REG - Beeks Fin Cloud Grp - Interim Results
05/03/2024 07:00
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RNS Number : 5471F Beeks Financial Cloud Group PLC 05 March 2024
.
Beeks Financial Cloud Group plc
("Beeks" or the "Company")
Interim Results
5(th) March 2024 - Beeks Financial Cloud Group Plc (AIM: BKS)
(https://beeksgroup.com/) , a cloud computing and connectivity provider for
financial markets, is pleased to announce its unaudited results for the six
months ended 31 December 2023.
Financial Highlights
· Revenues increased by 25% to £12.96m (H1 2023: £10.40m)
· Annualised Committed Monthly Recurring Revenue (ACMRR) up 25% to
£26.60m (H1 2023: £21.30m)
· Gross profit up by 15% to £4.99m (H1 2023: £4.35m)
· Underlying EBITDA* increased by 28% to £4.61m (H1 2023: £3.59m)
· Underlying profit before tax** up 113% to £1.38m (H1 2023:
£0.65m)
· Statutory profit before tax up 121% to £0.16m (H1 2023: Loss
(£0.76m)
· Underlying diluted EPS*** up 42% to 1.77 pence (H1 2023: 1.25
pence)
· Cash flow from operations (before movement in working capital) up
27% to £4.69m (H1 2023: £3.68m)
· Net cash**** of £5.44m (H1 2023: net cash £3.35m; 30 June
2023: net cash £4.41m)
* Underlying EBITDA is defined as profit for the period before amortisation,
depreciation, finance costs, taxation, share based payments, exchange rate
gains/losses on statement of financial position translation and exceptional
non-recurring costs
** Underlying profit before tax is defined as profit before tax excluding
amortisation on acquired intangibles, share based payments, exchange rate
gains/losses on statement of financial position translation and exceptional
non-recurring costs
***Underlying diluted EPS is defined as underlying profit after underlying tax
divided by the weighted average number of ordinary shares including share
options outstanding but not exercisable.
**** Net cash is defined as cash less total bank loans and asset financing
liabilities
Operational Highlights
· Another period of significant double-digit growth.
· Growth of Tier 1 customer base following notable new customer
wins, conditionally including a third Global exchange for the Exchange Cloud
offering post period end with completion of the contract subject to regulatory
approval.
· Continued significant expansion with existing customers,
including a Proximity Cloud contract which more than doubled in value to $3.6m
post period-end.
· £5m Proximity Cloud contract win and preferred cloud computing
and connectivity vendor status for one of the world's largest banking groups,
secured post period end.
· Further expansion potential remains across the vast majority of
existing customers.
· Collaboration with BlueVoyant, to enhance security protection
with its award-winning Managed Extended Detection and Response offering and
further investment into the Beeks Security Operations Centre.
Outlook
· Exchange Cloud is a transformational opportunity, with
significant early successes to date.
· Confident in achieving results for FY24 in line with Board
expectations.
· As previously announced, FY25 trading anticipated to be
significantly ahead of prior Board expectations.
· Confidence underpinned by high levels of contracted, multi-year,
recurring revenue, a unique proposition, and growing Tier 1 customer base.
Statutory Equivalents
The above highlights are based on underlying results. Reconciliations between
underlying and statutory results are contained within the financial
information. The statutory equivalents of the above results are as follows:
· Profit before tax of £0.16m (H1 2023: loss of £0.76m)
· Basic earnings per share profit of 0.12p (H1 2023: loss of 0.73p)
The largest reconciling item is the consistent add back of the non-cash
share-based payment charge.
Gordon McArthur, CEO of Beeks Financial Cloud commented:
"The consistent growth we continue to demonstrate, combined with our confident
outlook for this and next year, underline the size of the opportunity we are
addressing. Financial markets are still only at the start of the journey to
the cloud. With our proven offering and growing tier 1 customer base, which
includes some of the largest financial organisations in the world, as well as
our increasing profit margins and cash generation, we have never been better
placed to seize the opportunity. Our focus for the second half remains the
conversion of our significant pipeline."
For further information please contact:
Beeks Financial Cloud Group plc via Alma
Gordon McArthur, CEO
Fraser McDonald, CFO
Canaccord Genuity +44 (0)20 7523 8000
Adam James / Alex Orr
Alma Strategic Communications +44(0)20 3405 0205
Caroline Forde / Joe Pederzolli
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 www.beeksgroup.com (http://www.beeksgroup.com)
Chief Executive Officer's Review:
Our vision is simple: Build. Connect. Analyse. Providing end-to-end
outsourcing of financial services compute environments.
It has been another period of financial and strategic progress for Beeks. We
have achieved significant growth across revenue, EBITDA and ACMRR, while
improving operating profit margins and delivering a positive H1 operational
cash flow. Our high proportion of recurring revenue provides confidence in
FY24 results being in line with the Board's expectations, and as previously
announced, our positive contract momentum means we anticipate FY25 trading to
be significantly ahead of prior Board expectations.
