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 Group PLC KEY AUDIT MATTERS allocation of resources in the audit; GOVERNANCE Key audit matters are those and directing the efforts of the matters that, in our professional engagement team. These matters judgement, were of most were addressed in the context of our significance in our audit of The audit of The Group financial statements Group financial statements of the as a whole, and in forming our opinion current period and include the thereon, and we do not provide a most significant assessed risks of separate opinion on these matters. material misstatement (whether or not due to fraud) that we identified. In the graph below, we have These matters included those that presented the key audit matters, had the greatest effect on: the significant risks and other risks overall audit strategy; the relevant to the audit. 49

50 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Independent Auditors’ Report to the members of Beeks Financial Cloud Group PLC Key Audit Matter How our scope addressed the matter GOVERNANCE Revenue recognition In responding to the key audit matter, we performed We identified revenue recognition as one of the most the following audit procedures: significant assessed risks of material misstatement due We utilised revenue data analytics on private and to fraud. wholesale revenue streams to identify any anomalies, being transactions the software identifies that falls Group revenue recognised in the year has grown out with the standard posting cycle. Any anomalies from £9.4m last year to £11.6m for the year ended 30 identified were followed up with management and June 2021. traced to supporting evidence; In addition to this, a substantive sample of invoices was We have pinpointed the significant risk in revenue selected for testing to gain further evidence over the to be the impact of contract assets and contract occurrence of these sales; liabilities adjustment made at year end due to Using the IFRS 15 technical paper provided by the manual process and judgement involved in management, we have obtained relevant invoices, determining the satisfaction of the performance delivery notes and sales orders to agree the treatment obligation. This differs from the revenue recognised, of accrued and deferred income. The entries were and received, in the year where we note there is less traced into the consolidated statement of financial judgement involved. position with the corresponding consolidated statement of comprehensive income impact In addition to this, the application of International confirmed as the movement between the opening and Financial Reporting Standard (IFRS) 15 ‘Revenue from closing position; Contracts with Customers’, specifically in relation A sample of hardware sales and one-off sales to management judgement and complexities recognised at year end were traced to goods regarding the revenue recognised under contract dispatched notes or relevant supporting accounting within Velocimetrics Limited, is documentation such as timesheets for professional considered a significant risk.. services to ensure revenue is recognised at the correct We also identified a significant risk regarding the point in time, being when control is passed to the recognition of non-recurring elements of revenue customer, or when the service has been provided; and hardware sales around the year end to ensure We obtained an updated paper on the application the risks and rewards of the goods had passed to the of IFRS 15 specific to Velocimetrics Limited and, via customer prior to the year end. a sample, assessed whether the revenue has been recognised in line with the framework by reviewing both existing and new revenue contracts and creating expectations, comparing against actual revenue recognised. This included selecting samples of contract assets and contract liabilities and testing these for accuracy; and We reviewed and assessed the revenue recognition policies at a group level for appropriateness. Relevant disclosures in the Annual Report 2021 Our results / Financial statements: Note 1 - Summary of Overall, our audit testing did not identify any evidence significant accounting policies, Revenue recognition of material misstatement in respect of group revenue and Note 2 – Critical accounting judgements and recognition. key sources of estimation uncertainty, Revenue; / Strategic Report: Financial performance, Revenue; and / Strategic Report: Principal risks and uncertainties, Terms of client contracts.

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Independent Auditors’ Report to the members of Beeks Financial Cloud Group PLC Impairment of goodwill In responding to the key audit matter, we performed in Velocimetrics Limited the following audit procedures: We identified the impairment of goodwill in We obtained the impairment model and challenged GOVERNANCE Velocimetrics Limited as one of the most significant the core assumptions within these management assessed risks of material misstatement due to fraud approved cashflows, specifically looking into forecast and error. v actual and the historic accuracy of management’s In the prior year, the acquisition of Velocimetrics Limited forecasting; resulted in goodwill of £1.8m. We obtained management’s assessment of CGUs Due to the performance of the newly acquired business and the allocation of cashflows and assets, including falling below expectation, evidenced by the fact that corporate assets, to these CGUs; £2.0m of previously accrued contingent consideration Revenue growth within the forecasts was specifically was not paid out in the current year, there is a risk that challenged given the underperformance of the goodwill value is impaired. Velocimetrics Limited since acquisition. The key The process for assessing whether an impairment revenue driver in the model, being the pipeline of future exists under International Accounting Standard (IAS) sales opportunities, was challenged and corroborating 36 ‘Impairment of Assets’ is complex. Calculating the evidence, such as contracts won post year end and value in use, through forecasting cash flows related proposals issued at the tender stage, were obtained to CGUs and the determination of the appropriate and agreed back into the forecasts. We further discount rate and other assumptions to be applied, is challenged the inputs into the run-rate, specifically highly judgemental and as a result of the subjectivity those values impacting the terminal value year; of selecting the assumptions, can be subject to Costs and the allocation of sufficient corporate management bias. The selection of certain inputs into assets were considered and challenges made to the cashflow forecast can significantly impact the management with regards to the reasonableness of result of the impairment review. overheads incorporated; The key inputs impacting the model are considered to be: Our internal experts reviewed the reasonableness of the discount rate applied including the workings / The pipeline of future sales opportunities; behind this discount rate; / The discount rate; Sensitivities were performed on the cashflows to bring / The allocation of costs and corporate assets; and together all evidence to identify a potential undetected / The growth rate. impairment; and Assessed whether group disclosures with respect to the As a result of this process management identified an carrying value of the Group’s goodwill and intangible impairment of £994,000 within the goodwill in relation assets are adequate and the key assumptions have to Velocimetrics Limited. been disclosed, including management’s impairment methodology being in line with IAS 36. Relevant disclosures in the Annual Report 2021 Our results / Financial statements: Note 1 – Summary of Overall, our testing did not identify any evidence of significant accounting policies, Intangible assets an additional material impairment charge against and amortisation and Impairment; goodwill being required. / Financial statements: Note 2 – Critical accounting judgements and key sources of estimation uncertainty, Goodwill and other indefinite life intangible assets; / Financial statements: Note 10 – Intangible assets; and / Report of the Audit Committee: Areas of estimates. 51

52 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Independent Auditors’ Report to the members of Beeks Financial Cloud Group 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 Country of  incorporation  Materiality for financial We define materiality as the magnitude of misstatement in the financial statements as a whole statements that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of these financial statements. We use materiality in determining the nature, timing and extent of our audit work. Materiality threshold £174,000, which represents approximately 1.5% of the Group’s revenue. GOVERNANCE Significant judgements In determining materiality, we made the following significant judgements: made by auditor in We considered revenue to be the most appropriate benchmark given the determining the materiality Group’s focus on driving revenue growth for the stakeholders. Materiality for the current year is higher than the level that we determined for the year ended 30 June 2020 to reflect an increase in revenue across the group as a whole, including a full year of revenue from Velocimetrics Limited.  Performance materiality We set performance materiality at an amount less than materiality for the used to drive the extent of financial statements as a whole to reduce to an appropriately low level the our testing probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole. Performance £121,800, which is 70% of financial statement materiality. Materiality threshold Significant judgements In determining performance materiality, we made the following significant made by auditor in judgements: determining the materiality 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. Specific materiality We determine specific materiality for one or more particular classes of transactions, account balances or disclosures for which misstatements of lesser amounts than materiality for the financial statements as a whole could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. Specific materiality We determined a lower level of specific materiality for the following areas: / Directors’ remuneration; and / Related party transactions.

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Independent Auditors’ Report to the members of Beeks Financial Cloud Group PLC Communication We determine a threshold for reporting unadjusted differences of misstatements to to the audit committee. the audit committee £8,700 and misstatements below that threshold that, in ourview, warrant Threshold for reporting on qualitative grounds. communication The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for potential uncorrected misstatements. OVERALL MATERIALITY GOVERNANCE AN OVERVIEW OF THE SCOPE opinion on The Group financial Identifying significant OF OUR AUDIT statements. We take into account components We performed a risk-based audit size, risk profile, changes in the that requires an understanding business environment and other / Of all components, two were of The Group’s business and in factors when assessing the level determined to be significant to particular matters related to: of work to be performed on each The Group – Beeks Financial Cloud component; Group PLC, the parent company, Understanding The Group, / We obtained an understanding and Beeks Financial Cloud Limited. its components, and their of the component-level controls Full scope audit procedures were environments, including of The Group as a whole, which completed on these components. group-wide controls assisted us in identifying and / Significant group components assessing the risks of material were determined by calculating / Our assessment of audit risk, misstatement due to fraud or benchmark percentages, with our evaluation of materiality and error, as well as assisting us in anything identified above our allocation of performance determining the most appropriate 15% considered a significant materiality determines the audit strategy. component. Benchmarks reviewed scope of our audit work for each included revenue, profit before component within The Group, tax, cash and cash equivalents which when taken together, and total assets (excluding enables us to form an audit intercompany). 53

54 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Independent Auditors’ Report to the members of Beeks Financial Cloud Group PLC Independent Auditors’ Report GOVERNANCE Type of work to be performed on profit position. There are no other misstatement of this other financial information of parent and material changes in the scope of information, we are required to other components (including how it the current year from the scope report that fact. addressed the key audit matters) of the prior year. We have nothing to report in / audit of the financial information OTHER INFORMATION this regard. of the component using The directors are responsible component materiality (full-scope for the other information. The Our opinion on other matters audit) for Beeks Financial Cloud other information comprises the prescribed by the Companies Group PLC and Beeks Financial information included in the annual Act 2006 is unmodified Cloud Limited; report, other than the financial In our opinion, based on the / audit of one or more account statements and our auditor’s work undertaken in the course balances, classes of transactions report thereon. Our opinion on of the audit: the information or disclosures of the component the financial statements does not given in the strategic report (specific-scope audit) for cover the other information and, and the directors’ report for the Velocimetrics Limited and Beeks except to the extent otherwise financial year for which The Group FX VPS USA Inc.; explicitly stated in our report, we do financial statements are prepared / analytical procedures at group not express any form of assurance is consistent with The Group level (analytical procedures) for conclusion thereon. financial statements; and the Beeks Financial Cloud Co. Ltd and strategic report and the directors’ Velocimetrics Inc; In connection with our audit of report have been prepared in / no component auditors were The Group financial statements, accordance with applicable utilised throughout this audit, all our responsibility is to read legal requirements. work was performed by The Group the other information and, in engagement team. doing so, consider whether the MATTER ON WHICH WE ARE other information is materially REQUIRED TO REPORT UNDER THE Performance of our audit inconsistent with The Group COMPANIES ACT 2006 / an interim visit was undertaken financial statements or our In the light of the knowledge to perform specific procedures knowledge obtained in the and understanding of The Group on the equity raises completed to audit or otherwise appears and its environment obtained in December and the re-finance in to be materially misstated. the course of the audit, we have the year; If we identify such material not identified material / the year-end audit was inconsistencies or apparent misstatements in the strategic undertaken remotely. material misstatements, we are report or the directors’ report. required to determine whether Changes in approach from there is a material misstatement MATTERS ON WHICH WE previous year of The Group financial statements ARE REQUIRED TO REPORT or a material misstatement of the BY EXCEPTION / In the current year, specific other information. If, based on We have nothing to report in audit procedures were performed the work we have performed, we respect of the following matters in at a USA component level due conclude that there is a material relation to which the Companies to the high percentage of losses making up the closing group

