BEEKS
FINANCIAL
CLOUD
GROUP plc
a n n u a l r e p o r t
XXIV
30 June 2024 Registered Number SC521839
CONTENTS
FINANCIAL AND OPERATIONAL HIGHLIGHTS
4
OUR COMPANY AT A GLANCE
6
CHAIRMAN’S STATEMENT
7
STRATEGIC REPORT
10
STRATEGIC REPORT – CHIEF EXECUTIVE’S REVIEW
13
STRATEGIC REPORT – FINANCIAL REVIEW
16
STRATEGIC REPORT – PRINCIPAL RISKS AND UNCERTAINTIES
20
BOARD OF DIRECTORS
24
DIRECTORS’ REPORT
26
REPORT ON REMUNERATION
30
CORPORATE GOVERNANCE
33
REPORT OF THE AUDIT COMMITTEE
42
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF
BEEKS FINANCIAL CLOUD GROUP PLC
44
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
53
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
54
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
55
CONSOLIDATED CASH FLOW STATEMENT
56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
57
COMPANY STATEMENT OF FINANCIAL POSITION
91
COMPANY STATEMENT OF CHANGES IN EQUITY
92
NOTES TO THE COMPANY FINANCIAL STATEMENTS
93
Financial and
Operational
Highlights
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
5 Positive operational free cash flow position, with Net cash5 as at 30 June 2024 of £6.6m (30 June 2023: £4.4m)
notwithstanding continued investment in Beeks’ product offering
STATUTORY EQUIVALENTS
The above highlights are based on underlying results.
Reconciliations between underlying and statutory results
are contained within these financial statements. The
statutory equivalents of the above results are as follows:
◊
Profit before tax was £1.46m (2023: Loss before tax
£0.65m)
◊
Basic EPS was 3.33p (2023: Loss per share 0.14p)
OPERATIONAL
HIGHLIGHTS
Significant growth of Tier 1 customer base and expansion
with existing customers
◊
Post-period multi-year Exchange Cloud® contract
with one of the largest exchange groups globally
received regulatory approval, as announced in
February. Beeks remains under a Non-Disclosure
Agreement (NDA) with the exchange until the
product’s launch, which remains on track.
◊
Further significant extensions of the JSE contract,
including the launch of JSE’s Colo 2.0 offering in
September 23 and the addition of a second data centre
location, as announced in August 24
◊
Significant Proximity Cloud® wins including £5m
contract with one of the world’s largest banking
Groups, and a $3.6m (c£2.7m) contract in aggregate
over a five‑year period with a Tier 1 investment
manager
◊
Private Cloud Contracts to a value of $4m (c£3m)
signed in July, including a significant win, via a
partner, with one of the UK’s largest banks
◊
Further expansion potential remains across the vast
majority of existing customers
Investment in enhanced security and
continued product innovation:
◊
Completed industry-leading SOC 2 Type 1 security
compliance for Proximity and Exchange Cloud®
Products, as announced in March, and successfully
achieved ISO 22301 the Global standard for Business
Continuity Management
◊
Strategic partnership with Securities & Trading
Technology (STT) to meet the evolving needs of
global financial markets, and a collaboration with
BlueVoyant, to enhance security protection
◊
Investment and implementation of new layered
security defences & mitigations including; Privileged
Access Management (PAM), External Attack Surface
Management (EASM), and the Security Awareness
Training Platform.
◊
Major Analytics releases providing new features, with
ongoing investment into Artificial Intelligence in
Beeks Analytics, implementing the next version of AI
capability
Investment in inventory, team and sales
and marketing, to deliver on the growth
opportunity:
◊
Strengthened our team with the appointment of key
personnel in strategic regions, including a Head of
APAC and a Technical Pre-Sales Specialist.
◊
Increased brand awareness through participation
in key industry conferences, including events in
Istanbul, London, Chicago, New York, Boca Raton, and
Johannesburg.
◊
Further investment into inventory, ensuring the Group
is capable of delivering against all contracts either
signed or in the immediate pipeline.
OUTLOOK
◊
Material growth in sales pipeline for Exchange
Cloud®, with several major international exchanges
entering the final stages of contracting, and others at
earlier points in the sales funnel
◊
Significant opportunity to scale Exchange Cloud®
through expansion with existing customers, the JSE
contract serving as an example of the expansion
potential once a customer has signed
◊
Favourable market trends as the financial services
sector continues to shift to cloud computing
◊
Even at this early stage of the year, the Board is
confident in achieving results for FY25 in line with
its expectations, underpinned by high levels of
recurring revenue, a strong pipeline, an established,
international reputation and a significant market
opportunity.
Gordon McArthur, CEO
“This has been another year of strong trading with double-digit growth across the board. Demand for our product
is stronger than ever, fuelling a regular flow of new contract wins and extensions that offer long-term, recurring
revenues. The expansion of our customer base is a testament to the value of our offering becoming increasingly
recognised by the market and has resulted in a record sales pipeline. Exchange Cloud® continues to offer the most
exciting opportunity with a pipeline comprising of some of the world’s largest exchanges. Supported by favourable
market trends and our increasingly recognised international reputation, we are confident in driving this momentum
into the next financial year and beyond.”
Financial and Operational Highlights
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Financial and Operational Highlights
4
V
WHAT WE DO
Beeks Financial Cloud Group plc, trading as Beeks Group,
is the market leader in cloud compute, connectivity, and
analytics for the financial markets, including capital
markets and payments. Since 2011, we’ve been delivering
low-latency, secure, and scalable private cloud solutions
tailored specifically for these sectors.
Our comprehensive product suite includes bare metal and
virtual private servers, dedicated servers, connectivity,
colocation, on-premise solutions, and advanced
performance analytics. These offerings are optimised
for high-frequency trading and other time‑sensitive
operations, enabling clients to execute trades
sub‑millisecond timeframes.
Through our cloud-based Infrastructure-as-a-Service
(IaaS) model, we empower financial institutions to
rapidly deploy and connect to over 200 trading venues,
exchanges, and cloud providers worldwide. This allows
firms to avoid the costs and complexities of building their
own infrastructure while benefiting from a scalable,
on-demand solution.
With SOC2 and ISO 27001 certifications, security is
embedded in everything we do, safeguarding trading
operations and ensuring compliance. Our infrastructure
is optimised for high performance, low latency, and
operational resilience, making Beeks the go-to choice for
the financial markets and payments industry.
Headquartered in the UK, we operate across major
financial hubs including New York, London, Hong Kong,
Tokyo, Singapore, and Sydney. Supported by our 24/7
Network Operations Centre (NOC), we provide reliable
infrastructure management, enabling firms to focus on
growth and innovation.
OFFICE LOCATIONS
◊
Renfrew, UK
◊
London, UK
◊
Tokyo, Japan
◊
Surabaya, Indonesia
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
◊
Montreal, Canada
◊
Johannesburg, South Africa
Beeks has yet again proven its leading position and
reputation in providing advanced technology solutions
the capital markets, catering to the needs of the largest
financial organisations globally. Revenues to the 30 June
2024 increased by 27% to £28.5m (2023: £22.4m), and
underlying EBITDA by 27% to £10.7m (2023: £8.4m).
The Group delivered an exit ACMRR of £28.0m (2023:
£23.8m), up 18% in the year, providing a strong basis for
continued growth in FY24.
Strong progress has been made against our financial and
strategic objectives in FY24, exemplified by another set
of impressive financial results, representing a period of
significant growth. We are delighted to have now moved
into a more profitable and operationally cash-generative
position, yet again delivering double-digit increases in
revenue, EBITDA, PBT and ACMRR, driven by a strong
performance across Beeks’ Private, Proximity and
Exchange Cloud® offerings.
I am particularly pleased with the strategic progress
made during the year. Notwithstanding the strong
performance across our Private and Proximity Cloud®
products, we continue to be highly optimistic about
Exchange Cloud®’s transformational prospects for Beeks.
With three exchanges now signed up to the offering and
clear traction gained during the period under review, we
look forward to capitalising on the offering’s steadily
increasing momentum.
I would like to take this opportunity to extend my thanks
to the team at Beeks, without whom such a pleasing
performance would not have been possible.
It is clear that we have a solid foundation on which to
grow, bolstered by increasing levels of revenue visibility
for FY25 and beyond. The conversion of our new customer
sales pipeline remains a core focus moving forwards,
and the current period has started very encouragingly,
with significant new contracts already secured, providing
confidence in the delivery of FY25 financial results in line
with the Board’s expectations.
Mark Cubitt, Chairman
4 October 2024
OUR COMPANY
AT A GLANCE
CHAIRMAN’S
STATEMENT
6
7
OUR COMPANY AT A GLANCE
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
CHAIRMAN’S STATEMENT
For over 13 years,
Beeks has built the infrastructure shaping the future of financial markets. Like the Romans, who laid the
groundwork for history’s most resilient structures, we’ve constructed a robust global network. Our infrastructure,
spanning key financial districts worldwide, is purpose-built for low-latency trading, supporting today’s financial
institutions with the stability and performance they need.
Our architecture doesn’t rest on borrowed foundations. Beeks empowers customers with their own environments,
giving them the flexibility and control to drive future growth. With Beeks, customers don’t just use the cloud...
they command it.
More than a technology provider, Beeks stands as an architect of tomorrow’s financial
world, fortifying the foundations for markets of the future.
Data Centre Location
Data Centre Location
Chicago
Hong Kong
Tokyo
Singapore
Toronto
Montreal
Washington DC
New York
Johannesburg
Sydney
europe, middle east
and africa
ASIA PACIFIC
Frankfurt
Paris
London
Amsterdam
Zurich
Geneva
europe
functions that demand hands-on infrastructure expertise,
especially for performance-sensitive front-office
operations. Beeks is well positioned to provide these
specialised services and seize this opportunity.
As firms seek cloud solutions that address not just
scalability, but also complex regulatory, security, and
sustainability challenges, Beeks is ready to deliver
innovative and secure infrastructure that ensures
operational resilience and growth for financial
institutions worldwide.
BUSINESS MODEL
#PoweredbyBeeks
For over thirteen years, Beeks has been a trusted partner
for financial markets and payments, providing cloud
compute and infrastructure solutions tailored to the
unique demands of this fast-paced, high-stakes sector.
Our mission is to deliver ultra-low latency, secure, and
high-performance cloud infrastructure that optimises
operations in capital markets, financial services, and
payments.
Beeks is strategically positioned as the market leader
in cloud solutions for financial markets and payments,
offering cloud deployment options across a global
network of financial data centres. Whether it’s on-
premise or cloud‑based, we support clients in building
robust, scalable cloud strategies. Our on-demand services
ensure that financial firms maintain peak operational
performance while lowering costs and mitigating risks.
As cloud adoption accelerates within financial services,
Beeks leads the way in delivering cutting-edge
infrastructure and analytics. We are one of the few
companies globally that can provide a fully integrated
solution that combines low-latency compute, secure
connectivity, and real-time analytics to optimise the
performance of financial trading environments.
Innovations and Solutions
One of our core offerings, Proximity Cloud®, is a
fully configured and pre-installed physical trading
environment tailored to the needs of global exchanges.
This secure, private cloud solution offers a seamless
and rapid deployment, reducing time to market and
operational complexities for clients.
Following the success of Proximity Cloud®, we
introduced Exchange Cloud®. Designed specifically
for financial exchanges and Electronic Communication
Networks, Exchange Cloud® is a multi-tenant iteration
of Proximity Cloud®, empowering exchanges to act
as cloud service providers. This solution enhances
scalability, security, and compliance while enabling
exchanges to offer their clients customisable, co-located
cloud services.
We’ve also enhanced our market-leading analytics
capabilities through Beeks Analytics. Our product
delivers packet-level monitoring and deep insights into
network traffic, helping clients to optimise their trading
infrastructure. Beeks Analytics now features flexible,
user-friendly dashboards powered by Grafana, offering
intuitive visualisations and integration options for
financial enterprises. The modularity of Beeks Analytics
ensures that clients can scale the solution to fit their
needs, whether it’s just the VMX-Capture layer or the full
analytics suite.
What We Provide
As the market leader in cloud infrastructure for financial
markets and payments, Beeks offers a comprehensive
range of cloud compute, private cloud, connectivity,
and analytics solutions, tailored specifically to meet the
demands of this fast-moving industry:
◊
Compute on Demand: High-performance virtual
and dedicated servers, delivering ultra-low
latency compute power in key financial hubs. Our
infrastructure supports real-time trading, with
the flexibility to scale up or down based on market
demand
◊
Private Cloud: Through Proximity Cloud® and
Exchange Cloud®, we provide secure, pre-configured
environments for capital markets. These private cloud
solutions enable operational resilience, enhanced
security, and reduced latency, giving financial
institutions the control and agility they need to
respond to market shifts efficiently
◊
Low-Latency Connectivity: Our global connectivity
services, including WAN, private networks, and
cross-connects, ensure reliable, ultra-low latency
connections. These are optimised for high-frequency
trading and other time-sensitive financial operations,
helping our clients maintain a competitive edge
MARKET OVERVIEW
“Cloud has become essentially indispensable.
However, the tables are turning: business outcomes
are now shaping cloud models, rather than the
other way around.”
Sid Nag, Vice President Analyst at Gartner
Growth in Cloud Adoption
As cloud computing continues to drive digital
transformation, its role in financial markets and
payments is evolving. What was once a tool to enable
innovation is now being shaped by the specific needs of
financial institutions. The global IaaS market is forecast
to grow significantly, but the focus is shifting from basic
infrastructure provision to solving complex business
challenges like regulatory compliance, cybersecurity,
sustainability, and operational efficiency.
Regulatory Compliance and Data Sovereignty
As regulations grow more stringent, particularly in
the EU and US, cloud providers must ensure robust
compliance frameworks. Financial institutions need cloud
solutions that can address data residency requirements
while maintaining operational efficiency. Beeks, with its
SOC2 certification and extensive experience in regulated
markets, is well-positioned to meet this demand.
Cybersecurity
As cyber threats become more sophisticated, financial
institutions are prioritising security above all else.
They require cloud infrastructure that not only offers
low‑latency and scalability but also protects sensitive
financial data. Beeks’ partnership with BlueVoyant
and our in-house cybersecurity measures give us a
competitive edge in this rapidly growing area of concern.
Sustainability and Green Finance
Cloud infrastructure is increasingly seen as a tool to
help financial firms meet their sustainability goals. By
migrating to cloud environments, institutions can reduce
their carbon footprint compared to traditional on-premise
data centres. Beeks’ global network of energy-efficient
data centres aligns with the sustainability objectives of
financial institutions, making us a valuable partner for
firms focused on green finance initiatives.
Real-time Data and Analytics
In financial markets, real-time data is critical for
decision‑making. Cloud solutions that deliver ultra‑low
latency and high-performance analytics are in high
demand. Beeks’ infrastructure is designed to handle the
real-time data needs of financial institutions, enabling
clients to make quicker, more informed decisions in
fast‑moving markets.
Payment Modernisation
The payments industry is evolving rapidly, with new
technologies like real-time payments and Central Bank
Digital Currencies (CBDCs) becoming mainstream.
Financial institutions need scalable cloud solutions
that can adapt to these innovations. Beeks’ flexible
infrastructure supports the complex requirements of
modern payment systems, positioning us at the forefront
of this transformation.
AI in Risk Management
Artificial Intelligence is increasingly being used to
manage risk and detect fraud in financial services.
Institutions require cloud environments that can support
complex AI models and provide the computational power
needed for real-time risk analysis. Beeks offers the
infrastructure to meet these growing demands, allowing
financial firms to deploy AI solutions at scale.
Positioning for the Future
With an addressable market that includes over 21,000
banks and hundreds of global exchanges, Beeks is
uniquely positioned to capitalise on the continued growth
of cloud adoption in financial services. As the demand for
real-time data processing increases, particularly for high-
frequency trading and risk management, Beeks’ ultra-
low latency infrastructure ensures our clients remain
competitive in fast-paced markets.
Our cloud solutions are also built to support the growing
integration of artificial intelligence (AI) in financial
services, particularly in areas such as risk management,
fraud detection, and automated trading strategies. As AI
adoption scales, financial institutions will rely on cloud
providers like Beeks to handle the complex computational
workloads required to deliver real-time insights and
improve decision-making.
As more financial organisations adopt cloud-first IT
strategies, there’s a growing trend towards outsourcing
Strategic
Report
10
Strategic Report
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Strategic Report
XI
CHIEF EXECUTIVE’S
REVIEW
FY24 has been another year of strong progress for Beeks.
Our impressive financial performance, driven by the
conversion of our sales pipeline into significant new
customer wins, represents yet another period of
double-digit top and bottom line growth. Our consistent
growth rate since becoming a listed business now leaves
us in a more profitable and operationally cash-generative
position, providing a strong basis for the continued
delivery of accelerated growth.
We now have an established profile in the global financial
services industry. Customers clearly recognise the value
of our offering, with the benefits for the customer and
their clients alike increasingly understood in the sector.
The significant new contracts signed demonstrate the
demand for our solutions and serves as material proof of
the financial services sector shifting to cloud computing.
With our increasingly established and international
profile, we are confident in our ability to seize the
opportunity ahead of us.
Our confidence in the ability of our Exchange Cloud®
offering to transform the financial status of our business
continues to grow. The contract with the Johannesburg
Stock Exchange (JSE) is an example of how an Exchange
Cloud® contract can rapidly expand following adoption.
Since the launch with JSE in September 2023, two further
expansions have been secured, due to the huge demand
from JSE customers. We anticipate each Exchange
Cloud® contract will materially expand over multiple
years, providing a sustained runway of growth. Our sales
pipeline for the offering has developed materially in
the year, with several of the world’s leading exchanges
entering the final stages of contracting, and others at
earlier points in the sales funnel.
We have also continued to demonstrate a strong
performance across our Private and Proximity Cloud®
products, further executing against our land and expand
strategy.
With our increasingly established and international
profile, we are confident in our ability to seize the
opportunity ahead of us.
Financial performance
Revenue in the period grew by 27% to £28.5m (2023:
£22.4m), resulting in an increase in underlying EBITDA
of 27% to £10.7m (2023: £8.4m). Significantly, this year
we have successfully improved operating profit margins
with underlying profit before tax growth of 68% to £3.9m
(FY23: £2.3m), as well as a positive operational free cash
flow position, with net cash increasing to £6.6m at 30
June 2024 (2023: £4.4m) notwithstanding continued
investment in Beeks’ product offering.
Growth was largely driven by the significant Exchange
and Proximity Cloud® contracts with Tier 1 customers
as Beeks continues to achieve new wins and scale with
existing customers, our ACMRR growing 18% to £28.0m
at 30 June 2024 (2023: £23.8m). Our customer retention
remains high, and we continue to have a strong recurring
revenue profile, with 84% of revenue in the year recurring
(2023: 91%).
Operational Expansion
We made some key hires during the year however
headcount remained broadly in line with the previous
period. Headcount as at 30 June 2024 increased to 105
from 103 as at 30 June 2023, with the marginal increase
representing a number of senior hires focussed on specific
growth areas of the business. Senior hires included a new
Head of Software Development, Head of Site Reliability
Engineering and Head of APAC sales.
We now have a right sized sales team led by personnel
with valuable experience in financial markets, providing
confidence in ongoing momentum moving forward. We
have also made a strategic senior hire with experience
in AI to support the new developments in artificial
intelligence within our Analytics offering, an area that
has had continued focus this year.
We have continued to increase our data centre presence in
the year both in existing locations and expanding in areas
Strategic Report
–Chief Executive’s
Review
◊
Beeks Analytics: Our real-time performance
monitoring and analytics platform empowers clients
with full transparency and control over their trading
infrastructure. By capturing and analysing network
traffic, clients can optimise performance, enhance
decision-making, and improve operational efficiency
Our solutions are designed with flexibility and scalability
in mind, enabling clients to manage their resources
efficiently and adapt to changing market conditions. By
combining industry-leading infrastructure, managed
cloud services, advanced analytics, and low-latency
connectivity, Beeks continues to set the standard as the
trusted partner for financial institutions worldwide.
STRATEGY
At Beeks, our purpose is to deliver secure, scalable, and
rapid deployment cloud solutions for financial enterprises
of all sizes. Our vision is to enable our clients to operate
with speed, agility, and resilience in a rapidly changing
market.
Our core strategic goal is to continue expanding our
customer base across public, private, and hybrid cloud
deployments, along with our advanced analytics solutions.
We will achieve this by continuously innovating, building
on the success of our products like Proximity Cloud® and
Exchange Cloud®®, and refining our offerings to meet
the evolving demands of financial institutions.
To support our growth and meet increasing demand,
we will continue to enhance our product development
roadmap, introducing new features and capabilities
that address industry challenges such as regulatory
compliance, cybersecurity, and sustainability.
Additionally, we aim to broaden our reach into new
asset classes and geographies, leveraging the significant
opportunities we have identified in these markets.
By maintaining our focus on innovation, scalability,
and client success, Beeks is well-positioned to continue
leading the way in cloud infrastructure for financial
markets and payments.
