Beeks Financial Cloud plc Annual Report 2021

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Independent Auditors’ Report to the members of Beeks Financial Cloud PLC OUR APPLICATION OF MATERIALITY We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of identified misstatements on the audit and of uncorrected misstatements, if any, on the financial statements and in forming the opinion in the auditor’s report. Materiality was determined as follows: Materiality measure Parent Company FINANCE Materiality for financial statements as a whole We define materiality as the magnitude of misstatement in the financial statements that, individually or in the aggregate, could reasonably be Materiality threshold expected to influence the economic decisions of the users of these financial statements. We use materiality in determining the nature, timing Significant judgements and extent of our audit work. made by auditor in determining the materiality £114,000, which represents 1% of the parent company’s total assets at the planning stage of the audit. We chose not to revise our materiality during Performance materiality the course of the audit once the final total assets figure, which was higher, used to drive the extent of was known. our testing In determining materiality, we made the following significant judgements: Performance materiality threshold We considered total assets to be the most appropriate benchmark given Significant judgements that the parent company does not trade and its primary purpose is that of made by auditor holding investments for the group. in determining the performance materiality Materiality for the current year is higher than the level that we determined for the year ended 30 June 2020 to reflect the increase in total assets, particularly in intercompany receivables and cash, at the year end. We set performance materiality at an amount less than materiality for the financial statements as a whole to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole. £79,800, which is 70% of financial statement materiality. In determining performance materiality, we made the following significant judgements: We considered 70% of financial statement materiality to be appropriate for performance materiality given the AIM listed status of the business. Prior year unadjusted errors have also been considered, however these have historically been immaterial individually and in aggregate. The internal control environment is dependent upon a sufficiently sized and qualified finance team which is considered appropriate for the current size and scale of the business, which is further supported through robust Board oversight. 99

100 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Independent Auditors’ Report to the members of Beeks Financial Cloud PLC Independent Auditors’ Report FINANCE Specific Materiality We determine specific materiality for one or more particular classes of transactions, account balances or disclosures for which misstatements of Specific Materiality lesser amounts than materiality for the financial statements as a whole could reasonably be expected to influence the economic decisions of users taken Communication of on the basis of the financial statements. misstatements to the audit committee We determined a lower level of specific materiality for the following areas: Threshold for / Directors’ remuneration; and communication / Related party transactions. We determine a threshold for reporting unadjusted differences to the audit committee. £5,700 and misstatements below that threshold that, in our view, warrant reporting on qualitative grounds. The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for potential uncorrected misstatements. OVERALL MATERIALITY

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Independent Auditors’ Report to the members of Beeks Financial Cloud PLC AN OVERVIEW OF THE SCOPE OF / The key focus for the audit of statements, our responsibility is to FINANCE OUR AUDIT the parent company, as identified read the other information and, in We performed a risk-based audit within the key audit matters doing so, consider whether the other that requires an understanding of section, is the valuation of the information is materially inconsistent the parent company’s business and investment in Velocimetrics with the parent company financial in particular matters related to: Limited, where the impairment statements or our knowledge assessment was audited to gain obtained in the audit or otherwise Understanding the parent assurance over the valuation of appears to be materially misstated. company, its environment, the investment at year end; If we identify such material including controls inconsistencies or apparent material Performance of our audit misstatements, we are required / Our assessment of audit risk, / An interim visit was undertaken to determine whether there is a our evaluation of materiality, to perform specific audit material misstatement of the parent our allocation of performance procedures on equity raises company financial statements or a materiality and the procedures completed to December 2020; material misstatement of the other performed as part of the audit, and information. If, based on the work we enables us to form an opinion / The year-end audit was have performed, we conclude that on the parent company financial undertaken remotely. there is a material misstatement statements. We take into of this other information, we are consideration account sizes, risk Changes in approach from required to report that fact. profile, changes in the business previous year environment and other factors We have nothing to report in when assessing the level of work / There were no material changes this regard. to be performed on each scoped in the scope of the current year item; from the scope of the prior year. OUR OPINION ON OTHER MATTERS / We have obtained an PRESCRIBED BY THE COMPANIES understanding of the entity-level OTHER INFORMATION ACT 2006 IS UNMODIFIED controls of the parent company, The directors are responsible In our opinion, based on the work which assisted us in identifying for the other information. The undertaken in the course of the audit: and assessing the risks of material other information comprises the misstatement due to fraud or information included in the annual / the information given in the error, as well as assisting us in report, other than the financial strategic report and the directors’ determining the most appropriate statements and our auditor’s report report for the financial year for audit strategy; thereon. Our opinion on the financial which the parent company statements does not cover the other financial statements are prepared Work to be performed on financial information and, except to the extent is consistent with the parent information of parent company otherwise explicitly stated in our company financial statements; and (including how it addressed the key report, we do not express any form / the strategic report and the audit matters) of assurance conclusion thereon. directors’ report have been prepared in accordance with / We performed a full scope audit In connection with our audit of applicable legal requirements. of the financial statements of the the parent company financial parent company; 101