Since becoming a listed business, we have consistently delivered annual growth
rates of 20-30%, and this period is no exception. This has been driven by the
successful expansion of our offering to address the cloud computing needs of
the largest financial services organisation in the world. Our top-line growth
means we have now moved into a more profitable and operationally
cash-generative position, providing a strong basis for continued progress.
We are now consistently targeting and securing the biggest financial
organisations as customers. Our most recently launched 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, is a transformational opportunity for Beeks. With three customers
already signed, we have proven our ability to win deals with the world's
largest exchanges. While, as previously announced, lead times on deals of this
magnitude can take time, we see a substantial opportunity for growth and
expansion once chosen as a preferred vendor. Each of these customers presents
a considerable expansion opportunity. With a substantial addressable market
opportunity, a growing reputation and a blue-chip customer base, we are
well-placed to continue achieving growth acceleration as the financial markets
are increasingly adopting cloud solutions.
Financial Performance
Revenue in the period grew by 25% to £12.96m (H1 2023: £10.40m), resulting
in an increase in underlying EBITDA of 28% to £4.61m (H1 2023: £3.59m). We
were pleased to have delivered a positive operational cash flow position in
the first half, as well as benefiting from improved operating profit margins
driven by both Proximity and Exchange Cloud new wins and a stable overhead
cost base against increased revenues. Beeks continues to have a strong
recurring revenue profile, with customer retention remaining high and with
ACMRR growing 25% to £26.6m at 31 December 2023 (H1 2023: £21.30m).
In line with strategy, Beeks has achieved a positive operational free cash
flow position in the period, with unaudited net cash increasing to £5.44m at
31 December 2023 (June 2023: net cash of £4.41m).
Operational Expansion
We have largely maintained a similar-sized team during the first half
following headcount expansion in the prior year. Headcount has increased
marginally to 105, up from 103 as at 30 June 2023 and in the second half of
the year we are planning some senior sales and technical hires to capitalise
on our pipeline of opportunities.
In January we were delighted to announce our collaboration with BlueVoyant, a
cybersecurity company, to enhance our security with their award-winning
Managed Extended Detection and Response offering. The partnership enhances
Beeks' cybersecurity defences, offering customers improved protection while
also demonstrating the company's commitment to proactive security measures.
We have continued to increase our data centre presence in the year with a
focus on 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 building out the functionality of Exchange and Proximity
Cloud. Areas of development in the period included;
· Continuation of the build out of the functionality of Exchange
and Proximity Cloud. We are focusing on features that will appeal to Tier 1
bank customers and large exchanges. These have included investments in areas
like multi-factor authentication support, further network automation and
single sign-on.
· Deepening of the multitenant experience allowing exchanges to
subdivide an Exchange Cloud rack between multiple individual clients and have
further improved the usability of the self-service infrastructure portal.
· Completion of significant engineering work and customer migration
work on our virtualisation platform to improve performance and reduce the cost
of operating this platform across our current client base.
· Our Analytics product continues to receive investment, with
further work to improve the client documentation and marketing messages
associated with the product and technical work to further develop the high
capacity, open architecture that we have identified a significant market
demand for.
Looking ahead, we plan to increase our investment in artificial intelligence.
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.
We also plan to be more platform-based with our technology investment. We will
be looking to leverage common components across our different product
offerings in order to reduce our costs, and to unlock further market
opportunities. These market opportunities will be unlocked by a combined
infrastructure and analytics platform which has a flexible architecture that
allows clients to integrate our offerings more fully into their workflows.
We see significant opportunity in our two major product lines: our
Private/Public and our Proximity/Exchange Cloud offerings.
Land and Expand
We have been successful at reaching new Tier 1 customers through the execution
of our Land and Expand strategy with a number of Tier 1 customers at various
stages of deployment.
Land - This focuses on growing our Tier 1 customer base, with organisations of
varying sizes, ranging from Proof of Concepts to large scale, phase 2
roll-outs - with expansion opportunities across the majority.
Significant new customers were secured in the first half, including the
signing of a conditional contract with one of the largest exchanges globally,
marking the third international exchange to sign up to Exchange Cloud. The
deal marks the initial phase of an intended multi-year partnership between
Beeks and the Exchange and is subject to regulatory approval.
Post period-end we won a significant £5 million Proximity Cloud contract with
one of the world's largest banks. Beeks achieved preferred cloud computing and
connectivity vendor status in a competitive RFP. Revenue from the contract,
which has the ability for further expansion, is expected to commence in H1
FY25.
Expand - we have made great progress at generating additional revenue coming
from deals that have grown in size since being signed. Of particular note has
been the expansion of an initial $1.3 million Proximity Cloud contract which
was signed with a Tier 1 investment manager in November 2023, to a value of
$3.6 million in aggregate over a five-year period.
We see expansion potential across the vast majority of existing customers and
we are focused on the continued execution of our land and expand strategy.
Future Growth and Outlook
Our high proportion of recurring revenue means we are confident in delivering
results for FY24 in line with Board expectations and as previously announced,
FY25 trading is anticipated to be significantly ahead of prior Board
expectations.