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Independent Auditors’ Report to the members of Beeks Financial Cloud Group PLC Act 2006 requires us to report AUDITOR’S RESPONSIBILITIES with laws and regulations. We GOVERNANCE to you if, in our opinion: FOR THE AUDIT OF THE GROUP design procedures in line with our certain disclosures of directors’ FINANCIAL STATEMENTS. responsibilities, outlined above, to remuneration specified by law Our objectives are to obtain detect material misstatements in are not made; or we have not reasonable assurance about respect of irregularities, including received all the information and whether The Group financial fraud. Owing to the inherent explanations we require for statements as a whole are free limitations of an audit, there is our audit. from material misstatement, an unavoidable risk that material whether due to fraud or error, misstatements in the financial RESPONSIBILITIES OF DIRECTORS and to issue an auditor’s report statements may not be detected, FOR THE GROUP FINANCIAL that includes our opinion. even though the audit is properly STATEMENTS Reasonable assurance is a high planned and performed in As explained more fully in the level of assurance, but is not a accordance with the ISAs (UK). directors’ responsibilities statement, guarantee that an audit conducted the directors are responsible for the in accordance with ISAs (UK) The extent to which our preparation of The Group financial will always detect a material statements and for being satisfied misstatement when it exists. procedures are capable of that they give a true and fair view, Misstatements can arise from and for such internal control as the fraud or error and are considered detecting irregularities, including directors determine is necessary material if, individually or in the to enable the preparation of group aggregate, they could reasonably fraud is detailed below: financial statements that are be expected to influence the free from material misstatement, economic decisions of users / We obtained an understanding whether due to fraud or error. taken on the basis of these group financial statements. of the legal and regulatory In preparing The Group financial statements, the directors are A further description of our frameworks applicable to responsible for assessing The responsibilities for the audit Group’s ability to continue as of the financial statements is The Group and the industry a going concern, disclosing, as located on the Financial Reporting applicable, matters related to Council’s website at: www.frc. in which it operates through going concern and using the org.uk/auditorsresponsibilities. going concern basis of accounting This description forms part of our our general commercial unless the directors either intend auditor’s report. to liquidate The Group or to cease and sector experience. We operations, or have no realistic Explanation as to what extent the alternative but to do so. audit was considered capable of determined the following detecting irregularities, including fraud laws and regulations were Irregularities, including fraud, are instances of non-compliance most significant: international accounting standards in conformity with the requirements of the Companies Act 2006, the Companies Act 2006 and the Quoted Companies Alliance (QCA) Corporate Governance Code. In addition, we concluded that there are certain sector laws and regulations that may impact the financial statements, namely GDPR regulations and Information Security Management System (ISMS) Standards; 55

56 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Independent Auditors’ Report to the members of Beeks Financial Cloud Group PLC Independent Auditors’ Report GOVERNANCE / We obtained an understanding to prevent and detected fraud; the potential for fraud in revenue of how The Group is complying - Journal entry testing, with recognition and inaccurate with these legal and regulatory a focus on manual journals assumptions included within the frameworks by making enquiries with a profit impact or that goodwill impairment assessment. of management, the Audit increase revenue; These are also reported as key Committee and reviewing legal - Challenging assumptions audit matters in the relevant correspondence via sampling and judgements made by section of our report where invoices in relation to legal management in areas of the matters are explained in expenditure. We corroborated estimation and judgement; more detail; our enquiries through a review - Assessing the extent of / In assessing the potential risk of board minute papers. compliance with the relevant of material misstatement, we Management and the Audit laws and regulations as part obtained an understanding of: Committee confirmed they were of our procedures on legal - The operations of The Group, not aware of any instances of expenditure; and including the different revenue non-compliance and that they - Performing audit procedures streams, products and services had no knowledge of actual, to test whether the disclosures offered and the objectives and suspected or alleged fraud; required by international strategies of The Group, in order / We assessed the susceptibility accounting standards in to understand the classes of of The Group’s financial conformity with the requirements transactions, account balances, statements to material of the Companies Act 2006 expected disclosures and risk misstatement, including how and the Companies Act 2006 areas; and fraud might occur, by evaluating are present within The Group management’s incentives and financial statements. - The Group’s control opportunities for manipulation / Our assessment of the environment, including the of the financial statements. Our appropriateness of the collective policies and procedures audit procedures were designed competence and capabilities of implemented to comply with to provide reasonable assurance the engagement team included regulatory requirements, that the financial statements consideration of the team’s: including the adequacy of were free from fraud or error. - Understanding of, and the training to inform staff However, detecting irregularities practical experience with, audit of changes in legislation, that result from fraud is inherently engagements of a similar internal review procedures and more difficult than detecting nature and complexity, through resources available to ensure those that result from error, as appropriate training and that possible breaches of those irregularities that result participation; and requirements are appropriately from fraud may involve collusion, - Knowledge of the industry in investigated and reported. deliberate concealment, forgery which The Group operates. or intentional misrepresentation. / Our communications, both OTHER MATTERS The procedures included: with management and the We have reported separately on Audit Committee, in respect of the parent company financial - Evaluation of the design non-compliance with laws and statements of Beeks Financial effectiveness of controls that regulations and fraud included Cloud Group PLC for the year management has in place

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Independent Auditors’ Report to the members of Beeks Financial Cloud Group PLC ended 30 June 2021. That report permitted by law, we do not accept includes details of the parent or assume responsibility to anyone company key audit matters; other than the company and the how we applied the concept company’s members as a body, for of materiality in planning and our audit work, for this report, or for performing our audit; and an the opinions we have formed. overview of the scope of our audit. USE OF OUR REPORT GOVERNANCE This report is made solely to the company’s members, as a body, in JAMES CHADWICK accordance with Chapter 3 of Part Senior Statutory Auditor for and 16 of the Companies Act 2006. Our on behalf of Grant Thornton UK LLP audit work has been undertaken Statutory Auditor, so that we might state to the Chartered Accountants, Glasgow company’s members those matters 24 September 2021 we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent 57

58 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Consolidated Statement of Comprehensive Income Revenue Note 2021  2020  Other Income 3 £000  £000  Cost of sales 3 11,615 9,360  Gross profit 4 309 59 (6,591) (4,845) Administrative expenses 10 9 5,333 4,574 Operating (loss)/profit 9 (5,783) (3,619) 9 Analysed as 4 (450) 955 20 Earnings before depreciation, amortisation, acquisition 4 4,452 3,394 costs, share based payments and non-recurring costs: Depreciation 2,020 1,474 Amortisation – acquired intangible assets 806 237 Amortisation – other intangible assets 231 150 Impairment of intangible assets 994 Non-recurring acquisition integration costs 140 - Share based payments 546 205 Other non-recurring costs 165 312 Operating (loss)/profit (450) 61 955 FINANCE Gain on revaluation of contingent consideration 15 1,989 Finance income 5 5 - Finance costs 2 8 (289) (279) Profit before taxation 1,255 Taxation 349 678  Profit after taxation for the year attributable to the owners 1,604 (103) of Beeks Financial Cloud Group PLC (157) 575 Other comprehensive income 1,447 43 Amounts which may be reclassified to profit and loss pence 618 Currency translation differences 3.07 3.07 pence Total comprehensive income for the year attributable 1.13 to the owners of Beeks Financial Cloud Group PLC 1.13 Basic earnings per share 24 Diluted earnings per share 24 The above income statement should be read in conjunction with the accompanying notes.

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Consolidated Statement of Financial Position Non-current assets Note 2021  2020  Intangible assets £000  £000  Property, plant and equipment 9 Deferred tax 10 6,008 6,741 11 10,390 6,755 Current assets Trade and other receivables 12 896 380 Cash and cash equivalents 13 17,294 13,876 2,210 1,525 3,372 1,433 5,582 2,958 Total assets 22,876 16,834 Liabilities Non-current liabilities 16 896 1,461 Borrowings 16 2,210 1,991 Lease liabilities 15 1,957 Contingent consideration due on acquisitions 11 - 531 Deferred tax 617 5,940  Total non-current liabilities 3,723 Current liabilities 17 4,143 2,449 FINANCE Trade and other payables Contingent consideration 15 - 488 Lease liabilities Borrowings 16 656 544 Total current liabilities 16 589 697 5,388 4,178 Total liabilities 9,111 10,118 Net assets 13,765 6,716  Equity Issued capital 19 70 64 Share premium Reserves 21 9,452 4,309 Retained earnings Total equity 19 1,261 909 2,982 1,434 13,765 6,716 These financial statements were GORDON MCARTHUR,CHIEF Beeks Financial Cloud Group Plc, approved by the Board of Directors on EXECUTIVE OFFICER, Company number: SC521839 24 September 2021 and were signed on its behalf by: 59The above statement of changes in equity should be read in conjunction with the accompanying notes.

60 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Consolidated Statement of Changes in Equity Issued Foreign Merger Other Share Share Retained Total capital currency reserve reserve based premium earnings equity £000 reserve payments Reserve £000 £000 £000 £000 £000 £000  £000 As at 1 July 2019 64 102 372 (315) 63 4,309 1,037 5,632 Profit after income tax expense - - - - - - 575 575 for the year Currency translation difference - 43 - - - - - 43 Total comprehensive income - 43 - - - - 575 618 Deferred tax -------- Issue of share capital - - 333 - - - - 333 Share based payments - - - - 311 - - 311 Dividends paid - - - - - - (178) (178) Total transaction with owners - - 333 - 311 - (178) 466 Balance at 30 June 2020 64 145 705 (315) 374 4,309 1,434 6,716 and 1 July 2021 Profit after income tax expense - - - - - - 1,604 1,604 for the year Currency translation difference - (157) - - - - - (157) FINANCE Total comprehensive income - (157) - - - - 1,604 1,447 Deferred tax - - - - - - 86 86 Issue of share capital 6 - - - - 5,143 - 5,149 Share based payments - - - - 547 - - 547 Exercise of share options - - - - (38) - 38 - Dividends paid - - - - - - (180) (180) Total transaction with owners 6 - - - 509 5,143 (56) 5,602 Balance at 70 (12) 705 (315) 883 9,452 2,982 13,765 30 June 2021 The above statement of changes in equity should be read in conjunction with the accompanying notes.

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Consolidated Statement of Cash Flow Note 2021  2020  £000  £000  Cash flows from operating activities Profit before taxation for the year 1,255 678 Adjustments for: Depreciation and amortisation 3,059 1,861 Share options 546 312 Gain on revaluation of contingent consideration - Impairment (1,989) - Foreign exchange 994 17 Interest received (6) (2) Finance fees and interest (5) 192 190 Operating cash flows 3,058 4,044 (419) (Increase) in receivables (874) Increase/ (decrease) in payables 2,336 678 Operational cash flows after movement in working capital 5,506 3,317  Corporation tax paid (33) (23) Net cash inflow from operating activities 5,473 3,294 Cash flows from investing activities 9 (2,005) (720) FINANCE Capitalised development costs 10 (4,746) (2,819) Payments for property, plant and equipment (750) Payments for prior period acquisition 5 (555) Proceeds from grant income 669 115 Net cash (outflow)/ inflow from investing activities (4,174) (6,637) Cash flows from financing activities Repayment of existing loan borrowings (3,736) (324) Dividends paid (180) (178) Lease liabilities (485) (731) Interest on lease liabilities (99) (87) Deferred consideration (460) Issue of loans 3,050 - Finance fees and interest (190) 1,485 Interest received 5 (192) Proceeds from the issue of share capital 5,198 2 - Net cash outflow from financing activities 3,103 (25)  Net increase/(decrease) in cash and cash equivalents 1,939 (905) Cash and cash equivalents at beginning of year 1,433 2,338 Cash and cash equivalents at end of year 13 3,372 1,433 The above statement of changes in equity should be read in conjunction with the accompanying notes. 61