102 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Independent Auditors’ Report to the members of Beeks Financial Cloud PLC Independent Auditors’ Report FINANCE MATTER ON WHICH WE ARE preparation of the parent company misstatement when it exists. REQUIRED TO REPORT UNDER financial statements and for being Misstatements can arise from THE COMPANIES ACT 2006 satisfied that they give a true and fair fraud or error and are considered In the light of the knowledge and view, and for such internal control as material if, individually or in the understanding of the parent the directors determine is necessary aggregate, they could reasonably company and its environment to enable the preparation of parent be expected to influence the obtained in the course of the audit, company financial statements that economic decisions of users we have not identified material are free from material misstatement, taken on the basis of these parent misstatements in the strategic report whether due to fraud or error. company financial statements. or the directors’ report. In preparing the parent company A further description of our MATTERS ON WHICH WE financial statements, the directors responsibilities for the audit of ARE REQUIRED TO REPORT are responsible for assessing the parent company financial BY EXCEPTION the parent company’s ability to statements is located on the We have nothing to report in respect continue as a going concern, Financial Reporting Council’s of the following matters in relation disclosing, as applicable, matters website at: www.frc.org.uk/ to which the Companies Act 2006 related to going concern and auditorsresponsibilities. This requires us to report to you if, in our using the going concern basis of description forms part of our opinion: accounting unless the directors auditor’s report. either intend to liquidate the parent / adequate accounting records company or to cease operations, EXPLANATION AS TO WHAT have not been kept by the parent or have no realistic alternative but EXTENT THE AUDIT WAS company, or returns adequate for to do so. CONSIDERED CAPABLE OF our audit have not been received DETECTING IRREGULARITIES, from branches not visited by us; or AUDITOR’S RESPONSIBILITIES INCLUDING FRAUD / the parent company financial FOR THE AUDIT OF THE Irregularities, including fraud, are statements are not in agreement PARENT COMPANY FINANCIAL instances of non-compliance with the accounting records and STATEMENTS with laws and regulations. We returns; or Our objectives are to obtain design procedures in line with our / certain disclosures of directors’ reasonable assurance about responsibilities, outlined above, to remuneration specified by law are whether the parent company detect material misstatements in not made; or financial statements as a respect of irregularities, including / we have not received all the whole are free from material fraud. Owing to the inherent information and explanations we misstatement, whether due to limitations of an audit, there is require for our audit. fraud or error, and to issue an an unavoidable risk that material auditor’s report that includes our misstatements in the financial RESPONSIBILITIES OF DIRECTORS opinion. Reasonable assurance statements may not be detected, FOR THE PARENT COMPANY is a high level of assurance but even though the audit is properly FINANCIAL STATEMENTS is not a guarantee that an audit planned and performed in As explained more fully in the conducted in accordance with ISAs accordance with the ISAs (UK). directors’ responsibilities statement, (UK) will always detect a material the directors are responsible for the