Our core focus for the second half remains the conversion of our significant
pipeline. We find ourselves with a firm financial footing as a profitable and
cash-generative business, and we are well-placed to continue seeking to
achieve growth acceleration in the current year and beyond.
Gordon McArthur
CEO
5 March 2024
Chief Financial Officer's Review:
Financial Review
We are pleased to report on our first half of the year where we have grown
revenue by 25% and delivered a significant increase in profitability when
compared to H1 2023.
Group revenues grew by 25% to £12.96m (H1 2023: £10.40m) driven by organic
growth in both our core Public/Private Cloud offering as well as new wins in
Exchange and Proximity Cloud. Refer to note 3 for a breakdown of the Group's
revenues.
Our core Public and Private Cloud revenues grew by 14% to £11.66m (H1 2023:
£10.20m).
Our overall contractual revenue (ACMRR) grew 25% to £26.60m (H1 2023:
£21.30m). We still have a high proportion of recurring revenue which gives us
good visibility for forecasting and a steady operating cash collection
profile. Recurring revenue represented 87% (H1 2023: 93%) of H1 2024 revenues
with the remainder being represented by the upfront element of Proximity and
Exchange Cloud plus hardware and software licence sales.
We maintain an established customer base with low attrition rates at 0.5% (H1
2023: 0.8%) of monthly revenue. We have continued to grow our Tier 1 customer
base as we execute on our land and expand strategy by both adding new Tier 1
customers and growing our existing Tier 1 customer base. Tier 1 customers now
represent over half of our total revenue, with some of these contracted via
partners.
Non-recurring revenue - growth relating to Exchange and Proximity.
During the period we delivered growth in both our Proximity and Exchange Cloud
products via two new customers, recognising additional revenues of £1.1m
relating to these two new contract wins. In November 2023 we announced a new
Proximity Cloud contract with a Tier 1 investment manager. The first location
was successfully delivered in December 2023, just four weeks after contract
signature, with the second location delivered in February 2024. September 2023
saw the successful go-live of the Johannesburg Stock Exchange's (JSE) Colo 2.0
and it is pleasing to see how quickly we are able as an institution to deploy
these solutions following contract signature. Proximity and Exchange Cloud
contracts fall under different revenue recognition principles where a
significant proportion of revenue is required to be recognised upfront at the
time when the fully configured appliance is delivered to the client's data
centre.
Gross profit in the period increased by 15% to £4.99m (H1 2023: £4.35m) with
gross margin reducing to 39% (H1 2023: 41%). The reduction in gross margin is
largely as a result of increased capacity in infrastructure and hosting costs.
We expect gross margins to improve in the second half of the year as we
deliver on our sales pipeline with a lower cost of investment given current
capacity levels. It is also worth noting that Proximity and Exchange Cloud
solutions do not always require third party data centre hosting costs when
they reside in the client's own data centre and given our expectation that
these types of contracts will represent a higher overall proportion of our
business going forward, there is further potential upside in gross margin to
be realised.
Underlying EBITDA increased by 28% to £4.61m (H1 2023: £3.59m) with
underlying EBITDA margins slightly ahead of this time last year at 35.6% (H1
2023: 34.5%). Underlying profit before tax is defined as profit before tax
excluding amortisation on acquired intangibles, share-based payments, exchange
rate gains/losses on statement of financial position translation and
exceptional non-recurring costs. This increased by 113% to £1.38m (H1 2023:
£0.65m). Underlying profit before tax margins have increased to 10.6% (H1
2023: 6.3%) largely as a result of stable overhead costs against growing
revenues.
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.
Key performance indicator review
H1 2024 H1 2023 Growth
Revenue £12.96m £10.40m 25%
ACMRR £26.60m £21.30m 25%
Gross profit £4.99m £4.35m 15%
Gross margin 38.5% 41.8%
Underlying EBITDA £4.61m £3.59m 28%
Underlying EBITDA margin 35.6% 34.5%
Underlying profit before tax £1.38m £0.65m 113%
Underlying profit before tax margin 10.6% 6.3%
Profit /(Loss) before tax (£m) £0.16m (£0.76m) 44%
Underlying basic EPS 1.95p 1.35p
*All references to margins are as a percentage of revenue.
Profit /(Loss) before Tax Period ended 31 Dec 2023 Period ended 31 Dec 2022
£000 £000
Profit/(loss) before tax for the period 158 (762)
Deduct:
Grant Income (137) (130)
Add back:
Non-recurring costs 22 81
Amortisation of acquired intangibles 156 301
Share-based payments 1,129 1,155
Exchange rate loss on intercompany translation 49 -
Underlying profit for the period 1,377 645
Beeks reported a Statutory profit before tax of £0.16m (H1 2023: loss of
£0.76m) with underlying profit before tax increasing to £1.38m (H1 2023:
£0.65m).
Cost of sales (excluding amortisation on acquired assets) increased by 35% to
£8.00m (H1 2023: £5.94m), largely in line with sales growth under gross
profit margins as referenced earlier. There is always a relatively fixed
direct cost associated with revenue growth resulting in higher data centre
hosting costs and the cost of infrastructure. As is typical in our growth, we
again added capacity across our global data centre estate during the period.
