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RNS

Final Results

Released 07:00 29-Aug-2018

RNS Number : 0623Z
Beeks Financial Cloud Group PLC
29 August 2018
 

Beeks Financial Cloud Group plc

("Beeks" or the "Company")

 

Final Results

 

29 August 2018 -its final results for the year ended 30 June 2018.

 

Financial highlights

 

Ø Revenues increased by 41% to £5.58m (2017: £3.97m)

Ø Annualised Committed Monthly Recurring Revenue (ACMRR) up 47% to £6.9m (2017: £4.7m)

Ø Gross profit up 90% to £2.98m (2017: £1.57m)

Ø Gross profit margin 53% (2017: 39%)

Ø Underlying* EBITDA increased by 258% to £1.95m (2017: £0.54m)

Ø Underlying* EBITDA margin 35% (2017: 14%)

Ø Underlying profit before tax** £1.19m (2017: £0.0m)

Ø Underlying EPS** 2.27p (2017: 0.22p loss)

Ø Net cash as at 30 June 2018 is £2.09m (2017: Net debt £0.74m)

Ø Proposed maiden final dividend of 0.3p (2017: 0.0p)

 

* Underlying EBITDA is defined as earnings before amortisation, depreciation, finance costs, taxation and IPO exceptional costs

** Underlying profit before tax and underlying EPS excludes amortisation on acquired intangibles and IPO exceptional costs

 

 

Operational Highlights

 

Ø Successfully completed IPO onto the London AIM market in November 2017, raising £4.5m

Ø Entry into new asset classes including Fixed Income, Cryptocurrencies and Equities

Ø Geographical expansion into Singapore and opening of sales offices in Shanghai and London

Ø Number of cloud hosting sites increased to 11, adding new sites in London and the US

Ø Built and launched industry leading customer self-service portal enabling clients to build their own infrastructure, a unique offering in the financial services sector

Ø Number of institutional clients increased to 192 as at 30 June 2018 (30 June 2017: 156)

Ø Largest customer is 5% of revenues (2017: 4%)

Ø Top 10 customers produce 29% of revenues (2017: 28%)

 

Outlook

 

Ø Strong pipeline of sales opportunities

Ø Confident in continued strong organic growth in year ahead

 

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:

 

Ø Profit before tax was £0.75m (2017: £0.76m loss)

Ø Basic EPS was 2.37p (2017: 44.00p loss)

 

Gordon McArthur, CEO of Beeks Financial Cloud commented:

 

"I am delighted to report on a successful first year as a public company, delivering good levels of profitable growth and the announcement of our maiden dividend. We have delivered against our strategy, expanding both geographically and into all the key asset classes in financial markets. While the majority of revenue is still associated with forex and futures, the increased breadth of our offering further strengthens our competitive position and provides for the potential for additional growth.

 

"Our business opportunities remain strong going into the start of the new financial year, as we see continued momentum to our Infrastructure as a Service model. With an established and growing customer base, high levels of recurring revenue and strong market drivers, we are confident in delivering a successful outcome for the year ahead."

 

 

For further information please contact:

 

Beeks Financial Cloud Group plc

 

Gordon McArthur, CEO

via Alma PR

Simon Goulding, CFO

 

 

 

Cenkos Securities plc

+44(0)131 220 6939

Derrick Lee / Beth McKiernan

 

 

 

Alma PR

+44(0)20 8004 4219

Caroline Forde / Helena Bogle / Josh Royston

 

 

 

ABOUT BEEKS FINANCIAL CLOUD

Beeks Financial Cloud is a UK-based low-latency Infrastructure-as-a-Service (IaaS) provider for automated trading in Forex, Futures, Equities, Fixed income and cryptocurrency financial products. With eleven data centres globally and low-latency connectivity between sites, the Beeks Financial Cloud focuses on reducing barriers to entry and time to market for institutional clients. For more information, visit: www.beeksfinancialcloud.com.

 

 

 

Beeks Financial Cloud Group PLC

Chairman's Statement

30 June 2018

 

Chairman's Statement

I am delighted to report on a successful first year trading for Beeks Financial Cloud as a public company. The strong revenue growth delivered each year since inception has continued in 2017/18 with revenues growing by 41% to £5.58m, resulting in an increase in underlying EBITDA by 258% to £1.95m, with a strong annualised committed monthly recurring revenue moving into 2018/19.

The successful IPO on AIM in November 2017 was a key strategic development for the business in the first half of the year, providing Beeks with the funds to continue to invest in the expansion of its offerings and geographical presence, capitalising on the global growth in automated trading. With the addition of Singapore, Beeks can now offer hosting in 11 geographical locations, each in proximity to leading global financial markets. We have also expanded the range of asset classes to which we provide access to include Fixed Income, Cryptocurrencies and Equities. While the majority of revenue is still associated with forex and futures automated trading, the increased breadth of our offering further strengthens our competitive position and provides the potential for additional growth. 

Our cloud based infrastructure and connectivity considerably reduces barriers to entry and time to market for financial institutions looking to roll out infrastructure to key trading locations around the globe. The Company's business model generates high levels of recurring revenue with a high retention rate from a growing number of clients. This, coupled with the investments made into the infrastructure of the business over the past two years, provides Beeks with a highly scalable business.

As we move into 2018/19, activity will be focused on continued geographical expansion and enhancements to our offerings. The board remains confident in the continued growth prospects of the Group and in a successful outcome to 2018/19 and beyond.

We would like to take this opportunity to thank our global team for their hard work which has enabled our successful evolution into a public company and will be the backbone of our future growth.

 

 

Mark Cubitt

Chairman

28 August 2018

 

 

 

Beeks Financial Cloud Group PLC

Our Strategic Overview

30 June 2018

 

Market Overview

The Group continues to operate successfully in a demanding, time-sensitive industry. Our addressable market is extensive with up to 20,000 financial institutions as potential customers. The majority of these organisations are currently utilising their own IT infrastructure and are yet to move to the cloud computing model. We believe the decreased latency, flexibility and cost-benefits of cloud computing that we facilitate will see a gradual long-term shift to this model. Our innovations such as the self-service portal, allow us to enhance the efficiency of our services and take advantage of new opportunities in our market.

Business Model

Beeks Financial Cloud is a leading cloud computing and connectivity provider for financial markets, offering Infrastructure as a Service to institutional and retail traders in forex, futures, equities, fixed income and cryptocurrency asset classes.

Beeks provides:

·      Dedicated and virtual servers that host traders and brokers in 11 data centres around the world

·      Ultra-low latency connectivity between clients and key financial venues and exchanges

·      Co-location for clients 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 DDoS attacks

 

Our model focuses on efficiency and flexibility, offering our clients the ability to scale up and scale down as needed. Due to market fluctuations and the inherent risk involved in algorithmic trading, this makes our services highly attractive to clients.

Strategy

Our strategy is to continue to grow organically through the expansion of our service offerings to both our existing customer base and to new customers. We will selectively expand within our existing asset classes and add new geographies to our portfolio in order to further satisfy client demand where we see operational leverage. 

The main priority to drive shareholder value is through organic growth.  With the business currently servicing what the directors believe is less than 1% of our addressable market, we believe the scope for growing organically is substantial. Our business model is highly scalable and our existing infrastructure has the capacity to exploit this market opportunity.

The Company has acquired in the past and will continue to explore suitable acquisition opportunities to accelerate growth. We are looking to acquire organisations that are growing, profitable and are either a respected competitor or an organisation that will add value to Beeks' product offering.

During 2017/18 we have evaluated a number of businesses but none that met our acquisition criteria. As can be seen, however, this has not hindered our ability to strongly grow the business.

Headcount and Recruitment

The Group now employs 33 people globally. Our new recruits over the last 12 months include experienced financial markets professionals, which we believe add considerable value to the Company by enabling us to access some of the larger customers in our sector. Whilst we continue to hire quality people, our aim is to automate tasks wherever possible - from billing through to service delivery, to allow us to provide a competitive price and to build operational leverage.

Beeks Financial Cloud Group PLC

Chief Executive's Review

30 June 2018

 

Strategic Report - Chief Executive's Review

Our vision is simple: to provide a rapidly deployed, secure and scalable cloud environment for trading applications.

We are pleased to report our full year results, for the first time as a public company, and are extremely proud of the Group's achievements since we began operations in 2011. We have established Beeks as a leading technology provider to the growing automated trading market in foreign exchange and financial futures products and have now entered into equities, fixed income and cryptocurrency markets. We have continued to increase the number of financial institutions using our platform, and now have almost 200 connections to trading venues globally across eleven data centre locations.

We continue to see considerable momentum towards the adoption of our business model in our marketplace. Our cloud-based Infrastructure as a Service ('IaaS') model allows financial organisations the flexibility and agility to deploy and connect to a variety of trading venues globally, at speed and at a fraction of the cost of building their own networks and infrastructure.

