revenue
generation, have been classified as cost of sales.
Where assets are purchased under a finance lease arrangement, they are
recognised initially as Right of Use Assets and disclosed within the Property
plant and equipment note 11. Assets that are subsequently sold as part of a
Proximity or Exchange Cloud contract are transferred to profit and loss as
cost of sales.
Interest
Interest revenue is recognised as part of the financing component within some
Proximity Cloud and Software Licencing contracts. Interest accrues using the
effective interest method. This is a method of calculating the amortised cost
of a financial asset and allocating the interest income over the relevant
period using the effective interest rate, which is the rate that exactly
discounts estimated future cash flows through the expected life of the
financial asset to the net carrying amount of the financial asset.
Other non-recurring costs
The Group defines other non-recurring costs as costs incurred by the Group
which relate to material non-recurring costs. These are disclosed separately
where it is considered it provides additional useful information to the users
of the financial statements.
Taxation and deferred taxation
The income tax expense or income for the period is the tax payable on the
current period's taxable income. This is based on the national income tax rate
enacted or substantively enacted for each jurisdiction with any adjustment
relating to tax payable in previous years and changes in deferred tax assets
and liabilities attributable to temporary differences between the tax bases of
assets and liabilities and their carrying amounts in financial statements.
Deferred tax assets and liabilities are recognised for temporary differences
at the tax rates expected to be applicable when the asset or liability
crystallises based on current tax rates and laws that have been enacted or
substantively enacted by the reporting date. The relevant tax rates are
applied to the cumulative amounts of deductible and taxable temporary
differences to measure the deferred tax asset or liability.
A deferred tax asset is regarded as recoverable and therefore recognised only
when, on the basis of all available evidence, it can be regarded as more
likely than not that there will be suitable taxable profits against which to
recover carried forward tax losses and from which the future reversal of
temporary differences can be deducted. The carrying amount of deferred tax
assets are reviewed at each reporting date.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position
based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised
or intended to be sold or consumed in the Group's normal operating cycle; it
is held primarily for the purpose of trading; it is expected to be realised
within 12 months after the reporting period; or the asset is cash or cash
equivalent unless restricted from being exchanged or used to settle a
liability for at least 12 months after the reporting period. All other assets
are classified as non-current.
A liability is classified as current when: it is either expected to be settled
in the Group's normal operating cycle; it is held primarily for the purpose of
trading; it is due to be settled within 12 months after the reporting period;
or there is no unconditional right to defer the settlement of the liability
for at least 12 months after the reporting period. All other liabilities are
classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash at bank, overnight and longer term deposits which are held for the
purpose of meeting short term cash commitments are disclosed within cash and
cash equivalents.
Financial instruments
A financial instrument is any contract that gives rise to a financial asset in
one entity and a financial liability or equity instrument in another and is
recognised when the Group becomes party to the contractual provisions of the
instrument.
To protect elements of our cash flows against the level of exchange rate risk,
the Group entered into forward exchange contracts to hedge foreign exchange
USD exposures arising on the forecast receipts and payments during the year.
As at 30 June the group had a forward exchange contract to sell $1.3m USD
(c£1m). This was rolled forward post year end. Had the amount been settled at
the year-end spot rate it would have resulted in an exchange loss of $25,212
(c£19,161). The Group does not use derivative instruments.
Financial assets and liabilities are recognised initially at fair value, and
subsequently measured at amortised cost, with any directly attributable
transaction costs adjusted against fair value at initial recognition and
recognised immediately in the Consolidated income statement as a profit or
loss.
Financial assets
Trade and other receivables
Trade and other receivables are initially recognised at transaction price,
less allowances for impairment. These are subsequently measured at amortised
costs using the effective interest method. An allowance for impairment of
trade and other receivables is established when there is evidence that Beeks
Financial Cloud Group PLC will not be able to collect all amounts due
according to the original terms of the receivables. Significant financial
difficulties of the debtors, probability that the debtor will enter bankruptcy
or financial reorganisation, and default or delinquency in payments (more than
90 days overdue) are considered indicators that the trade and other
receivables may be impaired. The amount of the allowance is the difference
between the asset's carrying amount and the present value of estimated future
cash flows, discounted at the original effective interest rate. The carrying
amount of the asset is reduced through the use of an allowance account, and
the amount of the loss is recognised in profit or loss within expenses. When a
trade or other receivable is uncollectible, it is written off against the
allowance account for trade and other receivables. Subsequent recoveries of
amount previously written off are credited against 'administrative expenses'
in the Consolidated statement of comprehensive income.
IFRS 9 requires an expected credit loss ("ECL") model which requires the Group
to account for expected credit losses and changes in those expected credit
losses at each reporting date to reflect changes in credit risk since initial
recognition of the financial assets. The main financial assets that are
subject to the expected credit loss model are trade receivables and contract
assets, which consist of billed receivables arising from contracts.
The Group has applied the simplified approach to providing for expected credit
losses ("ECL") prescribed by IFRS 9, which permits the use of lifetime
expected loss provision for all trade receivables.
The ECL model reflects a probability weighted amount derived from a range of
possible outcomes. To measure the ECL, trade receivables and contract assets
have been grouped based on shared credit risk characteristics and the days
past due. The Group has established a provision matrix based on the payment
profiles of historic and current sales and the corresponding credit losses
experienced. The historical loss rates are adjusted to reflect current and
forward-looking information that might affect the ability of customers to
settle the receivables, including macroeconomic factors as relevant.
Provision against trade and other receivables is made when there is evidence
that the Group will not be able to collect all amounts due to it in accordance
with the original terms of those receivables. The amount of the write-down is
determined as the difference between the asset's carrying amount and the
present value of estimated future cash flows. An assessment for impairment is
undertaken at least at each reporting date.
Where a financing component is applicable, the Group has chosen to measure any
loss allowance at an amount equal to lifetime expected credit losses.
Financial liabilities
Trade and other payables
Trade and other payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest method.
These amounts represent liabilities for goods and services provided to Beeks
Financial Cloud Group PLC prior to the end of the financial period which are
unpaid as well as any outstanding tax liabilities.
Borrowings
Loans and borrowings are initially recognised at the fair value of the
consideration received, net of transaction costs. They are subsequently
measured at amortised cost using the effective interest method.
Defined contribution schemes
The defined contribution scheme provides benefits based on the value of
contributions made. Contributions to the defined contribution superannuation
plans are expensed in the period in which they are incurred.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair
value for recognition or disclosure purposes, the fair value is based on the
price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date;
and assumes that the transaction will take place either: in the principal
market; or in the absence of a principal market, in the most advantageous
market.
Fair value is measured using the assumptions that market participants would
use when pricing the asset or liability, assuming they act in their economic
best interests. For non-financial assets, the fair value measurement is based
on its highest and best use. Valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to measure fair
value, are used, maximising the use of relevant observable inputs, and
minimising the use of unobservable inputs.
Inputs determining fair value measurements are categorised info different
levels based on how observable the inputs used in the valuation technique
utilised are (the "fair value hierarchy"):
· Level 1: Quoted prices in active markets for identical items
(unadjusted).
· Level 2: Observable direct or indirect inputs other than Level 1
inputs.
· Level 3: Unobservable inputs (i.e. not derived from market data).
The classification of an item into the above levels is based on the lowest
level of inputs used that has a significant effect on the fair value of the
item. The Group measures a number of items at fair value, including;
· Trade and other receivables (note 13)
· Trade and other payables (note 17)
· Borrowings (note 16)
· Share based payments (note 20)
For more detailed information in relation to the fair value of the items above
please refer to the applicable notes.
Share based payments
The Group operates equity-settled share based remuneration plans for its
employees. Options are measured at fair value at grant date using the Black
Scholes model. Where options are redistributed, options are measured at fair
value at the redistribution date using the Black Scholes Model. The fair value
is expensed on a straight line basis over the vesting period, based on an
estimate of the number of options that will eventually vest. Fair value is
appraised at the grant date and excludes the impact of non-market vesting
conditions (for example, profitability growth targets).
Under the Group's share option scheme, share options are granted to directors
and selected employees. The options are expensed in the period over which the
share based payment vests. A corresponding increase to the share based payment
reserve in equity is recognised.