SALES AND MARKETING
In 2024, our marketing strategy has evolved to reflect
Beeks’ commitment to becoming the market leader in
financial markets and payments infrastructure. We’ve
focused on strengthening our brand positioning, aligning
our messaging to clearly communicate our unique value
in low-latency cloud infrastructure for financial services.
Our focus this year has been on solidifying Beeks’ position
within both institutional and retail markets. We’ve
enhanced our participation in high-impact industry
events such as Finacle Conclave, FIA Boca, and JSE Trade
Connect. These engagements have allowed us to showcase
how Beeks’ low-latency compute solutions address the
critical needs of financial institutions, capital markets,
and trading firms.
A critical part of our strategy is targeting regional
markets with tailored messaging. We embarked on an
Asia Roadshow, attending events such as FISD AsiaFIC
and the FIX Trading Community AsiaPac Trading Summit,
demonstrating our solutions to key players in growth
markets. This focus on region-specific engagement
supports our efforts to build stronger relationships with
institutional clients and ensures our offerings are aligned
with local market demands.
Looking ahead, the upcoming World Federation of
Exchanges event in November is a prime opportunity
for Beeks to highlight Exchange Cloud® as the go-to
infrastructure solution for exchanges and trading venues.
This will further bolster our brand presence, positioning
us as the leader in cloud infrastructure for financial
markets, while reinforcing our expertise in
high-performance, low-latency solutions.
To support this strategic growth, we’ve placed a
renewed emphasis on brand positioning and thought
leadership. By focusing on low-latency technology and
the critical role it plays in financial trading and payments
processing, we continue to differentiate Beeks from
larger cloud providers. Our memberships with STAC and
FIA strengthen our standing in the industry, providing
platforms to showcase our expertise and engage with key
decision-makers.
As we continue to grow, our strategy is to enhance Beeks’
thought leadership and brand visibility in the financial
markets space. By leveraging data-driven marketing
initiatives and focusing on targeted campaigns, we are
well-positioned to further solidify our leadership in
low-latency cloud infrastructure. This strategic focus
is designed to meet the unique needs of institutional
financial clients, driving growth and cementing Beeks’
role as the trusted provider of cutting-edge infrastructure
for financial markets and payments.
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Strategic Report
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Strategic Report
driven by customer demand. We will continue to evaluate
new locations in line with our sales pipeline.
Product roadmap
We remain focused on evolving the functionality of our
product offerings and during the year we continued to
enhance our product set.
We have continued investing into the security of our
products this year and were delighted to achieve the
Service Organization Control 2 (SOC 2) compliance for
our Proximity Cloud® and Exchange Cloud® products,
as announced in March. SOC 2 compliance, the widely
respected and recognised standard developed by the
American Institute of Certified Public Accountants
(AICPA), demonstrates Beeks’ commitment to ensuring
the security of customer data and strengthens Beeks’
reputation as a trusted partner in the financial services
sector, assuring clients that their core business functions
are supported by a secure infrastructure.
In April we were also pleased to announce a strategic
partnership with Securities & Trading Technology (STT),
a leader in trading, clearing, and surveillance technology.
This collaboration introduces a service-based solution
that combines Beeks’ financial cloud infrastructure with
STT’s trading and clearing systems to meet the evolving
needs of global financial markets; streamlining operation,
reducing costs, and enhancing market competitiveness
by covering all aspects of exchange trading. The
partnership enhances Beeks’ solutions and demonstrates
our dedication to innovation and value-creation for the
financial markets.
This comes following continued investment into
cybersecurity measures, such as the significant
partnership with cybersecurity company BlueVoyant
that was announced in January, enhancing Beeks’
cybersecurity defences with their award-winning
Managed Extended Detection and Response offering.
We have increased investment into Artificial Intelligence
in the year. We believe that the latency and client
experience insights that our analytics product provides
can become an essential part of the capital markets
front-office trading workflow. The open architecture
and transparent commercial model of Beeks Analytics
offers us a unique position to exploit this opportunity.
During the year we implemented the next version of AI
capability. Our Analytics product serves as an additional
revenue stream as it is a stand-alone supplementary
software that customers can access.
Sales and Marketing
Having made strategic hires during the year, gaining
senior personnel with extensive industry experience
and connections to enhance our sales and marketing
strategies, we feel confident in our ability to delivering on
our growth opportunity, particularly on scaling Exchange
Cloud® to reach new customers.
Our professional memberships serve as a valuable
platform for Beeks to engage and establish connections
with industry experts. These connections can potentially
result in business opportunities, partnerships, and
collaborations as well as offer access to valuable
competitor insights. Furthermore, they set us apart from
large-scale cloud service providers.
Customers
Beeks continues to support a diverse clientele, including
banks, brokers, hedge funds, cryptocurrency traders and
exchanges as well as insurance companies, financial
technology firms, payment providers, and Independent
Software Vendors (ISVs).
During the year we made material leaps in our
sales pipeline for Exchange Cloud®, a multi-home,
fully configured and pre-installed physical trading
environment fully optimised for global exchanges to offer
cloud solutions to their end users. Significant Exchange
Cloud® wins include:
◊
The launch of the Johannesburg Stock Exchange’s
(JSE) Colo 2.0 offering in September 2023, providing
JSE customers with leading edge innovative hosting
and connectivity solutions
◊
Significant extension of the JSE contract, announced
in March, to meet stronger than anticipated customer
demand for the solution, with the contract expanded
again in August 2024, post period end, to a second
data centre location, to meet the needs of large banks’
regulatory requirements for dual location disaster
recovery
◊
Post-period multi-year Exchange Cloud® contract
with one of the largest exchange groups globally
received regulatory approval, as announced in
February. Beeks remains under an NDA with the
exchange until the product’s launch, which remains
on track
We have also continued to demonstrate a strong
performance across our Private and Proximity Cloud®
products, further executing against our land and expand
strategy.
Notable wins during the year include:
◊
Private Cloud Contracts to a value of $4 million (c£3
million) signed in July, including a significant win, via
a partner, with one of the UK’s largest banks
◊
$1.3 million (c£1 million) Proximity Cloud® contract
win with a Tier 1 investment manager, announced in
November. Subsequent expansion of this initial $1.3
million (c£1 million) Proximity Cloud® contract to a
value of $3.6 million (c£2.7 million) in aggregate over
a five-year period, as announced in February
◊
£5 million contract with one of the world’s largest
banks, announced in March
As demonstrated in the year, there is considerable
potential for further expansion with existing customers
across each of our product offerings. We have made
strong progress with our Land and Expand strategy, with
these extensions driving additional revenue from deals
that grow in size since being signed.
Future Growth and Outlook
Looking ahead, we see a significant opportunity to scale
with Exchange Cloud®. Our sales pipeline for the offering
has developed materially in the year, with several of
the world’s leading exchanges entering the final stages
of contracting, and others at earlier points in the sales
funnel.
We remain in a very strong position to continue our
growth trajectory, boosted by high levels of recurring
revenue, an established, international reputation and a
significant market opportunity. Even at this early stage
of the year, we are confident in our ability to achieve
results for FY25 in line with the Board’s expectations.
Gordon McArthur
CEO
4 October 2024
14
15
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BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Strategic Report
KEY PERFORMANCE INDICATOR REVIEW
1Revenue excludes grant income and rental income
2ACMRR is Annualised Committed Monthly Recurring Revenue
3Gross profit margin is statutory gross profit divided by Revenue
4Underlying 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
5Underlying EBITDA margin is defined as Underlying EBITDA divided by Revenue
6Underlying 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
7Underlying profit before tax margin is defined as Underlying profit before tax divided by Revenue
8Underlying EPS is defined as profit for the year excluding amortisation on acquired intangibles, acquisition costs, share
based payments, exchange rate gains/losses on statement of financial position translation and exceptional
non-recurring costs divided by the number of shares
I am pleased to report on another year of strong financial performance, with good revenue growth reflecting a positive
response by both new and existing customers to our growing cloud offering. Recurring revenues remain high as a % of
revenue, with high customer retention across our portfolio. Steady margins, high levels of recurring revenues, strong
cash generation and a well-funded balance sheet provides us a solid foundation as we look to the year ahead.
Strategic Report
–financial Review
REVENUE
FY24 was another good year in terms of revenue growth.
Group revenues grew by 27% to £28.5m (2023: £22.4m)
driven by both Proximity, Exchange Cloud® as well as our
core Private Cloud offering across both existing and new
customers. It has been pleasing to see growth within both
these areas. Proximity and Exchange Cloud® revenues
grew by £3.0m and Private Cloud grew by £3.1m when
compared to FY23. Refer to note 3 for a further breakdown
of the Group’s revenues. 84% of revenues (2023: 91%) were
recurring with Tier 1 customers now representing 58% of
delivered revenue (2023: 45%) and a high proportion of our
recurring revenue on multi-year contracts. Historically
we have always had high percentage levels of recurring
revenue. The different revenue recognition principles
of Proximity and Exchange Cloud®, where a significant
proportion is recognised upfront, will mean more
fluctuations in our percentage of recurring revenue each
year depending on the mix of Private/Public/Proximity
and Exchange Cloud® sales. It is pleasing to see another
strong year of growth in contracted recurring revenue as
represented by our ACMRR growth of 18% to £28.0m (2023:
£23.8m).
GROSS PROFIT
Statutory gross profit earned, which is calculated by
deducting from revenue variable cost of sales such as data
centre costs, software licencing, connectivity charges and
depreciation and amortisation on our server estate and
internally developed software, increased 24% to £11.3m
(2023: £9.1m), with gross margin relatively stable, albeit
reduced by one percent due largely to increased software
licencing costs. These additional licencing costs are not
expected to recur into FY25 as we have transitioned our
server licence estate from VMWare to OpenNebula which
has a lower software licencing charge. The investment in
both Proximity Cloud® and Exchange Cloud® including
Analytics during the year has continued as we seek to
enhance the customer experience. We have incurred internal
gross capitalised development costs at a similar level to the
previous year of £2.8m (2023: £2.9m). This is largely made
up of our internal software team which is now
well established.
With a strong pipeline of Proximity and Exchange Cloud®
deals and with investment expected to be at a lower
quantum when compared to sales growth, we anticipate
gross margins to increase as these deals are converted
into FY25.
UNDERLYING
ADMINISTRATIVE
EXPENSES
Underlying administrative expenses, which are defined
as administrative expenses less share based payments
and non-recurring costs, have increased by 5% from
£7.0m to £7.4m primarily as a result of increases in staff
costs. In line with our strategy, we maintained similar
staffing levels from FY23 with an average headcount
of 105 throughout the year (2023: 103) therefore these
costs are largely as a result of inflationary pay increases.
Other overhead costs have remained relatively flat during
the year as we have worked hard to maintain margins.
Hires will continue to be made in value add areas but we
anticipate the trend of incremental headcount increases in
support areas moving forward as deals are converted and
we look to deliver better operating margins.
UNDERLYING EBITDA
Earnings before interest, tax, depreciation, amortisation
and exceptional non-recurring costs (“Underlying
EBITDA”) increased by 27% to £10.7m (2023: £8.4m).
The growth in Underlying EBITDA has been driven by
continued organic revenue growth.
Underlying EBITDA, underlying profit before tax and
underlying earnings per share are alternative performance
measures, considered by the Board to be a better
reflection of true business performance than statutory
measures only. The key adjusting items are share based
payments, amortisation, grant income and unrealised
exchange rate gains and losses.
Underlying Profit before tax** increased to £3.9m (2023:
£2.3m) as a result of the changes in the key financial
metrics discussed on page 16.
Statutory Profit before tax increased to a profit of £1.5m
(2023: Loss of £0.7m). The other reconciling differences
are shown on the table following:
n
FY24
FY23
Growth
Revenue1 (£m)
£28.49
£22.36
27%
ACMRR2 (£m)
£28.00
£23.80
18%
Gross Profit (£m)
£11.34
£9.12
24%
Gross Profit margin3
39.8%
40.8%
(1%)
Underlying EBITDA4 (£m)
£10.73
£8.42
27%
Underlying EBITDA margin5
37.7%
37.7%
-
Underlying Profit before tax6 (£m)
£3.90
£2.32
68%
Underlying Profit before tax margin7
13.7%
10.4%
3.3%
Profit / (loss) before tax (£m)
£1.46
(£0.65)
325%
Underlying EPS8 (pence)
£7.01
£4.31
63%
17
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Strategic Report
16
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BEEKS FINANCIAL CLOUD GROUP PLC
*Other non-recurring costs in the year relates exceptional costs in relation to one off staff termination payments, and
other one off property costs. Prior year non-recurring costs were incurred due to refinancing and one off property
costs. All of these costs are not expected to recur and are therefore disclosed separately to trading results
**Underlying profit before tax is defined as profit before tax excluding amortisation on acquired intangibles,
acquisition costs, share based payments, exchange rate gains/losses on statement of financial position translation and
exceptional non-recurring costs
***EBITDA is defined as earnings before depreciation, amortisation, acquisition costs, share based payments and
non‑recurring costs
YEAR ENDED 30
JUNE 2024
YEAR ENDED 30
JUNE 2023
£'000
£'000
Statutory (Loss) / Profit Before Tax
1,459
(650)
Add back:
Share Based Payments
2,326
2,291
Other Non-recurring costs*
29
136
Amortisation of acquired intangibles
304
489
Deduct:
Grant Income
(275)
(267)
Exchange rate gains on intercompany translation
60
325
Underlying Profit before tax for the year
3,903
2,324
YEAR ENDED 30
JUNE 2024
YEAR ENDED 30
JUNE 2023
£'000
£'000
EBITDA**
10,940
8,362
Deduct:
Grant Income
(275)
(267)
Exchange rate losses on intercompany translation
60
325
Underlying EBITDA
10,725
8,420
TAXATION
The effective tax rate (‘ETR’) for the period was (50.3%),
(2023: 86.3%).
The overall effective tax rate has benefitted from the UK
Super-deduction on plant and machinery assets, deferred
tax on share options and prior year adjustments for R&D
claims.
See tax notes 9 and 12 for further details.
EARNINGS PER SHARE
Underlying earnings per share increased 63% to 7.01p
(2023: 4.31p). Underlying diluted earnings per share
increased to 6.36p (2023: 3.96p). The increase in
underlying EPS is largely as a result of the increased
underlying profitability in FY24. See note 24 for further
details.
Basic earnings per share increased to 3.33p (2023: loss per
share of 0.14p). The increase in basic EPS is as a result
of the statutory profit in the period. Diluted earnings per
share has also increased to 3.11p (2023: loss per share
0.13p)
STATEMENT OF
FINANCIAL POSITION
AND CASH FLOWS
The statement of financial position shows an increase in
total assets to £49.5m (2023: £47.4m) with operating
cash flows before movement in working capital during
the year increased by 23% to £11.0m (2023. £9.0m).
Our strategy is to always have sufficient infrastructure
capacity both across our global data centre network and
to hold a sufficient level of IT inventory at our Glasgow
Head Office. As such, a proportion of our capital spend
during the year is spent to satisfy the growing pipeline
demand for the year ahead. Investment in property,
plant and equipment, hardware and infrastructure was
again significant with £3.6m (2023: £4.1m) of additions
(excluding Property and new leases in accordance with
IFRS 16) throughout our expanding global network and
supporting the client and revenue growth made during
the year. We hold a stock supply of circa £1.5m in IT
infrastructure which is capable of delivering against the
immediate FY25 sales pipeline. As global supply chain
issues are easing, we will not require these levels of stock
which should assist working capital requirements going
forward.
During the year we took advantage of preferential pricing
with a supplier with additional borrowings via asset
finance of £0.2m We repaid total debt of £1.8m against
our borrowing facilities. Our net cash at the end of the
year is £6.6m (30 June 2023: net cash £4.4m) and gross
borrowings at £1.1m remain at 0.1x Underlying EBITDA
of £10.7m which we believe is a very comfortable level of
debt to carry given the recurring revenue business model
and strong cash generation. We note the increases to the
cost of borrowing and will look to maintain or reduce our
interest rate cover as we move forward.
At 30 June 2024 net assets were £37.5m compared to net
assets of £32.8m at 30 June 2023.
Fraser McDonald
Chief Financial Officer
4 October 2024
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BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Strategic Report
XVIII
BOARD
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.
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. Volatility in energy prices and supply chain are still
monitored by the Board, although no longer considered to
be principal risks.
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). The Chief
Information Security Officer (CISO) is accountable for
the security control framework and risk mitigation
strategies. The strategic partnership with BlueVoyant
has continued to evolve providing Managed Extended
Detection and Response (MXDR) and incident response
services underpinned by the 24x7 Security Operations
Centre (SOC)
◊
Investment and implementation of new layered
security defences & mitigations including; Privileged
Access Management (PAM), External Attack Surface
Management (EASM), and the Security Awareness
Training Platform
◊
Continued enhancements to DDoS protection
infrastructure, mitigating against larger traffic
volumes and identification of new attack techniques
◊
Extensive penetration testing of the Beeks
infrastructure and services carried out by a trusted 3rd
party provider
◊
Further commitment to the security assurance
programme by obtaining ISO 22301 certification and
completing a SOC 2 Type 1 report
Furthermore, maintained compliance with standards
and regulations such as ISO/IEC 27001, GDPR , NIST
Cyber Security Framework (CSF) and Center for
Internet Security (CIS)
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:
◊
Introduction of a Site Reliability Engineering (SRE)
function whose primary focus is achieving the highest
levels of reliability for our products and services for
clients
◊
Continuous improvement of monitoring tailored to
our systems, services and client base
◊
Upgrade and enhancement of internal network
and compute infrastructure to improve stability
and resilience
Strategic Report
–Principal risks and
uncertainties
◊
Board Level focus on business risks and mitigations
with follow-up actions identified and reported against
c. Actions of third parties and suppliers
Any disruption to Beeks relationship with third-party
suppliers such as Data centres, 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:
◊
A thorough SOC2 compliant supplier on boarding
procedure to ensure suppliers are fit for purpose and
have in place appropriate practices and accreditations
to mitigate risk
◊
Regular key supplier management meetings to ensure
healthy ongoing relationship and to identify and
resolve any potential issues
◊
Reviewing the performance of key suppliers and
considering alternative options available in the market
place. 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
d. Other Operational risks
Management of unexpected peaks or troughs in client
demand for delivery of Beeks systems services and
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 33 to 41 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. Prioritising the well-being of our employees
by offering competitive benefits, continuous learning
opportunities, and a supportive work environment
that champions diversity and inclusion. We prioritise
our employee’s well-being continuously offering a
suite of on-site benefits for our teams to enjoy which
includes access to the fully equipped gym, our own
personal trainer and in-house yoga instructor as well
as weekly relaxation or sports therapy sessions. For
more recreational fun we also have the Beeks pool table,
20
21
Strategic Report
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Strategic Report
various comfortable break‑out areas and our very own
Beeks Bar. This is in addition to an excellent private
medical insurance policy which now includes generous
dental cover and access to annual full medical health
checks.
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. 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.
c. The Group remains committed to building and
strengthening relationships with key suppliers,
customers, and industry innovators. Regular
engagement allows us to review operations, explore new
opportunities, and ensure we are aligned with the needs
of the financial markets.
This year, we prioritised key geographic regions through
targeted roadshows and technical industry events. Our
Asia-Pacific roadshow took us to key financial hubs like
Hong Kong, Singapore, and Malaysia, where we met
with leading industry players to discuss infrastructure
optimisation and trading solutions. In the Americas,
we hosted a roadshow in New York, engaging with
tier-1 banks and exchanges to explore cloud computing
strategies and the future of trading infrastructure.
We also took part in the ITRS Executive Roundtable
dinner in Sydney, which brought together senior leaders
for in-depth discussions on the future of financial
services technology. This exclusive event strengthened
our connections in the region and highlighted our
commitment to fostering collaborative solutions.
Additionally, our participation in highly technical events
such as the STAC Summits in New York, Chicago,
Singapore and London enabled us to dive deep into
discussions around benchmarking and performance
standards. These summits are critical for connecting
with the right audience in the capital markets space.
Other notable events included FIA Boca, JSE Trade
Connect in Johannesburg, FIX Asia Pacific Trading
Summit and FISD forums in Singapore. Senior leaders
from Product Development, Sales, and Operations were
actively involved, driving key conversations around low-
latency trading and cloud solutions.
We also continue to maintain strong relationships with
our strategic suppliers, ensuring operational efficiency
and securing favourable terms for the business.
For further details on supplier engagement, please refer
to the Directors’ report on pages 26 to 28.
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. As referred to earlier in this report, under ESG, training
and development has also been high on the people
agenda with investment being made for upskilling
existing employees in their relevant fields and adopting
a global training plan to carve our clearer career paths
across the organisation.
f.
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.
g. 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 eleven 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.
The strategic report on pages 10 to 22 has been approved by
the board and signed on its behalf by:
Gordon McArthur, CEO
4 October 2024
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.
The Board discussed the significant opportunity within the proximity and
Exchange Cloud® pipeline whilst acknowledging the elongated sales cycle
due to the size and complexity of these organisations.
