Beeks Financial Cloud Group (LSE:BKS) — Beeks Financial Cloud - Interim Results FY21

0:01 Good afternoon, ladies and gentlemen. Welcome to the BEEKS FINANCIAL CLOUD GROUP PLC interim results investor presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the q and a tab situated in the right hand corner of your screen. Simply type in your question and press send. The company may not be in a position to answer every question it received during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your investor.me company dashboard, and you'll also

0:32 get notification when they're ready for your review. I'd also like to remind you that this presentation is being recorded. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Gordon McArthur, CEO, and Fraser McDonald, CFO of BEEKS FINANCIAL CLOUD GROUP PLC. Good afternoon. Good afternoon, folks. Gordon McArthur. So I I'm gonna start off the presentation today and then we'll hand over to Fraser to do some numbers. So I'll do a brief overview of the company. I think, you know, some of the shareholders or people on the call may know us may may know us already, but there may be some new folks. So so big financial cloud, we are a a cloud computing organization who solely focus on financial markets.

1:18 I mean, I say cloud computing, our strap lane is is now threefold. We our strap lane is we build, connect, and analyze financial market footprints. So if you click on the the first slide, our business model is actually relatively simple. So we offer cloud computing capabilities and financial data centers around the world. So our cloud computing capabilities are to start with in the build component. We can build you server footprint be a be it dedicated to be a metal servers or virtual private servers or virtual machines and our data centers, which is no different from a genetic cloud provider like an AWS, Google, or an Azure. We can give you the same portal based ability to build, delete, and manage compute resources in our data centers.

2:12 So that is not a differentiator. It's just part and parcel of what we do. So that's about the build piece. Second piece is a connect. So this is where we start getting to our our niche service offering and and and why we exist as a business. So when we say connect, we talk about private connectivity between our cloud infrastructure and financial market ecosystem. So that could be a bank, an exchange, a broker, a technology provider. So when we talk about connect, it's a connectivity within a data center. So and you can see from the first slide, are we're now at 19 data centers around the world. And those that know us know the story fairly well. We we don't pick genetic data centers. We are either in an an exchange data center or a financial data center.

3:05 And financial markets participants tend to congregate into the data centers. So when we talk about connectivity, what that means is we deploy our infrastructure, our cloud infrastructure and the data center. We then run fiber across and then say the internal data center roof and down directly into the exchange. So that gives us point to point secure, private, reliable, and fast connectivity between our cloud and whoever you need to talk to within that financial ecosystem. So we have gonna make 250 venues on net around the world, some data centers have more than others. But that means you build your own server infrastructure via portal. You pick who you want to connect to. That's all built for you in almost real time. And you get your server and your connectivity to do whatever type of capital markets activity you want to do.

4:02 The last piece of the strap lane is analyze. So for you, those who have been following us for a while, will know that we acquired a business called Velocimetrics around a year ago. And that has maybe been rebranded into BEEKS analytics. And that gives us that analytics capability. So when we talk about analytics as, you know, looking at in real time at network, their financial network, monitoring it for latency, monitoring it for performance, but actually goes a lot deeper than that. So it will allow people to measure trade execution between themselves in a venue. It will allow sales say venues to check that they've not get steel pricing in the market, that some of their the feed pricing is is not down or is not stale, which allows them to get picked off.

4:53 So we build, connect, analyze is really a a strap lane to the the financial markets community. The first slide kind of breaks down our business model. It's a recurring revenue business model. The majority of it is, I think we're over 90% recurring. We've got quite a good split by geography, as you can see from the charts. The focus of the business has been institutional business for many years now. We still have a retail segment where our client can come in over the Internet and buy a VPS from us to run a retail trading platform. And that's a steady business, but it's not certainly not the where we are focusing the majority of our investment. And then that last pie chart just shows you the rough breakdown between our different business lines.

5:45 So the next slide, the map that we show all the time and every presentation is is getting busy every time we show it. So we're at 19 data centers around the world now. Know, as we go in to go through the the the the period, you'll see that we've added quite a lot of data centers over the last year. We have just signed for two more, our first venture into Canada on the back of a customer contract. So we are gonna have primary and redundant data centers in Toronto. And yeah. I mean, the map's getting fairly full. Think if you look at if you look at the look at the map, I think the only major areas that we don't have a presence are South America and kind of South Africa as as you know, trading venues. So we are getting to a point where I don't think we'll see as many new data centers online in the last twelve or eighteen months.