When share options are exercised, the company issues new shares. The nominal
share value from the proceeds received are credited to share capital and
proceeds received above nominal value, net of attributable transaction costs,
are credited to the share premium when the options are exercised. When share
options are forfeited, cancelled, or expire, the corresponding fair value is
transferred to the retained earnings reserve. Amounts held in the share based
payments reserve are transferred to Retained Earnings on exercise of the
related options.
The Group has no legal or constructive obligation to repurchase or settle the
options in cash.
Where the Group entity incurs a share based payment charge relating to
subsidiary employees, the charge is treated as a capital contribution in the
subsidiary and an increase in investment in the Group entity.
Property, plant and equipment (PPE)
PPE is stated at historical cost less accumulated depreciation. Historical
cost includes expenditure that is directly attributable to the acquisition of
the items. Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to Beeks Financial
Cloud Group PLC and the cost of the item can be measured reliably. All other
repairs and maintenance are charged to profit or loss during the financial
period in which they are incurred.
Depreciation on IT infrastructure and fixtures and fittings is calculated
using the straight line method to allocate their cost or revalued amounts, net
of their residual values, over their estimated useful lives, as follows:
· Leasehold property and improvements over the lease period
· Freehold property over 50 years
· Computer Equipment over 5 years and over the length of lease
· Office equipment and fixtures and fittings over 5-20 years
The residual values, useful lives and depreciation methods are reviewed, and
adjusted if appropriate, at each reporting date.
Leasehold improvements and plant and equipment under lease are depreciated
over the unexpired period of the lease or the estimated useful life of the
assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when
there is no future economic benefit to the Group. Gains and losses between the
carrying amount and the disposal proceeds are taken to profit or loss. Any
revaluation surplus reserve relating to the item disposed of is transferred
directly to retained profits.
Where assets are purchased under a finance lease arrangement, they are
recognised as Right of Use Assets and disclosed within the Property plant and
equipment note 11. Where these assets are subsequently sold as part of a
Proximity or Exchange Cloud contract, they are transferred from PP&E to
stock and thereafter to the profit and loss as cost of sales.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost
includes all expenses directly attributable to bringing the asset to its
current condition. Costs of ordinarily interchangeable items are assigned
using the first in, first out cost formula. Net realisable value is the
estimated selling price in the ordinary course of business less any directly
attributable selling expenses.
Where inventories are purchased under a finance lease arrangement, they are
recognised initially as Right of Use Assets and disclosed within the Property
plant and equipment note 10.
Inventories that are subsequently sold as part of a Proximity or Exchange
Cloud contract are transferred to profit and loss as cost of sales.
At each reporting date, an assessment is made for impairment. Any excess of
the carrying amount of inventories over its estimated selling prices less
costs to complete and sell is recognised as an impairment loss in the income
statement. Reversals of impairment losses are also recognised in profit or
loss.
Assets held at Head Office are classified and disclosed as inventory until the
point in which the assets purpose is identified. At the point, the asset will
either be transferred to property, plant and equipment and sold under
Infrastructure-as-a-Service (IaaS) or sold to a customer under a proximity or
exchange cloud solution and transferred to Cost of Sales within the Income
statement.
Leases
A lease is defined as a contract, or part of a contract, that conveys the
right to use an asset (the underlying asset) for a period of time in exchange
for consideration. To apply this definition the Group assesses whether the
contract meets three key evaluations which are whether the contract contains
an identified asset, which is either explicitly identified in the contract or
implicitly specified by being identified at the time the asset is made
available to the Group; the Group has the right to obtain substantially all of
the economic benefits from use of the identified asset throughout the period
of use, considering its rights within the defined scope of the contract; and
the Group has the right to direct the use of the identified asset throughout
the period of use.
At the lease commencement date, the Group recognises a right-of-use asset and
a corresponding lease liability on the Consolidated statement of financial
position. The right-of-use asset is measured at cost, which is made up of the
initial measurement of the lease liability measured at the present value of
future lease payments, any initial direct costs incurred by the Group. If that
rate cannot be determined, the lessee's incremental borrowing rate is used,
being the rate that the lessee would have to pay to borrow the funds necessary
to obtain an asset of similar value in a similar economic environment with
similar terms and conditions. The Group depreciates the right-of-use assets on
a straight-line basis from the lease commencement date to the earlier of the
end of the useful life of the right-of-use asset or the end of the lease term.
The Group assesses the right-of-use asset for impairment under IAS 36
'Impairment of Assets' where such indicators exist.
Lease liabilities are presented on two separate lines in the Consolidated
statement of financial position for amounts due within one year and amounts
due after more than one year. The lease liability is initially measured at the
present value of lease payments that are not paid at the commencement date,
discounted using the rate implicit in the lease. If this rate cannot readily
be determined, the Group applies an incremental borrowing rate. The lease
liability is subsequently measured by increasing the carrying amount to
reflect interest on the lease liability and by reducing the liability by
payments made. The Group re-measures the lease liability (and adjusts the
related right-of-use asset) whenever the lease term has changed, or a lease
contract is modified, and the modification is not accounted for as a separate
lease.
Lease payments included in the measurement of the lease liability can be made
up of fixed payments and an element of variable charges depending on the
estimated future price increases, whether these are contractual or based on
management's estimate of potential increases. Subsequent to initial
measurement, the liability will be reduced for payments made and increased for
interest. It is re-measured to reflect any reassessment or modification, or if
there are changes in fixed payments. When the lease liability is re-measured,
the corresponding adjustment is reflected in the right-of-use asset, or profit
and loss if the right-of-use asset is already reduced to zero. Where
non-contractual payment discounts are subsequently received from suppliers,
these are treated as a discharge of the lease liability with a credit
recognised in the profit or loss statement.
The Group has elected to account for short-term leases and leases of low-value
assets using the practical expedients available under IFRS 16. Instead of
recognising a right-of-use asset and lease liability, the payments in relation
to these are recognised as an expense in profit or loss on a straight line
basis over the lease term.
Under IFRS 16, the Group recognises depreciation of the right-of-use asset and
interest on lease liabilities in the Consolidated statement of comprehensive
income over the period of the lease. On the Consolidated statement of
financial position, right-of-use assets have been included in right of use
assets and lease liabilities have been included in lease liabilities due
within one year and after more than one year.
Intangible assets and amortisation
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair
value of the assets and liabilities assumed at the date of acquisition.
Goodwill acquired in business combinations is not amortised. Instead, goodwill
is tested for impairment annually or more frequently if events or changes in
circumstances indicate that it might be impaired, and is carried at cost less
accumulated impairment losses. Intangible assets carried forward from prior
years are re-valued at the exchange rate in the current financial year.
Impairment testing is carried out by assessing the recoverable amount of the
cash generating unit to which the goodwill relates. A bargain purchase is
immediately released to the Consolidated statement of comprehensive income in
the year of acquisition.
Customer relationships
Included within the value of intangible assets are customer relationships.
These represent the purchase price of customer lists and contractual
relationships purchased on the acquisition of the business and assets of
Gallant VPS Inc. and Commercial Network Services as well as the purchase of
Velocimetrics Ltd. These relationships are carried at cost less accumulated
amortisation or impairment losses where applicable. Amortisation is calculated
using the straight line method over periods of between five and ten years and
is charged to cost of sales.
Development costs
Expenditure on research (or the research phase of an internal project) is
recognised as an expense in the period in which it is incurred.
Development costs incurred are capitalised when all the following conditions
are satisfied:
· Completion of the intangible asset is technically feasible so that it
will be available for use or sale;
· The Group intends to complete the intangible asset and use or sell it;
· The Group has the ability to use or sell the intangible asset;
· The intangible asset will generate probable future economic benefits;
· There are adequate technical, financial, and other resources to
complete the development and to use or sell the intangible asset, and
· The expenditure attributable to the intangible asset during its
development can be measured reliably.
