TIDMBKS
RNS Number : 5839E
Beeks Financial Cloud Group PLC
02 March 2020
The information contained within this announcement (the
"Announcement") is deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulations (EU)
No. 596/2014. Upon the publication of this Announcement via
Regulatory Information Service, this inside information is now
considered to be in the public domain.
Beeks Financial Cloud Group plc
("Beeks" or the "Company")
Interim Results
2 March 2020 - Beeks Financial Cloud Group plc (AIM: BKS), a
cloud computing and connectivity provider for financial markets, is
pleased to announce its unaudited results for the six months ended
31 December 2019.
Financial Highlights
-- Revenues increased by 23% to GBP4.29m (H1 2019: GBP3.50m).
-- Annualised Committed Monthly Recurring Revenue (ACMRR) up 37%
to GBP10.20m (H1 2019: GBP7.45m)
-- Gross profit up 25% to GBP2.12m (H1 2019: GBP1.70m)
-- Gross profit margin 49% (H1 2019: 49%)
-- Underlying EBITDA* increased by 66% to GBP1.56m (H1 2019:
GBP0.94m), including IFRS 16 adjustment of GBP0.34m
-- Underlying profit before tax** up 46% to GBP0.60m (H1 2019: GBP0.41m)
-- Underlying basic EPS** 1.01 pence (H1 2019: 0.96 pence)
-- Period end net cash of GBP0.72m (H1 2019: Net cash GBP1.84m)
-- Proposed interim dividend of 0.20p (H1 2019: 0.20p)
Statutory Equivalents
The above highlights are based on underlying results.
Reconciliations between underlying and statutory results are
contained within these financial statements. The statutory
equivalents of the above results are as follows:
-- Profit before tax of GBP0.39m (H1 2019: GBP0.34m)
-- Basic earnings per share of 0.62p (H1 2019: 0.82p)
* Underlying EBITDA is defined as earnings before share based
payment charges, amortisation, depreciation, finance costs and
exceptional costs
** Underlying profit before tax and underlying EPS excludes
share based payment charges, amortisation on acquired intangibles
and exceptional costs
Operational Highlights
-- Signing of a further two Tier 1 clients, a cloud based
payments provider (GBP1.1m contract over three years) and a global
financial markets technology provider ($1m annualised contract),
demonstrating continued momentum and ability to attract large scale
customers
-- Expansion of further new data centres, NY2 and NY5 in New
York, with a further three opened during January 2020, Singapore
SG1, Paris PA1 and London LD8
-- Successful integration of the CNS platform, ahead of
timescale, and performing in line with expectations
-- Launch of Back Up as a Service in first quarter with client
uptake in line with expectations
-- Award of a grant of up to GBP2m from Scottish Enterprise to
support the Network Automation Project facilitating growth and
expansion and enabling a broader product offering
-- Average entry monthly recurring value for a new institutional
customer contract increased to GBP3,680 (H1 2019: GBP1,825)
Outlook
-- Current trading is positive and is within the range of market expectations
Gordon McArthur, CEO of Beeks Financial Cloud commented:
"I am pleased to report on another positive trading period for
Beeks, delivering continued growth in revenue, underlying EBITDA
and Annualised Committed Monthly Recurring Revenues (ACMRR). Our
success is being driven by a combination of the growing demand for
secure and scalable cloud environments by financial institutions,
and the superior breadth of our offering and capability.
"Momentum has continued into the second half of the year, with
the implementations of the Tier 1 contracts progressing well and to
plan. The business has grown considerably over the last six months,
in terms of offering and customer base but also in addressable
market, due to the successes we have had in new areas of the
financial services market. These factors combined with the
continued growth in our committed recurring revenues and size of
our new business pipeline, provide us with confidence in our
continued success."
For further information please
contact:
Beeks Financial Cloud Group plc
Gordon McArthur, CEO via Alma PR
Fraser McDonald, CFO
Canaccord Genuity +44(0)20 7523 8000
Adam James / Angelos Vlatakis
Alma PR +44(0)20 3405 0212
Caroline Forde / Josh Royston /
Helena Bogle
The Directors of the Company are responsible for the contents of
this announcement.
ABOUT BEEKS FINANCIAL CLOUD
Beeks Financial Cloud is a leading cloud computing and
connectivity provider for financial services. Our cloud-based
Infrastructure-as-a-Service (IaaS) model allows financial
organisations the flexibility and agility to deploy and connect to
a variety of exchanges, trading venues and cloud service providers
at a fraction of the cost of building their own networks and
infrastructure.
Based in the UK with an international network of fifteen
datacentres, Beeks supports its global customers at scale in the
leading financial centres. For more information, visit:
www.beeksfinancialcloud.com .
Chief Executive Officer's Review
Our vision is simple: to provide a rapidly deployable, secure
and scalable cloud environment for financial institutions.
I am pleased to report on another positive trading period for
the Group, delivering continued growth in revenue, underlying
EBITDA and Annualised Committed Monthly Recurring Revenues (ACMRR).
Our success is being driven by a combination of the growing demand
for secure and scalable cloud environments by financial
institutions, and the strong breadth of our offering and
capability.
We have seen continued growth in customer numbers in the half,
including the winning of two further multi-year contracts with Tier
1 institutions, both of significantly higher value than we have
historically signed. One takes us into the growing Open Banking
sector and the other is our first $1 million annualised deal. With
both contracts signed in December, the majority of associated
revenue will be recognised in future periods, adding to our high
levels of visible revenue as we enter the second half of the year.
These contracts were signed at the end of H1 and so help underpin
our expectations for FY20 and beyond.
We have continued to invest in the expansion of our offerings,
to capture our growing opportunity. We have expanded our datacentre
estate, moved to a new head office and added further talent to our
teams. We have continued to expand our offering into the wider
financial services market, broadening out from our heritage in
forex, into growth areas such as Fixed Income, Cryptocurrencies and
Open Banking.
