ANNUAL
APPROVED BY
THE BEEKS
FINANCIAL CLOUD
GROUP PLC
‘23
GLA
IN THIS ISSUE...
A COMPREHENSIVE REPORT ON
BEEKS GROUP ACTIVITIES AND
FINANCIAL STANDINGS
THROUGH TO YEAR END 2023
REPORT
Beeks FInancial Cloud Group plc 30 June 2023
Registered Company No. SC521839
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CONTENTS
FINANCIAL & OPERATIONAL HIGHLIGHTS
OUR COMPANY AT A GLANCE
CHAIRMAN’S STATEMENT
STRATEGIC REPORT
CHIEF EXECUTIVE’S REVIEW
FINANCIAL REVIEW
PRINCIPAL RISKS AND UNCERTAINTIES
BOARD OF DIRECTORS
DIRECTORS’ REPORT
REPORT ON REMUNERATION
CORPORATE GOVERNANCE
REPORT OF THE AUDIT COMMITTEE
INDEPENDENT AUDITORS REPORT (BEEKS FINANCIAL CLOUD GROUP plc)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED CASH FLOW STATEMENT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
COMPANY STATEMENT OF FINANCIAL POSITION
COMPANY STATEMENT OF CHANGES IN EQUITY
NOTES TO THE COMPANY FINANCIAL STATEMENTS
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BEEKS FINANCIAL CLOUD GROUP PLC
FINANCIAL AND OPERATIONAL HIGHLIGHTS
FOR THE YEAR ENDED 30 JUNE 2023
FINANCIAL AND
OPERATIONAL HIGHLIGHTS
P O W !
P O W !
P O W !
Revenues1
increased
Underlying2 EBITDA
increased
33%
33%
to £8.42m
(2022: £6.31m)
Underlying diluted
3.96p3.96p
EPS4
(2022: 4.19p)
GROSS PROFIT UP!
15%
15%
to £9.12m
(2022: £7.94m)
Underlying profit
before tax3
increased
22%
22%
to £22.36m
(2022: £18.29m)
Annualised
Committed
Monthly Recurring
Revenue
(ACMRR) up
23%
23%
to £23.8m
(2022: £19.3m) increasing
further to £25.0m by the end of
August 2023 following a strong
start to the new financial year
Net cash5 as at
30 June 2023 of
13%
13% £4.41m
£4.41m
to £2.33m
(2022: £2.06m)
(30 June 2022: £7.86m)
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.
4
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BEEKS FINANCIAL CLOUD GROUP PLC
FINANCIAL AND OPERATIONAL HIGHLIGHTS
FOR THE YEAR ENDED 30 JUNE 2023
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:
◊ Loss before tax was £0.65m (2022: Profit before tax
£0.07m)
◊ Basic (LPS)/EPS was (0.14p) (2022: EPS 1.43p)
OPERATIONAL HIGHLIGHTS
Continued customer base expansion and
growing pipeline:
◊ Continued customer base expansion and growing
pipeline. Johannesburg Stock Exchange (JSE) – the
largest stock exchange in Africa, signed a multi-year
contract for Exchange Cloud. The contract went live
during September 2023 with capacity now sold to JSE
customers and follow on opportunities advancing.
The Exchange Cloud pipeline continues to build
with advanced discussions taking place with major
exchanges across the globe, including additional proof
of concept implementations.
Continued product innovation:
◊ Major user interface refresh of the Beeks infrastructure
automation portal, allowing clients to tailor the user
experience for their own users.
◊ Re-architecture of the underlying server hosting
platform to improve the efficiency of The Group, driving
long-term cost benefits.
Investment in enhanced security:
◊ Completed stage 1 of industry-leading SOC 2 security
accreditation with a view to being SOC 2 compliant by
calendar year end.
◊ Launch of Beeks Security Operations, providing
end-to-end security detection and response
capabilities for our customers, through partnership
with cybersecurity service provider BlueVoyant.
Investment in inventory, team and sales
and marketing, to deliver on the growth
opportunity:
◊ Investment into inventory, ensuring The Group is
capable of delivering against all contracts either
signed or in the immediate pipeline.
◊ Implementation of new inventory management
system to streamline stock management and audit
compliance.
◊ Increased average headcount to 103 (2022: 89) to
support the product development roadmap.
◊ Increased brand awareness through attendance
at international industry conferences in Bangkok,
Chicago, Boca Raton and Paris.
OUTLOOK
◊ The Company continues to be supported by underlying
market trends, with the ongoing shift of the financial
services sector to cloud computing.
◊ Well positioned moving forward, with an established
reputation and a track record of sustained growth.
◊ Core focus on converting the record pipeline of
opportunities across The Group’s product offerings, in
particular the Exchange Cloud offering with a number
of contracts at an advanced stage.
◊ Exchange Cloud remains a potentially transformational
opportunity for Beeks, with significant traction with
both existing and new customers, including additional
proof of concept implementations, albeit contracts of
this size take time to convert.
◊ The Board is confident in achieving growth
acceleration and results for FY24 in line with its
expectations. Confidence underpinned by high levels
of contracted recurring revenue, a unique proposition
and growing international profile.
WITH AN ESTABLISHED REPUTATION AND A TRACK RECORD OF SUSTAINED GROWTH, WE ARE WELL-
POSITIONED TO CAPITALISE ON THE SHIFT OF THE FINANCIAL SERVICES SECTOR TO CLOUD COMPUTING
AND CONTINUE ON OUR GROWTH TRAJECTORY. THE DEALS SIGNED TO DATE AND OUR EXIT ACMRR MEAN
THE BOARD IS CONFIDENT IN ACHIEVING RESULTS FOR FY24 IN LINE WITH ITS EXPECTATIONS.
WE REMAIN FOCUSED ON CONVERTING OUR RECORD PIPELINE OF OPPORTUNITIES ACROSS OUR
PRODUCT OFFERINGS, AND IN PARTICULAR THE RECENTLY LAUNCHED EXCHANGE CLOUD OFFERING. THE
ADVANCED NATURE OF SEVERAL OF THESE DISCUSSIONS, INCLUDING ADDITIONAL PROOF OF CONCEPT
IMPLEMENTATIONS, PROVIDES CONFIDENCE IN OUR ABILITY TO PROVIDE GROWTH ACCELERATION IN FY24.
WITH HIGH LEVELS OF CONTRACTED, RECURRING REVENUE, A UNIQUE PROPOSITION AND GROWING
INTERNATIONAL PROFILE, WE LOOK TO THE FUTURE WITH CONTINUED CONFIDENCE.
Gordon McArthur, CEO
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BEEKS FINANCIAL CLOUD GROUP PLC
OUR COMPANY AT A GLANCE
FOR THE YEAR ENDED 30 JUNE 2023
OUR COMPANY
AT A GLANCE
WHAT WE DO
OFFICE LOCATIONS
Beeks Financial Cloud Group plc trades as Beeks Group
and has been the leading provider of managed cloud
compute, connectivity, and analytics in the global
financial sector since 2011. Beeks delivers low-latency,
private cloud solutions optimised exclusively for capital
markets and financial services.
◊ Renfrew, UK
◊ London, UK
◊ Tokyo, Japan
◊ Surabaya, Indonesia
The Group offers bare metal and virtual private servers,
in addition to connectivity, colocation and on-premise
solutions as well as comprehensive monitoring and
performance analytics.
Our cloud-based Infrastructure-as-a-Service (IaaS)
model gives organisations the flexibility and agility to
deploy and connect to a variety of exchanges, trading
venues and cloud service providers at a fraction of the
cost of building their own networks and infrastructure.
With sub-millisecond latencies, the Beeks infrastructure
greatly expedites the time taken from placing a trade to
its execution – a critical factor given the time sensitivity
demands of our customers. We have an established
infrastructure footprint of over 200 pre-built connections
to venues and exchanges across the globe.
Our IaaS services are entirely cloud based, with
our customers self-provisioning infrastructure and
connectivity in the key financial data centres with a
minimum 30-day customer commitment. Where possible,
we leverage automation to allow our clients the ability
to reduce complexity in deploying and managing IT
environments.
Based in the UK with an expanding network of global data
centres, Beeks supports international customers at scale
in leading financial hubs such as New York, London, Hong
Kong, Tokyo, Singapore and Australia, supported by our
24/7 Network Operations Centre (NOC).
DATA CENTRE LOCATIONS
◊ London, UK
◊ Frankfurt, Germany
◊ Amsterdam, Netherlands
◊ Paris, France
◊ Geneva, Switzerland
◊ Zurich, Switzerland
◊ Chicago, US
◊ New York, US
◊ Washington DC, US
◊ Hong Kong, China
◊ Tokyo, Japan
◊ Singapore
◊ Sydney, Australia
◊ Toronto, Canada
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BEEKS FINANCIAL CLOUD GROUP PLC
CHAIRMAN’S STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
CHAIRMAN’S
STATEMENT
It has been a year of further progress for Beeks, with The
Group growing the sales pipeline for its transformational
Exchange Cloud offering, while continuing to deliver
services across the globe. Revenues increased by 22% to
£22.4m, and underlying EBITDA by 33% to £8.4m. The Group
delivered an exit ACMRR of £23.8m, up 23% in the year,
providing a strong basis for continued growth in FY24.
The growth potential of the business is significant, typified
by the scale of the first two customers now secured for
Exchange Cloud, the largest stock exchange in Africa as
well as a division of Intercontinental Exchange (ICE), the
world’s largest exchange group and owner of the New
York Stock Exchange (NYSE). We remain in discussions with
a number of further major global exchanges, including
additional proof of concept implementations, with the
market opportunity remaining transformational. However,
that said, as previously flagged, deals of this magnitude
with organisations such as these will take longer to
progress through to signed contracts than Private and
Proximity Cloud deals, which continue to provide a
growing foundation for the business.
The funds raised early in 2022 have provided the
ability to invest into resources, ensuring the business
is appropriately configured to address the significant
market opportunity. During the period strong progress
has been made in the development of the Beeks offering,
the expansion of the team and the purchase of inventory
to deliver against all contracts either signed or in the
immediate pipeline. With these investments having been
made, and no immediate requirements to expand either
the team or stock held, the potential to expand the profit
margins of The Group upon delivery of further contracts is
considerable.
While the macroenvironment has continued to present
challenges to all businesses, particularly surrounding
supply chain issues and general inflationary pressures,
The Group has continued to trade resiliently amidst the
challenging backdrop, these aspects have been well
managed within Beeks, as reflected by the businesses’
continued healthy operating margins.
On behalf of the Board, I would like to express my
gratitude to our staff for their commitment and work ethic.
They have created offerings unique in the market while
delivering excellent customer service. We are fortunate to
have such a talented team and I have every confidence in
their ability to capitalise on the opportunity ahead.
With a unique compelling proposition and a growing list of
high profile customers, The Group is ideally positioned to
benefit from long-term trends towards cloud-computing
within the financial services sector. The Group’s strong
financial fundamentals: increasing Annualised Contracted
Monthly Recurring Revenue (ACMRR), sufficient cash
reserves for medium-term organic growth, low levels of
debt, a highly scalable business model and a record sales
pipeline, provide for high levels of optimism within the
business moving forward. The team is keenly focused on
the conversion of the sales pipeline, and the achievement
of greater operational leverage as these deals flow
through into revenues and profits.
Mark Cubitt, Chairman
29 September 2023
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IN A WORLD WHERE FINANCE IS ENVELOPED IN A SHADOW OF TECHNOLOGY UNCERTAINTY...
HOW CAN WE BREAK FREE
FROM THIS DARKNESS? THE
OPPORTUNITIES ARE THERE,
BUT THE TECHNOLOGY IS
HOLDING US BACK
IN THE HEART OF THIS FINANCIAL TURMOIL, AN
EXTREMELY INNOVATIVE TRADING COMMUNITY
EMERGES, READY TO FACE THE CHALLENGES.
BUT BEHOLD! BEEKS,
THE GUARDIAN OF
CAPITAL MARKETS,
RISES TO THE
OCCASION!
THE TECHNOLOGY REQUIREMENTS
GROW MORE COMPLEX EVERY
DAY, HINDERING PROGRESS
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FEAR NOT, FOR I BRING THE
POWER OF MANAGED CLOUD
SOLUTIONS TO ILLUMINATE THE
PATH TO SUCCESS!
BEEKS' SOLUTIONS PROVIDE
SCALABILITY, FLEXIBILITY, AND COST
EFFICIENCY TO THE ONCE-TROUBLED
FINANCIAL WORLD
UNLIKE THE GIANTS, BEEKS ADDRESSES THE
VITAL CONCERNS - SECURITY, REGULATORY
REQUIREMENTS, ULTRA-LOW LATENCY
PERFORMANCE, & ROBUST SYSTEM MONITORING
WITH BEEKS LEADING THE CHARGE, CAPITAL
MARKETS AND FINANCE BASK IN THE LIGHT OF
MANAGED CLOUD SOLUTIONS
THE DAWN OF A NEW ERA HAS BEGUN - WHERE
INNOVATION, SECURITY, AND EFFICIENCY REIGN
SUPREME. THANKS TO BEEKS’ MANAGED CLOUD
SOLUTIONS, FINANCE HAS A NEW HERO!
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TO BE CONTINUED...
TO BE CONTINUED...
BEEKS FINANCIAL CLOUD GROUP PLC
STRATEGIC OVERVIEW
FOR THE YEAR ENDED 30 JUNE 2023
STRATEGIC
REPORT
MARKET OVERVIEW
“Organisations today view cloud as a highly strategic
platform for digital transformation.”
Sid Nag, Research Vice President at Gartner
Growth in Cloud Adoption
We operate in a considerable, and growing, market. Cloud
computing is driving the next phase of digital business,
as organisations pursue disruption through emerging
technologies like generative artificial intelligence (AI) and
Web3.
The global cloud computing market size was valued at
USD 337.76 billion in 2022. It is projected to reach USD
1412.39 billion by 2031, growing at a CAGR of 17.23% during
the forecast period (2023–2031)1. Infrastructure-as-a-service
(IaaS) is forecast to experience the highest end-user
spending growth in 2023 at 30.9%2.
The finance industry has been increasingly adopting
cloud solutions due to their scalability, cost-efficiency,
and flexibility. Managed cloud providers have been a key
enabler of this trend, as we offer expertise in managing
complex financial systems on cloud infrastructure.
The finance sector faces strict regulatory requirements
and Beeks has spent over 12 years developing solutions
and services tailored to meet these requirements, which
makes us attractive to financial institutions seeking to
maintain compliance while leveraging the cloud. Data
security and privacy are paramount in finance. Beeks has
invested heavily in security measures and technologies to
protect financial data. As financial institutions continue to
migrate sensitive operations to the cloud, the demand for
secure managed cloud services is expected to grow.
Cost management remains a critical concern for finance
companies and Beeks offer tools and services to help
organisations optimise their cloud spending, which is
especially important as cloud costs can quickly spiral if
not managed effectively.
Beeks has developed industry-specific solutions for
finance, including trading platforms, asset management
systems, and regulatory reporting tools and these
specialised offerings are expected to drive demand in the
financial sector.
Many financial organisations are adopting hybrid and
multi-cloud strategies to balance the benefits of the
public cloud with the need for on-premises infrastructure.
Beeks primary Proximity Cloud and Exchange Cloud
products were built to facilitate the management and
integration of these complex environments. As financial
institutions expand their global footprint, they require
cloud solutions that can support operations in multiple
regions. With our global presence and pre-built rack
solutions that can be deployed anywhere in the world,
Beeks are well positioned to capture this market.
Selecting the right capital markets and financial services
managed cloud provider involves careful consideration of
an organisation’s specific requirements, including trading
strategies, regulatory obligations, and data management
needs. Beeks continues to play a crucial role in enabling
financial organisations to leverage the benefits of cloud
technology while navigating the complex landscape of
the financial industry.
Our addressable market is extensive with up to 21,000
banks and hundreds of global exchanges, a large
percentage of which maintain their own IT infrastructure
and are yet to move to the Cloud computing model.
Cloud’s scale, resiliency and continuous innovation mean
it will likely form a critical part of every future business and
technology roadmap. The Independent Software Vendors
(ISVs) market has witnessed significant growth due to the
adoption of cloud computing in addition to the surge in
automation and visualisation for business process.
With further predicted annual growth of 13.6%3 and a faster
lead to sale timescale, the financial ISV space is another
area of focus for the sales team in the next financial year.
Our innovations, enhanced product range, growing
number of Tier 1 customers, breadth of asset classes and
a clear focus in the rapidly growing independent software
vendor (ISV) space, position us well to benefit from the
increased appetite in the market for automated trading
and the evolution of Cloud adoption by financial services
organisations.
1 Source: Straits Research (August 2023)
2 Source: Gartner (April 2023)
3 Source: Market Research Future (September 2020)
BUSINESS MODEL
#PoweredbyBeeks
For over 12 years Beeks has honed its infrastructure
provision and cloud compute approach in direct response
to its customers’ needs and requirements.
Beeks’ mission is to deliver cloud-based low-latency
compute power; ensure maximum security; and
optimise performance in the exceedingly fast-moving
capital markets and finance sector. Beeks provide cloud
deployment for capital markets and financial enterprises
within our global backbone of key financial data centres
as well as on-premise, helping them formulate a cloud
strategy and replicate that in different regions.
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BEEKS FINANCIAL CLOUD GROUP PLC
STRATEGIC OVERVIEW
FOR THE YEAR ENDED 30 JUNE 2023
The Group’s on-demand offering continues to operate
successfully in an ambitious, time-sensitive industry and
is uniquely positioned to take advantage of the rapid
acceleration of Cloud deployment in the finance sector
as well as the growing need for analytics around those
infrastructure environments. These latency-sensitive
environments need to be built, connected, and analysed,
and Beeks is one of the few companies in the world that
can fulfil those requirements.
Our latest iteration of Proximity Cloud, a fully configured
and pre-installed physical trading environment
was derived from an identified demand from global
exchanges for a secure, multi-client private cloud
environment.
Explicitly designed for global financial exchanges and
electronic communication networks (ECNs), Exchange
Cloud is a multi-home version of Proximity Cloud. While
Proximity Cloud makes it easier to quickly deploy on
premise, Exchange Cloud takes it one step further by
introducing multi-home capabilities, essentially enabling
exchanges and ECNs to become the cloud.
Building on the successful launch of Exchange Cloud,
further improvements have been made to the offering in
the areas of network automation, reporting and reduced
installation times, further increasing Beeks’ lead over other
providers in offering an integrated infrastructure solution
for capital markets.
The continued development of our trading analytics
division complements our product offering to include
the required analytics around those cloud infrastructure
environments. Two major releases of the Beeks Analytics
product provide significant benefits to our clients
including a new flexible dashboard user experience with
the introduction of Grafana as our graphical user interface
(GUI) of choice. These releases also enabled easier
integration points for clients to use the power of Beeks
Analytics within their own applications.
The setup experience for Beeks Analytics has been
reimagined from the ground up, allowing the product to
reach new users who don’t have the time or resources for
more complicated configuration tasks.
Beeks provides:
◊ Dedicated bare metal and virtual servers that host
capital markets and financial services organisations in
key financial data centres around the world
◊ Ultra-low latency connectivity between customers and
key financial venues and exchanges
◊ Colocation for customers to position their own
computing power in our space, benefitting from our
proximity to financial hubs
◊ In-house security software to protect client
infrastructure from cyber attacks
◊ The management of hybrid cloud deployments for
customers wishing to combine the Beeks IaaS with the
public cloud hyperscalers
◊ Our model focuses on efficiency and flexibility, offering
our customers the ability to scale up and scale
down as needed. Due to market fluctuations and the
inherent risk involved in algorithmic trading, this makes
our services highly desirable
◊ Beeks has a unique self-service customer portal that
facilitates the same-day deployment of a host of
services allowing customers to manage their own
servers
◊ Beeks Analytics offers comprehensive monitoring and
performance analysis to allow users to independently
track and analyse real-time performance of every
single price, quote or trade traversing business critical
processes.
STRATEGY
Our purpose is to provide a global rapid deployment
service using secure and scalable environments, both
public and private, which are easy to consume for small,
medium and large financial enterprises.
Our vision is to empower our clients to work with speed
and agility.
Our main strategic priority is to continue to grow our
customer base both for public, private and secure
cloud deployment as well as complementary analytics
solutions.
To satisfy existing demand and attract new customers, we
will continue along our product development roadmap
to develop and improve innovative new products such
as Proximity and Exchange Cloud. We also continue to
plan to selectively expand into new asset classes and
geographies, encouraged by the significant opportunities
we have identified.
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BEEKS FINANCIAL CLOUD GROUP PLC
STRATEGIC OVERVIEW
FOR THE YEAR ENDED 30 JUNE 2023
STRATEGIC REPORT -
CHIEF EXECUTIVE’S REVIEW
CHIEF EXECUTIVE’S REVIEW
FY23 was another year of progress, in which we secured
landmark customers across our Exchange Cloud and
private cloud offerings while raising our profile across
the global financial services industry. While the timing
of contract signatures and delivery means the financial
performance was at the lower end of our original
expectations, we are continuing to grow at pace, reporting
significantly increased metrics against the prior period.
The size of deals within our sales pipelines and our
position as sole vendor within these negotiations places
us in a position of strength. Following the launches of
Proximity and Exchange Cloud, we have now an expanded
product set, serving a wider pool of potential customers,
including the world’s largest exchanges. Exchange Cloud,
launched in June 2022, is explicitly designed for global
financial exchanges and electronic communication
networks. The response by the market has been extremely
positive and we believe it has the potential to be
transformative for Beeks, with no comparable offering on
the market.
We have received notable early endorsements of
Exchange Cloud, securing our first two customers, ICE
Global Network, a division of Intercontinental Exchange,
the world’s largest exchange group, and Johannesburg
Stock Exchange (JSE), the largest stock exchange in Africa.
We were delighted to take the JSE live in September 2023,
and highlighting the speed with which these significant
implementations can launch once contracts are signed,
underpinning our FY24 performance. Feedback received
from Exchange Cloud customers has been extremely
positive, and both contracts signed to date have the
ability for considerable expansion moving forwards.