6:43 That certainly won't be replicated going forward. We will increase capacity as we need to, but in terms of new rollouts that will minimize. So if we go on to the next slide. This is where we're starting to kinda look at first half. So I think the phase we're using is solid. I think there good parts of it and there was some frustration around some of the deliveries in COVID that will come into. So at high level, revenue is up 24%, EBITDA up 11%. We got a slight drag in profit, which is due to some of the challenges around COVID. Also, as we flagged in the last presentation, we had a twelve month investment fees into BEEKS Analytics.

7:31 And we've got a big new private cloud project that we will be have been invested in and we're hoping to launch in the summer. So but we'll cover more of the numbers as as we go through in Faisal, pick some of that up. I think yeah. So I mean, I think it was it was it was a good half. I think we the frustration was we've had some well, COVID has not affect our affected our underlying markets. It has affected our ability to

8:00 take some of the big contracts we say last year and it's extended the the period between signing of a contract and billing it. So we are a software company, you know, we say in a contract, we have to either build an infrastructure or give the client the logins to the existing infrastructure before we can start billing them. So I think if you look at one of the big million dollar a year annualized contract that we signed, and this thing last year, and slightly before that, It's taken us almost twelve months or has taken us twelve months to get that to a point where it's actually fully built. And the reason behind that was as part of the contract of six new data centers. And we basically signed the contract at the tail end of the year. We ordered the hardware.

8:45 They all arrived in Glasgow and come around March. And the world stopped allowing travel. Right? And our and our business model or the way we build out a data center is we do a little bit of the work in the Glasgow head office. And then we send some of our staff who will go and work on-site for three three or four weeks in the data center, building up the infrastructure, applying all the configuration, doing the, you know, the big tests that we need to do before we can say an office fit for purpose to lay clients on. So we simply went like it couldn't do that. So a lot of these geographies are new to us. We had to find remote representatives in the geography. We had to use them to do the install. We have to get, you know, do remote configuration with them helping us. And and these people were the best when they were able to really understand our technology set because it's a little bit different.

9:38 It just elongated that process. So I think we've been asked by a lot of our institutional investors this week, how much do we think it cost us? And finger in the air, it probably cost us about $300 onto the bottom line, that delay around COVID between getting contracts signed and getting them billing and delivered. So that was a sense of frustration. Luckily, we have done the the initial build out of sites is the most the most difficult as we've that. We still got the challenge of Toronto which we'll we'll be working on the next few weeks and months. But I think on the flip side is as we announced with results, one of our biggest client has doubled down on the commitment. You know, I think when we we talked about it last time when they've seen that first million dollar a year annual contract, that was the first phase of which we expect three or four. We have signed that second phase and that will be much quicker to deliver.

10:40 So I think we're gonna go from a million annualized to 2,000,000 annualized actual billing, which is an important part for us by the end of our financial year. So, you know and again, we expect that contract to materially increase even from now. So there's there's a there's a strong pipeline of opportunity with the my particular client.

11:02 So I think again, those of you that have been following us for a while, listened to is talk about the tier one opportunity for quite some time. So I think more positives are we now have nine tier one organizations that we are contracted directly with. I the same contracts with BEEKS. I mean, we've actually got a few more that are using our services via third party application providers. But when we talk about tier one clients other presentations, it's it's those that have direct contractual relationships with us. So we've got nine in various stages of maturity. Some on, you know, proof of concept stage, small, tiny initial rollouts, some like the ones that we announced on Monday are now into the second phases of their deals. And again, we announced that an

11:53 extension of the open banking one that we signed last year, which we again, we hope will grow in in size, shape, and scale even from the the extended amount we've signed up. So and we've got a, you know, a few quite a few tier one organizations that we are in discussions with. Some of which we will hope to contract with, some may not. But, you know, we are constantly trying to increase the amount of tier ones in the pipeline because it does give us that land and expand capability as we are we are seeing. So it's a kind of validation of our strategy so far that once we do get into these accounts, you do a good job. You deliver, as you said. You give us scalable, secure, resilient solution, and you find more opportunity.