There has been a decrease in administrative expenses (excluding share-based
payments and non-recurring costs) when compared to the prior year of 3% to
£3.55m (H1 2023: £3.67m). As a business, we had previously invested
significantly in headcount but are now largely in a position where we have the
right number of people in the right roles to support both the current and
near-term business growth. We are considering some strategic hires to
capitalise on our sales and product development opportunities, but engineering
and support staff growth will not change significantly. This is part of our
overarching strategy to deliver improved margins to shareholders. Staff costs
have only increased by 3% (excluding share-based payments and net of
capitalisation) to £2.25m in the period (H1 2023: £2.17m). During the period
our headcount has been relatively flat at 105, up from 103 as at 30 June 2023
and down from 106 as at 31 December 2022.
We have continued to invest in product, most significantly in product
enhancements to Exchange Cloud. We will continue to invest in this given our
product roadmap and where we are seeing a significant opportunity in the niche
market we operate in. As such, capitalised development costs in the period
were £1.33m (H1 2023: £1.43m). Most of this cost is internally generated as
we use our in-house teams to develop the bespoke technology. We intend to fund
this level of investment through operational cash generation.
Taxation
The effective tax rate ('ETR') for the period is -27%, (H1 2023: -37%). There
are some timing reasons for our tax provision being higher than the prevailing
tax rate in the UK of 25%. We expect this to normalise to nearer 20% for the
full year. As with previous years, we benefit from the impact of R&D tax
credits and there was a receipt of £0.1m received relating to a prior period.
Earnings per Share and Dividends
Underlying basic earnings per share has increased 44% to 1.95 pence (H1 2023:
1.35 pence). Underlying diluted earnings per share has increased 42% to 1.77
pence (H1 2023: 1.25 pence). The calculation of both underlying basic and
diluted earnings per share is included in note 6.
Balance Sheet and Cash Flows
The Group generated an increase of cash from operations (before movement in
working capital) in the period of 27%, up to £4.69m (H1 2023: £3.68m).
Expenditure on investing activities was lower than the prior year as we
utilised capacity of existing stock. We invested £1.65m (H1 2023: £4.17m) in
property, plant and equipment across our infrastructure estate, of which
£0.23m was funded via a new asset finance facility.
Our current stock levels remain healthy, having stock capacity of £1.88m as
represented by £1.41m owned and £0.47m that has been asset financed. As
supply chain lead times for many inventory items have reduced, we will look to
utilise existing stock capacity where possible and not hold the levels we have
had over the last few reporting periods. Our existing stock capacity will help
reduce some of H2 2024 investment although some Proximity and Exchange Cloud
deployments can require bespoke infrastructure solutions requiring new
investment.
Our capitalised development costs have remained stable at £1.40m (H1 2023:
£1.43m) as our in-house development teams add further feature functionality
in Proximity Cloud, Exchange Cloud and Beeks Analytics which is a key
strategic component of Exchange Cloud. As stated earlier in the report, our
staff levels, including our software development team, have been largely fixed
throughout the period.
During the period we have reduced our borrowings. In September 2023, the
mortgage on our Head Office property became due, rather than re-finance this,
we elected to fully repay the loan of £1.57m. Furthermore, we also repaid
term loan facilities of £0.25m and during the period we also took advantage
of a reduced rate asset finance loan of £0.23m. Period end debt has been
reduced to £1.73m (H1 2023: £3.34m). Cash and cash equivalents totalled
£7.17m at 31 December 2023 (H1 2023: £6.70m) with trade and other
receivables of £6.79m (H1 2023: £6.20m) as well as inventories of £1.41m
(H1 2023: £2.35m). Gross debt has reduced to 0.2x underlying annualised
EBITDA (H1 2023: 0.5x). Gross debt is defined as borrowings excluding IFRS16
lease liabilities divided by the annualised underlying EBITDA.
At the end of the period, the Group had net cash of £5.44m (H1 2023: net cash
£3.35m).
At 31 December 2023 net assets were £34.12m compared to net assets of
£31.54m at 31 December 2022 and net assets of £32.79m at 30 June 2023.