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. For our Tier 1 customers, we are also
increasingly supporting them in their wider cloud requirements,
managing their connections to the public cloud vendors, providing
and managing their cloud infrastructure and connectivity from the
ground up. While these contracts take longer to negotiate and on
board, they increase the quality of our recurring revenues and we
have been pleased with the rate of new customer wins in the first
half, and are encouraged by the size of the pipeline of
opportunities for H2 and beyond.
The Board is pleased to propose an interim cash dividend to
shareholders of 0.20p per share (H1 2019: 0.20p per share). The
Board intends to continue to meet its previously stated progressive
dividend policy in relation to the year as a whole, reflecting the
Board's confidence in the financial position of the Group and
future prospects.
As we move into the second half of the year, our focus will be
on successfully deploying our newly signed Tier 1 customers,
capitalising on the growth of the new sectors; Opening Banking,
Fixed Income and Cryptocurrencies; growing the institutional
customer base and securing further Tier 1 customers.
Financial performance
Revenues in the period grew by 23% to GBP4.3m (H1 FY19:
GBP3.5m), resulting in an increase in underlying EBITDA of 66% to
GBP1.56m (H1 FY19: GBP0.94m). The adoption of IFRS 16 lease
accounting, which reclassifies previous operating lease charges to
a depreciation and interest charge has had a benefit to the
adjusted EBITDA metric of GBP0.34m which is further explained in
the Financial Review. Excluding the IFRS 16 re-classification,
EBITDA has increased by 30% when compared with the same period last
year. Beeks has over 95% recurring revenue and customer retention
remained within target. Our Annualised Committed Monthly Recurring
Revenues (ACMRR) grew 37% to GBP10.2m at 31 December 2019,
increasing from GBP7.45m at 31 December 2018.
The two Tier 1 contracts were signed at the end of the period
and will provide a larger contribution to revenue in the second
half of the year, as they are deployed. Gross profit margin has
remained flat in the period helped partly by the change in
accounting estimate to align the Group's depreciation policy with
similar businesses. The change in estimate is further explained in
the notes to the financial statements. Excluding this change, the
gross profit margin reduced to 46% in the period in line with our
expectations reflecting investment in the Group, including the
expansion into new data centres and our self-service portal. Gross
margin is expected to increase through the remainder of the year,
as we recognise revenue from the newly signed Tier 1 contracts and
increase revenues from the new datacentres.
Strategy
Our main strategic priority is to grow our institutional
customer base both for hybrid cloud management and our core low
latency offering and we are encouraged by the significant
opportunities we have secured and the growing number of
opportunities we have identified. Financial institutions around the
world are looking to increase their customer offerings and require
sophisticated cloud-based technology platforms to do so.
Ongoing growth will continue to be achieved through entry into
new geographies, further development of our offerings across asset
classes, the continued evolution of our self-service web portal and
increased network automation. The ease and speed with which our
customers can increase their use of our platform via the web portal
continues to be a strong competitive differentiator for the
Group.
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.
Our retail trader offering remains steady, providing the
business with a strong, profitable foundation. We will maintain our
investment into this part of the business, to ensure we continue to
provide a market leading offering, while we focus our strategic
initiatives on the growth of the institutional offering.
While our focus is on organic growth, we will continue to assess
further strategic and bolt-on acquisition opportunities that will
accelerate growth and complement our business model. The
acquisition of CNS in the prior year added both scale and
cost-synergies to Beeks' retail trader offering and that
acquisition has now been successfully integrated into the Group
ahead of plan, with the acquired business performing in line with
our expectations. We remain alert to additional acquisitions of
business that are profitable or near term profitable and add value
to our customer offerings.
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 in delivering these services via the cloud. We
will continue to develop our cloud services in the second half of
the year, 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.
Operational Expansion
This has been an exceptional period for Beeks in terms of
delivering on our stated strategy of signing additional Tier 1
customers and expanding our offering. The Group has broadened its
geographical footprint, with the opening of two additional New York
datacentres in the period, and three new datacentres post period
end, in Singapore, London and Paris, bringing Beeks' international
network to a total of 15 datacentre locations worldwide in key
financial hubs.
Continued growth in client demand in these new locations has
prompted the expansion, with all new datacentres backed by initial
client deployments. The addition of these five new locations, and
an increase in capacity at existing sites, means Beeks has
increased its datacentre capacity by approximately 45% in the last
nine months, demonstrating the scale of customer demand for its
expanding service offerings.
In order to attract new clients and to meet existing client
demand, we successfully launched our expansion into new asset
classes in 2018, including Fixed Income and Cryptocurrency
offerings, which remain valuable to our combined offering. This
includes a partnership with BeQuant Exchange, a leading
cryptocurrency exchange based in London and Malta.
We are excited about the growing opportunity within the Open
Banking and Payments sector. New regulations, such as the second
Payment Services Directive (PSD2) and the Open Banking reforms,
which require the sharing of financial data, are driving a shift
towards new Open Banking and Payments offerings within Financial
Services and the growing adoption of cloud-computing to deliver
them. Our proven capabilities and global network mean we are
ideally placed to support Financial Services institutions in this
move to cloud-based infrastructure, providing an expanding
addressable market for us and the opportunity for accelerated
growth in the Open Banking sector.
We continue to innovate, adding additional services as well as
locations to our offering. In September 2019 we launched the Bare
Metal Automated Backup Service, within our London locations
initially, in response to the growing compliance and regulatory
pressures for backup and storage being experience by our customers.
This 'Back up as a Service' platform offering is an automated
server image backup for Dedicated Servers and storage within
Dedicated Servers, providing backup images of customers' data in
our offsite location, via a secure dedicated backup network.
The broadening of our offering and growing adoption of cloud
computing by financial services organisations has contributed to
the increase in our average monthly client revenue, as customers
expand the services they receive from us.