12:40 Last piece on this slide is our key metric that we measured at the board as our ACMRR, so our annual contracted monthly run rate. So that is what has cost what contracts have customers saying. That's not to see what has been built. So there's there's always a lag. We, you know, we have talked to be looking at our billing metric as well. But that ACMRR was at 12,000,000 at the end of December with some of the really strong period since then. I think we talked about in release on Monday. So we're just slightly under $13,000,000 for our ACMRR as of Monday of this week.

13:29 So there's real momentum in the business. Think it's the strongest quarter we'll ever have had. And we see momentum going into that our Q4, which is next quarter takes a year. So last year, we talked about the Era people. We are not quite doubled our headcount, but there was a significant increase in our headcount. We have about 75 people around the world now, give or take. And then that was to support the growing Tier one opportunity. We certainly won't replicate that over the next one to two periods. So be a gradual more incremental increase in headcount as is needed. But we took a lot of that pain in the last eighteen months. Have this year is the year of product, right? And I think we've talked about this before as well.

14:18 So when we acquired, I'm gonna call it BKS analytics. So BKS analytics was a software product. When we acquired it, one of the key intentions was to make it available on our BEEKS infrastructure as a SaaS product. We have done that already and we announced in December, I believe, that it was available in our London and New York data centers, which are our two biggest presence. So that's instead of selling it to a bank or a big broker as an enterprise software or appliance based sale, we know just ask them to connect directly to an infrastructure and we offer it as a service. They don't need to worry about hardware upgrades, don't need to worry about capacity. And we've got a simple month to month charging mechanism all based around the capacity they need on that system. So that was a really quick turnaround from acquiring the business to getting some joint value to our customers.

15:17 We also have a very large private cloud network. It's been based on our network automation project that we've been working on for last year. We're about three months away from releasing that and it's you know, kinda phase one

15:31 guys if you like. And we see some very significant opportunity around it. Still kinda commercially sensitive at the moment, but we hope to make some announcements around that in the next three to four months. Okay. I think we've kinda covered the land and it's expand success. So, you know, we've got case study in here with IPC, one of our one of our larger clients and actually partners now. You know, we we you know, get a really strong relationship with them. So, you know, we have built them a private a global private cloud. We've got they're on a technology company. So IPC have two main parts of the business.

16:09 All the big trader voice turret systems that you see on trading floors, IPC dominate that market. And then they've got our financial extranet network that supports both voice and data traffic linked to the trader targets, but also for transiting market data and financial data. So, you know, we have we have built them a global private cloud. They are now we are now working with them closely. I think, you know, they've made no secret of it. They have a a business unit called Connexus Infrastructure Services, which is them bundling the networking capability and our infrastructure service capability and allowing clients, their existing clients to buy under an IPC contract with one, we've integrated support desks.

17:01 And they are promoting that quite heavily and it's all powered by BEEKS. So it's a great success story for us. It's grown and will continue to grow over the next period. Alright. I'll pass over to Fraser to talk through some more detail on the numbers. Okay. Good afternoon, everyone. Fraser McDonald, Chief Financial Officer of BEEKS. I guess before we delve straight into the numbers, I thought it might be helpful just to give a bit of background and context in the last six months. And Gordon has actually covered quite a bit of this already. And I think part of the fact that we've kind of a weekend to a roadshow, we know what each other are going to see quite a lot of the time. So he's still in a bit of my thunder here, but I'll give you a bit of a I'll give you some of the metrics that we've touched on. So the graph really depicts there that the difference between what Gordon was mentioning, annual value of our same contract with IPC, which is the higher blue line there. And then the yellow line is depicts the value of what we invoiced over the period.

18:05 And then the blocks are our investment or our cumulative CapEx spend. And as Gordon mentioned, we have faced some challenges over the last year and that prolonged period of almost a year in terms of signed to recognize revenue is something that would not be typical of a contract. So it took us almost a year as at the end of February, were at 90% of our initial contract billing. So I suppose that's the downside. But as Gordon has mentioned, on a positive note, we have delivered, we have opened the data centers, the seven data centers, the customer is happy. And as a result of that, as Gordon mentioned, we announced on Monday that the customer has doubled down on the initial contract value.