Fraser McDonald
CFO
5 March 2024
Beeks Financial Cloud Group PLC
Consolidated statement of comprehensive income
For the period ended 31 December 2023
6 months to 6 months to Year to
Note December 2023 (unaudited) December 2022 (unaudited) June
2023 (audited)
£'000 £'000 £'000
Revenue 3 12,957 10,398 22,357
Other Income 3 185 191 361
Cost of sales (8,153) (6,241) (13,602)
Gross profit 4,989 4,348 9,116
Administrative expenses (4,703) (4,910) (9,447)
Operating profit/(loss) 4 286 (562) (331)
Analysed as:
Earnings before depreciation, amortisation, share based payments and 4,695 3,723 8,362
non-recurring costs
Share based payments 4 (1,129) (1,155) (2,291)
Other non-recurring costs (22) (81) (136)
Depreciation 4 (2,373) (2,149) (4,550)
Amortisation - acquired intangible assets (152) (301) (489)
Amortisation - other intangible assets (733) (599) (1,227)
Operating profit/(loss) 286 (562) (331)
Finance income 84 - 101
Finance costs (212) (200) (420)
Profit/(loss) before taxation for the period 158 (762) (650)
Taxation 5 43 284 561
Profit/(loss) after taxation for the period 201 (478) (89)
Other comprehensive income
Amounts that may be reclassified to profit and loss
Currency translation differences 4 104 77
Total comprehensive income/(loss) for the period 205 (374) (12)
Pence Pence Pence
Basic earnings/(loss) per share 6 0.12 (0.73) (0.14)
Diluted earnings/(loss) per share 6 0.12 (0.73) (0.13)
Beeks Financial Cloud Group PLC
Consolidated statement of financial position
For the period ended 31 December 2023
December 2023 (unaudited) December 2022 (unaudited) June
2023 (audited)
Assets Note £'000 £'000 £'000
Non-current assets
Intangible 7 8,793 7,347 8,106
assets
Property, plant and 8 17,262 17,835 17,952
equipment
Deferred tax 5,410 4,413 5,398
Total non-current assets 31,465 29,595 31,456
Current assets
Trade and other receivables 6,794 6,203 6,391
Inventories 1,408 2,351 1,767
Cash and cash equivalents 7,169 6,696 7,829
Total current assets 15,371 15,250 15,987
Total assets 46,836 44,845 47,443
Liabilities
Non-current liabilities
Borrowings - 247 -
Lease liabilities 10 1,269 2,428 2,047
Deferred tax 3,884 2,968 3,884
Total non-current liabilities 5,153 5,643 5,931
Current liabilities
Trade and other payables 5,251 4,040 4,952
Lease liabilities 10 2,068 1,778 1,960
Borrowings 10 244 1,844 1,814
Total current liabilities 7,563 7,662 8,726
Total liabilities 12,716 13,305 14,657
Net assets 34,120 31,540 32,786
Equity
Issued capital 82 82 82
Share premium 23,775 23,775 23,775
Reserves 5,896 3,898 4,879
Retained earnings 4,367 3,785 4,050
Total equity 34,120 31,540 32,786
Beeks Financial Cloud Group PLC
Consolidated statement of changes in equity
For the period ended 31 December 2023
Issued capital Foreign currency Merger reserve Other reserve Share based payment reserve Share premium Retained earnings Total equity
retranslation reserve
£'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
Loss after tax for the period - - - - - - (478) (478)
Total comprehensive loss for the period - - - - - - (478) (478)
Currency translation difference - 104 - - - - - 104
Share based payments - - - - 1,155 - - 1,155
Exercise of share options - - - - (17) - 17 -
Balance at 31 December 2022 (unaudited) 82 97 705 (315) 3,412 23,775 3,784 31,540
Profit after tax for the period - - - - - - 389 389
Total comprehensive income for the period - - - - - - 389 389
Currency translation difference - (27) - - - - - (27)
Share based payments
Exercise of share options - - - - 1,136 - - 1,136
(129) 129 -
Deferred tax - - - - - - (252) (252)
Balance at 30 June 2023 (audited) 82 70 705 (315) 4,419 23,775 4,050 32,786
Balance at 1 July 2023 82 70 705 (315) 4,419 23,775 4,050 32,786
Profit after tax for the period - - - - - - 201 201
Total comprehensive income for the period - - - - - - 201 201
Currency translation difference - 4 - - - - - 4
Share based payments - - - - 1,129 - - 1,129
Exercise of share options - - - - (116) - 116 -
Balance at 31 December 2023 (unaudited) 82 74 705 (315) 5,432 23,775 4,367 34,120
Beeks Financial Cloud Group PLC
Consolidated cash flow statement
For the period ended 31 December 2023
6 months to Year to
December 2023 (unaudited) December 2022 (unaudited) June
2023 (audited)
£'000 £'000 £'000
Cash flows from operating activities
Profit/(loss) before taxation for the period 158 (762) (650)
Adjustments for:
Depreciation and amortisation 3,217 3,049 6,435
Share based payment charge 1,129 1,155 2,291
Bank charges 70 53 115
Loan interest 59 67 140
Bank interest received (26) - -
Lease liability interest 82 80 165
Proceeds from grant income - - 609
Operating cash flows before movements in working capital 4,689 3,642 9,105
Increase in trade and other receivables (541) (733) (1,667)
Decrease/(increase) in Inventory 359 (485) 311
Increase/(decrease) in trade and other payables 468 (1,456) (696)
Cash generated from operating activities before tax 4,975 968 7,053
Corporation tax received 117 125 (6)
Net cash generated from operating activities 5,092 1,093 7,047
Cash flows from investing activities
Purchase of property, plant and equipment (1,480) (3,382) (4,329)
Capitalisation of development costs (1,404) (1,433) (2,822)
Net cash used in investing activities (2,884) (4,815) (7,151)
Cash flows from financing activities
Bank charges (70) (52) (115)
Repayment of existing bank loans (1,570) (207) (618)
Repayment of asset financing (346) (113) -
Repayment of right of use leases (770) (542) (1,267)
Interest on lease liabilities (82) (80) (165)
Interest payable on bank loans (59) (147) (140)
Bank interest received 26 - -
Issue of loans - 1,358 -
Net cash generated from financing activities (2,871) 217 (2,305)
Net (decrease)/increase in cash and cash equivalents (663) (3,505) (2,409)
Cash and cash equivalents at the beginning of the financial period 7,829 10,160 10,160
Exchange effect on cash and cash equivalents 3 41 78
Cash and cash equivalents at the end of the financial period 7,169 6,696 7,829
Beeks Financial Cloud Group PLC
Notes to the financial statements
For the period ended 31 December 2023
Note 1. General information
The financial information covers the consolidated entity, Beeks Financial
Cloud Group PLC and the entities it controlled at the end of, or during, the
interim period to 31 December 2023.