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Independent Auditors’ Report to the members of Beeks Financial Cloud PLC The extent to which our procedures of the parent company’s / Our assessment of the FINANCE are capable of detecting financial statements to material appropriateness of the collective irregularities, including fraud, is misstatement, including how competence and capabilities of detailed below: fraud might occur, by evaluating the engagement team included management’s incentives and consideration of the engagement / We obtained an understanding opportunities for manipulation team’s: of the legal and regulatory of the financial statements. Our frameworks applicable to the audit procedures were designed - Understanding of, and practical parent company and the industry to provide reasonable assurance experience with, engagements in which it operates through our that the financial statements of similar nature and complexity, general commercial and sector were free from fraud or error. through appropriate training and experience. We determined the However, detecting irregularities participation; and following laws and regulations that result from fraud is inherently - Knowledge of the industry were most significant: Financial more difficult than detecting in which the parent company Reporting Standard 101 ‘Reduced those that result from error, as operates. Disclosure Framework’, the those irregularities that result / Our communications, both Companies Act 2006 and the from fraud may involve collusion, with management and the Quoted Companies Alliance deliberate concealment, forgery Audit Committee, in respect of (QCA) Corporate Governance or intentional misrepresentation. non-compliance with laws and Code. In addition, we concluded The procedures included: regulations and fraud pertain to that there are certain sector laws inaccurate assumptions included and regulations that may impact - Evaluation of the design within the investment impairment the financial statements, namely effectiveness of controls that assessment. This is reported as GDPR regulations and Information management has in place to key audit matter in the relevant Security Management System prevent and detected fraud; section of our report where the (ISMS) Standards; - Journal entry testing, with a matter is explained in more detail; / We obtained an understanding focus on manual journals with a / In assessing the potential risk of how the parent company is profit impact; of material misstatement, we complying with these legal and - Challenging assumptions obtained an understanding of: regulatory frameworks by making and judgements made by - The operations of the parent enquiries of management, the management in areas of company, including the objectives Audit Committee and reviewing estimation and judgement; and strategies, in order to legal correspondence. We - Assessing the extent of understand the classes of corroborated our enquiries compliance with the relevant laws transactions, account balances, through a review of board minute and regulations as part of our expected disclosures and risk papers. Management and the procedures on legal expenditure; areas; and Audit Committee confirmed they and - The control environment, were not aware of any instances - Performing audit procedures to including the policies and of non-compliance and had no test whether all the disclosures procedures implemented knowledge of actual, suspected or required by FRS 101 and the to comply with regulatory alleged fraud; Companies Act 2006 were made requirements, including the / We assessed the susceptibility in the financial statements. 103adequacy of the training to inform

104 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Independent Auditors’ Report to the members of Beeks Financial Cloud PLC Independent Auditors’ Report FINANCE staff of changes in legislation, and an overview of the scope of other than the company and the internal review procedures and our audit. company’s members as a body, for resources available to ensure our audit work, for this report, or for that possible breaches of USE OF OUR REPORT the opinions we have formed. requirements are appropriately This report is made solely to the investigated and reported. company’s members, as a body, in JAMES CHADWICK accordance with Chapter 3 of Part Senior Statutory Auditor for and OTHER MATTERS 16 of the Companies Act 2006. Our on behalf of Grant Thornton UK LLP We have reported separately on audit work has been undertaken Statutory Auditor, The Group financial statements of so that we might state to the Chartered Accountants Beeks Financial Cloud Group PLC company’s members those matters Glasgow for the year ended 30 June 2021. we are required to state to them 24 September 2021 That report includes details of The in an auditor’s report and for no Group key audit matters; how we other purpose. To the fullest extent applied the concept of materiality in permitted by law, we do not accept planning and performing our audit; or assume responsibility to anyone

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Company Statement of Financial Position Note 2021  2020 £000  Restated 4 5 £000  6 Assets 4,045 4,647 FINANCE Non-current assets 10 313 - Investments 5 Deferred tax 4,358 4,647 8 Current assets 9 7,275 4,246 Trade and other receivables 9 1,930 8 Cash and cash equivalents 9 9,205 Total current assets 13,563 4,254 Total assets 8,901 Liabilities - Non-current liabilities - 1,961 Contingent Consideration - 3 Deferred tax 383 1,964 Current liabilities 8,822 Trade and other payables 13,180 1,301 Net current assets 2,953 Net assets 70 5,636 Equity 9,452 Issued capital 1,588 64 Share premium 2,070 4,309 Reserves 13,180 1,079 Retained earnings Total equity 184 5,636 The parent company has taken advantage of section 408 of the Companies Act 2006 and has not included its own profit and loss account in these financial statements. The parent company’s profit after tax for the year was £1,958,641 (2020: £106,000). These financial statements were approved by the Board of Directors and were authorised for issue on 24 September 2021 and are signed on its behalf by: GORDON MCARTHUR 105 Chief Executive Officer Company name, Beeks Financial Cloud Group PLC Company number, SC521839