The admission of our shares to trading on AIM in November 2017 was a significant milestone in our evolution, and was always part of the management team's business plan. The successful capital raise puts the Company on a sound footing as well as providing the business with a strong platform from which to expand its geographic offering and exploit any acquisitions that we believe may add value to the Group.

Financial performance

I am delighted with the record results achieved during our first year of trading as an AIM listed company. Revenue increased by 41% year on year with growth in institutional sales, on which management is focussed, particularly encouraging. Beeks has strong recurring revenue and customer retention remained high with losses mainly as a result of customers exiting the market. Monthly and quarterly new sales wins can be subject to seasonality and there was a slightly lower level of new sales immediately after the Company's IPO in November 2017. The Board are strongly encouraged, however, by the record performance in the last quarter of the year in which Beeks saw its highest ever level of new business closed. Our Annualised Committed Monthly Recurring Revenues (ACMRR) at 30 June 2018 reached £6.9m, up £2.2m since 30 June 2017.

Our margins increased as expected as we continue to utilise the capacity and investments already made in the Group over the past 18 months, resulting in underlying EBITDA increasing 258% to £1.95m (2017: £0.54m).

Market & Strategy

Our principal objective is to grow our institutional customer base in the markets for automated trading. Financial institutions around the world are looking to increase their customer offerings and require sophisticated cloud-based technology platforms to do so. Growth will be achieved through the entry into new geographies, further development of our offerings across the asset classes, and the continued evolution of our self-service web portal, which we recently released with full dedicated server automated provisioning to compliment the VPS offering released in Phase 1 of the product. This is a major milestone and we believe gives the Group competitive advantage in terms of deployment speeds against our peers. 

We will continue to add further services to our platform, such as data feeds from additional trading venues, data normalisation (where data from trading venues is collated and packaged), cloud data recovery and additional connectivity offerings and WAN capacity. We will also look at both bolt on acquisition opportunities and larger, more strategic initiatives. We have strict criteria for both valuation metrics and target performance which will be used to evaluate any potential opportunities.

Competitive positioning

We have an established customer base and a strong competitive advantage through the breadth of our connectivity to trading venues, the sophistication of our self-service web portal, and the breadth of our services. We now have a foot-hold in all asset classes of note, meaning we can enter into contract discussions with any financial institution within the trading ecosystem. We believe we are now one of only very few businesses with this breadth globally and are unique in delivering these services via the cloud. We will continue to develop our cloud services in the year ahead, to capitalise on our strength in this area of the market. We are confident in our ability to remain at the forefront of this evolving market and grow our market share. 

We continue to see the forex sector fragment, with new entrants requiring IaaS solutions. The cryptocurrency markets continue to evolve at break-neck speed and we are seeing a maturing in exchanges' hosting and connectivity requirements. We anticipate these factors as being continued drivers for demand for our service in the year ahead.

Operational Expansion

This year saw the expansion of our business in several key areas: across our people, our locations, the asset classes we cover and the sophistication of our product offering.

 

Headcount increased to 33 as at 30 June 2018, up from 22 as at 30 June 2017, predominantly in the areas of technical support, delivery and sales. We have expanded our sales team and appointed an experienced Commercial Director to grow our direct sales presence.  We plan on continuing to expand this direct sales presence throughout the next financial year.

 

We have continued our geographical expansion, including establishing connectivity and cloud compute capability in the Singapore Exchange, Asia's leading international, multi-asset exchange. We launched a new data centre site at 165 Halsey in New Jersey which has become the Beeks Point of Presence for WAN connectivity into the USA. The Halsey data centre is one of the most connected centres in the world and allows us to connect to a wide variety of ISP's to extend our WAN presence and other offerings. A further addition in London brings our total number of sites to 11. We are assessing a number of new locations for infrastructure deployment in the year ahead with further expansion in Asia and our first deployment in South America currently being considered. We will deploy into a site if we believe we have the business opportunities to make it break even at a monthly operating level within 12 months of launch.

 

With recent regulatory changes in the domestic Chinese market we are adopting a "wait and see" strategy before we invest in hard assets in country, although we are in the process of establishing a local entity registered to trade which will be supported by a small local team based in Shanghai.

 

The year has seen us expand into new asset classes, including the delivery of the first Fixed Income project and the launch into the cryptocurrency market via a collaboration with Gemini, a next-generation digital asset exchange and custodian, located in New York.  Both of these generated revenue in the year and we anticipate will provide a growing contribution in the year ahead. We also added connectivity to IEX, the New York Exchange, in order to enter the Equities automated trading market.  This is very much just an initial step into Equities and we will expand our offering in this area.

 

We have carried out several important initiatives in the year to enhance our sales channels. The first, in November, saw the launch of the Beeks Partner Portal, an industry-leading customer self-service portal that automates the creation of infrastructure to allow clients the ability to build servers themselves. By reducing human intervention, the speed and ease of the provision of products is greatly improved with a basic virtual private server, the building block for our clients being able to trade, being ready in as little as five minutes. This is unique to Beeks in the financial services sector.  We have also joined the Equinix Cloud Exchange™ Fabric which is the largest Cloud marketplace of its kind in the world and allows any participant within the Equinix Cloud Exchange to connect to Beeks via the Exchange. We have opened additional sales support offices in Shanghai and London, to better respond to the rising demand from Chinese-speaking customers, and to be better placed for face-to-face presence with our high number of existing and potential clients in London.

 

We have sufficient unused power and capacity around the world to meet our current growth projections without significant additional increase in monthly operating spend requirements.

 

Customers

 

Institutional customer numbers using the platform grew from 156 at 30 June 2017 to 192 at 30 June 2018. Beeks now caters for banks as well as brokers and hedge funds. Our recent collaborations in the cryptocurrency industry has opened up a new scope of customers and partners in this market, such as crypto traders, brokers and exchanges, with the first revenue generated in Q4 of the year.

 

Future Growth and Outlook

 

Our business opportunities remain strong going into the start of the new financial year as we see continued momentum to our Infrastructure as a Service model. We are confident the business will continue to grow. We will roll out more cloud hosting and have a strategic focus on Asia over the near term. With an established and growing customer base, high levels of recurring revenue and strong market drivers, we are confident in delivering a successful outcome for the year ahead.

 

 

Gordon McArthur

Chief Executive Officer

28 August 2018

 

 

Beeks Financial Cloud Group PLC

Financial Review

30 June 2018

 

Strategic Report - Financial Review

 

Financial Review

 

Group revenues grew by 40.6% to £5.58m (2017: £3.97m), driven by continued organic growth.  99% of the Group's revenues were recurring.  Annualised Committed Monthly Recurring Revenues (ACMRR) increased by 46.8% to £6.9m (2017: £4.7m).

 

Gross profit earned increased 90.0% to £2.98m (2017: £1.57m) and the Group saw an increase in gross margins from  39.5% to 53.4% as a result of the previous investments made in capacity now becoming revenue generating.  Earnings before interest, tax, depreciation, amortisation and exceptional costs ("Underlying EBITDA") increased by 258.3% to £1.95m (2017: £0.54m) with underlying EBITDA margins increasing to 34.9% (2017: 13.7%).

 

Profit Before Tax

 

 

Year ended 30 June 2018

£000

Year ended 30 June 2017

£000

Profit / (loss) before tax for the period

747

(761)

Add back:

 

 

IPO exceptional costs

368

736

Amortisation of acquired intangibles

76

80

Underlying profit before tax for the period

1,191

55

 

Reported profit before tax increased to £0.75m (2017: loss £0.76m) as a result of increased sales and improved margins following significant investment in capacity as well as lower exceptional costs.

 

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. 

 

Underlying EBITDA increased by 258.3% to £1.95m (2017: £0.54m) impacted by a strong organic growth performance which has capitalised on the capacity investments previously made.

 

Cost of sales has increased by 8.3% to £2.6m (2017: £2.4m), largely due to an increase in depreciation of 47.5% to £0.6m (2017: £0.4m). This was due to the significant investment in operational fixed assets during the year.  Administrative expenses excluding IPO exceptional costs increased by 13.8% to £1.71m (2017: £1.51m) largely resulting from increased costs of being a public company and higher staff costs.

 

Finance costs have increased to £0.16m (2017: £0.09m) due to additional finance leases being taken prior to the listing on AIM when additional funds became available.  No additional leases have been signed since that date.

 

The Group has invested in developing innovative technology solutions and has incurred capitalised development costs of £0.4m (2017: £nil).

 

Taxation

 

The effective tax rate ('ETR') for the period was (1.3%), (2017: 0.0%).