Development costs not meeting the criteria for capitalisation are expensed as
incurred. The costs which do meet the criteria range from new product
development to the enhancement of existing services. The scope of the
development team's work continues to evolve as the Group continues to deliver
business critical solutions to a growing customer base. Development costs
capitalised are amortised on a straight-line basis over the estimated useful
life of the asset. The estimated useful life is deemed to be five years for
all developments capitalised. Amortisation is charged at the point of a major
product release or upgrade in which that asset is made available for sale or
release to the customer. Charges are recognised through cost of sales in the
Consolidated statement of comprehensive income in the period in which they are
incurred.
Impairment
Goodwill and assets with an indefinite useful life are tested annually for
impairment, or more frequently if events or changes in circumstances indicate
that they might be impaired. Other non-financial assets are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable or where the asset is still in
development and is not yet being amortised as it is not available for use. An
impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of
disposal and value-in-use. The value-in-use is the present value of the
estimated future cash flows relating to the asset using a pre-tax discount
rate specific to the asset or cash-generating unit to which the asset belongs.
Assets that do not have independent cash flows are grouped together to form a
cash-generating unit.
A previously recognised impairment loss is reversed only if there is an
indication that an impairment loss recognised in prior periods for an asset or
cash-generating unit may no longer exist or may have decreased. If that is
the case, the carrying amount of the asset is increased to its recoverable
amount. That increased amount cannot exceed the carrying amount that would
be determined, net of depreciation, had no impairment loss been recognised for
the asset or cost-generating unit in prior years. Such a reversal is
recognised in profit or loss unless the asset is carried at a revalued amount,
in which case the reversal is treated as a revaluation increase.
Equity
Ordinary shares are classified as equity. An equity instrument is any
contract that evidences a residual interest in the assets of Beeks Financial
Cloud Group plc after deducting all of its liabilities. Equity instruments
issued by Beeks Financial Cloud Group plc are recorded at the proceeds
received net of direct issue costs.
The share capital account represents the amount subscribed for shares at
nominal value. Details on this can be found at note 21.
Amounts arising from the revaluation of non-monetary assets and liabilities
held in foreign subsidiaries, and joint operations are held within the foreign
currency reserve.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to
the owners of Beeks Financial Cloud Group PLC, excluding any costs of
servicing equity other than ordinary shares, by the weighted average number of
ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of
basic earnings per share to take into account the after income tax effect of
interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued
for no consideration in relation to dilutive potential ordinary shares.
Value-added tax ('VAT') and other similar taxes
Revenues, expenses, and assets are recognised net of the amount of associated
VAT, unless the VAT incurred is not recoverable from the tax authority. In
this case it is recognised as part of the cost of the acquisition of the asset
or as part of the expense.
Trade receivables and trade payables are stated inclusive of the amount of VAT
receivable or payable. The net amount of VAT recoverable from, or payable to,
the tax authority is included in other receivables or other payables in the
statement of financial position.
Cash flows are presented on a net basis. The VAT components of cash flows
arising from investing or financing activities which are recoverable from, or
payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of VAT
recoverable from, or payable to, the tax authority.
Alternative performance measures
In addition to measuring financial performance of the Group based on statutory
profit measures, the Group also measures performance based on underlying
EBITDA, underlying profit before tax and underlying diluted earnings per
share.
The alternative performance measures provide management's view of the Group's
financial performance and are not necessarily comparable with other entities.
These alternative measures exclude significant costs (such as Share Based
Payments) and as such, should not be regarded as a complete picture of the
Group's financial performance. These measures should not be viewed in
isolation, but as supplementary information to the rest of the financial
statements.
Underlying EBITDA
Underlying EBITDA is defined as earnings before amortisation, depreciation,
finance costs, taxation, acquisition costs, share based payments and
exceptional non-recurring costs.
Underlying EBITDA is a common measure used by investors and analysts to
evaluate the operating financial performance of companies, particularly in the
sector that the Group operates.
The Group considers underlying EBITDA to be a useful measure of operating
performance because it approximates the underlying operating cash flow by
eliminating the charges mentioned above. It is not a direct measure of
liquidity, which is shown in the Consolidated statement of cash flows, and
needs to be considered in the context of the Group's financial commitments.
Reference is also made to the right of use asset implication on depreciation
in the year as a result of the Group taking additional space in data centres.
Underlying profit before tax
Underlying profit before tax is defined as profit before tax adjusted for the
following:
· Amortisation charges on acquired intangible assets;
· Exchange variances on statement of final position gains and losses;
· Share-based payment charges;
· M&A activity including:
o Professional fees;
o Any non-recurring integration costs; Any gain or loss on the revaluation
of contingent consideration where it is material; and
o Any material non-recurring costs where their removal is necessary for the
proper understanding of the underlying profit for the period.
The Group considers underlying profit before tax to be a useful measure of
performance because it eliminates the impact of certain non-recurring items
including those associated with acquisitions and other charges commonly
excluded from profit before tax by investors and analysts for valuation
purposes.
Underlying diluted earnings per share
Underlying diluted earnings per share is calculated by taking the adjusted
profit before tax as described after deducting an appropriate taxation charge
and dividing by the total weighted average number of ordinary shares in issue
during the year and adjusting for the dilutive potential ordinary shares
relating to share options.
The Group considers adjusted diluted earnings per share to be a useful measure
of performance for the same reasons as underlying profit before tax. In
addition, it is used as the basis for consideration to the level of dividend
payments.
Net cash/Net Debt
Net cash/net debt is a financial liquidity metric that measures the ability of
a business to pay all its debts if they were to be called immediately. This is
defined as current and non-current borrowing liabilities (debt and asset
finance but excluding lease liabilities)- cash and cash equivalents.
Operational costs
Operational costs are defined as operating expenses less exceptional costs,
share based payments and non-recurring costs. These costs are adjusted to
reflect the true business operational trading costs.
Profit after Tax
Management believes that profitability measures after tax are not measures
that would specifically require alternative performance measures as they do
not constitute trading results. Tax legislation is out with the control of the
Group. Whilst the group currently benefits from some tax relief such as
R&D tax credits, the group does not rely on these in terms of trading
results or provide consideration of the tax impact of adjusted items for
alternative performance measures. Further information on tax impact on
profitability can be found on Note 9.
Annualised Committed Monthly Recurring Revenue
Annualised Committed Monthly Recurring Revenue (ACMRR) is committed recurring
revenue. Management believes that ACMRR is a key measure as it provides
investors with the total contracted committed revenue of the Group.
2. Segment Information
Operating segments are reporting in a manner consistent with the internal
reporting provided to the chief operating decision makers.
The chief operating decision makers, who are responsible for allocating
resources and assessing performance of operating segments, have been
identified as the executive directors.
In the current year there is one customer that account for more than 10% of
Group revenue. The total revenue for this customer amounts to £11.2m (2023:
£7.1m).
Performance is assessed by a focus on the change in revenue across
public/private cloud and new sales relating to Proximity Cloud/Exchange Cloud.
Cost is reviewed at a cost category level but not split by segment. Assets are
used across all segments and are therefore not split between segments so
management review profitability at a group level.
Revenues by Operating segment, further disaggregated are as follows:
Year ended 30/06/24 (£'000) Year ended 30/06/23 (£'000)
Public/ Private Cloud Proximity/ Total Public/ Proximity/ Total
Exchange Cloud Private Exchange Cloud
Cloud
Over time
Infrastructure/software as a service 22,723 - 22,723 19,162 - 19,162
Maintenance 388 - 388 537 537
Proximity Cloud - 378 378 - 454 454
Exchange Cloud 53 53 - - -
Professional services 463 - 463 273 - 273
Over time total 23,574 431 24,005 19,972 454 20,426
Point in time
Hardware/Software resale 826 - 826 529 - 529
Software licences 456 - 456 1,267 - 1,267
Set up fees 100 - 100 135 - 135
Software other 57 - 57 - - -
Proximity Cloud - 1,626 1,626 - - -
Exchange Cloud - 1,417 1,417 - - -
Point in time total 1,439 3,043 4,482 1,931 - 1,931
Total revenue 25,013 3,474 28,487 21,903 454 22,357
Revenues by operating segment, further disaggregated are as follows:
2024 2023
£'000 £'000
Revenues by geographic location are as follows:
United Kingdom 7,140 5,660
Europe 2,861 3,119
US 11,140 9,193
Rest of World 7,346 4,385
Total 28,487 22,357
During the year £0.3m (2023: £0.3m) was recognised in other income for grant
income received from Scottish Enterprise and £0.1m (2023: £0.1m) was
recognised as rental income.