62 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements Notes to Financial Statements FINANCE 1. SUMMARY OF SIGNIFICANT The financial statements have been 1 January 2020. The amendments ACCOUNTING POLICIES prepared on the historical cost provide a new definition of material basis except for the valuation of that states, “information is material CORPORATE INFORMATION certain financial instruments that if omitting, misstating or obscuring Beeks Financial Cloud Group PLC are measured at fair values at each it could reasonably be expected to is a public limited company which reporting period, as explained in influence decisions that the primary is listed on the AIM Market of the the accounting policies below. users of general purpose London Stock Exchange and is financial statements make on the incorporated in Scotland. The The measurement bases and basis of those financial statements, address of its registered office is principle accounting policies of which provide financial information Lumina Building, 40 Ainslie Road, The Group are set out below and about a specific reporting entity.” Ground Floor, Hillington Park, are consistently applied to all years Glasgow, UK, G52 4RU. The principal presented unless otherwise stated. The amendments clarify that activity of The Group is the provision materiality will depend on the of information technology services. International Financial Reporting nature or magnitude of information, Standards and Interpretations either individually or in combination The registered number of the issued but not yet effective with other information, in the Company is SC521839. New and revised IFRSs in issue but context of the financial statements. The financial statements are not yet effective and have not been A misstatement of information is prepared in pounds sterling and adopted by The Group at the date material if it could reasonably be rounded to the nearest thousand. of authorisation of these financial expected to influence decisions In certain cases, amounts in the statements, the following standards, made by the primary users. report have been rounded to the interpretations and amendments The Directors consider that this nearest pound. have been issued but are not yet amendment had no impact on the effective and have no material financial statements of The Group, The principal accounting policies impact on The Group’s financial nor is there expected to be any adopted in the preparation of the statements: future impact to The Group. financial statements are set out below. These policies have been / IFRS 17 - Insurance Contracts; During the year, the below revised consistently applied to all the years / IAS 1 – Classification of assets as IFRSs took effect. The Group have presented, unless otherwise stated. current or non-current made an assessment on the / Annual improvements to IFRS standards and amendments BASIS OF PREPARATION Standards 2018-2020 cycle below and has concluded that These financial statements have there is no material impact on the been prepared in accordance with Adoption of new and revised financial statements: applicable International Financial Standards - amendments to IFRS Reporting Standards (IFRS) in that are mandatorily effective for / Definition of a Business conformity with the requirements the current year (Amendments to IFRS 3) of the Companies Act 2006. The Group applied the amendments / Amendments to ‘References to to IAS 1 and IAS 8 Definition of Material the Conceptual Framework in IFRS for the first time as this is effective for Standards’ annual periods beginning on or after / Amendments to IFRS 9, IAS

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements 39 and IFRS 7 – Interest Rate covenants processes for managing its capital; FINANCE benchmark reform phase 2 / Potential further impact of its financial risk management Covid-19 objectives; details of its financial CHANGE IN ACCOUNTING / the finance facilities available instruments and hedging activities; ESTIMATES to The Group, including the and its exposures to credit risk and During the year, as part of the availability of any short term liquidity risk. impairment review carried out on funding required. acquired intangible assets, The The directors are of the opinion that Group reviewed the appropriateness The Group’s business activities, The Group can operate within their of the remaining useful life of together with the factors likely current debt facilities and comply the customer relationship list of to affect its future development, with its banking covenants. At the CNS, acquired in 2019. The Group performance and position are set end of the financial year, The Group deemed it appropriate to reduce the out in the Strategic report on pages had net cash of £1.9m (2020: Net estimated useful life from 8 years to 4 to 23 including the potential impact debt £0.75m) a level which the Board 4 years. The impact on the current of Covid-19. The financial position is comfortable with given the strong and remaining years’ amortisation of The Group, its cash flows, liquidity cash generation of The Group and charge for this asset is an additional position and borrowing facilities low level of debt to EBITDA ratio. The annual charge of £70,000. are described in the Chief Financial Group has a diverse portfolio of Officer’s Report on pages 13 to 16. customers with relatively low customer GOING CONCERN concentration which are split across The Directors have assessed the In the past eighteen months since different geographic areas. As a current financial position of Beeks the response to the Covid-19 consequence, the directors believe Financial Cloud Group PLC, taking pandemic was initiated in the UK, that The Group is well placed to account of its business activities, there has been limited impact manage its business risks. together with the factors likely to affect on Beeks’ trading from Covid-19. its future development, performance We take great comfort from the The directors have considered The and position as set out in the resilience of our business model Group budgets and the cash flow Strategic report on pages 4 to 23. and are fortunate that we are forecasts for the next two financial not significantly exposed to the years, and associated risks, including The key factors considered by the industries that are suffering the the potential impact of Covid-19, and Directors were: worst effects. The level of customer the availability of bank and leasing churn across our business has facilities. We have run appropriate / historic and current trading and remained low and cash collection scenario and stress tests applying profitability of The Group, has been in line with our typical reasonable downside sensitivities / the rate of growth in sales both profile. We do however remain and are confident we have the historically and forecast, vigilant to the economic impact resources to meet our liabilities as / the competitive environment in the ongoing situation may create, they fall due including mitigating which The Group operates, particularly on the SME segment actions to take should some loan / the current level of cash of the market. Note 1 to the facilities not be made available reserves, financial statements includes The at the end of current terms, which / current level of debt obligations Group’s objectives, policies and / Ability to comply with existing 63is December 2022 and coincides

64 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements Notes to Financial Statements FINANCE with the end of management’s liabilities incurred to former owners Foreign operations assessment period. Within these of the acquiree and the equity The assets and liabilities of foreign scenarios, we have taken into interests issued to The Group. The operations are translated into pound consideration the acquisition of consideration transferred includes sterling using the exchange rates the property referenced in the the fair values of any asset or at the reporting date. The revenues subsequent events section. After liability resulting from a contingent and expenses of foreign operations making enquiries, the directors consideration arrangement. are translated into Pound sterling have a reasonable expectation Identifiable assets acquired using the average exchange rates, that The Group will be able to meet and liabilities and contingent which approximate the rates at the its financial obligations and has liabilities assumed in a business dates of the transactions, for the adequate resources to continue combination are measured initially period. All resulting foreign exchange in operational existence for the at their fair values on the acquisition differences are recognised in other foreseeable future. For this reason date. Acquisition related costs are comprehensive income through the they continue to adopt the going expensed as incurred. As each of the foreign currency reserve in equity. concern basis in preparing the subsidiaries are 100% wholly owned, financial statements. The Group has full control over Business Combinations each of its investees. Intercompany Acquisitions of subsidiaries are Accordingly, the Directors have transactions, unrealised gains and accounted for using the acquisition adopted the going concern basis losses on intragroup transactions and method. The acquisition method in preparing the Report for the year balances between group companies involves the recognition at fair value ending 30 June 2021. are eliminated on consolidation. of all identifiable assets and liabilities, including contingent liabilities of PRINCIPLES OF CONSOLIDATION Foreign currency transactions the subsidiary, at the acquisition Subsidiaries are all entities over Foreign currency transactions date, regardless of whether or not which The Group has control. The translated into pound sterling using they were recorded in the financial Group controls an entity when The the exchange rates prevailing at statements of the subsidiary prior to Group is exposed to, or has rights to, the dates of the transactions. acquisition. On initial recognition, the variable returns from its involvement Foreign exchange gains and losses assets and liabilities of the subsidiary with the subsidiary and has the resulting from the settlement of are included in the statement of ability to affect those returns through such transactions and from the financial position at their fair values, its power over the entity. Subsidiaries translation at financial year-end which are also used as the bases are fully consolidated from the date exchange rates of monetary assets for subsequent measurement on which control is transferred to and liabilities denominated in in accordance with The Group The Group. They are deconsolidated foreign currencies are recognised accounting policies. from the date that control ceases. in profit or loss. Foreign exchange The Group applies the acquisition gains and losses resulting from Where The Group’s assessment of method to account for business the retranslation of inter-company the net fair value of a subsidiary’s combinations. The consideration balances are recognised in the identifiable assets acquired and transferred for the acquisition of a profit and loss account. Non liabilities assumed is less than subsidiary or a business is the fair monetary assets are translated at the fair value of the consideration values of the assets transferred, the the historical rate. including contingent consideration

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements of the business combination then combination includes a contingent 4. Allocating the transaction price FINANCE the excess is treated as goodwill. consideration arrangement, to the performance conditions Where The Group’s assessment of the contingent consideration is 5. Recognising revenue when/ the net fair value of a subsidiary’s measured at its acquisition-date as performance obligation(s) are net assets and liabilities exceeds fair value and included as part of satisfied. the fair value of the consideration the consideration transferred in a including contingent consideration business combination. Changes Revenue is measured at transaction of the business combination then the in fair value of the contingent price, stated net of VAT and other excess is recognised through profit or consideration that qualify as sales related taxes, if applicable. loss immediately. measurement period adjustments are adjusted retrospectively, with Infrastructure services Where an acquisition involves a corresponding adjustments against The Group’s core business potential payment of contingent goodwill. Measurement period provides managed Cloud computing consideration the estimate of any adjustments are adjustments that infrastructure and connectivity. The such payment is based on its fair arise from additional information Group considers the performance value. To estimate the fair value obtained during the ‘measurement obligation to be the provision of an assessment is made as to the period’ (which cannot exceed one access and use of servers to our amount of contingent consideration year from the acquisition date) clients. As the client receives and which is likely to be paid having about facts and circumstances consumes the benefit of this use regard to the criteria on which any hat existed at the acquisition date. and access over time, the related sum due will be calculated and revenue is recognised evenly over is probability based to reflect the Deferred consideration is recognised the life of the contract. likelihood of different amounts at fair value at the acquisition date. being paid. Where a change is Subsequent changes to the fair Monitoring software and made to the fair value of contingent value of the deferred consideration, maintenance services consideration within the initial which is deemed to be an asset or Following the acquisition of measurement period as a result liability, are recognised either in the Velocimetrics, The Group also of additional information obtained profit and loss account or in other provides software products that on facts and circumstances that comprehensive income. analyse and monitor IT infrastructure. existed at the acquisition date then Revenue from the provision of this is accounted for as a change REVENUE RECOGNITION software licences is split between in goodwill. Where changes are Revenue arises from the provision the delivery of the software licence made to the fair value of contingent of Cloud-based localisation. To and the ongoing services associated consideration as a result of events determine whether to recognise with the support and maintenance. that occurred after the acquisition revenue, The Group follows a 5-step The supply of the software licence date then the adjustment is process as follows: is recognised on a point in time accounted for as a charge or credit basis when control of the goods has to profit or loss. 1. Identifying the contract with a transferred, being the delivery of customer the item to the customer, whilst the When the consideration transferred 2. Identifying the performance ongoing support and maintenance by The Group in a business conditions 3. Determining the transaction price 65service is recognised evenly over the

66 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements Notes to Financial Statements FINANCE period of the service being rendered equipment is completed on a point will be received, and all attached on an over time basis. The Group in time basis. conditions will be complied with. applies judgement to determine When the grant relates to an the percentage of split between the Hardware and software sales expense item, it is recognised as licence and maintenance portions, Revenue from the supply of income on a systematic basis over which includes an assessment of the hardware or software is recognised the periods that the related costs, for pricing model and comparison to when control of the goods has which it is intended to compensate, industry standards transferred, being when delivery are expensed. When the grant relates to the customer of the item is to an asset, it is deducted from Revenue from the provision of completed, on a point in time basis. carrying amount of the intangible perpetual licences in exchange for asset over the expected useful life a minimum guaranteed royalty The Group has concluded it acts as a of the related asset. Note 3 Revenue fee, is recognised at a point in time principal in each sales transaction vs provides further information on basis when the delivery of the item an agent. This has been determined Government grants. is complete. by giving consideration to whether The Group holds inventory risk, COST OF SALES Set up fees has control over the pricing over a Costs considered to be directly Set up fees charged on contracts particular service, takes the credit risk, related to revenue are accounted are reviewed to consider the and whether responsibility ultimately for as cost of sales. All direct material rights of the set-up fee. sits within The Group to service the production costs and overheads, When a set-up fee is arranged, promise of the agreements. including indirect overheads that Beeks will consider the material can reasonably be allocated, have rights of the set-up fee, if in Professional services been classified as cost of sales. substance it constitutes a payment and training services in advance, the set-up fee will be Revenue from Consultancy services INTEREST deemed to be a material right. are recognised as these services Interest revenue is recognised as The accounting treatment for both are rendered and the performance interest accrues using the effective material rights and non-material obligation satisfied. Any unearned interest method. This is a method of rights set-up fees is as follows: portion of revenue( i.e. amounts calculating the amortised cost of a invoiced in advance of the service financial asset and allocating the / Any set up fees that are material being provided) is included in interest income over the relevant rights are spread over The Group’s payables as deferred revenue. period using the effective interest average contract term rate, which is the rate that exactly / Set up fees that are not material Revenue recognised over time and at discounts estimated future cash rights are recognised over the a point in time is disclosed at note 3 of receipts through the expected life of enforceable right period, i.e. 1 the notes to the financial statements. the financial asset to the net carrying to 3 months depending on the amount of the financial asset. termination period GOVERNMENT GRANT INCOME Grants from Government agencies EXCEPTIONAL COSTS Revenue in respect of installation are recognised where there is The Group defines exceptional items or training, is recognised when reasonable assurance that the grant as costs incurred by The Group which delivery and installation of the