We remain in talks with a number of major exchanges
globally, including additional proof of concept
implementations, and while the lead times on deals can
take time, as previously disclosed, we remain confident in
our ability to convert them. The prior investments we have
made into fixed inventory means we have the capability
to deliver deals rapidly, once secured.
We similarly have a strong pipeline across our Proximity
Cloud offering, launched in August 2021. We secured
notable private cloud and Exchange Cloud wins and this
has continued post period end into FY24. Our Proximity
Cloud and Exchange Cloud pipeline are at record levels
and there are multiple contracts in final stages of
negotiations. We are encouraged by a building number
of leads and are providing confidence in securing further
deals in FY24.
Confidence levels are high moving into FY24, with the
size of deals within our sales pipelines as well as our
position as a sole vendor within negotiations underpinning
optimism and placing us in a position of strength during
the current period, such that the Board is confident in
achieving results for FY24 in line with its expectations.
Financial performance
Revenue in the period grew by 22% to £22.4m (2022:
£18.3m), resulting in an increase in underlying EBITDA of
33% to £8.4m (2022: £6.3m). Beeks continues to have a
strong recurring revenue profile, with 91% of revenue in
the year recurring (2022: 76%) and customer retention
remained within target. Our percentage of recurring
revenue can change year-on-year depending on the mix
of private/public and Proximity/Exchange Cloud sales,
given the upfront revenue recognition associated with
Proximity and Exchange Cloud contracts. Our ACMRR grew
23% to £23.8m at 30 June 2023 (2022: £19.3m).
Revenue growth in FY23 was largely due to continued
momentum across our private cloud offering. Whilst we
have not recognised any new revenue from Exchange
Cloud during the year, the recently deployed JSE
contract has given us a strong start into FY24, which we
expect to be further enhanced by our strong Proximity
and Exchange Cloud pipeline. Operating margins have
reduced in the year due to prior year investment but
these are expected to increase as we move into FY24 and
convert the considerable pipeline of opportunities ahead.
Operational Expansion
We invested in the expansion of our team during the
year, in order to capitalise on the considerable market
opportunity ahead. The main priority when expanding the
team was to build out the software development team
division, to support the roll out and evolution of Exchange
Cloud. Investment in this area was largely complete in H1,
with the average headcount during the year increasing to
103 from 89 as at 30 June 2023.
Investment made into inventory during FY23 ensures
we are appropriately configured to deliver against all
contracts, including those which are signed already
and those which are in the immediate pipeline. It
is pleasing to have the capability to deliver deals
quickly once secured, with significant investment
into inventory serving as a sign of confidence in the
conversion of our pipeline. The implementation of a new
inventory management system to streamline our stock
management and audit compliance was introduced in
FY23, driving internal efficiencies.
In May, we were delighted that OneChronos, a U.S. equities
Alternative Trading System (ATS), selected Beeks to power
high performance compute and private environment
of their new ATS, standing out as the strongest provider
over Beeks’ direct competitors. The collaboration is
an endorsement of Beeks’ value in delivering global,
rapid deployment solutions using secure and scalable
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BEEKS FINANCIAL CLOUD GROUP PLC
STRATEGIC OVERVIEW
FOR THE YEAR ENDED 30 JUNE 2023
environments, with the flexibility of no long-term contracts
or commitments. Off the back of a volatile year for equities
in 2022, OneChronos have seen substantial success on
their value proposition delivery since selecting Beeks to
enhance their Smart Market Technology, in particular by
meeting the ever-growing need for on-demand compute.
Adjustments to Beeks’ infrastructure automation portal
have been made in FY23, which will drive improved
efficiencies across The Group as a result of long-term
cost benefits. The changes have been well-received, with
the major user interface refresh allowing Proximity and
Exchange Cloud customers to tailor the user experience
for their own users.
The business has continued to show resilience in the face
of inflationary pressures and supply chain disruption
during the year. Appropriate price increases have been
passed on to customers and we are pleased to see an
improving picture with regards to supply chain disruption.
We have continued to increase our data centre
presence in the year with a focus on existing locations.
We will continue with our approach of expanding into
areas where we already have customer demand. The
Beeks brand continues to grow its presence globally,
and we were pleased to attend international industry
conferences in Bangkok, Chicago, Boca Raton and Paris
during the year, showcasing the value of our offering to
new audiences.
Product roadmap
We have continued to streamline our products and
enhance them including a focus on the investment into
the security of our products during the year.
Throughout the year we focused on security automation
where possible, this included the deployment of
vulnerability scanning, patch management, malware
protection and secure configuration technology.
The enhancements have strengthened the security
of our Proximity/Exchange Cloud offering to provide
customers with the confidence and assurance that their
infrastructure is secure. Furthermore, the investments
we continue to make show the commitment to align
our products to industry leading information security
certifications and standards including (but not limited to)
GDPR, ISO/IEC 27001, NIST CSF, and CIS.
We have a fully funded product roadmap that extends
out for the next few years and see significant opportunity
through investing resources in our two major product
lines: our Private Cloud and our Proximity/Exchange
Cloud offerings.
We have continued to streamline our products and
enhance them, with a focus on the investment into
the security of our products during the year. The most
significant being a new strategic partnership with
‘BlueVoyant’, a Managed Security Services Provider
(MSSP). BlueVoyant provide Beeks with Managed
Extended Detection & Response (MXDR) services
underpinned by their 24x7 Security Operations Centre
(SOC) based in New York. The MXDR service has been
fully integrated into our Proximity/Exchange Cloud
offering which provides end-to-end security detection
and response capabilities for our customers.
Sales and Marketing
Our central marketing strategy continues to revolve
around inbound marketing, with our ongoing efforts to
expand global brand awareness serving as a driving force
behind our sales and marketing initiatives this year.
After the pandemic, our emphasis shifted towards
in-person events and investing in prominent industry
event booths, specifically targeting the global institutional
market at JSE Trade Connect, FIA Boca and TradeTech
Paris, as well as the retail market at iFX Expo Bangkok.
Furthermore, senior managers and representatives
from our sales team participated in key industry events,
including AWS Re-Invent, Security Traders Association
Chicago, FIA London Tech and FIA IDX London.
We extended our STAC membership and successfully
secured professional memberships with both the
FIA and FISD, bolstering our industry presence and
reputation. STAC plays a crucial role in supporting our
product team by facilitating a deeper comprehension
of customer preferences, competitive landscape,
collaborative opportunities, and the assessment of our
company’s offerings.
FIA stands as the foremost global trade organization
for futures, options, and centrally cleared derivatives
markets, with a significant focus on the Americas market.
Meanwhile, FISD serves as the preferred global forum for
essential stakeholders in the value chain, encompassing
consumer firms, third-party entities, and data providers.
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.
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BEEKS FINANCIAL CLOUD GROUP PLC
STRATEGIC OVERVIEW
FOR THE YEAR ENDED 30 JUNE 2023
Customers
We are witnessing substantial growth in the range of
customers we serve, as Beeks now provides support
to 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)
Significant new customers secured in the year include:
◊ Two Exchange Cloud customers, described above (JSE
and ICE), both with further expansion potential.
◊ The JSE contract went live in September 2023, with
all units pre-sold to JSE customers with contract
extension discussions underway.
◊ Two multi-year Private Cloud contracts with global
Asset Management firms, worth $2 million in
aggregate over three years, for deployments across
US, APAC and EMEA.
Post year-end we have seen further momentum, securing
Private Cloud contracts in July with a total contract value
of over $4 million, including a significant win via a partner
with one of the UK’s largest banks.
Future Growth and Outlook
With an established reputation and a track record of
sustained growth, we are well-positioned to capitalise
on the shift of the financial services sector to cloud
computing and continue on our growth trajectory.
The deals signed to date and our exit ACMRR mean the
Board is confident in achieving results for FY24 in line with
its expectations.
We remain focused on converting the pipeline of
opportunities across all of our product offerings, and in
particular the recently launched Exchange Cloud offering.
The advanced nature of several of these discussions
provides confidence in our ability to would provide growth
acceleration in FY24.
With high levels of contracted, recurring revenue, a unique
proposition and growing international profile, we look to
the future with continued confidence.
Gordon McArthur
CEO
29 September 2023
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BEEKS FINANCIAL CLOUD GROUP PLC
STRATEGIC OVERVIEW
FOR THE YEAR ENDED 30 JUNE 2023
STRATEGIC REPORT -
FINANCIAL REVIEW
KEY PERFORMANCE INDICATOR REVIEW
Revenue1 (£m)
ACMRR (£m)
Gross Profit (£m)
Gross Profit margin2
Underlying EBITDA3 (£m)
Underlying EBITDA margin4
Underlying Profit before tax5 (£m)
Underlying Profit before tax margin6
(Loss)/Profit before tax (£m)
Underlying EPS7 (pence)
FY23
£22.36
£23.80
£9.12
40.8%
£8.42
37.7%
£2.32
10.4%
(£0.65)
£4.31
FY22
£18.29
£19.30
£7.94
43.4%
£6.31
34.5%
£2.06
11.3%
£0.07
£4.49
GROWTH
22%
23%
15%
(2.6%)
33%
9.3%
13%
(0.9%)
(1,029%)
(4%)
1Revenue excludes grant income and rental income
2Gross profit margin is statutory gross profit divided by revenue
3Underlying 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
4Underlying EBITDA margin is defined as underlying EBITDA divided by revenue
5Underlying 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
6Underlying profit before tax margin is defined as Underlying Profit before tax divided by Revenue
7Underlying 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
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BEEKS FINANCIAL CLOUD GROUP PLC
STRATEGIC OVERVIEW
FOR THE YEAR ENDED 30 JUNE 2023
costs, has increased by 33%. Most of our headcount
increase has been to support future product and sales
growth with a relatively small increase in support staff
given our automation and self-service strategy. We have
largely completed our recruitment drive and anticipate
incremental headcount increases moving forward
as deals are converted and we look to deliver better
operating margins.
UNDERLYING EBITDA
Earnings before interest, tax, depreciation, amortisation
and exceptional non-recurring costs (“Underlying EBITDA”)
increased by 33% to £8.42m (2022: £6.31m). 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 £2.32m (2021:
£2.06m) as a result of the changes in the key financial
metrics discussed above.
Statutory Profit before tax decreased to a loss of £0.65m
(2022: profit of £0.07m). The other reconciling differences
are shown on the table opposite
REVENUE
FY23 was another good year in terms of revenue growth.
Group revenues grew by 22% to £22.36m (2021: £18.29m)
driven mainly by our core private cloud offering across
both existing and new customers. Refer to note 3 for
a further breakdown of The Group’s revenues. 91% of
revenues (2022: 76%) were recurring with Tier 1 customers
now representing 45% of delivered revenue (2022: 35%).
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 good year of growth in contracted recurring
revenue as represented by our ACMRR growth of 23% to
£23.8m which increased further to £25.0m by the end of
August following a strong start to the year.
GROSS PROFIT
Statutory gross profit earned increased 15% to £9.12m
(2022: £7.94m), with gross margin reduced due to
increased depreciation and amortisation charges
following the investment made during FY23 into both
Exchange Cloud and across our global asset base.
The investment in both Proximity Cloud and Exchange
Cloud including Analytics during the year has incurred
internal gross capitalised development costs of £2.87m
(2022: £2.59m) in line with the additions to the software
development team made during the year.
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.
UNDERLYING
ADMINISTRATIVE EXPENSES
Underlying administrative expenses, which are defined
as administrative expenses less share-based payments
and non-recurring costs, have increased by £1.08m from
£5.94m to £7.02m primarily as a result of headcount
increases within our software development and
engineering functions. We had an average headcount of
103 throughout the year (2022: 89) therefore gross staff
costs have increased by 23%, from £5.64m to £6.91m.
Given a high proportion of recruitment has been to
support our Proximity and Exchange Cloud development,
some of these costs are capitalised. Net staff costs, which
is defined as total staff costs less capitalised development
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BEEKS FINANCIAL CLOUD GROUP PLC
STRATEGIC OVERVIEW
FOR THE YEAR ENDED 30 JUNE 2023
YEAR ENDED 30
JUNE 2023
YEAR ENDED 30
JUNE 2022
£'000
£'000
Statutory (Loss) / Profit Before Tax
(650)
66
Add back:
Share-based payments
2,291
1,661
Other non-recurring costs*
136
28
Amortisation of acquired intangibles
489
802
Exchange rate losses on intercompany translation and
unrealised currencies
325
-
Deduct:
Grant income
(267)
(419)
Exchange rate gains on intercompany translation
-
(81)
Underlying Profit before tax for the year
2,324
2,057
EBITDA**
Deduct:
Grant Income
Exchange rate losses/(gains) on intercompany translation
Underlying EBITDA
YEAR ENDED 30
JUNE 2023
YEAR ENDED 30
JUNE 2022
£'000
8,362
(267)
325
8,420
£'000
6,811
(419)
(81)
6,311
*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, acquisition transition costs
and Covid-19 related expenditure. All of these costs are not expected to recur and are therefore disclosed separately to
trading results.
**EBITDA is defined as earnings before depreciation, amortisation, acquisition costs, share-based payments and
non-recurring costs
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BEEKS FINANCIAL CLOUD GROUP PLC
STRATEGIC OVERVIEW
FOR THE YEAR ENDED 30 JUNE 2023
TAXATION
The effective tax rate (‘ETR’) for the period was (73.46%),
(2022: -1,151.51%).
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 decreased 4.00% to
4.31p (2022: 4.49p). Underlying diluted earnings per
share decreased to 3.96p (2022: 4.19p). The decrease in
underlying EPS is largely as a result of the increased group
share capital following the equity raise in April-22 given
the increased underlying profitability and higher tax credit
in FY23. See note 24 for further details.
Basic loss per share decreased to 0.14p (2022: earnings
per share of 1.43p). The decrease in basic EPS is as a result
of the statutory loss in the period as well as the additional
share capital in FY23 following last year’s equity raise.
Diluted loss per share has also decreased to 0.13p (2022:
earnings per share 1.35p).
STATEMENT OF FINANCIAL
POSITION AND CASH FLOWS
The statement of financial position shows an increase in
total assets to £47.44m (2022: £44.75m) with operating
cash flows during the year increased by 34% to £9.01m
(2022: £6.70m). The equity raise in FY22 provided us with
the ability to further enhance our core products, most
notably in Proximity and Exchange Cloud whilst also
funding additional working capital including advanced
purchases of IT rack capacity, computer servers and
other associated hardware. Our strategy is always to
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 to
satisfy the growing pipeline demand for the year ahead.
Investment in property, plant and equipment, hardware
and infrastructure was again significant with £4.1m (2022:
£5.2m) 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 almost
£2m in IT infrastructure which will cover a significant
amount of FY24 sales pipeline. As global supply chain
issues ease, we will not require these levels of stock which
should assist working capital requirements going forward.
During the year we took on additional borrowings via
asset finance of £2.0m in order to preserve cash. We
repaid debt of £0.5m against our borrowing facilities. Our
net cash at the end of the year is £4.4m (30 June 2022:
net cash £7.9m) and gross borrowings at £3.4m remain
at 0.4x Underlying EBITDA of £8.4m 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 2023 net assets were £32.8m compared to net
assets of £30.8m at 30 June 2022.
Fraser
McDonald
Chief Financial
Officer
29 September
2023
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BEEKS FINANCIAL CLOUD GROUP PLC
STRATEGIC OVERVIEW
FOR THE YEAR ENDED 30 JUNE 2023
STRATEGIC REPORT - PRINCIPAL
RISKS AND UNCERTAINTIES
BOARD
composition analysis identifying insecure code and
vulnerable open-source libraries.
Risk identification and management continues to be a key
role for the Board. The Board has overall responsibility for
The Group’s risk management, processes and reporting.
Risk management processes and internal control
procedures are the ultimate responsibility of the Board.
◊ Continued enhancements to DDoS protection
infrastructure, mitigating against larger traffic volumes
and identification of new attack techniques.
◊ Extensive penetration testing of our infrastructure and
products carried out by a trusted 3rd party provider.
AUDIT COMMITTEE
The Audit Committee has responsibility for assessing
and challenging the robustness of the internal control
environment. It directs and reviews management
and Group finance reports on internal control and risk
management throughout the year and reports the
principal risks to the Board.
RISKS RELATING TO BEEKS
AND ITS BUSINESS
The below risks have been identified by the Board as
the principal risks that The Group face. These risks are
reviewed on an ongoing basis and updated at each
reporting period. Upon review of principal risks in the
current financial year, The Group determined that whilst
the following areas remained risks to the business, they
were no longer classed as principal risks –volatility in
energy prices and supply chain.
a. Cyber Risk
◊ An information security breach or cyber-attack
resulting in loss or theft of data, content or intellectual
property could affect service to our clients and cause
reputational damage. Due to the nature of our services
for clients in financial services, the most significant
threats come from supply chain attacks, ransomware,
and Distributed Denial of Service (DDoS). As a result,
the board have appointed a Chief Information
Security Officer (CISO), accountable for key controls
and mitigating factors. These include a new strategic
partnership with BlueVoyant to provide 24x7 Managed
Extended Detection and Response (MXDR) and
incident response services underpinned by their
Security Operations Centre (SOC).
◊ Investment and implementation of new layered
security defences including; Identity and access
management, cloud access security broker (CASB),
email security, vulnerability scanning, automated
patching, and next generation endpoint detection and
response (EDR) software.
◊ Secure software development lifecycle (SDLC)
improvements through static code and software
◊ Security culture and awareness enhancements
through training and phishing simulations.
◊ Maintained our certifications and alignment to
GDPR, ISO/IEC 27001, NIST CSF and CIS. Furthermore,
enhancing our security assurance by progressing
towards the SOC2 attestation.
b. Key systems failure, disruption and
interruption
Any degradation or interruption to Beeks systems and
services exposes The Group to risk in its position as a
Cloud hosting provider to the financial sector. This could
result in a lack of confidence in The Group’s products, with
a consequential material adverse effect on The Group’s
business, financial condition, prospects and operations.
Many of the vulnerabilities are not in Beeks’ control, such
as:
◊ Loss of data centre facilities such as power
◊ Interruption to telecommunication or other third party
services
◊ Natural disasters
◊ Operating system issues, software failures or viruses
◊ Acts of war or terrorism
The technical teams and management at Beeks make
operational stability and performance the highest priority
and as a result, regular continuous improvement to
systems and process are made. Examples that assist in
mitigation of the risks are:
◊ Program of work to standardise operating systems on
network and server infrastructure
◊ Introduction of improved monitoring tailored to our
systems, services and client base
◊ Upgrade and enhancement of network infrastructure
to improve stability and resilience
◊ Consultation for a deep dive review of IT Infrastructure
and Security
◊ Board Level focus on these risks and mitigations with
follow-up actions identified and reported against
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BEEKS FINANCIAL CLOUD GROUP PLC
STRATEGIC OVERVIEW
FOR THE YEAR ENDED 30 JUNE 2023
c. Actions of third parties and suppliers
Any disruption to Beeks relationship with third-party
suppliers such as Datacentres, internet providers and
trading venues could be detrimental to the future
business, operating results and/or profitability of The
Group. This risk is being mitigated by:
◊ Implementing a thorough supplier on boarding
procedure to ensure suppliers are fit for purpose
and have in place appropriate practices and
accreditations to mitigate risk
◊ Engaging with our suppliers on a regular basis to
ensure healthy ongoing relationship and to identify
and resolve any potential issues
◊ Cybersecurity monitoring of key supply chain and own
external network
◊ Larger suppliers have been replaced with smaller
more dynamic vendors better suited to our business
model. This reduces the risk of supply chain and
service affecting issues by forging closer relationships
and better understanding of our requirements and
working practices
◊ The Group relies on, inter alia the internet and
broadband internet access and the development and
maintenance of internet and telecommunications
infrastructure by third parties
The delivery of The Group’s products and services
depends on third party telecommunications and internet
service providers to continue to expand high-speed
internet access, to maintain reliable and efficient networks
with the necessary speeds, quality of service, capacity
and security. Deterioration in the infrastructure may
adversely affect the ability or willingness of clients to use
The Group’s services. In addition, increasing traffic, user
numbers or bandwidth requirements may result in a
decline in internet or telecommunications performance
and/or internet or telecommunications reliability may
decline. Internet or telecommunications outages,
intermittent disruptions or delays could adversely affect
The Group’s ability to provide services to its clients. All of
these factors are out of The Group’s control.
This risk is being mitigated by:
◊ Beeks have continued to increase the total available
telecommunications bandwidth globally and
introduce additional telecommunications and internet
providers to mitigate the risk of a degraded service
from one or more providers.
ensuring that the appropriate levels of resource are
in place to maintain quality remains as the highest
operational risk. This risk is managed by having a
core of highly skilled permanent staff along with a
pool of temporary staff that can be brought in at
short notice to help at times of high volume. We
continue to supplement these resources by engaging
international businesses to operate within our
technology platform, giving us further variable cost
capacity. The use of technology helps mitigate this
risk by streamlining processes as much as possible
and enabling efficient access to a large, global and
scalable pool of independent contractors
SECTION 172(1) STATEMENT
The Directors consider, both individually and collectively,
that they have taken decisions in a manner they consider,
in good faith, would be most likely to promote the
success of The Group for the benefit of its shareholders,
having regard to the matters set out in s172(1)(a-f) of the
Companies Act 2006. This is detailed in the Corporate
Governance Report on pages 32 to 40 and below:
a. The likely consequences of any decision in the
long-term: the long-term success of The Group is
always a key factor when making strategic decisions.
b. The interests of The Group’s employees: Our
employees are at the core of our success and we
continue our ongoing commitment to enhance their
wellbeing and development, which remains at the
heart of our strategy for success. Within the past
year, we have launched a number of additional
benefits for our employees’ health and well-
being such as providing access to the head office
gymnasium including free personal training, sport or
relaxation massages and yoga classes. We have also
significantly improved our Group Pension Scheme
as well as increasing the level of private medical
cover to all staff to include dental care. As part of our
commitment to both our employee experience and
sustainability, we recently introduced our own Electric
Vehicle (EV) Scheme where our employees can benefit
from saving up to 60% on a new electric car along
with free charging facilities at our Head office. Share
ownership remains at the heart of our reward strategy
with all employees eligible to participate in our Long-
term Incentive Programme (LTIP) following a period of
continuous employment. This not only aids employee
retention but also enables us to attract the best local
talent.
d. Other Operational risks
◊ Management of unexpected peaks or troughs in client
demand for delivery of Beeks systems services and
c. The need to foster business relationships with
suppliers, customers, innovators and others; The Group
regularly meets with key suppliers and customers to
20
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BEEKS FINANCIAL CLOUD GROUP PLC
STRATEGIC OVERVIEW
FOR THE YEAR ENDED 30 JUNE 2023
The strategic report on pages 10 to 22 has been
approved by the board and signed on its behalf by:
Gordon McArthur, CEO
29 September 2023
review operations and explore mutually beneficial
future actions. During the year The Group participated
in an FX Expo event in Bangkok as well as institutional
industry events; FIA Chicago, AWS Las Vegas, Security
Traders Association in Chicago, JSE Trade Connect in
Johannesburg, FISD London Tech Forum, FIA Boca in
Florida and Trade Tech Paris. Senior staff from Product
Development, Operations and Sales met with key
industry thought leaders, customers and prospective
customers to help engage in conversations on their
cloud computing strategies and future developments.
