Beeks Financial Cloud : Final Results 2023

Beeks Financial Cloud Group plc

("Beeks" or the "Company")

Final Results for the year ended 30 June 2023

2 October 2023 - Beeks Financial Cloud Group plc (AIM: BKS), a cloud computing and connectivity provider for financial markets, is pleased to announce its final results for the year ended 30 June 2023.

Financial highlights

• Revenues1 increased 22% to £22.36m (2022: £18.29m)
• Annualised Committed Monthly Recurring Revenue (ACMRR) up 23% to £23.8m (2022: £19.3m) increasing further to £25.0m by the end of August 2023 following a strong start to the new financial year
• Gross profit up 15% to £9.12m (2022: £7.94m)
• Underlying2 EBITDA increased 33% to £8.42m (2022: £6.31m)
• Underlying profit before tax3 increased 13% to £2.33m (2022: £2.06m)
• Underlying diluted EPS4 3.96p (2022: 4.19p)
• Net cash5 as at 30 June 2023 of £4.41m (30 June 2022: £7.86m)

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Revenue referenced throughout the accounts excludes grant income and rental income

Underlying EBITDA is defined as profit for the year before amortisation, depreciation, finance costs, taxation, acquisition costs, share based payments, exchange rate gains/losses on statement of financial position translation and exceptional non-recurring costs

Underlying profit before tax is defined as profit before tax excluding amortisation on acquired intangibles, acquisition costs, share based payments, exchange rate gains/losses on statement of financial position translation and exceptional non-recurring costs

Underlying diluted EPS is defined as profit for the year excluding amortisation on acquired intangibles, acquisition costs, share based payments, exchange rate gains/losses on statement of financial position translation and exceptional non-recurring costs divided by the number of shares including any dilutive share options

Net cash is defined as closing cash less closing asset financing loans and bank loans.

Statutory Equivalents

The above highlights are based on underlying results. Reconciliations between underlying and statutory results are contained within these financial statements. The statutory equivalents of the above results are as follows:

• Loss before tax was £0.65m (2022: Profit before tax £0.07m)
• Basic (LPS)/EPS was (0.14p) (2022: EPS 1.43p)

Operational highlights

• Continued customer base expansion and growing pipeline:
• • Continued customer base expansion and growing pipeline. Johannesburg Stock Exchange (JSE) - the largest stock exchange in Africa, signed a multi-year contract for Exchange Cloud. The contract went live during September 2023 with capacity now sold to JSE customers and follow on opportunities advancing The Exchange Cloud pipeline continues to build with advanced discussions taking place with major Exchanges across the globe, including additional proof of concept implementations.

• Continued product innovation:
• • Major user interface refresh of the Beeks infrastructure automation portal, allowing clients to tailor the user experience for their own users.
  • Re-architectureof the underlying server hosting platform to improve the efficiency of the Group, driving long-term cost benefits.
• Investment in enhanced security:
• • Completed stage 1 of industry-leading SOC 2 security accreditation with a view to being SOC 2 compliant by calendar year end.
  • Launch of Beeks Security Operations, providing end to end security detection and response capabilities for our customers, through partnership with cybersecurity service provider BlueVoyant.
• Investment in inventory, team and sales and marketing, to deliver on the growth opportunity:
• • Investment into inventory, ensuring the Group is capable of delivering against all contracts either signed or in the immediate pipeline.
  • Implementation of new inventory management system to streamline stock management and audit compliance.
  • Increased average headcount to 103 (2022: 89) to support the product development roadmap.
  • Increased brand awareness through attendance at international industry conferences in Bangkok, Chicago, Boca Raton and Paris.

Outlook

• The Company continues to be supported by underlying market trends, with the ongoing shift of the financial services sector to cloud computing.
• Well positioned moving forward, with an established reputation and a track record of sustained growth.
• Core focus on converting the record pipeline of opportunities across the Group's product offerings, in particular the Exchange Cloud offering with a number of contracts at an advanced stage.
• Exchange Cloud remains a potentially transformational opportunity for Beeks, with significant traction with both existing and new customers, including additional proof of concept implementations, albeit contracts of this size take time to convert.
• The Board is confident in achieving growth acceleration and results for FY24 in line with its expectations. Confidence underpinned by high levels of contracted, recurring revenue, a unique proposition and growing international profile.

Gordon McArthur, CEO of Beeks, commented: "With an established reputation and a track record of sustained growth, we are well-positioned to capitalise on the shift of the financial services sector to cloud computing and continue on our growth trajectory. The deals signed to date and our exit ACMRR mean the Board is confident in achieving results for FY24 in line with its expectations.

We remain focused on converting our record pipeline of opportunities across our product offerings, and in particular the recently launched Exchange Cloud offering. The advanced nature of several of these discussions, including additional proof of concept implementations, provides confidence in our ability to provide growth acceleration in FY24.

With high levels of contracted, recurring revenue, a unique proposition and growing international profile, we look to the future with continued confidence."

For further information please contact:
Beeks Financial Cloud Group plc
Gordon McArthur, CEO	via Alma PR
Fraser McDonald, CFO
Canaccord Genuity	[phone]
Adam James / Gordon Hamilton
Alma PR	[phone]
Caroline Forde / Hilary Buchanan / Joe Pederzolli

About Beeks Financial Cloud

Beeks is a leading managed cloud computing, connectivity and analytics provider for Capital Markets and financial services. Our vision is simple: Build. Connect. Analyse.

