We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register to chat with like-minded investors on our interactive forums.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Beeks Financial Cloud Group Plc | LSE:BKS | London | Ordinary Share | GB00BZ0X8W18 | ORD GBP0.00125 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 2.50 | 1.43% | 177.00 | 174.00 | 180.00 | 177.00 | 173.50 | 174.50 | 601,770 | 16:09:14 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Computer Related Svcs, Nec | 22.36M | -89k | -0.0014 | -1,264.29 | 116.66M |
From Apr 2022 to Apr 2024
TIDMBKS
RNS Number : 2550C
Beeks Financial Cloud Group PLC
10 October 2022
Beeks Financial Cloud Group plc
("Beeks" or the "Company")
Final Results for the year ended 30 June 2022
10 October 2022 - Beeks Financial Cloud Group plc (AIM: BKS), a cloud computing and connectivity provider for financial markets, is pleased to announce its final results for the year ended 30 June 2022.
Financial highlights
-- Revenues(1) increased 57% to GBP18.29m (2021: GBP11.62m) -- Annualised Committed Monthly Recurring Revenue (ACMRR) up 40% to GBP19.3m (2021: GBP13.8m) -- Gross profit up 49% to GBP7.94m (2021: GBP5.33m) -- Underlying(2) EBITDA increased 52% to GBP6.31m (2021: GBP4.14m) -- Underlying profit before tax(3) increased 28% to GBP2.06m (2021: GBP1.61m) -- Underlying diluted EPS(4) 4.19p (2021: 2.99p) -- Net cash as at 30 June 2022 of GBP7.86m (30 June 2021: Net cash GBP1.89m)
(1) Revenue referenced throughout the accounts excludes grant income and rental income
(2) Underlying EBITDA is defined as profit for the year before amortisation, depreciation, finance costs, taxation, acquisition costs, share based payments, exchange rate gains/losses on statement of financial position translation and exceptional non-recurring costs
(3) Underlying profit before tax is defined as profit before tax excluding amortisation on acquired intangibles, acquisition costs, share based payments, exchange rate gains/losses on statement of financial position translation and exceptional non-recurring costs
(4) Underlying diluted EPS is defined as profit for the year excluding amortisation on acquired intangibles, acquisition costs, share based payments, exchange rate gains/losses on statement of financial position translation and exceptional non-recurring costs divided by the number of shares including any dilutive share options
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 GBP0.66m (2021: GBP1.25m) -- Basic EPS was 1.43p (2021: 3.07p)
Operational highlights
-- Oversubscribed fundraising in April of approximately GBP15 million, with funds allocated towards continued exploitation of considerable market opportunity of the Private Cloud, Proximity Cloud and Exchange Cloud offerings
-- Exchange Cloud launched in June 2022, explicitly designed for global financial exchanges and electronic communication networks (ECNs)
o ICE Global Network (IGN), part of ICE Data Services - a division of Intercontinental Exchange (NYSE: ICE), signed a multi-year contract, with a period of exclusivity
o Currently in talks with a number of major Exchanges across the globe, including additional proof of concept implementations
-- Ongoing success of Proximity Cloud offering, launched in August 2021:
o The total value of Proximity Cloud contracts to date stands at $5.2 million since launch
o The Proximity Cloud pipeline continues to build
-- A leading cloud-native payments technology provider, appointed Beeks to underpin its technology platform, with subsequent expansion of the contract
-- Extended Asia-Pacific presence with access to the Australian Securities Exchange (ASX) offering colocation services into the Australian Liquidity Centre (ALC)
-- Moved to a new head office in February, allowing the Group to execute its expansion plans, as well as securing the businesses' position as an attractive place to work
-- Increased headcount within the business to 89 by the end of the year, to support the product roadmap and sales
-- Further expansion of data centre geographies with additional operations now in Switzerland and Amsterdam
Outlook
-- While cognisant of the ongoing pressures of the macroeconomic environment, the size of the sales pipeline and expanded product offering provides the Board with confidence in the prospects for Beeks
-- We have the potential for considerable additional growth given the size of the sales pipeline, however these types of discussions will take time to flow through into contracts and revenues
-- As separately announced today, the Group has secured two 3-year contracts via a partner with aggregate TCV of $2m, further underpinning our FY23 expectations
Gordon McArthur, CEO of Beeks Financial Cloud commented: " Beeks is now recognised as an established technology provider to financial markets, with a track record and compelling reference clients, providing us with a strong foundation to drive our business forward. The majority of financial services organisations around the world are exploring how to utilise the power of the cloud to support their ambitions. This presents us with a considerable opportunity and through our Private Cloud, Proximity Cloud and Exchange Cloud, we have the offering to address it. We will continue to invest into the development of our offering and increased sales and marketing activities to capitalise on our early successes in this significant market. We have a considerable and growing pipeline and look to the future with confidence."
For further information please contact:
Hot Features
Premium
Beeks Financial Cloud Group plc
Gordon McArthur, CEO via Alma PR
Fraser McDonald, CFO
+44 (0)20 7523
Canaccord Genuity 8000
Adam James / Patrick Dolaghan
Alma PR +44(0)20 3405 0205
Caroline Forde / Hilary Buchanan / Joe Pederzolli
About Beeks Financial Cloud
Beeks is a leading managed cloud computing, connectivity and analytics provider for Capital Markets and financial services. Our vision is simple: Build. Connect. Analyse.
With a growing international network of data centres, Beeks provides end to end outsourcing of compute environments by delivering low-latency compute, connectivity and analytics, on-demand. Our cloud-based Infrastructure-as-a-Service (IaaS) model allows financial organisations the flexibility and agility to deploy and connect to exchanges, trading venues and cloud service providers at a fraction of the cost of building their own networks and infrastructure.
ISO 27001 certified, Beeks supports its global customers at scale exclusively within global capital markets and leading financial centres.
beeksgroup.com
Chairman's Statement
This has been a year in which Beeks has proven its ability to deliver on its ambition. Following several years of investment into the offering and team, two significant new products were launched targeting the world's largest financial institutions and several multi-million pound contracts secured.
The potential for these offerings and the business can be seen in the financial results, delivering 57% growth in revenues and 52% growth in underlying EBITDA. But the Board is confident this is still only the beginning of Beeks' growth. The opportunity ahead of Beeks is global in nature and with the market fit of the offerings having been proven, careful investment into their evolution will continue.
We were grateful for the support shown by new and existing investors in the significantly over-subscribed GBP15m equity fundraise which took place in April 2022, providing the firepower to develop and launch the exciting Exchange Cloud offering. These resources have been carefully invested, with over GBP10m gross cash remaining on the consolidated statement of financial position, providing the business with the funding to execute on its growth strategy.
The management team successfully navigated the macroeconomic challenges prevalent through the year, ensuring supply chain issues did not materially impact the capability to deploy equipment for clients, while successfully hiring and retaining valuable new team members across sales and product development.
The Beeks team has expanded considerably over the last two years, and I would like to thank all of them for the diligence and enthusiasm with which they have contributed to the success of Beeks. The fact that some of the world's largest organisations are now signing up to the offerings they have developed speaks to the quality of the team.
With over GBP19m in ACMRR, and a considerable sales pipeline, Beeks has entered the new financial year in a strong position and the Board is confident in continued success in this coming year and beyond.
Mark Cubitt
Chairman
8 October 2022
Strategic Report
Market Overview
"Cloud is the powerhouse that drives today's digital organisations."
Sid Nag, research vice president at Gartner
We operate in a considerable, and growing, market. The Global Cloud Computing Market size is expected to reach USD 456.05 billion in 2022, and is projected to grow at a CAGR 15.14% to reach USD 923.46 billion by 2027(1) . Infrastructure-as-a-service (IaaS) is forecast to experience the highest end-user spending growth in 2022 at 30.6%(2) .
The major growth drivers for the market include low costs, flexibility, scalability, and security. The cloud infrastructure service offerings provide accelerated Time-to-Market (TTM) and speedy application development and running processes.
Increased user and resource mobility, ongoing migration of applications over the cloud, and the emergence of more sophisticated threats are leading organisations toward the adoption of hybrid cloud. A large majority (76%) of companies are using two or more public clouds, with the average having 2.3 clouds in use. For larger organisations, these figures are even higher: those with more than $1bn in revenue are twice as likely to be using three or more clouds, than smaller businesses(3) .
The 'as a Service' model is expected to witness the highest adoption in the coming five years, as enterprises are deploying this service model to cut down on the CAPEX cost and focus on their core competencies instead of worrying about the IT infrastructure.
Capital markets infrastructure providers (CMIPs) have been conspicuous high achievers in recent years, posting 3 percent average annual revenue growth despite mixed fortunes in the wider financial services sector(4) .
The complex nature of building and managing a latency sensitive infrastructure means financial enterprises are moving away from on premise data centres to third party facilities. We believe the decreased latency, increased flexibility and cost-benefits of Cloud computing that we facilitate will see a gradual long-term shift to this model. As Cloud adoption in financial services evolves, companies are finding that the benefits are not just about cost efficiencies but also to do with resilience, agility and innovation which brings additional opportunities for by--products such as analytics and scalable global connectivity.
Our addressable market is extensive with up to 20,000 financial institutions, a large percentage of which maintain their own IT infrastructure and are yet to move to the Cloud computing model.
Cloud's scale, resiliency and continuous innovation mean it will likely form a critical part of every future business and technology roadmap.
There are many factors that give rise to financial services companies' adoption of public cloud, including pressure from internal and external customers to digitise processes while maintaining strict security and compliance controls.
The realisation is that incremental adoption of public cloud solutions could enable firms to keep pace, while also providing cost, revenue and agility benefits. To realise these benefits, firms need to scale up from discrete, targeted cloud use cases and create a foundational enterprise-wide cloud layer.