18:50 So we're now over $2,000,000 annualized. So again, one of the biggest of our customers deployments we've made and we've proven we could execute it during a difficult period. So it's been a good result. And then again, just echoing what Gordon said, we don't see envisage the same problems in terms of the second part of that contract. We have customer orders dates in line for that second part. So in terms of the sort of lag of saying to recognize in

19:20 the second part of the period, we don't expect the same delay. So we expect that margin to be generating better in the second half as we did in the first half. So again, next slide. So as Gord mentioned, last year we made a huge increase in investment into our people, whereas this year is we're calling it the year of product.

19:46 And over the last six months, we have made significant investment, over GBP 2,000,000 across kind of the two projects that Gordon called out there, the BEEKS analytics, which is previously what the Veloximetrics was and then on our network automation as well. So over those two projects, we've spent about 1,500,000 as we said we would.

20:10 In terms of the Veloximetics business, again, when we bought it, it was a privately run company, fairly bootstrapped. We talked for those of you who heard us at full year results that we'd invest about 1,000,000 both in staff and investment in product and the supporting infrastructure. So we're kind of fairly well into that journey. And as Gordon mentioned, we have released the first product of that cloud based analytics back in November. And then again, in terms of the network automation, that's another area that we continue to invest in. It's how we differentiate from our competitors by offering a true cloud model to allow customers to manage their own infrastructure. So again, there's been investment in the last six months in that. And then the cash flow in the right there that really just shows our investment. So we'll come on to our operating cash flows, but in terms of what we've created, so operating cash flow is about 1,500,000 in the period, but we've invested more than

21:09 that. We invested just over GBP 2,000,000 in product and capacity to support that. And then the other thing worth highlighting for those who are not aware that we actually did receive a GBP 2,000,000 grant from the Scottish Government to help support that network automation program. So we're actually seeing some of that money coming in and we will do over the next year and a half to help fund that.

21:35 Okay. Just coming on to the income statement. So again, we're calling it a solid year. We are 24% up on revenue year on year, so up from GBP 4,300,000 to 5,300,000. And as a result of that, gross profit is up GBP 400,000, so about 18% on last year. Gross margin is down slightly on prior year, but again reflecting the fact that we have made quite a bit of investment in the business over the last six to twelve months. We opened seven data centers last year, so there's a slight lag on gross profit margin on that as we'd expect. And again, reflecting the level of investment we've made across the capital base. But overall, our gross margin just under 50%. And again, we'd expect second half that starts to uptick a bit because less investment in terms of the data centers opening as Gordon mentioned. So we expect that to start coming up a bit.

22:32 And then again in terms of operating profit, we are slightly down. So it's 4% if you look at the operating profit margin and PBT margin, which again in quantum wise is roundabout 200,000. But again, if you reflect back the IPC revenue delay and the investment we've made in velocimetrics, which we bought it is loss making is still loss making, that's had a slight lag on overall profitability. Again, because we're a recurring revenue business, we expect second half weighting to be better because we get that recognized revenue that's higher to the same revenue coming through. So as a target for our business, we look to get operating profit before tax rendered by the mid teen percentages.

23:25 And again, just coming back to cash flow. So again, cover some of this already. Operating cash flow is relatively strong because of the recurring revenue model. We are fairly flat on last year at GBP 1,500,000 because of the what we've talked about in terms of the IPC contract lag and the loss metrics we loss making. And the other things that maybe call out on a cash side is we did refinance our debt. We got better terms if we move to Barclays and we drew down some additional funding to support our growth, around about 1,000,000. We are still relatively low gearing as a business with about 0.6 times EBITDA. Overall, again, as I say, we are down on cash, we're about GBP 700,000 decrease in the period. And again, we would expect similar levels of investment in the second half as we have in the first half as we move forward.

24:23 And I'll hand you back over to Gordon. Thank you. Okay. So I think we just last few slides to summarize, then we'll kind of open up to Q and A. But I think financial markets move to the cloud is still I mean, it's not exactly mature, right? There are more things moving. I think COVID has enhanced that a little bit. I think during the we've talked about this before as well. I think during the height of the market volatility, a lot of a lot of bigger organizations just put the brakes on everything and and, you know, it was maintaining systems and making sure things didn't collapse under the the strain and load.