Shareholders,
Employees,
Customers,
Suppliers
Performance
of the Group
including
financial
performance
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 discussed the implications of the revenue recognition of
Exchange Cloud® when discussing contract nuances such as hardware
ownership term and enforceable rights.
Shareholders,
Employees,
Customers,
Suppliers,
Environment
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. The Group has achieved
certification in ISO 9001, ISO 14001, and ISO 22301 including maintaining
compliance with ISO 27001. SOC 2 Type 1 compliance was also achieved for
the Proximity Cloud® and Exchange Cloud® products.
Risk control documents are presented at Board meetings on the Group’s
key risks which include an updated assessment of controls and mitigation
actions required in respect of each out of appetite risk.
During the year the Board discussed at length the cyber security threats and
the associated risk mitigation strategies. The Board remains committed
to invest in the cyber security strategy to enhance the overall maturity.
The board authorised the establishment of two new boards/committees
during the year: the Technical Board, which concentrates on the aligning
the strategic technology roadmap with organisational objectives, and the
Engineering Assurance Committee, which is focused on reviewing material
engineering changes and associated investment requests. As noted in the
Chief Executive Officer’s review on page 13, Principal Risks and Uncertainties
on page 20 and the Corporate Governance report on page 33, the Board has
formally considered the risk mitigating measures as a result of Global Supply
chain issues through the use of alternative suppliers and 3rd party carriers to
minimise potential impact.
Shareholders,
Employees,
Customers,
Suppliers,
Environment
22
23
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BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Strategic Report
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 also 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 was a Chartered Accountant and remains 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.
BOARD OF
DIRECTORS
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.
FRASER
MCDONALD
CHIEF FINANCIAL
OFFICER
AGE 50
MARK
CUBITT
NON-EXECUTIVE
CHAIRMAN
AGE 61
GORDON
MCARTHUR
CHIEF EXECUTIVE
OFFICER
AGE 48
WILLIAM
MELDRUM
NON-EXECUTIVE
DIRECTOR
AGE 56
KEVIN
COVINGTON
NON-EXECUTIVE
DIRECTOR
AGE 65
24
25
BOARD OF DIRECTORS
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
BOARD OF DIRECTORS
RESULTS
The Group’s audited financial statements for the year
ended 30 June 2024 are set out on pages 57 to 97. The
Group’s profit for the year after tax amounted to £2.2m
(2023: loss after tax £0.10m).
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 23.
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 24. 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.
CREDIT RISK
Credit risk is managed on a Group basis. Credit risks arise
from cash and cash equivalents and deposits with banks
DIRECTOR’S
REPORT
2024
2023
SHARES
OPTIONS
SHARES
OPTIONS
Gordon McArthur
21,653,440
-
24,593,440
-
Mark Cubitt
70,707
-
70,707
-
William Meldrum
41,450
-
41,450
-
Fraser McDonald
-
719,742
44,118
909,742
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
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
23 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 16 to 19.
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 and liquidity risk.
The directors are of the opinion that the Group can operate
within their current levels of cash reserves including further
financing facilities available . At the end of the financial
year, the Group had net cash of £6.6m (2023: £4.4m) 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 sufficiently diverse portfolio
of customers and suppliers with long‑term contracts across
different geographic areas. As a consequence, the directors
believe that the Group is well placed to manage its business
risks.
The directors have considered the Group budgets and the
cash flow forecasts to December 2025, and associated risks
including the risk of climate change and the impact on
our data centre estate, useful economic life of assets, and
the availability of bank and leasing facilities. We have run
appropriate scenario and stress tests applying reasonable
downside sensitivities in respect of profitability and
associated cash flow generation and are confident we have
the resources to meet our liabilities as they
fall due.
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.
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 33 to 41.
26
27
DIRECTOR’S REPORT
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
DIRECTOR’S REPORT
STREAMLINED
STREAMLINED ENERGY
AND CARBON REPORTING
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
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
Haysmacintyre LLP were appointed auditors on the 22
March 2024 following a thorough tender process overseen
by the Company’s Board Audit Committee and will be
confirmed in a vote of shareholders at the Company’s
next Annual General Meeting.
By order of the Board.
Fraser McDonald
Chief Financial Officer
4 October 2024
STRENGTH
TH
AND
D STABILITY
Engineered for performance and
reliability, BeeksÕs global network is
designed to withstand the demands
of modern trading, empowering
institutions with the stability to
adapt and grow.
The
he Pil
illars
of
f Finan
inancial
ial
In
Infrastructure
28
DIRECTOR’S REPORT
BEEKS FINANCIAL CLOUD GROUP PLC
DIRECTORS’
REMUNERATION REPORT
FOR THE YEAR ENDED 30
JUNE 2024
On behalf of the Board, I am pleased to present the
Directors’ Remuneration Report for the year ended 30
June 2024 which sets out our Directors’ Remuneration
policy and provides details of amounts earned by
Directors in respect of the year ended 30 June 2024.
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 scheme (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.
Report on
Remuneration
BASIC SALARY
BENEFIT IN KIND
TOTAL
PENSION
£’000
£’000
£’000
£’000
2023
Executive Directors
Gordon McArthur
63
1
64
5
Fraser McDonald
125
1
126
9
Non-executive
Directors
Mark Cubitt
35
-
35
-
William Meldrum
35
-
35
-
Kevin Covington
35
-
35
-
TOTAL
293
2
295
14
2024
Executive Directors
Gordon McArthur
100
2
102
10
Fraser McDonald
125
2
127
12
Non-executive
Directors
Mark Cubitt
35
-
35
-
William Meldrum
35
-
35
-
Kevin Covington
35
-
35
-
TOTAL
330
4
334
22
DIRECTORS’ REMUNERATION
30
31
Report on Remuneration
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Report on Remuneration
Mark Cubitt
Chairman of the Remuneration Committee
4 October 2024
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:
During the year ended 30 June 2024, share options exercised by the Director, Fraser McDonald are shown below:
DIRECTOR
DATE OF GRANT
SHARE
OPTIONS
VESTING DATE
LAPSE DATE
EXERCISE PRICE (£)
Fraser
McDonald
17 Oct 19
538,922
17 Oct 22
17 Oct 29
0.00125
Fraser
McDonald
19 Oct 20
105,820
19 Oct 23
19 Oct 30
0.00125
Fraser
McDonald
26 Nov 21
195,000
26 Nov 24
26 Nov 31
0.00125
Fraser
McDonald
2 Dec 22
70,000
2 Dec 25
2 Dec 32
0.00125
Fraser
McDonald
20 Nov 23
50,000
20 Nov 26
20 Nov 33
0.00125
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 ten 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 to 23.
PRINCIPLE 2: SEEK TO
UNDERSTAND AND MEET
SHAREHOLDER NEEDS
AND EXPECTATIONS
Corporate
Governance
Fraser
McDonald
240,000
0.00125
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.
The aggregate amount of gains realised by Directors, who
served during the year, on the exercise of share options
during the year was £388,000 (2023: £nil).
For the year ended 30 June 2024, 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 2024.
DIRECTORS’ SHARE INTERESTS
The Directors’ shareholdings in the Company are shown
in the Directors’ Report on page 26.
32
33
Report on Remuneration
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Corporate Governance
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 THEIRIMPLICATIONS
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
21, the Group has taken 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 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 20 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 2024, 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 10 times in the year ended 30 June 2024. The
attendance of each director is shown on page 38.
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
34
35
Corporate Governance
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Corporate Governance
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 2024 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 42 to 52. 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
December 2024.
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 24 and 25.
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
◊
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.
36
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Corporate Governance
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Corporate Governance
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 ten 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:
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 2024, 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.
BOARD
MEETINGS
AUDIT
COMMITTEE
REMUNERATION
COMMITTEE
Possible
Attended
Possible
Attended
Possible
Attended
Executive
Directors
Gordon McArthur
10
10
2
2
1
1
Fraser McDonald
10
10
2
2
1
1
Independent
Non-executive
Directors
Mark Cubitt
10
10
2
2
1
1
William Meldrum
10
10
2
2
1
1
Kevin Covington
10
10
2
2
1
1
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 this 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 broker provides 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, Governance
At Beeks, we are committed to building a sustainable
and equitable future. We recognise that we have a
responsibility to involves contributing positively to
society and minimising our environmental impact where
we can.
Environmental Responsibility
We are dedicated to reducing our carbon footprint and
promoting environmental sustainability. Our initiatives
include:
◊
Energy Efficiency: Implementing energy-efficient
practices in our operations, including the use of
renewable energy sources in our offices and adopting
an electric car scheme available to all staff
◊
Sustainable Products: Developing digital products that
reduce the need for paper-based transactions, thereby
minimising waste and resource consumption
◊
Supply Chain Management: Partnering with vendors
and suppliers who adhere to environmental best
practices, ensuring that our supply chain is as
sustainable as possible
Social Responsibility
Our commitment to social responsibility is reflected in
our efforts to create positive social impact and foster an
inclusive, diverse, and equitable environment. We are
proud of the non-corporate culture we have created and
which continues to attract and retain some of the best
talent there is working in Glasgow, London, the US and
remote workers on a global scale.
Our key areas of focus include:
Employee Wellbeing
We prioritise our employee’s well-being continuously
offering a suite of on-site benefits for our teams to enjoy
which includes access to the fully equipped gym, our own
personal trainer and in-house yoga instructor as well as
weekly relaxation or sports therapy sessions. For more
recreational fun we also have the Beeks pool table.
Positive Workplace Culture
38
39
Corporate Governance
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Corporate Governance
Our unrivalled wellbeing offering contributions to the
culture that Beeks are fostering. It is critical that we
position ourselves in the market as a company different
to the rest with our aggressive growth targets but a
non‑corporate working environment where people are
happy to come to work.
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.
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.
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 108 employees.
Succession planning has been a key initiative throughout
the year with 11 internal promotions happening and career
paths in place for many more over the coming months.
Training and Development has also been high on the
people agenda with investment being made for upskilling
existing employees in their relevant fields and adopting
a global training plan to carve our clearer career paths
across the organisation. Earlier in the year our Head of
HR & Talent Management graduated with her MSc. in
Employment Law which was sponsored by Beeks and we
are also supporting one of our Project Managers through
her Business Management BA (hons).
This has seen us close the year on an impressive rolling
retention rate of 94% and a turnover rate of 14% (the
average turnover in the UK is 34%).
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. To raise additional
awareness, this has been bolstered with the roll-out of
compulsory compliance training in this area for the entire
organisation to raise awareness.
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.
Supply Chain
At Beeks, we believe that the key to success is building
strong relationships with our suppliers and customers.
Our teams are dedicated in forging open and regular
channels of communication with customers to ensure we
meet their requirements and deliver the highest quality
customer service. Our 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 are aware that a shared commitment to the values of
ESG is compelling market players to establish partnerships
to deliver workable and sustainable financial systems.
As an example, our partnership with IPC facilitates
the delivery of accessible, cloud-based solutions that
turbo‑charge market participants’ business. We mindfully
work with 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’ latest dedicated server hosting solution,
Exchange 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 centre footprint and achieve natural efficiencies
in power consumption, cost and cooling. Beeks has
plans to undergo an internal assessment for ESG in the
near future. At present, Beeks commits to procuring
energy from renewable sources whenever feasible and is
increasing renewable energy sourcing by 2% each year.
Co-locating in data centres owned by large data centre
providers, Beeks and our customers also benefit from
their Corporate Sustainability Programme, ensuring
reduced power consumption and heightened energy
efficiency for cooling and lighting across the whole site.
By offering co‑location in 32 locations, Beeks leverages
the sustainable innovation these providers offer and
assists in the worldwide goal to reach 100% renewable
energy by 2030 by reducing operational emissions and
moving towards a zero-carbon energy grid.
Every ESG-sensitive operation would benefit from
in-depth monitoring, fine-tuning and improving their
existing infrastructure over acquiring new equipment.
Beeks’ technology has developed on-premise and cloud-
based Analytics as a Service enabling businesses to
get more granular insight into how their networks are
performing, and how to optimise their existing stacks
within Data Centres and in the Cloud. Beeks’ business
model will now enable firms to enter into shorter
commitments than the typical demand from on-premise
data centres. 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.
As part of our efforts to improve our environmental
impact, and educate our people on how they can help,
we have also rolled out compulsory ISO 14001 compliant
training which now also forms part of our onboarding
process. This training goes hand in hand with our newly
established ISO 14001 accreditation.
In addition, 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 and ESG Initiatives
We continue our commitment to hiring locally, proud
to attract and retain the best talent in our head office,
working hybrid hours. Our graduate programme
continues to grow, with new Graduate Network
Engineers joining our team this year. We also welcomed
two software engineering interns from the University
of Glasgow and the University of Strathclyde, further
investing in the development of future talent.
In 2023/24, we’ve expanded our charitable activities
and local sponsorships, focusing on grassroots sports,
all Powered by Beeks. This year, we proudly sponsor
Inverclyde Amateur Swimming Club, Kilsyth Athletic,
Mosi Rovers in South Africa, Ashbourne Aztecs Junior
Football Club, Bridge of Weir United, and Mixed
Martial Arts competitor Robert McVitie. Through these
partnerships, we support local communities, encouraging
teamwork, physical activity, and personal development.
This focus on grassroots sports is an important part of
our wider ESG strategy. By helping young athletes and
community sports teams, we aim to promote well-being
and provide opportunities for people to thrive.
Looking ahead, as we expand globally, we will continue
to give back to local communities through initiatives like
these. Whether through sports sponsorships or charitable
support, we’re committed to ensuring that every new
region we enter benefits from our presence, with
communities always Powered by Beeks.
By order of the Board.
Mark Cubitt
Chairman
4 October 2024
40
41
Corporate Governance
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Corporate Governance
COMMITTEE ACTIVITIES
IN THE FINANCIAL YEAR
ENDING 30 JUNE 2024
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 38. 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 2024, 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 the
annual financial statements, the audit plan for the
year and the results of the annual audit. These reports
included the scope of the 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
◊
Review the enhanced audit report
Significant areas considered by the Audit Committee
in relation to the 2024 financial statements are set out
below:
Report of the
Audit Committee
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. The committee considered
management’s assessment of revenue recognition specifically in relation to the
proximity and Exchange Cloud® contracts in the year and the nuances within these
contracts. The committee critically assessed the principles, assumptions,
judgements and estimates applied by management to identify and allocate amounts
to each performance obligation.
Capitalisation of intangibles
As the evolvement and development of proximity/Exchange Cloud® and analyt-
ics products continued in the year to 30th June 2024, the committee assessed the
appropriateness of capitalisation of these intangibles in line with how the relevant
criteria have been met and how management have applied judgement.
The committee critically assessed the inputs and resultant costs capitalised in line
with the relevant accounting standard, as well as the appropriateness of the cut off
points in which amortisation commenced.
Hive-up/across of trade and
assets of Velocimetrics
Limited and Velocimetrics Inc
On the 31 December 2023 the group completed the Hive-up of VMX Inc into VMX
Ltd, and the subsequent hive across of VMX Ltd into Beeks Financial Cloud Limited.
The committee critically assessed the impact to Beeks Financial Cloud Limited and
considered the calculations supporting the transfers of assets and liabilities. The
committee reviewed the supporting papers prepared by management and third
parties and considered the judgements taken on the accounting treatment used and
the tax advice sought on the transfer of trading losses.
Recoverability of Deferred
Tax Asset
The committee considered the appropriateness to recognise the deferred tax asset in
the year, specifically assessing managements judgment to identify if there is
sufficient forecastable future taxable profits to utilise the deferred tax asset on
carried forward losses.
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,
Haysmacintyre LLP, was appointed Auditor on 22 March
2024.
AUDIT AND
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 £79,000 for the Group and £70,000 for the
subsidiary audit. There were no fees paid to the Auditor
for non-audit fees (2023: £20,250 paid to the previous
Auditor for assurance related services).
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 QCA Corporate
Governance Code, the requirements of the AIM Rules for
Companies and 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
4 October 2024
42
43
Report of the Audit Committee
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Report of the Audit Committee
The financial reporting framework that has been applied
in the preparation of the Group financial statements is
applicable law and United Kingdom adopted international
accounting standards. The financial reporting framework
that has been applied in the preparation of the 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 Company’s affairs as at 30 June 2024 and of
the Group’s profit for the period then ended
◊
have been properly prepared in accordance with
United Kingdom adopted international accounting
standards IFRS
◊
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 in accordance with the
ethical requirements that are relevant to our audit of the
financial statements in the United Kingdom, 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.
Independent Auditor’s
Report to the members
of beeks financial
cloud group plc
AN OVERVIEW OF THE
SCOPE OF OUR AUDIT
Our audit scope covered all the Group’s components, with
varying levels of testing based upon the significance of each
component. We performed a scoping assessment of the
Group at the planning stage of the audit and subsequently
updated this assessment for the year-end figures. We
assessed the risk of material misstatement for each of the
components and determined their significance based on the
overall impact to the Group financial statements. This was
performed as a result of there being only one subsidiary
of the Group which has a signed statutory audit report,
by taking into account the balances in each component
which related to the significant risks as determined in our
risk assessment, as well as any other balances determined
to be significant when compared to the Group financial
statements.
Subsidiaries with >10% of the Group balance for an area of
significant risk were selected for testing, as well as balances
with >35% impact on a line within the financial statements.
We also assessed each group entity in relation to the risk
of management override of controls. At 30 June 2024, the
Company and Beeks Financial Cloud Limited were deemed
to be the significant components of the Group. Velocimetrics
Limited and Beeks FX VPS USA Inc were considered to
be material components and therefore subject to specific
procedures following our scoping assessment. The remaining
entities were deemed insignificant to the audit of the
Group financial statements based on the above metrics and
therefore, the audit work on these components has been
limited to analytical review and verification of bank balances
to third-party confirmation, where considered appropriate.
The audits of the Group and Company, as well as the audit
procedures carried out on entities not subject to statutory
audit being both overseas and United Kingdom subsidiaries
were carried out by the Group engagement team.
We communicated with both the Directors and the Audit
Committee our planned audit work via our audit planning
report and relevant discussions throughout the audit process.
We have communicated any issues to the Audit Committee
and the Directors in our final audit findings report.
CONCLUSIONS RELATING
TO GOING CONCERN
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.
Our evaluation of the Directors’ assessment of the Group’s
ability to continue to adopt the going concern basis of
accounting included consideration of the inherent risks to
the Group’s business model and analysed how those risks
might affect the Group’s financial resources or ability to
continue operations over the period 12 months from the
date of the signing of the financial statements.
The risks that we considered most likely to affect
the Group’s financial resources or ability to continue
operations over this period were adverse circumstances
impacting timely conversion of contract assets and trade
receivables to cash, growth in revenues, adverse changes
in working capital trends and reliance on significant
customers. We considered these risks through a review
of the application of reasonably foreseeable downside
scenarios that could arise with reference to the level of
available financial resources indicated by the Group’s
financial forecasts and managements assessment of
these risks, including potential mitigation available. This
has been aligned with our review of the development of
future products, sales pipeline of existing products and
assessments performed by management in determining
the market opportunities that they look to exploit.
Our audit procedures to evaluate the director’s assessment
of the Group and the Company’s ability to continue to
adopt the going concern basis of accounting included:
◊
Undertaking an initial assessment at the planning stage
of the audit to identify events or conditions that may
cast significant doubt on the Group and the Company’s
ability to continue as a going concern;
◊
Discussing management’s assessment of the Group’s
ability to remain a going concern;
OPINION
We have audited the financial statements of Beeks Financial Cloud Group plc (the ‘Company’) and its subsidiaries
(together the ‘Group’) for the year ended 30 June 2024 which comprise:
GROUP
COMPANY
•
the Consolidated Statement
of Comprehensive Income
•
the Company Statement of Changes In
Equity;
•
the Consolidated Statement
of Changes in Equity;
•
the Company Statement of Financial
Position;
•
the Consolidated Statement
of Financial Position;
•
and related notes to the financial
statements
•
the Consolidated Statement
of Cash flows;
•
and related notes to the financial
statements including a summary of
significant accounting policies
44
45
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BEEKS FINANCIAL CLOUD GROUP PLC
KEY AUDIT MATTER
HOW WE ADDRESSED THE KEY AUDIT MATTER IN THE
AUDIT
Revenue recognition
The Group’s revenue recognition policies are included
within the accounting policies in note 1, the critical
accounting judgements and key sources of estimation
uncertainty related to revenue are included in note 2, and
the components of revenue are set out in note 3.
Revenue recognition has been identified as a significant
risk area regarding misstatement as a result of fraud,
error, classification and cut off.
Group revenue has grown from £22.4m in the prior year
to £28.5m in the year ended 30 June 2024.
Revenue is derived from provision of access to IP, the
sale of own intellectual property (IP), the provision and
delivery of hardware, support and maintenance and the
provision of consultancy services.
The significant risk of fraud, error, classification and cut
off was considered to fall into two categories:
◊
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
The Group enters into Proximity Cloud® and Exchange
Cloud® contracts that span four to five years.
Management make key judgements and estimates in
relation to the revenue recorded in relation to long term
contracts, in particular as to the portions of revenue
recorded at a point in time as well as over time.