 

The tax rate in 2017 and 2018 has been impacted by the significant disallowable costs relating to the IPO, which has increased the ETR. The ETR has been reduced by R&D tax credit claims for 2017 and 2018, which we would expect to continue in future years. The ETR has been further reduced by deductions for share options exercised during the year. Tax has become payable in the US for the first time which was at a higher rate, although tax reforms in the US will impact the future tax charge as the rates reduce.

 

 

Earnings Per Share and Dividends

 

Basic earnings per share rose to 2.37p (2017: loss 44.00).  Diluted earnings per share rose to 2.26p (2017: loss 44.00p).

 

Underlying earnings per share rose to 2.27p (2017: 0.22p loss).  Underlying diluted earnings per share rose to 2.20p (2017: 0.22p loss). 

 

The Board proposes a final dividend of 0.3p (2017: 0.0p).  This is in line with our progressive dividend policy for dividend growth.  Subject to shareholder approval at the forthcoming Annual General Meeting, the final dividend is expected to be paid on 31 October 2018 to shareholders on the register at 28 September 2018.

 

Balance Sheet and Cashflows

 

The Group's balance sheet was strengthened during the period due to the successful Admission of the Company to trading on AIM in November 2017 which was accompanied by the issue of 9 million ordinary shares at a price of 50 pence each raising £4.5m before costs.  The funds raised on Admission have strengthened the Group's working capital position providing us with greater financial flexibility and will enable the Group to reduce its use of asset finance.

 

At 30 June 2018 net assets were £4.84m compared to net liabilities of £0.38m at 30 June 2017.

 

The Group ended the period with net cash (cash less loans and leases) of £2.09m (30 June 2017: net debt £0.74m).

 

The Group's outstanding borrowings and finance leases stood at £0.80m at 30 June 2018 (30 June 2017: £0.76m) and is expected to fall as cash resources are used to acquire additional infrastructure equipment in place of expensive historic lease finance.

 

Deferred income, representing invoiced subscriptions yet to be recognised in revenue stood at £0.21m (30 June 2017: £0.15m).

 

Key performance indicator review

 

 

2018

2017

Growth

Revenue

£5.58m

£3.97m

40.6%

ACMRR

£6.90m

£4.70m

46.8%

Gross margin

53.4%

39.5%

 

Underlying EBITDA*

£1.95m

£0.54m

258.3%

Underlying EBITDA margin

34.9%

13.7%

 

Underlying profit before tax**

£1.19m

£0.06m

2,065.5%

Underlying EPS (Note 3)

2.27p

(0.22)p

 

Dividend per share

0.30p

0.00p

 

 

 

 

 

Simon Goulding

Chief Financial Officer

28 August 2018

 

 

 

Beeks Financial Cloud Group PLC

Consolidated statement of comprehensive income

For the year ended 30 June 2018

 

 

 

            Consolidated

 

Note

2018

2017

 

 

£'000

£'000

 

 

 

 

Revenue

3

Cost of sales

 

 

 

 

 

Gross profit

 

2,981

1,569

 

 

 

 

Administrative expenses

 

 

 

 

 

Operating profit/(loss)

5

 

 

 

 

Analysed as:

 

 

 

Earnings before depreciation, amortisation and IPO Exceptional costs

 

Depreciation

10

Amortisation of intangibles

9

IPO Exceptional costs

5

 

 

 

 

Operating profit/(loss)

5

 

 

 

 

Finance income

 

Finance costs

4

Profit/(loss) before taxation expense

 

 

 

 

 

Taxation

8

 

 

 

 

Profit/(loss) after taxation expense for the year attributable to the owners of Beeks Financial Cloud Group PLC

 

 

 

 

 

Other comprehensive income

 

 

 

 

Items that may be reclassified to Statement of Comprehensive income

 

 

 

Exchange gains on retranslation of foreign operations

 

 

 

 

 

Other comprehensive income for the year, net of tax

 

 

 

 

 

Total comprehensive income for the year attributable to the owners of Beeks Financial Cloud Group PLC

 

 

 

 

 

 

 

Pence

Pence

Basic earnings per share

23

Diluted earnings per share

23

 

 

 

 

 

 

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 2018

 

 

           Consolidated

 

Note

2018

2017

 

 

£'000

£'000

Assets

 

 

 

 

 

 

 

Non-current assets

 

 

 

Intangibles

9

Property, plant and equipment

10

Deferred tax

11

Total non-current assets

 

3,244

1,903

 

 

 

 

Current assets

 

 

 

Trade and other receivables

12

Cash and cash equivalents

13

Total current assets

 

 

 

 

 

Total assets

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

Borrowings and other financial liabilities

15

Deferred tax

11

Total non-current liabilities

 

 

 

 

 

Current liabilities

 

 

 

Trade and other payables

16

Total current liabilities

 

 

 

 

 

Total liabilities

 

 

 

 

 

Net assets/(liabilities)

 

 

 

 

 

 

 

 

 

Equity

 

 

 

Issued capital

17

Reserves

18

Retained profits/(accumulated losses)

 

 

 

 

 

Total equity/(deficiency)

 

 

 

The financial statements were approved by the Board of Directors and authorised for issue on 28 August 2018 and are signed on its behalf by:

 

______________________

Gordon McArthur

Chief Executive Officer

 

Company name: Beeks Financial Cloud Group PLC

Company number: SC521839

 

 

 

The above statement of financial position should be read in conjunction with the accompanying notes
 

 

 

Beeks Financial Cloud Group PLC

Consolidated statement of changes in equity

For the year ended 30 June 2018

 

 

 

Issued

 

Foreign currency

 

Merger relief

 

Other

 

Share

 

Retained

 

Total deficiency in equity

 

 

capital

 

retranslation reserve

 

reserve

 

reserve

 

premium

 

profits

 

Consolidated

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2016

 

2

 

71

 

372

 

(315)

 

-

 

244

 

374

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss after taxation expense for the year

 

-

 

-

 

-

 

-

 

-

 

(761)

 

(761)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the year

 

-

 

-

 

-

 

-

 

-

 

(761)

 

(761)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchange gain on retranslation of foreign operations

 

-

 

12

 

-

 

-

 

-

 

-

 

12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2017

 

2

 

83

 

372

 

(315)

 

-

 

(517)

 

(375)

 

 

 

Issued

 

Foreign currency

 

Merger relief

 

Other

 

Share

 

Retained

 

Total equity

 

 

capital

 

retranslation reserve

 

reserve

 

reserve

 

premium

 

profits

 

Consolidated

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2017

 

2

 

83

 

372

 

(315)

 

-

 

(517)

 

(375)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit after taxation expense for the year

 

-

 

-

 

-

 

-

 

-

 

757

 

757

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the year

 

-

 

-

 

-

 

-

 

-

 

757

 

757

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchange loss on retranslation of foreign operations

 

-

 

                 1

 

-

 

-

 

-

 

-

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transactions with owners in their capacity as owners:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred tax movement on share options

 

-

 

-

 

-

 

-

 

-

 

104

 

104

Issue of share capital

 

60

 

-

 

-

 

-

 

4,309

 

(12)

 

4,357

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2018

 

62

 

84

 

372

 

(315)

 

4,309

 

332

 

4,844

 

 

 

The above statement of changes in equity should be read in conjunction with the accompanying notes

 

 

Beeks Financial Cloud Group PLC

Consolidated statement of cash flows

For the year ended 30 June 2018

 

 

 

 

Note

 

 

Cash flows from operating activities

 

 

 

Profit/(loss) before taxation expense for the year

 

 

 

 

 

Adjustments for:

 

 

 

Depreciation and amortisation

 

Interest received

 

Interest and other finance costs

 

 

 

 

 

 

 

Change in operating assets and liabilities:

 

 

 

Increase in trade and other receivables

 

(Decrease) / increase in trade and other payables

 

 

 

 

 

 

 

 

 

 

 

Taxation paid

8

 

 

 

 

Net cash from operating activities

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

Acquisitions of trademarks

 

Payments for intangible assets

9

Payments for property, plant and equipment

 

 

 

 

 

Net cash used in investing activities

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

Proceeds from borrowings

 

Repayment of borrowings

 

Sale and Leaseback of Property, plant and equipment

 

Finance lease repayments

Interest received

Interest and other finance costs paid

 

 

4

Proceeds from the issue of new share capital

 

 

 

 

 

Net cash from financing activities

 

 

 

 

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

Cash and cash equivalents at the beginning of the financial year

 

 

 

 

 

Cash and cash equivalents at the end of the financial year

13

 

 

 

 

 

 

 

 

The above statement of cash flows should be read in conjunction with the accompanying notes

 

 

Beeks Financial Cloud Group PLC

Notes to the consolidated financial statements

30 June 2018

 

Note 1. Significant accounting policies

 

Corporate Information

 

Beeks Financial Cloud Group PLC is a public limited company which is listed on the AIM Market of the London Stock Exchange and is incorporated in Scotland. The address of its registered office is Phoenix House, Pegasus Avenue, Phoenix Business Park, Paisley, PA1 2BH. The principal activity of the Group is the provision of information technology services. The registered number of the Company is SC521839.