The company is a public limited company which is quoted on the Alternative
Investment Market and is incorporated and domiciled in United Kingdom. Its
registered office and principal place of business is:
Registered office
Riverside Building
2 Kings Inch Way
Unit A
Riverside
Braehead
PA4 8YU
Note 2. Basis of preparation
The financial information for the period ended 31 December 2023 set out in
this interim report does not constitute statutory accounts as defined in
Section 434 of the Companies Act 2006 and is unaudited. The figures for the
year ended 30 June 2023 have been extracted from the Group financial
statements for that year. Those have been filed with the Registrar of
Companies. The auditor's report on those financial statements was unmodified
and did not contain statements under Section 493 of the Companies Act 2006.
The interim financial information has been prepared using the same accounting
policies and estimation techniques as will be adopted in the Group financial
statements for the year ending 30 June 2024. The group financial statements
for the year ended 30 June 2023 were prepared under international accounting
standards in conformity with the requirements of Companies Act 2006. These
interim financial statements have been prepared on a consistent basis and
format with the Group financial statements for the year ended 30 June 2023,
and have not been audited or reviewed by the auditors.
The provisions of IAS 34 'Interim Financial Reporting' have not been applied
in full.
Going Concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Chief
Executive's Statement.
The directors are of the opinion that the Group can operate within their
current debt facilities and comply with its banking covenants. At the end of
the period, the Group had net cash of £5.44m (H1 2023: net cash £3.35m) a
level which the Board is comfortable with given the strong cash generation of
the Group. The Group has a diverse portfolio of customers with relatively low
customer concentration which are split 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 potential impact of the
current economic climate. We have run appropriate scenarios applying
reasonable downside sensitivities and are confident we have the resources to
meet our liabilities as they fall due including the base case assumption of
our existing loan facilities not being made available at the end of current
terms (June 2024). The budgets and cash flow forecasts have assumed all loan
facilities being repaid in full. We have also run reverse stress test
scenarios in order to identify circumstances where cash reserves would be
depleted. The circumstances that would lead into such scenarios (such as
moving from revenue growth to revenue attrition) are not considered plausible
given the historic track record and trading prospects of the group.
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.
Note 3. Operating Segments
Identification of reportable operating segments
Operating segments are reported 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
Board. During the period ended 31 December 2023, the Group was organised into
two main business segments for revenue purposes. The group does not place
reliance on any specific customer and has no individual customer that
generates 33% (H1 2023: 34%) or more of its total group revenue.
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:
Period ended 31/12/23 (£'000) (Unaudited) Period ended 31/12/22 (£'000) Year ended 30/06/23 (£'000)
(Unaudited) (Audited)
Public/ Proximity /Exchange Cloud Total Public/ Proximity /Exchange Cloud Total Public/ Proximity /Exchange Cloud Total
Private Cloud Private Cloud Private Cloud
Over time
Infrastructure/software as a service 10,674 - 10,674 9,078 - 9,078 19,162 - 19,162
Maintenance 199 - 199 270 - 270 537 - 537
Proximity/Exchange Cloud - 199 199 - 201 201 - 454 454
Professional services 214 - 214 138 - 138 273 - 273
Over time total 11,087 199 11,286 9,486 201 9,687 19,972 454 20,426
Point in time
Proximity/Exchange Cloud - 1,103 1,103 - - - - - -
Hardware/Software resale 381 - 381 474 - 474 529 - 529
Software licences 143 - 143 186 - 186 1,267 - 1,267
Set up fees 44 - 44 51 - 51 135 - 135
Point in time total 568 1,103 1,671 711 - 711 1,931 - 1,931
Total revenue 11,655 1,302 12,957 10,197 201 10,398 21,903 454 22,357
6 months to Year to
December 2023 (unaudited) December 2022 (unaudited) June
2023 (audited)
£'000 £'000 £'000
Revenues by geographic location are as follows:
United Kingdom 3,458 2,385 5,660
Europe 1,570 1,454 3,119
US 4,771 3,711 9,193
Rest of World 3,158 2,848 4,385
Total 12,957 10,398 22,357
During the period, £137k (H1 2023: £130k) was recognised in other income for
grant income received from Scottish Enterprise and £48k (H1 2023: £61k) was
recognised as rental income.