With a growing international network of data centres, Beeks provides end to end outsourcing of compute environments by delivering low-latency compute, connectivity and analytics, on-demand. Our cloud-basedInfrastructure-as-a-Service (IaaS) model allows financial organisations the flexibility and agility to deploy and connect to exchanges, trading venues and cloud service providers at a fraction of the cost of building their own networks and infrastructure.

ISO 27001 certified, Beeks supports its global customers at scale exclusively within global capital markets and leading financial centres.

beeksgroup.com

Chairman's Statement

It has been a year of further progress for Beeks, with the Group growing the sales pipeline for its transformational Exchange Cloud offering, while continuing to deliver services across the globe. Revenues increased by 22% to £22.4m, and underlying EBITDA by 33% to £8.4m. The Group delivered an exit ACMRR of £23.8m, up 23% in the year, providing a strong basis for continued growth in FY24.

The growth potential of the business is significant, typified by the scale of the first two customers now secured for Exchange Cloud, the largest stock exchange in Africa as well as a division of Intercontinental Exchange, the world's largest exchange group and owner of the New York Stock Exchange. We remain in discussions with a number of further major global exchanges, including additional proof of concept implementations, with the market opportunity remaining transformational. However, that said, as previously flagged, deals of this magnitude with organisations such as these will take longer to progress through to signed contracts than Private and Proximity Cloud deals, which continue to provide a growing foundation for the business.

The funds raised early in 2022 have provided the ability to invest into resources, ensuring the business is appropriately configured to address the significant market opportunity. During the period strong progress has been made in the development of the Beeks offering, the expansion of the team and the purchase of inventory to deliver against all contracts either signed or in the immediate pipeline. With these investments having been made, and no immediate requirements to expand either the team or stock held, the potential to expand the profit margins of the Group upon delivery of further contracts is considerable.

While the macroenvironment has continued to present challenges to all businesses, particularly surrounding supply chain issues and general inflationary pressures, the Group has continued to trade resiliently amidst the challenging backdrop, these aspects have been well managed within Beeks, as reflected by the businesses' continued healthy operating margins.

On behalf of the Board, I would like to express my gratitude to our staff for their commitment and work ethic. They have created offerings unique in the market while delivering excellent customer service. We are fortunate to have such a talented team and I have every confidence in their ability to capitalise on the opportunity ahead.

With a unique compelling proposition and a growing list of high profile customers, the Group is ideally positioned to benefit from long-term trends towards cloud-computing within the Financial Services sector. The Group's strong financial fundamentals: increasing Annualised Contracted Monthly Recurring Revenue, sufficient cash reserves for medium term organic growth, low levels of debt, a highly scalable business model and a record sales pipeline, provide for high levels of optimism within the business moving forward. The team is keenly focused on the conversion of the sales pipeline, and the achievement of greater operational leverage as these deals flow through into revenues and profits.

Mark Cubitt

Chairman

29 September 2023

Strategic Report

Market Overview

"Organisations today view cloud as a highly strategic platform for digital transformation."

Sid Nag, research vice president at Gartner

Growth in Cloud Adoption

We operate in a considerable, and growing, market. Cloud computing is driving the next phase of digital business, as organisations pursue disruption through emerging technologies like generative artificial intelligence (AI) and Web3.

The global cloud computing market size was valued at USD 337.76 billion in 2022. It is projected to reach USD 1412.39 billion by 2031, growing at a CAGR of 17.23% during the forecast period (2023-2031)1. Infrastructure- as-a-service (IaaS) is forecast to experience the highest end-user spending growth in 2023 at 30.9%2.

The finance industry has been increasingly adopting cloud solutions due to their scalability, cost-efficiency, and flexibility. Managed cloud providers have been a key enabler of this trend, as we offer expertise in managing complex financial systems on cloud infrastructure.

The finance sector faces strict regulatory requirements and Beeks has spent over 12 years developing solutions and services tailored to meet these requirements, which makes us attractive to financial institutions seeking to maintain compliance while leveraging the cloud. Data security and privacy are paramount in finance. Beeks has invested heavily in security measures and technologies to protect financial data. As financial institutions continue to migrate sensitive operations to the cloud, the demand for secure managed cloud services is expected to grow.

Cost management remains a critical concern for finance companies and Beeks offer tools and services to help organisations optimise their cloud spending, which is especially important as cloud costs can quickly spiral if not managed effectively.

Beeks has developed industry-specific solutions for finance, including trading platforms, asset management systems, and regulatory reporting tools and these specialised offerings are expected to drive demand in the financial sector.

Many financial organisations are adopting hybrid and multi-cloud strategies to balance the benefits of the public cloud with the need for on-premises infrastructure. Beeks primary Proximity Cloud and Exchange Cloud products were built to facilitate the management and integration of these complex environments. As financial institutions expand their global footprint, they require cloud solutions that can support operations in multiple regions. With our global presence and pre-built rack solutions that can be deployed anywhere in the world, Beeks are well positioned to capture this market.

Selecting the right capital markets and financial services managed cloud provider involves careful consideration of an organisation's specific requirements, including trading strategies, regulatory obligations, and data management needs. Beeks continues to play a crucial role in enabling financial organisations to leverage the benefits of cloud technology while navigating the complex landscape of the financial industry.

Our addressable market is extensive with up to 21,000 banks and hundreds of global Exchanges, a large percentage of which maintain their own IT infrastructure and are yet to move to the Cloud computing model.