TIDMELIX
RNS Number : 8349Z
Elixirr International PLC
20 September 2022
Elixirr International plc
("Elixirr", the "Company" or the "Group")
RESULTS FOR THE SIX MONTHSED 30 JUNE 2022
Elixirr International plc (AIM:ELIX), an established, global
award-winning challenger consultancy, is pleased to report its
unaudited interim results for the six months ended 30 June 2022 (H1
22). Comparative results are presented for the six months ended 30
June 2021 (H1 21).
Financial Highlights
Elixirr is pleased to report the following financial highlights
for the Group for H1 22:
-- 39% increase in revenue compared to H1 21, with revenue
totalling GBP33.4 million and Group record revenue in four of the
six months in the period
-- Organic revenue growth of 8%, and material contributions from
the two acquisitions made in H1 21 and H1 22 (together +31%)
-- 28% increase in adjusted EBITDA ([1]) compared to H1 21,
totalling GBP10.4 million, and maintaining our strong track record
of profitability with an adjusted EBITDA margin of 31%
-- 31% increase in profit before tax, totalling GBP8.4 million (H1 21: GBP6.4 million)
-- 21% increase in adjusted diluted EPS ([1]) compared to H1 21
-- The Board remains confident in the Group's outlook for full
year FY 22, with revenue expected to be in the range of GBP70-75
million, and adjusted EBITDA expected to be at least GBP20.0
million - above the market expectation of GBP19.9 million
H1 22 H1 21 Change
--------
Revenue GBP33.4m GBP24.0m +39%
Adjusted EBITDA ([1]) GBP10.4m GBP8.1m +28%
Adjusted EBITDA margin 31% 34% -8%
Profit before tax GBP8.4m GBP6.4m +31%
Adjusted diluted EPS
([1]) 15.1p 12.5p +21%
------------------------- ---------- ---------- --------
([1]) In order to provide better clarity to the underlying
performance of the Group, Elixirr uses adjusted EBITDA and adjusted
earnings per share as alternative performance measures ('APMs').
Please refer to note 2 of the Group's interim condensed
consolidated financial statements.
Operating Highlights
-- Continued progression on our four-pillar growth strategy with
developments across each element in H1 22
-- Challenging market conditions, through which we have pivoted
to meet clients' changing needs with enhanced capabilities from our
acquisitions
-- Continued expansion of our US business, with total US revenue
in H1 22, including from the acquisition of iOLAP Inc. ("iOLAP"),
now accounting for more than 40% of Group revenue
-- Maintaining a strong profit margin following the unusual
conditions of the pandemic, with tight control of the cost base and
efficient deployment of the team
-- Increased client retention, showing the deepening of
relationships with our existing client base
-- Continued growth in key accounts, on track to grow the number
of GBP1m+ and GBP2m+ clients year on year
-- Maintaining strong cross-sell across the Group, utilising our
expanding capabilities across the client base and finding further
opportunities in addition to traditional consulting work
-- Extending the equity opportunity to our teams in acquired
businesses, aligning their personal incentives with the success of
the Group, and seeing increased engagement on our Employee Share
Purchase Plan ("ESPP")
-- Selected for and received further awards and accolades across
the Group in a variety of industries and categories, further
establishing our premium position in the market
-- Post period end team hire of Jersey-based consulting firm,
KIT Consulting, broadening our ESG service offering and services to
Channel Islands based clients
Commenting on the results, Stephen Newton, Chief Executive
Officer said:
"So far on a macro-level, 2022 has not been without its
challenges, but Elixirr's ability to adapt to changing market
demands has continued to be evident in the first half of the year.
We can see the results of our profile growing in the market and
have reaped the benefits of our expanding capabilities as we
continue to provide an extensive range of services to our clients,
while retaining our bespoke and personalised approach - a key
differentiator for us in our industry.
We have continued to pursue each element of our four-pillar
growth strategy with rigour and have sustained the robust levels of
growth the business has seen since listing in 2020 during the H1 22
period. Our ambition for Elixirr is only growing, and I'm looking
forward to seeing what we can achieve in the remainder of the year
and beyond."
Enquiries:
For enquiries, please refer to our Investor Contacts page:
https://www.elixirr.com/investors/investor-contacts
Elixirr International plc +44 (0)20 7220 5410
Stephen Newton, Chief Executive Officer
Graham Busby, Chief Financial Officer
Public and Investor Relations investor-relations@elixirr.com
Caroline Pitt
finnCap Ltd (Nominated Adviser & Sole Broker) +44 (0)20 7220 0500
Christopher Raggett
Notes to editors
Elixirr International plc (AIM: ELIX) is an established, global,
award-winning management consultancy. The Company challenges the
larger consultancies by delivering innovative and bespoke solutions
to a repeat, globally-recognised client base.