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements relate to material non-recurring against which to recover carried Deferred tax assets and liabilities are FINANCE costs. These are disclosed separately forward tax losses and from which always classified as non-current. where it is considered it provides the future reversal of temporary additional useful information to the differences can be deducted. CASH AND CASH EQUIVALENTS users of the financial statements. The carrying amount of deferred Cash at bank, overnight and longer tax assets are reviewed at each term deposits which are held for the TAXATION AND reporting date. purpose of meeting short term cash DEFERRED TAXATION commitments are disclosed within The income tax expense or income CURRENT AND NON-CURRENT cash and cash equivalents. for the period is the tax payable on CLASSIFICATION the current period’s taxable income. Assets and liabilities are presented FINANCIAL INSTRUMENTS This is based on the national income in the statement of financial A financial instrument is any contract tax rate enacted or substantively position based on current and that gives rise to a financial asset enacted for each jurisdiction with non-current classification. in one entity and a financial liability any adjustment relating to tax or equity instrument in another payable in previous years and An asset is classified as current and is recognised when The Group changes in deferred tax assets and when: it is either expected to be becomes party to the contractual liabilities attributable to temporary realised or intended to be sold or provisions of the instrument. differences between the tax bases of consumed in The Group’s normal assets and liabilities and their carrying operating cycle; it is held primarily Financial assets and liabilities are amounts in financial statements. for the purpose of trading; it is recognised initially at fair value, and expected to be realised within subsequently measure at amortised Deferred tax assets and liabilities 12 months after the reporting costs, with any directly attributable are recognised for temporary period; or the asset is cash or cash transaction costs adjusted against differences at the tax rates expected equivalent unless restricted from fair value at initial recognition and to be applicable when the asset or being exchanged or used to settle recognised immediately in the liability crystallises based on current a liability for at least 12 months after consolidated income statement tax rates and laws that have been the reporting period. All other assets as a profit or loss. enacted or substantively enacted by are classified as non-current. the reporting date. The relevant tax FINANCIAL ASSETS rates are applied to the cumulative A liability is classified as current when: Trade and other receivables amounts of deductible and taxable it is either expected to be settled in Trade and other receivables are temporary differences to measure The Group’s normal operating cycle; initially recognised at transaction the deferred tax asset or liability. it is held primarily for the purpose of price, less allowances for impairment. trading; it is due to be settled within These are subsequently measured A deferred tax asset is regarded 12 months after the reporting period; at amortised costs using effective as recoverable and therefore or there is no unconditional right to interest method. An allowance for recognised only when, on the basis defer the settlement of the liability impairment of trade and other of all available evidence, it can be for at least 12 months after the receivables is established when regarded as more likely than not that reporting period. All other liabilities there is evidence that Beeks Financial there will be suitable taxable profits are classified as non-current. 67Cloud Group PLC will not be able to

68 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements Notes to Financial Statements FINANCE collect all amounts due according to that is subject to the expected amount and the present value the original terms of the receivables. credit loss model is trade of estimated future cash flows. receivables, which consist of billed An assessment for impairment Significant financial difficulties receivables arising from contracts. is undertaken at least at each of the debtors, probability that reporting date. the debtor will enter bankruptcy The Group has applied the or financial reorganisation, and simplified approach to providing FINANCIAL LAIBILITIES default or delinquency in payments for expected credit losses (“ECL”) Trade and other payables (more than 90 days overdue) prescribed by IFRS 9, which permits Trade and other payables are are considered indicators that the use of lifetime expected loss recognised initially at fair value the trade and other receivables provision for all trade receivables. and subsequently measured at may be impaired. The amount amortised cost using the effective of the allowance is the difference The ECL model reflects a probability interest method. These amounts between the asset’s carrying weighted amount derived from a represent liabilities for goods and amount and the present value range of possible outcomes. To services provided to Beeks Financial of estimated future cash flows, measure the ECL, trade receivables Cloud Group plc prior to the end discounted at the original effective and contract assets have been of the financial period which are interest rate. The carrying amount grouped based on shared credit unpaid as well as any outstanding of the asset is reduced through risk characteristics and the tax liabilities. the use of an allowance account, days past due. The Group has and the amount of the loss is established a provision matrix Borrowings recognised in the profit or loss based on the payment profiles Loans and borrowings are initially within ‘administrative expenses’. of historic and current sales and recognised at the fair value When a trade or other receivable the corresponding credit losses of the consideration received, is uncollectible, it is written off experienced. The historical loss net of transaction costs. They against the allowance account rates are adjusted to reflect current are subsequently measured at for trade and other receivables. and forward-looking information amortised cost using the effective Subsequent recoveries of amounts that might affect the ability of interest method. previously written off are credited customers to settle the receivables, against ‘admin costs’ in the income including macroeconomic factors Defined contribution schemes statement. as relevant. The defined contribution scheme provide benefits based on the IFRS 9 requires an expected Provision against trade and other value of contributions made. credit loss (“ECL”) model which receivables is made when there Contributions to the defined requires The Group to account is evidence that The Group will contribution superannuation plans for expected credit losses and not be able to collect all amounts are expensed in the period in which changes in those expected credit due to it in accordance with the they are incurred. losses at each reporting date to original terms of those receivables. reflect changes in credit risk since The amount of the write-down Fair value measurement initial recognition of the financial is determined as the difference When an asset or liability, financial assets. The main financial asset between the asset’s carrying or non-financial, is measured at fair

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements value for recognition or disclosure The options are expensed in the period the financial period in which they are purposes, the fair value is based on over which the share based payment incurred. the price that would be received vests. A corresponding increase to sell an asset or paid to transfer to the share option reserve under Depreciation on IT infranstructure FINANCE a liability in an orderly transaction shareholder’s funds is recognised. and fixtures and fittings is between market participants at the calculated using the straight line measurement date; and assumes When share options are exercised, method to allocate their cost or that the transaction will take place the company issues new shares. revalued amounts, net of their either: in the principal market; or in The nominal share value from the residual values, over their estimated the absence of a principal market, in proceeds received are credited useful lives, as follows: the most advantageous market. to share capital and proceeds received above nominal value, net / Leasehold property and Fair value is measured using of attributable transaction costs, improvements the assumptions that market are credited to the share premium over the lease period participants would use when pricing when the options are exercised. / Computer Equipment the asset or liability, assuming they When share options are forfeited, 5 years and over the length act in their economic best interests. cancelled or expire, the corresponding of lease For non-financial assets, the fair fair value is transferred to the / Office equipment 5 years value measurement is based on accumulated losses reserve. its highest and best use. Valuation The residual values, useful lives and techniques that are appropriate in The Group has no legal or depreciation methods are reviewed, the circumstances and for which constructive obligation to repurchase and adjusted if appropriate, at each sufficient data are available to or settle the options in cash. reporting date. measure fair value, are used, maximising the use of relevant Property, plant Leasehold improvements and observable inputs and minimising and equipment (PPE) plant and equipment under lease the use of unobservable inputs. PPE is stated at historical cost are depreciated over the unexpired less accumulated depreciation. period of the lease or the estimated Share based payments Historical cost includes expenditure useful life of the assets, whichever The Group operates equity-settled that is directly attributable to the is shorter. share based remuneration plans for acquisition of the items. Subsequent its employees Options are measured costs are included in the asset’s An item of property, plant and at fair value at grant date using the carrying amount or recognised as Black Scholes model. The fair value a separate asset, as appropriate, equipment is derecognised upon is expensed on a straight line basis only when it is probable that future over the vesting period, based on an economic benefits associated with disposal or when there is no estimate of the number of options the item will flow to Beeks Financial that will eventually vest. Cloud Group PLC and the cost of the future economic benefit to The Under The Group’s share option item can be measured reliably. All scheme, share options are granted other repairs and maintenance are Group. Gains and losses between to directors and selected employees. charged to profit or loss during 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. 69

70 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements Notes to Financial Statements FINANCE Leases lease term. The Group assesses the made and increased for interest. A lease is defined as a contract, right-of-use asset for impairment It is re-measured to reflect any or part of a contract, that conveys under IAS 36 ‘Impairment of Assets’ reassessment or modification, the right to use of an asset (the where such indicators exist. or if there are changes in fixed underlying asset) for a period of payments. When the lease liability time in exchange for consideration. Lease liabilities are presented on is re-measured, the corresponding To apply this definition The Group two separate lines in the balance adjustment is reflected in the assesses whether the contract sheet for amounts due within one right-of-use asset, or profit and loss meets three key evaluations which year and amounts due after more if the right-of-use asset is already are whether the contract contains than one year. The lease liability is reduced to zero. an identified asset, which is either initially measured at the present explicitly identified in the contract value of lease payments that are The Group has elected to account or implicitly specified by being not paid at the commencement for short-term leases and leases of identified at the time the asset date, discounted using the rate low-value assets using the practical is made available to The Group; implicit in the lease. If this rate expedients available under IFRS 16. The Group has the right to obtain cannot readily be determined, Instead of recognising a right-of-use substantially all of the economic The Group applies an incremental asset and lease liability, the payments benefits from use of the identified borrowing rate. The lease liability in relation to these are recognised asset throughout the period of is subsequently measured by as an expense in profit or loss on a use, considering its rights within increasing the carrying amount to straight line basis over the lease term. the defined scope of the contract; reflect interest on the lease liability and The Group has the right to and by reducing the liability by Under IFRS 16, The Group direct the use of the identified asset payments made. The Group re- recognises depreciation of the throughout the period of use. measures the lease liability (and right-of-use asset and interest on adjusts the related right-of-use lease liabilities in the consolidated At the lease commencement date, asset) whenever the lease term statement of comprehensive The Group recognises a right-of-use has changed or a lease contract is income over the period of the asset and a corresponding lease modified and the modification is not lease. On the balance sheet, right- liability on the balance sheet. The accounted for as a separate lease. of-use assets have been included right-of-use asset is measured at in leasehold property and cost, which is made up of the initial Lease payments included in the improvement and lease liabilities measurement of the lease liability measurement of the lease liability have been included in lease measured at the present value of can be made up of fixed payments liabilities due within one year and future lease payments, any initial and an element of variable charges after more than one year. direct costs incurred by The depending on the estimated Group The Group depreciates future price increases, whether INTANGIBLE ASSETS AND the right-of-use assets on a these are contractual or based AMORTISATION straight-line basis from the lease on management’s estimate of Goodwill commencement date to the earlier potential increases. Subsequent Goodwill represents the excess of the of the end of the useful life of the to initial measurement, the liability cost of an acquisition over the fair right-of-use asset or the end of the will be reduced for payments value of the assets and