In response to this risk, our work consisted of, but was
not limited to, the following audit procedures in respect
of all full scope components:
◊
Assessed the Group’s accounting policy for
each material revenue stream and obtained an
understanding of the relevant business processes and
controls assessing their design and implementation
◊
We utilised substantive audit data analytics on all
revenue streams to identify any anomalies being
transaction that fall outside the standard posting
cycle
◊
We performed substantive tests of detail for a sample
of revenue items recorded during the year to ensure
that revenue had not been materiality overstated
◊
For new Exchange Cloud® and Proximity Cloud®
contracts we obtained and scrutinised managements
application of their accounting policies in accounting
for contract revenue in accordance with IFRS 15.
As part of this, we reviewed the estimates and
judgements considered to be significant in the
application of the accounting policy for these revenue
streams, challenging management to ensure these
were reasonable
◊
We have reviewed the allocation of revenue in
accordance with the principles of IFRS 15 to
identifiable performance obligations determined by
management following a review of the contracts
relating to the Exchange Cloud® and Proximity
Cloud® revenue streams
◊
Our review also included an assessment of the
appropriateness of the accounting for contract assets,
trade receivables and contract liabilities
◊
We performed specific targeted testing around
the reporting date, with June 2024 and July 2024
bank receipts and sales listings being reviewed
and selecting a sample of significant sales or
receipts. We agreed receipts and sales to supporting
documentation ensuring that revenue has been
recorded in the appropriate reporting period having
determined when the performance obligations
pertaining to these transactions were satisfied
◊
We have reviewed the disclosures included with the
financial statements in respect of revenue including
those made in the accounting policies in note 1, the
critical accounting judgements and key sources of
estimation uncertainty related to revenue as included
in note 2, and the components of revenue as set out
in segmental reporting within note 3
◊
Evaluating the methodology used by the directors
to assess the Group and the Company’s ability to
continue as a going concern including assessment
and evaluation of the key assumptions used and
judgements;
◊
Considering the sufficiency of financing facilities
available to the Group over the period of management’s
assessment to December 2025, challenging
management on the possibility of non-renewal of
certain arrangement and mitigations that could be
applied;
◊
Performing stress tests including sensitivity analysis
to model the effect of changing assumptions made or
amending key data used in management’s cash flow
forecasts and considering the impact on the Group’s
ability to adopt the going concern basis; and
◊
Reviewing the appropriateness of the directors’
disclosures regarding going concern in the financial
statements
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 ability to continue as a
going concern for a period of at least twelve months from
when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the
directors with respect to going concern are described in
the relevant sections of this report.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our
professional judgment, 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) we identified,
including those which had the greatest effect on:
◊
the overall audit strategy
◊
the allocation of resources in the audit
◊
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 determining the key audit matters we considered the:
◊
Areas of higher risks of material misstatement or
significant risks identified in accordance with ISA (UK)
315
◊
Significant audit judgements on financial statement
line items that involved significant management
judgement such as accounting estimates, and
◊
The impact of significant events and transactions
during the period covered by the audit.
The following table summarises the key audit matters
we have identified and rationale for their identification
together we how we responded to each in our audit and
our key observations.
46
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
47
BEEKS FINANCIAL CLOUD GROUP PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BEEKS FINANCIAL CLOUD GROUP PLC
KEY AUDIT MATTER
HOW WE ADDRESSED THE KEY AUDIT MATTER IN THE
AUDIT
Capitalisation of development costs in Intangible assets
and application of IAS 38.
The capitalisation of development costs has been
identified as a significant risk area regarding
misstatement as a result of fraud, and error in
capitalisation of development costs and application of
IAS 38.
The net book value of the Group’s capitalised
development costs has grown from £5.6m in the
prior period to £7.1m in the year ended 30 June 2024.
The Group has capitalised £2.8m of development
expenditure during the period in line with
management’s assessment of development costs and
projects in line with IAS 38.
The Group’s accounting policy for intangible assets
is included within the accounting policies in note 1,
the critical accounting judgements and key sources of
estimation uncertainty related to development costs are
included in note 2, and the components of intangible
assets are set out in note 10.
The costs capitalised during the period relate to directly
attributable costs relating to ongoing development
projects.
Significant judgement is required by management in
assessing if the relevant conditions per IAS 38 have
been met for development costs and in assessing if
costs relate to enhancement of assets or maintenance
of existing assets. These judgements are therefore
susceptible to management bias or error.
In response to this risk, our work consisted of, but was
not limited to, the following audit procedures in respect
of all full scope components:
◊
We obtained and reviewed the Group research and
development policy and critically assessed the
application of the policy in line with the IAS 38
requirements
◊
We obtained the intangible fixed assets register and
verified the brought forward figures to the prior year
signed financial statements
◊
For the development projects ongoing in the year,
we obtained management’s assessment of additions
in line with IAS 38 criteria
◊
We performed a sample test of capitalised
additions to supporting documentation to assess
whether it satisfied the development costs criteria.
Consideration of the overall projects to which costs
were attributable to were included in management’s
assessment and our review
◊
We discussed ongoing projects with members
outside of the finance team to ensure we understood
the commercial background of the projects and how
this factored into the determination that a project is
capital in nature
◊
We discussed additions relating to time costs with
members outside of the finance team to assess the
nature of the time spent and assess whether the
capitalisation of these costs in line with IAS 38 was
appropriate
◊
We critically assessed the costs and projects that
moved from development phase to completed which
is at the point of a major product release or upgrade
in which that asset is made available for sale and
release to customer
◊
We have reviewed the disclosures included within
the financial statements in respect of intangible
assets including those made in the accounting
policies in note 1, the critical accounting judgements
and key sources of estimation uncertainty in note 2,
and the intangible assets disclosures in note 10
OUR APPLICATION OF MATERIALITY
The scope and focus of our audit were influenced by our assessment and application of materiality. We define materiality as the
magnitude of misstatement that could reasonably be expected to influence the readers and the economic decisions of the users of
the financial statements. We use materiality to determine the scope of our audit and the nature, timing and extent of our audit
procedures and to evaluate the effect of misstatements, both individually and on the financial statements as a whole.
The following table shows our judgement of the likelihood and magnitude of each significant risk, the significant risks
deemed to be key audit matters where fraud, error, classification and cut off in revenue recognition and capitalisation
of development costs
RISK AREAS
LIKELIHOOD
MAGNITUDE
Fraud in revenue
recognition
Management override
of controls
Capitalisation of
development costs
Error, classification
and cut off in
revenue recgonition
GROUP FINANCIAL STATEMENTS
COMPANY FINANCIAL STATEMENTS
Materiality
£427,500
£216,000
Benchmark
Materiality for the Group was determined
to be 1.5% of Revenue for the period, based
on the point at which we performed our
audit planning and risk assessment.
Materiality has been based on 1% of gross
assets but capped at £216,000 being the
remaining available allocation of Group
materiality as assessed as part of our
Group scoping and component materiality
allocation.
Basis for, and
judgements used in
the determination of
materiality
Revenue has been used as the basis for
materiality because profit before tax and
adjusted profit before tax (adjusted to
exclude amortisation, acquisition costs,
share-based payments and exceptional
non-recurring costs) have varied
significantly year on year.
Revenue has grown year on year but
is considered to be more stable. When
considering the usage of EBITDA, PBT
and Revenue, the revenue metric was
deemed the most appropriate on the basis
that revenue is deemed a key figure for
investors, alongside presenting the most
stable figure of the three.
The Company is non trading and as
such gross assets was deemed the most
appropriate measure of materiality.
As a result of Group scoping the allocation
of Group component materiality to
the Company resulted in a maximum
allocation of £216,000. We have therefore
capped the materiality to this figure
and figures have been audited to this
materiality.
49
BEEKS FINANCIAL CLOUD GROUP PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BEEKS FINANCIAL CLOUD GROUP PLC
48
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Performance materiality - Based on our risk assessment and our review of the Group’s control environment,
performance materiality was set at 65% of materiality, being £277,875 for the Group and £140,400 for the Company.
65% was set as the benchmark for performance materiality to reflect our assessment and understanding of the control
environment with consideration of findings in previous audits.
Reporting threshold - The reporting threshold to the audit committee was set as 5% of materiality, being £21,375 for
the Group and £10,800 for the Company.
OVERALL MATERIALITY GROUP
OTHER INFORMATION
The directors are responsible for the other information.
The other information comprises the information
included in the annual report, other than the financial
statements and our auditor’s report thereon. 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.
In connection with our audit of the financial statements,
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 apparent material misstatements, we
are required to determine whether there is a material
misstatement in the financial statements or a material
misstatement of the other information. 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.
OPINIONS ON OTHER
MATTERS PRESCRIBED BY
THE COMPANIES ACT 2006
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 period for which the
financial statements are prepared is consistent with
the financial statements
◊
the strategic report and the directors’ report have
been prepared in accordance with applicable legal
requirements.
MATTERS ON WHICH
WE ARE REQUIRED TO
REPORT BY EXCEPTION
In the light of the knowledge and understanding of the
Group and the Company and its environment obtained in
the course of the audit, we have not identified material
misstatements in the strategic report or the directors’
report.
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 Company, or returns adequate for our audit have
not been received from branches not visited by us
◊
the Company financial statements are not in
agreement with the accounting records and returns
◊
certain disclosures of directors’ remuneration
specified by law are not made
◊
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, 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 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 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. We design
procedures in line with our responsibilities, outlined above,
to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are
capable of detecting irregularities, including fraud is
detailed below. However, the primary responsibility for
the prevention and detection of fraud rests with both those
charged with governance of the Group and management.
EXPLANATION AS TO
WHAT EXTENT THE
AUDIT WAS CONSIDERED
CAPABLE OF DETECTING
IRREGULARITIES,
INCLUDING FRAUD
Based on our understanding of the Company and industry,
we identified that the principal risks of non‑compliance
with laws and regulations related to regulatory requirements
in respect of employment law, including but not limited to
minimum wage regulation, and food standards requirements.
We considered the extent to which non-compliance might
have a material effect on the financial statements. We also
considered those laws and regulations that have a direct
impact on the preparation of the financial statements such as
the Companies Act 2006, payroll tax and sales tax.
We evaluated management’s incentives and opportunities
for fraudulent manipulation of the financial statements
(including the risk of override of controls) and determined
that the principal risks were related to posting inappropriate
manual journal entries to revenue and the risk of
management bias in accounting estimates. Audit procedures
performed by the engagement team included:
◊
Discussions with management including consideration of
known or suspected instances of non-compliance with
laws and regulation and fraud
◊
The evaluation of management’s controls designed to
prevent and detect irregularities
◊
We inspected relevant tax filings and considered these
and other relevant correspondence for indications of non-
compliance
◊
The identification and review of manual journals,
in particular journal entries which shared key risk
characteristics
◊
The review and challenge of assumptions, estimates and
judgements made by management in their recognition of
accounting estimates
51
BEEKS FINANCIAL CLOUD GROUP PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BEEKS FINANCIAL CLOUD GROUP PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
L
Because of the inherent limitations of an audit, there is
a risk that we will not detect all irregularities, including
those leading to a material misstatement in the financial
statements or non-compliance with regulation. This
risk increases the more that compliance with a law or
regulation is removed from the events and transactions
reflected in the financial statements, as we will be less
likely to become aware of instances of non-compliance.
The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves
intentional concealment, forgery, collusion, omission or
misrepresentation.
A further description of our responsibilities for the audit
of the financial statements is located on the Financial
Reporting Council’s website at: https://www.frc.org.uk/
library/standards-codes-policy/audit-assurance-and-
ethics/auditors-responsibilities-for-the-audit/. 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.
Jonathan Maddison
(Senior Statutory Auditor)
For and on behalf of Haysmacintyre LLP, Statutory Auditors
10 Queen Street Place
London
EC4R 1AG
4 October 2024
Consolidated Statement
of Comprehensive Income
2024
2023
Note
£000
£000
Revenue
3
28,487
22,357
Other Income
3
371
361
Cost of sales
(17,516)
(13,602)
Gross profit
11,342
9,116
Administrative expenses
(9,759)
(9,447)
Operating profit / (loss)
4
1,583
(331)
Analysed as
Earnings before depreciation, amortisation, acquisition costs,
share based payments and non-recurring costs:
10,940
8,362
Depreciation
11
(5,085)
(4,550)
Amortisation – acquired intangible assets
10
(326)
(489)
Amortisation – other intangible assets
10
(1,591)
(1,227)
Share based payments
21
(2,326)
(2,291)
Other non-recurring costs
4
(29)
(136)
Operating profit / (loss)
1,583
(331)
Finance income
6
250
101
Finance costs
5
(374)
(420)
Profit / (loss) before taxation
1,459
(650)
Taxation
9
734
561
Profit / (loss) after taxation for the year attributable to the owners
of Beeks Financial Cloud Group plc
2,193
(89)
Other comprehensive income
Amounts which may be reclassified to profit and loss
Currency translation differences
8
77
Total comprehensive income / (loss) for the year attributable to
the owners of Beeks Financial Cloud Group PLC
2,201
(12)
Pence
Pence
As Restated
Basic earnings / (loss) per share
24
3.33
(0.14)
Diluted earnings / (loss) per share
24
3.11
(0.13)
The above income statement should be read in conjunction with the accompanying notes.
52
53
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Consolidated Statement of Comprehensive Income
2024
2023
(RESTATED)
Note
£000
£000
Non-current assets
Intangible assets
10
9,368
8,106
Trade and other receivables
14
3,287
1,891
Property, plant and equipment
11
16,739
17,952
Deferred tax
12
6,726
5,398
36,120
33,347
Current assets
Trade and other receivables
14
4,171
4,500
Inventories
13
1,506
1,767
Cash and cash equivalents
15
7,701
7,829
13,378
14,096
Total assets
49,498
47,443
Liabilities
Non-current liabilities
Trade and other payables
18
136
531
Lease liabilities
17
1,283
2,047
Deferred tax
12
4,196
3,884
Total non-current liabilities
5,615
6,462
Current liabilities
Trade and other payables
18
4,777
4,421
Lease liabilities
19
1,611
1,960
Borrowings
17
-
1,814
Total current liabilities
6,388
8,195
Total liabilities
12,003
14,657
Net assets
37,495
32,786
Equity
Issued capital
20
83
82
Share premium
22
23,775
23,775
Reserves
22
6,297
4,879
Retained earnings
7,340
4,050
Total equity
37,495
32,786
Consolidated Statement
of Financial Position
These financial statements
were approved by the Board of
Directors on 4th October 2024
and were signed on its behalf
by:
Gordon McArthur
Chief Executive Officer,
Beeks Financial Cloud Group
plc,
Company number: SC521839
The above statement of
financial position should be
read in conjunction with the
accompanying notes.
ISSUED
CAPITAL
FOREIGN
CURRENCY
RESERVE
MERGER
RESERVE
OTHER
RESERVE
SHARE
BASED
PAYMENTS
SHARE
PREMIUM
RETAINED
EARNINGS
TOTAL
EQUITY
£000
£000
£000
£000
£000
£000
£000
£000
Balance at 1 July
2022
82
(7)
705
(315)
2,274
23,775
4,245
30,759
Profit after income
tax expense for the
year
-
-
-
-
-
-
(89)
(89)
Currency translation
difference
-
77
-
-
-
-
-
77
Total
comprehensive
income
-
77
-
-
-
-
(89)
(12)
Deferred tax
-
-
-
-
-
-
(252)
(252)
Share based
payments
-
-
-
-
2,291
-
-
2,291
Exercise of share
options
-
-
-
-
(146)
-
146
-
Total transaction
with owners
-
-
-
-
2,145
-
(106)
2,039
Balance at 30 June
2023
82
70
705
(315)
4,419
23,775
4,050
32,786
Profit after income
tax expense for the
year
-
-
-
-
-
-
2,193
2,193
Currency translation
difference
-
8
-
-
-
-
-
8
Total
comprehensive
income
-
8
-
-
-
-
2,193
2,201
Deferred tax
-
-
-
-
-
-
181
181
Issue of share
capital
1
-
-
-
-
-
-
1
Share based
payments
-
-
-
-
2,326
-
-
2,326
Exercise of share
options
-
-
-
-
(916)
-
916
-
Total transaction
with owners
1
-
-
-
1,410
-
1,097
2,508
Balance at 30 June
2024
83
78
705
(315)
5,829
23,775
7,340
37,495
The above statement of changes in equity should be read in conjunction with the accompanying notes.
Consolidated Statement
of Changes in Equity
BEEKS FINANCIAL CLOUD GROUP PLC
Consolidated Statement of Changes in Equity
54
Consolidated Statement of Financial Position
BEEKS FINANCIAL CLOUD GROUP PLC
LV
Consolidated Cash
Flow Statement
2024
2023
Note
£'000
£'000
Cash flows from operating activities
Profit / (loss) for the year before tax
1,459
(650)
Adjustments for:
Depreciation of tangible fixed assets
11
5,085
4,737
Amortisation of intangible assets
10
1,917
1,698
Interest payable on bank loans
5
85
140
Lease liability interest
5
163
165
Share based payment charge
7
2,326
2,291
Proceeds from grant income
-
609
Operating cash flows
11,035
8,990
(Increase) in receivables
14
(1,343)
(1,667)
Increase in inventory
13
997
311
(Decrease) in payables
18
(171)
(696)
Operational cash flows after movement in working capital
10,518
6,938
Corporation tax received / (paid)
33
(6)
Net cash generated from operating activities
10,551
6,932
Cash flows from investing activities
Purchase of property, plant and equipment
11
(3,882)
(4,329)
Capitalised development costs
10
(2,909)
(2,822)
Net cash used in investing activities
(6,791)
(7,151)
Cash flows from financing activities
Repayment of existing loan borrowings
17
(1,814)
(618)
Repayment of lease liabilities
17
(2,065)
(1,267)
Interest on lease liabilities
19
(163)
(165)
Interest payable on bank loans
5
(85)
(140)
Proceeds from asset finance
17
229
-
Net cash generated from financing activities
(3,898)
(2,190)
Net (decrease) in cash and cash equivalents
(138)
(2,409)
Effects of exchange rates on cash and cash equivalents
10
78
Cash and cash equivalents at beginning of year
15
7,829
10,160
Cash and cash equivalents at end of year
15
7,701
7,829
The above statement of changes in equity should be read in conjunction with the accompanying notes.
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 and products. The
registered number of the Company is SC521839.
The principal accounting policies adopted in the
preparation of the financial statements are set out below.
These policies have been consistently applied to all the
years presented, unless otherwise stated.
Basis of preparation
These financial statements have been prepared in
accordance with UK-adopted International Financial
Reporting Standards (IFRS) and with the requirements
of the Companies Act 2006. The financial statements are
prepared in pounds sterling because that is the currency
of the primary economic environment in which the Group
operates.
The financial statements have been prepared on the
historical cost basis except for the valuation of certain
financial instruments that are measured at fair values
at each reporting period, as explained in the accounting
policies below.
The measurement bases and principal accounting policies of
the group are set out below and are consistently applied to
all years presented unless otherwise stated.
New and revised IFRSs in issue but not yet effective
and have not been adopted by the Group. At the date of
authorisation of these financial statements, the following
standards, interpretations and amendments have been
issued but are not yet effective and have no material impact
on the Group’s financial statements:
◊
Amendment to IAS 1 – Classification of liabilities as
Current or Non-Current
◊
Amendments to IAS 7 and IFRS 7 - Supplier Finance
Arrangements
◊
Amendments to IFRS 10 and IAS 28: Sale or Contribution
of Assets between an Investor and its Associate or
Joint Venture
◊
Amendments to IAS 1: Non-current Liabilities
with Covenants
None of these have been adopted early and the Directors do
not expect that the adoption of the Standards listed above
will have a material impact on the financial statements of
the Group in future periods.
Adoption of new and revised Standards -
amendments to IFRS that are mandatorily
effective for the current year
In the current year, the group has applied a number of
amendments to IFRS Accounting Standards issued by the
International Accounting Standards Board (IASB) that are
mandatorily effective for an accounting period that begins
on or after 1 January 2023. Their adoption has not had
any material impact on the disclosures or on the amounts
reported in these financial statements:
◊
Amendments to IAS 1 Presentation of Financial
Statements and IFRS Practice Statement 2 Making
Materiality Judgements—Disclosure of Accounting
Policies
◊
Amendments to IAS 12 Income Taxes—Deferred Tax
related to Assets and Liabilities arising from a Single
Transaction
◊
Amendments to IAS 8 Accounting Polices, Changes
in Accounting Estimates and Errors—Definition of
Accounting Estimates
There are no new accounting policies applied in the year
ended 30 June 2024 which have had a material effect on
these accounts.
Going concern
The key factors considered by the Directors were:
◊
Historic and current trading and profitability of the Group
◊
The rate of growth in sales both historically and forecast
◊
The competitive environment in which the group operates
◊
The current level of cash reserves
◊
The finance facilities available to the Group, including the
availability of any short term funding required through
the use of the Revolving Credit Facility
The financial position of the Group, its cash flows and
56
57
Consolidated Cash Flow Statement
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Notes to the consolidated Financial Statements
liquidity position are described in the Chief Financial
Officer’s Report on pages 15 to 18.