Note 4. Operating profit/(loss)
6 months to Year to
December 2023 (unaudited) December 2022 (unaudited) June
2023 (audited)
£'000 £'000 £'000
Operating profit/(loss) is stated after charging:
Depreciation on owned assets 1,670 1,487 3,140
Staff costs 3,530 3,586 6,909
Depreciation of right-of-use asset 703 662 1,410
Amortisation of intangibles 875 900 1,716
Currency translation gain 4 104 256
Other cost of sales * 4,923 3,192 7,191
Share based payments 1,129 1,155 2,291
* Included within other cost of sales are the direct costs associated with the
business including data centre connectivity, software licences, security and
other direct support costs.
Note 5. Taxation
6 months to Year to
December 2023 (unaudited) December 2022 (unaudited) June
2023 (audited)
£'000 £'000 £'000
Current Tax
R&D tax receipt (121) (125) (95)
Foreign tax on overseas companies 90 53 65
Total current tax credit (31) (72) (30)
Deferred tax
Origination and reversal of temporary differences (12) (212) (531)
Total deferred tax credit (12) (212) (531)
Total tax credit (43) (284) (561)
The effective tax rate for the six months to 31 December 2023, based on the
taxation credit for the period as a percentage of the profit before tax is
(27%) (H1 2023: 37%).
The tax charge in the period has been more than offset by the receipt of the
R&D tax receipt relating to 2022.
Note 6. Earnings per share
As at 31 December 2023, the company had 65,709,158 shares (H1 2023:
65,428,710).
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares in
issue during the year. Diluted earnings per share is calculated by dividing
the earnings attributable to ordinary shareholders by the total of the
weighted average number of ordinary shares in issue during the year and
adjusting for the dilutive potential ordinary shares relating to share
options.
6 months to Year to
December 2023 (unaudited) December 2022 (unaudited) June
2023 (audited)
£'000 £'000 £'000
Profit/(Loss) after taxation attributable to the owners of Beeks Financial 201 (478) (89)
Cloud Group PLC
Pence* Pence Pence
Basic earnings/(loss) per share 0.12 (0.73) (0.73) (0.14)
Diluted earnings/(loss) per share 0.12 (0.13)
Weighted average number of ordinary shares used in calculated basic earnings 65,610,356 65,407,957 65,446,755
per share
Dilutive impact of share options 4,736,830 5,177,149 4,736,830
Adjustments for calculation of diluted earnings per share: 99,551 - 125,611
Options over ordinary shares
Weighted average number of ordinary shares used in calculated diluted earnings 70,446,737 70,585,106 70,309,196
per share
*The above is calculated on profit after tax excluding the £121k R&D tax
credit received during the period.
6 months to Year to
December 2023 (unaudited) December 2022 (unaudited) June
2023 (audited)
£'000 £'000 £'000
Underlying earnings per share
Underlying profit after taxation attributable to the owners of Beeks Financial 1,278 881 2,818
Cloud Group PLC
Pence Pence Pence
Underlying earnings per share - basic 1.95 1.35 4.31
Underlying earnings per share - diluted 1.77 1.25 3.96
Weighted average number of ordinary shares used in calculated basic earnings 65,610,356 65,407,957 65,446,755
per share
Adjustments for calculation of diluted earnings per share: 4,836,380 5,177,149 5,696,786
Options over ordinary shares
Weighted average number of ordinary shares used in calculated diluted earnings 70,446,736 70,585,106 71,143,541
per share
Included in the weighted average number of shares for the calculation of
underlying diluted EPS are share options that have vested and that are not yet
exercised and share options that have still to meet vesting criteria. It is
management's intention that the vested shares will be exercised and that the
Group will meet the challenging growth targets for the unvested shares to
vest. As such, both these types of share options have been included in the
underlying diluted EPS calculation.
Note 7. Intangible Assets
Acquired Customer Development
relationships Costs Trade name/IP addresses Goodwill Total
£000 £000 £000 £000 £000
Cost
As at 1 July 2022 2,530 6,148 137 2,336 11,151
Additions - 1,433 - - 1,433
Grant funding received - 130 - - 130
Foreign exchange movements (9) - - - (9)
As at 31 Dec 2022 2,521 7,711 137 2,336 12,705
Additions - 1,435 - - 1,435
Grant funding received - (277) - - (277)
Foreign exchange movements (20) - - - (20)
As at 30 June 2023 2,501 8,869 137 2,336 13,843
Additions - 1,333 103 - 1,436
Foreign exchange movements (11) - - - (11)
As at 31 Dec 2023 2,490 10,202 240 2,336 15,268
Accumulated Amortisation
Balance at 1 July 2022 (1,146) (2,278) (61) (968) (4,453)
Charge for the period (148) (738) (14) - (900)
Foreign exchange movements (5) - - - (5)
As at 31 Dec 2022 (1,299) (3,016) (75) (968) (5,358)
Charge for the period (197) (605) (13) - (815)
Foreign exchange movements 22 - - - 22
Grant income release 414 - - 414
As at 30 June 2023 (1,474) (3,207) (88) (968) (5,737)
Charge for the period (138) (733) (14) - (885)
Foreign exchange movements 9 - - - 9
Grant funding - 138 - - 138
As at 31 Dec 2023 (1,603) (3,802) (102) (968) (6,475)
N.B.V. 31 Dec 2023 887 6,401 138 1,368 8,793
N.B.V. 30 June 2023 1,027 5,662 49 1,368 8,106
N.B.V. 31 Dec 2022
1,222 4,695 62 1,368 7,347
During the period, IP addresses of £0.1m (H1 2023: £nil) were purchased and
held a carrying value of £0.1m (H1 2023: £nil) at the end of the period.