2024 2023
£'000 £'000
Non-Current Assets by geographic location are as follows:
United Kingdom - Property, plant and equipment 8,343 9,235
Europe - Property, plant and equipment 1,416 1,610
Rest of World - Intangible assets 8,000 6,738
Rest of World - Goodwill 1,368 1,368
Rest of World - Property, plant and equipment 2,531 2,750
US - Property, plant and equipment 4,449 4,357
Total Non-Current Assets 26,107 26,058
Intangible assets have been classified as "Rest of World" due to the fact they
represent products that are available to customers throughout the World as
well as the US intangible assets referred to in note 10.
The Group has taken advantage of the practical expedient permitted by IFRS 15
and has therefore not disclosed the amount of the transaction price allocated
to unsatisfied performance obligations or when it expects to recognise that
revenue. Longer term contracts continue to be paid on a monthly basis.
3. Operating Profit / (Loss)
Operating Profit / (Loss)is stated after charging:
2024 2023
£000 £000
Staff costs (note 7) 7,198 6,909
Depreciation on owned assets (note 11) 3,789 3,140
Depreciation right-of-use assets (note 11) 1,296 1,410
Amortisation of acquired intangibles (note 10) 318 489
Amortisation of other intangibles (note 10) 1,599 1,227
Other cost of sales and admin* 10,681 7,191
Foreign exchange losses 38 256
Share based payments (note 21) 2,326 2,291
Other non-recurring costs 29 136
*Included within other cost of sales and admin are the remainder of direct
costs associated with the business including data centre connectivity,
software licences, security, and other direct support costs.
Auditor's remuneration
2024 2023
£000 £000
Audit
Fees payable for the audit of the consolidation and the parent company 79 83
accounts
Fees payable for the audit of the subsidiary 70 75
Non Audit
Fees payable for the interim review of the group - 5
Assurance related services - 20
149 183
4. Finance Costs
2024 2023
£000 £000
Bank charges 126 115
Interest on loan liabilities 85 140
Interest expense 163 165
Total finance costs 374 420
5. Finance Income
2024 2023
£000 £000
Financing charge on Proximity Cloud contracts 147 101
Bank Interest received 103 -
Total finance income 250 101
6. Average number of employees and employee benefits expense
Including directors, the average number of employees (at their full time
equivalent) during the year was as follows:
2024 2023
£000 £000
Management and administration 21 22
Support and development staff 84 81
Average numbers of employees 105 103
The employee benefits expense during the year was as follows:
2024 2023
£000 £000
Wages and salaries 6,153 5,969
Social security costs 666 669
Other pension costs 379 271
Total employee benefits expense 7,198 6,909
Share based payments (note 21) 2,326 2,291
Wages and salary costs directly attributable to the development of products
are capitalised in intangible assets. The total additions capitalised in
intangible assets relates to payroll costs and external third-party costs.
Refer to Note 10 for capitalised development costs.
7. Directors' emoluments
2024 2023
£000 £000
Aggregate remuneration in respect of qualifying services 330 292
Aggregate amounts of contributions to pension schemes in respect of qualifying 22 14
services
Other benefits in kind 4 2
Gain on exercise of options 388 -
Total Directors' emoluments 744 308
Highest paid director - aggregate remuneration (excluding share based 125 126
payments)
There are two directors (2023: two) who are accruing retirement benefits in
respect of qualifying services.
8. Taxation expense
2024 2023
£000 £000
Current
Foreign tax on overseas companies 222 65
R&D tax credit received (121) (95)
Total current tax 101 (30)
Origination and reversal of temporary differences (835) (531)
Total deferred tax (835) (531)
Tax on Profit / (Loss) on ordinary activities (734) (561)
The differences between the total tax credit above and the amount calculated
by applying the standard rate of UK corporation tax to the profit before tax,
together with the impact of the effective tax rate, are as follows:
2024 % ETR 2023 % ETR
£000 movement £000 movement
Profit / (Loss) before tax 1,459 (650)
Profit / (Loss) on ordinary activities multiplied by the standard rate of 354 24% (124) 21%
corporation tax in the UK of 25% (2023: 25%)
Effects of:
Impact of super deduction 14 0.96% (215) (33.18%)
Expenses not deductible for tax purposes 554 37.97% 481 (74.23%)
R&D tax credits relief (451) 30.91% (89) 13.73%
Share option deduction (1,059) 72.58% (404) 62.35%
Prior year deferred tax adjustments (144) 9.87% (88) 13.58%
Capital gains/losses (37) 2.54% - -
Adjustment for tax rate differences - - (37) 4.01%
Foreign tax suffered 156 10.69% 40 0.32%
R&D tax credit received (121) - (125) -
Total tax charge (734) (50.31%) (561) 86.31%
The effective tax rate (ETR) for the year was 50.31% (2023: 86.31%).
9. Intangible assets
Acquired customer relationships Development costs IP addresses Trade name Goodwill Total
Cost
As at 30 June 2022 2,530 6,148 - 137 2,336 11,151
Charge for year
Additions - 2,868 - - - 2,868
Grant funding received - (147) - - - (147)
Foreign exchange movements (29) - - - - (29)
As at 1 July 2023 2,501 8,869 - 137 2,336 13,843
Additions - 2,796 104 - - 2,900
Foreign exchange movements (2) - - - - (2)
As at 30 June 2024 2,499 11,665 137 2,336 16, 741
104
Accumulated Amortisation
As at 30 June 2022 (1,146) (2,278) - (61) (968) (4,453)
Charge for the year (345) (1,343) - (27) - (1,715)
Foreign exchange movements 17 - - - - 17
Grant funding received - 414 - - - 414
As at 1 July 2023 (1,474) (3,207) - (88) (968) (5,737)
Charge for the year (263) (1,627) - (27) - (1,917)
Foreign exchange movements 5 - - - - 5
Grant income release - 276 - - - 276
As at 30 June 2024 (1,732) (4,558) - (115) (968) (7,373)
NBV as at 1st July 2023 1,027 5,662 - 49 1,368 8,106
NBV as at 30th June 2024 767 7,107 104 22 1,368 9,368
Development costs have been recognised in accordance with IAS 38 in relation
to the Open Nebula project and development of the Proximity and Exchange Cloud
products, including analytics and its integration into this product.
Development costs in relation to Proximity and Exchange Cloud have a useful
life of 5 years.
Brought forward development costs consist of £5.9m where £3.0m was
capitalised in FY22 and £2.9m was capitalised in FY23. These assets now have
a carrying value of £3.3m.
During the year, a total of £2.8m development costs relating to the
development of Proximity Cloud/Exchange Cloud and £0.3m relating to the Open
Nebula project were capitalised. These assets now have a carrying value of
£2.9m.
As at 30 June 2024, £1.5m (2023: £1.6m) of development costs capitalised are
currently being carried as work in progress not yet amortised. This relates to
cost where projects have not yet been completed and made available to
customers. All costs incurred during the preliminary stages of development
projects are charged to profit or loss. Within the Proximity/Exchange Cloud
segment in the current year, an impairment review was carried out solely on
the projects within development costs for which amortisation is yet to begin
as no revenue has yet been generated from these items not yet under sale. No
impairment indicators were found.
During the year, Beeks purchased IP Addresses for £0.1m due to the finite
supply of IP addresses. Beeks have taken the view not to amortise this
intangible asset given their value is not expected to be reduced over time.
Impairment test for goodwill
For this review, goodwill was allocated to individual cash generating units
(CGU) on the basis of the Group's operations as disclosed in the segmental
analysis. As the Board reviews results on a segmental level, the Group
monitors goodwill and annually assesses it on the same basis for impairment.
The carrying value of goodwill by each CGU is as follows:
2024
£'000
Private/public cloud 1,368
Proximity/Exchange Cloud -
Total goodwill 1,368
Goodwill has been allocated to the public/private segment and management have
reviewed and confirmed that there is no indication of impairment.