 

The financial statements are prepared in pound sterling.

 

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of Preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and the Companies Act 2006 applicable to companies reporting under IFRS.

 

The financial statements have been prepared under the historical cost convention.

Publication of non-statutory accounts

The financial information set out in this announcement does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.

 

The consolidated statement of financial position, the consolidated statement of changes in equity and the consolidated statement of cash flows as at 30 June 2018 and the consolidated statement of comprehensive income for the year ended 30 June 2018, together with the associated notes, have been extracted from the Group's 2018 financial statements upon which the auditor's opinion is unqualified and does not include any statement under section 498 of the Companies Act 2006.

 

International Financial Reporting Standards and Interpretations issued but not yet effective

At the date of authorisation of these financial statements, the following new standards, amendments and interpretations to existing standards have been published that are mandatory for forthcoming financial periods, but which the Group has not adopted early.

 

These are not expected to have a material impact on the Group's consolidated financial statements:

·  IFRS 9: 'Financial instruments' - effective for periods commencing on or after 1 January 2018

·  IFRIC 22 'Foreign Currency Transactions and Advance Consideration' - effective for periods commencing on or after 1 Jan 2018

·  IFRIC 23: 'Uncertainties over Taxation Treatment' - effective for periods commencing on or after 1 January 2019

·  Amendments to IFRS 2: 'Classification and Measurement of Share-based Payment Transactions' - effective for periods commencing on or after 1 Jan 2018

·  Amendments to IFRS 4: Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' - effective for periods commencing on or after 1 Jan 2018

·  Annual Improvements to IFRS Standards 2014-2016 Cycle - effective for periods commencing on or after 1 Jan 2018

·  Amendments to IAS 40: 'Transfers of Investment Property' - effective for periods commencing on or after 1 Jan 2018

·  Amendments to IFRS 9: 'Prepayment Features with Negative Compensation' - effective for periods commencing on or after 1 Jan 2019

·  Amendments to IAS 28: 'Long-term Interests in Associates and Joint Ventures' - effective for periods commencing on or after 1 Jan 2019

·  IFRS 17 'Insurance Contracts' - this requires insurance liabilities to be measured at a current fulfilment value and provides a more uniform measurement and presentation approach for all insurance contracts. These requirements are designed to achieve the goal of a consistent, principle-based accounting for insurance contracts. IFRS 17 supersedes

 

 

IFRS 4 Insurance Contracts as of 1 January 2021. The Group will review the impact of this revision during 2018.

 

Amendments that are expected to have an impact on the Group's consolidated financial statements:

 

•       IFRS 15 'Revenue from contracts with customers' - effective for periods commencing on or after 1 January 2018. The company do not plan to adopt IFRS 15 early.  IFRS 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Group is required to adopt IFRS 15 for the year ending 30 June 2019. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognised at the date of initial application (the cumulative catch-up transition method).

 

The core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or

 

services to customers in an amount that reflects the consideration to which the entity expects to be entitled to exchange for those goods or services. The Standard introduces a 5-step approach to revenue recognition:

 

Step 1: Identify the contract(s) with a customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract

Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation.

 

Under IFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied i.e. when 'control' of the goods or services underlying the particular performance obligation is transferred to the customer. The Group plans to complete a detailed assessment of the impact of IFRS 15 during the second quarter of its current financial year and any changes to revenue recognition or disclosures will be disclosed in the interim financial statements as at 31 December 2018.

The current view from the Group is that there is unlikely to be a material impact on revenue recognition.

 

•       IFRS 16 'Leases' - effective for periods commencing on or after 1 January 2019. The impact of this amendment is that operating leases will be shown on the statement of financial position which will increase both the assets and liabilities of the group and will result in some re-classification of costs. The net effect to both the statement of financial position and income statement are not expected to be significant; refer to Note 19 for the future value of capital commitments of operating leases.

 

 Adoption of new and revised standards

 

There were no additional standards, amendments and interpretations that had a material impact on the Group's financial statements during the year. The following standards, amendments and interpretations were effective in the year but had no material impact on the Group's financial statements

 

·      Disclosure Initiative (Amendments to IAS 7)

·      Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS 12)

 

Going concern

The Directors have assessed the current financial position of Beeks Financial Cloud Group PLC, taking account of its business activities, together with the factors likely to affect its future development, performance and position as set out in the Strategic Report on pages 4 to 12.

 

The key factors considered by the Directors were:

 

•           historic and current trading and profitability of the Group;

•           the rate of growth in sales both historically and forecast;

•           the competitive environment in which the Group operates;

•           the current level of cash reserves;

•           the current level of debt obligations;

•           the finance facilities available to the Group, including the availability of any short-term funding required.

 

 

The Group prepares regular forecasts and projections of revenues, profits and cash flows that are essential for identifying areas on which management can focus to improve performance and mitigate the possible adverse impact of a deteriorating economic outlook. They also provide projections of working capital requirements. The Directors have reviewed the company's trading forecasts for the 12 months after the year ended 30 June 2018 as part of their going concern assessment, including downside sensitivities, which take into account the uncertainties in the current operating environment.

 

Having considered all the factors impacting the Group's business and having prepared relevant financial projections and sensitivities, including financial projections which allow for reasonably possible downsides to the Group's base case projections, and taking account of mitigating actions that can be taken in periods when headroom is tight, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the

 

foreseeable future. Accordingly, the Directors have adopted the going concern basis in preparing the annual financial statements.

Critical accounting judgements and estimates

The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2.

Principles of consolidation

In order to insert the Company as the ultimate holding company of the Group, in financial year 2016/17, the Company entered into a share for share exchange with the then existing shareholders of Beeks Financial Cloud Limited. Management have treated this as a common control transaction and have accounted for this transaction under the predecessor value method.

 

Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary or a business is the fair values of the assets transferred, the liabilities incurred to former owners of the acquiree and the equity interests issued to the Group. The consideration transferred includes the fair values of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values on the acquisition date. Acquisition related costs are expensed as incurred. As each of the subsidiaries are 100% wholly owned, the Group has full control over each of its investees.

Intercompany transactions, unrealised gains and losses on intragroup transactions and balances between group companies are eliminated on consolidation.

Foreign currency translation

The financial statements are presented in Pound sterling, which is Beeks Financial Cloud Group PLC's functional and presentation currency.

Foreign currency transactions

Foreign currency transactions are translated into Pound sterling using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Foreign operations

The assets and liabilities of foreign operations are translated into Pound sterling using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Pound sterling using the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity.

The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable net of sales related taxes.

 

The Group follows the principles of IAS 18 "Revenue" in determining appropriate revenue recognition policies. In principle revenue is recognised when it is probable that the economic benefits associated with the transaction will flow into the Group.

 

The Group accounts for revenue at the point, or over the period that, the service is provided. The majority of the Group's revenues are based on a recurring subscription model and therefore revenue recognition is matched with the service provision period. The Group also has a small amount of revenue it earns through some one-off services. There has historically been some re-sale of hardware, which is recognised on delivery to the customer, as well as one-off set up fees which are again recognised on delivery.

The Group has different types of customer payments; annual, monthly, payment in arrears and in advance therefore accounts for revenue by deferring or accruing as is appropriate for the type of customer payment. Business to business revenue is either deferred or accrued depending on the timing of customer billing in relation to the end of the month. Business to customer revenue is deferred due to non-business customers being required to pay in advance for their service.

Cost of Sales

Costs considered to be directly related to revenue are accounted for as cost of sales. All direct production costs and overheads, including indirect overheads that can reasonably be allocated, have been classified as cost of sales.

Interest

Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

Taxation and deferred taxation

The taxation expense or income for the period is the tax payable on the current period's taxable income. This is based on the national taxation rate enacted or substantively enacted for each jurisdiction with any adjustment relating to tax payable in previous years and changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in financial statements.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applicable when the asset or liability crystallises based on current tax rates and laws that have been enacted or substantively enacted by the reporting date. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability.

A deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits against which to recover carried forward tax losses and from which the future reversal of temporary differences can be deducted. The carrying amount of deferred tax assets are reviewed at each reporting date.

Current and non-current classification

Assets and liabilities are presented in the statement of financial position based on current and non-current classification.

An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.

A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

Deferred tax assets and liabilities are always classified as non-current.

Cash and cash equivalents

Cash at bank, overnight and longer term deposits which are held for the purpose of meeting short term cash commitments are disclosed within cash and cash equivalents.

Financial Instruments

Recognition, initial measurement and de-recognition.