Our innovations, enhanced product range, breadth of asset classes and growing number of Tier 1 customers, position us well to benefit from the growth in the market for automated trading and the continued adoption of Cloud computing by financial services organisations.
(1) August 10, 2022 09:06 ET | Source: ReportLinker
(2) August 29, 2022 07:25 ET | Source: ReportLinker
(3) Gartner (April 2022)
(4) McKinsey&Partners (Capital Markets Infrastructure: An Industry Reinventing Itself)
Strategic Overview
Business Model
#PoweredbyBeeks
For over eleven years Beeks has honed its infrastructure provision and software development approach in direct response to its customers' needs and requirements.
Beeks' mission is to deliver ultra-low latency compute power, ensure maximum security and optimise performance in the exceedingly fast-moving capital markets sector. Our global backbone of global data centres provide cloud deployment for capital markets and financial services customers, helping them to formulate a cloud strategy and replicate that in different regions.
The Group continues to operate successfully in a demanding, time-sensitive industry and is uniquely positioned to take advantage of the rapid acceleration of Cloud deployment in financial services and the growing need for analytics around those infrastructure environments. These latency sensitive environments need to be built, connected and analysed and Beeks is one of the few groups in the world that can provide this.
Our latest iteration of Proximity Cloud is a pre-configured IaaS trading environment platform derived from an identified demand from global exchanges for a secure, multi-client private cloud environment.
Explicitly designed for global financial exchanges and electronic communication networks (ECNs), Exchange Cloud is a multi-home version of Proximity Cloud, a fully configured and pre-installed, physical trading environment. While Proximity Cloud makes it easier to quickly deploy on premise, Exchange Cloud takes it one step further by introducing multi-home capabilities. The expansion into trading analytics and launch of Analytics as a Service expanded our product offering to include the required analytics around those infrastructure environments.
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
-- Co-location for customers to position their own computing power in our space, benefitting from our proximity to financial hubs
-- In-house security software in order 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
-- 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: Comprehensive monitoring and performance analysis allows the user to independently track and analyse real-time performance of every single price, quote or trade traversing business critical processes.
Strategy
Our purpose is to provide a global rapid deployment service using secure and scalable environments, both public and private, which are easy to consume for small, medium and large financial enterprises.
Our vision is to empower our clients to work with speed and agility.
Our main strategic priority is to continue to grow our customer base both for public, private and secure Cloud deployment as well as complementary analytics solutions.
In order to satisfy existing demand and attract new customers, we will continue to develop innovative new products like Proximity and Exchange Cloud. We also plan to expand into new asset classes and geographies, encouraged by the significant opportunities we have identified.
Chief Executive's Review
Our vision is simple: Build. Connect. Analyse. Providing end to end outsourcing of financial services compute environments.
I'm delighted to report on a record trading performance for Beeks in the year, with our enlarged team executing on the opportunity in front of them. The strong demand for our product offering from both existing and new customers saw us deliver record revenue growth of 57% to over GBP18.3m, underlying EBITDA of GBP6.3m and an exit ACMRR of GBP19.3m, all ahead of initial market expectations and thus providing a strong basis for further growth in the current year.
Since our IPO in FY 2018, we have been focused on extending our offering to meet the needs of the world's largest financial services organisations, investing in our product set and team. These investments saw the launch in August 2021 of Proximity Cloud, wrapping up our low-latency private cloud product pre-built into a physical cabinet and delivered to site, for those customers who wish to benefit from the cloud within their own infrastructure, and in June 2022 the launch of Exchange Cloud, the adaption of our offering specifically for the requirements of exchanges, enabling them to provide secure, low latency cloud computing to their customers.
In less than one year post launch, Proximity Cloud accounts for 12% of this year's total revenue having been purchased by some of world's leading Financial Services organisations. All of these contracts have the potential to expand and we have a growing sales pipeline. Meanwhile Exchange Cloud has now launched with our first customer, InterContinental Exchanges, revenue from which underpins our FY23 expectations, and we are in conversation with many of the largest exchanges in the world.
The success of our investment strategy can be seen in the typical deal sizes we are now securing, with several deal sizes in the TCV range of between GBP1.5m and GBP3m secured in the year. Moving into this type of contract will naturally increase the length of our sales cycles, but we are now in multiple conversations which could transform our business. Meanwhile our underlying base of business continues to grow, as our customers expand their use of our offerings within both the mid-market and the Tier 1 space. The investments into our team mean that more than half our technical team are now software engineers, a considerable shift in focus for us, providing us with the resources to continue to expand our offerings in line with the requirements of our evolving customer base.
We see a considerable opportunity ahead, and while the macro environment presents challenges to all businesses, we believe the shift of the financial services sector to cloud computing will continue at pace and our pipeline of business with both existing and potential new customers provides us with a considerable runway of visible revenue.
Financial performance
Revenue in the year grew by 57% to GBP18.3m (2021: GBP11.6m), resulting in an increase in underlying EBITDA of 52% to GBP6.3m (2021: GBP4.1m). Beeks has 76% (2021: 93%) recurring revenue, changed by the introduction of more up-front revenue in relation to Proximity Cloud sales (information on the proximity cloud revenue recognition accounting policy is included in Note 2 of the Consolidated Financial Information). Customer retention remained within target and our ACMRR grew 40% to GBP19.3m at 30 June 2022.
Operating margins have reduced in the year, in line with the Board's expectations, given the level of investment into product and capacity. We expect operating margins to increase in the medium terms as we grow in scale, however we are also cognisant that the global macro-economic climate and growing inflationary pressures and supply chain pressures may have some impact on our operating margins in the short term. We remain well funded and are confident in our ability to navigate such issues helped by our recently improved statement of financial position strength. This will allow us to benefit from holding higher levels of fixed asset inventory to deploy against our growing sales pipeline.
Operational Expansion
This was another year of significant investment across the business, in which we expanded our offering and team in order to strengthen our position in the rapidly growing cloud computing market.
Headcount increased to an average of 89 in the year, up from 73 in the year to 30 June 2021. The hires have predominantly been in the area of product development to support the roll out and evolution of Proximity Cloud and Exchange Cloud. We have also instigated our first graduate recruitment programme, as part of our commitment to support the local community. This will involve working in partnership with two local Universities to onboard software developer graduates, network engineer graduates and back-office graduates. We will also be supporting Strathclyde University's summer intern scheme by welcoming several interns to our Software Development team to support with their workplace learning with a view to welcoming them to Beeks once they have graduated.
In September 2021, we acquired a new premises for the Group headquarters and moved in during February 2022. With roughly three times the square footage, the larger premises is suitable to provide the necessary space to fulfil the Group's further growth potential and we have found to be beneficial in attracting talented team members to the Group.
Our growing partnership with IPC has enabled us to expand our geographical data centre footprint in Toronto and Sydney. We have also launched services in Zurich, Geneva, Amsterdam, Washington DC, with Mexico scheduled for later in the year. We now have data centres in 14 locations, and will continue with our approach of expanding into areas where we already have customer demand.
Product roadmap
With the initial launches of Proximity Cloud and Exchange Cloud now complete, the team continues to build out the functionality of both offerings, with further releases planned for later in the year. We have a product roadmap that extends out for the next couple of years and see significant opportunity by investing resources in our two major product lines: our Private/Public and our Proximity/Exchange Cloud offerings.
Customers
We continue to see considerable expansion of the types of customer we support, with Beeks now catering for banks, brokers, hedge funds, crypto traders and exchanges, insurance organisations, financial markets technology providers and payments providers.
Land and Expand
We have been successful at reaching new Tier 1 customers through the execution of our Land and Expand strategy.
This focuses on growing our Tier 1 customer base, with organisations of varying sizes, ranging from Proof of Concepts to large scale, phase 2 roll-outs - with expansion opportunities across the majority.
Significant new customers secured in the year include:
-- $1m Proximity Cloud multi-year contract with a leading technology and service provider to global financial markets.
-- $2.2m Proximity Cloud contract over 4 years with one of the world's largest Foreign Exchange brokers.
-- $2m Proximity Cloud initial contract over 5 years with a North American bank via a partner. -- GBP4.4m Private Cloud contract over 5 years with a European Tier 1 client, via a partner.
We have also had success at 'expanding' our contracts during the period: with additional revenue coming from deals that have grown in size since being signed: an initial $1m contract for global private Cloud solution increased to $7.9m by year end, and an increased initial contract for an open banking provider that is now 7 times its initial monthly commitment with further expansion opportunities ahead across our client base.
Future Growth and Outlook
Beeks is now recognised as an established technology provider to financial markets, with a track record and compelling reference clients, providing us with a strong foundation to drive our business forward. The majority of financial services organisations around the world are exploring how to utilise the power of the cloud to support their ambitions. This presents us with a considerable opportunity and through our Private Cloud, Proximity Cloud and Exchange Cloud, we have the offering to address it.
The Board is confident in achieving results for FY23 in line with market expectations, with the potential for considerable additional growth given the size of the pipeline for Exchange Cloud. These types of discussions however will naturally take time to flow through into contracts and revenues.
We will continue to invest into the development of our offering and increased sales and marketing activities to capitalise on our early successes in this significant market. We have a considerable and growing pipeline and look to the future with confidence.