The recoverable amount of all CGUs has been determined by using value-in-use
calculations, estimating future cash inflows and outflows from the use of the
assets and applying an appropriate discount rates to those cash flows to
ensure that the carrying value of each individual asset is still
appropriate.
In performing these reviews, under the requirements of IAS 36 "Impairment of
Assets" management prepare forecasts for future trading over a useful life
period of up to five years.
These cash flow projections are based on financial budgets and market
forecasts approved by management using a number of assumptions including;
· Historic and current trading
· Weighted sales pipeline
· Potential changes to cost base (including staff to support the CGU)
· External factors including competitive landscape and market growth
potential
· Forecasts that go beyond the approved budgets are based on long term
growth rates on a macro-economic level.
Management performed a full impairment assessment on the goodwill allocated to
Public/Private Cloud. This included including modelling projected cash flows
based on the current weighted sales pipeline, a discount rate based on the
calculated pre-tax weighted average cost of capital (15%, 2023: 15%) and cost
base assumptions that included contingency and investment to deliver against
the weighted sales pipeline. Conservative mid-term rates of 20% and terminal
growth rates of 2% (2023: 2%) were estimated, which were significantly less
than both the Group's internal business plan, external market mid-term
forecast as well as historic performance.
Sensitivity analysis has been performed to show the impact of reasonable or
possible changes in key assumptions. An increase in discount rate from 15% to
20% was applied with sales growth assumptions reduced. This resulted in no
resultant indication of impairment.
An impairment review was carried out on the three development projects, for
which amortisation is yet to begin, in line with the testing on impairment of
intangible assets as referenced within the Group's accounting policies in note
1. For Exchange Cloud and Analytics, the existing weighted sales pipeline was
used as a typical pipeline profile for current and future years and cash flows
on the business unit to which the goodwill relates were forecast. Discount
rates and cost base assumptions were consistent to what has been detailed
above in regards to the impairment testing on goodwill. For Open Integration,
cost comparisons of the two platform were compared based on current pricing
with discount rates again consistent with the impairment testing on goodwill.
Based on an analysis of the impairment calculation's sensitivities to changes
in key parameters (growth rate, discount rate and pre-tax cash flow
projections) there was no reasonably possible scenario where these recoverable
amounts would fall below their carrying amounts therefore as at 30 June 2024,
no change to the impairment provision against the carrying value of
intangibles was required. The revaluation of these from prior year represents
exchange adjustment only.
Note during the year the trade assets and liabilities of Velocimetric Inc were
hived up to Velocimetrics Ltd and the subsequent trade assets and liabilities
of Velocimetrics Ltd were hived across to Beeks Financial Cloud Ltd. This
revenue stream was already considered as a CGU and therefore had no impact on
the Group's impairment assessments.
10. Non-current assets - Property, plant and equipment
Computer Equipment Office equipment and fixtures and fittings Right of Use Freehold property Total
Cost £'000 £'000 £'000 £'000 £'000
As at 30 June 2022 16,543 180 5,420 3,034 25,177
Additions 3,950 146 2,149 5 6,250
Exchange adjustments (3) - 172 - 169
As at 1 July 2023 20.490 326 7,741 3,039 31,596
Additions 3,550 68 950 1 4,569
Transfer to stock (175) - (595) - (770)
Exchange adjustments (3) - (58) - (61)
As at 30 June 2024 23,862 394 8,038 3,040 35,334
Depreciation
As at 30 June 2022 (6,778) (48) (2,054) (27) (8,907)
Charge for the year (3,020) (49) (1,410) (71) (4,550)
Exchange adjustments (30) - (157) - (187)
As at 1 July 2023 (9,828) (97) (3,621) (98) (13,644)
Charge for the year (3,435) (63) (1,516) (71) (5,085)
Transfer to stock 78 - - - 78
Exchange adjustments 6 - 50 - 56
As at 30 June 2024 (13,179) (160) (5,087) (169) (18,595)
NBV as at 30 June 2023 10,662 229 4,120 2,941 17,952
NBV as at 30 June 2024 10,683 234 2,951 2,871 16,739
All revenue generating depreciation charges are included within cost of sales.
Non-revenue generating depreciation charges are included with administrative
expenses.
The Group recognises rental income for the rental of units at their Head
Office property in Renfrew. This asset is disclosed as Freehold Property.
Units are leased to tenants under operating leases with rentals payable
quarterly. Full details on operating leases as a lessor can be found on note
18.
Assets held at Head Office are classified and disclosed as inventory until the
point in which the assets purpose is identified. Where an asset is sold to a
customer under a proximity or exchange cloud solution, it is transferred to
stock and subsequently transferred to Cost of Sales within the Income
statement.
11. Non-current assets - Deferred tax
Deferred tax is recognised at the standard UK corporation tax of 25% for fixed
assets in the UK (2023: 25%). Deferred tax in the US is recognised at an
average rate of 21% for 2024 (2023: 21%). The deferred tax asset relates to
the difference between the amortisation period of the US acquisitions for tax
and reporting purposes as well as the impact of the share options exercised
during the year and tax losses carried forward in both UK and overseas
companies.
2024 2023
£000 £000
The split of the deferred tax asset and liabilities are summarised as follows:
Deferred tax (liabilities) (4,197) (3,884)
Deferred tax asset 6,727 5,398
Total deferred tax 2,530 1,514
Movements
Opening balance 1,514 1,232
Charge to profit or loss (note 9) 835 531
Charged to goodwill / equity 181 (252)
Other movement - 3
Closing balance 2,530 1,514
The movement in deferred tax assets and liabilities during the year is as
follows:
Share options Tax losses c/fwd Accelerated tax depreciation and other movement Total deferred tax asset carried forward Total deferred tax (liability) carried forward
(temporary differences on assets)
£000 £000 £000 £000 £000
As at 30 June 2022 671 3,377 153 4,201 (2,968)
Charge to income 387 1,036 24 1,447 (916)
Charge to equity (251) - - (251) -
As at 30 June 2023 807 4,413 177 5,397 (3,884)
Charge to income 709 601 (161) 1,149 (312)
Charge to equity 181 - - 181 -
As at 30 June 2024 1,697 5,014 16 6,727 (4,196)
12. Current assets - Inventories
2024 2023
£000 £000
Materials 1,084 1,315
Consumables 422 452
1,506 1,767
With the launch of Proximity Cloud in the previous year, the Group holds
hardware which can be used in the sale of Proximity or Exchange Cloud
contracts. Subsequent to the year end, if they are not used as part of a
Proximity or Exchange Cloud sale, they will be reclassified as PPE at the
point in which they are delivered into one of the Group's data centres.
During the period, £0.7m (2023 - £nil) of inventories were recognised as an
expense in the period through cost of sales. Of the £1.8m classified as
inventories at 30 June 2023, £1.1m was subsequently transferred to PPE during
the year at the point in which they were delivered into one of the Group's
data centres.
13. Trade and other receivables
2024 2023 (Restated)
£000 £000
Trade receivables 1,334 2,186
Less: allowance for impairment of receivables (124) (47)
1,210 2,139
Prepayments 1,153 1,040
Contract assets 1,490 826
Other taxation 60 111
Other receivables 258 384
Trade and other receivables - current 4,171 4,500
2024 2023 (Restated)
£000 £000
Contract assets 3,287 1,891
Trade and other receivables - non-current 3,287 1,891
Contract assets primarily relate to our rights to consideration for goods or
services delivered but not invoiced at the reporting date. The associated
performance will either be the delivery of the bundled appliance for
proximity/exchange cloud contracts or the delivery of the licence key for
software contracts. The contract assets are transferred to receivables when
invoiced. Contract liabilities relate to deferred revenue. At the end of each
reporting period, these positions are netted on a contract basis and presented
as either an asset or a liability in the Consolidated Statement of Financial
Position. Consequently, a contract balance can change between periods from a
net contract asset balance to a net contract liability balance in the
statement of financial position.
