Cloud Factory A/S

Ledelsesberetning

Key activities Cloud Factory A/S provides cloud services, Microsoft CSP, and hosting to IT partners. With more than 50 employees and 450 partners, the company is one of the fastest-growing Microsoft distributors in Europe. Since 2022, the company has invested heavily in their partner platform and opened offices in Oslo, Stockholm, and Hilversum.Cloud Factory’s focus has changed in recent years from producing and selling hosting to IT Partners to reselling third-party Software from Microsoft, Acronis, Keepit and other vendors. Therefore, measurement of Net Revenue has changed from the Financial Year 2023-24 to measure third-party revenue in accordance with guidance of IAS 18, where only the Net Margin income from third-party re-selling is considered, when measuring Net Revenue. Development in the year The income statement of the Group for 2023/24 shows a loss of DKK 13,530,977, and at 30 June 2024 the balance sheet of the Group shows a negative equity of DKK 2,294,621. Gross Revenue increased by 49% to DKK 277 million, while Net Revenue increased by 40% to DKK 47 million. Partner base grew by 44%. Core markets include Denmark, Norway, Sweden, and the Netherlands. EBITDA increased from DKK 1.8 million to DKK 6.2 million. The company has changed accounting policies for measuring revenue to apply IAS 18 as its basis of interpretation for the recognition of revenue. Consequently the company recognizes revenue as agent and not principal. Gross profit and result for the year are not affected in current and last year. Furthermore the company's equity and cash flow are not affected by the change. Management refers to note 20. The past year and follow-up on development expectations from last year Despite the growth, a loss of DKK 5.0 million before tax was realized, which is a major improvement from last year's loss of DKK 10.6 million before tax. The deficit, which was worse than budgeted, is due to the delayed onboarding of a major partner and increased compliance costs in the hosting business. Capital resources The company received a growth loan from Riverside Acceleration Capital in February 2024, which improved liquidity and enabled expansion in Norway, Sweden, and the Netherlands. Management also refers to note 1. Targets and expectations for the year ahead For 2024/25, a gross revenue of DKK 425-485 million, a Net Revenue of DKK 55-75 million and a positive result of DKK 1-5 million is expected. The focus will be on growth in existing markets and expansion into new areas, as well as investments in technological platforms. Financial Risks The company has a conservative financial risk management strategy and has converted short term loans to long term financing agreements and thereby reduced the financial Risk in the group. Research and development Development activities continued with a focus on innovative cloud solutions, the Partner Portal, and automated processes. External environment The company is working to reduce its environmental footprint using renewable energy and internal energy-saving policies. Uncertainty relating to recognition and measurement There has been no uncertainty regarding recognition and measurement in the Annual Report. Management has reassessed the useful lifetime of development cost from 3 years to 5 years based on management's historical knowledge and experiences.The change has resulted in a decrease of depreciation for the current year with TDKK 3,050. Management refers to note 20. Unusual events A deferred tax asset of DKK 9.6 million has not been recognized as an asset in the balance sheet 30 June 2024. With the current strategic focus of the company being continued growth into rest of Europe over short-term profitability the criteria for recognition in 2023/24 has not been met and therefore the deferred tax asset has been written down. Consequently a tax expense of DKK 8.3 million has been recognized in the income statement for 2023/24. Subsequent events After year end the company received further capital in the amount of DKK 4 million as capital increase, to reestablish the Equity and to open new Markets in Early 2025. No other significant events affect the annual report after the balance sheet date.