25:10 But we're seeing a lot more conversations about strategic moves from both mid size and larger clients. So in terms of our sector, we're certainly not at the end of a growth growth phase if you like. It's it's it's still still a long way to go. We are we have historically, over the last two or three years, have been, you know, persistently talking about the tier one opportunity. I think the the arrangements we're gonna hope to make in this summer, maybe a little bit after that. So that's a big project. Allow us to tap more into the tier one market and allow us to go after some infrastructures and some systems that were not available to us before. But hopefully more of that comes on.

25:58 You know, we we can drag into more and more bits and pieces. So I think, you know, three, four years ago, a 100% of our revenue was directly related to execution, straight execution, right? Trading and whether that be retail trading or small brokers, mid sized brokers, whatever, with a 100%. I think what we've seen over the last, you know, with our some of our announcements and we've made, our use case for providing secure infrastructure in the financial data centers that has point to point connectivity resonates, I would say just the pure capital markets play. It's got a bigger place in that larger financial services vector.

26:44 We announced an open banking stroke payments And when it was fairly significant for us, we are seeing, you know, some blockchain stroke distributed ledger projects and initiatives from some large clients take start to take shape and there's there's some good engagement there. You know, the IPC stuff is, you know, that is voice recording and voice communication systems, albeit to support financial trading desks. But we our ability to go and have conversations outside of just pure trading as it seems to be growing, which is also a positive sign, increases the addressable market available to us. M and A, it's a hard one. Think we've made a couple of what we class as smaller acquisitions. I think the BKS analytic stuff strategically actually quite more important than maybe the commercials around it because it's it will tend to a future product strategy and everything.

27:46 And it's hard to say, I mean, we're always looking, I think some of the challenges are in our sector. They seem to organizations seem to go from quite small, you know, couple million turnover. There's not that many BKS size type organizations. They tend to go from, you know, a couple million or that a 100,000,000 turnover or 200,000,000 turnover or whatever. So we're we're not exactly in a sweet spot of of our size and and scale. So, you know, we are starting to think about, you know, do we look at some transformational stuff? But again, there's so much organic growth that lays that lies ahead of us. We think that it's still the same message. Does it add value? Is it growing? Is it profitable?

28:31 And is it, you know, valuation not, you know, ridiculous? And then, you know, getting yes to all four of the questions is actually really hard in our world. So we are always looking, I think is the lane I would give to answer that. And as I said, the business has had its probably record quarter. We see real momentum in the pipeline. We've got land and expand opportunity with most definitely all of our tier ones have already signed. We've got more that we're in commercial discussions with. Some of the names that we I look back at where we were three years ago when we IPO ed and our average client spend, I think was about £1,200 a month. And some of the organizations were engaged with now, it's not gonna happen quick.

29:23 It doesn't happen quickly. It's a an iterative process, but you don't have the ability to spend huge sums of this. So we I think we've we've shown a consistent performance. We tend to be between 2030% revenue growth every year and we've done that every year since we started. There is the opportunity to continue that as the numbers get bigger. The product offering is expanding. Think with the analytics offering, the SaaS offering and the private cloud offering is coming in summer. We have got real differentiated products rather than a service, a cloud offering that really sets us apart in the market. And I think the way that we are tackling the market is different from anyone else in our sector at all. If you look at some of our more classic competitors, more managed service providers than than I would say cloud providers. And and really we are continue to hammer home that cloud message in the financial markets.

30:27 Yeah. I mean, COVID-nineteen still has an impact. We look at the Toronto thing, we still cannot travel to Canada to do what we need to do. So we're relying on third parties. But as I said at the top of the presentation, I think most of our new sites are, you know, done, dusted. It's now just a case of adding capacity. So hopefully and is the hopefully, the world opens up and gets back to our level of normality, then the challenges of lack of travel don't impact at all. So, you know, the underlying business has not been impacted as I said, but it's just given us some operational challenges over the last last period. And that's I think that's me. I think that was the main areas I wanted to cover. So happy to go into Q and A. Fantastic.