Significant changes in the contract assets and the contract liability balances
during the period are as follows:
Contract assets Contract liabilities
£000 £000
Balance at 1 July 2023 2,717 1,153
Transferred to receivables from contract assets from the beginning of the (2,155) -
period
Revenues recognised during the period to be invoiced 4,215 -
Revenue recognition that was included in the contract liability balance at the - (703)
beginning of the period
Remaining performance obligations for which considerations have been received - 501
Balance at 30 June 2024 4,777 951
The credit risk relating to trade receivables is analysed as follows:
2024 2023
£000 £000
Trade receivables 1,334 2,186
Less: allowance for impairment of receivables (124) (47)
1,210 2,139
Movements in the allowance for expected credit losses are as follows:
2024 2023
£000 £000
Opening balance 47 80
Movement in allowances 92 (24)
Receivables written off during the year as uncollectable (15) (9)
Closing balance 124 47
The Directors consider that the carrying amount of trade and other receivables
is approximately equal to their fair value. The group has applied the
simplified approach to providing for expected credit losses prescribed by IFRS
9, which permits the use of lifetime expected loss allowance for all trade
receivables. The expected credit loss allowance under IFRS 9 as at 30 June
2024 is £46k (2023 - £25k). The increase in expected credit loss allowance
is in line with the revenue growth of the business.
The following table details the risk profile of trade receivables based on the
Group's provision matrix. As the Group's historical credit loss experience
does not show significantly different loss patterns for different customer
segments, the provision for loss allowance based on past due status is not
further distinguished between the Group's different customer segments.
2024 ECL rate 2024 ECL allowance 2023 ECL rate 2023 ECL allowance
Risk profiling category (ageing) £'000 % £'000 £'000 % £'000
Current 438 -0.25% -1 959 -10% -1
0-30 days 582 -3.00% -18 988 -1.00% -10
30-60 days 161 -4.00% -6 94 -2.00% -2
60-90 days 5 -6.00% -0 12 -5.00% -1
Over 90 days 118 -18.00% -21 88 -15.00% -11
Total 1.304 -46 2.141 -25
The ECL rate in the current year has been reduced in line with the risk
profile of trade receivables, historic trade losses and continued tight credit
control procedures.
Trade receivables consist of a large number of customers across various
geographical areas. The aging below shows that almost all are less than three
months old and historic performance indicates a high probability of payment
for debts in this aging. Those over three months relate to customers without
history of default for which there is a reasonable expectation of recovery.
For contract asset ECL rates, Beeks have concluded that there is minimal
credit risk, as it is significantly unlikely that the customers associated
with these contract assets default on their contracts. To be prudent, the
Group have considered a 0.001% provision which equates to approximately
£2,000 and therefore wholly trivial. As such, no additional provision has
been incorporated against the value currently sitting within contract assets
relating to Proximity or Exchange cloud sales.
Past due but not impaired
The Group did not consider a credit risk on the aggregate balances after
reviewing the credit terms of the customers based on recent collection
practices.
The aging of trade receivables at the reporting date is as follows:
2024 2023
£000 £000
Not yet due 437 965
Due 1 to 3 months 768 1,115
Due 3 to 6 months 116 30
More than 6 months due 13 76
1,334 2,186
14. Current assets - Cash and cash equivalents
2024 2023
£000 £000
Cash and bank balances 7,701 7,829
7,701 7,829
The credit risk on cash and cash equivalents is considered to be negligible
because over 99% of the balance is with counter parties that are UK and US
banking institutions.
15. Current assets - Financial instruments and risk management
Financial risk management objectives and policies
The Group's principal financial instruments comprise cash and cash
equivalents, short term deposits and bank and other borrowings.
The carrying amount of all financial assets presented in the statement of
financial position are measured at amortised cost.
The carrying amount of all financial liabilities presented in the statement of
financial position are measured at amortised cost.
There have been no changes to valuation techniques, or any amounts recognised
through 'Other Comprehensive Income'.
The main purpose of these financial instruments is to finance the Group's
operations. The Group has other financial instruments which mainly comprise
trade receivables and trade payables which arise directly from its operations.
Risk management is carried out by the finance department under policies
approved by the Board of Directors. The Group finance department identifies,
evaluates, and manages financial risks. The Board provides guidance on overall
risk management including foreign exchange risk, interest rate risk, credit
risk, and investment of excess liquidity.
The impact of the risks required to be discussed under IFRS 7 are detailed
below:
Market risk
Foreign exchange risk
Foreign exchange risk arises when future commercial transactions or recognised
assets or liabilities are denominated in a currency that is not the functional
currency of the operations. The Group had potential exchange rate exposure
within USD trade payable balances of £1,254,998 at 30 June 2024 (£1,255,542
at 30 June 2023) and potential exchange rate exposure within EUR trade
payables balances of £61,880 (£59,768 at 30 June 2023). The Group had
potential exchange rate exposure within USD trade receivables of £585,469
(£1,179,455 as at 30 June 2023) and potential exchange rate exposure within
EUR trade receivables of £12,888 (£37,262 at 30 June 2023). The Group had
potential exchange rate exposure within USD intercompany balances of
£5,920,060 (£5,807,729 as at 30 June 2023) and within JPY intercompany
balances of £188,311 (£189,028 as at 30 June 2023). The Group also has
potential exchange rate exposure within USD bank balances of £7,127,773
(£3,644,955 as at 30 June 2023) and £110,650 within EUR bank balances
(£607,023 as at 30 June 2023).
Cash flow and interest rate risk
The Group has relatively limited exposure to interest rate risk in respect of
cash balances and long-term borrowings held with banks and other highly rated
counterparties. Loans are at variable rates of interest based on the Bank of
England's base rate therefore the Group is subject to changes in interest
rates. Given the relatively low level of debt the Board do not consider this
to be a significant risk. The Group has a total debt level of £1.1m all of
which was held at a fixed rate under asset finance agreements.
Credit risk
The Group's maximum exposure to credit risk is limited to the carrying amount
of financial assets recognised at the reporting date, as summarised below:
2024 2023 (Restated)
£000 £000
Cash and cash equivalents 7,701 7,829
Trade receivables 1,334 2,186
Contract assets 1,490 826
Other receivables 259 384
10,784 11,225
Credit risk is managed on a Group basis. Credit risks arise from cash and cash
equivalents and deposits with banks and financial institutions, as well as
credit exposures to customers, including outstanding receivables and committed
transactions. Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial losses to the Group. The
Group provides standard credit terms (normally 30 days) to all of its
customers which has resulted in trade receivables of £1.2m (2023: £2.1m)
which are stated net of applicable allowances, and which represent the total
amount exposed to credit risk.
The Group's credit risk is primarily attributable to its trade receivables and
contract assets. The Group present the amounts in the statement of financial
position net of allowances for doubtful receivables, estimated by the Group's
management based on prior experience and the current economic environment. The
Group reviews the reliability of its customers on a regular basis, such a
review takes into account the nature of the Group's trading history with the
customer, along with management's view of expected future events and market
conditions.
The credit risk on liquid funds is limited because the majority of funds are
held with two banks with high credit-ratings assigned by international
credit-rating agencies. Management does not expect any losses from
non-performance of these counterparties.
None of the Group's financial assets are secured by collateral or other credit
enhancements.
Liquidity risk
The Group closely monitors its access to bank and other credit facilities in
comparison to its outstanding commitments on a regular basis to ensure that it
has sufficient funds to meet obligations of the Group as they fall due. The
Group monitors its current debt facilities and complies both with its gross
borrowings to adjusted EBITDA, minimum adjusted cash banking and LTV
covenants. Judgement is required in assessing what items are allowable for the
adjusted components.
The Board receives regular debt management forecasts which estimate the cash
inflows and outflows over the next twelve months, so that management can
ensure that sufficient financing is in place as it is required.
As at 30 June 2024, the Group's financial liabilities (excluding leases
disclosed in Note 16) have contractual maturities (including interest payments
where applicable) as summarised below:
Current
Non-current
Within 1-3 3-12 1-5 After
1 month months months years 5 years
£'000 £'000 £'000 £'000 £'000
Trade and other payables 3,772 935 206 - -
The above amounts reflect the contractual undiscounted cash flows, which may
differ from the carrying values of the liabilities at the reporting date.
Trade and other payables includes trade payables, accruals, contract
liabilities, other taxation and social security and other payables.