Gordon McArthur
CEO
8 October 2022
Financial Review
Key Performance Indicator Review
Key Performance Indicator Review FY22 FY21 Growth ---------------------------------------- ---------- ---------- -------- Revenue(1) (GBPm) GBP18.29 GBP11.62 57% ACMRR (GBPm) GBP19.30 GBP13.80 40% Gross Profit (GBPm) GBP7.94 GBP5.33 49% Gross Profit margin(2) 43.4% 45.9% (2.5%) Underlying EBITDA(3) (GBPm) GBP6.31 GBP4.14 52% Underlying EBITDA margin(4) 34.5% 35.7% (1.2%) Underlying Profit before tax(5) (GBPm) GBP2.06 GBP1.61 28% Underlying Profit before tax margin(6) 11.3% 13.9% (2.6%) Profit before tax (GBPm) GBP0.07 GBP1.26 (94.8%) Underlying EPS(7) (pence) GBP4.49 GBP3.14 43%
(1) Revenue excludes grant income and rental income
(2) Gross profit margin is statutory gross profit divided by Revenue
(3) Underlying EBITDA is defined as profit for the year excluding amortisation, depreciation, finance costs, taxation, acquisition costs, share based payments, exchange rate gains/losses on statement of financial position translation and exceptional non-recurring costs
(4) Underlying EBITDA margin is defined as Underlying EBITDA divided by Revenue
(5) 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
(6) Underlying profit before tax margin is defined as Underlying profit before tax divided by Revenue
(7) Underlying EPS is defined as profit for the year excluding amortisation on acquired intangibles, acquisition costs, share based payments, exchange rate gains/losses on statement of financial position translation and exceptional non-recurring costs divided by the number of shares
(8) Underlying profit before tax margin has been added as a KPI in the current year for additional key trading profitability information. Dividend per share has been removed following the change in dividend policy in the prior year.
Revenue
FY22 was an exceptional year in terms of revenue growth. Group revenues grew by 57% to GBP18.29m (2021: GBP11.62m) driven mainly by both by Tier 1 growth and new sales relating to Proximity Cloud. Proximity Cloud has a different revenue recognition profile under international accounting standards due to the preconfigured nature of the appliance and associated performance obligations. As such, a significant proportion of the total contract value is recognised upfront on delivery of the Proximity Cloud to the client. Proximity Cloud sales of three contracts contributed towards GBP2.28m (12%) of the overall Group revenue in the year (FY21: GBP0m). Refer to Note 2 for a further breakdown of the Group's revenues. 76% of revenues were recurring with Tier 1 customers now representing 34.7% of delivered revenue (2021: 18%).
Gross Profit
Statutory gross profit earned increased 49% to GBP7.94m (2021: GBP5.33m), with gross margin reduced in line with expectations following a significant investment in both hardware infrastructure and software development costs in the current year. The Group has undergone a major period of investment over the past few years in capacity, people and product which has culminated in the successful launch of both Proximity and Exchange Cloud. The sales of Proximity Cloud have underpinned the current year's revenue growth and there is also a strong pipeline of these deals as we look forward to the year ahead. The investment in both Proximity Cloud and Exchange Cloud including Analytics during the year has incurred internal gross capitalised development costs of GBP2.59m (2021: GBP1.98m) in line with the recruitment drive in the year.
Underlying Administrative Expenses
Underlying administrative expenses, which are defined as administrative expenses less share based payments and non-recurring costs, have increased by GBP2.00m from GBP3.94m to GBP5.94m primarily as a result of headcount increases within our software development function. We had an average headcount of 89 throughout the year (2021: 73) therefore gross staff costs have increased by 28%, from GBP4.41m to GBP5.62m. Given a high proportion of recruitment has been to support our Proximity and Exchange Cloud development some of these costs are capitalised. Net staff costs, which is defined as total staff costs less capitalised development costs, has increased by 16%. Most of our headcount increase has been to support future product and sales growth with a relatively small increase in support staff given our automation and self-service strategy.
Earnings before interest, tax, depreciation, amortisation and exceptional non-recurring costs ("Underlying EBITDA") increased by 56% to GBP6.31m (2021: GBP4.14m). 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 and grant income.
Underlying Profit before tax increased to GBP2.06m (2021: GBP1.61m).
Statutory Profit before tax decreased to GBP0.07m (2021: GBP1.26m) mainly as a result of the fact there was a one off write back of GBP1.99m due to the contingent consideration due to VMX Ltd in FY21 that was not paid. The other reconciling differences are shown on the table below:
Year ended Year ended
30 June 30 June
2022 2021
GBP'000 GBP'000
---------------------------------------------- ----------- -----------
Statutory Profit Before Tax 66 1,255
----------- -----------
Add back:
Acquisition/post acquisition integration
costs - 140
Share Based Payments 1,661 546
Other Non-recurring costs* 28 165
Amortisation of acquired intangibles 802 806
Impairment of goodwill - 994
Deduct:
Write back of contingent consideration - (1,989)
Grant Income (419) (309)
Exchange rate (gains)/losses on intercompany (81) -
translation
Underlying Profit for the year 2,057 1,608
---------------------------------------------- ----------- -----------
Year ended 30 June 2022 Year ended 30 June 2021
GBP'000 GBP'000
---------------------------------------------------------- ------------------------ ------------------------
EBITDA(**) 6,811 4,454
------------------------ ------------------------
Deduct:
Grant Income (419) (309)
Exchange rate (gains)/losses on intercompany translation (81) -
Underlying EBITDA 6,311 4,145
---------------------------------------------------------- ------------------------ ------------------------
(1) Other non-recurring costs in the year relates to head office relocation expenses with no further property moves anticipated due to the purchase of Riverside building. Prior year non-recurring costs were incurred due to refinancing, acquisition transition costs and Covid-19 related expenditure. All of these costs are not expected to recur and are therefore disclosed separately to trading results.
(2) EBITDA is defined as earnings before depreciation, amortisation, acquisition costs, share based payments and non-recurring cost
Taxation
The effective tax rate ('ETR') for the period was -1,144.64%, (2021: -27.81%).
The overall effective tax rate has benefitted from the UK Super-deduction on plant and machinery assets, deferred tax on share options not previously recognised and prior year adjustments for R&D claims.
See tax notes 10 and 14 for further details.
Earnings per Share
Underlying earnings per share increased 43% to 4.49p (2021: 3.14p). Underlying diluted earnings per share increased to 4.19p (2021: 2.99p). The increase in underlying EPS is as a result of both the increased underlying profitability when compared to last year and also the additional taxation credits when compared to the prior year. This has more than offset the dilution as a result of the equity raise in April. See note 25 for further details.
Basic earnings per share decreased to 1.43p (2021: 3.07p). The decrease in basic EPS is largely as a result of last year's one off gain on the revaluation of the contingent consideration and subsequent increase in statutory profit after tax in FY 21. Diluted earnings per share has also decreased to 1.42p (2021: 3.07p).
Statement of Financial Position and Cash flows
The statement of financial position shows an increase in total assets to GBP44.7m (2021: GBP22.9m) with operating cash flows during the year increased by 66% to GBP6.70m (FY21: GBP4.04m).
Our Equity Raise in April 2022 saw us strengthen our consolidated statement of financial position by raising net proceeds of GBP14.3m to fund the next stage of our growth. The cash raised in April will provide us with the ability for additional infrastructure capacity and product development (including internal and external resource) for Exchange Cloud, investment into the recent and future expected contract wins and for additional working capital, including advanced purchases of IT rack capacity, computer servers and other associated hardware to help minimise impact from global supply chain issues.
We referred to 2021 as our "Year of Product" and have made further investment in our two new strategic product lines of Proximity and Exchange Cloud (with pre-configured built in analytics) of GBP2.6m (2021: GBP2.0m). This is offset by amortisation and further helped by the Scottish Enterprise Grant award of which GBP0.4m was recognised against the development costs for the year. Our strategy is always to have sufficient infrastructure capacity both across our global data centre network and to hold a sufficient level of IT Inventory at our Glasgow Head Office. As such, a proportion of our capital spend during the year is to satisfy the growing pipeline demand for the year ahead. Investment in property, plant and equipment hardware infrastructure was again significant with over GBP5.2m (2021: GBP4.7m) 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.
During the year we took on additional borrowings of GBP1.5m against the GBP2.1m purchase of our new Head Office facilities in Glasgow. We paid down debt of GBP0.6m against our term loan and also fully repaid our revolving credit facility. This revolving credit facility is due to mature in December 2022 but we are in discussions with our lender on extending and increasing this facility in order to give us more flexibility in our working capital. Our net cash at the end of the year is GBP7.86m (30 June 2021: net cash GBP1.89m) and gross borrowings at GBP2.3m are 0.37x Underlying EBITDA of GBP6.3m which we believe is a very comfortable level of debt to carry given the recurring revenue business model and strong cash generation.
At 30 June 2022 net assets were GBP30.7m compared to net assets of GBP13.8m at 30 June 2021.
Fraser McDonald
Chief Financial Officer
8 October 2022
Beeks Financial Cloud Group PLC
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2022
2022 2021
Note GBP000 GBP000
------------------------------------------------- ----- --------- --------
Revenue 3 18,289 11,615
Other Income 3 512 309
Cost of sales (10,862) (6,591)
Gross profit 7,939 5,333
--------- --------
Administrative expenses (7,554) (5,783)
Operating profit / (loss) 4 385 (450)
--------- --------
Analysed as
Earnings before depreciation, amortisation,
acquisition costs, share based payments
and non-recurring costs: 6,811 4,454
Depreciation 11 (3,213) (2,022)
Amortisation - acquired intangible assets 10 (802) (806)
Amortisation - other intangible assets 10 (726) (231)
Impairment of intangible assets 10 - (994)
Non-recurring acquisition integration
costs 4 - (140)
Share based payments 21 (1,661) (546)
Other non-recurring costs 4 (24) (165)
Operating profit / (loss) 385 (450)
--------- --------
Gain on revaluation of contingent consideration - 1,989
Finance income 6 21 5
Finance costs 5 (340) (289)
Profit before taxation 66 1,255
--------- --------
Taxation 9 760 349
--------- --------
Profit after taxation for the year attributable
to the owners of Beeks Financial Cloud
Group PLC 826 1,604
--------- --------
Other comprehensive income
Amounts which may be reclassified to
profit and loss
Currency translation differences 5 (157)
Total comprehensive income for the year
attributable to the owners of Beeks Financial
Cloud Group PLC 831 1,447
------------------------------------------------- ----- --------- --------
Pence Pence
Basic earnings per share 24 1.43 3.07
Diluted earnings per share 24 1.42 3.07
The above income statement should be read in conjunction with the accompanying notes.