31:15 Gordon Fraser, thank you very much indeed for the presentation. And ladies and gentlemen, do please continue to submit your questions using the Q and A tab situated in the top right hand corner of your screen. But just while the team take a few moments to review those investor questions submitted already, I'd like to remind you that recording this presentation, along with a copy of the slides and the published Q and A, can be accessed via your investor meet company dashboard. I'd also like to remind you that your feedback is important to the company. And immediately after the presentation has ended, you will be redirected for the opportunity to provide feedback in order that the company can better understand your views and expectations. Gordon Fraser, perhaps before we look at the questions that are coming during the live then, we had a a presubmitted question which reads as follows, if I could start there. Assuming part of your income is dominated in US dollars, to what extent will the adverse move in the exchange rate impact on future profitability, or is it little impact due to matching currency costs?

32:12 Yes, I'm happy to pick this one up. We do still have a reasonably natural hedge. So roundabout 40% of our revenues are in dollars and about 50% of our cost base is in dollars. So we do have that natural hedge. We do monitor it. So things like that, the IPC contract renew is all in dollars. So we will continue to monitor. We do have hedging instruments available to us should we need to use them. We've not utilized them so far because of that natural hedge, but we do monitor it within that business. So we are very much aware of it. Fantastic. Thank you very much. Gentlemen, could I just address you to the the q and a tab? You could just click on that, and you'll see some of the questions that we've had in during the meeting.

32:59 If I could just ask you to read out the question and respond where appropriate to do so, that'd be fantastic. Yeah. It's Gordon here. I'll I'll take the first one. So what competitive pressures are you facing in the markets that you're operating in? That's a good question. I mean, we have our what we call our classic competitors. You know, I don't I don't like calling them on our on our calls because, you know, I prefer to talk about our business rather than competitors. But, know, we were not seeing, you know, particularly new entrance into the into the sector. I think some of the generic cloud providers are, you know, looking at, you know, market data storage and retrieval.

33:44 But they are, you know, they're they're still unable to provide real low latency infrastructure and trade execution for for exchanges and venues. They they they just simply don't operate in the data centers that that these guys are in. So, you know, that was always our, you know, natural, you know, way of of, you know, differentiating our proposition as the, you know, you can't do this. You can't do the stuff that we do with the genetic cloud providers. But I'm I'm not seeing any specialists entrance into the the sector that would overly concern me or or material in the in the the way they're doing things. Two of our larger competitors, our competitors actually merged about a month and a half, two months ago, two London based ones. So, you know, we've kinda really got, you know, two competitors, one based in New York, one in London that I would see are the the managed service providers. So hopefully that answers the question.

34:46 Second question, what other areas would you look to add to your the portfolio to up and cross sell into your clients? I mean, do you look to acquire or do it organically? So again, another good question. So become more relevant as we as we are going through the summer. So we're trying to build end to end capability. Right? So if you look at the analytics add on, it is again part and parcel of we say to yourself, what do what do all of these organizations, what are they trying to deliver? How can we make it easier for them? How can we pre integrate things?

35:32 How can we pre configure things that allow clients to go focus on the business? And we are constantly, you know, asking ourselves that. I think there are some value add areas that we are currently exploring. Plus some areas that we're kinda never gonna go into. We're never gonna be a big market data provider. But you know, there are what I call financial middleware providers out there who can add value to our story. I don't think you know what, we are building our own products, but we will also look to complement that with add ons, strategic value adds that give us capability in that end to end story when we go and talk and see our, you know, our trading organization, a bank, a broker, whatever it is.

36:26 And then, you know, we're constantly evaluating it. Some are probably out over a price range, but it's a constant thought process. And we we announced Kevin Covington has joined our board as an as an exec couple months ago now. And really, Kevin is I'm just a veteran. He he knows most of the people in our world and and his job is to look at our strategic m and a piece. And and that may be to say, you know, we don't do any, but, you know, he's he's got a big focus on it. Okay. I cannot next question is really again about the competitive landscape. Can't can I answer that? I don't as I say, I don't think there's any material new players that would give us any cause for concern.

37:19 So what what can you please what you see as your defensible moat? It's not fairly crowded marketplace, what sets you apart. I don't think as a crowded marketplace, I would beg to differ on that. Generic cloud is a crowded a crowded marketplace, you know, having genetic compute resources anywhere. Yeah. It's certainly not an area that I would like us to, we certainly would look at it. Our defensive more as the fact that we have 200 connections that it would exchanges, banks, brokers that are all immediately available to clients has taken seven or eight years to put in. It doesn't just happen overnight. We are in the data centers that matter. Again, you need to build out specifically.

