Page 109 - Beeks Financial Cloud Group Annual Report 2021

Beeks Financial Cloud Group PLC
Notes to the Company Financial Statements For the year ended 30 June 2021

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