Beeks Financial Cloud Group PLC
Consolidated Statement of Financial Position
As at 30 June 2022
2022 2021
Note GBP000 GBP000
------------------------------- ----- ------- -------
Non-current assets
Intangible assets 10 6,698 6,008
Property, plant and equipment 11 16,270 10,390
Deferred tax 12 4,201 896
27,169 17,294
------- -------
Current assets
Trade and other receivables 14 5,600 2,210
Inventories 13 1,818 -
Cash and cash equivalents 15 10,160 3,372
17,578 5,582
Total assets 44,747 22,876
------- -------
Liabilities
Non-current liabilities
Borrowings 17 1,320 896
Lease liabilities 17 2,303 2,210
Deferred tax 12 2,968 617
Total non-current liabilities 6,591 3,723
------- -------
Current liabilities
Trade and other payables 18 5,139 4,143
Lease liabilities 18 1,280 656
Borrowings 17 978 589
Total current liabilities 7,397 5,388
------- -------
Total liabilities 13,988 9,111
------- -------
Net assets 30,759 13,765
------- -------
Equity
Issued capital 20 82 70
Share premium 22 23,775 9,452
Reserves 22 2,657 1,261
Retained earnings 4,245 2,982
------- -------
Total equity 30,759 13,765
------------------------------- ----- ------- -------
Beeks Financial Cloud Group PLC
Consolidated Statement of Changes in Equity
As at 30 June 2022
Issued Foreign Merger Other Share Share Retained Total
capital currency reserve reserve based premium earnings equity
reserve payments
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------- --------- ---------- --------- --------- ---------- --------- ---------- --------
Balance at 1 July
2020 64 145 705 (315) 374 4,309 1,434 6,716
---------------------- --------- ---------- --------- --------- ---------- --------- ---------- --------
Profit after income
tax expense for
the year - - - - - - 1,604 1,604
Currency translation
difference - (157) - - - - - (157)
Total comprehensive
income - (157) - - - - 1,604 1,447
Deferred tax - - - - - - 86 86
Issue of share
capital 6 - - - - 5,143 - 5,149
Share based payments - - - - 547 - - 547
Exercise of share
options - - - - (38) - 38 -
Dividends paid - - - - - - (180) (180)
Total transaction
with owners 6 - - - 509 5,143 (56) 5,602
--------- ---------- --------- --------- ---------- --------- ---------- --------
Balance at 30
June 2021 70 (12) 705 (315) 883 9,452 2,982 13,765
---------------------- --------- ---------- --------- --------- ---------- --------- ---------- --------
Profit after income
tax expense for
the year - - - - - - 826 826
Currency translation
difference - 5 - - - - - 5
Total comprehensive
income - 5 - - - - 826 831
Deferred tax - - - - - - 167 167
Issue of share
capital 12 - - - - 14,323 - 14,335
Share based payments - - - - 1,661 - - 1,661
Exercise of share
options - - - - (270) - 270 -
Total transaction
with owners 12 - - - 1,391 14,323 437 16,163
--------- ---------- --------- --------- ---------- --------- ---------- --------
Balance at 30
June 2022 82 (7) 705 (315) 2,274 23,775 4,245 30,759
---------------------- --------- ---------- --------- --------- ---------- --------- ---------- --------
The above statement of changes in equity should be read in conjunction with the accompanying notes.
Beeks Financial Cloud Group PLC
Consolidated Cash Flow Statement
For the year ended 30 June 2022
2022 2021
Note GBP'000 GBP'000
---------------------------------------------------------- ------ ---------------------- -----------------------
Cash flows from operating activities
Profit for the year before tax 66 1,255
---------------------- -----------------------
Adjustments for:
Depreciation and amortisation 10/11 4,741 3,059
Foreign exchange (66) (6)
Interest received 6 (21) (5)
Gain on disposal of property, plant and equipment (24) -
Gain on revaluation of contingent consideration - (1,989)
Impairment - 994
Bank charges 5 95 -
Loan interest 5 245 190
Share options 21 1,661 546
Operating cash flows 6,697 4,044
---------------------- -----------------------
Increase in receivables 14 (3,014) (874)
Increase in inventory 13 (988) -
Increase in payables 17/18 1,765 2,336
Operational cash flows after movement in working capital 4,460 5,506
---------------------- -----------------------
Corporation tax received/(paid) 44 (33)
Net cash generated from operating activities 4,504 5,473
---------------------- -----------------------
Cash flows from investing activities
Purchase of property, plant and equipment 11 (9,562) (4,746)
Proceeds from disposal of property, plant and equipment 60 -
Proceeds from grant income - 669
Capitalised development costs 10 (2,590) (2,005)
Payments for prior period acquisition - (555)
Net cash used in investing activities (12,092) (6,637)
---------------------- -----------------------
Cash flows from financing activities
Repayment of existing loan borrowings (2,900) (3,736)
Lease liabilities (936) (485)
Interest on lease liabilities 19 (131) (99)
Deferred consideration - (460)
Issue of loans 17 3,670 3,050
Bank charges 5 (95) -
Loan interest 5 (242) (190)
Dividends paid - (180)
Proceeds from the issue of new share capital 20 14,989 5,198
Interest received 6 21 5
Net cash generated from financing activities 14,376 3,103
---------------------- -----------------------
Net increase in cash and cash equivalents 6,788 1,939
---------------------- -----------------------
Cash and cash equivalents at beginning of year 3,372 1,433
---------------------- -----------------------
Cash and cash equivalents at end of year 15 10,160 3,372
---------------------------------------------------------- ------ ---------------------- -----------------------
The above cash flow statement should be read in conjunction with the accompanying notes.
Beeks Financial Cloud Group PLC
Notes to the Consolidated Financial Information
For the year ended 30 June 2022
1. Summary of significant accounting policies
Basis of preparation
These financial statements have been prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006.
The financial statements have been prepared on the historical cost basis except for the valuation of certain financial instruments that are measured at fair values at each reporting period, as explained in the accounting policies below.
The measurement bases and principal accounting policies of the group are set out below and are consistently applied to all years presented unless otherwise stated.
International Financial Reporting Standards and Interpretations issued but not yet effective
New and revised IFRSs in issue but not yet effective and have not been adopted by the Group
At the date of authorisation of these financial statements, the following standards, interpretations and amendments have been issued but are not yet effective and have no material impact on the Group's financial statements:
-- IFRS 17 (including the June 2020 Amendments to IFRS 17) - Insurance Contracts
-- Amendments to IFRS 10 and IAS 28 - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
-- Amendments to IAS 1 - Classification of Liabilities as Current or Non-current -- Amendments to IFRS 3 - Reference to the Conceptual Framework -- Amendments to IAS 16 - Property, Plant and Equipment - Proceeds before Intended Use -- Amendments to IAS 37 - Onerous Contracts - Cost of Fulfilling a Contract
-- Annual Improvements to IFRS Standards 2018-2020 Cycle - Amendments to IFRS 1 First-time Adoption of
International Financial Reporting Standards, IFRS 9 Financial Instruments and IFRS 16 Leases
-- Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting Policies -- Amendments to IAS 8 - Definition of Accounting Estimates
-- Amendments to IAS 12 - Deferred Tax related to Assets and Liabilities arising from a single transaction
None of these have been adopted early and the Directors do not expect that the adoption of the Standards listed above will have a material impact on the financial statements of the Group in future periods.
Adoption of new and revised Standards - amendments to IFRS that are mandatorily effective for the current year
There are no new accounting policies applied in the year ended 30 June 2022 which have had a material effect on these accounts. In addition, the Directors do not consider that the adoption of new and revised standards and interpretations issued by the IASB in 2021 has had any material impact on the financial statements of the Group.
Revenue recognition
Revenue arises from the provision of Cloud-based localisation. To determine whether to recognise revenue, the group follows a 5-step process as follows:
1. Identifying the contract with a customer 2. Identifying the performance conditions 3. Determining the transaction price 4. Allocating the transaction price to the performance conditions 5. Recognising revenue when/as performance obligation(s) are satisfied.
Revenue is measured at transaction price, stated net of VAT and other sales related taxes, if applicable.
Infrastructure services
The group's core business provides managed Cloud computing infrastructure and connectivity. The Group 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 pricing model and comparison to industry standards.
Where an agreement includes a royalty fee as a result of future sales by a customer to third parties and there is a minimum amount guaranteed, this is recognised at point in time when the delivery of the item is complete.
Set up fees
Set up fees charged on contracts are reviewed to consider the material rights of the set-up fee. When a set-up fee is arranged, Beeks will consider the material rights of the set-up fee, if in substance it constitutes a payment in advance, the set-up fee will be deemed to be a material right. The accounting treatment for both material rights and non-material rights set-up fees is as follows:
-- Any set up fees that are material rights are spread over the group's average contract term
-- Set up fees that are not material rights are recognised over the enforceable right period, i.e. 1 to 3 months depending on the termination period
Revenue in respect of installation or training, as part of the set-up, is recognised when delivery and installation of the equipment is completed on a point in time basis.