106 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Consolidated Statement of Changes in Equity Share Issued  Merger  Share  Retained  Total  based  capital  relief  premium  earnings  equity  payments  £000  £000  £000  £000  £000  £000  130  4,938  106 As at 1 July 2019 63 64  372  4,309  106 Profit after income tax -  -  333 expense for the year -  -  -  -  -  Issue of share capital (178) 311 311 -  333  -  (178)  Share based payments -  -  -  -  58 -  -  -  5,510 Dividends paid 374 126 As at 30 June 2020 and 1 64 705 4,309 126 July 2020 (as previously 374 184 FINANCE stated) - 64 705 4,309 5,636 Prior periods share - --- 1,959 expense (note 4) --- 1,959 As at 30 June 2020 and 1 - 1,959 July 2020 (restated) 547 6 - 5,143 69 1,959 Profit after income tax (38) --- - 69 expense for the year - Total comprehensive - --- 38 5,149 income 883 70 705 9,452 547 Deferred tax (180) - 2,070 Issue of share capital (180) 13,180 Share based payments Issue of share capital Dividends paid As at 30 June 2021 1. COMPANY INFORMATION 2. ACCOUNTING POLICIES Disclosure exemptions adopted Beeks Financial Cloud Group PLC Basis of preparation In preparing these financial (the “Company”) is a public limited These financial statements have statements the Company has company which is listed on the been prepared in accordance with taken advantage of all disclosure AIM Market of the London Stock applicable accounting standards exemptions conferred by FRS 101. Exchange and incorporated in and in accordance with Financial These financial statements do not Scotland. Reporting Standard 101 – The include: Reduced Framework (FRS 101). The address of the registered / A statement of cash flows and office is: Lumina Building, 40 Ainslie The principal accounting policies related notes, Road, Ground Floor, Hillington adopted in preparation of the / Disclosure of key management Park, Glasgow, UK, G52 4RU. Beeks financial statements are set out personnel compensation, Financial Cloud Group PLC was on pages 62 to 93. These policies / The effect of future accounting incorporated on 4 December have been applied consistently standards not adopted, 2015 and has subsequently been throughout the year unless / Related party transactions with converted to a public limited otherwise stated. other group entities, company “plc” on 8 November 2017. / Share based payments The financial statements have been disclosures, The principal activity of the prepared on an historic cost basis. / Financial instrument disclosures. Company and its subsidiaries is the provision of information technology The financial statements are Going concern services. The company number presented in pounds sterling. The Company has net current is SC521839. assets of £8.8m at 30th June 2021 (2020: £3.0m).

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Company Financial Statements After making enquiries, the directors goodwill. Where changes are made indicates that the carrying value of FINANCE have a reasonable expectation that to the fair value of contingent a investment is possible. In addition, the Company will be able to meet consideration as a result of events the Company carries out an annual its financial obligations and has that occurred after the acquisition impairment review. An impairment adequate resources to continue date then the adjustment is is recognsed when the recoverable in operational existence for the accounted for as a charge or amount is less than the carrying foreseeable future (being a period credit to profit or loss. amount. The impairment tests are extending at least twelve months carried out by cash generating unit from the date of approval of these Deferred consideration is and reflect the latest projections financial statements). For this recognised at fair value at the from the subsidiary. reason they continue to adopt the acquisition date. Subsequent The value in use calculation going concern basis in preparing changes to the fair value of the requires an estimate to be made the financial statements. deferred consideration, which is of the timing and of the amount of deemed to be an asset or liability, future cash flows to be generated Revenue are recognised either in the profit and the application of a suitable Revenue arises from intercompany and loss account or in other discount rate in order to calculate management charges, stated net comprehensive income. the present value. A change in of VAT. the assumptions selected by Prior period adjustment management and used in the cash Investments During the year, it was identified flow projections could significantly Investments held as fixed assets that the full share based payment affect the impairment calculation. are stated at cost less provision charges for options awarded to During the year, the impairment for any permanent diminution in employees across The Group review identified an impairment value. On an annual basis, in order had been apportioned incorrectly to the carrying value of the to assess any potential impairment through the parent company only. investment, with a change to of investments, the carrying value The correct treatment should have the P&L of £784,000 recognised of the investment in all companies been to apportion the charge to the in the year. is considered against future cash subsidiary companies where the flows and reviewed for events or employees receiving the options 107 changes in circumstances that were contracted. indicate that the carrying amount may be impaired. As a consequence, the value of investment and retained earnings in Contingent consideration the Beeks Financial Cloud Group PLC Where an acquisition involves a (the “Company”) were understated potential payment of contingent in the prior period. The error has consideration the estimate of been corrected by restating the any such payment is based on value of investments in the prior its fair value. To estimate the fair year from £4.52m to £4.65m and value an assessment is made retained earnings from £0.05m to as to the amount of contingent £0.18m. This resulted in an overall consideration which is likely to increase in net assets from £5.51m be paid having regard to the to £5.64m. criteria on which any sum due will be calculated and is probability Critical accounting judgements based to reflect the likelihood of and key sources of estimation different amounts being paid. uncertainty Where a change is made to the fair The key judgements in preparation value of contingent consideration of the financial statements are within the initial measurement below and opposite: period as a result of additional information obtained on facts Carrying value of investments and circumstances that existed The Company carries out an at the acquisition date then this impairment review whenever is accounted for as a change in events or changes in circumstance