The CEO and COO continue to engage with a number
of key strategic partners to ensure we monitor the
quality of our suppliers to optimise operational
efficiency, ensure we receive the best level of service
and continue to contract on favourable terms to
support the business. For more details on how The
Group engages with suppliers, see the Directors’
Report on page 26.
d. The impact of The Group’s operations on the
community and the environment: the impact on both
the community and the environment is factored into
The Group’s decision making process. During the year
The Group helped both local and international projects
in sponsoring a local and African football team.
e. The Board engages with shareholders throughout the
year through the annual and half year results, trading
updates, regulatory news service announcements,
the Annual General Meeting, the investor roadshows
and the investor pages on the Beeks Group website.
The Board receives detailed feedback reports via
our various advisors, on views of shareholders and
covering analysts. Throughout the year the Board
have maintained open and effective engagement
with shareholders and investors on key topics such
as strategy, environmental, social and governance
(“ESG”) and business performance. During the year
management met with existing and prospective
shareholders at half year and full year results.
f. The Group’s reputation for high standards of business
conduct: integrity, both personally and professionally,
is embedded in The Group’s culture and is led by
example by the Directors. The need to act fairly
between members of The Group: no single set of
stakeholders is prioritised over other stakeholders and
all decisions are made trying to be equitable to all
members.
The Board held 11 board meetings in the year to address
and meet its obligations under Section 172 of the
Companies Act 2006. The following table covers the key
decisions made during the year and the stakeholder
group(s) impacted by these decisions.
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BEEKS FINANCIAL CLOUD GROUP PLC
STRATEGIC OVERVIEW
FOR THE YEAR ENDED 30 JUNE 2023
KEY IMPACT
KEY DECISION MADE
KEY
STAKEHOLDER
GROUP’S
IMPACTED
Long-term
Strategy and
Acquisitions
Each year, the Board approves the budget of The Group and reviews The
Group’s strategy and growth plans. The Board considers mergers and
acquisitions as part of the long-term growth strategy and continually
reviews the market for opportunities.
Shareholders,
Employees,
Customers,
Suppliers
Shareholders,
Employees,
Customers,
Suppliers,
Environment
Shareholders,
Employees,
Customers,
Suppliers,
Environment
Performance
of The Group
including
Financial
Performance
The Board discussed the significant opportunity within the Exchange
Cloud pipeline whilst acknowledging the elongated sales cycle due to
the size and complexity of these organisations.
On a monthly basis, the Board reviews the trading performance of The
Group with detailed Board reports provided by the CFO covering trading
in the month and year to date, with performance monitored against
internal budget, external market forecast and the previous financial year.
At each Board meeting, the Board also receives detailed Board reports
covering commercial, operational, security, product development
and HR matters prepared by senior managers of the business. These
reports cover sales and forecast pipeline, customers and suppliers, data
centre activity and various aspects of operational performance and key
employee activities.
The Board reviewed The Group’s cash position and working capital
requirements during the year before proceeding with additional asset
financing in order to preserve cash. The Board acknowledged the need to
focus on profitability and cash growth in the coming year.
The Board discussed the implications of the revenue recognition of
Exchange Cloud when discussing contract nuances such as hardware
ownership term and break clauses.
Governance,
Regulatory
Requirements
and Risk
The Board reviews and approves the results announcements and trading
updates, the half year report and annual report and the AGM statement.
The Board receives regular briefings from the Chief Executive Officer and
Chief Financial Officer and the Operations board members.
The Board takes regulatory responsibilities seriously and is committed
to ensuring that it is open and transparent with regulators. In the current
year, the Board met with our nominated adviser to obtain an update
on changes to AIM rules and market abuse regulations to ensure Beeks’
compliance with requirements.
In the current year, the Board has received updates on the internal
control framework and The Group risk register and the continued
compliance with the ISO27001 accreditation.
Risk control documents are presented at Board meetings on The
Group’s key risks which include an updated assessment of controls and
improvement actions required in respect of each major risk.
During the year the board discussed at length the cyber security threats
and the associated risk mitigation strategies. The board agreed to invest
into establishing a 24/7 Security Operations Centre (SOC) in New York.
As noted in the Chief Executive Officer’s review on page 12, Principal Risks
and Uncertainties on page 19 and the Corporate Governance Report on
page 32, the Board has formally considered the risk mitigating measures
as a result of global supply chain issues through the use of alternative
suppliers and third party carriers to minimise potential impact.
22
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BEEKS IS YOUR
BEEKS IS YOUR
SUPERHERO IN THE
SUPERHERO IN THE
FINANCIAL CLOUD WORLD
FINANCIAL CLOUD WORLD
THE IRON-CLAD GUARDIAN OF DATA,
KEEPS ITS DEFENCES RAZOR-SHARP!
SW I F T A S A B O LT, B E E K S B L A Z E S T H RO U G H
W I T H L I G H T N I N G S PE E D LO W L AT E N CY,
LEAV I N G C O M PE T I TOR S I N T H E I R WA K E !
B E E K S A N A L Y T I C S M A S T E R S
P E R F O R M A N C E A N A L Y T I C S F O R
F I N A N C I A L M A R K E T S W I T H
I N S I G H T ,
E N S U R I N G P R E C I S I O N T R A D I N G !
W A K A N D A - L E V E L
S U P E R C H A R G E D B Y G L O B A L C O N N E C T I V I T Y,
B E E K S O F F E R S C O L O C A T I O N S E R V I C E S
T H A T S O A R A N Y W H E R E
I N T H E W O R L D !
bbb
BEEKS: WHERE SPEED,
SECURITY, GLOBAL CONNECTIVITY,
ANALYTICS, AND CUTTING-EDGE
TECHNOLOGY UNITE!
BEEKS TECH, THE SILENT GUARDIAN
OF CUTTING-EDGE INNOVATION,
HARNESSES TECH BRILLIANCE ENSURING
A GOTHAM CITY-LEVEL EDGE!
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BEEKS FINANCIAL CLOUD GROUP PLC
BOARD OF DIRECTORS
FOR THE YEAR ENDED 30 JUNE 2023
BOARD OF
DIRECTORS
MARKMARKMARK
CUBITT
NON-EXECUTIVE
CHAIRMAN
AGE 60
GORDON
GORDON
GORDON
MCARTHUR
CHIEF EXECUTIVE
OFFICER
AGE 47
Mark has extensive multinational experience gained over the last 35 years,
including 24 years in the plc environment and eight years as Chief Financial
Officer at Wolfson Microelectronics plc until its sale to Cirrus Logic in August
2014. Mark is currently Non-executive Chairman of AIM listed Concurrent
Technologies plc. Previously Mark was Non-executive Chairman of Superglass
Holdings plc and was part of the team that turned around the business before
its sale in 2016. He also served as VP of finance at Jacobs Engineering and
was Finance Director of Babtie Group until the sale of the company to Jacobs
Engineering in 2004. During his time at Jacobs, he also sat on the board of
highways maintenance firm BEAR Scotland and was its chairman in 2006. Mark
has also worked at Denholm Oilfield Services Limited, Dawson International
plc, Christian Salvesen plc and its then subsidiary Aggreko. Mark is a chartered
accountant and a member of the Association of Corporate Treasurers, and has
a degree in Accountancy and Computer Science from Heriot-Watt University.
Gordon McArthur founded Beeks in 2010 having become increasingly frustrated
by the lack of low latency trading infrastructure available. He has since grown
the business from a three man start-up to its current, profitable form. Gordon’s
career in software and IT solutions businesses spans 20 years during which
time he has held commercial and managerial roles at IBM and Versko, an IT
specialist for IBM software platforms. During his time at IBM Gordon worked in
both financial services and the industrial sector and initially on SME businesses
but latterly covering IBM’s largest globally integrated accounts in the Oil and
Gas sector. Gordon has a BA (Hons) in Risk Management and a Master’s in
Business Information Management from Glasgow Caledonian University.
24
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BEEKS FINANCIAL CLOUD GROUP PLC
BOARD OF DIRECTORS
FOR THE YEAR ENDED 30 JUNE 2023
FRASER
FRASER
FRASER
MCDONALD
CHIEF FINANCIAL
OFFICER
AGE 49
WILLIAMWILLIAMWILLIAM
MELDRUM
NON-EXECUTIVE
DIRECTOR
AGE 55
KEVINKEVINKEVIN
COVINGTON
NON-EXECUTIVE
DIRECTOR
AGE 64
Fraser McDonald has over 20 years’ experience in finance, management and
consulting roles. Having commenced his finance career and management
accountancy training (CIMA) with National Australia Group, Fraser has
gained experience working for global organisations such as Royal BAM Group,
Lactalis McLelland, and Serco Group plc across different industries including
Banking, Manufacturing and Construction. Fraser has been in the Technology
sector since 2009, where he has held senior roles including Commercial
Manager and Head of Finance at ACCESS LLP (subsidiary of Serco Group
plc). Fraser joined Beeks on a consultancy basis in March 2016 to support the
company through the AIM admission process, before being appointed on a
permanent basis as Group Financial Controller in March 2017, and then Chief
Financial Officer in October 2018. Fraser has a BA (Hons) in Finance from the
University of Strathclyde, and a PgDip in Information Technology from the
University of Paisley.
Will is a partner at Longview Innovation, a US based venture capital firm, and
a management consultant. Previously he was Senior Vice President, employee
experience and chief of staff at IHS Markit, a world leader in critical information
and data analytics. Prior to joining Markit in 2005, Will worked at Deutsche Bank
managing the bank’s interests across a portfolio of investments with a key
focus on industry consortia, electronic trading systems and data. Will holds an
MA from the University of Edinburgh and an MBA from London Business School.
Kevin has had more than 30 years’ experience working internationally in the
financial services industry for both vendors and banks, with a particular focus
on M&A and advisory. Kevin currently runs a boutique advisory firm, Change
Alley, which helps develop and grow organisations in the FinTech sector. Kevin
also acts as an adviser and mentor to a number of companies in the sector,
including Adaptive Financial Consulting, KA2, Enyx and, prior to its acquisition
by Beeks, Velocimetrics. Previous positions include CEO of a VC backed
Australian technology company, Metamako, which was acquired by Silicon
Valley based Arista Networks in late 2018 and CEO at technology company ITRS
Group Limited. For a number of years Kevin has been ranked in the top 40 most
influential people in Trading Technology by the Institutional Investor Magazine.
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BEEKS FINANCIAL CLOUD GROUP PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
DIRECTOR’S
REPORT
RESULTS
The Group’s audited financial statements for the year
ended 30 June 2023 are set out on pages 41 to 94. The
Group’s loss for the year after tax amounted to £0.10m
(2022: profit after tax £0.83m).
RESEARCH AND
DEVELOPMENT
The Group develops cloud computing products including
public, private and proximity solutions.
FUTURE DEVELOPMENTS
The Group’s business activities, together with the factors
likely to affect its future development, performance and
position are set out in the Strategic Report on pages 10 to
22.
DIRECTORS AND THEIR
INTERESTS
The present membership of the Board is set out on pages
24 and 25 and the Directors who served during the year
are listed on page 30. Details of Directors’ interests in The
Group’s shares are set out below.
The directors’ interest in the Company’s £0.00125 ordinary
share capital are detailed in the table below:
INSURANCE FOR DIRECTORS
AND OFFICERS
The Group has purchased and maintains appropriate
insurance cover against legal action brought against
Directors and officers.
FINANCIAL RISK
MANAGEMENT OBJECTIVES
AND POLICIES
The Group uses various financial instruments which
include cash, leases, asset financing, bank loans and
items such as trade debtors and trade creditors that arise
directly from its operations. The main purpose of these
financial instruments is to raise finance for The Group’s
operations. The main risks arising from The Group’s
financial instruments are credit risk, exchange rate risk
and interest rate risk. The Directors review these risks on
an ongoing basis. This policy has remained unchanged
from previous years. Further information on financial
risk management is disclosed in note 16 of The Group
accounts.
SHARES
Gordon McArthur
24,593,440
Mark Cubitt
William Meldrum
Fraser McDonald
70,707
41,450
44,118
2023
OPTIONS
-
-
-
909,742
SHARES
24,593,440
70,707
41,450
44,118
2022
OPTIONS
-
-
-
839,742
26
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BEEKS FINANCIAL CLOUD GROUP PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
CREDIT RISK
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.
The Group’s credit risk is primarily attributable to its trade
receivables. It is the policy of The Group to present the
amounts in the Consolidated 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. 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.
EXCHANGE RATE RISK
The Group monitors its exposure to exchange rate risk
on an ongoing basis. The Group has limited exposure to
foreign exchange risk as a result of natural hedges arising
between sales and cost transactions. Details of exchange
rate exposure balances are disclosed in note 16 of The
Group accounts.
INTEREST RATE RISK
The Group has limited exposure to interest rate risk in
respect of cash balances and long-term borrowings held
with banks and other highly rated counterparties. All loans
and leases are charged at a fixed rate, other than the
term loan which is charged at the base rate of interest
plus margin. Therefore, The Group has limited exposure to
interest rate risk.
GOING CONCERN
We take great 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
climate 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.
The Directors are of the opinion that The Group can
operate within its current debt facilities and comply with
its banking covenants. At the end of the financial year, The
Group had net cash of £4.41m (2022: £7.86m). The Group
has a diverse portfolio of customers with relatively low
customer concentration 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 2024, 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 (December 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.
The Group’s business activities, together with the factors
likely to affect its future development, performance and
position are set out in the Strategic Report on pages 10 to
22 including the potential impact of the macro-economic
climate. The financial position of The Group, its cash flows,
liquidity position and borrowing facilities are described in
the Chief Financial Officer’s Report on pages 15 to 18.
AIM RULE COMPLIANCE
REPORT
Beeks Financial Cloud Group plc is quoted on AIM and
the Company has complied with AIM Rule 31. Further
information on AIM compliance is explained in the
Corporate Governance Report on pages 32 to 40.
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BEEKS FINANCIAL CLOUD GROUP PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
prevention and detection of fraud and other irregularities.
The directors confirm that:
◊ so far as each director is aware, there is no relevant
audit information of which the company’s auditor is
unaware; and
◊ the directors have taken all the steps that they
ought to have taken as directors in order to make
themselves aware of any relevant audit information
and to establish that the company’s auditor is aware
of that information.
The directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the company’s website. Legislation in
the United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
INDEPENDENT AUDITOR
AND DISCLOSURE OF
INFORMATION TO AUDITOR
This information is given and should be interpreted in
accordance with the provisions of s418 of the Companies
Act 2016.
AUDITOR
A resolution to reappoint the auditor, Grant Thornton
UK LLP and to authorise the Directors to agree their
remuneration will be placed before the forthcoming
Annual General Meeting of the Company.
By order of the Board.
Fraser McDonald
Chief Financial Officer
29 September 2023
STREAMLINED ENERGY AND
CARBON REPORTING (SECR)
As the Company does not meet the large sized threshold,
the Directors are not required to disclose the reporting
requirements of SECR.
DIRECTORS’
RESPONSIBILITIES
STATEMENT
The Directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have to prepare the financial statements in
accordance with UK-adopted international accounting
standards and have elected to prepare the Parent
Company financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law,
including FRS 101 ‘Reduced Disclosure Framework’). Under
company law the Directors must not approve the financial
statements unless they are satisfied that they give a true
and fair view of the state of affairs and profit or loss of the
company and group for that period. In preparing these
financial statements, the directors are required to:
◊ select suitable accounting policies and then apply
them consistently;
◊ make judgements and accounting estimates that are
reasonable and prudent;
◊ state whether applicable UK-adopted international
accounting standards have been followed for The
Group financial statements and whether applicable
UK Accounting Standards have been followed for the
parent company financial statements, subject to any
material departures disclosed and explained in the
financial statements;
◊ prepare the financial statements on the going concern
basis unless it is appropriate to presume that the
company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the company’s transactions and disclose with reasonable
accuracy at any time the financial position of the
company and enable them to ensure that the financial
statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the
company and hence for taking reasonable steps for the
28
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BEEKS FINANCIAL CLOUD GROUP PLC
REPORT ON REMUNERATION
FOR THE YEAR ENDED 30 JUNE 2023
REPORT ON
REMUNERATION
DIRECTORS’ REMUNERATION
REPORT FOR THE YEAR ENDED
30 JUNE 2023
On behalf of the Board, I am pleased to present the
Directors’ Remuneration Report for the year ended 30 June
2023 which sets out our Directors’ Remuneration policy
and provides details of amounts earned by Directors in
respect of the year ended 30 June 2023.
As the Company is listed on the Alternative Investment
Market it is not required to comply with the provisions of
the UK Corporate Governance Code 2018 (“Code”) issued
by the Financial Reporting Council, however, we continue
to provide disclosures in addition to that which is required
by AIM Rule 19 on a voluntary basis to enable shareholders
to understand and consider our remuneration
arrangements. If this was prepared under the Companies
Act 2006, additional disclosures would be required in order
to meet the requirement.
REMUNERATION COMMITTEE
The Remuneration Committee operates within defined
terms of reference. The Remuneration Committee
reviews the performance of the executive directors
and makes recommendations to the Board on matters
relating to their remuneration and terms of service. The
Remuneration Committee also makes recommendations
to the Board on proposals for the granting of share
options and other equity incentives pursuant to any
employee share option scheme or equity incentive
plans in operation from time to time. The Remuneration
Committee meets as and when necessary. The
Remuneration Committee comprises the Chairman and
the Non-Executive Directors and is chaired by Mark Cubitt.
REMUNERATION COMMITTEE
REPORT
During the period under review, the Remuneration
Committee met once and has granted options over
ordinary shares in the company to some senior
management, including an executive director, under
the Company’s Staff Long-term Incentive Plan (LTIP). In
granting these options, the Remuneration Committee’s
objective was to attract, motivate and retain key staff
over the long term, designed to incentivise delivery of the
company’s growth objectives.
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BEEKS FINANCIAL CLOUD GROUP PLC
REPORT ON REMUNERATION
FOR THE YEAR ENDED 30 JUNE 2023
BASIC SALARY
BENEFIT IN KIND
TOTAL
PENSION
£’000
£’000
£’000
£’000
63
125
35
35
35
293
25
109
35
35
35
239
1
1
-
-
-
2
-
-
-
-
-
-
64
126
35
35
35
295
25
109
35
35
35
239
5
9
-
-
-
14
1
3
-
-
-
4
2023
Executive Directors
Gordon McArthur
Fraser McDonald
Non-executive
Directors
Mark Cubitt
William Meldrum
Kevin Covington
TOTAL
2022
Executive Directors
Gordon McArthur
Fraser McDonald
Non-executive
Directors
Mark Cubitt
William Meldrum
Kevin Covington
TOTAL
30
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BEEKS FINANCIAL CLOUD GROUP PLC
REPORT ON REMUNERATION
FOR THE YEAR ENDED 30 JUNE 2023
NON-EXECUTIVE DIRECTORS
The Board, based on a recommendation by the Chairman
of the Remuneration Committee or, in the case of the
Chairman, the remainder of the Board determines the
remuneration of the Non-Executive Directors.
SERVICE CONTRACTS
The Executive Directors have entered into service
contracts with The Group that are terminable by either
party on no less than three months’ prior notice.
SHARE OPTIONS
Share options were awarded to staff (including a director)
during the year in accordance with the Company’s LTIP
(Long Term Incentive Plan). The details of these are
disclosed in Note 21.
Share options awarded to the Director, Fraser McDonald,
are shown below:
DIRECTOR
DATE OF
GRANT
SHARE
OPTIONS
VESTING
DATE
LAPSE DATE
EXERCISE
PRICE (£)
Fraser
McDonald
Fraser
McDonald
Fraser
McDonald
Fraser
McDonald
17 Oct 19
538,922
17 Oct 22
17 Oct 29
0.00125
19 Oct 20
105,820
19 Oct 23
19 Oct 30
0.00125
26 Nov 21
195,000
26 Nov 24
26 Nov 31
0.00125
2 Dec 22
70,000
2 Dec 25
2 Dec 32
0.00125
During the year ended 30 June 2023, no share options
were exercised by directors.
The aggregate amount of gains realised by Directors, who
served during the year, on the exercise of share options
during the year was £nil (2022: £133,051).
For the year ended 30 June 2023, share options awards
have been proposed to the Remuneration Committee
as part of the LTIP. These options will have a three year
vesting period for senior executives and between two
and three years for other staff. As with the previous
LTIP arrangements they will be based on challenging
performance conditions in line with the existing plan and
are expected to be approved during October 2023.
DIRECTORS’ SHARE
INTERESTS
The Directors’ shareholdings in the Company are shown in
the Directors’ Report on page 26.