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through profit or loss which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities is described below.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

 

Classification and subsequent measurement of financial assets

For the purpose of subsequent measurement, financial assets are classified into the following categories upon initial recognition.

Trade and other receivables

Trade and other receivables are recognised at fair value, less provision for impairment. A provision for impairment of trade and other receivables is established when there is objective evidence that Beeks Financial Cloud Group PLC will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtors, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 90 days overdue) are considered indicators that the trade and other receivables may be impaired.

The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the profit or loss within 'administrative expenses'. When a trade or other receivable is uncollectible, it is written off against the allowance account for trade and other receivables. Subsequent recoveries of amounts previously written off are credited against 'cost of sales' in the profit or loss.

Property, plant and equipment (PPE)

PPE is stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to Beeks Financial Cloud Group PLC and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

Depreciation on plant and machinery and fixtures and fittings is calculated using the straight line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives, as follows:

Leasehold improvements

 

over the lease period

Computer Equipment

 

3-4 years and over the length of the lease

 

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or the estimated useful life of the assets, whichever is shorter.

An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits.

Leases

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.

Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.

Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease term.

Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease.

 

Sale and leaseback transactions

For a sale and leaseback transaction that results in a finance lease, any excess of proceeds over the carrying amount is deferred and amortised over the lease term.

 

For a transaction that results in an operating lease: 

•           if the transaction is clearly carried out at fair value - the profit or loss should be recognised immediately

•           if the sale price is below fair value - profit or loss should be recognised immediately, except if a loss is compensated for by future rentals at below market price, the loss it should be amortised over the period of use

•           if the sale price is above fair value - the excess over fair value should be deferred and amortised over the period of use

•           if the fair value at the time of the transaction is less than the carrying amount - a loss equal to the difference should be recognised immediately.

Intangible assets and amortisation

Goodwill

 

Goodwill represents the excess of the cost of an acquisition over the fair value of the assets and liabilities assumed at the date of acquisition. Goodwill acquired in business combinations is not amortised. Instead, goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Intangible assets carried forward from prior years are re-valued at the exchange rate in the current financial year. Impairment testing is carried out by assessing the recoverable amount of the cash generating unit to which the goodwill relates.

Customer relationships

Included within the value of intangible assets are customer relationships. These represent the purchase price of customer lists and contractual relationships purchased on the acquisition of the business and assets of Gallant VPS Inc and VDIWare LLC. These relationships are carried at cost less accumulated amortisation. Amortisation is calculated using the straight line method over a period of five years.

Development costs

The Group reviews half yearly whether the recognition requirements for development costs have been met. This is necessary as the economic success of any product development is uncertain and may be subject to future technical problems at the time of recognition. Judgements are based on the information available at each bi-annual review. During the year ended 30 June 2018, management conducted a comprehensive review of all capitalised development. Development costs relating to the company's customer self-service portal and cyber attack prevention products have been capitalised. Management have estimated that five years is an appropriate useful life of these asset based on future revenues and cost savings. All new capitalised development is reviewed on an individual project basis and management will select the most appropriate rate of amortisation for each asset. For details on the estimates made in relation to intangible assets, see note 9.

Impairment

Goodwill and assets that are subject to amortisation are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.

Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

Trade and other payables

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. These amounts represent liabilities for goods and services provided to Beeks Financial Cloud Group PLC prior to the end of the financial period which are unpaid as well as any outstanding tax liabilities.

Borrowings

Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method.

Defined contribution schemes

The defined contribution scheme provides benefits based on the value of contributions made. Contributions to the defined contribution superannuation plans are expensed in the period in which they are incurred.

Fair value measurement

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

 

Equity

Ordinary shares are classified as equity.

 

An equity instrument is any contract that evidences a residual interest in the assets of Beeks Financial Cloud Group plc after deducting all of its liabilities. Equity instruments issued by Beeks Financial Cloud Group plc are recorded at the proceeds received net of direct issue costs.

 

The share capital account represents the amount subscribed for shares at nominal value.

 

The accounting policies set out above have, unless otherwise stated, been applied consistently by the Group to all periods presented.

Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to the owners of Beeks Financial Cloud Group PLC, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after taxation effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

Value-Added Tax ('VAT') and other similar taxes

Revenues, expenses and assets are recognised net of the amount of associated VAT, unless the VAT incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of VAT receivable or payable. The net amount of VAT recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.

Cash flows are presented on a gross basis. The VAT components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of VAT recoverable from, or payable to, the tax authority.

Rounding of amounts

Amounts in this report have been rounded off to the nearest thousand pounds, or in certain cases, the nearest pound.

 

 

Note 2. Critical accounting judgements, estimates and assumptions

 

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.

 

Estimation of useful lives of assets

The Group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

 

Goodwill and other indefinite life intangible assets

The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated in note 1. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated future cash flows. Sensitivity analysis is also performed to reduce growth assumptions and increase discount rates and there is still sufficient headroom in the asset.

 

Development costs

The Group reviews half yearly whether the recognition criteria for development costs have been met. This is necessary as the economic success of any product development is uncertain and may be subject to future technical problems at the time of recognition. Judgements are based on the information available at each review period. As with goodwill, sensitivities were run to reduce growth rate assumptions and increase discount rates and there is still sufficient headroom in the asset.  All internal activities related to the development of new products are continuously monitored by the Directors. See note 9 for further information.

 

Taxation

The Group is subject to taxation in the jurisdictions in which it operates. Significant judgement is required in determining the provision for taxation. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based on the Group's current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

 

Recovery of deferred tax assets

The Group has tax losses available to offset future taxable profits. In estimating the amount of deferred tax to be recognised as an asset the Group estimates the future profitability of the relevant business unit. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.

Within the deferred tax provisions are deferred tax assets that have been recognised in the US due to the difference between the amortisation period. The group has elected to amortise the US assets over a period of 15 years in line with US tax authorities. This gives rise to a deferred tax asset as the Group is using a five year useful life for financial reporting purposes. The deferred tax asset has been calculated at an average US tax rate of 21%. This is shown in Note 11.

 

 

Note 3. Segment  information

 

Operating segments are reporting in a manner consistent with the internal reporting provided to the chief operating decision makers.

 

The chief operating decision makers, who are responsible for allocating resources and assessing performance of operating segments, have been identified as the PLC Board.

 

During the year ended 30 June 2018, the Group was organised into two main business segments for revenue purposes, institutional and private customers. The group does not place reliance on any specific customer and has no individual customer that generates 5% or more of its total group revenue. Performance is assessed by a focus on the change in revenue across both institutional and retail revenue. Cost is reviewed at a cost category level but not split by segment.

 

All of the company's products and services are sold across all geographic locations. Assets are also utilised across all geographic locations and are therefore not split between segments so management review profitability at a group level.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues by business segment are as follows:

 

 

 

 

Institutional

 

 

Retail

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues by geographic location are as follows:

 

 

 

 

United Kingdom

 

 

Europe

 

 

Rest of World

 

 

 

 

 

 

 

Total

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

 

Non Current Assets by geographic location are as follows:

 

 

 

 

United Kingdom - Property, plant and equipment

 

 

Europe - Property, plant and equipment

 

 

Rest of World - Intangible assets

 

 

Rest of World - Goodwill

 

 

Rest of World - Property, plant and equipment

 

 

 

 

 

 

 

Total Non Current Assets

 

 

 

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 9.

 

 

Note 4. Finance costs

 

 

Consolidated

 

 

2018

 

2017

 

 

£'000

 

£'000

 

 

 

 

 

Bank charges

 

62

 

55

Loans and leasing

 

89

 

25

Other finance costs

 

4

 

8

 

 

 

 

 

 

 

155

 

88

 

Note 5. Operating profit / (loss)

 

 

 

Consolidated

 

 

2018

 

2017

 

 

£'000

 

£'000

 

 

 

 

 

Operating profit / (loss)  is stated after charging:

 

 

 

 

Staff costs

 

1,390

 

978

Depreciation

 

584

 

400

Amortisation of intangibles

 

94

 

80

Foreign exchange losses

 

15

 

6

Other operating leases

 

80

 

123

IPO exceptional items

 

368

 

736

 

 

 

 

 

IPO exceptional costs have been recognised in relation to the professional adviser and other costs incurred during the process of achieving an AIM admission.