Capital risk management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital. In order to maintain or
adjust the capital structure, the Group may adjust the amount of dividends
paid to shareholders, return capital to shareholders, issue new shares or sell
assets to reduce debts.
2024 2023
£000 £000
Total equity 37,495 32,786
Cash and cash equivalents 7,701 7,829
Capital 45,196 40,615
Total equity 37,495 32,786
Other loans - 1,814
Lease liabilities 2,894 4,006
Overall financing 40,389 38,606
Capital-to-overall financing ratio 1.12 1.05
Other risks
Rental income from the head office property leased out under operating leases
is recognised in the statement of the comprehensive income as other income as
these services are rendered, as the tenant occupies the space. Any associated
risk of the underlying asset used to generate this rental income is believed
to be minimal given the building is utilised as the head office and the
majority of staff are based there.
16. Non-current liabilities - Borrowings and other financial liabilities
2024 2023
£000 £000
Lease liabilities 1,283 2,047
1,283 2,047
Other loans
Under one year - 1,814
- 1,814
During the year the group fully repaid the £0.5m of the term loan facility
taken out from Barclays Bank in December 2020 and £1.3m of the property loan
facility. The group continues to retain a revolving credit facility of £3.5m
which was unutilised as at 30 June 2024.
Barclays have been given security for the facility of the UK assets of the
Group and an unlimited guarantee is afforded to Barclays.
During the year, the Group entered into one new asset financing arrangement of
£0.2m. This asset financing agreement has been disclosed under lease
liabilities (note 18).
Changes in liabilities arising from financing activities:
Lease liabilities Loans Total
£000 £000 £000
Balance at 1 July 2023 4,007 1,814 5,821
Lease liabilities additions IFRS 16 724 - 724
Proceeds from new leases under asset financing 229 - 229
Loan repayments - (1,814) (1,814)
Lease repayments (2,065) - (2,065)
Balance at 30 June 2024 2,895 - 2,895
Included within the lease liabilities balance of £2.9m is £1.1m of asset
finance lease liabilities.
17. Trade and other payables
2024 2023 (Restated)
£000 £000
Trade payables 2,792 2,937
Accruals 512 375
Contract liabilities 815 622
Other taxation and social security 324 373
Other payables 334 114
Trade and other payables - current 4,777 4,421
18. Leases
2024 2023 (Restated)
£000 £000
Contract liabilities 136 531
Trade and other payables - non-current 136 531
Non-current contract liabilities in the year relates deferred income from
support contracts that span over one year.
The Group leases assets including the space in data centres in order to
provide infrastructure services to its customers and also hardware for data
centres. Information about leases for which the Group is a lessee is presented
below:
Right-of-use assets
Leasehold Property and improvement
£000
Balance at 1 July 2023 4,120
Additions 950
Transfer to stock (595)
Depreciation (1,516)
Foreign exchange (8)
Balance at 30 June 2024 2,951
The right-of-use assets are disclosed as non-current assets and are disclosed
as property, plant and equipment (note 10).
Right-of-use lease liabilities
2024 2023
£000 £000
Maturity analysis:
Within one year (1,674) (2,068)
Within two years (1,044) (1,574)
Within three years (274) (461)
Within four years - (12)
Add: unearned interest 98 108
Total lease liabilities (2,894) (4,007)
Analysed as:
Non-current (Note 18) (1,283) (2,047)
Current (Note 19) (1,611) (1,960)
(2,894) (4,007)
The Group does not face a significant liquidity risk with regard to its lease
liabilities. The interest expense on lease liabilities amounted to £0.2m for
the year ended 30 June 2024 (2023: £0.2m). Lease liabilities are calculated
at the present value of the lease payments that are not paid at the
commencement date.
The Group has elected not to recognise a lease liability for short-term leases
(leases with an expected term of 12 months or less) or for leases of low value
assets. Payments made under such leases are expensed on a straight line basis.
During the year ended 30 June 2024, in relation to leases under IFRS 16, the
Group recognised the following amounts in the Consolidated statement of
comprehensive income:
2024 2023
£000 £000
Depreciation charge 1,516 1,410
Interest expense 163 165
Payments for short-term lease expenses in relation to data centre space have
not been disclosed below and are instead reflected within other cost of sales
under note 3.
Amounts recognised in the Consolidated statement of cash flows:
2024 2023
£000 £000
Amounts payable under leases:
Short-term and low value lease expense - 10
Repayment of lease liabilities within cash flows from financing activities 2,065 1,432
The Group recognises rental income for the rental of units at their Head
Office property in Renfrew. Units are leased to tenants under operating leases
with rentals payable quarterly. Lease income from operating leases where the
group is a lessor is recognised on a straight-line basis over the lease term.
The total recognised in profit or loss during the period is as follows:
2024 2023
£000 £000
Rental income from operating leases 96 94
As part of this, The Group receives rental payments on a quarterly basis. The
amounts due to be received over the next 5 years are as follows:
2024 2023
£000 £000
Within 1 year 96 96
Between 1 and 2 years 96 96
Between 2 and 3 years 96 96
19. Equity - issued capital
2024 2023 2024 2023
shares shares £000 £000
Ordinary shares - fully paid 66,541,009 65,571,434 83 82
Movements in ordinary share capital
Details Date Shares Shares Issue price £000
Balance 30 June 2018 50,043,100 62
EMI Share options exercised 31 August 2018 677,700 £0.00125 1
EMI Share options exercised 24 October 2018 32,200 £0.00125 -
EMI Share options exercised 20 June 2019 111,800 £0.00125 1
New share issue 14 April 2020 363,458 £0.00125 -
EMI Share options exercised 9 November 2020 44,118 £0.00125 -
New share issue 15 December 2020 430,946 £0.00125 1
New share issue 26 April 2021 4,347,827 £0.00125 5
EMI Share options exercised 15 November 2021 264,705 £0.00125 -
New share issue 25 April 2022 9,090,910 £0.00125 12
EMI Share options exercised 16 January 2023 21,946 £0.00125 -
EMI Share options exercised 5 April 2023 106,796 £0.00125 -
EMI Share options exercised 31 May 2023 35,928 £0.00125 -
Balance 30 June 2023 65,571,434 82
Share options exercised 13 November 2023 137,724 £0.00125 -
Share options exercised 16 January 2024 197,630 £0.00125 -
Share options exercised 28 March 2024 520,729 £0.00125 1
Share options exercised 26 April 2024 58,037 £0.00125 -
Share options exercised 13 May 2024 28,455 £0.00125 -
Balance 30 June 2024 66,514,009 83
Ordinary shares
During the year, 942,575 share options were exercised.
20. Share based payments
The movements in the share options during the year, were as follows:
2024 2023
Number of share options Weighted Average Fair Value price per share (£) Number of share options Weighted Average Fair Value price per share (£)
Outstanding at the beginning of the year 6,233,043 1.35 4,925,668 1.20
Exercised during the year (942,575) 0.97 (164,640) 1.24
Issued during the year 1,443,000 1.06 1,549.000 0.83
Forfeited during the year - - (76,955) 1.43
Outstanding at the end of the year 6,733,468 1.26 6,233,043 1.35
The Group granted a total of 1,443,000 share options on 20(th) November 2023.
Shares were forfeited during the year where employees left the business, with
their share options not being fully redistributed within the Group.
These share options outstanding at the end of the year have the following
expiry dates and exercise prices:
Grant 4A Grant 4B Grant 5A Grant 5B Grant 5C Grant 6A Grant 6B Grant 6C
Shares 1,022,500 597,150 604,000 462,500 462,500 395,000 524,000 524,000
Date of grant 26th November 2021 26th November 2021 2nd December 2022 2nd December 2022 2nd December 2022 20th November 2023 20(th) November 2023 20(th) November 2023
Exercise price £0.00125 £0.00125
£0.00125 £0.00125 £0.00125 £0.00125 £0.00125 £0.00125
Unvested expiry date 26th November 2024 26th November 2024 2nd December 2025 2nd December 2025 2nd December 2024 20(th) November 2026 20(th) November 2026 20(th) November 2025
These share options vest under challenging performance conditions based on
underlying profitability growth during the periods.