38:04 So if you look at a generic host or a generic hosting company or a cloud company in The UK, we really don't see them because clients know that they have to connect to the CME for instance. Right? They're trading with the CME. They have to connect to them, they want to be in the CME's data center. They come and talk to us. AWS are not in the CME's data center. They can connect, you can have a high latency connection from AWS to CME, but that's not really fit for purpose for trading. And generic cloud providers aren't any data centers, so they can't have the connectivity. So it's not a crowded marketplace at all. It's a very niche marketplace and we have very well established providers.

38:49 There's a handful that are in our space. Yes. I'll let Fraser answer that one. Okay. So it's a question from Simon. Does it make sense to continue giving a dividend given you've got debt and we'll probably need to increase investment in the business for existing and new Tier one rollouts? So this is something that we have been talking about internally and also with our institutional investors. That it's a very good point that's made. Do companies invest with us, I would doubt it for a dividend. So we have been aware of optics in terms of stopping dividends and how that may look, but I think it's a very valid point. And I think, you know, we are considering our dividend policy. I think it's the best way I would answer that.

39:39 Yeah. You know, we we we've as Fraser said, just to add into I mean, bizarrely, I'm the recipient of most of that dividend. So it's not you know, it doesn't it's not something that I'm overly promoting. And I think we have been discussing it for a period. Our advisers view is, you know, canceling a dividend, you know, and the and the COVID period was was not a particularly good optic or a good look because we didn't, you know, we didn't have to cancel it because of COVID. So but as Fraser says, you know, the feedback from our institutional investors on mass specifically that's because it's not really something that they're interested in or or acquire, you know, a shareholder for.

40:27 So can read into that what you will. Okay. Again, I think another question around margins, which so the question is, is there an operating profit or EBITDA margin that you're targeting for midterm? Yeah. I think when we look back over the last couple of years, margins have been relatively stable, give or take, a bit of timing. There is a cost to what we do in terms of we are an infrastructure business. Are doing a bit of software, but we're not a pure software business. So we are we cannot target EBITDAs at the mid-30s and operating profits at mid- high teens. But I think if doing that and scaling up, then I think we are happy. And if we can eke a wee bit more out of that, then all the better.

41:14 Question from Roger. What is expected expenditure to complete the network automation project? Again, good question. So we are we are, I hope, a few months away from our version one of the product, a private cloud product. So that investment cycle in terms of people to develop the product as coming to an end for that first phase. We fully expect that to be follow on phases. So I I'm I'm I don't think there's going to be a point where it just drops off a cliff. I I think that this is probably the biggest thing that we've ever done and give us a huge addressable market.

42:03 And to tap into that doesn't mean you don't just release it and forget about it. It's gonna be a continued expense. I think it also is a slightly different commercial model. It's it's higher CapEx investment on day one when we're contracts at a lower OpEx. So, you know, there there are there is gonna be some significant investment in it over the the period even even after we get it live. Next question. Do customers at each of the 18 data centers have access to all the company services? Yes. So when we sign up an institutional client, they sign up on the website, we approve this, we approve it. They get logged into the portal and then they can deploy infrastructure and any of our data centers around the world and deploy our connectivity in any of the data centers that's available. So you know, by just becoming a client, you can you can spin up stuff anywhere you want.

43:05 Next question is beyond the two tier client tier one clients you've announced previously, you've not announced any of the other seven. Do you intend to announce these contracts when they reach a certain scale or can complete proof of concept? And what do you see is the average annual value of those tier ones over the next two years? I mean, shouting out that we've signed a $30 a year contract with a big organization seems, you know, you we could know, we could it could be we could be a little bit disingenuous about it by, you know, naming some of the the organizations that we've got, you know, small proof of concepts with. I I I it's not really our style. Because of the nature of what we do as well, a lot of our clients don't, you know, will ban us from any type of an instrument whatsoever Even if it doesn't name them, it's very difficult.