Mark Cubitt
Chairman of the Remuneration Committee
29 September 2023
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BEEKS FINANCIAL CLOUD GROUP PLC
CORPORATE GOVERNANCE
FOR THE YEAR ENDED 30 JUNE 2023
CORPORATE
GOVERNANCE
CHAIRMAN’S
INTRODUCTION TO
CORPORATE GOVERNANCE
As Chairman of the Board it is my responsibility to ensure
that the highest standards of corporate governance
are embraced throughout The Group. All members of
the Board believe strongly in the value and importance
of good corporate governance and in The Group’s
accountability to all of Beeks’ stakeholders, including
shareholders, lenders, staff, contractors, clients and
suppliers.
The Corporate Governance Framework which The Group
operates, including Board leadership and effectiveness,
Board remuneration, and internal control is based upon
practices which the Board believes are proportional to
the size, risks, complexity and operations of the business
and is reflective of The Group’s values. Of the two
widely recognised formal codes, The Group decided, on
admission of its shares to AIM in November 2017, to adhere
to the Quoted Company Alliance’s (“QCA”) Corporate
Governance Code for small and mid-size Quoted
Companies (revised in April 2018 to meet the current
requirements of AIM Rule 26).
The QCA Code is constructed around 10 broad principles
and a set of disclosures. The Group has considered how it
applied each principle to the extent that the Board judges
these to be appropriate in the circumstances, and below
there is an explanation of the approach taken in relation
to each. The Board considers that it does not depart from
any of the principles of the QCA Code.
Set out below is an explanation at a high level of how The
Group currently applies the principles of the QCA Code
and, to the extent applicable, those areas where The
Group’s corporate governance structures and practices
differ from the expectations set out in the QCA Code.
We are confident that our approach to corporate
governance will underpin the development of a strong
organisation, well positioned to take the business to the
next phase of growth.
PRINCIPLE 1: ESTABLISH A
STRATEGY AND BUSINESS
MODEL WHICH PROMOTES
LONG-TERM VALUE FOR
SHAREHOLDERS
Beeks Financial Cloud Group plc is a leading managed
cloud computing, connectivity and analytics provider
exclusively for capital markets and financial services,
offering Infrastructure-as-a-Service (IaaS) to global
companies across multiple asset classes.
Beeks’ strategy is to ensure maximum security, optimise
performance and deliver ultra-low latency compute
power in the exceedingly fast-moving capital markets
sector.
Beeks provides:
◊ Dedicated bare metal and virtual servers that host
capital markets and financial services organisations in
key financial data centres around the world
◊ Ultra-low latency connectivity between customers and
key financial venues and exchanges
◊ Colocation for customers to position their own
computing power in our space, benefitting from our
proximity to financial hubs
◊ In-house security software to protect client
infrastructure from cyber attacks
◊ The management of hybrid cloud deployments for
customers wishing to combine the Beeks IaaS with the
public cloud hyperscalers
◊ Our model focuses on efficiency and flexibility, offering
our customers the ability to scale up and scale
down as needed. Due to market fluctuations and the
inherent risk involved in algorithmic trading, this makes
our services highly desirable
◊ Beeks has a unique self-service customer portal that
facilitates the same-day deployment of a host of
services allowing customers to manage their own
servers
◊ Beeks Analytics offers comprehensive monitoring and
performance analysis to allow users to independently
track and analyse real-time performance of every
single price, quote or trade traversing business critical
processes.
The business model focuses on efficiency and flexibility,
offering our clients the ability to scale up and scale down
as needed. Due to market fluctuations and the inherent
risk involved in algorithmic trading strategies, this makes
our services highly attractive to clients and in turn delivers
value to our shareholders.
The Group’s strategy can be viewed on pages 10-11.
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BEEKS FINANCIAL CLOUD GROUP PLC
CORPORATE GOVERNANCE
FOR THE YEAR ENDED 30 JUNE 2023
PRINCIPLE 2: SEEK TO
UNDERSTAND AND MEET
SHAREHOLDER NEEDS AND
EXPECTATIONS
The Group is committed to open communication with
all its shareholders to ensure that its strategy, business
model and performance are clearly understood.
Understanding what analysts and investors think about
us, and in turn, helping these audiences understand our
business, is a key part of driving our business forward and
we actively seek dialogue with the market. We do so via
investor roadshows, attending investor conferences and
through our regular reporting.
Institutional shareholders
The Directors hold regular meetings with institutional
shareholders to discuss and review The Group’s activities
and objectives. The CEO and CFO meet institutional
investors shortly after the annual and interim results, and
on an ongoing basis as required. Directors also undertake
consultation on certain matters with major shareholders
from time to time. Through these consultations, The
Group maintains a regular dialogue with institutional
shareholders and analysts. Feedback is reported to the
Board so that all Directors develop an understanding of
the views of major shareholders.
Private shareholders
Communication with private shareholders is done via
investor events during the year such as Mello, IMC and
Sharesoc where the CEO and CFO present and are
available to speak to private investors on a one to one
basis. This is in addition to the Annual General Meeting,
where attendance by shareholders is encouraged and
where the Board is available to answer questions. The
Notice of AGM is sent to shareholders at least 21 days
before the meeting. The Chairman of the Board and
the committees, together with all other directors attend
the AGM and are available to answer questions raised
by shareholders. For each vote, the number of proxy
votes received for, against and withheld is announced
at the meeting. The results of the AGM are subsequently
published on the Company’s corporate website.
Specific queries may be raised at any time by any
shareholder by emailing Beeks’ investor relations team
at investor@beeksgroup.com. The team ensures that the
person best placed to address each query responds as
soon as possible. The CEO is responsible for overseeing
day-to-day communications with shareholders.
The news and investor relations sections of the Beeks
website are regularly updated and provide the market with
the latest business news and shareholder updates. Following
major periods of communications, our advisers consolidate
feedback, on an anonymised basis, from the relevant parties
which then forms the basis of a briefing pack for the Board
to ensure awareness of shareholder opinions.
PRINCIPLE 3: TAKE
INTO ACCOUNT WIDER
STAKEHOLDER AND SOCIAL
RESPONSIBILITIES AND
THEIR IMPLICATIONS FOR
LONG-TERM SUCCESS
In addition to its shareholders, The Group believes its main
stakeholders are its employees and clients. The Group
dedicates significant time to understanding and acting on
the needs and requirements of these groups via meetings
dedicated to obtaining feedback which is then, where
appropriate, considered by the Board and acted upon.
The Group believes recruiting and maintaining highly
talented and motivated staff is key to its success. As
referenced within the Section 172(1) statement on page
20, The Group has taken a number of actions to enhance
the wellbeing and development of its employees. All
staff have objectives and regular communication with
management is encouraged as part of The Group’s
culture. Staff are also encouraged to develop their skills
and budget is always identified for staff training and
development. The Group has low levels of staff attrition
and fosters a culture of continuous improvement and
innovation.
PRINCIPLE 4: EMBED
EFFECTIVE RISK
MANAGEMENT, CONSIDERING
BOTH OPPORTUNITIES AND
THREATS, THROUGHOUT THE
ORGANISATION
The Board is responsible for risk management and internal
controls, supported and informed by the executive
team. The Board defines risk appetite and monitors the
management of significant risks to ensure that the nature
and extent of significant risks taken by The Group are
aligned with overall goals and strategic objectives.
The Board takes responsibility for establishing and
maintaining reliable systems of control in all areas of
operation. These systems of control, especially of financial
control, can only provide reasonable but not absolute
assurance against material misstatement or loss. The key
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BEEKS FINANCIAL CLOUD GROUP PLC
CORPORATE GOVERNANCE
FOR THE YEAR ENDED 30 JUNE 2023
matters relating to the system of internal control are set
out below:
◊ Beeks has established an operational management
structure with clearly defined responsibilities and
regular performance reviews
◊ The Group operates a comprehensive system for
reporting financial and non-financial information
to the Board, including review of strategy plans and
annual budgets
◊ Financial results are monitored against budgets,
forecasts and other performance indicators with
action dictated accordingly at each meeting
◊ A structured approval process based on assessment
of risk and value delivered
◊ Operational updates highlighting any risks
and/or issues are communicated to the Board
at Board Meetings by the CEO and the COO
Sufficient resource is focused to maintain and develop
internal control procedures and information systems,
especially in financial management. The Board considers
that there have been no substantial weaknesses in
internal financial controls that have resulted in any
material losses, contingencies or uncertainties that need
to be disclosed in the accounts
Beeks has implemented an operational risk framework
to evaluate how we operate our business. This enables
Beeks to measure outcomes and understand the input to
business processes and assess risks before making any
significant decision based on risk appetite. This will reduce
the likelihood of future potential damages as a result
of operational impact. The operational framework has
developed during the year to enhance The Group’s cyber
security function as referenced throughout this report.
More information on The Group’s principal risks and
internal control procedures are set out on pages 19 to 23.
PRINCIPLE 5: MAINTAIN
THE BOARD AS A WELL-
FUNCTIONING, BALANCED
TEAM LED BY THE CHAIR
Subject to the Articles of Association, UK legislation and
any directions given by special resolution, the business of
The Group is managed by the Board. The Code requires
The Group to have an effective Board whose role is to
develop strategy and provide leadership to The Group
as a whole. It sets out a framework of controls that allows
the Board to apply these principles for the identification,
assessment and management of risk. Additionally, it
ensures the Board takes collective responsibility for the
success of The Group.
The Board’s main roles are to provide leadership to the
management of The Group, determine The Group’s
strategy and ensure that the agreed strategy is
implemented. The Board takes responsibility for approving
potential acquisitions, annual budgets, annual reports,
interim statements and Group financing matters.
Ultimate responsibility for the quality of, and approach to,
corporate governance lies with the chair of the board.
The Board appoints its members and those of its
principal Committees following the recommendations
of the Nomination and Remuneration Committee. The
Board reviews the financial performance and operation
of The Group’s businesses. The Board also reviews the
identification, evaluation and management of the
principal risks faced by The Group, and the effectiveness
of The Group’s system of internal control.
For the year ended 30 June 2023, the plc Board comprises
the independent Non-Executive Chairman, the CEO, the
CFO and the two independent Non-Executive Directors.
The Board is highly committed and experienced and is
supported by qualified executive and senior management
teams. The Chairman, Mark Cubitt holds 70,707 ordinary
shares, William Meldrum holds 41,450 ordinary shares. The
Company considers the three Non-Executive Directors
to be independent. The board believes the current
composition enables the board to perform its duties
effectively and there is a clear division of responsibilities
between the running of the Board and the Executives
responsible for the Company’s business, to ensure that no
one person has unrestricted powers of decision.
The Executive Directors of the Company are full time
and do not serve as non-executive directors in any
other organisation. The Non-Executive Chairman is
also currently Non-executive Chairman of AIM listed
Concurrent Technologies plc and a non-executive director
of private company, RHA Technologies Ltd based in
Glasgow. Non-Executive Directors devote as much time
as is necessary for the proper performance of their duties.
The non-executive directors typically spend one to two
days a month on company-related matters.
The Board met 11 times in the year ended 30 June 2023.
The attendance of each director is shown on page 37.
Role of Chairman and Chief Executive Officer
The Code requires that there should be a clear division
of responsibilities between the running of the Board and
the executive responsible for The Group’s business, so as
to ensure that no one person has unrestricted powers of
decision. The Chairman is responsible for the leadership
of the Board, ensuring its effectiveness and setting its
agenda. Once strategic and financial objectives have
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BEEKS FINANCIAL CLOUD GROUP PLC
CORPORATE GOVERNANCE
FOR THE YEAR ENDED 30 JUNE 2023
been agreed by the Board, it is the CEO’s responsibility
to ensure they are delivered upon. To facilitate this, the
CEO regularly meets the Executive Management Team
(EMT) which comprises representatives from Operations,
Technical Delivery, Finance and Sales. The day to day
operations of The Group are managed by the EMT.
Composition of and appointments to
the Board
The Code requires that there should be a balance
of Executive and Non-Executive Directors and when
appointing new Directors to the Board, there should be a
formal, rigorous and transparent procedure.
For the year ended 30 June 2023 the plc Board comprises
the Non-Executive Chairman, the CEO, the CFO and the
Non-Executive Directors. Short biographies of the Directors
are given on pages 24 and 25. The Board is satisfied
with the balance between Executive and Non-Executive
Directors. The Board considers that its composition is
appropriate in view of the size and requirements of The
Group’s business and the need to maintain a practical
balance between Executive and Non-Executive Directors.
Each member of the Board brings different skills and
experience to the Board and the Board Committees. The
Board is satisfied that there is sufficient diversity in the
Board structure to bring a balance of skills, experience,
independence and knowledge to The Group.
The Board recognises that to remain effective it must
ensure that it has the right balance of skills, experience,
knowledge and independence to enable it to discharge
its duties and responsibilities. The Company has a highly
committed and experienced Board, which is supported
by a senior management team, with the qualification and
experience necessary to run the Company.
Each member of the Board brings different experience
and skills to the Board and its various committees. The
Board composition is kept under review as this mix of skills
and business experience is a major contributing factor
to the proper functioning of the Board, helping to ensure
matters are fully debated and that no individual or group
dominates the Board decision-making process.
The Code requires that the Board undertakes a formal and
rigorous annual evaluation of its own performance and
that of its Committees and Directors. The Board continues
to annually review its composition, to ensure there is
adequate diversity to allow for its proper functioning
and that the Board works effectively together as a unit.
When a new appointment to the Board is due to be
made, consideration will be given to the particular skills,
knowledge and experience that a potential new member
could add to the existing Board composition.
Board committees
The Board has established two committees to deal with
specific aspects of the Board’s responsibilities: the Audit
Committee and the Nomination and Remuneration
Committee. The Report of the Audit Committee can be
found on pages 41 and 42. The Audit Committee is chaired
by Mark Cubitt and includes William Meldrum and Kevin
Covington.
The Nomination and Remuneration Committee is chaired
by Mark Cubitt and includes William Meldrum and Kevin
Covington. The Committee has overall responsibility
for making recommendations to the Board of the
remuneration packages of the Executive Directors. The
Board considers it appropriate, due both to the size of The
Group and the experience of the Board members, to have
a combined nomination and remuneration committee.
The Audit Committee met two times during the year and
the Nominations and Remuneration Committee met once
during the year.
Re-election
Under the Code, Directors should offer themselves for
re-election at regular intervals. It is proposed that at least
one of the directors will be put forward for re-election
at The Group’s AGM which will be scheduled during
November 2023.
PRINCIPLE 6: ENSURE
THAT BETWEEN THEM THE
DIRECTORS HAVE THE
NECESSARY UP-TO-DATE
EXPERIENCE, SKILLS AND
CAPABILITIES
Biographies of the Board of Directors can be found on
pages 23 and 24.
Each member of the Board brings different skills and
experience to the Board and the Board Committees. The
Board is satisfied that there is sufficient diversity in the
Board structure to bring a balance of skills, experience,
independence and knowledge to The Group.
The CEO’s role is critical in developing and maintaining the
sustainability and effectiveness of The Group. Specifically,
the CEO’s key responsibilities include:
◊ Leading the development and execution of The
Group’s vision and strategy
◊ Senior human resource management: Recruit, retain
and motivate an appropriately skilled Executive
Management Team
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BEEKS FINANCIAL CLOUD GROUP PLC
CORPORATE GOVERNANCE
FOR THE YEAR ENDED 30 JUNE 2023
◊ Representing The Group: The CEO will be required to
consistently present The Group and its objectives to
key stakeholders and the market in general
◊ Lead and drive overall Merger and Acquisition strategy
The CEO is therefore expected to keep up to date with the
industry and market in which the Company operates.
The primary function of the CFO is to ensure that The
Group’s Board is able to make proper judgements as
to The Group’s financial position. This encompasses
responsibility for The Group’s financial health, that it has
in place an appropriate financial strategy to enable it
to achieve its wider strategic plan objectives, its annual
budget outcomes and, most importantly, is able to
meet its obligations to shareholders, the ‘market’, banks,
creditors, suppliers and other stakeholders as required.
The CFO’s responsibilities also encompass:
◊ Internal and external financial reporting
◊ Corporate governance
◊ Risk management and the maintenance of effective
systems of internal control
◊ Responsible for the Company Secretary role
◊ Tax compliance and planning
◊ Liaising with the Nomad on a regular basis
◊ Compliance with AIM Rules and MAR
The CFO is required to keep up to date with any changes
to accounting standards and to ensure his skillset is
refreshed on an ongoing basis.
The Non-Executive Directors hold senior positions with
other companies ensuring that their knowledge is
continuously refreshed. Specific training will be provided
to the Board by the Company when required to support
the Directors existing skillset.
PRINCIPLE 7: EVALUATE
BOARD PERFORMANCE
BASED ON CLEAR AND
RELEVANT OBJECTIVES,
SEEKING CONTINUOUS
IMPROVEMENT
The Company was admitted to trading on AIM on 27
November 2017. The Board was appointed in advance
of admission with the exception of the CFO who was
appointed at the Company’s AGM on 24 October 2018.
Since Admission, evaluation of the performance of the
Company’s Board has historically been implemented
in an informal manner. The Chairman regularly
communicates with Board Members outside of Board
meetings to ensure that each director is satisfied with
the performance of the Board and has the opportunity to
raise any issues of concern. Similarly, the Chairman uses
his substantial experience of plc boards to evaluate the
Board effectiveness on an ongoing basis.
The Chairman has been tasked with assessing the
individual contributions of each of the members of the
team to ensure that:
◊ Their contribution is relevant and effective
◊ They are committed
◊ Where relevant, they have maintained their
independence
The Board has established an executive team with
strength in depth in each of its core functions of
network operations, software development, security,
sales & marketing, human resources and finance
which it will draw on, together with appropriate external
appointments, in regards to succession.
PRINCIPLE 8: PROMOTE A
CORPORATE CULTURE THAT
IS BASED ON ETHICAL VALUES
AND BEHAVIOURS
The Board places a high degree of value on promoting
a corporate culture that reflects The Group’s ethical
principles and behaviours in order to maximise the quality
of service that is passed on to the customer. As The Group
works as an international team that is spread across three
continents, a lot of importance is placed on a culture
of inclusivity and open and honest communication;
ensuring that employees are equally understood, trusted,
and that individual cultural values and languages are
respected. The Company encourages innovation, has flat
management structures, open plan offices and a culture
of continuous improvement. This helps to ensure that
communication and understanding flows well within the
Company, and thereby provides the most efficient and
highest quality of service to clients.
The Board has implemented formal HR policies and
procedures including an employee handbook that
sets out details and guidelines on the culture of
the Company and how this should be reflected in
employees’ individual conduct.
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BEEKS FINANCIAL CLOUD GROUP PLC
CORPORATE GOVERNANCE
FOR THE YEAR ENDED 30 JUNE 2023
PRINCIPLE 9: MAINTAIN
GOVERNANCE STRUCTURES
AND PROCESSES THAT
ARE FIT FOR PURPOSE AND
SUPPORT GOOD DECISION
MAKING BY THE BOARD
The Board comprises three independent Non-executive
Directors and two Executive Directors.
Board programme
The Board is scheduled to meet 10 times each year in
accordance with its scheduled meeting calendar, with
additional meetings scheduled where necessary. The
Group has a highly committed and experienced Board
and is supported by qualified executive and senior
management teams.
Board meetings held during the period under review and
the attendance of directors is summarised below:
BOARD MEETINGS
AUDIT COMMITTEE
REMUNERATION
COMMITTEE
Possible
Attended
Possible
Attended
Possible
Attended
Executive
Directors
Gordon McArthur
Fraser McDonald
Independent
Non-executive
Directors
Mark Cubitt
William Meldrum
Kevin Covington
11
11
11
11
11
11
11
11
10
11
2
2
2
2
2
0
2
2
2
2
1
1
1
1
1
1
1
1
1
1
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CORPORATE GOVERNANCE
FOR THE YEAR ENDED 30 JUNE 2023
The Board and its Committees receive appropriate and
timely information prior to each meeting; a formal agenda
is produced for each meeting, and Board and Committee
papers are distributed several days before meetings take
place. Any Director may challenge Company proposals
and decisions are taken democratically after discussion.
Any Director who feels that any concern remains
unresolved after discussion may ask for that concern to
be noted in the minutes of the meeting, which are then
circulated to all Directors. Any specific actions arising
from such meetings are agreed by the Board or relevant
Committee and then followed up by the Company’s
management.
All Directors receive regular and timely information on The
Group’s operational and financial performance. Relevant
information is circulated to the Directors in advance of
meetings. The business reports monthly on its headline
performance against its agreed budget and market
forecast and the Board reviews the monthly update on
performance and any significant variances are reviewed
at each meeting.
The Board considers the appropriateness of its accounting
policies on an annual basis. The Board believes that its
accounting policies, in particular in relation to income
recognition and research and development, are
appropriate. During the financial year ended 30 June
2023, the business reviewed matters including revenue
recognition and capitalisation of R&D activities. Similar
to the prior year, technical accounting papers were
prepared, reviewed and assessed by the Company’s
auditor.
Financial results with comparisons to budget and forecast
results are reported to the Board on a regular basis,
together with a commercial report on strategic and
operational issues. Significant variances from budget or
strategy are discussed at Board meetings and actions set
in place to address them.
There is a clear division of responsibility at the head of the
Company. The Chairman is responsible for the leadership
of the Board, ensuring its effectiveness and setting its
agenda. Once strategic and financial objectives have
been agreed by the Board, it is the CEO’s responsibility
to ensure they are delivered upon. To facilitate this, the
CEO regularly meets the Executive Management Team
(EMT) which comprises representatives from Operations,
Technical Delivery, Finance, Sales and HR. The day to day
operations of The Group are managed by the EMT.
Board committees
The Board is supported by the Audit, and Remuneration
and Nominations committees. These committees
are represented by the chairman and the other two
Non-executive Directors. Board members not part of the
Audit, Remuneration and Nominations Committee are
invited to join where it is considered to be appropriate.
Each committee has access to such resources,
information and advice as it deems necessary, at the cost
of the Company, to enable the committee to discharge its
duty. Attendance at these committees is referenced in the
Board Programme table above.
Based on the current stage of growth within the business,
the Board do not believe it is requirement to have an
internal audit function, but this will be kept under review
as the business continues to grow or equivalent.