Headcount has increased to 40 at 31 December 2019, (30 June
2019: 33), with some key hires in operations and software
development to support our growth objectives.
In January 2020, post period end, we also recruited a Chief
Information Security Officer in order to further strengthen our
Cyber Security vision, strategy and program to ensure a world class
level of protection for customer assets and technologies.
We were delighted to have been awarded a Scottish Enterprise
R&D grant of up to GBP2m, to invest in our Network Automation
project. The funding will allow for acceleration of the project,
which will facilitate growth and expansion at our Glasgow
headquarters and enable us to broaden our product offering, in
particular to the Tier 1 financial services market. Customer
self-service and automation is at the heart of our strategic
objectives and is a key differentiator for us in the financial
services cloud computing sector. Through this cross-system project
we will aim to fully automate our network infrastructure
deployment, enhancing our ability to capitalise on the growing
adoption of cloud computing infrastructure by Tier 1 financial
institutions.
Our web portal is 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: for instance, a basic virtual private server, the
building block for our clients being able to trade, being ready in
as little as five minutes. Our continuous development of the portal
now allows for provision of dedicated servers, as well as providing
a platform for our clients to take inventory of their
infrastructure and to check available capacity of Beeks' servers
across our global locations. This, in turn, facilitates the scaling
of client infrastructure as clients can choose and build additional
servers at their own pace. This is unique to Beeks in the financial
services sector.
As we move into the second half of the year, our focus will be
on deploying the major contracts we have signed during the first
half, continuing to exploit new sectors and attracting additional
institutional clients. We now have the resources and server
capacity to meet our current growth projections, without
significantly increasing our capital expenditure.
Political changes
The political climate in the UK is currently challenging due to
the UK leaving the EU on the 31(st) January 2020. As the UK enters
into a transition period, we are regularly monitoring emerging news
and trends and remain alert to any impact on the trading of the
Group. At this point, we do not expect any adverse effect on the
operation of the business as our supply chain, customer base and
talent attraction has no single dependency on the EU and we have
multiple Global supplier options.
Customers
The number of institutional customers grew to 225, an increase
from the 210 clients reported at 31 December 2018, whilst the
average entry level new institutional customer contract has
increased to GBP3,680 per month, up from GBP1,825 when compared to
the same period last year.
Institutional revenue now represents 84% of total revenue, and
we expect to see this figure increase in the second half of the
year as we recognise a greater proportion of the revenue from the
recently secured Tier 1 customer engagements, and continue to add
to our institutional client base.
We are seeing considerable expansion of the types of customer we
support, with Beeks now catering for banks, brokers, hedge funds,
crypto traders and exchanges, insurance organisations, financial
markets technology providers and payments providers. The five Tier
1 customers we have now signed, signal a major step forward for
Beeks, and provides us with a solid foundation for further growth.
The first three tier one contracts, secured in previous periods,
have all commenced billing, with two now fully implemented and
live.
New Tier 1 customers
In December 2019 we were delighted to announce two further tier
1 customers.
One is a three-year contract worth a combined GBP1.1m with a
cloud-based payments solution provider to design and supply a
private network and fully managed infrastructure environment,
enabling the Payments Provider to expand its secure and resilient
end-to-end Payments-as-a-Service solution for financial
institutions and regulated Fintech organisations. This is our first
win for Beeks in the growing Open Banking and Payments sector,
demonstrating the security of the Beeks' offering and applicability
to this new segment of the financial markets. The core
infrastructure has now been deployed and network configuration is
underway with the client.
We also secured our first $1m annualised contract, with a global
financial markets technology provider. We are providing them with a
global deployment of private cloud infrastructure, complementing
their existing secure, high-performance data and voice
communications solutions delivered to the global financial markets.
The SaaS-based contract commenced in January 2020 and is committed
to grow to a run rate of $1 million annually, with the potential
for further expansion thereafter. The private cloud infrastructure
is now deployed on the Beeks network, with the first end customers
successfully live on the platform and further deployments
planned.
Future Growth and Outlook
Current trading is positive and is within the range of market
expectations. Momentum has continued into the second half of the
year, with the implementations of the new Tier 1 contracts
progressing well and to plan. The business has grown considerably
over the last six months, in terms of offering and customer base
but also in addressable market, due to the successes we have had in
new areas of the financial services market. These factors combined
with the continued growth in our committed recurring revenues and
size of our new business pipeline, provide us with confidence in
our continued success.
Gordon McArthur
CEO
28 February 2020
Chief Financial Officer's Review
Financial Review
We are pleased to report another sound set of financial results
for the first half of the year demonstrating growth in our key
financial metrics.
Group revenues grew by 23% to GBP4.29m (H1 2019: GBP3.50m),
driven mainly by continued organic growth with the now embedded CNS
business contributing approximately 8% of the Group's total revenue
in the period. 95% of revenues were recurring in the period. Due to
the timing of the Tier 1 Open Banking contract win, GBP0.25m of
revenue relating to this client will be recognised in the second
half of the year with a further GBP0.15m deferred into future
years. Annualised Committed Monthly Recurring Revenues (ACMRR)
increased by 37% to GBP10.20m (H1 2019: GBP7.45m).
Gross profit earned increased 25% to GBP2.12m (H1 2019:
GBP1.70m) with gross margin flat at 49%. Gross margin has
benefitted by the change in depreciation useful life estimate of
computer equipment which resulted in a reduction of depreciation in
the period of GBP0.15m. The decision to change from four years to
five years followed both an internal review of the useful life of
assets and an external review of similar companies' policies within
the infrastructure space. Gross profit margin was also slightly
impacted by IFRS 16 which resulted in an additional depreciation
charge of GBP0.31m offset by a cost of sales reduction of
GBP0.28m.