This announcement is released by Elixirr International plc and
contains inside information for the purposes of Article 7 of the
Market Abuse Regulation (EU) 596/2014 (MAR). It is disclosed in
accordance with Elixirr's obligations under Article 17 of MAR. For
the purposes of MAR and Article 2 of Commission Implementing
Regulation (EU) 2016/1055, this announcement is being made on
behalf of the Company by Graham Busby, Chief Financial Officer.
Disclaimer
This announcement contains certain statements that are, or may
be, forward looking statements with respect to the financial
condition, results of operations, business achievements and/or
investment strategy of the Company. Such forward looking statements
are based on the Board's expectations of external conditions and
events, current business strategy, plans and the other objectives
of management for future operations, and estimates and projections
of the Company's financial performance. Though the Board believes
these expectations to be reasonable at the date of this document
they may prove to be erroneous. Forward looking statements involve
known and unknown risks, uncertainties and other factors which may
cause the actual results, achievements or performance of the Group,
or the industry in which the Group operates, to be materially
different from any future results, achievements or performance
expressed or implied by such forward looking statements.
INTERIM MANAGEMENT REPORT
Financial Performance Review
H1 22 H1 21 Change
-------
Revenue GBP33.4m GBP24.0m +39%
Gross profit GBP11.4m GBP9.2m +23%
Adjusted EBITDA ([1]) GBP10.4m GBP8.1m +28%
Adjusted EBITDA margin 31% 34% -8%
Profit before tax GBP8.4m GBP6.4m +31%
Adjusted diluted EPS
([1]) 15.1p 12.5p +21%
Net cash ([2]) GBP11.1m GBP21.1m -47%
------------------------- ---------- ---------- -------
([1]) In order to provide better clarity to the underlying
performance of the Group, Elixirr uses adjusted EBITDA and adjusted
earnings per share as alternative performance measures ("APMs").
Please refer to note 2 of the Group's interim condensed
consolidated financial statements.
([2]) The Group has no debt other than office leases capitalised
under IFRS16. Net cash excludes capitalised office leases.
The Board is pleased to report that the Group performed well in
H1 22, continuing to grow revenue and adjusted EBITDA despite
global macro uncertainty. The Group successfully acquired iOLAP in
H1 22, integrating their service offerings and teams into the Group
and delivering enhanced capabilities to our client base. iOLAP's
complementary data services have been well received by our
clients.
During H1 22, Group revenue increased to GBP33.4 million. This
represents 39% growth compared to H1 21 and includes the impact of
both organic growth (8%) and the contribution from the acquisitions
of Retearn and iOLAP (together 31%). The Group's revenue growth is
reflective of continuing strong demand for our core management
consulting service offering as well as the leveraging of new
service capabilities from the acquisitions of Coast Digital,
Retearn and more recently iOLAP.
Group gross profit increased by 23% to GBP11.4 million (H1 21:
GBP9.2 million), reflecting revenue growth and investment in the
team, together with additional travel and business development
costs compared to the unusual lockdown environment in H1 21.
Group adjusted EBITDA grew by 28% and was delivered at a 31%
margin (H1 21: 34%). The EBITDA margin reflects the increased costs
referred to in relation to gross profit above, however it remains
in line with the adjusted EBITDA margin of 31% achieved in full
year FY 21.
Profit before tax (after exceptional items) increased by 31% to
GBP8.4 million (H1 21: GBP6.4 million). Further details of
exceptional items are set out in note 4 of the Group's interim
condensed consolidated financial statements .
Adjusted diluted earnings per share increased by 21% to 15.1p
(H1 21: 12.5p), with the calculation reflecting potential
additional dilution from shares that could be issued as deferred
consideration for the iOLAP acquisition. As reported in note 7 of
the Group's interim condensed consolidated financial statements,
the Group retains the option to satisfy this consideration through
a cash payment with a commitment to buy shares from the EBT in
order to minimise dilution.
The Group's net cash position decreased from GBP31.8 million at
31 December 2021 to GBP11.1 million at 30 June 2022 primarily due
to the initial consideration paid for the acquisition of iOLAP
(GBP17.2 million) and net purchases of shares for the EBT (GBP3.3
million). The lower operating cash flow in H1 22 compared to H1 21
was principally due to the payment of FY 21 annual bonus payments
in H1 22, which were significantly higher than in the previous
year. The working capital timing impact of bonus payments will
reverse in H2 22.
Net assets as at 30 June 2022 totalled GBP90.0 million (31
December 2021: GBP86.0 million). The increase in net assets during
H1 22 includes the retained profit for the period of GBP5.4 million
(after FY 21 final dividend of GBP1.9 million partially offset by
GBP0.5 million add back of share-based payments charge), foreign
currency gains of GBP1.8 million, gains on sale of shares by the
EBT of GBP0.7 million, less net purchases of shares by the EBT of
GBP4.0 million.
Operational Review
In the first half of FY 22, Elixirr has continued to solidify
its position with global clients and develop its offering, with
further progress across each element of its four-pillar growth
strategy.
