Page 17 - Beeks Financial Cloud Group Annual Report 2021

Beeks Financial Cloud Group PLC
Strategic Report - Financial Review For the year ended 30 June 2021

TAXATION business. Notwithstanding our solid The earn out deal was structured
The effective tax rate (‘ETR’) for the balance sheet, the expected growth in a way that missing the revenue
period was -27.81%, (2020: 15.2%). and investment into the business targets was binary and that not STRATEGIC REPORT
over the next few years, driven by achieving the targets would mean
The ETR has substantially reduced in Proximity Cloud has led us to take a pay out to the previous owners
the current year. The overall effective the decision that cash would be of nil. The quantum and timing of
tax rate has benefitted from the better re-invested in the business to the new deals, of which one was
non-taxable element of contingent compound growth for the benefit of signed post year end, was key in
consideration, deferred tax on share shareholders in the medium term. achieving the minimum revenue
options not previously recognised and Therefore subject to shareholder earn out target. The contingent
prior year adjustments for R&D claim. approval at the forthcoming Annual consideration of £2m therefore
General Meeting, future dividend is fully released to the income
EARNINGS PER SHARE AND distributions are expected to be statement this year.
DIVIDENDS put on hold.
Underlying earnings per share Having performed a full impairment
increased 25% to 3.14p (2020: 2.52p). CONTINGENT CONSIDERATION assessment including modelling
Underlying diluted earnings per share Following the acquisition of VMX projected cash flows, weighted
increased to 2.99p (2020: 2.45p). (now Beeks Analytics) last year, sales pipeline, with appropriate
The Group pr ovided for the discount rates and a range of
Basic earnings per share increased likelihood of an earn out target sensitivities and analysis of CGU’s,
to 3.07p (2020: 1.13p). The significant being met during this financial it was concluded that prudently
increase in basic EPS has benefitted year. This earn out was based the goodwill was impaired by £1m.
from the gain on the revaluation on achieving a very challenging
of the contingent consideration in performance target for this year We fully expect the Beeks Analytics
statutory profit after tax and the tax only, which has not been met. business to be an integral part of
credit in the year. Diluted earnings our business going forward and the
per share has also increased to 3.07p The revenue contribution from pipeline across the customer base
driven by the increased underlying Velocimetrics was lower than and product suite remains strong,
profitability and tax credits (2020: 1.13p). anticipated, while product updates as evidenced post year end in
took place and investment was August by securing a $1.1 million
Following consultation with our made in the senior management multiyear analytics deal with a Tier 1
shareholders during our equity team. This coupled whilst operating Bank for their Asia deployment.
raise in April, the Board has decided within a COVID-19 environment
to change our dividend policy resulted in a delay in signing new We continue to invest in the
which has been in place since deals and overall a lower revenue Analytics team, operations and
our IPO in November 2017. For generation than was expected at product, as our ability to offer
the last few years we have been the time of acquisition. network analytics is a key attraction
paying a modest dividend whilst of our offering to Tier 1 customers.
continuing to re-invest in our We also believe the analytics

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