Excluding the impact of the depreciation policy change and the
IFRS 16 adjustment, gross margin was 46%, reflecting the investment
in new datacentre expansion. In line with our 12 month target, both
London InterXion and our original Singapore site are now at
break-even level following their launch last year. Gross margin has
also been impacted by the timing of revenue recognition from the
two additional Tier 1 contracts, which were signed towards the end
of the period, and therefore had a minor contribution to the
revenue recognised in the period. As with prior years, we expect
gross margins to increase in the second half of the year, with
revenue growth utilising existing capacity without the need for
significant additional operating expenditure increase.
Earnings before interest, tax, depreciation, amortisation and
exceptional costs ("Underlying EBITDA") increased by 66% to
GBP1.56m (H1 2019: GBP0.94m) with underlying EBITDA margins
increasing to 36% (H1 2019: 27%). The adoption of IFRS 16 lease
accounting, which reclassifies previous operating lease charges to
a depreciation and interest charge has a benefit of GBP0.34m in the
six month period to the adjusted EBITDA metric. Excluding the IFRS
16 re-classification, EBITDA increased by 30% when compared with
the same period last year with EBITDA margin excluding the IFRS 16
lease re-classification 29% up from 27% in H1 2019.
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.
Profit before Tax
Period ended Period ended
31 Dec 2019 31 Dec 2018
GBP000 GBP000
Profit before tax for the period 389 340
------------- -------------
Deduct:
------------- -------------
Grant Income (13) -
------------- -------------
Add back :
------------- -------------
Acquisition costs 31 -
------------- -------------
Non-recurring costs 14 -
------------- -------------
Amortisation of acquired intangibles 77 40
------------- -------------
Share based payments 100 30
------------- -------------
Underlying profit for the period 598 410
------------- -------------
Reported profit before tax increased to GBP0.39m (H1 2019:
GBP0.34m) with underlying profit before tax increasing to GBP0.60m
(H1 2019: GBP0.41m).
Cost of sales has increased by 20% to GBP2.17m (H1 2019:
GBP1.80m), largely due to further investment across our data
centres to expand our capacity in both London and New York and to
further support geographical expansion.
There has been an increase in Administrative expenses (excluding
share based payments, acquisition and non-recurring costs) of 11%
to GBP1.41m (H1 2019: GBP0.127m) largely driven by an increase in
staff. We have grown our headcount from 33 to 40 across our network
support, software development and sales functions to support our
growing business.
Finance costs are higher, but in line with expectations at
GBP0.18m (H1 2019: GBP0.07m) due to the GBP1m debt facility to
support the CNS acquisition. Finance costs have also been impacted
by IFRS 16 which resulted in an additional finance interest charge
of GBP0.03m. No further debt has been taken during the first six
months of the year as growth has been financed by existing cash
reserves and historic lease finance has been repaid.
The Group has continued to invest in developing innovative
technology solutions and has incurred capitalised development cost
to date of GBP1.03m largely due to the customer self-service portal
(H1 2019: GBP0.58m). Phase III of the portal release went live
during Q2 and therefore the costs of the portal are now being fully
amortised over a useful life of five years.
Taxation
The effective tax rate ('ETR') for the period is 19%, (H1 2019:
(22%). In line with expectations the Group will have a more typical
tax charge than previous years as carried forward losses are fully
utilised. The lower effective rate than expected is largely as a
result of R&D tax credits.
Earnings per Share and Dividends
Underlying earnings per share has increased to 1.01 pence (H1
2019: 0.96 pence). Underlying diluted earnings per share has
increased to 0.98 pence (H1 2019: 0.95 pence). EPS was helped last
year by a tax credit in the period of GBP76,000 vs the current
period tax charge of GBP74,000. Statutory basic EPS has reduced
from 0.82p to 0.62p largely as a result of the difference in
effective tax rate as well as acquisition costs and share based
payments.
Maintaining our dividend policy, we will pay an interim dividend
of 0.20 pence per share (H1 2019: 0.20 pence) on 01 April 2020 to
shareholders on the register on 13 March 2020, with an ex-dividend
date of 12 March 2020. This dividend represents a pay-out ratio of
21% of the underlying diluted earnings per share for the interim
period.
Balance Sheet and Cashflows
At 31 December 2019 net assets were GBP5.91m compared to net
assets of GBP5.05m at 31 December 2019 and net assets of GBP5.63m
at 30 June 2019.
As a result of IFRS 16, the Group recognised a right-of-use
asset and lease liability of GBP2.00m as at 1 July 2019 with
further additions of GBP0.94m during the period. The value of the
right of use lease liability as at 31 December 2019 was GBP2.63m.
The Group ended the period with net cash of GBP0.72m (31 December
2018: net cash GBP1.84m).
Excluding the IFRS 16 right of use lease liability adjustment,
the Group's outstanding borrowings and finance leases stood at
GBP0.97m at 31 December 2019 (31 December 2018: GBP0.57m).
Operating cash flows for the period were GBP1.48m with further
investment in infrastructure and the customer portal of GBP1.42m.
Repayment of historic lease finance and the CNS loan facility of
GBP0.35m as well as interest charges has resulted in a net cash
deficit in the period of GBP1.05m.