PRINCIPLE 10: COMMUNICATE
HOW THE COMPANY
IS PERFORMING BY
MAINTAINING A DIALOGUE
WITH SHAREHOLDERS
AND OTHER RELEVANT
STAKEHOLDERS
Trading updates and press releases are issued as
appropriate and the Company’s brokers provide briefings
on shareholder opinion and compile independent
feedback from investor meetings. Information offered
at the analysts’ meetings together with financial press
releases are available on the Company’s website,
www.beeksgroup.com.
The Annual General Meeting is used by the Directors to
communicate with both institutional and private investors.
Every shareholder will have access to a full annual report
each year end and an interim report at the half year
end. Care is taken to ensure that any price sensitive
information is released to all shareholders, institutional
and private, at the same time in accordance with London
Stock Exchange requirements. The Company strives to
give a full, timely and realistic assessment of its business
in all price-sensitive reports and presentations.
Environmental, Social and Governance (ESG)
People/Social
Our people are at the very core of who we are, why we
are successful and why we continue to attract some of
the best talent around! We are committed to providing
a unique, non-corporate environment surrounded by
smart interesting people doing smart interesting work,
while having some fun in the process. This applies to our
teams working in Glasgow, London, the US and our remote
workers around the world.
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BEEKS FINANCIAL CLOUD GROUP PLC
CORPORATE GOVERNANCE
FOR THE YEAR ENDED 30 JUNE 2023
Positive Workplace Culture
The Beeks Group has had something of a transformation
in the last year, which has been driven by development
of our state of the art Headquarters based in Renfrew,
Glasgow. As we continue to grow, it is important that we
maintain our unique culture, which continues to attract
and retain the best talent. This begins with a competency
based recruitment process and continues long after
onboarding by ensuring all our teams know that they are
an integral part of the Beeks team.
We continue to develop and improve our on-site benefits
for our teams, which includes access to the fully equipped
gym and facilities with our own personal trainer who visits
weekly as does our in-house yoga instructor and on-site
relaxation or sports therapist, not to mention the Beeks
pool table and various comfortable break-out areas.
Employee Benefits and Reward
As we continue to expand, so too does our benefits
and rewards strategy. We continue to add to our suite
of benefits and this year have enhanced our private
healthcare offerings for all employees to expand the level
of cover as well as including dental care.
In addition, and as part of commitment to creating
the best employee experience for our team, we rolled
out our Electric Car Scheme where our employees can
benefit from saving up to 60% on a new electric car while
supporting our company’s sustainability journey. We have
charging facilities available to all staff for zero cost.
As well as our wellbeing initiatives, we also have the ability
to enable employees to benefit from the success of The
Group through share ownership. An HMRC approved Share
Incentive Plan was introduced to encourage employee
share ownership after admission to AIM, with applications
exceeding expectations. This scheme also acts as a
substantial incentive for attracting potential candidates.
Recruitment, Tenure and Vacancies
The Company had another busy year increasing our
headcount with particular investment in our technical
teams including hiring new Network Engineer Graduates
from Glasgow Caledonian University and ending the year
with a headcount of 103 employees.
There has also been a focus on supporting and
encouraging internal moves with various internal
promotions during the year with 6 so far and others on-
track to promotions through comprehensive training plans.
This year there has been a real push on ‘upskilling’ our
teams and a group training planned was rolled out with
many external training courses being booked throughout
the year to strengthen our teams knowledge.
The targeted focus on increasing engagement, benefits
and rewards, encouraging training, boosting moral and
being seen as an employer of choice has gone a long way
to attracting and retaining staff in an extremely buoyant
labour market seeing us close the year on an below
market average attrition rate of 9.6%.
Diversity and Equal Opportunities
At the heart of the Company’s approach to people is
the provision of an environment where everyone can
fulfil their potential and where colleagues from all
backgrounds can feel confident in their ability to achieve
their best. The Company has a Diversity Policy in place
and is fully committed to the elimination of unlawful and
unfair discrimination.
The Company recognises and values highly the benefits
of diversity in the workplace (of which gender is one
important aspect) and maintains a policy of employing
the best candidates available in every position, regardless
of gender, ethnic group or background, and is committed
to fair and equal treatment. We are also delighted to have
one of our Network Engineers currently as a shortlisted
nominee for the Scottish Women in Tech (SWiT) Awards
‘Technology Rising Star’ category.
Suppliers, Customers and Lenders
The Beeks Group believes strong business relationships
with suppliers, lenders and customers are crucial to our
success. Our in-house teams are focussed on regular
and open communication with customers to ensure we
meet their requirements and deliver quality customer
service. Senior management have regular meetings with
key customers to maintain visibility over their technology
roadmaps in order that The Group’s development plans
remain aligned to our customers’ future strategies.
Beeks recognise that a shared commitment to the
values of ESG is compelling market players to establish
partnerships to deliver workable and sustainable
financial systems with one example being our
partnership with trade comms leaders IPC to deliver
accessible, cloud-based solutions that turbo-charge
market participants’ business. We are constantly
seeking infrastructure partners with high ESG capability
in line with our customers’ requirements; and as we
collaborate with others, our own ESG preparedness
expands and benefits from shared approaches.
Environment
Beeks’ most recent dedicated server hosting solution,
Proximity Cloud, features high density compute racks
accommodating up to 80 servers within a data centre.
By fitting up to 8 times more servers in a rack than other
providers, we help organisations reduce their data
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BEEKS FINANCIAL CLOUD GROUP PLC
CORPORATE GOVERNANCE
FOR THE YEAR ENDED 30 JUNE 2023
centre footprint and achieve natural efficiencies in power
consumption, cost and cooling.
Co-locating in data centres such as the ones owned by
Equinix, Beeks and our customers also benefit from Equinix’
Corporate Sustainability Programme, ensuring reduced
power consumption and heightened energy efficiency for
cooling and lighting across the whole site.
Every ESG sensitive operation would favour monitoring,
fine-tuning and improving their existing infrastructure over
acquiring new kit. This is also where Beeks’ technology
steps in as we offer cloud-based Analytics-as-a-Service
(AaaS) enabling businesses to get more granular insight
into how their networks are performing, and how to
optimise the existing stack.
as well as expanding our sponsorship of local football
teams includes Bridge of Weir United, Cumbernauld Colts
FC and Kilsyth Athletic as well as Inverclyde Amateur
Swimming Club.
On an international level, Beeks and IPC are also
beginning an initiative to donate to local charities in the
geographical location of any new data centre region we
expand into.
By order of the Board.
Beeks’ business model will now enable firms to enter into
shorter commitments than the typical demand from
on-premise data centres.
Mark Cubitt
Chairman
29 September 2023
Beeks’ Infrastructure-as-a-Service (IaaS) also removes
the necessity for additional hardware, resulting in reduced
capital expenditures, more environmentally friendly
co-location options, and faster, cost-efficient expansion
into global, diverse, and inclusive markets. Beeks is now
equipped to assist our customers with their ESG audits,
providing clients such as Form3 with energy footprint
calculations and support on fuel consumption for
generator testing.
With the introduction of the employee Electric Car
Scheme, Beeks is integrating a workforce that is more
environmentally conscious. By educating employees
of the financial benefits such as saving on National
Insurance and Income Tax, and environmental benefits,
Beeks can actively contribute to a reduction in our carbon
footprint, resulting in fewer emissions, reduced noise
pollution, and improved air quality.
Local Community
We remain committed to hiring locally, and have hired
locally throughout the last 12 months. We are also proud
to partner with Glasgow Caledonian University and
the University of Strathclyde to develop our graduate
programmes which will flourish in the coming years as
we have also had several interns from Strathclyde and
Glasgow University supporting our teams to support their
studies.
Throughout the year we were also pleased to have
obtained our company A-rated sponsorship licence
enabling us to provide fantastic opportunities to eligible
migrant workers.
In addition, we have increased our charitable activities
in the year by providing sponsorship of an arts/culture
theatre group, ‘Bampots’, at the Edinburgh fringe Festival
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BEEKS FINANCIAL CLOUD GROUP PLC
REPORT OF THE AUDIT COMMITTEE
FOR THE YEAR ENDED 30 JUNE 2023
REPORT OF THE
AUDIT COMMITTEE
COMMITTEE ACTIVITIES IN
THE FINANCIAL YEAR ENDING
30 JUNE 2023
The Audit Committee is chaired by Mark Cubitt. The other
members are William Meldrum and Kevin Covington.
Attendance during the year can be seen within the Board
programme on page 37. Board members not part of these
committees are invited to attend meetings as and when it
is deemed appropriate.
The Committee met two times in relation to the financial
year ended 30 June 2023, one meeting was post year
end, with the second meeting to approve the annual
accounts. In addition to standing items on the agenda,
the Committee:
◊ Received and considered, as part of the review of
interim and annual financial statements, reports from
the Auditor in respect of the Auditor’s review of the
interim results, the audit plan for the year and the
results of the annual audit. These reports included
the scope of the interim review and annual audit, the
approach to be adopted by the Auditor to address
and conclude upon key estimates and other key
audit areas, the basis on which the Auditor assesses
materiality, the terms of engagement for the Auditor
and an on-going assessment of the impact of future
accounting developments for The Group;
◊ Considered the Annual Report and Accounts in the
context of being fair, balanced and understandable;
◊ Considered the effectiveness and independence of the
external audit; and
◊ Review the enhanced audit report.
Significant areas considered by the Audit Committee in
relation to the 2023 financial statements are set out below:
AREAS OF ESTIMATES
MATTER CONSIDERED AND ROLE OF THE COMMITTEE
Revenue recognition
The committee considered the risk associated with revenue recognition and
considered new contracts awarded during the year.
Capitalisation of intangibles
The committee considered management’s assessment of revenue recognition
in relation to the newly launched Exchange Cloud and critically assessed the
principles, assumptions, judgements and estimates applied by management to
identify and allocate amounts to each performance obligation.
As the evolvement and development of Proximity/Exchange Cloud and analytics
products continued in the year to 30th June 2023, the committee assessed the
capitalisation of these intangibles in line with how the relevant criteria have been
met and how management have applied judgement given these capitalised
costs are subsequent to the initial project having been completed. The committee
critically assessed the inputs and resultant costs capitalised in line with the
relevant accounting standard.
INDEPENDENCE AND
OBJECTIVITY OF THE
AUDITOR
The Committee continues to monitor the work of the
Auditor to ensure that the Auditor’s objectivity and
independence is not compromised by it undertaking
inappropriate non-audit work. The current Auditor, Grant
Thornton UK LLP, was appointed Auditor on 6 November
2017.
NON-AUDIT FEES
The Committee approves all non-audit work
commissioned from the external auditors. During the year
the fees payable for the current year audit to the Auditor
were £158,620 for Group and subsidiary audit, £5,150 for
the interim audit services and £20,250 for assurance
related services being SOC2 initial work.
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BEEKS FINANCIAL CLOUD GROUP PLC
REPORT OF THE AUDIT COMMITTEE
FOR THE YEAR ENDED 30 JUNE 2023
OTHER MATTERS
The Committee is authorised to seek any information it
requires from any Group employee in order to perform
its duties. The Committee can obtain, at The Group’s
expense, outside legal or other professional advice on any
matters within its terms of reference. The Committee may
call any member of staff to be questioned at a meeting of
the Committee as and when required.
REPORTING RESPONSIBILITIES
The Committee makes whatever recommendations
to the Board it deems appropriate on any area within
its remit where action or improvement is required. The
Committee ensures that it gives due consideration to laws
and regulations, the provisions of the Combined Code,
the requirements of the UK Listing Authority’s Listing Rules,
Prospectus and Disclosure and Transparency Rules and
any other applicable rules as appropriate. The Committee
also oversees any investigation of activities which are
within its terms of reference. The Audit Committee
operates within agreed terms of reference in accordance
with The Group’s Financial Position and Prospects.
Mark Cubitt
Chairman
29 September 2023
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BEEKS FINANCIAL CLOUD GROUP PLC
INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2023
INDEPENDENT
AUDITOR’S REPORT
OPINION
Our opinion on the financial
statements is unmodified
We have audited the financial statements of
Beeks Financial Cloud Group plc (the ‘Parent
company’) and its subsidiaries (the ‘Group’) for
the year ended 30 June 2023, which comprise
the Consolidated Statement of Comprehensive
Income, the Consolidated and Company
Statements of Financial Position, the Consolidated
Cash Flow Statement, the Consolidated and
Company Statements of Changes in Equity and
notes to the financial statements, including a
summary of significant accounting policies. The
financial reporting framework that has been
applied in the preparation of The Group financial
statements is applicable law and UK-adopted
international accounting standards. The financial
reporting framework that has been applied in
the preparation of the Parent company financial
statements is applicable law and United Kingdom
Accounting Standards, including Financial
Reporting Standard 101 ‘Reduced Disclosure
Framework’ (United Kingdom Generally Accepted
Accounting Practice).
In our opinion:
◊ the financial statements give a true and fair
view of the state of The Group’s and of the
Parent company’s affairs as at 30 June 2023
and of The Group’s loss for the year then
ended;
◊ The Group financial statements have been
properly prepared in accordance with UK
adopted international accounting standards;
◊ the Parent company financial statements
have been properly prepared in accordance
with United Kingdom Generally Accepted
Accounting Practice; and
◊ the financial statements have been prepared
in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further
described in the ‘Auditor’s Responsibilities for the Audit
of the Financial Statements’ section of our report. We are
independent of The Group and the Parent company in
accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including
the FRC’s Ethical Standard as applied to listed entities,
and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We are responsible for concluding on the appropriateness
of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events
or conditions that may cast significant doubt on The
Group’s and the Parent company’s ability to continue as a
going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our report to
the related disclosures in the financial statements or, if
such disclosures are inadequate, to modify the auditor’s
opinion. Our conclusions are based on the audit evidence
obtained up to the date of our report. However, future
events or conditions may cause The Group or the Parent
company to cease to continue as a going concern.
Our evaluation of the directors’ assessment of The Group’s
and the Parent company’s ability to continue to adopt the
going concern basis of accounting included:
◊ Obtaining and assessing management’s evaluation
of going concern assumptions and supporting
information, including budgets and cash flow
forecasts, for a period up to December 2024, as well
as sensitivity analyses covering downside and reverse
stress test scenarios;
◊ Challenging the key assumptions in the forecasts,
sensitivities, mathematical accuracy of the forecasts
and the scope of scenario planning undertaken given
current social and economic conditions in the UK and
globally;
◊ Obtaining an understanding of financing
arrangements in place, management’s assessment
of their adequacy and plans to manage these,
challenging them on the impact of potential
non-renewal of certain arrangements;
◊ Challenging management’s assessment of what
reasonably possible assumptions would cause the
business to run out of headroom and testing and
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BEEKS FINANCIAL CLOUD GROUP PLC
INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2023
assessing management’s mitigations to be applied if
the assumptions materialised;
◊ Assessing the historical accuracy of the forecasts
prepared by management by comparing forecasts
from prior years to actual results and understanding
the reasons for any significant variances to inform
sensitivities to be completed by the engagement
team;
◊ Engaging internal specialists to consider the
conclusions drawn from testing performed and the
appropriateness of the going concern assumption;
and
◊ Examining the disclosures concerning the basis of
preparation of the financial statements and assessing
the appropriateness of the use of the going concern
basis in preparing the financial statements.
In our evaluation of the directors’ conclusions, we
considered the inherent risks associated with The Group’s
and the Parent company’s business model including
effects arising from macro-economic uncertainties such
as high inflation rates, we assessed and challenged the
reasonableness of estimates made by the directors and
the related disclosures and analysed how those risks
might affect The Group’s and the Parent company’s
financial resources or ability to continue operations over
the going concern period.
In auditing the financial statements, we have concluded
that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements
is appropriate.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may
cast significant doubt on The Group’s and the Parent
company’s ability to continue as a going concern for
a period of at least 12 months from when the financial
statements are authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the
relevant sections of this report.
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BEEKS FINANCIAL CLOUD GROUP PLC
INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2023
OUR APPROACH TO THE
AUDIT
OVERVIEW OF OUR AUDIT APPROACH
Overall materiality:
Group: £345,970 which represents 1.5% of The Group’s total expected
revenues at the planning phase of the audit.
Parent company: £310,152, which represents 1% of the Parent company’s
expected total assets at the planning phase of the audit.
MATERIALITY
KEY AUDIT
MATTERS
Key audit matters were identified as:
SCOPING
◊ Revenue recognition (same as previous year); and
◊ Capitalisation of development costs in intangible fixed assets (same as
previous year).
Our auditor’s reports for the year ended 30 June 2022 included one Group
and one Parent company key audit matter that have not been reported as
a key audit matter in our current year’s report. These related to impairment
of goodwill related to Velocimetrics Limited cash-generating unit (“CGU”)
(at Group level) and impairment of the investment in Velocimetrics Limited
(at Parent company level). This Group level risk is not considered to be
a key audit matter in the current year as the CGUs in the prior year were
reassessed as a result of the integration of the Velocimetrics business into
the wider Group. We determined that the relevant CGU where this Goodwill
was allocated has substantial headroom and was therefore considered
less risky this year. The Parent company level risk was also not considered
to be a key audit matter in the current year due to there being no specific
indicators of impairment of the investment.
We performed full scope audit procedures to component materiality
on the financial information of Beeks Financial Cloud Group plc (the
Parent company) and Beeks Financial Cloud Limited, the largest UK
trading company within The Group. We performed an audit of one or
more account balances, classes of transactions or disclosures on the
financial information of Velocimetrics Limited. We performed specific audit
procedures on Beeks FX VPS USA Inc. We performed analytical procedures
on the financial information of the Japanese component, Beeks Financial
Cloud Co Limited and Velocimetrics Inc. There was one change to the
scope of The Group audit from the prior year, namely the Parent company
being the subject of full scope audit procedures using component
materiality, due to it being considered individually financially significant to
The Group in the current year.
Procedures were performed through a combination of remote and on site
audit from The Group’s headquarters in Glasgow, United Kingdom as that
is where The Group’s accounting records are kept.
In total, our audit procedures covered 100% of Group revenue and 86% of
total assets.
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BEEKS FINANCIAL CLOUD GROUP PLC
INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2023
KEY AUDIT MATTERS
Key audit matters are those matters that, in our
professional judgement, were of most significance in
our audit of the financial statements of the current
period and include the most significant assessed risks
of material misstatement (whether or not due to fraud)
that we identified. These matters included those that
had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the
efforts of the engagement team. These matters were
addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on
these matters.
In the graph below, we have presented the key audit
matters, significant risks and other risks relevant to the audit.
DESCRIPTION
AUDIT RESPONSE
DISCLOSURES
OUR RESULTS
GOING CONCERN
REVENUE RECOGNITION
MANAGEMENT OVERRIDE
OF CONTROLS
MANAGEMENT OVERRIDE
OF CONTROLS
LOW
EXTENT OF MANAGEMENT JUDGEMENT
HIGH
KEY AUDIT MATTER
SIGNIFICANT RISK
OTHER RISK
HIGH
POTENTIAL
FINANCIAL
STATEMENT
IMPACT
LOW
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BEEKS FINANCIAL CLOUD GROUP PLC
INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2023
KEY AUDIT MATTER - GROUP
HOW OUR SCOPE ADDRESSED THE MATTER - GROUP
In responding to the key audit matter, we
performed the following audit procedures:
◊ We obtained an understanding of the relevant business
processes and controls relating to revenue recognition and
assessed their design and implementation;
◊ We utilised revenue data analytics on private and
wholesale revenue streams to identify any anomalies, being
transactions that fall outside of the standard posting cycle;
◊ We inspected all new contracts within VMX and assessed
whether revenue recognition was in accordance with The
Group’s accounting policies, and assessed management’s
assumptions and estimates in the allocation of revenue
across performance obligations for reasonableness and
consistency;
◊ For the Exchange Cloud revenue stream and any new
Proximity Cloud contracts, we assessed the technical paper
provided by management outlining the accounting policies
adopted for this stream, challenging management where
required to check all areas of IFRS 15 had been considered
and corroborating any assertions made within the paper
to relevant supporting documentation and discussions
with relevant individuals outside of the finance team. We
noted that there were no new or modified Proximity Cloud
contracts in the year and no revenue recognised through
Exchange Cloud contracts; and
◊ We assessed whether the accounting policies adopted
by the directors are in accordance with the requirements
of IFRS 15, and whether management applied them
consistently and appropriately to revenue transactions.
Revenue recognition (applicable to
Beeks Financial Cloud Limited and
Velocimetrics Limited (“VMX”))
We identified revenue recognition as one of
the most significant assessed risks of material
misstatement due to fraud.
Group revenue recognised in the year has grown
from £18.3m in the prior year to £22.4m for the
year ended 30 June 2023.
We pinpointed the significant risk of fraud in
revenue recognition to fall into three areas:
◊ manual adjustments to revenue that were
outside the normal pattern of journal entries
expected, based on our understanding of The
Group’s pattern of revenue recognition;
◊ management judgements and estimates
made in relation to new or modified contracts
within the Proximity Cloud or Exchange Cloud
revenue streams which involve significant
judgement and estimation by management
in the application of IFRS 15 ‘Revenue from
contracts with customers’ (IFRS 15); and
◊ new revenue contracts within VMX given the
management judgement and estimates
involved related to the identification of
performance obligations and allocation of
the purchase price to these obligations.
Proximity and Exchange Cloud contracts
The Group enters into Proximity Cloud contracts
that span a period of four to five years.
Determining the performance obligations along
with the amount of revenue to be allocated
to these performance obligations requires
management to make key judgements and
estimates. The most significant of these
judgements is the recognition of the main
performance obligation at a point in time rather
than over time, with the key estimate related
to the costs expected to be incurred for future
maintenance and upgrades when calculating
the cost-plus markup approach. These areas
are susceptible to error and management bias
given their subjectivity and can have a significant
impact on the revenue recognised in the
financial period.