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements liabilities assumed at the date project) is recognised as an expense life is deemed to be five years FINANCE of acquisition. Goodwill acquired in the period in which it is incurred. for all developments capitalised. in business combinations is not Development costs incurred are Amortisation charges are amortised. Instead, goodwill is tested capitalised when all the following recognised through cost of sales in for impairment annually or more conditions are satisfied: the income statement in the period frequently if events or changes in in which they are incurred. circumstances indicate that it might / completion of the intangible asset be impaired, and is carried at cost is technically feasible so that it will IMPAIRMENT less accumulated impairment losses. be available for use or sale; Goodwill and assets with an Intangible assets carried forward / The Group intends to complete indefinite useful life are tested from prior years are re-valued at the the intangible asset and use or annually for impairment, or more exchange rate in the current financial sell it; frequently if events or changes in year. Impairment testing is carried / The Group has the ability to use circumstances indicate that they out by assessing the recoverable or sell the intangible asset; might be impaired. Other non- amount of the cash generating / the intangible asset will generate financial assets are reviewed for unit to which the goodwill relates. A probable future economic benefits; impairment whenever events or bargain purchase is immediately / there are adequate technical, changes in circumstances indicate released to the Income Statement in financial and other resources to that the carrying amount may not the year of acquisition. complete the development and to be recoverable. An impairment loss use or sell the intangible is recognised for the amount by Customer relationships asset, and which the asset’s carrying amount Included within the value of / the expenditure attributable exceeds its recoverable amount. intangible assets are customer to the intangible asset during its relationships. These represent the development can be measured Recoverable amount is the higher purchase price of customer lists reliably. of an asset’s fair value less costs and contractual relationships of disposal and value-in-use. The purchased on the acquisition of Development costs not meeting value-in-use is the present value the business and assets of Gallant the criteria for capitalisation are of the estimated future cash flows VPS Inc., and Commercial Network expensed as incurred. The costs relating to the asset using a pre-tax Services. These relationships are which do meet the criteria range discount rate specific to the asset carried at cost less accumulated from new product development or cash-generating unit to which amortisation or impairment losses to the enhancement of existing the asset belongs. Assets that do where applicable. Amortisation is services such as mail platforms. not have independent cash flows calculated using the straight line The scope of the development are grouped together to form a method over periods of between team’s work continues to evolve cash-generating unit. five and ten years and is charged to as The Group continues to cost of sales. deliver business critical solutions EQUITY to a growing customer base. Ordinary shares are classified as Development costs Development costs capitalised equity. An equity instrument is Expenditure on research (or the are amortised on a straight-line any contract that evidences a research phase of an internal basis over the estimated useful life of the asset. The estimated useful 71residual interest in the assets of

72 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements Notes to Financial Statements FINANCE Beeks Financial Cloud Group plc VALUE-ADDED TAX (‘VAT’) Underlying EBITDA after deducting all of its liabilities. AND OTHER SIMILAR TAXES Underlying EBITDA is defined as Equity instruments issued by Beeks Revenues, expenses and assets earnings before amortisation, Financial Cloud Group plc are are recognised net of the amount depreciation, finance costs, recorded at the proceeds received of associated VAT, unless the VAT taxation, acquisition costs, share net of direct issue costs. incurred is not recoverable from based payments and exceptional the tax authority. In this case it is non-recurring costs. The share capital account recognised as part of the cost of represents the amount subscribed the acquisition of the asset or as Underlying EBITDA is a common for shares at nominal value. part of the expense. measure used by investors and analysts to evaluate the EARNINGS PER SHARE Receivables and payables are operating financial performance Basic earnings per share stated inclusive of the amount of of companies, particularly in the Basic earnings per share is VAT receivable or payable. The net sector that The Group operates. calculated by dividing the profit amount of VAT recoverable from, attributable to the owners of or payable to, the tax authority is The accounting policies set out Beeks Financial Cloud Group PLC, included in other receivables or above have, unless otherwise excluding any costs of servicing other payables in the statement stated, been applied consistently by equity other than ordinary shares, of financial position. The Group to all periods presented by the weighted average number of ordinary shares outstanding during Cash flows are presented on a gross The Group considers adjusted the financial year, adjusted for bonus basis. The VAT components of cash EBITDA to be a useful measure of elements in ordinary shares issued flows arising from investing or financing operating performance because during the financial year. activities which are recoverable from, it approximates the underlying or payable to the tax authority, are operating cash flow by eliminating Diluted earnings per share presented as operating cash flows. the charges mentioned above. It Diluted earnings per share is not a direct measure of liquidity, adjusts the figures used in the Commitments and contingencies which is shown in the consolidated determination of basic earnings are disclosed net of the amount of statement of cash flows, and needs per share to take into account VAT recoverable from, or payable to be considered in the context of the after income tax effect of to, the tax authority. The Group’s financial commitments. interest and other financing costs associated with dilutive potential ALTERNATIVE PERFORMANCE Underlying profit before tax ordinary shares and the weighted MEASURES Underlying profit before tax average number of shares In addition to measuring financial is defined as profit before tax assumed to have been issued performance of The Group based adjusted for the following: for no consideration in relation to on statutory profit measures, The dilutive potential ordinary shares. Group also measures performance / amortisation charges on based on adjusted EBITDA, adjusted acquired intangible assets; profit before tax and adjusted / share-based payment charges; diluted earnings per share. / M&A activity including: - Professional fees;

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements - Any non-recurring integration used as the basis for consideration The Group do not consider that there FINANCE costs; Any gain or loss on the to the level of dividend payments. are any other critical accounting revaluation of contingent   judgements in the preparation of consideration where it is 2. CRITICAL ACCOUNTING the financial statements. material; and JUDGEMENTS AND KEY SOURCES - Any material non-recurring OF ESTIMATION UNCERTAINTY KEY ESTIMATIONS costs where their removal The key assumptions concerning is necessary for the proper KEY JUDGEMENTS the future, and other key sources of understanding of the underlying The key judgements in preparation estimation uncertainty at the year profit for the period. of the financial statements are end, that have a significant risk of as follows: causing a material adjustment to The Group considers underlying the carrying amounts of assets and profit before tax to be a useful Revenue liabilities within the next financial measure of performance because The Group applies judgment for year, are discussed below. it eliminates the impact of certain elements of revenue recognition. The non-recurring items including those key areas of assessment include Goodwill and other indefinite life associated with acquisitions and whether The Group acts as a principal intangible assets other charges commonly excluded vs an Agent for the sale of hardware, The Group tests annually, or from profit before tax by investors where third parties are utilised, and the more frequently if events or and analysts for valuation percentage of split between licence changes in circumstances purposes. and maintenance for the sale of indicate impairment, whether software licences. Full details of The goodwill and other indefinite life Underlying diluted earnings per share Group’s revenue recognition policy intangible assets have suffered any Underlying diluted earnings and these judgements can be impairment, in accordance with per share is calculated by taking found on page 65. the accounting policy stated in the adjusted profit before tax as note 1. The recoverable amounts of described after deducting an Right of Use assets and liabilities cash-generating units have been appropriate taxation charge The Group applies judgement for determined based on value-in-use and dividing by the total elements of capitalising leases calculations. These calculations weighted average number of under IFRS 16. The key areas of require the use of assumptions, ordinary shares in issue during the assessment include the treatment including estimated discount rates year and adjusting for the dilutive of the lease where the term is based on the current cost of capital potential ordinary shares relating not clearly defined as well as and growth rates of the estimated to share options. the applicable discount rate future cash flows. Sensitivity applied. Where the term is not analysis is also performed to The Group considers adjusted clearly defined, management use reduce growth assumptions and diluted earnings per share to be a judgement to determine the likely increase discount rates in order to useful measure of performance for term of the lease by reference to ascertain if there is still sufficient the same reasons as underlying comparable contracts and terms headroom in the asset, see note 10. profit before tax. In addition, it is as well as the future needs and strategy of the business. 73

74 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements Notes to Financial Statements FINANCE Development costs If vesting periods or other allocating resources and assessing The Group reviews half yearly non-market vesting conditions performance of operating segments, whether the recognition criteria for apply, the expense is allocated have been identified as the development costs have been met. over the vesting period, based executive directors. This is necessary as the economic on the best available estimate success of any product development of the number of share options During the year ended 30 June is uncertain and may be subject expected to vest. Estimates are 2021, The Group was organised into to future technical problems at subsequently revised if there is any three main business segments for the time of recognition. In addition, indication that the number of share revenue purposes, institutional, all internal activities related to the based incentives expected to vest private and analytics customers. development of new products which differs from previous estimates. The Group added analytics as a are not finalised by the period end The two key judgements are on segment duing the year, as The are continuously monitored by the the vesting conditions that apply Group benefitted from a full year’s Directors and assessed for any to share options (relating to the revenue generation following the indications of impairment. See note achievement of annual objectives) acquisition of Velocimetrics Ltd 10 for further information. and on continuous employment. in April 2020. The Group does not Any cumulative adjustment prior to place reliance on any specific Share based payments vesting is recognised in the current customer and has no individual The Group operates equity-settled period. No adjustment is made to customer that generates 10% or share based remuneration plans any expense recognised in prior more of its total group revenue. for its employees. All goods and periods if share based incentives services received in exchange ultimately exercised are different to Performance is assessed by a for the grant of any share based that estimated on vesting. focus on the change in revenue payment are measured at their across both institutional and retail fair values. Where employees 3. SEGMENT INFORMATION revenue. Cost is reviewed at a are rewarded using share Operating segments are reporting cost category level but not split by based payments, the fair values in a manner consistent with the segment. Assets are used across of employees’ services are internal reporting provided to the all segments and are therefore determined indirectly by reference chief operating decision makers. not split between segments so to the fair value of the instrument management review profitability granted to the employee. This fair The chief operating decision at a group level. value is appraised at the grant. makers, who are responsible for

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements Revenues by operating segment, further dissagregated are as follows: Year ended 30/06/21 Year ended 30/06/20 £000 £000 Institutional Retail Analytics Total Institutional Retail Analytics Total Points over time 8,701 1,080 - 9,781 7,127 1,365 - 8,492 - - 685 685 - - 158 158 Infrastructure 146 - 42 187 39 - - 39 as a service 8,847 1,080 727 10,653 7,166 1,365 158 8,688 Maintenance Professional services Point over time total Point in time Hardware / 299 - 38 337 486 - - 486 Software resale Software - - 556 556 - - 134 134 licences Set up fees 69 - - 69 52 - - 52 Point in time 368 - 594 962 538 - 134 672 total Total revenue 9,215 1,080 1,321 11,615 7,704 1,365 291 9,360 Revenues by geographic location are as follows:   FINANCE United Kingdom 3,214 2,720 Europe 2,282 1,180 United States 2,003 1,906 Rest of World 3,554 Total 4,116 9,360 11,615 Non-Current Assets by geographic location are as follows:       United Kingdom - Property, plant and equipment 3,980 Europe - Property, plant and equipment 727 2,028 Rest of World - Intangible assets 478 Rest of World - Goodwill 4,640 Rest of World - Property, plant and equipment 1,368 4,458 US – Property, plant and equipment 3,878 2,283 Total Non-Current Assets 1,805 3,003 16,398 1,246 13,496  75

76 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements 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. The Group has taken advantage of the practical expedient permitted by IFRS 15 and has therefore not disclosed the amount of the transaction price allocated to unsatisfied performance obligations or when it expects to recognise that revenue, as the majority of contracts have an expected duration of less than one year. Longer term contracts continue to be paid on a monthly basis. During the year, £309k was recognised in other income for grant income received from Scottish Enterprise. 4. OPERATING PROFIT 2021 2020 Operating Profit is stated after charging: £000 £000  Note Staff costs 6 4,408 2,526 Depreciation 10 1,396 891 Depreciation right-of-use assets 10 626 583 Amortisation of acquired intangibles 9 806 96 Amortisation of other intangibles 9 231 291 Other cost of sales* 3,319 2,984 Impairment of intangible 9 994 - Foreign exchange losses 47 17 Non-recurring acquisition integration costs 140 205 Share based payments 20 546 312 Other non-recurring costs – refinancing 37 - FINANCE Other non-recurring costs – head office relocation 25 - Other non-recurring costs 103 61 *Included within other cost of sales are the direct costs associated with the business including data centre connectivity, software licences, security and other direct support costs Auditors remuneration 2021 2020 £000 £000  Audit Auditors services 37 34  Fees payable for the audit of the consolidation and the parent 28 27  company accounts including the audit of the acquisition Fees payable for the audit of the subsidiaries 5 10 Non Audit 70 71 Fees payable for the interim review of the group 5. FINANCE COSTS 2021 2020 £000 £000  Bank charges Loans and leasing 92 89 Total finance costs 197 190  289 279 