43:58 They don't make it at all. I think as we've got material contracts, the step change in the contracts, so the ones we announced, the big two, you know, the long term commits, they were 1,000,000 a year. And one of them is a sale in a different sector. So after something state, you know, a state change and and and that contract, you know, if you say that a contract for, you know, a 10,000,000 TCV, we'll announce it. Right? What we're not gonna do is announce a $30 proof of concept with a big bank. What do see the average annual value of those tier ones over the next two years? And this goes back to why we are, you know, chasing the sector, you know. The the kind of those mega deals in here. Right? You know, and I, you know, don't don't wanna go into numbers because, you know, whatever we see, you kinda get, you know, that's the the lane in the sand.

44:50 But, you know, some of these organizations are spending tens of millions a year on the the trading infrastructure and the the data centers that we run around the world. So without giving an exact number, you know, that there are big contracts. But again, I keep going over this. No bank or investment manager is gonna give you as a new supplier, everything. Right? You you have to prove your worth. There's there's a very well worn path here. You get a small project. You deliver it. If you deliver it well, you then can have a further seat at the table. And these relationships then extend. No. We are not about to walk into one of the big banks and they're gonna give us a full trading infrastructure in the world that's 20,000,000 a year. Doesn't work like that. What they do do is say, okay.

45:40 You're gonna have up this and then you prove your worth and then you move on. I think that's the last question. Is this SaaS analytics product seen as as purely a revenue generator? Or do you expect to also use it as a loss leader to generate business by demonstrating the performance of of clients existing networks? That's a good question, but no is the answer. I think no. You know, it's it's a it's a bit of a tough call to go into a customer saying, you know, we've been monitoring your network, you know, doing very well. Let us do better. I think what what the analytics does is because it's really historically been the domain of the absolute biggest organizations in financial markets.

46:29 What we have seen as it opens doors for us. So we are having conversations with some big accounts that have used it, are interested in using it, know of it, but is dragging infrastructure conversations with it. And as we are going to be our strategy is more and more to to pin these offerings together, infrastructure and analytics. We're using we're seeing it as a real door opener into some very big conversations. You know, analytics, as we said when we bought it, for the amount of money we paid for it, I'm not expecting it to turn into 20,000,000 a year stand alone business. But strategically, as a value add, it's way we more worthwhile than the sum of money we paid for it as it gives us access to a lot of accounts that have the ability to spend a huge sum of money with us that we simply were not at the table with.

47:30 So there's some more come in. Once you release the new BKS private cloud services aimed is this aimed primarily at tier one clients? Do you foresee a new cohort of clients that will unlock that currently out of each? Yes. Yes. And all of that. So I I I I'm I'm low to go into it too much because it's still not available with the, you know, the subway audience for this call. But the whole point of it is is to unlock new tier one clients that really are not that interested in having any way shape or form shared trading infrastructure. And yeah, they they simply wouldn't entertain a BKS current system.

48:16 So, yes, time to answer all the above. Which sorry. I think there's another last question that's from Ray, which is kinda similar. Which new areas of the market do you see the network automation project opening access to? I kinda similar, you know, as I reiterated. It resonates with clients with ultimate security requirements, no desire to have shared infrastructure, and to manage their own world. I think I'll leave it at that. Gordon Fraser, thank you so much for for answering, yeah, all of the questions from investors. It was a really great question and answer session. So thank you very much there. Gordon, perhaps just before I redirect investors to give you some feedback, may I just ask you just for a few final words to wrap up? That would be fantastic.

49:08 Yeah. So thanks for thanks for the time, folks. Thanks for the interest in the company. I think we've you know, as to reiterate, it was a it was a solid period, Real momentum in the business, and we now get back to the the real world of getting eyes down, focusing our back on sales execution, customer satisfaction, and nailing the the the remainder of the year. And we look forward to talking to you again in the next roadshow. Fantastic. Gordon Fraser again. Thank you so much for updating investors today. Can I please ask investors not to close the session? You'll be automatically redirected for the opportunity to provide your feedback. If you've accessed the meeting from our website, the feedback page will appear in front of you. If you've accessed it via the link sent to you in the email, you'll just be asked to log back in to submit your feedback. It takes just a few moments, and it's greatly appreciated by the company. On behalf of BEEKS FINANCIAL CLOUD GROUP PLC, we'd like to thank you for attending today's presentation.

50:03 That concludes today's session. Thank you. Good afternoon.