 

 

 

 

 

 

 

Consolidated

 

 

 

 

2018

 

2017

 

 

 

 

 

 

 

 

 

Auditors' remuneration

 

 

 

 

 

 

Audit services

 

 

 

 

 

 

Fees payable for the audit of the consolidation and the parent company accounts

 

18

 

7

 

 

Fees payable for audit of subsidiaries

 

15

 

13

 

 

Fees payable for the interim audit of the consolidation and the parent company accounts

 

6

 

 

 

Tax advisory

 

-

 

32

 

 

Tax compliance

 

8

 

10

 

 

Corporate finance (listed within IPO exceptional fees above)

 

62

 

100

 

 

 

 

 

 

 

 

 

 

 

109

 

168

 

 

Note 6. Average number of employees and employee benefits expense

 

Excluding directors, the average number of employees (at their full time equivalent) during the year was as follows:

 

 

 

Consolidated

 

 

2018

 

2017

 

 

 

 

 

Management and administration

 

10

 

9

Support and development staff

 

13

 

8

 

 

 

 

 

Average number of employees

 

23

 

17

 

 

The employee benefits expense during the year was as follows:

 

 

 

Consolidated

 

 

2018

 

2017

 

 

£'000

 

£'000

 

 

 

 

 

Wages and salaries

 

1,241

 

899

Social security costs

 

139

 

79

Other pension costs

 

10

 

 

 

 

 

 

Total employee benefits expense

 

1,390

 

978

 

 

 

 

Note 7. Directors' remuneration

 

 

 

Consolidated

 

 

2018

 

2017

 

 

£'000

 

£'000

 

 

 

 

 

Aggregate remuneration in respect of qualifying services

 

304

 

143

Aggregate amounts of contributions to pension schemes in respect of qualifying services

 

2

 

1

Highest paid director - aggregate remuneration

 

120

 

59

 

There are two directors (2017: none) who are accruing retirement benefits in respect of qualifying services.

 

 

 

 

 

Note 8. Taxation expense

 

 

 

Consolidated

 

 

2018

 

2017

 

 

£'000

 

£'000

 

 

 

 

 

Current Tax

 

 

 

 

UK Corporation tax on profits for the period

 

-

 

12

Foreign tax on overseas companies

 

56

 

2

Over provision in respect of prior periods

 

3

 

9

 

 

 

 

 

Total current tax

 

59

 

23

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

Deferred tax

 

 

 

 

Original and reversal of temporary differences

 

 

Adjustment for rate change

 

 

Adjustments in respect of prior periods

 

 

 

 

 

 

 

Total deferred tax

 

 

 

 

 

 

 

 

 

Total tax charge

 

 

 

 

The differences between the total tax charge 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

 

 

 

 

 

 

 

2018

 

% ETR

 

2017

 

% ETR

 

 

 

 

£'000

 

movement

 

£'000

 

movement

 

 

Profit before tax

 

747

 

 

 

(761)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 19% (2017: 19%)

 

142

 

19.00%

 

(145)

 

19.00%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effects of:

 

 

 

 

 

 

 

 

 

 

Expenses not deductible for tax purposes

 

16

 

2.14%

 

141

 

(18.53%)

 

 

R&D tax credits relief

 

(63)

 

(8.43%)

 

-

 

-

 

 

Tax losses not relieved

 

-

 

-

 

20

 

(2.63%)

 

 

Share option deduction

 

(104)

 

(13.92%)

 

 

 

 

 

 

Prior year over-provision

 

3

 

0.40%

 

9

 

(1.18%)

 

 

Prior year deferred tax adjustments

 

(16)

 

(2.14%)

 

(14)

 

1.84%

 

 

Adjustment for tax rate differences

 

6

 

0.80%

 

(10)

 

1.31%

 

 

Foreign tax suffered

 

2

 

0.27%

 

2

 

(0.26%)

 

 

Other

 

                   4

 

0.54%

 

(3)

 

0.39%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total tax charge

 

(10)

 

    (1.34%)

 

-

 

(0.00%)

 

 

 

The effective tax rate ('ETR') for the period was (1.3%), (2017: 0.0%). Significant tax credits were recognised in 2018, not previously provided for, in respect of R&D claims and deductions for share options exercised during the year. An R&D claim for 2017 has been made which was not provided for in 2017, creating tax losses which were partially utilised in 2017, the balance being brought forward and utilised in 2018. These downward pressures on ETR were partially offset by disallowed expenses, mainly relating to IPO costs, and higher taxes in overseas jurisdictions.  

 

Prior year ETR was affected by significant costs which were disallowable and could not be utilised for tax purposes.  

 

 

UK unrelieved trading losses

 

Foreign unrelieved trading losses

 

Total unrelieved trading losses

 

Tax effect

 

 

 

 

 

 

 

 

 

 

 

£'000

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

Recognised Trading losses

 

 

 

 

 

 

 

 

As at 1 July 2017

 

-

 

-

 

-

 

-

Recognised during the year

 

258

 

315

 

573

 

109

As at 30 June 2018

 

258

 

315

 

573

 

109

 

                       

There were no unrecognised trading losses during the year.

 

Note 9. Non-current assets - intangibles

 

 

 

 

 

Intangible Asset - customer list

 

Intangible Asset - Development costs

 

Goodwill

 

Total

 

 

Consolidated

 

£'000

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2016

 

248

 

-

 

391

 

639

 

 

FX on opening balances

 

6

 

-

 

9

 

15

 

 

Amortisation expense

 

(80)

 

-

 

-

 

(80)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2017

 

174

 

-

 

400

 

574

 

 

Additions

 

-

 

384

 

-

 

384

 

 

FX on opening balances

 

(5)

 

-

 

(7)

 

(12)

 

 

Amortisation expense

 

(76)

 

(18)

 

-

 

(94)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2018

 

93

 

366

 

393

 

852

 

 

 

The customer list represents the fair value of the acquisition of Gallant VPS Inc which is recognised over a useful life of five years. As at 30 June 2018 the remaining useful life is 9 months. Fair value is not considered to be materially different to the value paid by the Group.

 

Development costs have been recognised in accordance with IAS 38 in relation to the creation of the company's self-service portal, website and cyber attack prevention software (DDoS). As at 30 June 2018 the remaining useful lives of these assets are 4 years and 7 months, 4 years and 6 months and 4 years and 5 months respectively.

Goodwill arising from the acquisition of the business and assets of VDIWare LLC has been capitalised and is assessed on an annual basis for impairment. The revaluation represents exchange adjustment only.

All goodwill and intangible assets primarily supports institutional clients. Impairment reviews are carried out on an annual basis considering value in use 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 prepared forecasts for future trading in which assumptions over sales growth, gross margins and costs were applied over a useful life period of five years with an assumption of terminal value. The forecasts were performed assuming an 8% growth in sales with a 5% annual price increase as was applied by the company during December 2017. There was an assumption of 2% growth in costs for the period which was considered prudent and appropriate, using a discount rate of 10%. Management's approach in deriving these assumptions was based on a numbers of factors including historic and forecast growth rates as well as current cost of capital.  Sensitivities were applied by reducing the growth by half and increasing the discount rate to 12%. After running these sensitivities, management concluded that there is still sufficient headroom in the value of the asset.

 

Management consider these assumptions to be reasonable based on current performance of the Group. As at 30 June 2018, no change to the impairment provision against the carrying value of intangibles was required.

 

 

Note 10. Non-current assets - property, plant and equipment

 

 

 

Computer Equipment

 

Office Equipment

 

Leasehold Improvements

 

 

 

 

 

 

 

 

 

 

Total

Consolidated

 

£'000

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

Balance at 1 July 2016

 

648

 

-

 

-

 

648

Additions

 

1,604

 

9

 

25

 

1,638

Disposals

 

(582)

 

(2)

 

-

 

(584)

Depreciation expense

 

(394)

 

(2)

 

(4)

 

(400)

 

 

 

 

 

 

 

 

 

Balance at 30 June 2017

 

1,276

 

5

 

21

 

1,302

Additions

 

1,622

 

14

 

5

 

1,641

Disposals

 

(222)

 

-

 

-

 

(222)

Depreciation expense

 

(576)

 

(3)

 

(5)

 

(584)

 

 

 

 

 

 

 

 

 

Balance at 30 June 2018

 

2,100

 

16

 

21

 

2,137

 

 

 

Disposals of £203,000 (2017: £584,000) relate to sale and leaseback transactions. There were no gains or losses recognised in these sale and leaseback transactions. The assets have been sold at terms which result in them being accounted for under finance leases within computer equipment. The Group recognised a profit of £4,000 (2017: £15,000) in relation to fixed asset disposals during the year.

 

All depreciation charges are included within cost of sales.

 

 

 

Computer Equipment

 

 

£'000

 

 

 

 

 

 

Fixed assets, included in the above, which are held under finance leases are as follows:

 

 

Balance as at 1 July 2016

 

257

Additions

 

819

Depreciation charge for the year

 

(250)

Balance at 30 June 2017

 

826

Additions

 

579

Depreciation charge for the year

 

(397)

 

 

 

 

 

1,008

 

The leases included above are standard finance leases with no special clauses. The leases are for the purchase of computer equipment and are for periods of between 2 to 3 years. The leases contain an option to purchase the assets at the end of the lease period.