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements 6. AVERAGE NUMBER OF EMPLOYEES AND EMPLOYEE BENEFITS EXPENSE 2021  2020  £000  £000  Including directors, the average number of employees (at their full time equivalent) during the year was as follows: 25 12 Management and administration 48 29 Support and development staff 73 41 Average numbers of employees The employee benefits expense during the year was as follows: 3,870 2,214 Wages and salaries 453 265 Social security costs 86 Other pension costs 46 Total employee benefits expense 4,408 2,526 Share based payments (note 20) 546 312 Wages and salaries directly attributable to the development of R&D products are capitalised in intangible assets (note 9). 7. DIRECTORS EMOLUMENTS 2021 2020 FINANCE £000 £000  Aggregate remuneration in respect of qualifying services Aggregate amounts of contributions to pension 221 258 schemes in respect of qualifying services Gain on exercise of options 4 5 Total Directors’ emoluments Highest paid director - aggregate remuneration (excluding share based payments) 43 - 268 263 104 96 There are two directors (2020: two) who are accruing retirement benefits in respect of qualifying services. 8. TAXATION EXPENSE 2021  2020  £000  £000  Current tax UK tax (32) (16)  Foreign tax on overseas companies 28 25  Total current tax (4) 9  Origination and reversal of temporary differences 94 Total deferred tax (345) 94 Tax on profit on ordinary activities (345) 103  (349) The differences between the total tax credit above and the amount calculated by applying the standard rate of UK corporation tax to the profit before tax, together with the impact of the effective tax rate, are as follows: 77

78 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements Profit before tax 2021 %ETR 2020 %ETR Profit on ordinary activities multiplied by £000 movement  £000 movement the standard rate of corporation 1,255 tax in the UK of 19% (2020: 19%) 19% 678 19% Effects of: 238 Expenses not deductible for tax purposes 129 R&D tax credits relief Income not taxable (81) (6,45%) 33 4.87% Share option deduction (95) (7.57%) (72) (10.62%) Prior year over-provision (377) (30.04%) (0.01) (0.00%) Prior year deferred tax adjustments Adjustment for tax rate differences 9 0.72% 59 8.70% Foreign tax suffered (32) (2.55%) - - Other (73) (5.82%) Total tax charge (49) (7.23%) 58 4.62% - - The effective tax rate (‘ETR’) for the year was –27.81%, (2020: (15.2%)). 4 0.32% 2 - 1 0.29% - 0.15% (349) (27.81%) 103 15.19% FINANCE UK Foreign Total Tax unrelieved unrelieved unrelieved effect As at 1 July 2020 £000 Recognised during the year trading trading trading As at 30 June 2021 losses losses losses 104 £000 £000 £000 353 457 547 - 547 1,856 - 1,856 2,403 - 2,403

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements 9. INTANGIBLE ASSETS Acquired Development Trade Goodwill Total Customer Costs Name £000 £000 Cost Lists £000 £000 £000 Balance at 1 July 2019 2,723  Acquisition of trading assets 1,383  821  - 519  4,333 FINANCE Additions 1,097 1,253 137 1,846 Grant funding received 720 720 Foreign exchange movements - (221) - - (221) Balance at 30 June 2020 - - - Additions 53 - - - 53 Grant funding received 2,533 2,573 137 2,365 7,608 Foreign exchange movements - 1,977 - 28 2,005 As at 30 June 2021 - (560) - - (560) Accumulated Depreciation (150) - (57) (207) Balance at 1 July 2019 2,383 - 137 2,336 8,846 Charge for the year 3,990 Foreign exchange movements (402) - 9  (494) Balance at 30 June 2020 (150) (101) (7) - (387) Charge for the year (230) 14 Impairment - - 23 14 Foreign exchange movements (552) - (7) - (867) As at 30 June 2021 (277) (331) (27) (994) (1,037) N.B.V. 30 June 2020 (733) 3 (994) N.B.V. 30 June 2021 - - (968) 56 - - 2,388 59 (773) - (34) 1,368 (2,839) 1,981 (1,064) 130 1,611 2,242 103 6,741 2,926 6,008 Included within Customer lists are IAS 38 in relation to the creation of during the preliminary stages of customer relationships in relation the company’s self-service portal, development projects are charged to the acquisition of CNS of £1.0m. website and cyber-attack prevention to the income statement. During the year, the Group has software (DDoS). As at 30 June 2021 elected to reduce the remaining the remaining useful lives of these IMPAIRMENT TEST FOR GOODWILL useful life of the asset, which has assets are 1 year and 7 months, 1 For this review, goodwill was been revised from 8 to 4 years. year and 6 months and 1 year and 5 allocated to individual cash The impact on the current and months respectively. Development generating units (CGU) on the remaining 4 years is an additional costs also include £1.3m of acquired basis of the Group’s operations annual depreciation charge of VMX software which is being as disclosed in the segemental £0.07m. Also included are customer amortised over a useful life of five analysis. As the Board reviews relationships in relation to the VMX years. In addition, there are £1.3m of results on a segmental level, the business of £1.1m with a useful life development costs relating to the Group monitors goodwill and of 10 years. network automation project and annually asseses it on the same £0.6m development costs relating basis for impairment.. Development costs have been to analytics development, which has recognised in accordance with yet to be amortised. All costs incurred 79

80 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements The carrying value of goodwill by each CGU is as follows: 2021  2020  £000  £000  Beeks Analytics Retail 883 1,846 Institutional 109 122 Total goodwill 376 420 1,368 2,388 FINANCE The recoverable amount of all Management performed a full that reflects current market CGUs has been determined by impairment assessment on the assessments of the time value using value-in-use calculations, goodwill of Beeks Analytics. This of money and the risks specific estimating future cash inflows included including modelling to these asset, of 12% and 14.5% and outflows from the use of the projected cash flows based was used. Based on an analysis assets and applying an appropriate on the current weighted sales of the impairment calculation’s discount rates to those cash flows pipeline, a discount rate based on sensitivities to changes in to ensure that the carrying value the calculated pre-tax weighted key parameters (growth rate, of each individual asset is still average cost of capital (15.5%) and discount rate and post-tax cash appropriate. cost base assumptions that included flow projections) there was no contingency and investment to reasonably possible scenario In performing these reviews, deliver against the weighted sales where these recoverable amounts under the requirements of pipeline. A mid-term growth rate would fall below their carrying IAS 36 “Impairment of Assets” (post sales pipeline) from year 2 amounts therefore as at 30 June management prepare forecasts was assumed at 3% and a terminal 2021, no change to the impairment for future trading over a useful life value of 2% was used following provision against the carrying value period of up to five years. the 5 year cash flow projection. of intangibles was required for Sensitivities were then performed institutional or retail goodwill. The These cash flow projections are against a range of possible revaluation of these from prior based on financial budgets and downside scenarios including further year represents exchange market forecasts approved by weighting against the sales pipeline adjustment only. management using a number of and changing of the discount rate. assumptions including; It was noted that a 1% change on the discount rate would impact the / Historic and current trading future net present value of the future / Weighted sales pipeline cash flows by £0.2m. / Potential changes to cost base (including staff to support the Management concluded, based CGU) on the range of possible outcomes, / External factors including and sensitivity of both the sales competitive landscape and pipeline and discount rate, that an market growth potential impairment charge of £1.0m should be processed against goodwill. Forecasts that go beyond the approved budgets are based on For institutional and retail goodwill, long term growth rates on a a pre-tax discount discount rate, macro-economic level.

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements Computer  Office  Leasehold Total  equipment  equipment  Property and £000  10 . NON-CURRENT ASSETS - improvement PROPERTY, PLANT AND EQUIPMENT £000  £000  4,862 £000  6  Balance at 1 July 2019 4,839 23 Acquisition of subsidiaries 6  -  -  5,811  Additions (39) Disposals 2,784  35  - 10,641  Balance at 30 June 2020 (39)  -  (12) Exchange adjustments 7,590  2,993  5,661 Additions (12) 58  16,290 As at 30 June 2021 4,733 - - Depreciation 12,311 13 (2,422) Balance at 1 July 2019 71 2,993  (1,474) Charge for the year 10 Disposals - Balance at 30 June 2020 (3,886) Charge for the year 915 (2,022) Exchange adjustments As at 30 June 2021 3,908 8 N.B.V. 30 June 2020 (5,900) N.B.V. 30 June 2021 (2,411) (11) -  (873) (12) (589)  6,755 10  10,390 -  - (3,274) (23) (589) (1,381) (15) (626) 8 - - (4,647) (38) (1,215) 4,316  2,404 7,664 35  2,693 33 Of the total additions in the year of of sales. Non-revenue generating the year and tax losses carried FINANCE £5.6m, £0.9m relates to right-of-use depreciation charges are included forward in both UK and overseas assets. with admin costs. companies. Deferred tax assets and liabilities on balance sheets Short term leases have been 11. NON-CURRENT ASSETS - prepared after the substantive accounted for in accordance with DEFERRED TAX enactment of the new tax rate are the recognition exemption in IFRS 16 Deferred tax is recognised at the calculated using a tax rate of 25% and hence related payments are standard UK corporation tax of 25% to the extent that the temporary expensed as incurred. The Group for fixed assets in the UK (2019: 19%). differences will reverse after 2023 has also made use of the option to Deferred tax in the US is recognised useful lives of these assets are 1 apply the recognition exemption at an average rate of 21% for 2020 year and 7 months, 1 year and 6 for low value assets, which means (2019: 21%). The deferred tax asset months and 1 year and 5 months that related payments have been relates to the difference between expensed as incurred. the amortisation period of the US acquisitions for tax and reporting All revenue generating depreciation purposes as well as the impact of charges are included within cost the share options exercised during 81

82 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements The split of fixed and intangible asset are summarised as follows: 2021  2020  Deferred tax liabilities £000  £000  Deferred tax asset Total deferred tax (617) (531) Movements 896 380 Opening balance 279 (151)  Charged to profit or loss (note 8) Charged to goodwill/equity (151) 88 Closing balance 345 (94) (145) 85 (151)  279 Total The movement in deferred income tax assets and liabilities during the year is as follows: deferred FINANCE At July 2019 Share Tax Accelerated Total tax Charge to income Options losses tax deferred liability Charge to equity carried Deferred tax on acquired assets £000 forward depreciation tax £000 As at 30 June 2020 £000 asset Charge to income - £000  £000  (48)  Charge to equity - 101  (200) As at 30 June 2021 - 35  136  - (46) - - 152 106 (283)  138 -  (531)  85 -  - 223 - (86) 138 138  - 55  325 380  (617) (12) 305 431 - - 85 43 630 896 12. CURRENT ASSETS - TRADE AND OTHER RECEIVABLES 2021  2020  Trade receivable £000  £000  Less: allowance for impairment of receivables 1,032 791 Prepayments (19) (20) Contract asset 1,013 Other taxation 723 771 Other receivables 721 191 241 - 42 - 2,210 33 1,525

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements The credit risk relating to trade receivables is analysed as follows: 2021  2020  Trade receivables £000  £000  Less: allowance for impairment of receivables 1,032 791 Movements in the allowance for expected credit losses are as follows: (19) (20) Opening balance 1,013 Additional allowance recognised 771 Receivables written off during the year as uncollectable 20 Unused amounts reversed 46 63 Closing balance (47) 20 (65) - 19 2 20 The Directors consider that the carrying amount of trade and other receivables is approximately equal to their FINANCE fair value. The group has applied the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss allowance for all trade receivables. The expected credit loss allowance under IFRS 9 as at 30 June 2021 is £8k (2021 - £13k). Trade receivables consist of a large number of customers across various geographical areas. The aging below shows that almost all are less than three months old and historic performance indicates a high probability of payment for debts in this aging. Those over three months relate to customers without history of default for which there is a reasonable expectation of recovery. Past due but not impaired The Group did not consider a credit risk on the aggregate balances after reviewing the credit terms of the customers based on recent collection practices. The aging of trade receivables at the reporting date is as follows: 2021  2020  £000  £000  Not yet due Past due 1 to 3 months 706 505 Past due 3 to 6 months 307 275 More than 6 months past due 19 0 0 11 1,032 791 13. THE CREDIT RISK RELATING TO TRADE RECEIVABLES IS ANALYSED AS FOLLOWS: 3,372 1,433 Cash and bank balances 3,372 1,433 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. 83