Key performance indicator review
H1 2020 H1 2019 Growth
Revenue GBP4.29m GBP3.50m 22.6%
---------- --------- -------
ACMRR GBP10.20m GBP7.45m 36.9%
---------- --------- -------
Gross profit GBP2.12m GBP1.70m 24.7%
---------- --------- -------
Gross margin 49.4% 48.6%
---------- --------- -------
Underlying EBITDA GBP1.56m GBP0.94m 66.0%
---------- --------- -------
Underlying EBITDA
margin 36.2% 26.8%
---------- --------- -------
Underlying profit
before tax GBP0.60m GBP0.41m 46.3%
---------- --------- -------
Underlying basic
EPS 1.01p 0.96p 5.2%
---------- --------- -------
Dividend per share 0.20p 0.20p
---------- --------- -------
Fraser McDonald
CFO
28 February 2020
Beeks Financial Cloud Group PLC
Consolidated statement of comprehensive income
For the period ended 31 December 2019
6 months to Year
to
Note December December June
2019 2018 2019
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Revenue 3 4,289 3,505 7,352
Cost of sales (2,168) (1,802) (3,707)
----------------- ------------------- --------------
Gross profit 2,121 1,703 3,645
Administrative expenses (1,559) (1,300) (2,457)
----------------- ------------------- --------------
Operating profit 4 562 403 1,188
Presented as:
Earnings before depreciation, amortisation,
acquisition costs, share based payments
and non-recurring costs 1,562 940 2,479
Non-recurring costs 4 (14) - (21)
Depreciation and amortisation expense 4 (855) (507) (1,080)
Acquisition costs 4 (31) - (127)
Share based payments 4 (100) (30) (63)
----------------- ------------------- --------------
Operating profit 562 403 1,188
--------------------------------------------- ----- ----------------- ------------------- --------------
Finance income 2 3 7
Finance costs (175) (66) (152)
----------------- ------------------- --------------
Profit before taxation for the period 389 340 1,043
Taxation 5 (74) 76 20
----------------- ------------------- --------------
Profit after taxation for the period 315 416 1,063
Other comprehensive income
Items that may be reclassified to Statement
of Comprehensive income
Exchange (losses) / gains on retranslation
of foreign operations (59) (1) 18
----------------- ------------------- --------------
Total comprehensive income for the
period 256 415 1,081
----------------- ------------------- --------------
Pence Pence Pence
Basic earnings per share 6 0.62 0.82 2.10
Diluted earnings per share 6 0.62 0.81 2.09
Beeks Financial Cloud Group PLC
Consolidated statement of financial position
For the period ended 31 December 2019
December December June
2019 (unaudited) 2018 (unaudited) 2019
(audited)
Assets GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 3,299 2,149 2,440
Right-of-use asset 7 2,632 - -
Intangibles 2,271 969 2,229
Deferred tax 158 285 136
------------------- ------------------ ----------------
Total non-current assets 8,360 3,403 4,805
------------------- ------------------ ----------------
Current assets
Cash and cash equivalents 1,289 2,410 2,338
Trade and other receivables 1,759 863 1,104
------------------- ------------------ ----------------
Total current assets 3,048 3,273 3,442
------------------- ------------------ ----------------
Total assets 11,408 6,676 8,247
------------------- ------------------ ----------------
Liabilities
Non-current liabilities
Borrowings and other financial
liabilities 509 140 699
Right-of-use liabilities 7 2,297 - -
Deferred tax 41 111 48
------------------- ------------------ ----------------
Total non-current liabilities 2,847 251 747
------------------- ------------------ ----------------
Current liabilities
Trade and other payables 2,109 967 1,569
Lease liabilities 137 404 299
Right-of-use liabilities 7 403 - -
------------------- ------------------ ----------------
Total current liabilities 2,649 1,371 1,868
------------------- ------------------ ----------------
Total liabilities 5,496 1,622 2,615
------------------- ------------------ ----------------
Net assets 5,912 5,054 5,632
=================== ================== ================
Equity
Issued share capital 64 63 64
Reserves 4,572 4,479 4,531
Retained earnings 1,276 512 1,037
------------------- ------------------ ----------------
Total equity 5,912 5,054 5,632
=================== ================== ================
Beeks Financial Cloud Group PLC
Consolidated statement of changes in equity
For the period ended 31 December 2019
Issued Foreign Merger Other Share Share Retained Total
capital currency relief reserve premium based profits equity
retranslation reserve payment
reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 July
2018 62 84 372 (315) 4,309 - 332 4,844
Profit after taxation
for the period - - - - - - 416 416
--------- --------------- --------- --------- --------- --------- --------- --------
Total comprehensive
income for the period - - - - - - 416 416
Exchange loss on
retranslation of
foreign operations - (1) - - - - - (1)
Share based payments - - - - - 30 - 30
Transactions with
owners in their capacity
as owners:
Issue of share capital 1 - - - - - - 1
Dividends paid - - - - - - (152) (152)
Deferred tax movement
on shares - - - - - - (84) (84)
--------- --------------- --------- --------- --------- --------- --------- --------
Balance at 31 December
2018 63 83 372 (315) 4,309 30 512 5,054
Balance at 31 December
2018 (unaudited) 63 83 372 (315) 4,309 30 512 5,054
Profit after taxation
expense for the period - - - - - - 647 647
Exchange gain/(loss)
on retranslation
of foreign operation
Share based payments
Transactions with
owners in their - 19 - - - - - 19
capacity
as owners - - - - - 33 - 33
Issue of share capital 1 - - - - - - 1
Deferred tax movement
on shares - - - - - - (20) (20)
Dividends paid - - - - - - (102) (102)
--------- --------------- --------- --------- --------- --------- --------- --------
Balance at 30 June
2019 64 102 372 (315) 4,309 63 1,037 5,632
========= =============== ========= ========= ========= ========= ========= ========
Balance at 1 July
2019 64 102 372 (315) 4,309 63 1,037 5,632
Profit after taxation
for the period - - - - - - 315 315
--------- --------------- --------- --------- --------- --------- --------- --------
Total comprehensive
income for the period - - - - - - 315 315
Exchange loss on
retranslation of
foreign operations - (59) - - - - - (59)
Share based payments - - - - - 100 - 100
Transactions with
owners in their capacity
as owners:
Dividends paid - - - - - - (76) (76)
Balance at 31 December
2019 64 43 372 (315) 4,309 163 1,276 5,912
========= =============== ========= ========= ========= ========= ========= ========
Beeks Financial Cloud Group PLC
Consolidated statement of cash flows
For the period ended 31 December 2019
6 months to Year to
December December June
2019 2018 2019