                     

 

Note 11. Non-current assets - deferred tax

 

Deferred tax is recognised at the standard UK corporation tax of 19% for fixed assets in the UK (2017: 19%). Deferred tax in the US is recognised at an average rate of 21% for 2018 (2017: 30%). The Group has unrecognised tax losses in overseas subsidiaries of £nil in (2017: £11,000).

 

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 share options exercised during the year and tax losses carried forward in both UK and overseas companies. There were no options issued in the year.

 

 

 

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

The split of fixed and intangible asset are summarised as follows:

 

 

 

 

 

 

 

 

 

Deferred tax liabilities

 

 

Deferred tax asset

 

 

 

 

 

 

 

Total deferred tax

 

 

 

 

 

 

 

Movements:

 

 

 

 

Opening balance

 

 

Charged to profit or loss (note 8)

 

 

Charged to equity

 

104

 

-

Other movement

 

13

 

-

 

 

 

 

 

Closing balance

 

 

 

 

 

 

Tax losses carried forward

 

Accelerated tax depreciation

 

Total deferred tax asset

 

Total deferred tax liability

 

 

 

 

 

 

 

 

 

 

£'000

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

The movement in deferred taxation assets and liabilities during the year is as follows:

 

 

 

 

 

 

 

 

At July 2016

-

 

12

 

12

 

(74)

Charge to income

-

 

15

 

15

 

8

 

 

 

 

 

 

 

 

 

As at 30 June 2017

-

 

27

 

27

 

(66)

 

 

Tax losses carried forward

 

Accelerated tax depreciation

 

Total deferred tax asset

 

Total deferred tax liability

 

 

 

 

 

 

 

 

 

 

£'000

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

At 1 July 2017

-

 

27

 

27

 

(66)

Charge to income

110

 

14

 

124

 

(29)

Charge to equity

-

 

-

 

104

 

-

Other movement

-

 

-

 

-

 

(13)

 

 

 

 

 

 

 

 

 

As at 30 June 2018

110

 

41

 

255

 

(108)

 

 

 

Note 12. Current assets - trade and other receivables

 

 

 

Consolidated

 

 

2018

 

2017

 

 

£'000

 

£'000

 

 

 

 

 

Trade receivables

 

460

 

106

Less: Provision for impairment of receivables

 

(82)

 

(5)

 

 

378

 

101

 

 

 

 

 

Prepayments and accrued income

 

169

 

218

VAT

 

69

 

61

Other receivables

 

48

 

12

 

 

286

 

291

 

 

 

 

 

 

 

 

 

 

 

 

664

 

392

 

 

The Group has two types of customer, institutional and retail clients. Retail clients pay for services in advance and so there is no credit risk associated with these clients.

 

A detailed review of the credit quality of each institutional client is completed before an engagement commences and the concentration of credit risk is limited as exposure is spread over a large number of clients. Some of the trade receivables balances are due in USD so there is some degree of currency translation risk on settlement (Note 14).

 

The carrying amount of trade and other receivables approximates to their fair value, which has been calculated based on expectations of debt recovery from historic performances feeding into impairment provision calculations.

 

Trade receivables are reviewed regularly for impairment and judgement made as to any likely impairment based on historic trends and the latest communication with customers.

 

The credit risk relating to trade receivables is analysed as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables

 

 

Bad debt provision

 

 

           

 

Movements in the provision for impairment of receivables are as follows:

 

 

 

 

                  Consolidated

 

 

 

 

 

 

 

 

 

 

 

Opening balance

 

 

Additional provisions recognised

 

 

Receivables written off during the year as uncollectable

 

 

Unused amounts reversed

 

 

 

 

 

 

 

Closing balance

 

 

 

 

The provision allowance in respect of trade receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible. At that point, the amounts are considered irrecoverable and are written off against the trade receivable directly. Where trade receivables are past due, an assessment is made of individual customers and the outstanding balance.

Past due but not impaired

The Group did not consider a credit risk on the aggregate balances after reviewing the credit terms of customers based on recent collection practices.

 

The ageing of trade receivables at the reporting date is as follows:

 

 

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

Not past due

 

 

Past due 1 to 3 months

 

 

Past due 3 to 6 months

 

 

More than 6 months past due

 

 

 

 

 

 

 

 

 

 

 

Note 13. Current assets - Cash and cash equivalents

 

 

Consolidated

 

 

2018

 

2017

 

 

£'000

 

£'000

 

 

 

 

 

Cash at bank and in hand

 

2,887

 

23

Cash and cash equivalents per cash flow statement

 

2,887

 

23

 

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.

 

Note 14. 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 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:

 

a)     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 had an impact on the Group's profit and equity by approximately £29,000. The Group has minimal exposure to any other foreign exchange movements. The Group had potential exchange rate exposure within USD trade payable balances of £69,775 as at 30 June 2018 (£166,905 at 30 June 2017).

 

 

Cash flow and interest rate risk

 

The Group has limited exposure to interest rate risk in respect of cash balances and long-term borrowings held with banks and other highly rated counterparties. All loans and leases are at fixed rates of interest therefore the group does not have exposure to interest rate risk.

 

 

b) Credit risk

 

 

 

2018

 

2017

 

 

£'000

 

£'000

 

 

 

 

 

The Group's maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at the reporting date, as summarised below:

 

 

 

 

Cash and cash equivalents

 

2,887

 

23

Trade receivables

 

460

 

106

Other receivables

 

48

 

12

VAT

 

69

 

61

 

 

 

 

 

 

 

3,464

 

202

 

 

 

Credit risk is managed on a Group basis. Credit risks arise from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions.

 

The Group's credit risk is primarily attributable to its trade receivables. It is the policy of the Group to present the amounts in the balance sheet net of allowances for doubtful receivables, estimated by the Group's management based on prior experience and the current economic environment.

 

The Group reviews the reliability of its customers on a regular basis, such a review takes into account the nature of the Group's trading history with the customer.

 

The credit risk on liquid funds is limited because the majority of funds are held with two banks with high credit-ratings assigned by international credit-rating agencies. Management does not expect any losses from non-performance of these counterparties.

 

None of the Group's financial assets are secured by collateral or other credit enhancements.

 

c)     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 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. Surplus cash within the Group is put 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 2018, the Group's financial liabilities have contractual maturities (including interest payments where applicable) as summarised below:

 

 

 

 

 

 

 

Current

 

 

 

Non-current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade payables

 

 

 

 

 

Other payables

 

 

 

 

 

Other loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The above amounts reflect the contractual undiscounted cash flows, which may differ from the carrying values of the liabilities at the reporting date.

 

d)     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.

 

 

 

 

                    Consolidated

 

 

 

 

 

 

 

 

 

 

 

Total Equity

 

 

Cash and cash equivalents

 

 

Capital

 

 

Total Equity

 

 

Other loans

 

 

Finance Leases

 

 

Overall Financing

 

 

Capital-to-overall financing ratio

 

 

Note 15. Non-current liabilities - Borrowings and other financial liabilities

 

 

Consolidated

 

 

2018

 

2017

 

 

£'000

 

£'000

 

 

 

 

 

Other loans

 

6

 

41

Finance leases

 

326

 

357

 

 

 

 

 

 

 

332

 

398

 

 

 

 

Consolidated

 

 

2018

 

2017

 

 

£'000

 

£'000

 

 

 

 

 

Other loans

 

 

 

 

Under one year

 

35

 

78

Between one to five years

 

6

 

41

 

 

 

 

 

Total

 

41

 

119

 

 

 

Consolidated

 

 

2018

 

2017

 

 

£'000

 

£'000

 

 

 

 

 

Finance Leases

 

 

 

 

Under one year

 

435

 

283

Between one to five years

 

326

 

357

 

 

 

 

 

Total

 

761

 

640

 

Finance Leases. The future minimum finance lease payments are as follows:

 

 

 

Consolidated

 

 

2018

 

2017

 

 

£'000

 

£'000

 

 

 

 

 

Under one year

 

494

 

309

Between one to five years

 

380

 

394

 

 

 

 

 

Total gross payments

 

874

 

703

 

 

 

The finance leases are secured on the fixed assets to which they relate.

 

 

 

Consolidated

 

 

 

 

2018

 

2017

 

 

 

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

The present value of the future minimum finance lease payments is as follows:

 

 

 

 

 

 

Under one year

 

450

 

281

 

 

Between one to five years

 

312

 

316

 

 

 

 

 

 

 

 

 

 

 

762

 

597

 

             

 

 

The discount applied to the future payments was 10% per annum.