84 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements FINANCE 14. CURRENT ASSETS - There have been no changes recognised assets or liabilities are FINANCIAL INSTRUMENTS AND to valuation techniques or any denominated in a currency that is RISK MANAGEMENT amounts recognised through ‘Other not the functional currency of the Financial risk management Comprehensive Income’. operations. The Group has minimal objectives and policies exposure to foreign exchange The Group’s principal financial The main purpose of these financial risk as a result of natural hedges instruments comprise cash instruments is to finance The arising between sales and cost and cash equivalents, short Group’s operations. The Group has transactions. A 10% movement in term deposits and bank and other financial instruments which the USD rate would have an impact other borrowings. mainly comprise trade receivables on The Group’s profit and equity and trade payables which arise by approximately £172,000. A 10% The carrying amount of all financial directly from its operations. movement in the Euro rate would assets presented in the statement have an impact on The Group’s of financial position are measured Risk management is carried out profit and equity by approximately at amortised cost. by the finance department under £49,000. policies approved by the Board The carrying amount of all of Directors. The Group finance The Group had potential financial liabilities presented in department identifies, evaluates exchange rate exposure within USD the statement of financial position and manages financial risks. The trade payable balances of £1,210,143 are measured at amortised costs Board provides guidance on overall as at 30 June 2021 (£77,617 at 30 with the exception of contingent risk management including foreign June 2020). consideration with is measured at exchange risk, interest rate risk, Fair Value through profit or loss. credit risk, and investment of Cash flow and interest rate risk excess liquidity. The Group has limited exposure to The Group’s financial liabilities interest rate risk in respect of cash per the fair value hierarchy The impact of the risks required balances and long-term borrowings classifications under IFRS 13 to be discussed under IFRS 7 are held with banks and other highly ‘Financial Instruments: Disclosures’ detailed below: rated counterparties. All loans and are described below: leases are at fixed rates of interest MARKET RISK therefore The Group does not have As at 30 June 2021, contingent Foreign exchange risk exposure to interest rate risk. consideration due on acquisitions is Foreign exchange risk arises when £nil (2020: £2.445m) - refer to note 15. future commercial transactions or Credit risk The Group’s maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at the reporting date, as summarised below: 2021  2020  £000  £000  Cash and cash equivalents 3,372 1,433 Trade receivables 1,032 791 Contract asset 223 Other receivables 191 28 43 4,638 2,475

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements Credit risk is managed on a Group takes into account the nature of EBITDA and minimum adjusted cash basis. Credit risks arise from cash The Group’s trading history with the banking covenants. Judgement is and cash equivalents and deposits customer, along with managements required in assessing what items with banks and financial institutions, view of expected future events and are allowable for the adjusted as well as credit exposures to market conditions. components. customers, including outstanding receivables and committed The credit risk on liquid funds is The Board receives regular debt transactions. Credit risk refers to the limited because the majority of management forecasts which risk that a counterparty will default funds are held with two banks with estimate the cash inflows and on its contractual obligations high credit-ratings assigned by outflows over the next twelve resulting in financial losses to international credit-rating agencies. months, so that management can The Group. The Group provides Management does not expect any ensure that sufficient financing is standard credit terms (normally 30 losses from non-performance of in place as it is required. Surplus days) to all of its customers which these counterparties. cash within The Group is put on has resulted in trade receivables of deposit in accordance with limits £981,000 (2020: £751,000) which are None of The Group’s financial assets and counterparties agreed by stated net of applicable allowances are secured by collateral or other the Board, the objective being to and which represent the total credit enhancements. maximise return on funds whilst amount exposed to credit risk. ensuring that the short-term cash Liquidity risk flow requirements of The Group The Group’s credit risk is primarily The Group closely monitors its are met. attributable to its trade receivables. access to bank and other credit The Group present the amounts in facilities in comparison to its As at 30 June 2021, The Group’s the balance sheet net of allowances outstanding commitments on a financial liabilities (excluding for doubtful receivables, estimated regular basis to ensure that it has leases disclosed in Note 17) have by The Group’s management based sufficient funds to meet obligations contractual maturities (including on prior experience and the current of The Group as they fall due. The interest payments where applicable) economic environment. The Group Group monitors it’s current debt as summarised below: reviews the reliability of its customers facilities and comply both with on a regular basis, such a review its gross borrowings to adjusted FINANCE Current Non-Current Trade and other payables Within 1–3 3–12 1–5 After Borrowings 1 month months months years 5 years £  £ £ £ £ 995 1,958 1,192 - - - 147 442 897 - The above amounts reflect the contractual undiscounted cash flows, which may differ from the carrying values of the liabilities at the reporting date. 85

86 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements 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. Total equity 2021  2020  Cash and cash equivalents £000  £000  Capital Total equity 13,765 6,716 Other loans 3,372 1,433 Lease liabilities 17,137 8,149 Overall financing 13,765 6,716 Capital-to-overall financing ratio 1,485 2,158 2,866 2,535 18,116 11,409 0.95 0.71 15. CONTINGENT CONSIDERATION DUE ON ACQUISITIONS 2021  2020  Contingent consideration due on the acquisition of VMX Ltd £000  £000  - 2,445 FINANCE At the prior year end, there was £0.49m of contingent consideration in relation to the first year earn out and £1.96m for the second year earn out for the acquisition of Velocimetrics Ltd. During the current year, the group settled the deferred consideration and the contingent consideration in relation to the first year earn out in full at a total of £0.49m against the provision of £0.48m. In the current period, the fair value of the final contingent consideration has been reassessed. Given the minimum earn out revenue target was not met in the period, the full contingent consideration of £1.96m was credited to the income statement. 16. NON-CURRENT LIABILITIES - BORROWINGS AND OTHER FINANCIAL LIABILITIES 2021  2020  Other loans £000  £000  Lease liabilities 896 1,461 Other loans 2,210 1,991 Under one year 3,106 3,452 Between one to five years 589 697 896 1,461 1,485 2,158

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements The bank loan derives from a £1.8m term loan facility taken out from Barclays Bank in December 2020 and is repayable in 8 quarterly instalments of £0.15m which commenced in March 2021 along with a bullet balance repayable at Maturity. This, along with the Group’s revolving credit facility available of £2.2m, is used to fund the Group’s working capital requirements when required. The revolving credit facility balance was nil as at 30 June 2021. Barclays have been given security for the facility of the UK assets of the Group. Costs of £21,500 have been amortised over the life of the loan and aged in line with the capital repayments. Changes in liabilities arising from financing activities: Lease Loans Total liabilities Balance at 1 July 2020 2,158 4,693 Lease liabilities additions IFRS 16 2,535 - 915 Impact of effective interest rate 915 - (3) Proceeds from new loans (3) Repayment of old loans - 3,050 1,800 Loan repayments - (2,186) (1,806) Lease repayments - (1,537) Balance at 30 June 2021 (667) (581) - (581) 2,866 1,485 4,351 Included within loans is £14,000 of unamortised bank arrangement fees in respect of the new bank facilities following the re-financing with Barclays. These costs have been capitalised and amortised over the term of the facility. 17. CURRENT LIABILITIES – TRADE AND OTHER PAYABLES Note 2021  2020  FINANCE 15 £000  £000  Trade payables Other loans 2,538 699 Lease liability 589 697 Accruals 656 544 Contract liabilities 472 1,019 Other taxation and social security 982 Other payables 128 - VAT 23 96 Deferred consideration - 16 Contingent consideration - 67 - 552 488 5,388 4,178 87

88 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements 18. LEASES The Group leases assets including the space in data centres in order to provide infrastructure services to its customers, and for the Head Office lease in relation to its Glasgow Headquarters. Information about leases for which The Group is a lessee is presented below: Right-of-use assets Leasehold Property and Balance at 1 July 2020 improvement  Additions Depreciation £000  Balance at 30 June 2021 2,357 915 (619) 2,653 The right-of-use assets in relation to leasehold property are disclosed as PPE (note 10). Lease Liabilities Note 2021  2020  £000  £000  Maturity analysis: 14 FINANCE Within one year 14 (806) (643) Within two to five years (2,269) (2,195) After more than five years Add: unearned interest - - Total lease liabilities 209 303 Analysed as: (2,866) (2,535) Non-current Current (2,210) (1,991) (656) (544) (2,866) (2,535) The Group does not face a significant liquidity risk with regard to its lease liabilities. The interest expense on lease liabilities amounted to £99,026 for the year ended 30 June 2021. Lease liabilities are calculated at the present value of the lease payments that are not paid at the commencement date. The Group has elected not to recognise a lease liability for short-term leases (leases with an expected term of 12 months or less) or for leases of low value assets. Payments made under such leases are expensed on a straight line basis. During the year ended 30 June 2021, in relation to leases under IFRS 16, The Group recognised the following amounts in the consolidated statement of comprehensive income: 2021  2020  £000  £000  Short-term and low value lease expense 25 25 Depreciation charge 619 582 Interest expense 99 87

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements Amounts recognised in the consolidated statement of cash flows: 2021  2020  £000  £000  Amounts payable under leases: Short-term and low value lease expense 25 25 Repayment of lease liabilities within cash flows from financing activities 558 214 2021  2020  2021  2020  shares  shares  £000  £000  19. EQUITY - ISSUED CAPITAL 56,051,149 51,228,258 70  64 Ordinary shares - fully paid Shares Issue price £000 Movements in ordinary share capital 50,043,100  62  £.00125 1 Details Date 677,700  £.00125 - 32,200  £.00125 1 Balance 30 June 2018  111,800  £.00125 - 363,458 64 EMI Share options exercised 31 August 2018  51,228,258 £.00125 - £.00125 1 EMI Share options exercised 24 October 2018  44,118 £.00125 5 430,946 70 EMI Share options exercised 20 June 2019  4,347,827 56,051,149  New share issue 14 April 2020 30 June 2020 EMI Share options exercised 9 November 2020 FINANCE New share issue 15 December 2020 New share issue 26 April 2021 Balance 30 June 2021  Ordinary shares During the year 4,778,773 ordinary shares were issued for a total consideration of £5.42m resulting in a premium over the nominal value of £5,973. Transaction costs of £0.27m were netted off against the premium (see note 18). The Director, F McDonald, exercised 44,118 share options during the year. The share price at the exercise date was £0.98. 20. SHARE BASED PAYMENTS 2021  2020  The movements in the share options during the year, were as follows:- £000  £000  Outstanding at the beginning of the year 1,889,662 308,824 Exercised during the year (44,118) - Issued during the year 1,071,429 Outstanding at the end of the year 1,580,838 Exercisable at the end of the year 2,916,973 1,889,662 - - 89

90 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements The Group granted a total of 1,071,429 share options to members of its management team on 9th October 2020. These share options outstanding at the end of the year have the following expiry dates and exercise prices: Shares Grant 1 Grant 3  Grant 4  Total Date of grant 2,916,973 Exercise price 264,706 1,580,838 1,071,429 Vesting date 6th September 2018 17th October 2019 9th October 2020 £0.00125 £0.00125 £0.00125 6th September 2021 17th October 2022 9th October 2023 These share options vest under challenging performance conditions based on underlying profitability growth during the three year period. The Black Scholes model was used to calculate the fair value of these options, the resulting fair value is expensed over the vesting period. The following table lists the range of assumptions used in the model: Grant 1 Grant 3  Grant 4  Total Shares 264,706 1,580,838 1,071,429 2,916,973 Share price (£) 1.02 0.84 0.945 FINANCE Volatility 5% 5% 5% Annual risk free rate 4% 4% 4% Exercise strike price (£) Time to maturity (yrs) 0.00125 0.00125 0.00125 1.1667 1.3333 2.3333 The total expense recognised from difference between the nominal value The other reserve arose on the share based payments transactions of the share capital in Beeks Financial share for share exchange and on the group’s profit for the year was Cloud Group Limited and the value reflects the difference between £546,363 (2020: £311,713). of The Group being acquired, Beeks the value of Beeks Financial Cloud Financial Cloud Limited. Group Limited and the share capital These share options vest on the of The Group being acquired achievement of challenging During the prior year £333,000 through the share for share growth targets. It is management’s was recognised within the merger exchange. Also included in the intention that the Company will meet reserve, which arose on the share other reserve is the fair value of the these challenging growth targets for share exchange reflecting the warrants issued on the acquisition therefore, based on management’s difference between the nominal of VDIWare LLC. expectations, the share options value of the share capital issued are included in the calculation of from Beeks Financial Group Plc and Any transaction costs associated underlying diluted EPS in note 24. the value of the shares issued to with the issuing of shares are the owners of Velocimetrics Ltd at deducted from share premium, net 21. EQUITY - RESERVES the date of acquisition. of any related income tax benefits. The foreign currency retranslation reserve represents exchange gains Share premium represents the 22. CAPITAL AND OTHER and losses on retranslation of excess over nominal value of the COMMITMENTS foreign operations. Included in this fair value of consideration received Excluding the contingent liabilities is revaluation of opening balances for equity shares, net of expenses of associated with the contingent from prior years. the share issue. consideration (Note 1), there are no contingent assets or contingent The merger reserve arose on the share Retained earnings represents liabilities as at 30 June 2021 for share exchange reflecting the retained profits. (2020: nil).