The directors take comfort from the resilience of our
business model. The level of customer churn across our
business has remained low and cash collection has been
in line with our typical profile. We do however remain
vigilant to the economic impact the ongoing macro-
economic environment may create, particularly on the
SME segment of the market.
Note 16 to the financial statements includes the Group’s
objectives, policies and processes for managing its capital;
its financial risk management objectives; details of its
financial instruments and hedging activities; and its
exposures to credit risk and liquidity risk.
The directors are of the opinion that the Group can
operate within their current levels of cash reserves
including further financing facilities available. At the end
of the financial year, the Group had net cash of £6.58m
(2023: Net cash £4.41m) a level which the Board is
comfortable with given the strong cash generation of the
Group and low level of debt to EBITDA ratio. The Group
has a diverse portfolio of customers and suppliers with
long-term contracts across different geographic areas. As
a consequence, the directors believe that the Group is well
placed to manage its business risks.
The directors have considered the Group budgets and the
cash flow forecasts to December 2025, and associated
risks including the risk of climate change and the
impact on our data centre estate, useful economic life of
assets, and the availability of bank and leasing facilities.
We have run appropriate scenario and stress tests
applying reasonable downside sensitivities in respect of
profitability and associated cash flow generation and are
confident we have the resources to meet our liabilities as
they fall due for a period of at least 12 months from the
date of these
financial statements.
After making enquiries, the directors have a reasonable
expectation that the Group will be able to meet its
financial obligations and has adequate resources to
continue in operational existence for the foreseeable
future. For this reason they continue to adopt the going
concern basis in preparing the financial statements.
Accordingly, the Directors have adopted the going concern
basis in preparing the Report for the year ended
30 June 2024.
Principles of consolidation
Subsidiaries are all entities over which the Group has
control. The Group controls an entity when the Group
is exposed to, or has rights to, variable returns from its
involvement with the subsidiary and has the ability to affect
those returns through its power over the entity. Subsidiaries
are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the
date that control ceases. The Group applies the acquisition
method to account for business combinations. The
consideration transferred for the acquisition of a subsidiary
or a business is the fair values of the assets transferred, the
liabilities incurred to former owners of the acquiree and the
equity interests issued to the Group.
The consideration transferred includes the fair values of any
asset or liability resulting from a contingent consideration
arrangement. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination
are measured initially at their fair values on the acquisition
date.
Acquisition related costs are expensed as incurred. As
each of the subsidiaries are 100% wholly owned the Group
has full control over each of its investees. Intercompany
transactions, unrealised gains and losses on intragroup
transactions and balances between group companies are
eliminated on consolidation.
Foreign currency transactions
In line with IAS 21 foreign currency transactions are
translated into pound sterling using the exchange rates
prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement
of such transactions and from the translation at financial
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in
profit or loss. Foreign exchange gains and losses resulting
from the retranslation of inter-company balances are
recognised in profit or loss. Non-monetary assets are
translated at the historical rate.
Foreign operations
The assets and liabilities of foreign operations are
translated into pound sterling using the exchange rates at
the reporting date. The revenues and expenses of foreign
operations are translated into Pound sterling using the
average exchange rates, which approximate the rates at
the dates of the transactions, for the period. All resulting
foreign exchange differences are recognised in other
comprehensive income through the foreign currency
reserve in equity.
Business Combinations
Acquisitions of subsidiaries are accounted for using the
acquisition method. The acquisition method involves
the recognition at fair value of all identifiable assets and
liabilities, including contingent liabilities of the subsidiary,
at the acquisition date, regardless of whether or not they
were recorded in the financial statements of the subsidiary
prior to acquisition. On initial recognition, the assets and
liabilities of the subsidiary are included in the statement of
financial position at their fair values, which are also used as
the bases for subsequent measurement in accordance with
the Group accounting policies.
Where the Group’s assessment of the net fair value of a
subsidiary’s identifiable assets acquired and liabilities
assumed is less than the fair value of the consideration
including contingent consideration of the business
combination then the excess is treated as goodwill.
Where the Group’s assessment of the net fair value of a
subsidiary’s net assets and liabilities exceeds the fair value
of the consideration including contingent consideration
of the business combination then the excess is recognised
through profit or loss immediately.
Where an acquisition involves a potential payment of
contingent consideration the estimate of any such payment
is based on its fair value. To estimate the fair value an
assessment is made as to the amount of contingent
consideration which is likely to be paid having regard to
the criteria on which any sum due will be calculated and
is probability based to reflect the likelihood of different
amounts being paid. Where a change is made to the
fair value of contingent consideration within the initial
measurement period as a result of additional information
obtained on facts and circumstances that existed at the
acquisition date then this is accounted for as a change
in goodwill. Where changes are made to the fair value of
contingent consideration as a result of events that occurred
after the acquisition date then the adjustment is accounted
for as a charge or credit to profit or loss.
The Group’s accounting policy for common control
transactions is to recognize and measure such transactions
at carrying amounts, with no gain or loss recognized in the
financial statements. This policy ensures consistency and
comparability in the treatment of transactions within the
Group.
Revenue recognition
Revenue arises from the provision of Cloud-based
localisation. To determine whether to recognise revenue,
the group follows a five-step process as follows:
◊
Identifying the contract with a customer
◊
Identifying the performance conditions
◊
Determining the transaction price
◊
Allocating the transaction price to the performance
conditions
◊
Recognising revenue when/as performance
obligation(s) are satisfied.
Revenue is measured at transaction price, stated net of VAT
and other sales related taxes and discounts, if applicable.
The below outlines all the Group’s revenue streams and
associated accounting policies:
Infrastructure as a Service (IaaS)
The group’s core business provides managed Cloud
computing infrastructure and connectivity. The Group
considers the performance obligation to be the provision
of access and use of servers to our clients. As the client
receives and consumes the benefit of this use and access
over time, the related revenue is recognised evenly over
the life of the contract.
Monitoring software and maintenance
services
The group also provides software products that analyse
and monitor IT infrastructure. Revenue from the provision
of software licences is split between the delivery of the
software licence and the ongoing services associated with
the support and maintenance. The supply of the software
licence is recognised on a point in time basis when control
of the goods has transferred, being the delivery of the
item to the customer, whilst the ongoing support and
maintenance service is recognised evenly over the period
of the service being rendered on an over time basis. The
group applies judgement to determine the percentage
of split between the licence and maintenance portions,
which includes an assessment of the expected cost plus
margin that would be received in a standalone sale of the
performance obligations.
Where an agreement includes a royalty fee as a result of
future sales by a customer to third parties and there is a
minimum amount guaranteed, this is recognised at point in
time when the delivery of the item is complete.
Set up fees
Set up fees charged on contracts are reviewed to consider
the material rights of the set-up fee. When a set-up fee
is arranged, Beeks will consider the material rights of the
set-up fee, if in substance it constitutes a payment in
advance, the set-up fee will be deemed to be a material
right. The accounting treatment for both material rights
and non‑material rights set-up fees is as follows:
◊
Any set up fees that are material rights are spread
over the group’s average contract term
◊
Set up fees that are not material rights are recognised
over the enforceable right period, i.e. 1 to 3 months
depending on the termination period
Revenue in respect of installation or training, as part of
the set-up, is recognised when delivery and installation
of the equipment is completed on a point in time basis.
58
59
Notes to the consolidated Financial Statements
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Notes to the consolidated Financial Statements
Hardware and software sales
Revenue from the supply of hardware is recognised when
control of the goods has transferred. For hardware, this
occurs upon delivery and installation of the item to the
customer. For software, control is deemed to pass on
provision of the licence key to the customer being the point
in time the customer has the right to use the software.
The Group has concluded it acts as a principal in each
hardware sales transaction vs an agent. This has been
determined by giving consideration to whether the Group
holds inventory risk, has control over the pricing over
a particular service, takes the credit risk, and whether
responsibility ultimately sits within the Group to service
the promise of the agreements. Refer to note 2 for more
detail on these considerations.
Professional and consultancy services
Revenue from professional and consultancy services are
recognised using the output method as these services
are rendered and the performance obligation satisfied.
Any unearned portion of revenue (i.e. amounts invoiced
in advance of the service being provided) is included in
payables as a contract liability.
Proximity and Exchange Cloud® Services
Proximity and Exchange Cloud® are a fully-managed and
configurable compute, storage and analytics racks built
with industry-leading low latency hardware that allow
capital markets and financial services customers to run
compute, storage and analytics on-premise.
Revenue from the sale of proximity and Exchange Cloud®
contracts has been assessed under IFRS 15 and using the
five step process, the following performance obligations
have been identified:
◊
Delivery and installation of the hardware, and provision
of the software licence
◊
Delivery of maintenance and technical support over the
contract
◊
Delivery of unspecified upgrades and future software
releases
◊
Significant financing components
The delivery and installation of the hardware, and
provision of the software licence are highly interrelated
and considered to be one performance obligation.
Management have assessed that the software is the
predominant item within the performance obligation as it
is the functionality and use of the developed software that
provides benefit to the customer, furthermore the purpose
of the contract is for provision of the software licence
with the hardware being required to facilitate this. This
is recognised on a point in time basis when the control of
the goods have been transferred, being when delivery of
the item is completed and the right to use the software
is granted to the customer. This is further explained in
significant judgements.
The maintenance and technical support, as well as the
delivery of the unspecified upgrades and future software
releases are recognised evenly on an over time basis over
the period of the contract. The performance obligation
for both is considered to be that of standing ready to
provide technical product support and unspecified updates,
optional upgrades and enhancements when made available
over the period of service being rendered.
These contracts include multiple deliverables. The Group
applies judgement to determine the transaction price to
be allocated between a) the delivery and installation of the
hardware and provision of the software licence, recognised
on a point in time basis and b) the stand ready services
(support, maintenance, unspecified upgrades) recognised
over time. The Group applies the expected cost plus margin
approach to the stand ready services and the delivery and
installation of the hardware and provision of software
licence is estimated using the residual approach, given this
is a new product to market and standalone selling prices
are not directly observable. Further detail is provided
within key judgement and estimations on page 79.
Where such contracts include a significant financing
component, the group also adjusts the transaction price
to reflect the time value of money. Finance income
is recognised as other income in the statement of the
comprehensive income.
Revenue recognised over time and at a point in time is
disclosed at note 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.
Rental Income
Rental income from the head office property leased out
under operating leases is recognised in the statement
of the comprehensive income as other income as these
services are rendered, as the tenant occupies the space.
Cost of sales
Costs considered to be directly related to revenue are
accounted for as cost of sales. All direct production costs
and overheads, including indirect overheads that can
reasonably be allocated as relating to the Group’s revenue
generation, have been classified as cost of sales.
Where assets are purchased under a finance lease
arrangement, they are recognised initially as Right of
Use Assets and disclosed within the Property plant and
equipment note 11. Assets that are subsequently sold as
part of a Proximity or Exchange Cloud® contract are
transferred to profit and loss as cost of sales.
Interest
Interest revenue is recognised as part of the financing
component within some Proximity Cloud® and Software
Licencing contracts. Interest accrues using the effective
interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the
interest income over the relevant period using the effective
interest rate, which is the rate that exactly discounts
estimated future cash flows through the expected life of the
financial asset to the net carrying amount of the
financial asset.
Other non-recurring costs
The Group defines other non-recurring costs as
costs incurred by the Group which relate to material
non‑recurring costs. These are disclosed separately where
it is considered it provides additional useful information
to the users of the financial statements.
Taxation and deferred taxation
The income tax expense or income for the period is the
tax payable on the current period’s taxable income.
This is based on the national income tax rate enacted
or substantively enacted for each jurisdiction with any
adjustment relating to tax payable in previous years and
changes in deferred tax assets and liabilities attributable
to temporary differences between the tax bases of assets
and liabilities and their carrying amounts in financial
statements.
Deferred tax assets and liabilities are recognised for
temporary differences at the tax rates expected to be
applicable when the asset or liability crystallises based
on current tax rates and laws that have been enacted or
substantively enacted by the reporting date. The relevant
tax rates are applied to the cumulative amounts of
deductible and taxable temporary differences to measure
the deferred tax asset or liability.
A deferred tax asset is regarded as recoverable and
therefore recognised only when, on the basis of all
available evidence, it can be regarded as more likely than
not that there will be suitable taxable profits against
which to recover carried forward tax losses and from
which the future reversal of temporary differences can be
deducted. The carrying amount of deferred tax assets are
reviewed at each reporting date.
Current and non-current classification
Assets and liabilities are presented in the statement of
financial position based on current and non-current
classification.
An asset is classified as current when: it is either expected
to be realised or intended to be sold or consumed in the
Group’s normal operating cycle; it is held primarily for the
purpose of trading; it is expected to be realised within 12
months after the reporting period; or the asset is cash or
cash equivalent unless restricted from being exchanged
or used to settle a liability for at least 12 months after
the reporting period. All other assets are classified as
non‑current.
A liability is classified as current when: it is either expected
to be settled in the Group’s normal operating cycle; it is
held primarily for the purpose of trading; it is due to be
settled within 12 months after the reporting period; or
there is no unconditional right to defer the settlement
of the liability for at least 12 months after the reporting
period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as
non-current.
Cash and cash equivalents
Cash at bank, overnight and longer term deposits
which are held for the purpose of meeting short term
cash commitments are disclosed within cash and cash
equivalents.
Financial instruments
A financial instrument is any contract that gives rise to
a financial asset in one entity and a financial liability or
equity instrument in another and is recognised when the
Group becomes party to the contractual provisions of the
instrument.
To protect elements of our cash flows against the level of
exchange rate risk, the Group entered into forward exchange
contracts to hedge foreign exchange USD exposures arising
on the forecast receipts and payments during the year. As
at 30 June the group had a forward exchange contract to
sell $1.3m USD (c£1m). This was rolled forward post year
end. Had the amount been settled at the year-end spot
60
61
Notes to the consolidated Financial Statements
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Notes to the consolidated Financial Statements
rate it would have resulted in an exchange loss of $25,212
(c£19,161). The Group does not use derivative instruments.
Financial assets and liabilities are recognised initially at fair
value, and subsequently measured at amortised cost, with
any directly attributable transaction costs adjusted against
fair value at initial recognition and recognised immediately
in the Consolidated income statement as a profit or loss.
Financial assets
Trade and other receivables
Trade and other receivables are initially recognised at
transaction price, less allowances for impairment. These
are subsequently measured at amortised costs using the
effective interest method. An allowance for impairment
of trade and other receivables is established when there
is evidence that Beeks Financial Cloud Group plc will
not be able to collect all amounts due according to the
original terms of the receivables. Significant financial
difficulties of the debtors, probability that the debtor
will enter bankruptcy or financial reorganisation, and
default or delinquency in payments (more than 90 days
overdue) are considered indicators that the trade and
other receivables may be impaired. The amount of the
allowance is the difference between the asset’s carrying
amount and the present value of estimated future cash
flows, discounted at the original effective interest rate.
The carrying amount of the asset is reduced through the
use of an allowance account, and the amount of the loss
is recognised in profit or loss within expenses. When a
trade or other receivable is uncollectible, it is written
off against the allowance account for trade and other
receivables. Subsequent recoveries of amount previously
written off are credited against ‘administrative expenses’
in the Consolidated statement of comprehensive income.
IFRS 9 requires an expected credit loss (“ECL”) model
which requires the Group to account for expected credit
losses and changes in those expected credit losses at each
reporting date to reflect changes in credit risk since initial
recognition of the financial assets. The main financial
assets that are subject to the expected credit loss model
are trade receivables and contract assets, which consist of
billed receivables arising from contracts.
The Group has applied the simplified approach to
providing for expected credit losses (“ECL”) prescribed
by IFRS 9, which permits the use of lifetime expected loss
provision for all trade receivables.
The ECL model reflects a probability weighted amount
derived from a range of possible outcomes. To measure
the ECL, trade receivables and contract assets have
been grouped based on shared credit risk characteristics
and the days past due. The Group has established a
provision matrix based on the payment profiles of
historic and current sales and the corresponding credit
losses experienced. The historical loss rates are adjusted
to reflect current and forward-looking information
that might affect the ability of customers to settle the
receivables, including macroeconomic factors as relevant.
Provision against trade and other receivables is made
when there is evidence that the Group will not be able
to collect all amounts due to it in accordance with the
original terms of those receivables. The amount of the
write-down is determined as the difference between
the asset’s carrying amount and the present value
of estimated future cash flows. An assessment for
impairment is undertaken at least at each reporting date.
Where a financing component is applicable, the Group has
chosen to measure any loss allowance at an amount equal
to lifetime expected credit losses.
Financial liabilities
Trade and other payables
Trade and other payables are recognised initially at fair
value and subsequently measured at amortised cost using
the effective interest method. These amounts represent
liabilities for goods and services provided to Beeks Financial
Cloud Group plc prior to the end of the financial period
which are unpaid as well as any outstanding tax liabilities.
Borrowings
Loans and borrowings are initially recognised at the fair
value of the consideration received, net of transaction
costs. They are subsequently measured at amortised cost
using the effective interest method.
Defined contribution schemes
The defined contribution scheme provides benefits based
on the value of contributions made. Contributions to the
defined contribution superannuation plans are expensed
in the period in which they are incurred.
Fair value measurement
When an asset or liability, financial or non-financial,
is measured at fair value for recognition or disclosure
purposes, the fair value is based on the price that would
be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the
measurement date; and assumes that the transaction will
take place either: in the principal market; or in the absence
of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market
participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For
non-financial assets, the fair value measurement is based
on its highest and best use. Valuation techniques that are
appropriate in the circumstances and for which sufficient
data are available to measure fair value, are used,
maximising the use of relevant observable inputs, and
minimising the use of unobservable inputs.
Inputs determining fair value measurements are
categorised info different levels based on how observable
the inputs used in the valuation technique utilised are (the
“fair value hierarchy”):
◊
Level 1: Quoted prices in active markets for identical
items (unadjusted).
◊
Level 2: Observable direct or indirect inputs other than
Level 1 inputs.
◊
Level 3: Unobservable inputs (i.e. not derived from
market data).
The classification of an item into the above levels is based
on the lowest level of inputs used that has a significant
effect on the fair value of the item. The Group measures a
number of items at fair value, including;
◊
Trade and other receivables (note 14)
◊
Trade and other payables (note 18)
◊
Borrowings (note 17)
◊
Share based payments (note 21)
For more detailed information in relation to the fair value
of the items above please refer to the applicable notes.
Share based payments
The Group operates equity-settled share based
remuneration plans for its employees. Options are
measured at fair value at grant date using the Black
Scholes model. Where options are redistributed, options
are measured at fair value at the redistribution date using
the Black Scholes Model. The fair value is expensed on a
straight line basis over the vesting period, based on an
estimate of the number of options that will eventually vest.
Fair value is appraised at the grant date and excludes the
impact of non-market vesting conditions (for example,
profitability growth targets).
Under the Group’s share option scheme, share options are
granted to directors and selected employees. The options
are expensed in the period over which the share based
payment vests. A corresponding increase to the share
based payment reserve in equity is recognised.
When share options are exercised, the company issues
new shares. The nominal share value from the proceeds
received are credited to share capital and proceeds received
above nominal value, net of attributable transaction costs,
are credited to the share premium when the options are
exercised. When share options are forfeited, cancelled, or
expire, the corresponding fair value is transferred to the
retained earnings reserve. Amounts held in the share based
payments reserve are transferred to Retained Earnings on
exercise of the related options.
The Group has no legal or constructive obligation to
repurchase or settle the options in cash.
Where the Group entity incurs a share based payment
charge relating to subsidiary employees, the charge is
treated as a capital contribution in the subsidiary and an
increase in investment in the Group entity.
Property, plant and equipment (PPE)
PPE is stated at historical cost less accumulated
depreciation. Historical cost includes expenditure that
is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits
associated with the item will flow to Beeks Financial Cloud
Group plc and the cost of the item can be measured reliably.
All other repairs and maintenance are charged to profit or
loss during the financial period in which they are incurred.
Depreciation on IT infrastructure and fixtures and fittings
is calculated using the straight line method to allocate their
cost or revalued amounts, net of their residual values, over
their estimated useful lives, as follows:
◊
Leasehold property and improvements over the lease
period
◊
Freehold property over 50 years
◊
Computer Equipment over 5 years and over the length
of lease
◊
Office equipment and fixtures and fittings over 5-20
years
The residual values, useful lives and depreciation methods
are reviewed, and adjusted if appropriate, at each reporting
date.
Leasehold improvements and plant and equipment under
lease are depreciated over the unexpired period of the lease
or the estimated useful life of the assets, whichever is
shorter.
An item of property, plant and equipment is derecognised
upon disposal or when there is no future economic benefit
to the Group. Gains and losses between the carrying amount
and the disposal proceeds are taken to profit or loss. Any
revaluation surplus reserve relating to the item disposed of
is transferred directly to retained profits.