 

Reconciliation of movements in debt

 

 

 

Finance Leases

 

Loans

 

 

 

 

 

 

 

 

Consolidated

 

£'000

 

£'000

 

 

 

 

 

 

 

 

Balance at 1 July 2017

 

640

 

119

 

Proceeds from leases through sale and leaseback

 

203

 

-

 

Proceeds from new finance leases

 

376

 

-

 

Loan and lease repayments

 

(458)

 

(78)

 

Balance as at 30 June 2018

 

761

 

41

 

 

 

 

 

 

 

 

 

Note 16. Current liabilities - trade and other payables

 

 

 

Consolidated

 

 

2018

 

2017

 

 

£'000

 

£'000

 

 

 

 

 

Trade payables

 

662

 

1,033

Other loans

 

35

 

78

Finance leases

 

435

 

283

Accruals and deferred income

 

319

 

720

Corporation tax

 

-

 

44

Other taxation and social security

 

45

 

43

Other payables

 

15

 

28

 

 

 

 

 

 

 

1,511

 

2,229

 

 

Note 17. Equity - issued capital

 

 

 

 

 

Consolidated

 

 

2018

 

2017

 

2018

 

2017

 

 

Shares

 

Shares

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

Ordinary shares - fully paid

 

50,043,100

 

2,162

 

62

 

2

 

 

 

 

 

Movements in ordinary share capital

 

Details

 

Date

 

Shares

 

Issue price

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance

 

1 July 2016

 

2,162

 

£1.00

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance

 

30 June 2017

 

2,162

 

£1.00

 

2

 

 

Share Capitalisation of distributable reserves

 

8 November 2017

 

47,838

 

£1.00

 

48

 

 

Share sub division from £1 to £0.00125

 

8 November 2017

 

(50,000)

 

£1.00

 

(50)

 

 

Share sub division from £1 to £0.00125

 

8 November 2017

 

40,000,000

 

£0.00125

 

50

 

 

New share issue (AIM admission)

 

27 November 2017

 

9,000,000

 

£0.00125

 

11

 

 

EMI Share options exercised

 

19 January 2018

 

138,000

 

£0.00125

 

-

 

 

EMI Share options exercised

 

06 April 2018

 

370,620

 

£0.00125

 

-

 

 

EMI Share options exercised

 

24 May 2018

 

534,480

 

£0.00125

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance

 

30 June 2018

 

50,043,100

 

 

 

62

 

Ordinary shares

As at 30 June 2016 the Company had 2,162 ordinary shares of £1 each. Prior to being admitted to the UK Alternative Investment Market (AIM), on 8 November 2017, (a) the Company capitalised the sum of £11,959.50 standing to the credit of its distributable reserves in paying up, as a quarter paid up, 47,838 ordinary shares of £1 each; (b) each of the issued ordinary shares of £1.00 each were subdivided into 800 Ordinary Shares of £0.00125; and (c) the Company approved the re-registration of the Company as a public limited company.

As at 8 November 2017 the company had 40,000,000 ordinary shares at £0.00125 in issue. On 27 November, the date of admission to the AIM market, there was an issue of a further 9,000,000 ordinary shares at £0.00125 taking the total number of ordinary shares in issue to 49,000,000.

 

During the year there were 1,043,100 of share options exercised. At the date of the grant, the fair value was immaterial.

 

For EPS comparative purposes, the EPS calculation for June 2017 has been done on a like for like basis taking the number of ordinary shares at the pre-admission date of 2,162 at the nominal value of £0.00125.

Detail of all share options over £0.00125 Ordinary shares, falling within the measurement and recognition criteria of IFRS 2 "Share based Payment" and forming part of the share scheme is as follows:

 

 

Consolidated

 

 

2018

 

2017

 

 

 

 

 

Outstanding at the beginning of the year

 

1,864,800

 

1,864,800

Exercised during the year

 

(1,043,100)

 

Outstanding at the end of the year

 

821,700

 

1,864,800

Exercisable at the end of the year

 

821,700

 

1,864,800

 

The exercise price for all the above share options is £0.00125

 

                     

 

Note 18. 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 relief reserve arose on the share for share exchange reflecting the difference between the nominal value of the share capital in Beeks Financial Cloud Group Limited and the value of the Group being acquired, Beeks Financial Cloud Limited.

 

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.

 

Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related taxation benefits.

 

Note 19. Capital and other commitments

 

a) The Group had the following future minimum lease payments under non-cancellable operating leases for each of the following periods. Operating lease payments represent rentals payable by the Group for office premises and computer equipment. The leases for computer equipment contain an option to purchase the assets at the end of the lease period. The leases are standard operating leases with no special clauses.

 

 

   

 

 

 

 

 

 

 

 

 

 

 

Lease commitments - operating

 

 

 

 

Committed at the reporting date but not recognised as liabilities, payable:

 

 

 

 

Within one year

 

 

One to five years

 

 

 

 

 

 

 

 

 

 

 

 

 

b) Capital Commitments

 

There were no material Group capital commitments at 30 June 2018.

 

 

Note 20. Related party transactions

 

Parent entity

Beeks Financial Cloud Group PLC is the parent entity.

 

Subsidiaries

Interests in subsidiaries are set out in note 21.

Transactions with related parties

The following transactions occurred with related parties:

 

 

 

          Consolidated

 

 

 

 

 

 

 

 

 

 

 

Withdrawals from the director, Mr G McArthur

 

 

Withdrawals from the director, Mr A Doleman

 

 

 

 

 

 

 

 

 

 

Mr Doleman is a director of the subsidiary, Beeks Financial Cloud Ltd

 

 

 

 

 

Consolidated

 

 

2018

 

2017

 

 

£'000

 

£'000

 

 

 

 

 

Current payables:

 

 

 

 

Amounts owed by / (to) the  director, Mr G McArthur

 

24

 

(1)

Amounts owed to the director, Mr A Doleman

 

(1)

 

(3)

 

The loan amount owed by the director, Mr G McArthur was repaid in full following the year end.

 

Beeks Financial Cloud Limited provided services in the normal course of its business and at arm's length to Ofelia Algos Limited.  Ofelia Algos Limited is owned by Mr G McArthur.  During the financial year Beeks Financial Cloud Limited made sales of £72,453 (2017: £nil) to Ofelia Algos Limited and amounts due to Beeks Financial Cloud Limited at the year end were £35,280 (2017: £nil).

 

Compensation paid to key management (which comprises the executive and non-executive PLC Board members) during the year was as follows:

 

 

 

          Consolidated

 

 

 

 

 

 

 

 

 

 

 

Wages and salaries including social security costs

 

 

Other pension costs

 

 

Other benefits in kind

 

10

 

-

 

 

Note 21. 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 subsidiaries are all 100% owned with 100% voting rights:

 

 

 

 

 

 

 

Proportion

 

 

Principal place of business /

 

 

 

held

Name

 

Country of incorporation

 

 

 

%

 

 

 

 

 

 

 

Beeks Financial Cloud Co.Ltd.

 

Japan, Head Office: FARO 1F, 2-15-5, Minamiaoyama, Minato-Ku,Tokyo, Japan

 

 

 

 

100.00%

BeeksFX VPS USA Inc

 

874 Walker Road, Suite C, Dover, Kent, Delaware, 19904, USA

 

 

 

100.00%

Beeks Financial Cloud Limited

 

Suite1, Phoenix House Phoenix Business Park, Linwood, Paisley, Renfrewshire, Scotland, PA1 2BH

 

 

 

100.00%

 

 

 

 

Note 22. Events after the reporting period

 

No matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.

 

Note 23. Earnings per share

 

 

 

        Consolidated

 

 

 

 

 

 

 

 

 

 

 

Profit/(loss) after taxation attributable to the owners of Beeks Financial Cloud Group PLC

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

 

Diluted earnings per share

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of ordinary shares used in calculating basic earnings per share

 

 

Adjustments for calculation of diluted earnings per share:

 

 

 

 

Weighted average number of options over ordinary shares

 

 

 

 

 

 

 

Weighted average number of ordinary shares used in calculating diluted earnings per share

 

 

 

 

 

         Consolidated

 

 

 

 

 

 

 

 

 

 

 

Underlying earnings per share

 

 

 

 

Profit after tax for the year

 

 

IPO exceptional costs

 

 

Amortisation on acquired intangibles

 

 

Tax effect

 

 

 

 

 

 

 

Underlying profit for the year

 

 

 

Weighted average number of shares in issue - basic*

 

 

Weighted average number of shares in issue - diluted*

 

 

 

Underlying earnings per share - basic

 

2.27

 

Underlying earnings per share - diluted

 

2.20

 

 

*The weighted average number of shares has been adjusted to assume that the number of shares in issue at IPO on 27 November 2017 were in issue for the full year. The prior year comparative has been calculated on the same basis.

 

 

Note 24. Ultimate controlling party

 

The Group is ultimately controlled by Gordon McArthur

 


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