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Profit before taxation
for the period 389 340 1,043
Adjustments for:
Depreciation and amortisation 4 855 507 1,080
Share based payments 4 100 30 63
Impairment - - 21
Foreign Exchange - - (16)
Interest and other finance
costs 136 63 145
----------------- ------------------ ---------------------
Operating cash flows before movements
in working capital 1,480 940 2,336
(Increase) in trade and
other receivables (655) (199) (440)
Increase/(Decrease) in
trade and other payables 435 (95) 229
----------------- ------------------ ---------------------
Cash generated from operating
activities 1,261 646 2,125
Taxation paid (13) (26) (26)
Net cash from operating
activities 1,248 620 2,099
Cash flows from investing
activities
Purchase of property, plant
and equipment (1,211) (448) (1,222)
Capitalisation of development
costs (209) (200) (437)
Acquisition of trading
assets of business - - (1,112)
----------------- ------------------ ---------------------
Net cash used in investing
activities (1,420) (648) (2,771)
----------------- ------------------ ---------------------
Cash flows from financing
activities
Repayment of borrowings (164) (17) (34)
Finance lease repayments (189) (218) (435)
Issue of loans - - 990
Right-of-use lease repayments (276) - -
Interest and other finance
costs (172) (63) (145)
Dividends paid (76) (152) (254)
Proceeds from the issue
of new share capital - 1 1
----------------- ------------------ ---------------------
Net cash (used in)/from
financing activities (877) (449) 123
----------------- ------------------ ---------------------
Net (decrease) in cash and cash
equivalents (1,049) (477) (549)
Cash and cash equivalents at the beginning
of the financial period 2,338 2,887 2,887
----------------- ------------------ ---------------------
Cash and cash equivalents at the
end of the financial period 1,289 2,410 2,338
================= ================== =====================
Beeks Financial Cloud Group PLC
Notes to the financial statements
For the period ended 31 December 2019
Note 1. General information
The financial statements cover the consolidated entity, Beeks
Financial Cloud Group PLC and the entities it controlled at the end
of, or during, the interim period to 31 December 2019.
The company is a public limited company which is quoted on the
Alternative Investment Market and is incorporated and domiciled in
United Kingdom. Its registered office and principal place of
business are:
Registered office
Lumina Building
40 Ainslie Road
Hillington
Glasgow
G52 4RU
Note 2. Basis of preparation
The financial information for the period ended 31 December 2019
set out in this interim report does not constitute statutory
accounts as defined in Section 434 of the Companies Act 2006 and is
unaudited. The figures for the year ended 30 June 2019 have been
extracted from the Group financial statements for that year. Those
have been filed with the Registrar of Companies. The auditor's
report on those financial statements was unmodified and did not
contain statements under Section 498(2) or Section 498(3) of the
Companies Act 2006.
The interim financial information has been prepared using the
same accounting policies and estimation techniques as will be
adopted in the Group financial statements for the year ending 30
June 2020. The group financial statements for the year ended 30
June 2019 were prepared under International Financial Reporting
Standards as adopted by the European Union. These interim financial
statements have been prepared on a consistent basis and format with
the Group financial statements for the year ended 30 June 2019,
with the exception of the adoption of IFRS 16 as discussed
below.
The provisions of IAS 34 'Interim Financial Reporting' have not
been applied in full.
New accounting standards and interpretations
IFRS 16 - Leases
In the current year, the Group, for the first time, has applied
IFRS 16 Leases (as issued by the IASB in January 2016).
IFRS 16 introduces new or amended requirements with respect to
lease accounting. It introduces significant changes to the lessee
accounting by removing the distinction between operating and
finance leases and requiring the recognition of a right-of-use
asset and a lease liability at the lease commencement for all
leases, except for short-term leases and leases of low value
assets.
The impact of the adoption of IFRS 16 on the Group's
consolidated financial statements is described below.
The date of initial application of IFRS 16 for the Group is 1
July 2019.
The Group has applied IFRS 16 using the modified retrospective
approach, with no restatement of the comparative information.
Impact of the new definition of a lease;
The Group has made use of the practical expedient available on
transition to IFRS 16 not to reassess whether a contract is or
contains a lease. The change in definition of a lease mainly
relates to the concept of control. IFRS 16 determines whether a
contract contains a lease on the basis of whether the customer has
the right to control the use of an identified asset for a period of
time in exchange for consideration.
Impact on Lessee Accounting;
IFRS 16 changes how the Group accounts for leases previously
classified as operating leases under IAS 17, which were off-balance
sheet.
IFRS 16 has impacted the Group's head office lease and the space
within the data centres in which it operates throughout its global
locations.
Applying IFRS 16, for all leases (except as noted below), the
Group:
a) recognises right-of-use assets and lease liabilities in the
consolidated statement of financial position, initially measured at
the present value of future lease payments;
b) recognises depreciation of right-of-use assets and interest
on lease liabilities in the consolidated statement of profit or
loss; and
c) separates the total amount of cash paid into a principal
portion and interest in the consolidated statement of cash
flows.
Lease incentives (e.g. free rent period) are recognised as part
of the measurement of the right-of-use assets and lease
liabilities. Under IFRS 16, right-of-use assets are tested for
impairment in accordance with IAS 36 Impairment of Assets.
For short -- term leases (lease term of 12 months or less) and
leases of low-value assets, the Group has opted to recognise a
lease expense on a straight-line basis as permitted by IFRS 16.
The Group assesses whether a contract is or contains a lease, at
inception of a contract.
The Group recognises a right-of-use asset and a corresponding
lease liability with respect to all lease agreements in which it is
the lessee, except for short-term leases (defined as leases with a
lease term of 12 months or less) and leases of low value assets.