Hardware and software sales
Revenue from the supply of hardware is recognised when control of the goods has transferred. For hardware, this occurs upon delivery of the item to the customer. For software, control is deemed to pass on provision of the licence key to the customer being the point in time the customer has the right to use the software.
The Group has concluded it acts as a principal in each sales transaction vs an agent. This has been determined by giving consideration to whether the Group holds inventory risk, has control over the pricing over a particular service, takes the credit risk, and whether responsibility ultimately sits within the Group to service the promise of the agreements. Refer to note 2 for more detail on these considerations.
Professional and consultancy services
Revenue from professional and consultancy services are recognised as these services are rendered and the performance obligation satisfied. Any unearned portion of revenue (i.e. amounts invoiced in advance of the service being provided) is included in payables as deferred revenue.
Proximity Cloud Services
During the year, the Group launched a new product Proximity Cloud. Proximity Cloud is a fully-managed and configurable compute, storage and analytics rack 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 cloud contracts has been assessed under IFRS 15 and using the five step process, the following performance obligations have been identified:
6. Delivery and installation of the hardware, and provision of the software licence 7. Delivery of maintenance and technical support over the contract 8. Delivery of unspecified upgrades and future software releases
The delivery and installation of the hardware, and provision of the software licence are highly interrelated and considered to be one performance obligation. This is recognised on a point in time basis when the control of the goods have been transferred, being when delivery of the item is completed and the right to use the software is granted.
The maintenance and technical support over the contract, as well as the delivery of the unspecified upgrades and future software releases are recognised evenly on an over time basis over the period of the contract. The performance obligation for both is considered to be that of standing ready to provide technical product support and unspecified updates, optional upgrades and enhancements on a when-and-if-available basis over the period of service being rendered.
The Proximity Cloud 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 within the annual report.
Where such contracts include a financing component, the group also adjusts the transaction price to reflect the time value of money. Finance income is recognised as other income in the statement of the comprehensive income.
Revenue recognised over time and at a point in time is disclosed at note 3 of the notes to the financial statements
Government grant income
Grants from Government agencies are recognised where there is reasonable assurance that the grant will be received, and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is deducted from carrying amount of the intangible asset over the expected useful life of the related asset. Note 3 Revenue provides further information on Government grants.
Rental Income
Rental income from 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.
Exceptional costs
The Group defines exceptional items 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.
2. Segment Information
Operating segments are reporting in a manner consistent with the internal reporting provided to the chief operating decision makers.
The chief operating decision makers, who are responsible for allocating resources and assessing performance of operating segments, have been identified as the executive directors.
During the year ended 30 June 2022, the Group was reorganised from three operating segments, being institutional, retail and analytics into two main segments as a result of the strategic direction of the Group. The two new segments are public/private cloud and Proximity Cloud/Exchange Cloud. Retail and analytics segments are no longer reviewed in isolation by the chief operating decision makers and instead considered under the wider public/private cloud segment.
In the current year there are two customers that account for more than 10% of Group revenue (nil in prior year). The total revenue for these two customers amounts to GBP6.92m, with the largest customer accounting for GBP4.58m. GBP1.37m of this revenue has occurred within the Proximity Cloud operating segment, with the other GBP5.55m of revenue included within public/private cloud revenue.
Performance is assessed by a focus on the change in revenue across public/private cloud and new sales relating to Proximity Cloud/Exchange Cloud. Cost is reviewed at a cost category level but not split by segment. Assets are used across all segments and are therefore not split between segments so management review profitability at a group level.
Revenues by Operating segment, further disaggregated are as follows:
Year ended 30/06/22 (GBP'000) Year ended 30/06/21 (GBP'000)
Public/Private Cloud Proximity Total Public/Private Proximity Total
Cloud Cloud Cloud
---------------------------------- --------------------- ---------- -------- --------------- ---------- --------
Over time
Infrastructure/software as a
service 13,057 - 13,057 9,781 - 9,781
Maintenance 518 518 685 - 685
Proximity Cloud 57 57
Professional services 234 - 234 187 - 187
Over time total 13,809 57 13,866 10,653 - 10,653
--------------------- ---------- -------- --------------- ---------- --------
Point in time
Proximity Cloud - 2,222 2,222 - - -
Hardware/Software resale 1,601 - 1,601 337 - 337
Software licences 520 - 520 556 - 556
Set up fees 80 - 80 69 - 69
Point in time total 2,201 2,222 4,423 962 - 962
--------------------- ---------- -------- --------------- ---------- --------
Total revenue 16,010 2,279 18,289 11,615 - 11,615
---------------------------------- --------------------- ---------- -------- --------------- ---------- --------
Revenues by operating segment, further disaggregated are as follows:
2022 2021
GBP'000 GBP'000
---------------------------------------- -------- --------
Revenues by geographic location are as
follows:
United Kingdom 5,849 3,214
Europe 2,508 2,282
US 5,556 2,003
Rest of World 4,376 4,116
-------- --------
Total 18,289 11,615
---------------------------------------- -------- --------
During the year GBP419k (2021: GBP309k) was recognised in other income for grant income received from Scottish Enterprise and GBP93k (2021: GBPnil) was recognised as rental income.
2022 2021
GBP'000 GBP'000
----------------------------------------------- -------- --------
Non-Current Assets by geographic location
are as follows:
United Kingdom - Property, plant and
equipment 8,132 3,980
Europe - Property, plant and equipment 1,717 727
Rest of World - Intangible assets 5,330 4,640
Rest of World - Goodwill 1,368 1,368
Rest of World - Property, plant and equipment 2,509 3,878
US - Property, plant and equipment 3,912 1,805
-------- --------
Total Non-Current Assets 22,968 16,398
----------------------------------------------- -------- --------
Intangible assets have been classified as "Rest of World" due to the fact they represent products that are available to customers throughout the World as well as the US intangible assets referred to in note 10.
The Group has taken advantage of the practical expedient permitted by IFRS 15 and has therefore not disclosed the amount of the transaction price allocated to unsatisfied performance obligations or when it expects to recognise that revenue. Longer term contracts continue to be paid on a monthly basis.
3. Operating Profit
Operating Profit is stated after charging:
2022 2021
GBP000 GBP000
----------------------------------------- ------- -------
Staff costs (note 7) 5,637 4,408
Depreciation (note 11) 2,189 1,396
Depreciation right-of-use assets (note
11) 1,024 626
Amortisation of acquired intangibles
(note 10) 802 806
Amortisation of other intangibles (note
10) 726 231
Other cost of sales* 6,452 3,319
Impairment of intangible (note 10) - 994
Foreign exchange (gains)/losses (98) 47
Non-recurring acquisition integration
costs - 140
Share based payments (note 21) 1,661 546
Other non-recurring costs - refinancing - 37
Other non-recurring costs - head office
relocation 24 25
Other non-recurring costs - 103
*Included within other cost of sales are the direct costs associated with the business including data centre connectivity, software licences, security and other direct support costs.
Auditor's remuneration
2022 2021
GBP000 GBP000
------------------------------------------------- ------- -------
Audit
Fees payable for the audit of the consolidation
and the parent company accounts 63 37
Fees payable for the audit of the subsidiaries 59 28
------- -------
Non Audit
Fees payable for the interim review of
the group 4 5
------- -------
126 70
------------------------------------------------- ------- -------
4. Finance Costs
2022 2021
GBP000 GBP000
--------------------- ------- -------
Bank charges 95 92
Loans and leasing 245 197
------- -------
Total finance costs 340 289
--------------------- ------- -------
5. Finance Income
2022 2021
GBP000 GBP000
----------------------------------------------- ------- -------
Financing charge on Proximity Cloud contracts 21 -
Exchange gain on intercompany retranslation - 5
------- -------
Total finance income 21 5
----------------------------------------------- ------- -------
6. Average number of employees and employee benefits expense
Including directors, the average number of employees (at their full time equivalent) during the year was as follows:
2022 2021
GBP000 GBP000
------------------------------- ------- -------
Management and administration 32 25
Support and development staff 57 48
Average numbers of employees 89 73
------------------------------- ------- -------
The employee benefits expense during the year was as follows:
2022 2021
GBP000 GBP000
--------------------------------- ------- -------
Wages and salaries 4,925 3,870
Social security costs 591 453
Other pension costs 121 86
Total employee benefits expense 5,637 4,409
------- -------
Share based payments (note 21) 1,661 546
--------------------------------- ------- -------
Wages and salaries directly attributable to the development of products are capitalised in intangible assets (note 10).
Wages and salaries costs reside within administrative expenses in the SOCI as the costs for staff resources are not allocated against specific sales.
7. Directors' emoluments
2022 2021
GBP000 GBP000
------------------------------------------------ ------- -------
Aggregate remuneration in respect of
qualifying services 239 221
Aggregate amounts of contributions to
pension schemes in respect of qualifying
services 4 4
Other benefits in kind 2 2
Gain on exercise of options 133 43
Total Directors' emoluments 378 270
------- -------
Highest paid director - aggregate remuneration
(excluding share based payments) 109 104
------------------------------------------------ ------- -------
There are two directors (2021: two) who are accruing retirement benefits in respect of qualifying services.