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BEEKS FINANCIAL CLOUD GROUP PLC
INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2023
KEY AUDIT MATTER - GROUP
HOW OUR SCOPE ADDRESSED THE MATTER - GROUP
Relevant disclosures in the Annual
Report and Accounts 2023
◊ Financial statements: Note 1 – Summary of
significant accounting policies, Revenue
recognition and Note 2 – Critical accounting
judgements and key sources of estimation
uncertainty, Revenue;
◊ Strategic Report: Pages 10 to 22: Financial
Review, Revenue;
◊ Report of the Audit Committee, Page 41:
Significant areas of estimates considered by
the Audit Committee.
Capitalisation of development costs
in intangible fixed assets (applicable
to Beeks Financial Cloud Limited and
VMX)
We identified that the capitalisation of
development costs, specifically related to
subsequent expenditure on additional phases
of already existing assets, was one of the
most significant assessed risks of material
misstatement due to error.
We are aware that development costs have
been capitalised relating to subsequent
expenditure which involves more complex
judgements to differentiate between what is
maintenance of the existing asset and what is an
improvement that is eligible for capitalisation per
IAS 38 ‘Intangible Assets’.
We identified that £2.87m of development costs
were capitalised in the year.
IAS 38 sets out the criteria for recognising and
measuring intangible assets and requires
disclosures about them. The process for
assessing whether development costs incurred
are capitalised when all the relevant conditions
have been met can be judgemental and
is therefore susceptible to both error and
management bias.
Our results
Overall, our audit testing did not identify evidence of material
misstatement in respect of Group revenue recognition.
In responding to the key audit matter, we performed the
following audit procedures:
◊ We obtained an understanding of the relevant business
processes and controls relating to capitalisation of
development costs and assessed their design and
implementation;
◊ We obtained a breakdown of the development costs
incurred in the current period and management’s technical
paper setting out their rationale for the capitalisation
of such costs with reference to applicable accounting
standards;
◊ We challenged management’s assessment setting out the
relevant projects for which costs have been capitalised,
and assessed whether these have been accounted for in
line with IAS 38, specifically on how the relevant criteria
have been met, including where the capitalised costs relate
to newer versions of an already completed asset;
◊ We selected a sample of capitalised costs during the
period, agreeing each item to supporting documentation,
such as timesheet and payroll records, discussions with
individual employees and third-party invoices. This was
to obtain evidence that the costs represented a valid
transaction and that the associated amounts were
appropriately capitalised per the requirements of IAS 38;
◊ We challenged management as to the key differences
between the initial version of an asset, and the more up to
date version, to assess whether subsequent expenditure
was maintenance in nature or whether the costs related
to substantially improving the original asset through
additional functionality or features; and
◊ We assessed the point at which assets were available for
use by reference to when the additional features became
effective for the customer, corroborating this with the
development team.
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BEEKS FINANCIAL CLOUD GROUP PLC
INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2023
KEY AUDIT MATTER - GROUP
HOW OUR SCOPE ADDRESSED THE MATTER - GROUP
Our results
Overall, our audit testing did not identify any evidence of
material misstatement in respect of The Group’s capitalisation
of development costs.
Relevant disclosures in the Annual
Report and Accounts 2023
◊ Financial statements: Note 1 – Summary of
significant accounting policies, Intangible
assets and amortisation and Impairment.
◊ Financial statements: Note 2 – Critical
accounting judgements and key sources of
estimation uncertainty, Development costs.
◊ Financial statements: Note 10 – Intangible
assets; and
◊ Report of the Audit Committee: Areas of
estimates.
Our application of materiality
We apply the concept of materiality both in planning and performing the audit, and in evaluating
the effect of identified misstatements on the audit and of uncorrected misstatements, if any, on
the financial statements and in forming the opinion in the auditor’s report.
Materiality was determined as follows:
MATERIALITY
MEASURE
GROUP
PARENT COMPANY
Materiality
for financial
statements as a
whole
Materiality threshold
Significant judgements
made by auditor
in determining
materiality
We define materiality as the magnitude of misstatement in the financial statements that,
individually or in the aggregate, could reasonably be expected to influence the economic
decisions of the users of these financial statements. We use materiality in determining the
nature, timing and extent of our audit work.
£345,970, which represents 1.5% of The
Group’s total expected revenues at the
planning stage of the audit.
£310,152, which represents 1% of the Parent
company’s expected total assets at the
planning stage of the audit.
In determining materiality, we made the
following significant judgements.
In determining materiality, we made the
following significant judgements.
We considered revenue to be the most
appropriate benchmark given The Group’s
focus on driving revenue growth by
increasing its investment in its people,
products, and network to capture more
customers in its growing markets.
Materiality for the current year is higher
than the level that we determined for the
year ended 30 June 2022 to reflect an
increase in revenue across The Group as
a whole.
We considered total assets to be the
most appropriate benchmark given that
the Parent company does not trade and
its primary purpose is that of holding
investments for The Group.
Materiality for the current year is higher
than the level that we determined for the
year ended 30 June 2022 due to the prior
year materiality requiring to be capped
so as not to exceed The Group materiality.
Due to the growth in Group materiality, no
such cap was required to be applied in the
current year.
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BEEKS FINANCIAL CLOUD GROUP PLC
INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2023
MATERIALITY
MEASURE
GROUP
PARENT COMPANY
Performance
materiality used
to drive the extent
of our testing
We set performance materiality at an amount less than materiality for the financial
statements as a whole to reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements exceeds materiality for the
financial statements as a whole.
Performance
materiality threshold
£233,530, which is 67.5% of financial
statement materiality.
£209,353, which is 67.5% of financial
statement materiality.
Significant judgements
made by auditor
in determining
performance
materiality
In determining performance materiality,
we made the following significant
judgements.
In determining performance materiality,
we made the following significant
judgements.
We have determined 67.5% of materiality
as performance materiality across The
Group. This was considered appropriate
as a result of the volume and individual
amounts of audit adjustments in the prior
period.
We have determined 67.5% of materiality
as performance materiality across The
Group. This was considered appropriate
as a result of the volume and individual
amounts of audit adjustments in the prior
period.
Specific
materiality
We determine specific materiality for one or more particular classes of transactions,
account balances or disclosures for which misstatements of lesser amounts than
materiality for the financial statements as a whole could reasonably be expected to
influence the economic decisions of users taken on the basis of the financial statements.
Specific materiality
We determined a lower level of specific
materiality for the following areas:
We determined a lower level of specific
materiality for the following areas:
Communication
of misstatements
to the audit
committee
Threshold for
communication
Directors’ remuneration and transactions
with directors.
Directors’ remuneration and transactions
with directors.
We determine a threshold for reporting unadjusted differences to the audit committee.
£17,300 and misstatements below that
threshold that, in our view, warrant
reporting on qualitative grounds.
£15,500 and misstatements below that
threshold that, in our view, warrant
reporting on qualitative grounds.
The graph below illustrates how performance materiality
interacts with our overall materiality and the tolerance for
potential uncorrected misstatements.
FSM: Financial statements materiality
PM: Performance materiality
TFPUM: Tolerance for potential uncorrected misstatements
OVERALL
MATERIALITY
- GROUP
REVENUE
£23m
1.5%
OVERALL
MATERIALITY
- PARENT
COMPANY
TOTAL
ASSETS
£31m
1.5%
FSM
£346k
1.5%
PM
£234k
67.5%
TFPUM
£112k
32.5%
FSM
£310k
1%
PM
£209k
67.5%
TFPUM
£101k
32.5%
50
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BEEKS FINANCIAL CLOUD GROUP PLC
INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2023
AN OVERVIEW OF THE SCOPE
OF OUR AUDIT
We performed a risk-based audit that requires an
understanding of The Group’s and the Parent company’s
business and in particular matters related to:
Understanding The Group, its components, and their
environments, including group-wide controls
◊ Our assessment of audit risk, our evaluation of
materiality and our allocation of performance
materiality determines the scope of our audit work for
each component within The Group, which when taken
together, enables us to form an audit opinion on The
Group and Parent company financial statements.
We consider size, risk profile, changes in the business
environment and other factors when assessing the
level of work to be performed on each component.
◊ We obtained an understanding of the component-level
and group-wide controls of The Group, which assisted
us in identifying and assessing the risks of material
misstatement due to fraud or error, as well as assisting
us in determining the most appropriate audit strategy.
Identifying significant components
◊ Of all components, three were determined to be
significant to The Group: Beeks Financial Cloud Group
plc (the Parent entity), Beeks Financial Cloud Limited
and Velocimetrics Limited. Full scope audit procedures
were completed on the first two components with
audit of one or more classes of transactions being
performed on Velocimetrics Limited.
◊ Significant Group components were determined by
calculating benchmark percentages, with anything
identified above 15% considered a significant
component. Benchmarks reviewed included revenue
and profit before tax (excluding balances which are
eliminated on consolidation). Further, any components
that we considered likely to contain Group significant
risks were considered significant.
Type of work to be performed on financial information
of Parent and other components (including how it
addressed the key audit matters)
◊ Audit of the financial information of the component
using component materiality (full-scope audit) for
Beeks Financial Cloud Group plc and Beeks Financial
Cloud Limited;
◊ Audit of one or more account balances, classes
of transactions or disclosures of the component
(specific-scope audit) for Velocimetrics Limited;
◊ Specific audit procedures on Beeks FX VPS USA Inc;
◊ Analytical procedures at Group level (analytical
procedures) for Beeks Financial Cloud Co. Ltd and
Velocimetrics Inc;
◊ We identified revenue recognition and capitalisation
of development costs as key audit matters and the
procedures performed in respect of those areas has
been included in the key audit matters section of our
report
Performance of our audit
◊ In total, our full scope audit procedures covered 92%
of The Group’s total revenue and 71% of The Group’s
total assets. Audit of one or more account balances
covered 8% of The Group’s total revenue and 9% of
The Group’s total assets. Specific audit procedures
covered 7% of The Group’s total assets; and
◊ The audit was performed by a combination of on site
and remote procedures.
Communications with component auditors
◊ No component auditors were utilised throughout
this audit; all work was performed by The Group
engagement team.
Changes in approach from previous period
◊ The only significant change from the approach taken
in the prior year is that the Parent company is now
considered individually financially significant. The
scope of our procedures has remained unchanged.
Other information
The other information comprises the information included
in the Annual Report, other than the financial statements
and our auditor’s report thereon. The directors are
responsible for the other information contained within the
Annual Report. Our opinion on the financial statements
does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon.
Our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears
to be materially misstated. If we identify such material
inconsistencies or Parent material misstatements, we
are required to determine whether there is a material
misstatement in the financial statements themselves. If,
based on the work we have performed, we conclude that
there is a material misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
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BEEKS FINANCIAL CLOUD GROUP PLC
INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2023
Our opinion on other matters
prescribed by the Companies Act 2006
is unmodified
In our opinion, based on the work undertaken in
the course of the audit:
◊ the information given in the strategic report
and the directors’ report for the financial
year for which the financial statements are
prepared is consistent with the financial
statements; and
◊ the strategic report and the directors’ report
have been prepared in accordance with
applicable legal requirements.
Matter on which we are required to report
under the Companies Act 2006
In the light of the knowledge and understanding of The
Group and the Parent company and their environment
obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the
directors’ report.
Matters on which we are required to report by
exception
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
◊ adequate accounting records have not been kept by
the Parent company, or returns adequate for our audit
have not been received from branches not visited by
us; or
◊ the Parent company financial statements are not in
agreement with the accounting records and returns;
or
◊ certain disclosures of directors’ remuneration specified
by law are not made; or
◊ we have not received all the information and
explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities
statement set out on page 28, the directors are
responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view,
and for such internal control as the directors determine
is necessary to enable the preparation of financial
statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing The Group’s and the Parent
company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting
unless the directors either intend to liquidate The Group
or the Parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is
not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
financial statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. The extent to which our
procedures are capable of detecting irregularities,
including fraud, is detailed below:
◊ We obtained an understanding of the legal and
regulatory frameworks applicable to The Group
and Parent company and the industry in which
they operate through our general commercial and
sector experience. We determined the following laws
and regulations were most significant: UK-adopted
international accounting standards, the Companies
Act 2006, the AIM Rules for Companies, the Quoted
Companies Alliance (QCA) Corporate Governance
Code and the relevant tax compliance regulations
in the jurisdictions in which The Group and Parent
company operate;
◊ We obtained an understanding of how The Group
and Parent company are complying with these legal
and regulatory frameworks by making enquiries of
management, the Audit Committee and reviewing
legal correspondence. We corroborated our enquiries
through a review of board minute papers;
◊ We assessed the susceptibility of The Group and
Parent company’s financial statements to material
misstatement, including how fraud might occur,
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BEEKS FINANCIAL CLOUD GROUP PLC
INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2023
by evaluating management’s incentives and
opportunities for manipulation of the financial
statements. The procedures included:
›
›
Evaluation of the design effectiveness and
implementation of controls that management has
in place to prevent and detect fraud;
Journal entry testing, with a focus on manual
journals with an impact on revenue outside
of expectation, journals with unusual account
combinations and journals processed by users
where such entries were considered higher risk; and
› Challenging assumptions and judgements made
by management in areas of estimation.
◊ In assessing the potential risk of material
misstatement, we obtained an understanding of:
›
›
the operations of The Group and Parent company,
including the different revenue streams, products
and services offered and the objectives and
strategies of The Group and Parent Company, in
order to understand the classes of transactions,
account balances, expected disclosures and risk
areas; and
The Group and Parent company’s control
environment, including the policies and procedures
implemented to comply with regulatory
requirements, including the adequacy of the
training to inform staff of changes in legislation,
internal review procedures and resources available
to ensure that possible breaches of requirements
are appropriately investigated and reported;
◊ We completed audit procedures to conclude on
the compliance of disclosures in the annual report
and financial statements with applicable financial
reporting requirements;
◊ These audit procedures were designed to provide
reasonable assurance that the financial statements
were free from fraud or error. The risk of not detecting
a material misstatement due to fraud is higher than
the risk of not detecting one resulting from error
and detecting irregularities that result from fraud is
inherently more difficult than detecting those that
result from error, as fraud may involve collusion,
deliberate concealment, forgery or intentional
misrepresentations. Also, the further removed non-
compliance with laws and regulations is from events
and transactions reflected in the financial statements,
the less likely we would become aware of it;
◊ The engagement partner’s assessment of the
appropriateness of the collective competence and
capabilities of the engagement team included
consideration of the team’s:
›
›
›
understanding of, and practical experience
with, audit engagements of a similar nature and
complexity, through appropriate training and
participation;
knowledge of the industry in which The Group and
Parent company operate; and
understanding the legal and regulatory
requirements specific to The Group and Parent
company.
◊ The communications within the engagement
team in respect of non-compliance with laws and
regulations and fraud included the potential for fraud
in revenue recognition through manual journal entries
and also through areas of key estimation or where
management judgement is required.
A further description of our responsibilities for
the audit of the financial statements is located
on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the company’s members
those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the
company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
James Andersen
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Glasgow
29 September 2023
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BEEKS FINANCIAL CLOUD GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
Revenue
Other Income
Cost of sales
Gross profit
Administrative expenses
Operating (loss) / profit
Analysed as
Earnings before depreciation, amortisation, acquisition costs,
share-based payments and non-recurring costs:
Depreciation
Amortisation – acquired intangible assets
Amortisation – other intangible assets
Share-based payments
Other non-recurring costs
Operating (loss) / profit
Finance income
Finance costs
(Loss) / Profit before taxation
Taxation
(Loss)/Profit after taxation for the year attributable to the
owners of Beeks Financial Cloud Group plc
Other comprehensive income
Amounts which may be reclassified to profit and loss
Currency translation differences
Total comprehensive income for the year attributable to the
owners of Beeks Financial Cloud Group plc
Basic (loss)/earnings per share
Diluted (loss)/earnings per share
2023
£000
22,357
361
2022
£000
18,289
512
(13,602)
(10,862)
9,116
(9,447)
(331)
8,362
(4,550)
(489)
(1,227)
(2,291)
(136)
(331)
101
(420)
(650)
561
(89)
77
(12)
Pence
(0.14)
(0.13)
7,939
(7,554)
385
6,811
(3,213)
(802)
(726)
(1,661)
(24)
385
21
(340)
66
760
826
5
831
Pence
As Restated
1.43
1.35
Note
3
3
4
11
10
10
21
4
6
5
9
24
24
The above income statement should be read in conjunction with the accompanying notes.
54
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BEEKS FINANCIAL CLOUD GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2023
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
Note
10
11
12
14
13
15
17
17
12
18
18
17
20
22
22
Non-current assets
Intangible assets
Property, plant and equipment
Deferred tax
Current assets
Trade and other receivables
Inventories
Cash and cash equivalents
Total assets
Liabilities
Non-current liabilities
Borrowings
Lease liabilities
Deferred tax
Total non-current liabilities
Current liabilities
Trade and other payables
Lease liabilities
Borrowings
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share premium
Reserves
Retained earnings
Total equity
2023
£000
8,106
17,952
5,398
31,456
6,391
1,767
7,829
15,987
47,443
-
2,047
3,884
5,931
4,952
1,960
1,814
8,726
14,657
32,786
82
23,775
4,879
4,050
32,786
2022
£000
6,698
16,270
4,201
27,169
5,600
1,818
10,160
17,578
44,747
1,320
2,303
2,968
6,591
5,139
1,280
978
7,397
13,988
30,759
82
23,775
2,657
4,245
30,759
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These financial statements
were approved by the Board of
Directors on 29th September
2023 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.
55
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BEEKS FINANCIAL CLOUD GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
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
70
(12)
705
(315)
883
9,452
2,982
13,765
-
-
-
-
12
-
-
12
82
-
-
-
-
-
-
-
-
5
5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
826
826
-
5
826
831
167
167
14,323
-
14,335
1,661
(270)
-
-
-
1,661
270
-
-
-
-
1,391
14,323
437
16,163
(7)
705
(315)
2,274
23,775
4,245
30,759
-
77
77
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,291
(146)
2,145
-
-
-
-
-
-
-
(89)
(89)
-
77
(89)
(12)
(252)
(252)
-
2,291
146
-
(106)
2,039
82
70
705
(315)
4,419
23,775
4,050
32,786
Balance at 1 July
2021
Profit after income
tax expense for the
year
Currency translation
difference
Total
comprehensive
income
Deferred tax
Issue of share
capital
Share-based
payments
Exercise of share
options
Total transaction
with owners
Balance at 30 June
2022
Loss after income
tax expense for the
year
Currency translation
difference
Total
comprehensive
income
Deferred tax
Share-based
payments
Exercise of share
options
Total transaction
with owners
Balance at 30 June
2023
The above statement of changes in equity should be read in conjunction with the accompanying notes.
56
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BEEKS FINANCIAL CLOUD GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
CONSOLIDATED CASH
FLOW STATEMENT
Cash flows from operating activities
(Loss)/Profit for the year before tax
Adjustments for:
2023
£'000
2022
£'000
Note
(650)
66
Depreciation and amortisation
10/11
6,435
4,741
Foreign exchange
Gain on disposal of property, plant and equipment
Loan interest
Lease liability interest
Share options
Proceeds from grant income
Operating cash flows
Increase in receivables
Increase/(Decrease) in inventory
(Decrease)/Increase in payables
Operational cash flows after movement in working capital
Corporation tax received
Net cash generated from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Capitalised development costs
Net cash used in investing activities
Cash flows from financing activities
Repayment of existing loan borrowings
Repayment of lease liabilities
Interest on lease liabilities
Issue of loans
-
-
140
165
(71)
(24)
129
115
2,291
1,661
609
8,990
-
6,617
(1,667)
(3,014)
311
(988)
(696)
1,765
6,938
4,380
(6)
44
6,932
4,424
(4,329)
(9,562)
-
60
(2,822)
(2,590)
(7,151)
(12,092)
(618)
(2,900)
(1,267)
(936)
(165)
(131)
-
3,670
5
5
7
14
13
11
10
19
17
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BEEKS FINANCIAL CLOUD GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
Interest payable on bank loans
5
(140)
(242)
Proceeds from the issue of new share capital
-
14,989
Net cash generated from financing activities
(2,190)
14,450
Net (decrease)/increase in cash and cash equivalents
(2,409)
6,782
Effects of exchange rates on cash and cash equivalents
78
5
Cash and cash equivalents at beginning of year
10,160
3,372
Cash and cash equivalents at end of year
15
7,829
10,160
The above statement of changes in equity should be read in conjunction with the accompanying notes.
58
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
1. 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. The registered number of the
Company is SC521839. The financial statements are
prepared in pounds sterling and rounded to the nearest
thousand. In certain cases, amounts in the report have
been rounded to the nearest pound.
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 Accounting
Standards and with the requirements of the Companies
Act 2006.
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.
International Financial Reporting Standards
(IFRS) and Interpretations issued but not yet
effective
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:
◊ IFRS 17 (including the June 2020 Amendments
to IFRS 17) – Insurance Contracts
◊ Amendments to IAS 1 – Classification of Liabilities as
Current or Non-current
◊ Amendments to IAS 1 and IFRS Practice Statement 2
– Disclosure of Accounting Policies
◊ Amendments to IAS 8 – Definition of Accounting
Estimates
◊ IFRS16 – Lease Liability in a Sale and Leaseback
transaction
◊ IFRS 4 - Amendments to IFRS 4 Insurance Contracts
- deferral of IFRS 9
◊ Amendments to IAS 12 – Deferred Tax related to Assets
and Liabilities arising from a single transaction
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
There are no new accounting policies applied in the year
ended 30 June 2023 which have had a material effect on
these accounts. In addition, the Directors do not consider
that the adoption of new and revised standards and
interpretations issued by the IASB in 2021 has had any
material impact on the financial statements of The Group.
Going concern
The Directors have assessed the current financial position
of Beeks Financial Cloud Group plc, taking account of its
business activities, together with the factors likely to affect
its future development, performance and position as set
out in the Strategic Report on pages 10 to 22.
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
◊ Current level of debt obligations
◊ Ability to comply with existing covenants
◊ 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, liquidity
position and borrowing facilities are described in the Chief
Financial Officer’s Report on pages 15 to 18.
We take great comfort from the resilience of our business
model. The level of customer churn across our business
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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.
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 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 financial
year, The Group had net cash of £4.41m (2022: Net cash
£7.86m) 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 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 2024, 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 (December 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.