The Black Scholes model was used to calculate the fair value of these options,
the resulting fair value is expensed over the vesting period. The following
table lists the range of assumptions used in the model:
Grant 1 Grant 2 Grant 3 Grant 4A Grant 4B Grant 4C Grant 5A
Shares 264,706 1,574,850 1,042,063 1,022,500 597,150 632,150 604,000
Share price (£) 1.02 0.84 0.945 1.575 1.575 1.575 1.43
Volatility 5% 5% 5% 5% 5% 5% 5%
Annual risk free rate 4% 4% 4% 4% 4% 4% 4%
Exercise strike price (£) 0.00125 0.00125 0.00125 0.00125 0.00125 0.00125 0.00125
Time to maturity (yrs) 3 3 3 3 3 2 3
Grant 5B Grant 5C Grant 6A Grant 6B Grant 6C Total
Shares 462,500 462,500 395,000 632,150 604,000 6,662,419
Share price (£) 1.43 1.43 1.065 1.065 1.065
Volatility 5% 5% 5% 5% 5%
Annual risk free rate 4% 4% 4% 4% 4%
Exercise strike price (£) 0.00125 0.00125 0.00125 0.00125 0.00125
Time to maturity (yrs) 3 2 3 3 2
The total expense recognised from share based payments transactions on the
Group's profit for the year was £2.3m (2023: £2.3m).
Expected volatility was determined at the date of grant from historic
volatility, adjusted for events that were not considered to be reflective of
the volatility of the share price going forward.
These share options vest on the achievement of challenging growth targets. It
is management's intention that the Group will meet these challenging growth
targets therefore, based on management's expectations, the share options are
included in the calculation of underlying diluted EPS in note 23.
21. Equity - Reserves
The foreign currency retranslation reserve represents exchange gains and
losses on retranslation of foreign operations. Included in this is revaluation
of opening balances from prior years.
The merger reserve initially arose on the share for share exchange reflecting
the difference between the nominal value of the share capital in Beeks
Financial Cloud Group PLC and the value of the Group being acquired, Beeks
Financial Cloud Limited. The merger reserve then increased upon acquisition of
Velocimetrics Ltd in FY 2018, reflecting the difference between the nominal
value of the share capital issued from Beeks Financial Cloud Group PLC and the
value of the shares issued to the owners of Velocimetrics Ltd.
Share premium represents the excess over nominal value of the fair value of
consideration received for equity shares, net of expenses of the share issue.
Any transaction costs associated with the issuing of shares are deducted from
share premium, net of any related income tax benefits.
Retained earnings represents retained profits and losses.
The other reserve arose on the share for share exchange and reflects the
difference between the value of Beeks Financial Cloud Group Limited and the
share capital of the Group being acquired through the share for share
exchange. Also included in the other reserve is the fair value of the warrants
issued on the acquisition of VDIWare LLC.
22. Related party transactions
Parent entity
Beeks Financial Cloud Group PLC is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 24.
Transactions with related parties
The following transactions occurred with related parties:
2024 2023
£000 £000
Withdrawals from the director, Gordon McArthur 10 53
During the financial year, Beeks Financial Cloud Limited received services in
the normal course of its business and at arm's length from A&B Property
and Rental Services Scotland Limited, a company owned by Gordon McArthur.
During the year, Beeks Financial Cloud Limited paid for services of £6,145
(2023: £17,700) to A&B Property and Rental Services Scotland Limited and
the amounts due at the year-end was £nil (2023: £nil).
The Group recognise that the total withdrawals from the director exceeded the
limit as defined in the Companies Act 2006 requiring shareholder approval. To
rectify this, the amounts due by the director will be repaid subsequent to the
financial year end.
Key management personnel
Compensation paid to key management (which comprises the executive and
non-executive PLC Board members) during the year was as follows:
2024 2023
£000 £000
Wages and salaries 330 292
Social security costs 36 37
Other pension costs 22 14
Other benefits in kind 4 2
Share based payments 155 188
23. Earnings per share
2024 Restated 2023
£000 £000
Profit/(Loss) after income tax attributable to the owners of Beeks Financial 2,193 (89)
Cloud Group PLC
Pence Pence
Basic (loss)/earnings per share 3.33 (0.14)
Diluted earnings/(loss) per share 3.11 (0.13)
Number Number
Weighted average number of ordinary shares used in calculating basic earnings 65,905,797 65,446,755
per share
Adjustments for calculation of diluted earnings per share:
Dilutive impact of share options 4,023,763 4,7366,830
Options over ordinary shares 610,795 125,611
Weighted average number of ordinary shares used in calculating diluted 70,540,354 70,309,196
earnings per share
2024 Restated 2023
£000 £000
Profit / (Loss) before tax for the year 1,459 (650)
Share Based payments 2,326 2,291
Amortisation on acquired intangibles 304 489
Exceptional non-recurring costs 29 136
Exchange rate losses/(gains) on intercompany translation and unrealised 60 325
currencies
Grant income (275) (267)
Tax effect 720 494
Underlying profit for the year 4,623 2,818
Weighted average number of shares in issue - basic 65,905,797 65,446,755
Weighted average number of shares in issue - diluted 72,688,673 71,43,541
Underlying earnings per share - basic 7.01 4.31
Underlying earnings per share - diluted 6.36 3.96
Included in the weighted average number of shares for the calculation of
underlying diluted EPS are share options outstanding but not exercisable. It
is management's intention that the Group will meet the challenging growth
targets therefore, based on management expectations, the share options are
included in the calculation of underlying diluted EPS.
24. Subsidiaries
The Consolidated financial statements incorporate the assets, liabilities and
results of the following subsidiaries held by the company in accordance with
the accounting policy described in note 1.
The subsidiary undertakings are all 100% owned, with 100% voting rights.
Company name Country of incorporation Principal place of business/registered office Activity
Beeks Financial Cloud Co Ltd Japan FARO 1F, 2-15-5, Minamiaoyama, Minato-Ku, Tokyo, Japan. Non-trading
Beeks FX VPS USA Inc. Delaware, USA 874 Walker Road, Suite C, Dover, Kent, Delaware, 19904, USA. Non-trading
Year end 31(st) December
Beeks Financial Cloud Limited Scotland Riverside Building, 2 Kings Inch Way, Renfrew, Renfrewshire, PA4 8YU Cloud Computing Services
Velocimetrics Limited England Birchin Court, 230 Park Avenue 20 Birchin Lane, Suite 300 West, London, Software Services
England, EC3V 9DU
Velocimetrics Inc. New York, USA 230 Park Avenue, 10(th) Floor, New York 10169, USA. Software Services
In accordance with S479A of the Companies Act 2006, Velocimetrics Limited
(06943398) have not prepared audited accounts. Beeks Financial Cloud Group plc
guarantees all outstanding liabilities in this company at the year ended 30
June 2024, until they are satisfied in full.
25. Prior Period Adjustment
During the year, it was identified that the ageing of current and non-current
contract assets and contract liabilities was not accurately disclosed within
the prior year consolidated statement of financial position and respective
notes. This error has been corrected within the correct ageing profiles
restated in the figures for 2023 and the total impact on the consolidated
statement of financial position is shown below:
Restated 2023
£000
Increase in non-current assets 1,891
Decrease in current assets (1,891)
Impact on total assets -
Increase in non-current liabilities 531
Decrease in current liabilities (531)
Impact on total liabilities -
Impact on net current assets (1,360)
Impact on net assets -
The above prior year adjustment has a net impact of £nil on net assets. There
is also no resulting impact on the consolidated statement of comprehensive
income and therefore no impact to EPS and diluted EPS.
26. Ultimate controlling party
The Directors have assessed that there is no ultimate controlling party
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR QKABDFBDDBKKRecent news on Beeks Financial Cloud
See all newsREG - AIM - AIM Notice - 25/04/2025
AnnouncementREG - Beeks Fin Cloud Grp - Exercise of Share Options
AnnouncementREG - Beeks Fin Cloud Grp - Proximity Cloud Win
AnnouncementREG - AIM - AIM Notice - 04/04/2025
AnnouncementREG - Beeks Fin Cloud Grp - Exercise of Share Options
Announcement