8. Taxation expense
2022 2021
GBP000 GBP000
--------------------------------------- ------- -------
Current tax
UK tax - (32)
Foreign tax on overseas companies 33 28
Total current tax 33 (4)
------- -------
Origination and reversal of temporary
differences (435) (272)
Prior year deferred tax adjustments (358) (73)
Total deferred tax (793) (345)
------- -------
Tax on profit on ordinary activities (760) (349)
--------------------------------------- ------- -------
The differences between the total tax credit above and the amount calculated by applying the standard rate of UK corporation tax to the profit before tax, together with the impact of the effective tax rate, are as follows:
2022 % ETR 2021 % ETR
GBP000 movement GBP000 movement
Profit before tax 66 1,255
Profit on ordinary activities
multiplied by the standard rate
of corporation tax in the UK
of 19% (2020: 19%) 13 19% 238 19%
Effects of:
Impact of super deduction (170) (257.81%) - -
Expenses not deductible for
tax purposes 243 368.13% (81) (6.45%)
R&D tax credits relief (140) (212.12%) (95) (7.57%)
Income not taxable - - (377) (30.04%)
Share option deduction (173) (262.12%) 9 0.72%
Prior year over-provision - 0.00% (32) (2.55%)
Prior year deferred tax adjustments (358) (542.42%) (73) (5.82%)
Adjustment for tax rate differences (175) (265.15%) 58 4.62% Foreign tax suffered - - 4 0.32% Other - - - - Total tax charge (760) (1,151.51%) (349) (27.81%)
The effective tax rate (ETR) for the year was -1,151.51% (2021: -27.81%).
9. Intangible assets
Acquired Development Trade Goodwill Total
customer costs name
relationships
GBP000 GBP000 GBP000 GBP000 GBP000
Cost
As at 30 June 2020 2,533 2,573 137 2,365 7,608
Additions - 1,977 - 28 2,005
Grant funding received - (560) - - (560)
Fo reign exchange
movements (150) - - (57) (207)
As at 1 July 2021 2,383 3,990 137 2,336 8,846
Additions - 2,590 - - 2,590
Grant Funding received - (432) - - (432)
Currency translation
differences 147 - - - 147
As at 30 June 2022 2,530 6,148 137 2,336 11,151
Accumulated Amortisation
As at 30 June 2020 (552) (331) (7) 23 (867)
Charge for the year (277) (733) (27) - (1,037)
Impairment - - - - (994)
Foreign exchange movements 56 - - - 59
As at 1 July 2021 (773) (1,064) (34) (968) (2,839)
Charge for the year (287) (1,214) (27) - (1,528)
Foreign exchange movements (86) (86)
As at 30 June 2022 (1,146) (2,278) (61) (968) (4,453)
NBV as at 1st July
2021 1,611 2,926 103 1,368 6,008
NBV as at 30th June
2022 1,384 3,870 76 1,368 6,698
Development costs have been recognised in accordance with IAS 38 in relation to the network automation project and development of the Proximity Cloud (and two instances below) product, including analytics and its integration into this product. Development costs in relation to Proximity Cloud have a remaining useful of 4 years.
In addition, there are GBP1.7m of development costs relating to the development of proximity cloud V2/Exchange Cloud which will be amortised for five years commencing July 2023. All costs incurred during the preliminary stages of development projects are charged to profit or loss.
Impairment test for goodwill
For this review, goodwill was allocated to individual cash generating units (CGU) on the basis of the Group's operations as disclosed in the segmental analysis. As the Board reviews results on a segmental level, the Group monitors goodwill and annually assesses it on the same basis for impairment.
The carrying value of goodwill by each CGU is as follows:
2022
GBP'000
Private/public cloud 1,368
Proximity/Exchange Cloud -
Total goodwill 1,368
In the previous year, the GBP1,368k goodwill was allocated against the prior year operating segments. Following the changes to operating segments (as detailed within the Segment Information at note 3), goodwill has been allocated to the public/private segment and management have reviewed and confirmed that there is no indication of impairment. There is no requirement for an impairment review of the Proximity/Exchange Cloud segment in the current year as there are no associated indefinite life intangibles.
The recoverable amount of all CGUs has been determined by using value-in-use calculations, estimating future cash inflows and outflows from the use of the assets and applying an appropriate discount rates to those cash flows to ensure that the carrying value of each individual asset is still appropriate.
In performing these reviews, under the requirements of IAS 36 "Impairment of Assets" management prepare forecasts for future trading over a useful life period of up to five years.
These cash flow projections are based on financial budgets and market forecasts approved by management using a number of assumptions including;
-- Historic and current trading -- Weighted sales pipeline -- Potential changes to cost base (including staff to support the CGU) -- External factors including competitive landscape and market growth potential
-- Forecasts that go beyond the approved budgets are based on long term growth rates on a macro-economic level.
Management performed a full impairment assessment on the goodwill allocated to Public/Private Cloud. This included including modelling projected cash flows based on the current weighted sales pipeline, a discount rate based on the calculated pre-tax weighted average cost of capital (13.5%) and cost base assumptions that included contingency and investment to deliver against the weighted sales pipeline. Conservative mid-term and long term growth rates were estimated, which were less than both the Group's internal business plan and external market mid term forecasts.
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 2022, 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.
10. Non-current assets - Property, plant and equipment
Computer Office Right of Freehold Total
Equipment equipment Use property
and fixtures
and fittings
Cost GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 30 June 2020 7,590 58 2,993 - 10,641
Exchange adjustments (12) - - - (12)
Additions 4,733 13 915 - 5,661
As at 1 July 2021 12,311 71 3,908 - 16,290
Additions 5,055 163 1,997 3,034 10,249
Stock transfers (830) - - - (830)
Disposals - (54) (485) - (539)
Exchange adjustments 7 - - - 7
As at 30 June 2022 16,543 180 5,420 3,034 25,177
Depreciation
As at 30 June 2020 (3,274) (23) (589) - (3,886)
Charge for the year (1,381) (15) (626) - (2,022)
Exchange adjustments 8 - - - 8
As at 1 July 2021 (4,647) (38) (1,215) - (5,900)
Charge for the year (2,134) (28) (1,024) (27) (3,213)
Exchange adjustments 3 - - - 3
Depreciation on disposals - 18 185 - 203
As at 30 June 2022 (6,778) (48) (2,054) (27) (8,907)
NBV as at 30 June
2021 7,664 33 2,693 - 10,390
NBV as at 30 June
2022 9,765 132 3,366 3,007 16,270
Of the total additions in the year of GBP10.2m, GBP2m relates to right-of-use assets. GBP3m additions have also been recognised in relation to the purchase and refurbishment of the head office in Glasgow.
Disposals of GBP0.5m within right-of-use assets relate to the termination of the previous head office lease in Glasgow. A right-of-use liability of GBP0.4m was also disposed of as part of this lease assignation. GBP0.06m proceeds were received in relation to the disposal.
All revenue generating depreciation charges are included within cost of sales. Non-revenue generating depreciation charges are included with admin costs.
11. Non-current assets - Deferred tax
Deferred tax is recognised at the standard UK corporation tax of 25% for fixed assets in the UK (2021: 25%). Deferred tax in the US is recognised at an average rate of 21% for 2022 (2021: 21%). The deferred tax asset relates to the difference between the amortisation period of the US acquisitions for tax and reporting purposes as well as the impact of the share options exercised during the year and tax losses carried forward in both UK and overseas companies. Deferred tax assets and liabilities on statement of financial position prepared after the substantive enactment of the new tax rate are calculated using a tax rate of 25% to the extent that the temporary differences will reverse after 2023.
2022 2021
GBP000 GBP000
----------------------------------------- -------- -------
The split of the deferred tax asset and
liabilities are summarised as follows:
Deferred tax (liabilities) (2,968) (617)
Deferred tax asset 4,201 896
Total deferred tax 1,233 279
-------- -------
Movements
Opening balance 279 (151)
Charge to profit or loss (note 9) 793 345
Charged to goodwill / equity 167 85
Other movement (6) -
-------- -------
Closing balance 1,233 279
----------------------------------------- -------- -------
The movement in deferred tax assets and liabilities during the year is as follows:
Share options Tax losses Accelerated Total deferred Total deferred
c/fwd tax depreciation tax asset tax (liability)
and other carried carried forward
movement forward
GBP000 GBP000 GBP000 GBP000 GBP000
------------------ -------------- ----------- ------------------ --------------- -----------------
At 1 July 2020 - 325 55 380 (531)
Charge to income 138 305 (12) 431 (86)
Charge to equity 85 - - 85 -
As at 30 June
2021 223 630 43 896 (617)
Charge to income 281 2,747 110 3,138 (2,351)
Charge to equity 167 - - 167 -
As at 30 June
2022 671 3,377 153 4,201 (2,968)
12. Current assets - Inventories
2022 2021
GBP000 GBP000
------------- ------- -------
Materials 1,566 -
Consumables 252 -
------- -------
1,818 -
------------- ------- -------
With the launch of Proximity Cloud in the current year, the group now 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, GBP0.99m of inventories were recognised as an expense in the period.
13. Current assets - Trade and other receivables
2022 2021
GBP000 GBP000
----------------------------------------------- ------- -------
Trade receivables 1,036 1,032
Less: allowance for impairment of receivables (80) (19)
956 1,013
------- -------
Prepayments 2,083 723
Contract asset 2,329 191
Other taxation 107 241
Other receivables 125 42
------- -------
5,600 2,210
----------------------------------------------- ------- -------
The contract assets primarily relate to our rights to a consideration for goods or services delivered but not invoiced at the reporting date. The contract assets are transferred to receivables when invoiced. Contract liabilities relate to deferred revenue. At the end of each reporting period, these positions are netted on a contract basis and presented as either an asset or a liability in the Consolidated Statement of Financial Position. Consequently, a contract balance can change between periods from a net contract asset balance to a net contract liability balance in the statement of financial position.