62
63
Notes to the consolidated Financial Statements
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Notes to the consolidated Financial Statements
Where assets are purchased under a finance lease
arrangement, they are recognised as Right of Use Assets
and disclosed within the Property plant and equipment
note 11. Where these assets are subsequently sold as
part of a Proximity or Exchange Cloud® contract, they
are transferred from PP&E to stock and thereafter to the
profit and loss as cost of sales.
Inventories
Inventories are stated at the lower of cost and net
realisable value. Cost includes all expenses directly
attributable to bringing the asset to its current condition.
Costs of ordinarily interchangeable items are assigned
using the first in, first out cost formula. Net realisable
value is the estimated selling price in the ordinary course
of business less any directly attributable selling expenses.
Where inventories are purchased under a finance lease
arrangement, they are recognised initially as Right of
Use Assets and disclosed within the Property plant and
equipment note 11.
Inventories that are subsequently sold as part of a
Proximity or Exchange Cloud® contract are transferred to
profit and loss as cost of sales.
At each reporting date, an assessment is made for
impairment. Any excess of the carrying amount of
inventories over its estimated selling prices less costs to
complete and sell is recognised as an impairment loss in
the income statement. Reversals of impairment losses
are also recognised in profit or loss.
Assets held at Head Office are classified and disclosed
as inventory until the point in which the assets purpose
is identified. At the point, the asset will either be
transferred to property, plant and equipment and sold
under Infrastructure-as-a-Service (IaaS) or sold to a
customer under a proximity or Exchange Cloud® solution
and transferred to Cost of Sales within the Income
statement.
Leases
A lease is defined as a contract, or part of a contract, that
conveys the right to use an asset (the underlying asset) for
a period of time in exchange for consideration. To apply
this definition the Group assesses whether the contract
meets three key evaluations which are whether the contract
contains an identified asset, which is either explicitly
identified in the contract or implicitly specified by being
identified at the time the asset is made available to the
Group; the Group has the right to obtain substantially all
of the economic benefits from use of the identified asset
throughout the period of use, considering its rights within
the defined scope of the contract; and the Group has the
right to direct the use of the identified asset throughout the
period of use.
At the lease commencement date, the Group recognises
a right-of-use asset and a corresponding lease liability
on the Consolidated statement of financial position. The
right-of-use asset is measured at cost, which is made up
of the initial measurement of the lease liability measured
at the present value of future lease payments, any initial
direct costs incurred by the Group. If that rate cannot be
determined, the lessee’s incremental borrowing rate is used,
being the rate that the lessee would have to pay to borrow
the funds necessary to obtain an asset of similar value in
a similar economic environment with similar terms and
conditions. The Group depreciates the right‑of-use assets
on a straight-line basis from the lease commencement date
to the earlier of the end of the useful life of the right-of-
use asset or the end of the lease term. The Group assesses
the right-of-use asset for impairment under IAS 36
‘Impairment of Assets’ where such
indicators exist.
Lease liabilities are presented on two separate lines in the
Consolidated statement of financial position for amounts
due within one year and amounts due after more than
one year. The lease liability is initially measured at the
present value of lease payments that are not paid at the
commencement date, discounted using the rate implicit
in the lease. If this rate cannot readily be determined,
the Group applies an incremental borrowing rate. The
lease liability is subsequently measured by increasing the
carrying amount to reflect interest on the lease liability
and by reducing the liability by payments made. The Group
re-measures the lease liability (and adjusts the related
right-of-use asset) whenever the lease term has changed,
or a lease contract is modified, and the modification is not
accounted for as a separate lease.
Lease payments included in the measurement of the
lease liability can be made up of fixed payments and an
element of variable charges depending on the estimated
future price increases, whether these are contractual or
based on management’s estimate of potential increases.
Subsequent to initial measurement, the liability will be
reduced for payments made and increased for interest. It is
re-measured to reflect any reassessment or modification,
or if there are changes in fixed payments. When the lease
liability is re-measured, the corresponding adjustment
is reflected in the right-of-use asset, or profit and loss if
the right-of-use asset is already reduced to zero. Where
non‑contractual payment discounts are subsequently
received from suppliers, these are treated as a discharge of
the lease liability with a credit recognised in the profit or
loss statement.
The Group has elected to account for short-term leases
and leases of low-value assets using the practical
expedients available under IFRS 16. Instead of recognising
a right‑of‑use asset and lease liability, the payments in
relation to these are recognised as an expense in profit or
loss on a straight line basis over the lease term.
Under IFRS 16, the Group recognises depreciation of the
right-of-use asset and interest on lease liabilities in the
Consolidated statement of comprehensive income over
the period of the lease. On the Consolidated statement of
financial position, right-of-use assets have been included
in right of use assets and lease liabilities have been included
in lease liabilities due within one year and after more than
one year.
Intangible assets and amortisation
Goodwill
Goodwill represents the excess of the cost of an acquisition
over the fair value of the assets and liabilities assumed
at the date of acquisition. Goodwill acquired in business
combinations is not amortised. Instead, goodwill is
tested for impairment annually or more frequently if
events or changes in circumstances indicate that it might
be impaired, and is carried at cost less accumulated
impairment losses. Intangible assets carried forward
from prior years are re-valued at the exchange rate in the
current financial year. Impairment testing is carried out by
assessing the recoverable amount of the cash generating
unit to which the goodwill relates. A bargain purchase is
immediately released to the Consolidated statement of
comprehensive income in the year of acquisition.
Customer relationships
Included within the value of intangible assets are
customer relationships. These represent the purchase price
of customer lists and contractual relationships purchased on
the acquisition of the business and assets of Gallant VPS Inc.
and Commercial Network Services as well as the purchase
of Velocimetrics Ltd. These relationships are carried at cost
less accumulated amortisation or impairment losses where
applicable. Amortisation is calculated using the straight
line method over periods of between five and ten years
and is charged to cost of sales.
Development costs
Expenditure on research (or the research phase of an
internal project) is recognised as an expense in the period in
which it is incurred.
Development costs incurred are capitalised when all the
following conditions are satisfied:
◊
Completion of the intangible asset is technically feasible
so that it will be available for use or sale
◊
The Group intends to complete the intangible asset and
use or sell it
◊
The Group has the ability to use or sell the intangible
asset
◊
The intangible asset will generate probable future
economic benefits
◊
There are adequate technical, financial, and other
resources to complete the development and to use or sell
the intangible asset
◊
The expenditure attributable to the intangible asset
during its development can be measured reliably
Development costs not meeting the criteria for capitalisation
are expensed as incurred. The costs which do meet the
criteria range from new product development to the
enhancement of existing services. The scope of the
development team’s work continues to evolve as the Group
continues to deliver business critical solutions to a growing
customer base. Development costs capitalised are amortised
on a straight-line basis over the estimated useful life of the
asset. The estimated useful life is deemed to be five years
for all developments capitalised. Amortisation is charged
at the point of a major product release or upgrade in
which that asset is made available for sale or release to the
customer. Charges are recognised through cost of sales in
the Consolidated statement of comprehensive income in the
period in which they are incurred.
Impairment
Goodwill and assets with an indefinite useful life are tested
annually for impairment, or more frequently if events
or changes in circumstances indicate that they might be
impaired. Other non-financial assets are reviewed for
impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable or
where the asset is still in development and is not yet being
amortised as it is not available for use. An impairment loss
is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset’s fair value
less costs of disposal and value-in-use. The value-in-use is
the present value of the estimated future cash flows relating
to the asset using a pre-tax discount rate specific to the
asset or cash-generating unit to which the asset belongs.
Assets that do not have independent cash flows are grouped
together to form a cash-generating unit.
A previously recognised impairment loss is reversed only if
there is an indication that an impairment loss recognised in
prior periods for an asset or cash-generating unit may no
longer exist or may have decreased. If that is the case, the
carrying amount of the asset is increased to its recoverable
64
65
Notes to the consolidated Financial Statements
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Notes to the consolidated Financial Statements
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.
Amounts arising from the revaluation of non-monetary
assets and liabilities held in foreign subsidiaries, and joint
operations are held within the foreign currency reserve.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the
profit attributable to the owners of Beeks Financial Cloud
Group plc, excluding any costs of servicing equity other
than ordinary shares, by the weighted average number
of ordinary shares outstanding during the financial year,
adjusted for bonus elements in ordinary shares issued
during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in
the determination of basic earnings per share to take
into account the after income tax effect of interest and
other financing costs associated with dilutive potential
ordinary shares and the weighted average number of
shares assumed to have been issued for no consideration
in relation to dilutive potential ordinary shares.
Value-added tax (‘VAT’) and other similar taxes
Revenues, expenses, and assets are recognised net of the
amount of associated VAT, unless the VAT incurred is
not recoverable from the tax authority. In this case it is
recognised as part of the cost of the acquisition of the asset
or as part of the expense.
Trade receivables and trade payables are stated inclusive of
the amount of VAT receivable or payable. The net amount
of VAT recoverable from, or payable to, the tax authority
is included in other receivables or other payables in the
statement of financial position.
Cash flows are presented on a net basis. The VAT
components of cash flows arising from investing or
financing activities which are recoverable from, or payable
to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the
amount of VAT recoverable from, or payable to, the tax
authority.
Alternative performance measures
In addition to measuring financial performance of the
Group based on statutory profit measures, the Group
also measures performance based on underlying EBITDA,
underlying profit before tax and underlying diluted
earnings per share.
The alternative performance measures provide
management’s view of the Group’s financial performance
and are not necessarily comparable with other entities.
These alternative measures exclude significant costs
(such as Share Based Payments) and as such, should not
be regarded as a complete picture of the Group’s financial
performance. These measures should not be viewed in
isolation, but as supplementary information to the rest of
the financial statements.
Underlying EBITDA
Underlying EBITDA is defined as earnings before
amortisation, depreciation, finance costs, taxation,
acquisition costs, share based payments and exceptional
non-recurring costs.
Underlying EBITDA is a common measure used by
investors and analysts to evaluate the operating financial
performance of companies, particularly in the sector that
the Group operates.
The Group considers underlying EBITDA to be a useful
measure of operating performance because it approximates
the underlying operating cash flow by eliminating the
charges mentioned above. It is not a direct measure of
liquidity, which is shown in the Consolidated statement
of cash flows, and needs to be considered in the context
of the Group’s financial commitments. Reference is also
made to the right of use asset implication on depreciation
in the year as a result of the Group taking additional space
in data centres.
Underlying profit before tax
Underlying profit before tax is defined as profit before tax
adjusted for the following:
◊
Amortisation charges on acquired intangible assets
◊
Exchange variances on statement of final position
gains and losses
◊
Share-based payment charges
◊
M&A activity including:
›
Professional fees
›
Any non-recurring integration costs; Any gain or
loss on the revaluation of contingent consideration
where it is material
›
Any material non-recurring costs where their
removal is necessary for the proper understanding
of the underlying profit for the period
The Group considers underlying profit before tax to be a
useful measure of performance because it eliminates the
impact of certain non-recurring items including those
associated with acquisitions and other charges commonly
excluded from profit before tax by investors and analysts
for valuation purposes.
Underlying diluted earnings per share
Underlying diluted earnings per share is calculated by taking
the adjusted profit before tax as described after deducting
an appropriate taxation charge and dividing by the total
weighted average number of ordinary shares in issue during
the year and adjusting for the dilutive potential ordinary
shares relating to share options.
The Group considers adjusted diluted earnings per share to
be a useful measure of performance for the same reasons
as underlying profit before tax. In addition, it is used as the
basis for consideration to the level of dividend payments.
Net cash/Net Debt
Net cash/net debt is a financial liquidity metric that
measures the ability of a business to pay all its debts if
they were to be called immediately. This is defined as
current and non-current borrowing liabilities (debt and
asset finance but excluding lease liabilities)– cash and
cash equivalents.
Operational costs
Operational costs are defined as operating expenses
less exceptional costs, share based payments and non-
recurring costs. These costs are adjusted to reflect the
true business operational trading costs.
Profit after Tax
Management believes that profitability measures after tax
are not measures that would specifically require alternative
performance measures as they do not constitute trading
results. Tax legislation is out with the control of the Group.
Whilst the group currently benefits from some tax relief
such as R&D tax credits, the group does not rely on these
in terms of trading results or provide consideration of the
tax impact of adjusted items for alternative performance
measures. Further information on tax impact on
profitability can be found on Note 9.
Annualised Committed Monthly Recurring Revenue
Annualised Committed Monthly Recurring Revenue (ACMRR)
is committed recurring revenue. Management believes that
ACMRR is a key measure as it provides investors with the
total contracted committed revenue of the Group.
2. CRITICAL ACCOUNTING
JUDGEMENT 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 69.
Principal 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
66
67
Notes to the consolidated Financial Statements
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Notes to the consolidated Financial Statements
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 and maintenance)
recognised over time
c. delivery of unspecified upgrades and future software
releases recognised over time
The most significant judgement is that the delivery and
installation of the hardware and provision of the software
licence are considered to be one performance obligation,
with the software considered the predominant item in
the contract. This is considered to be the case as it is the
functionality and use of the developed software that provides
benefit to the customer, furthermore the purpose of the
contract is for provision of the software licence with the
hardware being required to facilitate this. As the contract
is a right to use Beeks’ software, revenue for both the
software and hardware is recognised on a point in time basis
upon delivery. As such, the Group consider this to be one
performance obligation, recognised at a point in time basis,
once the delivery and installation 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.
On the occasion that the title for hardware included within
Proximity and Exchange Cloud® contracts is retained by
the Group and as such, indicate the existence of a lease,
management have applied judgment in order to determine
the appropriate accounting treatment. Management have
assessed that delivery and installation of the hardware,
and provision of the software licence is one performance
obligation under IFRS 15 as the two are considered to be non
distinct. As a result the accounting treatment follows that
of the predominant item within the performance obligation
which has been assessed by management to be the software
and as such is treated as revenue in accordance with IFRS 15
recognised at a point in time rather than a lease under IFRS
16.
Where judgement is required as to the present and
enforceable rights and obligations of a proximity and
Exchange Cloud® contract, management have applied
judgement as to whether cut off periods are substantive
either in nature or in financial quantum. These judgements
have supported the enforceable term applied to the
recognition of revenue on these types of contracts.
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. At this point in
time the customer has been granted the right to use the
software licence. 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.
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. Time tracking
and categorisation and the resultant capitalisation of
development costs for software developers is done via an
internal time tracking system with management using
judgement for some senior employees who contribute to
development projects. Cut off for project capitalisation is
made based on the lifecycle and releases within the product
roadmap. Any non-development costs are recognised in the
statement of comprehensive income. See note 10 for further
information.
Inventories / Property, Plant and Equipment
The Group applies judgement to the classification and disclosure
of inventories within the financial statements. Assets held at
Head Office are classified and disclosed as inventory given these
assets could be resold to a customer under a proximity or
Exchange Cloud® sale. At the financial year end, it would
not be known whether the assets classified as inventories
will be transferred to Property, Plant and Equipment and
sold under Infrastructure As A Service, or sold customers as
a proximity or exchange cloud solution.
Deferred tax
The Group applies judgement to the recognition of
its deferred tax asset in relation to timing differences
on share based payment charges and carried forward
losses. Specifically in terms of losses carried forward,
management apply judgement to determine if there is
sufficient forecastable future taxable profits to utilise the
deferred tax asset. Given current profit trajectory in line
with future projections, management have concluded the
recognition of the deferred tax asset is appropriate.
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.
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 account for
more than 10% of Group revenue. The total revenue for
this customer amounts to £11.2m (2023: £7.1m).
Performance is assessed by a focus on the change in
revenue across public/private cloud and new sales relating
to Proximity Cloud®/Exchange Cloud®. Cost is reviewed
at a cost category level but not split by segment. Assets are
used across all segments and are therefore not split between
segments so management review profitability at a
group level.
Revenues by Operating segment, further disaggregated
are as follows:
Year ended 30/06/24 (£’000)
Year ended 30/06/23 (£’000)
PUBLIC/
PRIVATE
CLOUD
PROXIMITY/
EXCHANGE
CLOUD
TOTAL
PUBLIC/
PRIVATE
CLOUD
PROXIMITY/
EXCHANGE
CLOUD
TOTAL
Over time
Infrastructure/software as a service
22,723
-
22,723
19,162
-
19,162
Maintenance
388
-
388
537
537
Proximity Cloud®
-
378
378
-
454
454
Exchange Cloud®
53
53
-
-
-
Professional services
463
-
463
273
-
273
Over time total
23,574
431
24,005
19,972
454
20,426
Point in time
Hardware/Software resale
826
-
826
529
-
529
Software licences
456
-
456
1,267
-
1,267
Set up fees
100
-
100
135
-
135
Software other
57
-
57
-
-
-
Proximity Cloud®
-
1,626
1,626
-
-
-
Exchange Cloud®
-
1,417
1,417
-
-
-
Point in time total
1,439
3,043
4,482
1,931
-
1,931
Total revenue
25,013
3,474
28,487
21,903
454
22,357
68
69
Notes to the consolidated Financial Statements
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Notes to the consolidated Financial Statements
5. FINANCE COSTS
6. FINANCE INCOME
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:The
employee benefits expense during the year was as follows:
The employee benefits expense during the year was as
follows:
Wages and salary costs directly attributable to the
development of products are capitalised in intangible
assets. The total additions capitalised in intangible assets
relates to payroll costs and external third-party costs.
Refer to Note 10 for capitalised development costs.
8. DIRECTORS’
EMOLUMENTS
There are two directors (2023: two) who are accruing
retirement benefits in respect of qualifying services.
9. TAXATION EXPENSE
The differences between the total tax credit above and the
Revenues by operating segment, further disaggregated are
as follows.
During the year £0.3m (2023: £0.3m) was recognised in
other income for grant income received from Scottish
Enterprise and £0.1m (2023: £0.1m) was recognised as
rental income.
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.
4. OPERATING PROFIT/(LOSS)
Operating Profit / (Loss) is stated after charging:
*Included within other cost of sales and admin are the
remainder of direct costs associated with the business
including data centre connectivity, software licences,
security, and other direct support costs.
Auditor’s remuneration
2024
2023
£'000
£'000
Revenues by geographic
location are as follows:
United Kingdom
7,140
5,660
Europe
2,861
3,119
US
11,140
9,193
Rest of World
7,346
4,385
Total
28,487
22,357
2024
2023
£'000
£'000
Non-Current Assets by
geographic location are as
follows:
United Kingdom - Property,
plant and equipment
8,343
9,235
Europe - Property, plant and
equipment
1,416
1,610
Rest of World - Intangible
assets
8,000
6,738
Rest of World – Goodwill
1,368
1,368
Rest of World - Property,
plant and equipment
2,531
2,750
US – Property, plant and
equipment
4,449
4,357
Total Non-Current Assets
26,107
26,058
2024
2023
£000
£000
Staff costs (note 7)
7,198
6,909
Depreciation on owned
assets (note 11)
3,789
3,140
Depreciation right-of-use
assets (note 11)
1,296
1,410
Amortisation of acquired
intangibles (note 10)
318
489
Amortisation of other
intangibles (note 10)
1,599
1,227
Other cost of sales and
admin*
10,681
7,191
Foreign exchange losses
38
256
Share based payments (note
21)
2,326
2,291
Other non-recurring costs
29
136
2024
2023
£000
£000
Audit
Fees payable for the audit
of the consolidation and the
parent company accounts
79
83
Fees payable for the audit of
the subsidiaries
70
75
Non Audit
Fees payable for the interim
review of the group
-
5
Assurance related services
-
20
149
183
2024
2023
£000
£000
Bank charges
126
115
Interest on loan liabilities
85
140
Interest expense
163
165
Total finance costs
374
420
2024
2023
£000
£000
Financing charge on
Proximity Cloud® contracts
147
101
Bank interest received
103
-
Total finance income
250
101
2024
2023
£000
£000
Management and
administration
21
22
Support and development
staff
84
81
Average numbers of
employees
105
103
2024
2023
£000
£000
Wages and salaries
6,153
5,969
Social security costs
666
669
Other pension costs
379
271
Total employee benefits
expense
7,198
6,909
Share based payments (note
21)
2,326
2,291
2024
2023
£000
£000
Aggregate remuneration in
respect of qualifying services
330
292
Aggregate amounts of
contributions to pension
schemes in respect of
qualifying services
22
14
Other benefits in kind
4
2
Gain on exercise of options
388
-
Total Directors’ emoluments
744
308
Highest paid director -
aggregate remuneration
(excluding share based
payments)
125
126
70
71
Notes to the consolidated Financial Statements
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Notes to the consolidated Financial Statements
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:
The effective tax rate (ETR) for the year was 50.31%
(2023: 86.31%).