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements 23. RELATED PARTY TRANSACTIONS Parent entity Beeks Financial Cloud Group PLC is the parent entity. Subsidiaries 2021  2020  Interests in subsidiaries are set out in note 25. £000  £000  Transactions with related parties The following transactions occurred with related parties: 4 11 Withdrawals from the director, Gordon McArthur The loan account owed by the director; Gordon McArthur was repaid in full before 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, a company owned by Gordon McArthur. During the financial year Beeks Financial Cloud Limited made sales of £123,480 (2020: £120,540) to Ofelia Algos Limited and the amounts due to Beeks Financial Cloud Limited at the year-end were £20,682 (2020: £35,090). Key management personnel Compensation paid to key management (which comprises the executive and non-executive PLC Board members) during the year was as follows: 2021  2020  £000  £000  Wages and salaries including social security costs 221 258 FINANCE Other pension costs 45 Other benefits in kind 2- Share based payments 141 115 24. EARNINGS PER SHARE 2021  2020  £000  £000  Profit after income tax attributable to the owners of Beeks Financial Cloud Group PLC 1,604 575 Pence Pence Basic earnings per share Diluted earnings per share 3.07 1.13  3.07 1.13  Weighted average number of ordinary shares Number Number used in calculating basic earnings per share 52,276,498 50,942,258  Adjustments for calculation of diluted earnings per share: Options over ordinary shares 15,351 48,132  Weighted average number of ordinary shares 52,291,848 50,990,391  used in calculating diluted earnings per share 91

92 Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements Profit before tax for the year 2021  2020  Acquisition costs £000  £000  Share Based payments Amortisation on acquired intangibles 1,255 575  Exceptional non-recurring costs 140 205 Impairment of Intangibles assets / goodwill 546 312 Grant income 806 236 Gain on revaluation of contingent consideration 165 Tax effect 994 61 Underlying profit for the year - (309) (59) (1,989) - (45) 34 1,285 1,642 Weighted average number of shares in issue - basic 52,276,498 50,942,258 Weighted average number of shares in issue - diluted 54,915,279 52,409,256 Underlying earnings per share - basic 3.14 2.52 Underlying earnings per share - diluted 2.99 2.45 FINANCE 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, based on management expectations, the share options are included in the calculation of underlying diluted EPS. 25. SUBSIDIARIES The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries held by the company In accordance with the accounting policy described in note 1. The subsidiary undertakings are all 100% owned, with 100% voting rights. Company name Country of  Principal place Activity Beeks Financial Cloud Co Ltd incorporation  of business/  Non-trading Japan  Registered office  Non-trading Beeks FX VPS USA Inc. Delaware, USA  FARO 1F, 2-15-5, Minamiaoyama, Minato-Ku, Cloud Computing Beeks Financial Cloud Limited Scotland  Tokyo, Japan. Services 874 Walker Road, Suite C, Software Services Velocimetrics Limited England  Dover, Kent, Delaware, 19904, USA. Software Services Velocimetrics Inc New York, USA Lumina Building, 40 Ainslie Road, Ground Floor, Hillington Park, Glasgow, UK, G52 4RU Birchin Court, 230 Park Avenue 20 Birchin Lane, Suite 300 West, London, England, EC3V 9DU 230 Park Avenue, 10th Floor, New York 10169, USA.

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Notes to the Consolidated Financial Statements In accordance with S479A of the Companies Act 2006, Velocimetrics Limited (06943398) have not prepared audited accounts. Beeks Financial Cloud Group plc guarantees all outstanding liabilities in this company at the year ended 30 June 2021, until they are satisfied in full. 26. EVENTS AFTER THE REPORTING PERIOD Beeks headquarters will move from the existing leased office to the nearby Riverside Business Park, King’s Inch Road, Braehead, PA4 8YU in early 2022. In September 2021, the Group finalised the purchase of the property for £2.1m which was funded out of existing Company cash balances and a new debt facility of £1.5m taken post year end. 27. ULTIMATE CONTROLLING PARTY The Directors have assessed that there is no ultimate controlling party. FINANCE 93

94 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 OPINION BASIS FOR OPINION in the financial statements or, if Our opinion on the parent We conducted our audit in such disclosures are inadequate, company financial statements is accordance with International to modify the auditor’s opinion. Our unmodified Standards on Auditing (UK) conclusions are based on the audit We have audited the parent (ISAs (UK)) and applicable law. evidence obtained up to the date company financial statements of Our responsibilities under those of our report. However, future events Beeks Financial Cloud Group PLC standards are further described or conditions may cause the parent for the year ended 30 June 2021, in the ‘Auditor’s responsibilities for company to cease to continue as a which comprise the company the audit of the parent company going concern. statement of financial position, financial statements’ section of our he company statement of report. We are independent of the Our evaluation of the directors’ changes in equity and notes parent company in accordance assessment of the parent to the company financial with the ethical requirements company’s ability to continue to statements, including a summary that are relevant to our audit of adopt the going concern basis of of significant accounting policies. the parent company financial accounting was undertaken as part statements in the UK, including the of our evaluation of The Group. This The financial reporting framework FRC’s Ethical Standard as applied to evaluation included: that has been applied in their listed entities, and we have fulfilled preparation is applicable law our other ethical responsibilities / Obtaining management’s cash and United Kingdom Accounting in accordance with these flow forecasts for The Group Standards, including Financial requirements. We believe that the covering the period to December Reporting Standard 101 ‘Reduced audit evidence we have obtained 2022. We assessed how these Disclosure Framework’ (United is sufficient and appropriate to forecasts were compiled, and Kingdom Generally Accepted provide a basis for our opinion. assessed their accuracy by Accounting Practice). validating underlying information CONCLUSIONS RELATING and verifying mathematical In our opinion, the parent company TO GOING CONCERN accuracy of the model used; financial statements: We are responsible for concluding / Challenged management on / give a true and fair view of the on the appropriateness of the the key assumptions used with state of the parent company’s directors’ use of the going concern the forecasts testing the accuracy affairs as at 30 June 2021; basis of accounting and, based of the assumptions and inputs / have been properly prepared on the audit evidence obtained, by corroborating to underlying in accordance with United whether a material uncertainty information. We also assessed Kingdom Generally Accepted exists related to events or the mitigating actions available to Accounting Practice; and conditions that may cast significant management and corroborated / have been prepared in doubt on the parent company’s these available actions to accordance with the ability to continue as a going supporting information; requirements of the concern. If we conclude that a / Obtained forecast covenant Companies Act 2006. material uncertainty exists, we are compliance workings for the going required to draw attention in our concern period and reperformed report to the related disclosures the calculations to ensure mathematical accuracy;

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Independent Auditors’ Report to the members of Beeks Financial Cloud PLC / We performed a retrospective macro-economic uncertainties financial statements are authorised FINANCE review of management’s such as Covid-19 and Brexit, we for issue. forecasts by comparing the assessed and challenged the forecasts to actuals in the reasonableness of estimates In auditing the financial previous two financial years to made by the directors and the statements, we have concluded determine the accuracy of prior related disclosures and analysed that the directors’ use of the going year assessments. We also how those risks might affect concern basis of accounting in compared actual results to date the parent company’s financial the preparation of the financial to the forecasts; and resources or ability to continue statements is appropriate. / We assessed the adequacy operations over the going of the disclosures in the financial concern period. The responsibilities of the directors statements, including the impact with respect to going concern are of the disclosed post balance Based on the work we have described in the ‘Responsibilities of sheet event to the going performed, we have not identified directors for the parent company concern model. any material uncertainties financial statements’ section of relating to events or conditions that, this report. In our evaluation of the directors’ individually or collectively, may cast conclusions, we considered the significant doubt on the parent inherent risks associated with the company’s ability to continue as parent company’s business model a going concern for a period of at including effects arising from least twelve months from when the 95

96 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 OUR APPROACH TO THE AUDIT Key audit matters were identified as: We performed a full scope audit / Impairment of investment in of the financial statements of the Velocimetrics Limited (new) parent company. FINANCE Our auditor’s report for the year ended 30 June 2020 included one key audit matter that has not been reported as key audit matter in our current year’s report, which related to the impact of Covid-19 on going concern. This risk was rebutted for the current year given management’s ability to show no significant impact of Covid-19 on the performance of the business and a strong cash balance due to multiple equity raises in the year. OVERVIEW OF OUR AUDIT APPROACH Overall materiality: £114,000, which represents 1% of the parent company’s total assets at the planning stage of the audit.

Beeks Financial Cloud Group PLC For the year ended 30 June 2021 Independent Auditors’ Report to the members of Beeks Financial Cloud PLC KEY AUDIT MATTERS in the audit; and directing the efforts Key audit matters are those matters of the engagement team. These that, in our professional judgement, matters were addressed in the were of most significance in our context of our audit of the parent audit of the parent company company financial statements as financial statements of the current a whole, and in forming our opinion period and include the most thereon, and we do not provide a significant assessed risks of material separate opinion on these matters. misstatement (whether or not due to fraud) that we identified. These In the graph below, we have matters included those that had the presented the key audit matters, greatest effect on: the overall audit significant risks and other risks strategy; the allocation of resources relevant to the audit. FINANCE 97

98 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 Key Audit Matter How our scope addressed the matter Impairment of investment in Velocimetrics Limited In responding to the key audit matter, we performed the We identified the impairment of the investment in following audit procedures: Velocimetrics Limited as one of the most significant assessed risks of material misstatement due to We obtained management’s impairment assessment fraud and error. and challenged the assumptions within this, including: checking how these forecasts were replicated within In the prior year, the acquisition of Velocimetrics the going concern forecasting; and considering Limited resulted in an investment in shares in group management’s assessment of CGUs and the allocation undertakings with a carrying value of £4.083m on the to assets (including corporate assets) against these company’s balance sheet. There is a risk that these CGUs. We also confirmed the cashflows have been values are now impaired which is further evidenced management approved; by the release of £2.0m of accrued contingent consideration in the year. The process for assessing Revenue growth within the forecasts was specifically whether an impairment exists under International challenged given the underperformance of Velocimetrics Accounting Standard (IAS) 36 ‘Impairment of Assets’ post acquisition. The key revenue driver in the model, being is complex and requires calculating the value in the pipeline of sales opportunities, was challenged and use through forecasting cash flows related to cash corroborating evidence, such as contracts won post generating units (CGUs) and the determination of year end and proposals out at the tender stage, were the appropriate discount rate and other assumptions obtained and agreed back into the forecasts. We also to be applied is highly judgemental and subject to challenged the inputs into the run-rate specifically management bias. The selection of certain inputs into those values impacting the terminal value year; the cashflow forecast can significantly impact the result of the impairment review. Costs were considered and challenges made to management with regards to the reasonableness The key inputs impacting the model of overheads incorporated; are considered to be: / The pipeline of future sales opportunities; Our internal experts reviewed the reasonableness of the / The discount rate; discount rate applied to the impairment model including / The allocation of costs and corporate assets; and the workings behind this discount rate; / The growth rate. Sensitivities were performed on the cashflows to bring together all evidence to identify a potential undetected As a result of this process, management identified impairment; and an impairment of £784,000 within the Investment in relation to Velocimetrics Limited. We reviewed the disclosures and accounting policies relating to the impairment assessment and investment balances to assess whether these were in accordance with FRS 101. Relevant disclosures in the Annual Report 2021 Our results / Financial statements: Note 2, Investments Overall, our audit testing did not identify any evidence of a further material impairment charge being required against the carrying value of investments.