Significant changes in the contract assets and the contract liability balances during the period are as follows:
Contract Contract
assets liabilities
GBP000 GBP000
------------------------------------------ --------- -------------
Balance at 1 July 2021 191 982
--------- -------------
Transferred to receivables from contract (191) -
assets from the beginning of the period
Revenues recognised during the period 2,329 -
to be invoiced
Revenue recognition that was included
in the contract liability balance at
the beginning of the period - (979)
Remaining performance obligations for
which considerations have been received - 958
--------- -------------
Balance at 30 June 2022 2,329 961
------------------------------------------ --------- -------------
The credit risk relating to trade receivables is analysed as follows:
2022 2021
GBP000 GBP000
----------------------------------------------- ------- -------
Trade receivables 1,036 1,032
Less: allowance for impairment of receivables (80) (19)
------- -------
956 1,013
----------------------------------------------- ------- -------
Movements in the allowance for expected credit losses are as follows:
2022 2021
GBP000 GBP000
----------------------------------------- ------- -------
Opening balance 19 20
------- -------
Additional allowance recognised 91 46
Receivables written off during the year
as uncollectable (30) (47)
------- -------
Closing balance 80 19
----------------------------------------- ------- -------
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 2022 is GBP74k (2021 - GBP8k). The increase in expected credit loss allowance is in line with the more challenging wider macroeconomic environment.
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.
2022 ECL rate 2022 ECL 2021 ECL rate 2021 ECL
allowance allowance
Risk profiling category GBP'000 % GBP'000 GBP'000 % GBP'000
------------------------- -------- --------- ----------- -------- --------- -----------
Current 923 (1.5%) (14) 706 (0.25%) (2)
0-30 days 20 (2%) (0) 90 (0.25%) (0)
30-60 days 8 (15%) (1) 36 (0.25%) (0)
60-90 days 40 (45%) (18) 181 (2.00%) (4)
Over 90 days 45 (90%) (41) 19 (8.00%) (2)
-------- --------- ----------- -------- --------- -----------
Total 1,036 (74) 1,032 (8)
------------------------- -------- --------- ----------- -------- --------- -----------
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.
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:
2022 2021
GBP000 GBP000
------------------- ------- -------
Not yet due 923 706
Due 1 to 3 months 68 307
Due 3 to 6 months 45 19
------- -------
1,036 1,032
------------------- ------- -------
14. Current assets - Cash and cash equivalents
2022 2021
GBP000 GBP000
------------------------ ------- -------
Cash and bank balances 10,160 3,372
------- -------
10,160 3,372
------------------------ ------- -------
The credit risk on cash and cash equivalents is considered to be negligible because over 99% of the balance is with counter parties that are UK and US banking institutions.
15. Current assets - Financial instruments and risk management
Financial risk management objectives and policies
The Group's principal financial instruments comprise cash and cash equivalents, short term deposits and bank and other borrowings.
The carrying amount of all financial assets presented in the statement of financial position are measured at amortised cost.
The carrying amount of all financial liabilities presented in the statement of financial position are measured at amortised cost with the exception of contingent consideration with is measured at Fair Value through profit or loss.
There have been no changes to valuation techniques or any amounts recognised through 'Other Comprehensive Income'.
The main purpose of these financial instruments is to finance the Group's operations. The Group has other financial instruments which mainly comprise trade receivables and trade payables which arise directly from its operations.
Risk management is carried out by the finance department under policies approved by the Board of Directors. The Group finance department identifies, evaluates and manages financial risks. The Board provides guidance on overall risk management including foreign exchange risk, interest rate risk, credit risk, and investment of excess liquidity.
The impact of the risks required to be discussed under IFRS 7 are detailed below:
Market risk
Foreign exchange risk
Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the functional currency of the operations. The Group has minimal exposure to foreign exchange risk as a result of natural hedges arising between sales and cost transactions. A 10% movement in the USD rate would have an impact on the Group's profit and equity by approximately GBP111,000 (30 June 2021 GBP172,000). A 10% movement in the Euro rate would have an impact on the Group's profit and equity by approximately GBP14,300 (GBP49,000 at 30 June 2021). The Group had potential exchange rate exposure within USD trade payable balances of GBP1,512,444 at 30 June 2022 (GBP1,210,143 at 30 June 2021) and potential exchange rate exposure within EUR trade payables balances of GBP26,500 (GBP18,100 at 30 June 2021). The Group had potential exchange rate exposure within USD trade receivables of GBP403,700 (GBP182,000 at 30 June 2021) and potential exchange rate exposure within EUR trade receivables of GBP9,300 (GBP7,900 at 30 June 2021).
Cash flow and interest rate risk
The Group has relatively limited exposure to interest rate risk in respect of cash balances and long-term borrowings held with banks and other highly rated counterparties. Loans are at variable rates of interest based on the Bank of England's base rate therefore the Group is subject to changes in interest rates. Given the relatively low level of debt the Board do not consider this to be a significant risk. At a total debt level of GBP2.3m, a 1% increase in interest rates will give rise to an additional annual interest rate charg e of GBP23,000.
Credit risk
The Group's maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at the reporting date, as summarised below:
2022 2021
GBP000 GBP000
--------------------------- ------- -------
Cash and cash equivalents 10,160 3,372
Trade receivables 1,036 1,032
Contract asset 2,329 191
Other receivables 104 43
------- -------
13,629 4,638
--------------------------- ------- -------
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 p rovides standard credit terms (normally 30 days) to all of its customers which has resulted in trade receivables of GBP956,000 (2021: GBP1,013,000) 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. 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 and minimum adjusted cash banking covenants. As disclosed within the going concern note, the Group requested waivers in December 21 and March 22 from their cash covenants to support the accelerated investment within the business ahead of the equity raise in April 2022. Judgement is required in assessing what items are allowable for the adjusted components.
The Board receives regular debt management forecasts which estimate the cash inflows and outflows over the next twelve months, so that management can ensure that sufficient financing is in place as it is required. Given the higher cash balances following the equity raise during April the Group is currently looking at putting surplus cash on deposit in accordance with limits and counterparties agreed by the Board, the objective being to maximise return on funds whilst ensuring that the short-term cash flow requirements of the Group are met.
As at 30 June 2022, 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 1-3 3-12 1-5 After
1 month months months years 5 years
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- -------- -------- --------
Trade and other payables 4,409 683 49 - -
Borrowings - 211 767 1,320 -
The above amounts reflect the contractual undiscounted cash flows, which may differ from the carrying values of the liabilities at the reporting date.
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.
2022 2021
GBP000 GBP000
------------------------------------ ------- -------
Total equity 30,759 13,765
Cash and cash equivalents 10,160 3,372
Capital 40,919 17,137
Total equity 30,759 13,765
Other loans 2,297 1,485
Lease liabilities 3,583 2,866
Overall financing 36,639 18,116
Capital-to-overall financing ratio 1.12 0.95
16. Non-current liabilities - Borrowings and other financial liabilities
2022 2021
GBP000 GBP000
--------------------------- ------- -------
Other loans 1,320 896
Lease liabilities 2,303 2,210
3,623 3,106
------- -------
Other loans
Under one year 978 589
Between one to five years 1,320 896
------- -------
2,298 1,485
--------------------------- ------- -------
The bank loan derives from a GBP1.8m term loan facility taken out from Barclays Bank in December 2020 and a GBP1.47m property loan facility taken out from Barclays Bank in December 2021. The term loan is repayable in 8 quarterly instalments of GBP0.15m which commenced in March 2021 along with a bullet balance repayable at Maturity in December 2022. The property loan is repayable in 8 quarterly instalments of GBP0.03m which commenced in December 2021 along with a bullet balance repayable at Maturity in September 2023. This, along with the Group's revolving credit facility available of GBP2.2m, is used to fund the Group's working capital requirements when required. The available revolving credit facility balance of GBP2.2m was unutilised as at 30 June 2022.
Barclays have been given security for the facility of the UK assets of the Group and an unlimited guarantee is afforded to Barclays.
Costs of GBP21,500 have been amortised over the life of the term loan and aged in line with the capital repayments.
Changes in liabilities arising from financing activities:
Lease liabilities Loans Total
GBP000 GBP000 GBP000
------------------------------------- ------------------ --------- --------
Balance at 1 July 2021 2,866 1,485 4,351
------------------ --------- --------
Lease liabilities additions IFRS 16 1,492 - 1,492
Proceeds from new loans - 3,670 3,670
Loan repayments - (2,858) (2,858)
Lease repayments (1,031) - (1,031)
------------------ --------- --------
Balance at 30 June 2022 3,327 2,297 5,624
------------------------------------- ------------------ --------- --------
17. Current liabilities - Trade and other payables
2022 2021
GBP000 GBP000
------------------------------------ ------- -------
Trade payables 3,378 2,538
Other loans 978 589
Lease liability 1,280 656
Accruals 575 472
Contract liabilities 961 982
Other taxation and social security 192 128
Other payables 33 23
------- -------
7,397 5,388
------------------------------------ ------- -------
18. Leases
The Group leases assets including the space in data centres in order to provide infrastructure services to its customers. During the year, the Group disposed of a lease used for its old headquarters. Information about leases for which the Group is a lessee is presented below:
Right-of-use assets
Leasehold Property
and improvement
GBP000
------------------------- -------------------
Balance at 1 July 2021 2,653
-------------------
Additions 1,998
Disposals (300)
Depreciation (1,024)
-------------------
Balance at 30 June 2022 3,327
------------------------- -------------------
The right-of-use assets in relation to leasehold property are disclosed as PPE (note 10).