2024
2023
£000
£000
Current
Foreign tax on overseas
companies
222
65
R&D tax credit received
(121)
(95)
Total current tax
101
(30)
Origination and reversal of
temporary differences
(835)
(531)
Total deferred tax
(835)
(531)
Tax on profit / (loss) on
ordinary activities
(734)
(561)
2024
% ETR
2023
% ETR
£000
movement
£000
movement
Profit / (Loss) before tax
1,459
(650)
Profit / (Loss) on ordinary activities multiplied by the
standard rate of corporation tax in the UK of 25% (2023:
25%)
354
24%
(124)
21%
Effects of:
Impact of super deduction
14
0.96%
(215)
(33.18%)
Expenses not deductible for tax purposes
554
37.97%
481
(74.23%)
R&D tax credits relief
(451)
30.91%
(89)
13.73%
Share option deduction
(1,059)
72.58%
(404)
62.35%
Prior year deferred tax adjustments
(144)
9.87%
(88)
13.58%
Capital gains/losses
(37)
2.54%
-
-
Adjustment for tax rate differences
-
-
(37)
4.01%
Foreign tax suffered
156
10.69%
40
0.32%
R&D tax credit received
(121)
-
(125)
-
Total tax charge
(734)
(50.31%)
(561)
86.31%
10. INTANGIBLE ASSETS
ACQUIRED
CUSTOMER
RELATIONSHIP
DEVELOPED
COSTS
IP
ADDRESSES
TRADE NAME
GOODWILL
TOTAL
Cost
£000
£000
£000
£000
£000
£000
As at 30 June 2022
2,530
6,148
137
137
2336
11,151
Charge for year
Additions
-
2,868
-
-
-
2,868
Grant funding received
-
(147)
-
-
-
(147)
Foreign exchange movements
(29)
-
-
-
-
(29)
As at 1 July 2023
2,501
8,869
-
137
2,336
13,843
Additions
-
2,796
104
-
-
2,900
Foreign exchange movements
(2)
-
-
-
-
(2)
As at 30 June 2024
2,499
11,665
104
137
2,336
16,741
Accumulated Amortisation
As at 30 June 2022
(1,146)
(2,278)
-
(61)
(968)
(4,453)
Charge for the year
(345)
(1,343)
-
(27)
-
(1,715)
Foreign exchange movements
17
-
-
-
-
17
Grant funding received
-
414
414
As at 1 July 2023
(1,474)
(3,207)
-
(88)
(968)
(5,737)
Charge for the year
(263)
(1,627)
-
(27)
-
(1,917)
Foreign exchange movements
5
-
-
-
-
5
Grant income release
-
276
-
-
-
276
As at 30 June 2024
(1,732)
(4,558)
-
(115)
(968)
(7,373)
NBV as at 1st July 2023
1,027
5,662
-
49
1,368
8,106
NBV as at 30th June 2024
767
7,107
104
22
1,368
9,368
Development costs have been recognised in accordance
with IAS 38 in relation to the Open Nebula project and
development of the Proximity and Exchange Cloud®
products, including analytics and its integration into this
product. Development costs in relation to Proximity and
Exchange Cloud® have a useful life of 5 years.
Brought forward development costs consist of £5.9m where
£3.0m was capitalised in FY22 and £2.9m was capitalised in
FY23. These assets now have a carrying value of £3.3m.
During the year, a total of £2.8m development costs
relating to the development of Proximity Cloud®/Exchange
Cloud® and £0.3m relating to the Open Nebula project were
capitalised. These assets now have a carrying value of £2.9m.
As at 30 June 2024, £1.5m (2023: £1.6m) of development
costs capitalised are currently being carried as work in
progress not yet amortised. This relates to cost where
projects have not yet been completed and made available to
customers. All costs incurred during the preliminary stages
72
73
Notes to the consolidated Financial Statements
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Notes to the consolidated Financial Statements
of development projects are charged to profit or loss. Within
the Proximity/Exchange Cloud® segment in the current year,
an impairment review was carried out solely on the projects
within development costs for which amortisation is yet to
begin as no revenue has yet been generated from these items
not yet under sale. No impairment indicators were found.
During the year, Beeks purchased IP Addresses for £0.1m
due to the finite supply of IP addresses. Beeks have taken the
view not to amortise this intangible asset given their value is
not expected to be reduced over time.
Impairment test for goodwill
For this review, goodwill was allocated to individual cash
generating units (CGU) on the basis of the Group’s operations
as disclosed in the segmental analysis. As the Board reviews
results on a segmental level, the Group monitors goodwill
and annually assesses it on the same basis for impairment.
The carrying value of goodwill by each CGU is as follows:
Goodwill has been allocated to the public/private segment
and management have reviewed and confirmed that there is
no indication of impairment.
The recoverable amount of all CGUs has been determined
by using value-in-use calculations, estimating future cash
inflows and outflows from the use of the assets and applying
an appropriate discount rates to those cash flows to ensure
that the carrying value of each individual asset is still
appropriate.
In performing these reviews, under the requirements of IAS
36 “Impairment of Assets” management prepare forecasts
for future trading over a useful life period of up to five years.
These cash flow projections are based on financial budgets
and market forecasts approved by management using a
number of assumptions including;
◊
Historic and current trading
◊
Weighted sales pipeline
◊
Potential changes to cost base (including staff to support
the CGU)
◊
External factors including competitive landscape and
market growth potential
◊
Forecasts that go beyond the approved budgets are based
on long term growth rates on a macro-economic level.
2024
£'000
Private/public cloud
1,368
Proximity/Exchange Cloud®
-
Total goodwill
1,368
Management performed a full impairment assessment
on the goodwill allocated to Public/Private Cloud. This
included including modelling projected cash flows based on
the current weighted sales pipeline, a discount rate based
on the calculated pre-tax weighted average cost of capital
(15%, 2023: 15%) and cost base assumptions that included
contingency and investment to deliver against the weighted
sales pipeline. Conservative mid-term rates of 20% and
terminal growth rates of 2% (2023: 2%) were estimated,
which were significantly less than both the Group’s internal
business plan, external market mid-term forecast as well as
historic performance.
Sensitivity analysis has been performed to show the impact
of reasonable or possible changes in key assumptions. An
increase in discount rate from 15% to 20% was applied
with sales growth assumptions reduced. This resulted in no
resultant indication of impairment.
An impairment review was carried out on the three
development projects, for which amortisation is yet to
begin, in line with the testing on impairment of intangible
assets as referenced within the Group’s accounting policies
in note 1. For Exchange Cloud® and Analytics, the existing
weighted sales pipeline was used as a typical pipeline profile
for current and future years and cash flows on the business
unit to which the goodwill relates were forecast. Discount
rates and cost base assumptions were consistent to what
has been detailed above in regards to the impairment testing
on goodwill. For Open Integration, cost comparisons of the
two platform were compared based on current pricing with
discount rates again consistent with the impairment testing
on goodwill.
Based on an analysis of the impairment calculation’s
sensitivities to changes in key parameters (growth rate,
discount rate and pre-tax cash flow projections) there was
no reasonably possible scenario where these recoverable
amounts would fall below their carrying amounts therefore
as at 30 June 2024, no change to the impairment provision
against the carrying value of intangibles was required. The
revaluation of these from prior year represents exchange
adjustment only.
Note during the year the trade assets and liabilities of
Velocimetric Inc were hived up to Velocimetrics Ltd and the
subsequent trade assets and liabilities of Velocimetrics Ltd
were hived across to Beeks Financial Cloud Ltd.
This revenue stream was already considered as a CGU
and therefore had no impact on the Group’s
impairment assessments.
11. NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT
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.
Assets held at Head Office are classified and disclosed as inventory until the point in which the assets purpose is
identified. Where an asset is sold to a customer under a proximity or Exchange Cloud® solution, it is transferred to stock
and subsequently transferred to Cost of Sales within the Income statement.
COMPUTER
EQUIPMENT
OFFICE
EQUIPMENT
AND FIXTURES
AND FITTINGS
RIGHT OF USE
FREEHOLD
PROPERTY
TOTAL
Cost
£’000
£’000
£’000
£’000
£’000
As at 30 June 2022
16,543
180
5,420
3,034
25,177
Additions
3,950
146
2,149
5
6,250
Exchange adjustments
(3)
-
172
-
169
As at 1 July 2023
20,490
326
7,741
3,039
31,596
Additions
3,550
68
950
1
4,569
Transfer to stock
(175)
-
(595)
-
(770)
Exchange adjustments
(3)
-
(58)
-
(61)
As at 30 June 2024
23,862
394
8,038
3,040
35,334
Depreciation
As at 30 June 2022
(6,778)
(48)
(2,054)
(27)
(8,907)
Charge for the year
(3,020)
(49)
(1,410)
(71)
(4,550)
Exchange adjustments
(30)
-
(157)
-
(187)
As at 1 July 2023
(9,828)
(97)
(3,621)
(98)
(13,644)
Charge for the year
(3,435)
(63)
(1,516)
(71)
(5,085)
Transfer to stock
78
78
Exchange adjustments
6
-
50
-
56
As at 30 June 2024
(13,179)
(160)
(5,087)
(169)
(18,595)
NBV as at 30 June 2023
10,662
229
4,120
2,941
17,952
NBV as at 30 June 2024
10,683
234
2,951
2,871
16,739
75
BEEKS FINANCIAL CLOUD GROUP PLC
Notes to the consolidated Financial Statements
Notes to the consolidated Financial Statements
BEEKS FINANCIAL CLOUD GROUP PLC
LXXIV
Deferred tax is recognised at the standard UK
corporation tax of 25% for fixed assets in the UK
(2023: 25%). Deferred tax in the US is recognised at
an average rate of 21% for 2024 (2023: 21%). The
deferred tax asset relates to the difference between
the amortisation period of the US acquisitions for tax
and reporting purposes as well as the impact of the
share options exercised during the year and tax losses
carried forward in both UK and overseas companies.
2024
2023
£000
£000
The split of the deferred tax asset and
liabilities are summarised as follows:
Deferred tax (liabilities)
(4,197)
(3,884)
Deferred tax asset
6,727
5,398
Total deferred tax
2,530
1,514
Movements
Opening balance
1,514
1,232
Charge to profit or loss (note 9)
835
531
Charged to goodwill / equity
181
(252)
Other movement
-
3
Closing balance
2,530
1,514
SHARE OPTIONS
TAX LOSSES
C/FWD
ACCELERATED
TAX
DEPRECIATION
AND OTHER
MOVEMENT
TOTAL
DEFERRED TAX
ASSET CARRIED
FORWARD
TOTAL
DEFERRED TAX
(LIABILITY)
CARRIED
FORWARD
(TEMPORARY
DIFFERENCES ON
ASSETS)
£000
£000
£000
£000
£000
At 1 July 2022
671
3,377
153
4,201
(2,968)
Charge to income
387
1,036
24
1,447
(916)
Charge to equity
(251)
-
-
(251)
-
As at 30 June 2023
807
4,413
177
5,397
(3,884)
Charge to income
709
601
(161)
1,149
(312)
Charge to equity
181
-
-
181
-
As at 30 June 2024
1,697
5,014
16
6,727
(4,196)
The movement in deferred tax assets and liabilities during the year is as follows:
12. NON-CURRENT ASSETS - DEFERRED TAX
With the launch of Proximity Cloud® in the previous
year, the Group holds hardware which can be used in
the sale of Proximity or Exchange Cloud® contracts.
Subsequent to the year end, if they are not used as
part of a Proximity or Exchange Cloud® sale, they will
be reclassified as PPE at the point in which they are
delivered into one of the Group’s data centres.
During the period, £0.7m (2023 - £nil) of inventories
were recognised as an expense in the period through cost
of sales. Of the £1.8m classified as inventories at 30 June
2023, £1.1m was subsequently transferred to PPE during
the year at the point in which they were delivered into
one of the Group’s data centres.
2024
2023
£000
£000
Materials
1,084
1,315
Consumables
422
452
1,506
1,767
2024
2023
(Restated)
£000
£000
Trade receivables
1,334
2,186
Less: allowance for
impairment of receivables
(124)
(47)
1,210
2,139
Prepayments
1,153
1,040
Contract asset
1,490
826
Other taxation
60
111
Other receivables
258
384
Trade and other receivables
- current
4,171
4,500
2024
2023
(Restated)
£000
£000
Contract assets
3,287
1,891
Trade and other receivables
- non-current
3,287
1,891
Contract assets primarily relate to our rights to
consideration for goods or services delivered but
not invoiced at the reporting date. The associated
performance will either be the delivery of the
bundled appliance for proximity/Exchange Cloud®
contracts or the delivery of the licence key for
software contracts.
The contract assets are transferred to receivables
when invoiced. Contract liabilities relate to deferred
revenue. At the end of each reporting period,
these positions are netted on a contract basis and
presented as either an asset or a liability in the
Consolidated Statement of Financial Position.
Consequently, a contract balance can change
between periods from a net contract asset balance
to a net contract liability balance in the statement of
financial position.
13. CURRENT ASSETS - INVENTORIES DEFERRED TAX
14. CURRENT ASSETS - TRADE AND OTHER RECEIVABLES
76
77
Notes to the consolidated Financial Statements
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Notes to the consolidated Financial Statements
The ECL rate in the current year has been reduced in line
with the risk profile of trade receivables, historic trade
losses and continued tight credit control procedures.
Trade receivables consist of a large number of customers
across various geographical areas. The aging below shows
that almost all are less than three months old and historic
performance indicates a high probability of payment for
debts in this aging. Those over three months relate to
customers without history of default for which there is a
reasonable expectation of recovery.
For contract asset ECL rates, Beeks have concluded that
there is minimal credit risk, as it is significantly unlikely
that the customers associated with these contract assets
default on their contracts. To be prudent, the Group
have considered a 0.001% provision which equates to
approximately £2,000 and therefore wholly trivial. As
such, no additional provision has been incorporated
against the value currently sitting within contract assets
relating to Proximity or Exchange Cloud® sales.
Past due but not impaired
The Group did not consider a credit risk on the aggregate
balances after reviewing the credit terms of the customers
based on recent collection practices.
The aging of trade receivables at the reporting date is
as follows:
15. CURRENT ASSETS – CASH
AND CASH EQUIVALENTS
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.
CONTRACT
ASSETS
CONTRACT
LIABILITIES
£000
£000
Balance at 1 July 2023
2,717
1,153
Transferred to receivables
from contract assets from
the beginning of the period
(2,155)
-
Revenues recognised during
the period to be invoiced
4,215
-
Revenue recognition that
was included in the contract
liability balance at the
beginning of the period
-
(703)
Remaining performance
obligations for which
considerations have been
received
-
501
Balance at 30 June 2024
4,777
951
2024
2023
£000
£000
Trade receivables
1,334
2,186
Less: allowance for
impairment of receivables
(124)
(47)
1,210
2,139
Significant changes in the contract assets and the contract
liability balances during the period are as follows:
The credit risk relating to trade receivables is analysed as
follows:
2024
2023
£000
£000
Opening balance
47
80
Movement in allowances
92
(24)
Receivables written
off during the year as
uncollectable
(15)
(9)
Closing balance
124
47
Movements in the allowance for expected credit losses are
as follows:
The Directors consider that the carrying amount of trade
and other receivables is approximately equal to their fair
value. The group has applied the simplified approach to
providing for expected credit losses prescribed by IFRS 9,
which permits the use of lifetime expected loss allowance
for all trade receivables. The expected credit loss
allowance under IFRS 9 as at 30 June 2024 is £46k (2023
- £25k). The increase in expected credit loss allowance is
in line with the revenue growth of the business.
The following table details the risk profile of trade
receivables based on the Group’s provision matrix. As
the Group’s historical credit loss experience does not
show significantly different loss patterns for different
customer segments, the provision for loss allowance
based on past due status is not further distinguished
between the Group’s different customer segments.
2024
ECL RATE
2024 ECL
ALLOWANCE
2023
ECL RATE
2023 ECL
ALLOWANCE
Risk profiling category (ageing)
£'000
%
£'000
£'000
%
£'000
Current
438
-0.25%
-1
959
-10%
-1
0-30 days
582
-3.00%
-18
988
-1.00%
-10
30-60 days
161
-4.00%
-6
94
-2.00%
-2
60-90 days
5
-6.00%
-0
12
-5.00%
-1
Over 90 days
118
-18.00%
-21
88
-15.00%
-11
Total
1,304
-46
2,141
-25
2024
2023
£000
£000
Not yet due
437
965
Due 1 to 3 months
768
1,115
Due 3 to 6 months
116
30
More than 6 months due
13
76
1,334
2,186
2024
2023
£000
£000
Cash and bank balances
7,701
7,829
7,701
7,829
78
79
Notes to the consolidated Financial Statements
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Notes to the consolidated Financial Statements
Risk management is carried out by the finance department
under policies approved by the Board of Directors. The
Group finance department identifies, evaluates, and
manages financial risks. The Board provides guidance on
overall risk management including foreign exchange risk,
interest rate risk, credit risk, and investment of excess
liquidity.
The impact of the risks required to be discussed under
IFRS 7 are detailed below:
Market risk
Foreign exchange risk
Foreign exchange risk arises when future commercial
transactions or recognised assets or liabilities are
denominated in a currency that is not the functional
currency of the operations. The Group had potential
exchange rate exposure within USD trade payable balances
of £1,254,998 at 30 June 2024 (£1,255,542 at 30 June
2023) and potential exchange rate exposure within EUR
trade payables balances of £61,880 (£59,768 at 30 June
2023). The Group had potential exchange rate exposure
within USD trade receivables of £585,469 (£1,179,455 as
at 30 June 2023) and potential exchange rate exposure
within EUR trade receivables of £12,888 (£37,262
at 30 June 2023). The Group had potential exchange
rate exposure within USD intercompany balances of
£5,920,060 (£5,807,729 as at 30 June 2023) and within
JPY intercompany balances of £188,311 (£189,028 as at
30 June 2023). The Group also has potential exchange
rate exposure within USD bank balances of £7,127,773
(£3,644,955 as at 30 June 2023) and £110,650 within EUR
bank balances (£607,023 as at 30 June 2023).
Cash flow and interest rate risk
The Group has relatively limited exposure to interest rate
risk in respect of cash balances and long-term borrowings
held with banks and other highly rated counterparties.
Loans are at variable rates of interest based on the Bank
of England’s base rate therefore the Group is subject to
changes in interest rates. Given the relatively low level
of debt the Board do not consider this to be a significant
risk. The Group has a total debt level of £1.1m all of which
was held at a fixed rate under asset finance agreements.
Credit risk
The Group’s maximum exposure to credit risk is limited
to the carrying amount of financial assets recognised at
the reporting date, as summarised following:
Credit risk is managed on a Group basis. Credit risks arise
from cash and cash equivalents and deposits with banks
and financial institutions, as well as credit exposures
to customers, including outstanding receivables and
committed transactions. Credit risk refers to the risk that
a counterparty will default on its contractual obligations
resulting in financial losses to the Group. The Group
provides standard credit terms (normally 30 days) to all
of its customers which has resulted in trade receivables
of £1,210,000 (2023: £2,139,000) 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.
2023
2022
£000
£000
Cash and cash equivalents
7,701
7,829
Trade receivables
1,334
2,186
Contract asset
1,490
826
Other receivables
259
384
10,784
11,225
The Board receives regular debt management forecasts
which estimate the cash inflows and outflows over the
next twelve months, so that management can ensure that
sufficient financing is in place as it is required.
As at 30 June 2024, the Group’s financial liabilities
(excluding leases disclosed in Note 17) have contractual
maturities (including interest payments where applicable)
as summarised below:
CURRENT
NON-CURRENT
Within
1 month
1–3
months
3–12
months
1–5
years
After
5 years
£'000
£'000
£'000
£'000
£'000
Trade and other payables
3,772
935
206
-
-
These amounts reflect the contractual undiscounted cash
flows, which may differ from the carrying values of the
liabilities at the reporting date.
Trade and other payables includes trade payables,
accruals, contract liabilities, other taxation and social
security and other payables.
Capital risk management
The Group’s objectives when managing capital are to
safeguard the Group’s ability to continue as a going
concern in order to provide returns for shareholders and
benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital. In order to
maintain or adjust the capital structure, the Group may
adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to
reduce debts.
Other risks
Rental income from the head office property leased out
under operating leases is recognised in the statement of
the comprehensive income as other income as these
services are rendered, as the tenant occupies the space.
Any associated risk of the underlying asset used to
generate this rental income is believed to be minimal
given the building is utilised as the head office and the
majority of staff are based there.
17. NON-CURRENT
LIABILITIES -
BORROWINGS AND
OTHER FINANCIAL
LIABILITIES
During the year the group fully repaid the £0.5m of
the term loan facility taken out from Barclays Bank in
December 2020 and £1.3m of the property loan facility.
2024
2023
£000
£000
Total equity
37,495
32,786
Cash and cash equivalents
7,701
7,829
Capital
45,196
40,615
Total equity
37,495
32,786
Other loans
-
1,814
Lease liabilities
2,894
4,006
Overall financing
40,389
38,606
Capital-to-overall financing
ratio
1.12
1.05
2024
2023
£000
£000
Lease liabilities
1,283
2,047
1,283
2,047
Other loans
Under one year
-
1,814
-
1,814
80
81
Notes to the consolidated Financial Statements
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Notes to the consolidated Financial Statements
Right-of-use-assets
The right-of-use assets are disclosed as non-current
assets and are disclosed as property, plant and equipment
(note 11).