Accordingly, the Directors have adopted the going
concern basis in preparing the Report for the year ending
30th June 2023.
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.
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
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
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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.
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.
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.
Revenue recognition
Revenue arises from the provision of cloud-based
localisation. To determine whether to recognise revenue,
the group follows a 5-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, if applicable.
Infrastructure services
The Group’s core business provides managed cloud
computing infrastructure and connectivity. The Group
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 pricing model and
comparison to industry standards.
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. Where
such contracts include a 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
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.
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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 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
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. Refer to note 2 for more detail on these
considerations.
Professional and consultancy services
Revenue from professional and consultancy services
are recognised 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
5-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
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 on a when-and-if-available basis 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.
Further detail is provided within key judgement and
estimations on page 69.
Where such contracts include a 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 3 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.
◊ Delivery of unspecified upgrades and future software
releases
Rental Income
The delivery and installation of the hardware, and
provision of the software licence are highly interrelated
and considered to be one performance obligation. 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.
The maintenance and technical support over the contract,
as well as the delivery of the unspecified upgrades and
future software releases are recognised evenly on an
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, have been classified as cost of
sales.
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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.
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
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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 ‘administrative
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 amounts 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 asset that is subject to the expected credit
loss model is trade receivables, 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.
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.
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
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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 five 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.
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.
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.
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. 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
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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 5 and 10 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.
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Impairment
Diluted earnings per share
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 22.
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 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.
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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.
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.
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:
›
›
›
Professional fees;
Any non-recurring integration costs; Any gain or
loss on the revaluation of contingent consideration
where it is material; and
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.
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
2. CRITICAL ACCOUNTING
JUDGEMENTS AND KEY
SOURCES OF ESTIMATION
UNCERTAINTY
Key judgements
The key judgments in preparation of the financial
statements are below:
Revenue
The Group applies judgment for elements of revenue
recognition. The key areas of assessment include whether
The Group acts as a Principal vs an Agent for the sale of
hardware, where third parties are utilised. The Group also
applied several areas of judgement within the revenue
recognition of Proximity Cloud contracts as outlined
below.
Full details of The Group’s revenue recognition policy can
be found on page 61.
Principal v agent
Management is required to exercise its judgement in the
classification of revenue recognition on either an Agent
or Principal basis. Management have considered the
primary indicators used to assess the Agent/Principal
classification and has concluded that The Group acts
as a Principal in each sales transaction. This judgement
has been reached on the basis that The Group holds the
inventory risk, has control over the pricing over a particular
service, takes the credit risk, and bears the responsibility
to service the promise of the agreements. If management
concluded that The Group acted as Agent, then this would
result in revenue being recognised on a net basis where
margin earned would be recognised as revenue with nil
costs being recognised.
Proximity and Exchange Cloud
The Proximity and Exchange Cloud contracts include
multiple deliverables. The Group applies judgement to
identify the performance obligations which ultimately
feeds into the estimation of the transaction price to be
allocated between them. The Group has identified the
performance obligations as:
a. the delivery and installation of the hardware and
provision of the software licence (the appliance),
recognised on a point-in-time basis; and
b. the stand-ready services (support, maintenance,
unspecified upgrades) recognised over time.
Management considers that the delivery and installation
of the hardware and provision of the software licence are
highly interrelated as The Group could not fulfil its promise
to deliver the software licence without delivery and
installation of the hardware. As such, The Group consider
this to be one performance obligation, recognised at a
point-in-time basis, once the delivery of the appliance to
the Customer is complete and the relevant licence key
has been provided.
Management considers that the stand-ready services
do not affect the Customers’ ability to use and benefit
from the software licence and the software can function
on its own without this support. As such, the provision
of stand-ready services is considered to be a separate
performance obligation, recognised over time as the
services are rendered.
Please refer to key estimations below for further
information.
Software Licences
Management have applied judgement in determining
the performance obligations of the delivery of software
licenses and maintenances. Management have concluded
that delivery of the software license key is one performance
obligation, recognised upfront at a point-in-time when
control of the goods has transferred, being the delivery of
the software licence keys to the customer. The ongoing
support and maintenance service is deemed a separate
performance obligation and is recognised evenly over the
period as the service is rendered.
Operating Segments/Cash Generating Units
The Group applies judgement over the operating segments
to be reported in the financial statements. The key concept
applied is to provide information used by management that
will allow users to understand the entity’s main activities,
where these are located and how these are performing. In
doing so, management exercise judgement over who the
Chief Operating Decision Makers (CODMs) are, consider the
discrete financial information available and determine what
information is regularly reviewed by the CODMs. During
FY22, The Group was re-organised into two main business
segments for revenue purposes - public/private cloud and
Proximity Cloud/Exchange Cloud given the growth strategy
and changing opportunities of the business.
Also given the heavily integrated nature of the business,
the CGU associated with analytics is now classed at
operating segment level and as a result of this change,
goodwill is allocated and tested against these new
segments. Refer to Note 10 for further information on this.
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Development costs
The Group reviews half yearly whether the recognition
criteria for development costs have been met. This is
necessary as the economic success of any product
development is uncertain and may be subject to future
technical problems at the time of recognition. In addition,
all internal activities related to the development of new
products which are not finalised by the period end are
continuously monitored by the Directors and assessed
for any indications of impairment. Any non-development
costs are recognised in the statement of comprehensive
income. See note 10 for further information.
Key estimations
The key assumptions concerning the future, and other key
sources of estimation uncertainty at the year end, that
have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the
next financial year, are discussed below.
Software licences and maintenance
Management have used observable evidence from
maintenance support time, pricing models and industry
practice comparisons to estimate the percentage of
split between licence and maintenance for the sale of
software licences that have an attached maintenance
performance obligation.
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
3. 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 accounts
for more than 10% of Group revenue. The total revenue for
this customer amounts to £7.10m (2022 - £4.58m). £0.3m
of this revenue has occurred within the Proximity Cloud
operating segment, with the other £6.80m of revenue
included within public/private cloud revenue.
Performance is assessed by a focus on the change in
revenue across public/private cloud and newv 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 30/06/23 (£’000)
Year ended 30/06/22 (£’000)
PUBLIC/
PRIVATE
CLOUD
PROXIMITY/
EXCHANGE
CLOUD
TOTAL
PUBLIC/
PRIVATE
CLOUD
PROXIMITY/
EXCHANGE
CLOUD
TOTAL
Over time
Infrastructure/software as a service
19,162
Maintenance
Proximity/Exchange Cloud
Professional services
Over time total
Point in time
Proximity/Exchange Cloud
Hardware/Software resale
Software licences
Set up fees
Point in time total
-
-
454
-
19,162
13,057
-
13,057
537
454
273
518
-
234
-
57
-
518
57
234
537
-
273
19,972
454
20,426
13,809
57
13,866
-
529
1,267
135
1,931
-
-
-
-
-
-
529
1,267
135
1,931
-
2,222
2,222
1,601
520
80
-
-
-
1,601
520
80
2,201
2,222
4,423
Total revenue
21,903
454
22,357
16,010
2,279
18,289
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Revenues by Operating Segment, further disaggregated
are as follows:
2023
2022
£'000
£'000
Revenues by geographic
location are as follows:
United Kingdom
5,660
5,849
Europe
US
3,119
9,193
2,508
5,556
Rest of World
4,385
4,376
Total
22,357
18,289
During the year £267k (2022: £419k) was recognised in other
income for grant income received from Scottish Enterprise
and £94k (2022: £93k) was recognised as rental income.
Non-current Assets by geographic location are as
follows:
United Kingdom - Property, plant and equipment
Europe - Property, plant and equipment
Rest of World - Intangible assets
Rest of World – Goodwill
Rest of World - Property, plant and equipment
US – Property, plant and equipment
2023
2022
£'000
£'000
9,235
1,610
8,132
1,717
6,738
5,330
1,368
2,750
4,357
1,368
2,509
3,912
Total Non-Current Assets
26,058
22,968
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.
72
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
4. OPERATING (LOSS)/PROFIT
Operating (Loss)/Profit is stated after charging:
Auditor’s remuneration
2023
2022
£000
£000
Staff costs (note 7)
6,909
5,637
Audit
Depreciation on owned
assets (note 11)
Depreciation right-of-use
assets (note 11)
Amortisation of acquired
intangibles (note 10)
Amortisation of other
intangibles (note 10)
Other cost of sales and
admin*
Foreign exchange losses /
(gains)
Share-based payments
(note 21)
3,140
2,189
1,410
1,024
Fees payable for the audit
of the consolidation and the
parent company accounts
Fees payable for the audit of
the subsidiaries
489
802
Non Audit
1,227
726
Fees payable for the interim
review of the group
7,191
6,452
Assurance related services
256
(98)
2,291
1,661
Other non-recurring costs
136
24
*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.
2023
2022
£000
£000
83
75
5
20
183
63
59
4
-
126
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
5. FINANCE COSTS
The employee benefits expense during the year was as
follows:
Bank charges
Interest on loan liabilities
Interest on lease liabilities
2023
2022
£000
£000
115
140
165
95
129
115
Total finance costs
420
340
6. FINANCE INCOME
Financing charge on
Proximity Cloud contracts
Total finance income
2023
2022
£000
£000
101
101
21
21
7. 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:
2023
2022
£000
£000
22
21
81
68
2023
2022
£000
£000
Wages and salaries
5,969
4,925
Social security costs
669
591
Other pension costs
271
121
Total employee benefits
expense
6,909
5,637
Share-based payments
(note 21)
2,291
1,661
Wages and salary costs directly attributable to the
development of products are capitalised in intangible
assets (note 10). The total additions capitalised in
intangible assets relates to payroll costs and external third
party costs.
8. DIRECTORS’ EMOLUMENTS
2023
2022
£000
£000
292
239
14
2
-
308
4
2
133
378
126
109
Aggregate remuneration
in respect of qualifying
services
Aggregate amounts of
contributions to pension
schemes in respect of
qualifying services
Other benefits in kind
Gain on exercise of options
Total Directors’
emoluments
Highest paid director -
aggregate remuneration
(excluding share-based
payments)
103
89
There are two directors (2022: two) who are accruing
retirement benefits in respect of qualifying services.
Management and
administration
Support and development
staff
Average number of
employees
74
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
9. TAXATION EXPENSE
Current
Foreign tax on overseas companies
R&D tax credit received
Total current tax
2023
2022
£000
£000
65
(95)
(30)
33
-
33
Origination and reversal of temporary differences
(531)
(435)
Prior year deferred tax adjustments
Total deferred tax
-
(358)
(531)
(793)
Tax on (loss)/profit on ordinary activities
(561)
(760)
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:
2023
% ETR
2022
% ETR
£000 movement
£000 movement
(Loss)/profit before tax
(650)
(Loss)/profit on ordinary activities multiplied by the standard
rate of corporation tax in the UK of 19% (2022: 19%)
(124)
21%
66
13
19%
Effects of:
Impact of super deduction
(215)
33.18%
(170)
(257.81%)
Expenses not deductible for tax purposes
481
(74.23%)
243
368.13%
R&D tax credits relief
Share option deduction
Prior year deferred tax adjustments
Adjustment for tax rate differences
Foreign tax suffered
R&D tax credit received
Total tax charge
(89)
13.73%
(140)
(212.12%)
(404)
62.35%
(173)
(262.12%)
(88)
(37)
40
(125)
13.58%
(358)
(542.42%)
4.01%
0.32%
-
(175)
(265.15%)
-
-
-
-
(561)
86.31%
(760)
(1,151.51%)
The effective tax rate (ETR) for the year was 86.31% (2022: -1,151.51%).
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
10. INTANGIBLE ASSETS
ACQUIRED
CUSTOMER
RELATIONSHIPS
DEVELOPMENT
COSTS
TRADE NAME
GOODWILL
TOTAL
Cost
As at 30 June 2021
Charge for year
Additions
Grant funding received
£000
2,383
-
-
2,590
-
(432)
-
£000
£000
£000
£000
3,990
137
2,336
8,846
Foreign exchange movements
147
-
-
As at 1 July 2022
2,530
6,148
137
2,336
Additions
Grant Funding received
-
-
2,868
-
(147)
-
Foreign exchange movements
(29)
-
-
-
-
-
-
-
-
2,590
(432)
147
11,151
2,868
(147)
(29)
As at 30 June 2023
2,501
8,869
137
2,336
13,843
Accumulated Amortisation
As at 30 June 2021
Charge for the year
(773)
(287)
(1,064)
(1,214)
(34)
(27)
(968)
(2,839)
-
(1,528)
Foreign exchange movements
(86)
-
-
-
(86)
As at 1 July 2022
(1,146)
(2,278)
Charge for the year
(345)
(1,343)
Foreign exchange movements
Grant income release
17
-
-
414
(61)
(27)
-
-
(968)
(4,453)
-
-
-
(1,715)
17
414
As at 30 June 2023
(1,474)
(3,207)
(88)
(968)
(5,737)
NBV as at 1st July 2022
NBV as at 30th June 2023
1,384
1,027
3,870
76
1,368
6,698
5,662
49
1,368
8,106
76
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Development costs have been recognised in accordance
with IAS 38 in relation to the network automation 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 £2.5m
which was originally capitalised in July 2021. These assets
now have a carrying value of £1.5m and a remaining
useful life of 3 years.
During the year, a total of £2.9m of development costs
relating to the development of Proximity Cloud/Exchange
Cloud were capitalised. Included within this was the
release of Exchange Cloud which launched in July 2022.
£1.7m was capitalised in relation to this which now has
a carrying value of £1.4m at June 2023. The remaining
amortisation period on this asset is 4 years. In addition,
£1.7m was capitalised in relation to further releases of the
product. This has also been amortised over a useful life of
5 years. All costs incurred during the preliminary stages of
development projects are charged to profit or loss.
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.
Private/public cloud
Proximity/Exchange Cloud
Total goodwill
2023
£'000
1,368
-
1,368
Goodwill has been allocated to the public/private
segment and management have reviewed and
confirmed that there is no indication of impairment.
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.
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%) 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% were estimated,
which were significantly less than both The Group’s internal
business plan and external market mid-term forecasts.
An impairment review was carried out on the two
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, the existing
weighted sales pipeline was used as a typical pipeline
profile for current and future years. 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 2023, 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.
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
11. NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT
COMPUTER
EQUIPMENT
OFFICE
EQUIPMENT
AND FIXTURES
AND FITTINGS
RIGHT OF USE
FREEHOLD
PROPERTY
TOTAL
£’000
£’000
£’000
£’000
3,908
-
16,290
Cost
As at 30 June 2021
Additions
Stock transfers
Disposals
Exchange adjustments
As at 1 July 2022
Additions
Exchange adjustments
As at 30 June 2023
Depreciation
As at 30 June 2021
Charge for the year
Exchange adjustments
Depreciation on disposals
£’000
12,311
5,055
(830)
-
7
16,543
3,950
(3)
20,490
(4,647)
(2,134)
3
-
(54)
(485)
71
163
-
-
180
146
-
326
(38)
(28)
-
18
1,997
-
-
3,034
10,249
-
-
-
(830)
(539)
7
5,420
3,034
25,177
2,149
172
7,741
5
-
6,250
169
3,039
31,596
(1,215)
-
(5,900)
(1,024)
(27)
(3,213)
-
185
-
0
3
203
As at 1 July 2022
(6,778)
(48)
(2,054)
(27)
(8,907)
Charge for the year
Exchange adjustments
(3,020)
(30)
(49)
-
(1,410)
(157)
(71)
-
(4,550)
(187)
As at 30 June 2023
(9,828)
(97)
(3,621)
(98)
(13,644)
NBV as at 30 June 2022
NBV as at 30 June 2023
9,765
10,662
132
229
3,366
3,007
16,270
4,120
2,941
17,952
Of the total additions in the year of £6.2m, £2.1m relates to right-of-use assets held under IFRS16 (2022 - £2.0m).
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 19.
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
12. NON-CURRENT ASSETS
- DEFERRED TAX
Deferred tax is recognised at the standard UK
corporation tax of 25% for fixed assets in the UK
(2022: 25%). Deferred tax in the US is recognised at
an average rate of 21% for 2022 (2022: 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.
Deferred tax assets and liabilities on statement of
financial position prepared after the substantive
enactment of the new tax rate are calculated using
a tax rate of 25% to the extent that the temporary
differences will reverse after 2023.
2023
2022
£000
£000
The split of the deferred tax asset and
liabilities are summarised as follows:
Deferred tax (liabilities)
(3,884)
(2,968)
Deferred tax asset
Total deferred tax
Movements
Opening balance
Charge to profit or loss (note 9)
Charged to goodwill / equity
Other movement
Closing balance
5,398
1,514
1,232
531
(252)
3
4,201
1,233
279
793
167
(6)
1,514
1,233
The movement in deferred tax assets and liabilities
during the year is as follows:
SHARE OPTIONS
TAX LOSSES C/
FWD
£000
223
281
167
671
387
(251)
807
£000
630
2,747
-
3,377
1,036
-
4,413
ACCELERATED
TAX
DEPRECIATION
AND OTHER
MOVEMENT
£000
43
110
-
153
24
-
177
TOTAL
DEFERRED TAX
ASSET CARRIED
FORWARD
TOTAL
DEFERRED TAX
(LIABILITY)
CARRIED
FORWARD
£000
896
3,138
167
4,201
1,447
(251)
£000
(617)
(2,351)
-
(2,968)
(916)
-
5,397
(3,884)
At 1 July 2021
Charge to income
Charge to equity
As at 30 June 2022
Charge to income
Charge to equity
As at 30 June 2023
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
13. CURRENT ASSETS -
INVENTORIES
2023
2022
£000
£000
Materials
1,315
1,566
Consumables
452
252
1,767
1,818
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, £nil (2022 - £0.99m) of inventories were
recognised as an expense in the period.
14. CURRENT ASSETS - TRADE
AND OTHER RECEIVABLES
2023
2022
£000
£000
Trade receivables
2,186
1,036
The contract assets primarily relate to our rights to a
consideration for goods or services delivered but not
invoiced at the reporting date. 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 2022
2,329
961
Transferred to receivables
from contract assets from
the beginning of the period
Revenues recognised
during the period to be
invoiced
Revenue recognition
that was included in the
contract liability balance at
the beginning of the period
Remaining performance
obligations for which
considerations have been
received
(901)
1,289
-
-
-
-
(817)
1,009
Less: allowance for
impairment of receivables
(47)
(80)
Balance at 30 June 2023
2,717
1,153
2,139
1,040
2,717
111
384
956
2,083
2,329
107
125
6,391
5,600
The credit risk relating to trade receivables is analysed as
follows:
2023
2022
£000
£000
Trade receivables
2,186
1,036
Less: allowance for
impairment of receivables
(47)
(80)
2,139
956
Prepayments
Contract asset
Other taxation
Other receivables
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Movements in the allowance for expected credit losses
The Directors consider that the carrying amount of trade
are as follows:
Opening balance
Movement in allowances
Receivables written
off during the year as
uncollectable
2023
2022
£000
£000
80
(24)
19
91
(9)
(30)
Closing balance
47
80
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 2023 is £25k
(2022 - £74k). The decrease in expected credit loss
allowance is in line with the change in the lower risk profile
of trade receivables during the year.
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.
2023
ECL RATE
2023 ECL
ALLOWANCE
2022
ECL RATE
Risk profiling category (ageing)
£'000
%
£'000
Current
0-30 days
30-60 days
60-90 days
Over 90 days
Total
959
988
94
12
88
-0.10%
-1.00%
-2.00%
-5.00%
-15.00%
-1
-10
-2
-1
-11
-25
£'000
923
20
8
40
45
%
-1.5%
-2%
-15%
-45%
-90%
2022 ECL
ALLOWANCE
£'000
-14
-0
-1
-18
-41
-74
The ECL rate in the current year has been reduced in line
The aging of trade receivables at the reporting date is as
with the risk profile of trade receivables, historic trade
follows:
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
Not yet due
payment for debts in this aging. Those over three months
Due 1 to 3 months
relate to customers without history of default for which
there is a reasonable expectation of recovery.
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.
Due 3 to 6 months
More than 6 months due
2023
£000
965
1,115
30
76
2022
£000
923
68
45
-
2,186
1,036
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
15. CURRENT ASSETS – CASH
AND CASH EQUIVALENTS
2023
2022
£000
£000
Cash and bank balances
7,829
10,160
7,829
10,160
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.
16. 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 following:
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 £1,255,542 at 30 June 2023 (£1,512,444 at
30 June 2022) and potential exchange rate exposure
within EUR trade payables balances of £59,768 (£26,500
at 30 June 2022). The Group had potential exchange
rate exposure within USD trade receivables of £1,179,455
(£403,700 at 30 June 2022) and potential exchange rate
exposure within EUR trade receivables of £37,262 (£9,300
at 30 June 2022). The Group had potential exchange
rate exposure within USD intercompany balances of
£5,807,729 (£1,157,893 as at 30 June 2022) and within
JPY intercompany balances of £189,028 (£236,780 as at
30 June 2022). The Group also has potential exchange
rate exposure within USD bank balances of £3,644,955
(£159,534 as at 30 June 2022) and £607,023 within EUR
bank balances (£164,421 as at 30 June 2022).
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.
At a total debt level of £3.4m, with £1.8m contracted on a
variable rate and is the remainder under a fixed interest
rate, 1% increase in interest rates would give rise to an
additional annual interest rate charge of £18,140.
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:
Cash and cash equivalents
Trade receivables
Contract asset
Other receivables
2023
£000
7,829
2,186
2,717
384
2022
£000
10,160
1,036
2,329
125
13,116
13,650
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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 £2,139,000 (2022: £956,000) 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 2023, The Group’s financial liabilities
(excluding leases disclosed in Note 17) have contractual
maturities (including interest payments where applicable)
as summarised below:
CURRENT
NON-CURRENT
Within
1 month
1–3
months
3–12
months
£'000
3,483
-
£'000
£'000
1,052
1,445
417
369
1–5
years
£'000
-
-
After
5 years
£'000
-
-
Trade and other payables
Borrowings
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.
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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.