Lease Liabilities
2022 2021
GBP000 GBP000
-------------------------- -------- --------
Maturity analysis:
Within one year (1,407) (806)
Within one to five years (2,408) (2,269)
Add: unearned interest 232 209
Total lease liabilities (3,583) (2,866)
-------- --------
Analysed as:
Non-current (Note 18) (2,303) (2,210)
Current (Note 19) (1,280) (656)
-------- --------
(3,583) (2,866)
-------------------------- -------- --------
The Group does not face a significant liquidity risk with regard to its lease liabilities. The interest expense on lease liabilities amounted to GBP131k for the year ended 30 June 2022 (2021: GBP99k). 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 2022, in relation to leases under IFRS 16, the Group recognised the following amounts in the consolidated statement of comprehensive income:
2022 2021
GBP000 GBP000
---------------------------------------- ------- -------
Short-term and low value lease expense 10 25
Depreciation charge 1,024 619
Interest expense 131 99
Amounts recognised in the consolidated statement of cash flows:
2022 2021
GBP000 GBP000
---------------------------------------- ------- -------
Amounts payable under leases:
Short-term and low value lease expense 25 25
Repayment of lease liabilities within
cash flows from financing activities 1,067 558
19. Equity - issued capital
2022 2021 2022 2021
shares shares GBP000 GBP000
---------------------------------------- ----------- ------------ ----------- -------
Ordinary shares
- fully paid 65,406,764 56,051,149 82 70
Movements in ordinary
share capital
Details Date Shares Issue GBP000
price
----------------------- ---------------- ----------- ------------ ----------- -------
Balance 30 June 2018 50,043,100 62
EMI Share options
exercised 31 August 2018 677,700 GBP0.00125 1
EMI Share options 24 October 32,200 GBP0.00125 -
exercised 2018
EMI Share options
exercised 20 June 2019 111,800 GBP0.00125 1
New share issue 14 April 2020 363,458 GBP0.00125 -
EMI Share options 9 November 44,118 GBP0.00125 -
exercised 2020
15 December
New share issue 2020 430,946 GBP0.00125 1
New share issue 26 April 2021 4,347,827 GBP0.00125 5
Balance 30 June 2021 56,051,149 70
------------ ----------- -------
EMI Share options 15 November 264,705 GBP0.00125 -
exercised 2021
New share issue 25 April 2022 9,090,910 GBP0.00125 12
------------ ----------- -------
Balance 30 June 2022 65,406,764 82
----------------------- ---------------- ----------- ------------ ----------- -------
Ordinary shares
During the year 9,090,910 ordinary shares were issued for a total consideration of GBP15.00m resulting in a premium over the nominal value of GBP11,364. Transaction costs of GBP0.67m were netted off against the premium.
During the year, 264,705 share options were exercised. The share price at the exercise date was GBP1.94.
The Director, W Meldrum, purchased 17,950 shares during the year. The share price at the purchase date was GBP1.94.
20. Share based payments
The movements in the share options during the year, were as follows:
2022 2021
Outstanding at the beginning of the
year 2,916,973 1,889,662
---------- ----------
Exercised during the year (264,705) (44,118)
Issued during the year 2,273,400 1,071,429
Outstanding at the end of the year 4,925,668 2,916,973
---------- ----------
Exercisable at the end of the year - -
------------------------------------- ---------- ----------
The Group granted a total of 2,273,400 share options to members of its management team on 26th November 2021.
These share options outstanding at the end of the year have the following expiry dates and exercise prices:
Grant 2 Grant 3 Grant 4A Grant 4B Grant 4C Total
--------------- ------------- ------------ -------------- -------------- -------------- ----------
Shares 1,580,838 1,071,429 1,012,500 630,450 630,450 4,925,668
Date of grant 17th October 9th October 26th November 26th November 26th November
2019 2020 2021 2021 2021
Exercise GBP0.00125 GBP0.00125 GBP0.00125 GBP0.00125 GBP0.00125
price
Vesting date 17th October 9th October 26th November 26th November 26th November
2022 2023 2024 2024 2023
These share options vest under challenging performance conditions based on underlying profitability growth during the periods.
The Black Scholes model was used to calculate the fair value of these options, the resulting fair value is expensed over the vesting period. The following table lists the range of assumptions used in the model:
Grant Grant Grant Grant Grant Grant Total
1 2 3 4A 4B 4C
------------------- -------- ---------- ---------- ---------- -------- -------- ----------
Shares 264,706 1,580,838 1,071,429 1,012,500 630,450 630,450 5,190,373
Share price (GBP) 1.02 0.84 0.945 1.575 1.575 1.575
Volatility 5% 5% 5% 5% 5% 5%
Annual risk free
rate 4% 4% 4% 4% 4% 4%
Exercise strike
price (GBP) 0.00125 0.00125 0.00125 0.00125 0.00125 0.00125
Time to maturity
(yrs) 3 3 3 3 3 2
The total expense recognised from share based payments transactions on the Group's profit for the year was GBP1,661,273 (2021 : GBP546,363).
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.
21. Equity - Reserves
The foreign currency retranslation reserve represents exchange gains and losses on retranslation of foreign operations. Included in this is revaluation of opening balances from prior years.
The merger reserve initially arose on the share for share exchange reflecting the difference between the nominal value of the share capital in Beeks Financial Cloud Group PLC and the value of the Group being acquired, Beeks Financial Cloud Limited. The merger reserve then increased upon acquisition of Velocimetrics Ltd in FY 2018, reflecting the difference between the nominal value of the share capital issued from Beeks Financial Cloud Group PLC and the value of the shares issued to the owners of Velocimetrics Ltd.
Share premium represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.
Retained earnings represents retained profits and losses.
The other reserve arose on the share for share exchange and reflects the difference between the value of Beeks Financial Cloud Group Limited and the share capital of the Group being acquired through the share for share exchange. Also included in the other reserve is the fair value of the warrants issued on the acquisition of VDIWare LLC.
22. Related party transactions
Parent entity
Beeks Financial Cloud Group PLC is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 25.
Transactions with related parties
The following transactions occurred with related parties:
2022 2021
GBP000 GBP000
--------------------------------------- ------- -------
Withdrawals from the director, Gordon
McArthur 41 4
Beeks Financial Cloud Limited previously provided services in the normal course of its business and at arm's length to Ofelia Algos Limited, a company owned by Gordon McArthur. During the financial year Beeks Financial Cloud Limited made sales of GBPnil (2021: GBP123,480) to Ofelia Algos Limited and the amounts due to Beeks Financial Cloud Limited at the year-end were GBPnil (2021: GBP20,682).
Key management personnel
Compensation paid to key management (which comprises the executive and non-executive PLC Board members) during the year was as follows:
2022 2021
GBP000 GBP000
------------------------ ------- -------
Wages and salaries 239 221
Social security costs 2 7 24
Other pension costs 4 4
Other benefits in kind 2 2
Share based payments 316 141
23. Earnings per share
2022 2021
GBP000 GBP000
---------------------------------------------------- ----------- -----------
Profit after income tax attributable to the owners
of Beeks Financial Cloud Group PLC 826 1,604
Pence Pence
Basic earnings per share 1.43 3.07
Diluted earnings per share 1.42 3.07
Number Number
----------- -----------
Weighted average number of ordinary shares used
in calculating basic earnings per share 57,885,241 52,276,498
Adjustments for calculation of diluted earnings
per share:
Options over ordinary shares 96,454 15,351
Weighted average number of ordinary shares used
in calculating diluted earnings per share 57,981,696 52,291,848
2022 2021
GBP000 GBP000
------------------------------------------------------ ----------- -----------
Profit before tax for the year 66 1,255
----------- -----------
Acquisition costs - 140
Share Based payments 1,661 546
Amortisation on acquired intangibles 802 806
Exceptional non-recurring costs 28 165
Impairment of Intangibles assets / goodwill - 994
Grant income (419) (309)
Gain on revaluation of contingent consideration - (1,989)
Exchange gains/losses on statement of financial (81) -
position retranslation
Tax effect 542 34
Underlying profit for the year 2,599 1,642
----------- -----------
Weighted average number of shares in issue - basic 57,885,241 52,276,498
Weighted average number of shares in issue - diluted 61,985,547 54,915,279
Underlying earnings per share - basic 4.49 3.14
Underlying earnings per share - diluted 4.19 2.99
Included in the weighted average number of shares for the calculation of underlying diluted EPS are share options outstanding but not exercisable. It is management's intention that the Group will meet the challenging growth targets therefore, based on management expectations, the share options are included in the calculation of underlying diluted EPS.
24. Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries held by the company in accordance with the accounting policy described in note 1.
The subsidiary undertakings are all 100% owned, with 100% voting rights.
Company name Country of incorporation Principal place Activity
of business/registered
office
---------------------- ------------------------- ------------------------ ------------------
Beeks Financial Cloud Japan FARO 1F, 2-15-5, Non-trading
Co Ltd Minamiaoyama,
Minato-Ku, Tokyo,
Japan.
Beeks FX VPS USA Inc. Delaware, USA 874 Walker Road, Non-trading
Suite C, Dover,
Kent, Delaware,
19904, USA.
Beeks Financial Cloud Scotland Riverside Building, Cloud Computing
Limited 2 Kings Inch Services
Way, Renfrew,
Renfrewshire,
PA4 8YU
Velocimetrics Limited England Birchin Court, Software Services
230 Park Avenue
20 Birchin Lane,
Suite 300 West,
London, England,
EC3V 9DU
Velocimetrics Inc. New York, USA 230 Park Avenue, Software Services
10(th) Floor,
New York 10169,
USA.
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 2022, until they are satisfied in full.
25. Ultimate controlling party
The Directors have assessed that there is no ultimate controlling party
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
END
FR BKCBKPBDDBKK
(END) Dow Jones Newswires
October 10, 2022 02:00 ET (06:00 GMT)
1 Year Beeks Financial Cloud Chart |
1 Month Beeks Financial Cloud Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