Right-of-use lease liabilities
The Group does not face a significant liquidity risk with
regard to its lease liabilities. The interest expense on
lease liabilities amounted to £0.2m for the year ended 30
June 2024 (2023: £0.2m). Lease liabilities are calculated
at the present value of the lease payments that are not
paid at the commencement date.
The Group has elected not to recognise a lease liability
for short-term leases (leases with an expected term
of 12 months or less) or for leases of low value assets.
Payments made under such leases are expensed on a
straight line basis. During the year ended 30 June 2024, in
relation to leases under IFRS 16, the Group recognised the
following amounts in the Consolidated statement of
comprehensive income:
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.
Amounts recognised in the Consolidated statement of
cash flows:
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:
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:
The group continues to retain a revolving credit facility of
£3.5m which was unutilised as at 30 June 2024.
Barclays have been given security for the facility of the
UK assets of the Group and an unlimited guarantee is
afforded to Barclays.
During the year, the Group entered into one new asset
financing arrangement of £0.2m. This asset financing
agreement has been disclosed under lease liabilities (note
19).
Changes in liabilities arising from financing activities:
Included within the lease liabilities balance of £2.9m is
£1.1m of asset finance lease liabilities.
18. TRADE AND OTHER
PAYABLES
19. LEASES
Non-current contract liabilities in the year relates
deferred income from support contracts that span over
one year.
The Group leases assets including the space in data
centres in order to provide infrastructure services
to its customers and also hardware for data centres.
Information about leases for which the Group is a lessee
is presented as follows:
2024
2023
£000
£000
Trade payables
2,792
2,937
Accruals
512
375
Contract liabilities
815
622
Other taxation and social
security
324
373
Other payables
324
114
Trade and other payables -
current
4,777
4,421
LEASE
LIABILITIES
LOANS
TOTAL
£000
£000
£000
Balance at 1 July 2023
4,007
1,814
5,821
Lease liabilities additions IFRS 16
724
-
724
Proceeds from new leases under asset financing
229
-
229
Loan repayments
-
(1,814)
(1,814)
Lease repayments
(2,065)
-
(2,065)
Balance at 30 June 2024
2,895
-
2,895
LEASEHOLD
PROPERTY AND
IMPROVEMENT
£000
Balance at 1 July 2023
4,120
Additions
950
Transfer to stock
(595)
Depreciation
(1,516)
Foreign exchange
(8)
Balance at 30 June 2024
2,951
2024
2023
£000
£000
Contract liabilities
136
531
Trade and other payables -
non-current
136
531
2024
2023
£000
£000
Maturity analysis:
Within one year
(1,674)
(2,068)
Within two years
(1,044)
(1,574)
Within three years
(274)
(461)
Within four years
-
(12)
Add: unearned interest
98
108
Total lease liabilities
(2,894)
(4,007)
Analysed as:
Non-current (Note 18)
(1,283)
(2,047)
Current (Note 19)
(1,611)
(1,960)
(2,894)
(4,007)
2024
2023
£000
£000
Depreciation charge
1,516
1,410
Interest expense
163
165
2024
2023
£000
£000
Amounts payable under
leases:
Short-term and low value
lease expense
-
10
Repayment of lease
liabilities within cash flows
from financing activities
2,065
1,432
2024
2023
£000
£000
Rental income from
operating leases
96
94
2024
2023
£000
£000
Within 1 year
96
96
Between 1 and 2 years
96
96
Between 2 and 3 years
96
96
82
83
Notes to the consolidated Financial Statements
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Notes to the consolidated Financial Statements
2024
2023
2024
2023
shares
shares
£000
£000
Ordinary shares - fully
paid
66,541,009
65,571,434
83
82
Movements in ordinary share capital
Details
Date
Shares
Issue price
£000
Balance
30 June 2018
50,043,100
62
EMI Share options
exercised
31 August 2018
677,700
£0.00125
1
EMI Share options
exercised
24 October 2018
32,200
£0.00125
-
EMI Share options
exercised
20 June 2019
111,800
£0.00125
1
New share issue
14 April 2020
363,458
£0.00125
-
EMI Share options
exercised
9 November 2020
44,118
£0.00125
-
New share issue
15 December 2020
430,946
£0.00125
1
New share issue
26 April 2021
4,347,827
£0.00125
5
EMI Share options
exercised
15 November 2021
264,705
£0.00125
-
New share issue
25 April 2022
9,090,910
£0.00125
12
EMI Share options
exercised
16 January 2023
21,946
£0.00125
-
EMI Share options
exercised
5 April 2023
106,796
£0.00125
-
EMI Share options
exercised
31 May 2023
35,928
£0.00125
-
Balance
30 June 2023
65,571,434
82
Share options exercised
13 November 2023
137,724
£0.00125
-
Share options exercised
16 January 2024
197,630
£0.00125
-
Share options exercised
28 March 2024
520,729
£0.00125
1
Share options exercised
26 April 2024
58,037
£0.00125
-
Share options exercised
12 May 2024
28,455
£0.00125
-
Balance
30 June 2024
66,514,009
83
20. EQUITY
- ISSUED CAPITAL
Ordinary shares
During the year, 942,575 share options were exercised.
21. SHARE BASED
PAYMENTS
The movements in the share options during the year,
were as follows:
The Group granted a total of 1,443,000 share options on
20th November 2023.
Shares were forfeited during the year where employees
left the business, with their share options not being fully
redistributed within the Group.
These share options outstanding at the end of the year
have the following expiry dates and exercise prices:
2024
2023
Number
of share
options
Weighted
Average
Fair Value
price per
share (£)
Number
of share
options
Weighted
Average
Fair Value
price per
share (£)
Outstanding at the
beginning of the year
6,233,043
1.35
4,925,668
1.20
Exercised during the year
(942,575)
0.97
(164,640)
1.24
Issued during the year
1,443,000
1.06
1,549.000
0.83
Forfeited during the year
-
-
(76,955)
1.43
Outstanding at the end of
the year
6,733,468
1.26
6,233,043
1.35
GRANT 4A
GRANT 4B
GRANT 5A
GRANT 5B
GRANT 5C
GRANT 6A
GRANT 6B
GRANT 6C
Shares
1,022,500
597,150
604,000
462,500
462,500
395,000
524,000
524,000
Date of
grant
26th
November
2021
26th
November
2021
2nd
December
2022
2nd
December
2022
2nd
December
2022
20th
November
2023
20th
November
2023
20th
November
2023
Exercise
price
£0.00125
£0.00125
£0.00125
£0.00125
£0.00125
£0.00125
£0.00125
£0.00125
Unvested
expiry
date
26th
November
2024
26th
November
2024
2nd
December
2025
2nd
December
2025
2nd
December
2025
20th
November
2025
20th
November
2025
20th
November
2025
84
85
Notes to the consolidated Financial Statements
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Notes to the consolidated Financial Statements
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:
The total expense recognised from share based payments transactions on the Group’s profit for the
year was £2.3m (2023: £2.3m).
Expected volatility was determined at the date of grant from historic volatility, adjusted for events
that were not considered to be reflective of the volatility of the share price going forward.
These share options vest on the achievement of challenging growth targets. It is management’s
intention that the Group will meet these challenging growth targets therefore, based on
management’s expectations, the share options are included in the calculation of underlying diluted
EPS in note 24.
GRANT 1
GRANT 2
GRANT 3
GRANT 4A
GRANT 4B
GRANT 4C
GRANT 5A
Shares
264,706
1,574,850
1,042,063
1,022,500
597,150
632,150
604,000
Share price (£)
1.02
0.84
0.945
1.575
1.575
1.575
1.43
Volatility
5%
5%
5%
5%
5%
5%
5%
Annual risk free
rate
4%
4%
4%
4%
4%
4%
4%
Exercise strike
price (£)
0.00125
0.00125
0.00125
0.00125
0.00125
0.00125
0.00125
Time to maturity
(yrs)
3
3
3
3
3
2
3
GRANT 5B
GRANT 5B
GRANT 6A
GRANT 6B
GRANT 6C
TOTAL
Shares
462,500
462,500
395,000
632,150
604,000
6,662,419
Share price (£)
1.43
1.43
1.065
1.065
1.065
Volatility
5%
5%
5%
5%
5%
Annual risk free
rate
4%
4%
4%
4%
4%
Exercise strike
price (£)
0.00125
0.00125
0.00125
0.00125
0.00125
Time to maturity
(yrs)
3
3
3
3
2
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 Limited. The merger reserve then
increased upon acquisition of Velocimetrics Ltd in FY
2018, reflecting the difference between the nominal
value of the share capital issued from Beeks Financial
Cloud Group plc and the value of the shares issued to the
owners of Velocimetrics Ltd.
Share premium represents the excess over nominal
value of the fair value of consideration received for
equity shares, net of expenses of the share issue. Any
transaction costs associated with the issuing of shares
are deducted from share premium, net of any related
income tax benefits.
Retained earnings represents retained profits and losses.
The other reserve arose on the share for share exchange
and reflects the difference between the value of Beeks
Financial Cloud Group Limited and the share capital of
the Group being acquired through the share for share
exchange. Also included in the other reserve is the
fair value of the warrants issued on the acquisition of
VDIWare LLC.
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:
During the financial year, Beeks Financial Cloud Limited
received services in the normal course of its business and
at arm’s length from A&B Property and Rental Services
Scotland Limited, a company owned by Gordon McArthur.
During the year, Beeks Financial Cloud Limited paid for
services of £6,145 (2023: £17,700) to A&B Property and
Rental Services Scotland Limited and the amounts due at
the year-end was £nil (2023: £nil).
The Group recognise that the total withdrawals from the
director exceeded the limit as defined in the Companies
Act 2006 requiring shareholder approval. To rectify this,
the amounts due by the director will be repaid subsequent
to the financial year end.
Key management personnel
Compensation paid to key management (which comprises
the executive and non-executive plc Board members)
during the year was as follows:
2024
2023
£000
£000
Withdrawals from the
director, Gordon McArthur
10
53
2023
2022
£000
£000
Wages and salaries
330
292
Social security costs
36
37
Other pension costs
22
14
Other benefits in kind
4
2
Share based payments
155
188
87
BEEKS FINANCIAL CLOUD GROUP PLC
Notes to the consolidated Financial Statements
86
Notes to the consolidated Financial Statements
BEEKS FINANCIAL CLOUD GROUP PLC
24. EARNINGS PER SHARE
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.
2024
Restated 2023
£000
£000
Profit / (Loss) after income tax attributable to the owners of Beeks Financial Cloud
Group PLC
2,193
(89)
Pence
Pence
Basic (loss)/earnings per share
3.33
(0.14)
Diluted earnings / (loss) per share
3.11
(0.13)
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per
share
65,905,797
65,446,755
Adjustments for calculation of diluted earnings per share:
Dilutive impact of share options
4,023,763
4,736,830
Options over ordinary shares
610,795
125,611
Weighted average number of ordinary shares used in calculating diluted earnings
per share
70,540,354
70,309,196
Profit / (Loss) before tax for the year
1,459
(650)
Share Based payments
2,326
2,291
Amortisation on acquired intangibles
304
489
Exceptional non-recurring costs
29
136
Exchange rate losses/(gains) on intercompany translation and unrealised currencies
60
325
Grant income
(275)
(267)
Tax effect
720
494
Underlying profit for the year
4,623
2,818
Weighted average number of shares in issue - basic
65,905,797
65,446,755
Weighted average number of shares in issue - diluted
72,688,673
71,143,541
Underlying earnings per share - basic
7.01
4.31
Underlying earnings per share - diluted
6.36
3.96
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.
In accordance with S479A of the Companies Act 2006, Velocimetrics Limited (06943398) have not prepared audited
accounts. Beeks Financial Cloud Group plc guarantees all outstanding liabilities in this company at the year ended 30
June 2024, until they are satisfied in full.
26. PRIOR PERIOD ADJUSTMENT
During the year, it was identified that the ageing of current and non-current contract assets and contract liabilities was
not accurately disclosed within the prior year consolidated statement of financial position and respective notes. This
error has been corrected within the correct ageing profiles restated in the figures for 2023 and the total impact on the
consolidated statement of financial position is shown below:
COMPANY NAME
COUNTRY OF INCORPORATION
PRINCIPAL PLACE OF BUSINESS/
REGISTERED OFFICE
ACTIVITY
Beeks Financial
Cloud Co Ltd
Japan
FARO 1F, 2-15-5,
Minamiaoyama, Minato-Ku,
Tokyo, Japan.
Non-trading
Beeks FX VPS
USA Inc.
Delaware, USA
874 Walker Road, Suite C,
Dover, Kent, Delaware, 19904,
USA.
Non-trading
Year end 31st December
Beeks Financial
Cloud Limited
Scotland
Riverside Building, 2 Kings Inch
Way, Renfrew, Renfrewshire,
PA4 8YU
Cloud Computing Services
Velocimetrics
Limited
England
Birchin Court, 230 Park Avenue
20 Birchin Lane, Suite 300 West,
London, England, EC3V 9DU
Software Services
Velocimetrics
Inc.
New York, USA
230 Park Avenue, 10th Floor,
New York 10169, USA.
Software Services
Reinstated 2023
£000
Increase in non-current assets
1,891
Decrease in current assets
(1,891)
Impact on total assets
-
Increase in non-current liabilities
531
Decrease in current liabilities
(531)
Impact on total liabilities
-
Impact on net current assets
(1,360)
Impact on net assets
-
89
Notes to the consolidated Financial Statements
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Notes to the consolidated Financial Statements
Notes to the consolidated Financial Statements
BEEKS FINANCIAL CLOUD GROUP PLC
88
The prior year adjustment previous has a net impact of
£nil on net assets. There is also no resulting impact on
the consolidated statement of comprehensive income and
therefore no impact to EPS and diluted EPS.
27. ULTIMATE
CONTROLLING PARTY
The Directors have assessed that there is no ultimate
controlling party.
Company Statement
of Financial Position
2024
2023
Note
£000
£000
Non-current assets
Investments
4
7,042
5,906
Property, plant and equipment
5
4,075
4,443
Deferred tax
6
968
506
12,085
10,855
Current assets
Trade and other receivables
7
23,901
22,259
Cash and cash equivalents
130
171
24,031
22,430
Total assets
36,116
33,285
Current liabilities
Trade and other payables
8
965
681
Lease liabilities
8
547
472
1,512
1,153
Non-current liabilities
Lease liabilities
9
224
597
224
597
Total liabilities
1,736
1,750
Net assets
34,380
31,535
Equity
Issued capital
11
83
82
Share premium
12
23,775
23,775
Reserves
6,534
5,124
Retained earnings
3,988
2,554
Total equity
34,380
31,535
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
profit after tax for the year was
£404,988 (2023: £714,819).
These financial statements were
approved by the Board of Directors
and were authorised for issue on 4th
October 2024 and are signed on its
behalf by:
Gordon McArthur
Chief Executive Officer
Company name, Beeks Financial
Cloud Group plc
Company number, SC521839
91
BEEKS FINANCIAL CLOUD GROUP PLC
Company Statement of Financial Position
Notes to the consolidated Financial Statements
BEEKS FINANCIAL CLOUD GROUP PLC
XC
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 2022
82
705
2,274
23,775
3,158
29,994
Loss after income tax expense for
the year
-
-
-
-
(595)
(595)
Total comprehensive income
-
-
-
-
(595)
(595)
Deferred tax
-
-
-
-
(155)
(155)
Share based payments
-
-
2,291
-
-
2,291
Exercise of share options
-
-
(146)
-
146
-
Total transaction with owners
-
-
2,145
-
(9)
2,136
Balance at 30 June 2023
82
705
4,419
23,775
2,554
31,535
Profit after income tax expense
for the year
-
-
-
-
405
405
Total comprehensive income
-
-
-
-
405
405
Deferred tax
-
-
-
-
113
113
Share based Capital
1
-
-
-
-
1
Share based payments
-
-
2,326
-
-
2,326
Exercise of share options
-
-
(916)
-
916
-
Total transaction with owners
1
-
1,410
-
1,029
2,440
Balance at 30 June 2024
83
705
5,829
23,775
3,988
34,380
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 57 to 97. 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
◊
Company profit and loss account
Going concern
The Company has net current assets of £34.38m at 30th
June 2024 (2023: £31.53m).
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 2024). 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:
92
93
Company Statement
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Notes to the Company Financial Statements
◊
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:
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.
The key judgment in preparation of the financial
statements is below:
Deferred tax
The Company applies judgement to the recognition of
it’s deferred tax asset in relation to timing differences
on share based payment charges and carried forward
losses. Specifically in terms of losses carried forward,
management apply judgement to determine if there is
sufficient forecastable future taxable profits to utilise the
deferred tax asset. Given current profit trajectory in line
with future projections, management have concluded the
recognition of the deferred tax asset is appropriate.
Intercompany
The Company carries intercompany balances due from it’s
subsidiary entities within the Group. Management have
assessed recoverability of these intercompany balances
and deem no issues in terms of credit losses. The Group
companies have adequate net assets to assist in the
recovery of intercompany balances.
3. STAFF COSTS
Average monthly number of employees (including
directors) by activity:
Cost of employment (including directors):
4. INVESTMENTS
During the year, the Group charged share based payments
of £1,135,494 (2023: £1,179,535) to employees of the
subsidiary companies. As a result, the investment in
subsidiaries has increased during the year to reflect this.
2024
2023
£000
£000
Management and
administration
21
21
Support and development
11
9
Total employees
32
30
2024
2023
£000
£000
Wages and salaries
1,915
1,891
Social security costs
214
228
Other pension costs
131
99
Total employee benefits
expense
2,260
2,218
2024
2023
£000
£000
Shares in Group
undertakings
7,042
5,906
5. PROPERTY, PLANT AND
EQUIPMENT
A security is held against the property in respect of the
subsidiary’s debt to the lender.
£0.3m additions in the year relate to right-of-use assets
held under IFRS16 (2023 - £1.4m). Where a right-of-use
asset is sold to a customer under a proximity or Exchange
Cloud® solution, it is transferred to stock within Beeks
Financial Cloud Ltd and subsequently transferred to Cost
of Sales within its Income statement.
FREEHOLD
PROPERTY
FIXTURES
AND
FITTINGS
RIGHT OF
USE
TOTAL
Cost
£000
£000
£000
£000
As at 1 July 2022
3,034
104
-
3,138
Additions
5
95
1,407
1,507
As at 1 July 2023
3,039
199
1,407
4,645
Additions
1
8
226
235
Transferred to stock
-
-
(304)
(304)
As at 30 June 2024
3,040
207
1,329
4,576
Depreciation
As at 1 July 2022
27
5
-
32
Charge for the year
71
21
77
169
As at 1 July 2023
98
26
77
201
Charge for the year
71
30
199
300
As at 30 June 2024
169
56
276
501
NBV as at 30 June 2023
2,941
173
1,329
4,443
NBV as at 30 June 2024
2,871
151
1,053
4,075
94
95
Notes to the Company Financial Statements
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Notes to the Company Financial Statements
6. DEFERRED TAX
7. DEBTORS
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.
8. CURRENT LIABILITIES –
TRADE AND OTHER
PAYABLES
9. NON-CURRENT
LIABILITIES
10. LEASES
The company has a brought forward 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
The right-of-use assets in relation to leasehold property
are disclosed as PPE (note 5).
Right-of-use lease liabilities
2024
2023
£000
£000
Tax losses carried forward
506
590
Credit to profit or loss
350
70
Share based payments,
recognised in equity
112
(155)
Deferred tax asset
968
506
2024
2023
£000
£000
Prepayments
252
133
Amounts due from Group
undertakings
23,500
22,099
Trade debtors
-
1
Other receivables
149
26
23,901
22,259
2024
2023
£000
£000
Trade payables
267
259
Accruals
221
229
Other taxation and social
security
266
155
Other payables
211
19
Lease liabilities
547
472
1,512
1,134
2024
2023
£000
£000
Lease payables
224
597
224
597
2024
2023
£’000
£’000
Maturity analysis:
Analysed as:
Current (Note 8)
547
472
Non-current (Note 9)
224
597
771
1,069
LEASEHOLD
PROPERTY
Right-of-use-assets
£000
Balance at 1 July 2023
1,330
Additions
226
Transfer to stock
(304)
Depreciation
(199)
Balance at 30 June 2023
1,053
The interest expense on lease liabilities amounted to
£50,000 for the year ended 30th June 2024 (2023 - Nil).
Lease liabilities are calculated are calculated at the
present value of the lease payments that are not paid at
the commencement date.
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.
14. CONTINGENT
LIABILITIES
The Company had no material contingent liabilities at 30
June 2024.
15. ULTIMATE
CONTROLLING PARTY
The Directors have assessed that there is no ultimate
controlling party.
96
Notes to the Company Financial Statements
BEEKS FINANCIAL CLOUD GROUP PLC
BEEKS FINANCIAL CLOUD GROUP PLC
Notes to the Company Financial Statements
Notes to the Company Financial Statements
BEEKS FINANCIAL CLOUD GROUP PLC
XCVII
NOTES
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2 Kings Inch Way
Braehead
Renfrew
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