For these leases, the Company recognises the lease payments as an
operating expense on a straight-line basis over the term of the
lease unless another systematic basis is more representative of the
time pattern in which economic benefits from the leased asset are
consumed.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate
cannot be readily determined, the Company uses its incremental
borrowing rate, which is based on the current bank loan and amended
for leases outside of the UK based upon the differences in the base
rates.
Financial impact of initial application of IFRS 16;
The table below show the amount of adjustment for each financial
statement line item affected by the application of IFRS 16 for the
period ended 31 December 2019.
GBP'000
Impact on profit for the period ended 31 December 2019
Increase in depreciation and amortisation expense 308
Increase in finance costs 36
Decrease in other expenses (276)
Decrease in profit for the year 68
The effect on the opening balance sheet as at 1 July 2019
is as follows:
Right of Use asset 2,005
Liabilities (2,005)
The impact on EBITDA for the period to 31 December 2019 was an
increase of GBP0.34m.
Revenue recognition does not fall within the scope of IFRS 16 on
the basis that the company provide infrastructure and connectivity
as a service to their customers. The assets within the datacentres
are managed by the Group and the Group determine how these assets
are provided to each customer. Provision of infrastructure is
virtualised and at the control of the Group. Connectivity is
managed via shared cabling and therefore would not be solely
utilised by any individual customer.
IFRS 15 - "Revenue from Contracts with customers"
Following the adoption of IFRS 15 - Revenue from Contracts with
Customers in the year ended 30 June 2019 the Group has continued to
assess the impact of the standard as it enters into new streams of
business, particularly in relation to the on-boarding of Tier 1
institutions.
In the period to 31 December 2019, management have considered
key areas of IFRS 15 and have created a framework to assess whether
a material right exists in relation to set-up fees. The framework
included making key judgements to determine whether a material
right exists and this has been applied to all new set up fees in
the period.
Change in accounting estimates
The Group previously calculated depreciation on computer
equipment using the straight line method to allocate its cost or
revalued amount, net of residual value, over its estimated useful
life of 3-4 years or over the length of the lease.
On 1 July 2019, the Group carried out a full review of the
appropriateness of the useful life of its computer equipment.
Following this review, the Group considers the estimated useful
life of its computer equipment to be 5 years. The Group believes
that this provides more reliable and relevant information to the
users of its financial statements with regards to the length of
time economic benefits are consumed over. Changes in estimates are
applied prospectively.
The group depreciation charge for the period (GBP0.71m) is
calculated based on the carrying value of these assets at the 1
July 2019 and the remaining amount of the revised estimated useful
life.
If computer equipment had been measured under the previous
estimated useful life, the group depreciation charge for the period
would have been GBP0.86m and the carrying value of Property, Plant
and Equipment would have been GBP6.1m at the period end.
The group has also reviewed the amounts recognised in relation
to the acquisition of CNS in the period to 30 June 2019 and has
made no subsequent changes to the valuation of intangible
assets.
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 and performance. Key factors considered include:
-- Historic and current trading and profitability of the Group
-- The rate of growth in sales both historically and forecast,
-- The current level of cash reserves
-- Current level of debt obligations,
-- Ability to comply with existing covenants
-- The finance facilities available to the Group, including the
availability of any short term funding required.
The Group prepares regular forecasts and projections of
revenues, profits and cash flows. The group also monitors it's
working capital requirements and ability to comply with its
existing covenants. Having considered all factors and given the
company's profitability and working capital position, 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 interim report.
Note 3. Operating Segments
Identification of reportable operating segments
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision makers.
The chief operating decision makers, who are responsible for
allocating resources and assessing performance of operating
segments, have been identified as the Executive Board.
During the period ended 31 December 2019, the Group was
organised into two main business segments for revenue purposes. The
group does not place reliance on any specific customer and has no
individual customer that generates 8% 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. Assets
are used across all segments and are therefore not split between
segments so management review profitability at a group level.
On 24 October 2019, the Group was awarded a GBP2million research
and development grant from the Scottish Enterprise in order to
invest in the Group's network automation project. The grant is
payable in instalments over the next three years based on eligible
spend and milestone achievements. At 31 December 2019, GBP0.02m was
recognised in relation to accrued income for costs incurred on the
project to this point.
6 months to Year
to
December December June
2019 (unaudited) 2018 (unaudited) 2019
(audited)
GBP'000 GBP'000 GBP'000
Revenues by geographic location
are as follows:
United Kingdom 1,072 672 1,525
Europe 555 420 863
Rest of World 2,662 2,413 4,964
------------------ ------------------ ----------------
Total 4,289 3,505 7,352
================== ================== ================
6 months to Year
to
December December June
2019 (unaudited) 2018 (unaudited) 2019
(audited)
GBP'000 GBP'000 GBP'000
Revenues by segment are as follows:
Institutional Revenue 3,593 3,111 6,437
Retail Revenue 696 394 915
------------------ ------------------ ----------------
Total Revenue 4,289 3,505 7,352
================== ================== ================
Note 4. Operating profit
6 months to Year to
December December June
2019 (unaudited) 2018 2019
(unaudited) (audited)
GBP'000 GBP'000 GBP'000
Operating profit is stated after charging:
Depreciation 711 434 898
Amortisation of intangibles 144 73 182
Currency translation cost on settlement 1 15 36
Acquisition costs 31 - 127
Share based payments 100 - 63
Non-recurring costs 14 - -
Leasehold property
write down - - 21
Note 5. Taxation
6 months to Year
to
December December June
2019 (unaudited) 2018 (unaudited) 2019
(audited)
GBP'000 GBP'000 GBP'000
Current Tax
Corporation tax on profits for the period 92 - -
Foreign tax on overseas companies 11 34 25
Total current tax 103 34 25
================== ================== ===================
Deferred tax
Origination and reversal
of temporary differences (29) (110) (45)
Total Deferred tax - (110) (45)
================== ================== ===================
Total tax charge/(credit) 74 (76) (20)
================== ================== ===================
The group has also calculated the impact of deferred tax on the
IFRS 16 adjustments during the period, and has adopted a net
approach. No adjustments have therefore been made as at 31(st)
December 2019.