108 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Consolidated Statement of Changes in Equity 3. Staff Costs 2021  2020  Average monthly number of employees Number Number i) (including directors) by activity: 22 17  Management and administration £000 £000  ii) Cost of employment (including directors): 1,399 942 Wages and salaries 112 Social security costs 170 22 Pension costs 34 1,603 1,076 4. Investments 2021  2020 Shares in Group undertakings £000  Restated  4,045 £000  4,647  FINANCE During the year, the Group employees across the group had retained earnings have decreased issued share options of £308,144 been apportioned incorrectly by £126,179. to employees of the subsidiary through the parent company only. companies. Following an impairment review, This has been adjusted in the year, the investment in Velocimetrics During 2021, the Group identified with prior year being restated. As Limited was impaired by £784,000 that the full share based payment a result of this, Investments have (2020 - £nil). charges for options awarded to been increased by £126,179 and 5. Deferred Tax 2021  2020  £000  £000  Tax losses carried forward Share based payments, recognised in equity 244 - Deferred tax asset 69 - Deferred tax liability 313 - 3 2021  2020  6. Current assets – Trade and other receivables £000  £000  Repayments and accrued interest 75 48 Amounts due from Group undertakings 7,200 4,198 7,275 4,246

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Company Financial Statements 7. Current liabilities – Trade and other payables 2021  2020  £000  £000  Trade payables Accruals 23 14 Other taxes 148 53 Other payables 205 189 Deferred consideration Contingent consideration 7 5 - 552 - 488 383 1,301 8. EQUITY – ISSUED CAPITAL Financial Cloud Group Limited 12. CONTINGENT LIABILITIES For details of the issued share and the value of The Group being The Company had no material capital see note 19 in the acquired, Beeks Financial Cloud contingent liabilities at 30 June 2021. Group notes. Limited. 13.POST BALANCE SHEET EVENTS 9. EQUITY - RESERVES During the prior year £333,000 Beeks headquarters will move FINANCE Ordinary shares are classified was recognised within the merger from the existing leased office to the as equity. An equity instruments reserve, which arose on the share nearby Riverside Business Park, King’s is a contract that evidences a for share exchange reflecting the Inch Road, Braehead, PA4 8YU in residential interest in the assets difference between the nominal early 2022. In September 2021, The of Beeks Financial Cloud Group Plc value of the share capital issued Group finalised the purchase of after deducting all of its liabilities. from Beeks Financial Group plc the property for £2.1m which was Every instrument issued by Beeks and the value of the shares issued funded out of existing Company Financial Cloud Group Plc are to the owners of Velocimetrics Ltd cash balances and a new debt recorded at the proceeds received at the date of acquisition. facilities of £1.5m taken post net of direct issue costs. year end. 10. RELATED PARTY The share capital amount TRANSACTIONS 14. ULTIMATE represents the amount subscribed As permitted by FRS 101, related CONTROLLING PARTY for shares at nominal value. Any party transactions by wholly The Directors have assessed transactional costs associated with owned members of The Group that there is no ultimate the issuing of share are deducted have not been disclosed. Related controlling party. from the share premium, net of party transactions regarding any related taxation benefits. The remuneration and dividends accounting policies set out above paid to key management of the have, unless otherwise stated, have company have been disclosed been applied consistently by The in note 23 of The Group financial Group to all periods presented. statements. The merger reserve arose on the 11. CAPITAL COMMITMENTS share for share exchange reflecting The Company had no material the difference between the nominal capital commitments at 30 value of the share capital in Beeks June 2021. 109

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