2023
2022
£000
£000
17. NON-CURRENT LIABILITIES
- BORROWINGS AND OTHER
FINANCIAL LIABILITIES
2023
2022
£000
£000
Other loans
-
1,320
Lease liabilities
2,047
2,303
Total equity
32,786
30,759
Other loans
Cash and cash equivalents
7,829
10,160
Under one year
Between one to five years
2,047
3,623
1,814
-
978
1,320
1,814
2,298
Capital
Total equity
Other loans
40,615
40,919
32,786
30,759
1,814
2,297
Lease liabilities
4,006
3,583
Overall financing
38,606
36,639
Capital-to-overall
financing ratio
Other risks
1.05
1.12
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.
The bank loan derives from a £1.8m term loan facility
taken out from Barclays Bank in December 2020 and a
£1.47m property loan facility taken out from Barclays Bank
in December 2021. The term loan was renewed during the
financial year leaving 6 quarterly instalments of £0.125m
due from March 2023. The property loan is repayable in
8 quarterly instalments of £0.03m which commenced in
December 2021 along with a bullet balance which was
repaid at Maturity in September 2023. This, along with The
Group’s revolving credit facility available of £3.5m, is used
to fund The Group’s working capital requirements when
required. The available revolving credit facility balance of
£3.5m was unutilised as at 30 June 2023.
Barclays have been given security for the facility of the
UK assets of The Group and an unlimited guarantee is
afforded to Barclays.
Costs of £21,500 have been amortised over the life of the
term loan and aged in line with the capital repayments.
During the year, The Group entered into two new
asset financing arrangements. These asset financing
agreements have been disclosed under lease liabilities
(note 19).
84
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Changes in liabilities arising from financing activities:
LEASE
LIABILITIES
LOANS
TOTAL
£000
£000
£000
Balance at 1 July 2022
3,327
2,297
5,624
Lease liabilities additions
IFRS 16
Proceeds from new leases
under asset financing
149
1,963
-
-
149
1,963
Loan repayments
-
(483)
(483)
Lease repayments
(1,432)
-
(1,432)
Balance at 30 June 2023
4,007
1,814
5,821
Included within the lease liabilities
balance of £4.01m is £1.61m of asset
finance lease liabilities.
19. LEASES
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
18. CURRENT LIABILITIES –
TRADE AND OTHER PAYABLES
2023
2022
£000
£000
Trade payables
2,937
3,378
Other loans
Lease liability
Accruals
Contract liabilities
Other taxation and social
security
Other payables
1,814
1,960
375
1,153
373
114
978
1,280
575
961
192
33
Balance at 1 July 2022
Additions
Depreciation
Foreign exchange
8,726
7,397
Balance at 30 June 2023
LEASEHOLD
PROPERTY AND
IMPROVEMENT
£000
3,366
2,101
(1,410)
16
4,073
The right-of-use assets are disclosed as non-current
assets and are disclosed as property, plant and
equipment (note 11).
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Right-of-use lease liabilities
Amounts recognised in the Consolidated statement of
cash flows:
2023
2022
£000
£000
10
25
1,432
1,067
Amounts payable under
leases:
Short-term and low value
lease expense
Repayment of lease
liabilities within cash flows
from financing activities
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:
2023
2022
£000
£000
94
93
Rental income from
operating leases
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:
Within 1 year
Between 1 and 2 years
Between 2 and 3 years
2023
2022
£000
£000
96
96
96
94
94
94
2023
2022
£000
£000
Maturity analysis:
Within one year
(2,068)
(1,407)
Within two years
(1,574)
(1,639)
Within three years
(461)
(769)
Within four years
Add: unearned interest
(12)
108
-
232
Total lease liabilities
(4,007)
(3,583)
Analysed as:
Non-current (Note 18)
(2,047)
(2,303)
Current (Note 19)
(1,960)
(1,280)
(4,007)
(3,583)
The Group does not face a significant liquidity risk with
regard to its lease liabilities. The interest expense on lease
liabilities amounted to £165k for the year ended 30 June
2023 (2022: £131k). 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 2023,
in relation to leases under IFRS 16, The Group recognised
the following amounts in the Consolidated statement of
comprehensive income:
Depreciation charge
Interest expense
2023
2022
£000
£000
1,410
165
1,024
131
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 4.
86
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
20. EQUITY - ISSUED CAPITAL
Ordinary shares - fully paid
65,571,434
65,406,764
82
82
2023
2022
2023
2022
shares
shares
£000
£000
Movements in ordinary share capital
Details
Balance
Date
30 June 2018
Shares
50,043,100
Issue
price
£000
62
EMI Share options exercised
31 August 2018
677,700
£0.00125
EMI Share options exercised
24 October 2018
EMI Share options exercised
20 June 2019
32,200
£0.00125
111,800
£0.00125
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
New share issue
26 April 2021
4,347,827
£0.00125
EMI Share options exercised
15 November 2021
264,705
£0.00125
New share issue
25 April 2022
9,090,910
£0.00125
Balance
30 June 2022
65,406,764
EMI Share options exercised
16 January 2023
EMI Share options exercised
5 April 2023
EMI Share options exercised
31 May 2023
21,946
£0.00125
106,796
£0.00125
35,928
£0.00125
Balance
30 June 2023
65,571,434
1
-
1
-
-
1
5
-
12
82
-
-
-
82
Ordinary shares
During the year, 164,670 share options were exercised.
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
21. SHARE-BASED PAYMENTS
The movements in the share options during the year, were
as follows:
2023
2022
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
4,925,668
1.20
2,916,973
0.89
Exercised during the year
(164,670)
1.24
(264,705)
Issued during the year
1,549,000
0.83
2,273,400
Forfeited during the year
(76,955)
1.43
-
Outstanding at the end of
the year
Exercisable at the end of
the year
6,233,043
1.35
4,925,668
1,410,180
0.83
-
1.02
1.58
-
1.20
-
The Group granted a total of 1,549,000 share options to
members of its management team on 2nd December
2022.
During the year 1,574,850 shares from Grant 2 vested, with
164,670 shares being exercised in the year. The remaining
balance remain as exercisable at the end of the year.
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:
88
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
GRANT 3
GRANT 4A
GRANT 4B
GRANT 4C
GRANT 5A
GRANT 5B
GRANT 5C
TOTAL
Shares
1,042,063
1,022,500
597,150
632,150
604,000
462,500
462,500
4,822,863
Date of
grant
Exercise
price
Vesting
date
9th
October
2020
26th
November
2021
26th
November
2021
26th
November
2021
2nd
December
2022
2nd
December
2022
2nd
December
2022
£0.00125
£0.00125
£0.00125
£0.00125
£0.00125
£0.00125
£0.00125
9th
October
2023
26th
November
2024
26th
November
2024
26th
November
2023
2nd
December
2025
2nd
December
2025
2nd
December
2024
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
Shares
264,706
1,574,850
1,042,063
1,022,500
597,150
Share price (£)
Volatility
Annual risk free
rate
Exercise strike
price (£)
Time to maturity
(yrs)
1.02
5%
4%
0.84
0.945
1.575
1.575
5%
4%
5%
4%
5%
4%
5%
4%
0.00125
0.00125
0.00125
0.00125
0.00125
3
3
3
3
3
GRANT 4C
GRANT 5A
GRANT 5B
GRANT 5C
TOTAL
Shares
632,150
604,000
462,500
462,500
6,662,419
Share price (£)
1.575
1.43
5%
4%
1.43
5%
4%
1.43
5%
4%
5%
4%
0.00125
0.00125
0.00125
0.00125
2
3
3
2
Volatility
Annual risk free
rate
Exercise strike
price (£)
Time to maturity
(yrs)
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The total expense recognised
from share-based payments
transactions on The Group’s profit
for the year was £2,291,120 (2022:
£1,661,273).
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 24.
89
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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 £17,700 (2022: £nil) to A&B Property and Rental
Services Scotland Limited and the amounts due at the
year end was £nil (2022: £nil).
The Group recognise that the total withdrawals from the
director exceeded the limit as defined in the Companies
Act 2006 requiring shareholder approval. In order 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:
Wages and salaries
Social security costs
Other pension costs
Other benefits in kind
2023
2022
£000
£000
292
37
14
2
239
27
4
2
Share-based payments
188
316
22. 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 Ltd. 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.
23. RELATED PARTY
TRANSACTIONS
Parent entity
Beeks Financial Cloud Group plc is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 25.
Transactions with related parties
The following transactions occurred with related parties:
2023
2022
£000
£000
53
41
Withdrawals from the
director, Gordon McArthur
90
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
24. EARNINGS PER SHARE
(Loss)/Profit after income tax attributable to the owners of Beeks Financial Cloud
Group plc
Basic (loss)/earnings per share
Diluted (loss)/earnings per share
Weighted average number of ordinary shares used in calculating basic earnings
per share
Adjustments for calculation of diluted earnings per share:
Dilutive impact of share options
Options over ordinary shares
2023
Restated 2022
£000
(89)
£000
826
Pence
Pence
(0.14)
(0.13)
1.43
1.42
Number
Number
65,446,755
57,885,241
4,736,830
3,325,122
125,611
96,454
Weighted average number of ordinary shares used in calculating diluted earnings
per share
70,309,196
61,306,817
(Loss)/Profit before tax for the year
Share-based payments
Amortisation on acquired intangibles
Exceptional non-recurring costs
Exchange rate losses/(gains) on intercompany translation and unrealised currencies
Grant income
Tax effect
Underlying profit for the year
(650)
2,291
489
136
325
(267)
494
2,818
66
1,661
802
28
(81)
(419)
542
2,599
Weighted average number of shares in issue - basic
65,446,755
57,885,241
Weighted average number of shares in issue - diluted
71,143,541
61,985,547
Underlying earnings per share - basic
Underlying earnings per share - diluted
4.31
3.96
4.49
4.19
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.
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
25. 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
Beeks Financial
Cloud Co Ltd
Beeks FX VPS
USA Inc.
Beeks Financial
Cloud Limited
Velocimetrics
Limited
Velocimetrics
Inc.
ACTIVITY
Non-trading
Japan
FARO 1F, 2-15-5, Minamiaoyama,
Minato-Ku, Tokyo, Japan.
Delaware, USA
874 Walker Road, Suite C, Dover,
Kent, Delaware, 19904, USA.
Non-trading
Year end 31st December
Scotland
England
Riverside Building, 2 Kings Inch
Way, Renfrew, Renfrewshire, PA4
8YU
Birchin Court, 230 Park Avenue
20 Birchin Lane, Suite 300 West,
London, England, EC3V 9DU
Cloud Computing Services
Software Services
New York, USA
230 Park Avenue, 10th 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 2023, until they are satisfied in full.
26. PRIOR PERIOD
ADJUSTMENT
During the year, it was identified that share options which
contained conditions relating to future years’ performance
targets were not included in the diluted EPS figure, despite
the options having already achieved their performance
conditions related to EBITDA in the current period.
IAS 33 ‘Earnings per share’ considers the conditions at the
period end as if these were the conditions at the end of
the contingent period (i.e the future performance period)
and as such, these options should then be included in
the diluted EPS figure even though the vesting date and
associated future profit metric has not yet been achieved.
The error has been corrected. The number of shares
included in the diluted earnings per share calculation
has increased to include options of 3.33m that meet the
above conditions taking the total number of shares within
the diluted earnings per share calculation from 57.98m
to 61.31m. As a result, the diluted earnings per share has
been restated from 1.42p to 1.35p as disclosed in note 24.
27. ULTIMATE CONTROLLING
PARTY
The Directors have assessed that there is no ultimate
controlling party.
92
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BEEKS FINANCIAL CLOUD GROUP PLC
COMPANY STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2023
COMPANY STATEMENT OF
FINANCIAL POSITION
2023
£000
2022
£000
Note
Non-current assets
Investments
Property, plant and equipment
Deferred tax
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Borrowings
Non-current liabilities
Lease liabilities
Borrowings
4
5
6
7
8
8
8
9
9
5,906
4,443
506
4,727
3,106
590
10,855
8,423
22,259
22,028
171
163
22,430
22,191
33,285
30,614
681
19
453
620
-
-
1,153
620
31
566
597
-
-
-
Total liabilities
1,750
620
31,535
29,994
11
12
82
82
23,775
23,775
Net assets
Equity
Issued capital
Share premium
Reserves
Retained earnings
Total equity
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The parent company has taken
advantage of section 408 of the
Companies Act 2006 and has
not included its own profit and
loss account in these financial
statements. The parent company’s
loss after tax for the year was
£594,736 (2022: profit £714,819).
These financial statements were
approved by the Board of Directors
and were authorised for issue on 29th
September 2023 and are signed on
its behalf by:
5,124
2,554
2,979
3,158
31,535
29,994
Gordon McArthur
Chief Executive Officer
Company name, Beeks Financial
Cloud Group plc
Company number, SC521839
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BEEKS FINANCIAL CLOUD GROUP PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
COMPANY STATEMENT OF
CHANGES IN EQUITY
CALLED
UP SHARE
CAPITAL
MERGER
RESERVE
SHARE-
BASED
PAYMENTS
SHARE
PREMIUM
PROFIT
AND LOSS
ACCOUNT
TOTAL EQUITY
£000
£000
£000
£000
£000
£000
Balance at 1 July 2021
70
705
883
9,452
2,070
13,180
Profit after income tax expense for
the year
Total comprehensive income
Deferred tax
Issue of share capital
Share-based payments
Exercise of share options
Total transaction with owners
-
-
-
12
-
-
12
-
-
-
-
-
-
-
-
-
-
1,661
(270)
-
-
-
14,323
-
-
-
1,391
14,323
715
715
715
715
103
103
-
-
270
373
14,335
1,661
-
16,099
Balance at 30 June 2022
82
705
2,274
23,775
3,158
29,994
Loss after income tax expense for
the year
Total comprehensive income
Deferred tax
Share-based payments
Exercise of share options
Total transaction with owners
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,291
(146)
2,145
-
-
-
-
-
-
(595)
(595)
(595)
(595)
(155)
-
146
(9)
(155)
2,291
-
2,136
Balance at 30 June 2023
82
705
4,419
23,775
2,554
31,535
94
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTES TO THE COMPANY
FINANCIAL STATEMENTS
1. COMPANY INFORMATION
Beeks Financial Cloud Group plc (the “Company”) is a
public limited company which is listed on the AIM Market
of the London Stock Exchange and incorporated in
Scotland.
The address of the registered office is Riverside Building,
2 Kings Inch Way, Renfrew, Renfrewshire, PA4 8YU.
Beeks Financial Cloud Group plc was incorporated on 4
December 2015 and has subsequently been converted to
a public limited company “plc” on 8 November 2017.
The principal activity of The Company is a holding
company that holds investments in subsidiaries and holds
various central overheads and salary costs. The company
number is SC521839.
2. ACCOUNTING POLICIES
Basis of preparation
These financial statements have been prepared in
accordance with applicable accounting standards and in
accordance with Financial Reporting Standard 101 – The
Reduced Framework (FRS 101). The principal accounting
policies adopted in preparation of the financial
statements are set out on pages 59 to 92. These policies
have been applied consistently throughout the year
unless otherwise stated.
The financial statements have been prepared on an
historic cost basis.
The financial statements are presented in pounds sterling.
Disclosure exemptions adopted
In preparing these financial statements the Company has
taken advantage of all disclosure exemptions conferred
by FRS 101. These financial statements do not include:
◊ A statement of cash flows and related notes
◊ Disclosure of key management personnel
compensation
◊ The effect of future accounting standards not adopted
◊ Related party transactions with other group entities
◊ Share-based payments disclosures
◊ Financial instrument disclosures
◊ Capital management disclosures
Going concern
The Company has net current assets of £31.53m at 30th
June 2023 (2022: £29.99m).
After making enquiries, the directors have a reasonable
expectation that the Company will be able to meet its
financial obligations and has adequate resources to
continue in operational existence for the foreseeable
future (being a period extending to December 24). For this
reason they continue to adopt the going concern basis
in preparing the financial statements. Further information
can be seen in the Going Concern note within the
Directors’ Report in The Group accounts.
Revenue
Revenue arises from intercompany management
charges, stated net of VAT. Such charges are recognised
in the period they are earned.
Investments
Investments held as fixed assets are stated at cost less
provision for any permanent diminution in value. On an
annual basis, in order to assess any potential impairment
of investments, the carrying value of the investment in all
companies is considered against future cash flows and
reviewed for events or changes in circumstances that
indicate that the carrying amount may be impaired.
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 property, plant and equipment 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:
◊ Freehold property over 50 years
◊ Leasehold property over the lease term
◊ 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.
Critical accounting estimates and key sources of
estimation uncertainty
The key estimates in preparation of the financial
statements are below:
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Carrying value of investments
The Company carries out an impairment review whenever
events or changes in circumstance indicates that the
carrying value of an investment is possible. In addition,
The Company carries out an impairment review where
there are indicators of impairment. An impairment is
recognised when the recoverable amount is less than the
carrying amount. The impairment tests reflect the latest
projections from the subsidiary.
Management have concluded that there are no
judgements or estimates in the current year.
4. INVESTMENTS
2023
2022
£000
£000
5,906
4,727
Shares in Group
undertakings
During the year, The Group charged share-based
payments of £1,179,535 (2022: £681,456) to employees of
the subsidiary companies. As a result, the investment in
subsidiaries has increased during the year to reflect this.
3. STAFF COSTS
Average monthly number of employees (including
directors) by activity:
Management and
administration
Support and development
Total employees
2023
2022
£000
£000
21
9
30
21
7
28
Cost of employment (including directors):
2023
2022
£000
£000
Wages and salaries
1,891
1,472
Social security costs
228
241
Other pension costs
99
45
Total employee benefits
expense
2,218
1,758
96
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
5. PROPERTY, PLANT AND
EQUIPMENT (PPE)
During the year, The Group charged share-based
payments of £1,179,535 (2022: £681,456) to employees of
the subsidiary companies. As a result, the investment in
subsidiaries has increased during the year to reflect this.
FREEHOLD
PROPERTY
FIXTURES
AND
FITTINGS
RIGHT OF
USE
TOTAL
Cost
£000
£000
£000
£000
As at 1 July 2021
-
-
416
416
Additions
Disposals
3,034
104
-
-
-
(416)
3,138
(416)
As at 1 July 2022
3,034
104
-
3,138
Additions
As at 30 June 2023
Depreciation
5
3,039
95
199
1,407
1,407
1,506
4,644
As at 1 July 2021
-
-
Charge for the year
27
5
69
-
69
32
Eliminated on disposal
As at 1 July 2022
Charge for the year
As at 30 June 2023
-
27
71
98
-
(69)
(69)
5
21
26
-
77
77
32
169
201
NBV as at 30 June 2022
3,007
99
-
3,106
NBV as at 30 June 2023
2,941
173
1,330
4,443
A security is held against the property in respect of the
subsidiary’s debt to the lender.
Of the total additions in the year of £1.5m, £1.4m relates to
right-of-use assets held under IFRS16 (2022 - £nil).
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
6. DEFERRED TAX
8. CURRENT LIABILITIES –
TRADE AND OTHER PAYABLES
2023
2022
£000
£000
590
70
(155)
313
174
103
Tax losses carried forward
Credit to profit or loss
Share-based payments,
recognised in equity
Deferred tax asset
506
590
7. DEBTORS
2023
2022
£000
£000
Trade payables
Accruals
Other taxation and social
security
Other payables
Lease payables
2023
2022
£000
£000
259
229
155
20
472
160
263
187
10
-
1,134
620
Prepayments
133
151
9. NON-CURRENT LIABILITIES
Amounts due from Group
undertakings
22,099
21,857
Trade debtors
Other receivables
1
26
1
19
22,259
22,028
Lease payables
2023
2022
£000
£000
597
597
-
-
Management have assessed recoverability of
intercompany balances and deem no issues in terms of
credit losses. The Group has adequate net assets to assist
in recovery of intercompany balances.
98
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BEEKS FINANCIAL CLOUD GROUP PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
10. LEASES
The Company has a lease for a data centre space in
Slough, England. The Company also holds a right of
use lease by virtue of an asset finance lease with the
liability contracted to Beeks Financial Cloud Group plc.
Information about leases for which The Company is a
lessee is presented below:
Right-of-use-assets
Balance at 1 July 2022
Additions
Depreciation
Balance at 30 June 2023
LEASEHOLD
PROPERTY
£000
-
1,407
(77)
1,330
The right-of-use assets in relation to leasehold property
are disclosed as PPE (note 5).
Right-of-use lease liabilities
2023
2022
£’000
£’000
Maturity analysis:
Analysed as:
Non-current (Note 8)
Current (Note 9)
11. EQUITY – ISSUED CAPITAL
For details of the issued share capital see note 20 in The
Group notes.
12. EQUITY - RESERVES
Ordinary shares are classified as equity. An equity
instruments is a contract that evidences a residential
interest in the assets of Beeks Financial Cloud Group plc
after deducting all of its liabilities. Every instrument issued
by Beeks Financial Cloud Group plc are recorded at the
proceeds received net of direct issue costs.
The share capital amount represents the amount
subscribed for shares at nominal value. Any
transactional costs associated with the issuing of share
are deducted from the share premium, net of any related
taxation benefits.
The merger reserve 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.
13. RELATED PARTY
TRANSACTIONS
As permitted by FRS 101, related party transactions
by wholly owned members of The Group have not
been disclosed. Related party transactions regarding
remuneration and dividends paid to key management of
the company have been disclosed in note 23 of The Group
financial statements.
472
597
1,069
-
-
-
14. CAPITAL COMMITMENTS
The Company had no material capital commitments at
30 June 2023.
The interest expense on lease liabilities amounted to
£453 for the year ended 30th June 2023 (30th June 2022
£12,559). Lease liabilities are calculated are calculated at
the present value of the lease payments that are not paid
at the commencement date.
15. CONTINGENT LIABILITIES
The Company had no material contingent liabilities at 30
June 2023.
16. ULTIMATE CONTROLLING
PARTY
The Directors have assessed that there is no ultimate
controlling party.
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beeksgroup.com
Riverside Building
2 Kings Inch Way
Braehead
Renfrew
PA4 8YU
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