The effective tax rate for the six months to 31 December 2019,
based on the taxation charge for the period as a percentage of the
profit before tax is 19%, (H1 2019: (22%)). The main factors that
have caused the Group to have a tax credit in the prior period is
in respect of expected R&D claims and deductions for share
options exercised during the year as well as carried forward losses
in foreign jurisdictions.
Note 6. Earnings per share
As at 30 June 2019 and 31 December 2019, the company had
50,864,800 shares.
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the year. Diluted
earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the total of the weighted
average number of ordinary shares in issue during the year and
adjusting for the dilutive potential ordinary shares relating to
share options.
6 months to Year
to
December December June
2019 (unaudited) 2018 (unaudited) 2019
(audited)
GBP'000 GBP'000 GBP'000
Numerator
Profit after taxation attributable to the
owners of the parent 315 416 1,063
Denominator
Weighted average number of ordinary
shares used in calculated basic
earnings per share 50,864,800 50,505,633 50,632,965
Weighted average number of ordinary
shares used in calculated diluted
earnings per share 50,864,800 51,070,683 50,864,800
Profit per share - basic 0.62 0.82 2.10
Included in the weighted average number of shares for the
calculation of underlying diluted EPS are share options outstanding
but not exercisable. It is management's intention that the Company
will meet the challenging growth targets, therefore, for prudency
the share options are included in the underlying diluted EPS.
At 31 December 2019, the underlying basic earnings per share was
1.01 (2018: 0.96).
As at 30 June 2019, the company had 308,824 options outstanding.
During the period to 31 December 2019 1,580,838 share options were
granted taking the total number of options to 1,889,662.
Note 7. Right of use assets
Right-of-use assets with a NBV of GBP2.63m in relation to
leasehold property and datacentre equipment are disclosed as
non-current assets within property, plant and equipment at 31
December 2019. A summary of the movement of these Right-of-use
Assets is provided below:
Right-of-use Assets Data Centre Leasehold
Equipment Property Total
GBP'000 GBP'000 GBP'000
Balance at 1 July 2019
Adjustment to transition to IFRS 16 1,520 485 2,005
Additions 935 - 935
Depreciation charge (274) (34) (308)
Balance at 31 December 2019 2,181 451 2,632
=============== ================= ==============
At 31 December 2019, the Group had the following liabilities in
respect of right of use liabilities, which fall due as follows:
2019
GBP'000
Within one year 403
Within two to five years 2,297
2,700
The weighted average effective interest rate contracted is
3.74%.
Note 8. Events after the reporting period
No matter or circumstance has arisen since 31 December 2019 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 9. Availability of announcement and Half Yearly Financial
Report
Copies of this announcement are available on the Company's
website, www.beeksfinancialcloud.com. Copies of the Interim Report
will be downloadable from the Company's website and available from
the registered office of the Company shortly.
Independent review report to Beeks Financial Cloud Group PLC
Introduction
We have been engaged by the company to review the financial
information in the half-yearly financial report for the six months
ended 31 December 2019 which comprises the Consolidated Statement
of Comprehensive Income, Consolidated Statement of Financial
Position, Consolidated Statement of Changes in Equity, Consolidated
Statement of Cash Flows and the related explanatory notes that have
been reviewed. We have read the other information contained in the
half yearly financial report which comprises only the financial
highlights, Chief Executive's Review and Chief Financial Officers
Review and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The AIM rules of the London
Stock Exchange require that the accounting policies and
presentation applied to the financial information in the
half-yearly financial report are consistent with those which will
be adopted in the annual accounts having regard to the accounting
standards applicable for such accounts.
As disclosed in Note 2, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The financial information in the half-yearly
financial report has been prepared in accordance with the basis of
preparation in Note 2.
Our responsibility
Our responsibility is to express to the company a conclusion on
the financial information in the half-yearly financial report based
on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
The impact of uncertainties arising from the UK exiting the
European Union on our review
Our review of the condensed set of financial statements in the
half-yearly financial report requires us to obtain an understanding
of all relevant uncertainties, including those arising as a
consequence of the effects of Brexit. Such reviews assess and
challenge the reasonableness of estimates made by the directors and
the related disclosures and the appropriateness of the going
concern basis of preparation of the financial statements. All of
these depend on assessments of the future economic environment and
the company's future prospects and performance.
Brexit is one of the most significant economic events for the
UK, and at the date of this report its effects are subject to
unprecedented levels of uncertainty, with the full range of
possible outcomes and their impacts unknown. We applied a
standardised firm-wide approach in response to these uncertainties
when assessing the company's future prospects and performance.
However, no review of interim financial information should be
expected to predict the unknowable factors or all possible future
implications for a company associated with a course of action such
as Brexit.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the financial information in the
half-yearly financial report for the six months ended 31 December
2019 is not prepared, in all material respects, in accordance with
the basis of accounting described in Note 2.
Use of our report
This report is made solely to the company in accordance with
guidance contained in ISRE (UK and Ireland) 2410, 'Review of
Interim Financial Information performed by the Independent Auditor
of the Entity'. Our review work has been undertaken so that we
might state to the company those matters we are required to state
to it in a review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company for our review work, for this
report, or for the conclusion we have formed.
Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Glasgow
28 February 2020
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR FLFFAFSITFII
(END) Dow Jones Newswires
March 02, 2020 02:00 ET (07:00 GMT)
Beeks Financial Cloud (LSE:BKS)
Historical Stock Chart
From Apr 2024 to May 2024
Beeks Financial Cloud (LSE:BKS)
Historical Stock Chart
From May 2023 to May 2024