Note 8. Non-current assets - Property, plant and equipment
Computer Office Right of use Freehold Property
equipment Equipment and fixtures & fittings Total
£000 £000 £000 £000 £000
Cost
As at 1 July 2022 16,543 180 5,420 3,034 25,177
Additions 3,654 32 - - 3,686
Foreign exchange movement - - (169) - (169)
Stock transfers (48) - - - (48)
As at 31 December 2022 20,149 212 5,251 3,034 28,646
Additions 296 114 2,149 5 2,564
Foreign exchange movement 45 - 341 - 386
As at 30 June 2023 20,490 326 7,741 3,039 31,596
Additions 1,921 28 335 2 2,286
Disposals (12) - (608) - (620)
Foreign exchange movements - - (15) - (15)
As at 31 December 2023 22,399 354 7,453 3,041 33,247
Depreciation
As at 1 July 2022 (6,778) (48) (2,054) (27) (8,907)
Charge for the period (1,429) (23) (662) (35) (2,149)
Foreign exchange movement 29 - 218 - 247
As at 31 December 2022 (8,178) (71) (2,498) (62) (10,809)
Charge for the period (1,591) (26) (748) (36) (2,401)
Foreign exchange movement (59) - (374) - (433)
As at 30 June 2023 (9,828) (97) (3,620) (98) (13,643)
Charge for the period (1,619) (16) (703) (35) (2,373)
Foreign exchange movement - - 31 - 31
As at 31 December 2023 (11,447) (113) (4,292) (133) (15,985)
N.B.V. 31 December 2023 10,952 241 3,161 2,908 17,262
N.B.V. 30 June 2023 10,662 229 4,120 2,941 17,952
N.B.V. 31 December 2022 11,970 141 2,752 2,972 17,835
Of the total additions in the period of £2.29m, £0.1m (H1 2023: £3.69m)
relates to right-of-use assets held under IFRS16, which have a carrying value
of £1.70m (H1 2023: £2.75m). The remaining £0.2m of right of use additions
relates to assets purchased under asset financing agreements.
Note 9. Analysis of change in net debt
Cash and cash equivalents Bank loans Lease liabilities Total net debt
£000 £000 £000 £000
At 30 June 2022 10,160 (2,297) (3,583) 4,280
Cash and cash equivalents cash outflow (3,464) - - (3,464)
Proceeds from new leases under asset financing - - (1,358) (1,358)
Repayment of loans - 207 207
Lease repayments - - 848 848
At 31 December 2022 6,696 (2,090) (4,093) 513
Cash and cash equivalents cash outflow 1,133 - - 1,133
Repayment of loans - 276 - 276
Proceeds from new leases under asset financing (605) (605)
Lease additions - - (6) (6)
Lease repayments - - 6977 697
At 30 June 2023 7,829 (1,814) (4,007) 2,008
Cash and cash equivalents cash outflow (660) - - (660)
Lease additions - - (100) (100)
Proceeds from new leases under asset financing (229) (229)
Repayment of loans - 1,570 - 1,570
Lease repayments - - 997 997
At 31 December 2023 7,169 (244) (3,339) 3,586
During the period, the property loan was repaid in full with a repayment of
£1.57m.
Included within right of use lease liabilities is an asset financing facility
of £0.2m entered into during the period and £0.1m of leases held under
IFRS16 as right of use liabilities. The carrying value of asset financed
leases at the period end is £1.49m (H1 2023: £1.24m)
Note 10. Borrowings
31-Dec-23 31-Dec-22 30-Jun-23
£000 £000 £000
Current:
Right of Use Lease liabilities 2,068 1,778 1,960
Bank loans 244 1,844 1,814
Total current borrowings 2,312 3,622 3,774
Non-current:
Right of Use Lease liabilities 1,269 2,428 2,047
Bank loans - 247 -
Total non-current borrowings 1,269 2,675 2,047
Total borrowings 3,581 6,297 5,821
Note 11. Availability of announcement and Half Yearly Financial Report
Copies of this announcement are available on the Company's website,
www.beeksgroup.com. Copies of the Interim Report will be downloadable from the
Company's website and available from the registered office of the Company
shortly.
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