Some of our recent activity during the period included:
-- Despite challenging macro-economic headwinds, the firm has
adapted well to clients' changing needs, further supported by the
expansion of our capabilities and acquisition strategy
-- During a relatively volatile period for many firms, as well
as our core strategy and digital offering, we have met clients'
increased demands for transformation and cost reduction through
Retearn's expertise, and utilised the data and insights
capabilities of iOLAP across numerous clients
-- Increased client retention, showing the growing strength of
our relationships, with an increase in repeat clients from FY
21
-- Proven ability to continue scaling accounts, with an
increased number of clients generating GBP1m+ or GBP2m+ of annual
revenue, compared to FY 21, as we continue to embed ourselves
further into clients and offer a wider range of services
-- Further growth in the US, more than doubling our team in this
geography, with the acquisition of iOLAP, headquartered in Dallas,
which has performed ahead of target since acquisition
-- Extending the equity opportunity offered in our core business
to the teams in acquired businesses, increasing their alignment
with the overall success of the Group
-- Increased equity participation in our ESPP, with FY 22
enrolments considerably up on FY 21, showing the growing commitment
of our teams across the Group
-- Continuing to establish our profile in the market, building
brand awareness as the "challenger" consultancy, with a 100%
increase in inbound commercial opportunities year on year supported
by our 'Con-sulting' campaign and improved brand awareness
During the period, we carried out multiple notable client
engagements including:
-- Helped a major US-based manufacturer understand the effects
that COVID-19 had on its main suppliers, delivering a focused
Management Operating System (MOS) and building sustainable
prioritisation and scheduling tools including a Procurement
Advanced Warning System (PAWS)
-- Originally as a lead generated through our website, an
established UK healthcare company engaged us to design the future
of their corporate healthcare offering, aiming to be the second
biggest healthcare provider in the UK after the NHS. Initial
engagement produced seven propositions to future-proof their
corporate offering, three of which were put forward for immediate
development
-- Facilitated an Executive Immersion in Silicon Valley with a
leading global insurance firm, and a London-based hybrid Executive
Immersion with a financial services firm, helping them both to
adopt future-first solutions to supercharge their businesses
-- Continuing our long-established partnership with a
multinational bank, we supported their ambitions of developing an
enterprise data strategy through effectively leveraging the new
capabilities of iOLAP, providing a novel service offering to our
client that delivers expertise from strategic inception through to
execution
-- We carried out a current state assessment of a leading global
standards maker's website offering and digital marketing
performance using Elixirr Digital's end-to-end expertise,
identifying recommendations and creating a supporting roadmap for
execution
-- Originally a longstanding client of iOLAP's, we supported a
US bank in identifying 180+ opportunities to improve, helping them
to create great user experiences and tackle customer pain
points
Our work has been recognised through numerous awards and
accolades during the period including:
-- Earned a place on the Global Outsourcing 100(R), in 2022, the
annual list of the world's best outsourcing service providers and
advisors compiled by the International Association of Outsourcing
Professionals (IAOP(R))
-- Named as one of the '2022 Fastest Growing Firms' by Consulting Magazine
-- Two longstanding team members, Oliver Bishop (Partner) and
Rory Farquharson (Principal) selected for Consulting Magazine's
'Rising Stars of the Profession'
-- Coast Digital finalists for "Paid Social Campaign of the
Year" at the 2022 UK Paid Media Awards for their work with
Debenhams
-- Retearn shortlisted in the CIPS Procurement Consultancy
Project of the Year category, for their work with Convex
-- Nominated for the 2022 AIM Awards for "Company of the Year" and "Best Use of AIM"
Growth Strategy
Elixirr's overarching growth strategy continues to be driven by
the following pillars:
1. Stretching our existing Partners
2. Promoting Partners from within
3. Hiring new Partners
4. Acquiring new businesses
1. Stretching our existing Partners
We have continued to motivate our Partner team to grow sales,
strengthen existing client relationships and shape new
opportunities across both our organic business and cross-selling
our acquired capabilities.
Our Partner model continued to provide consistent performance in
H1 22, with growth on existing accounts, and further expansion of
our network. Revenue per client-facing Partner increased compared
to H1 21.
Our list of gold clients has continued to expand as we improve
our ability to scale projects and maintain client relationships.
This is supported by the increased facetime with the majority of
clients post the pandemic, including holding a Silicon Valley
Executive Immersion and the ability for our teams to travel to
projects across the globe - a valuable part of growing client
relationships.
2. Promoting Partners from within
In H1 22, we have continued with our dedication in growing our
talent from within - the most successful funnel for growing our
Partner team.
We were pleased to promote a further two Principals to Partner
in the H1 22 period, effective January 2023. One of the
individuals, Ben Gower, joined us at consultant grade and having
been with the firm for 7 years truly epitomises our culture,
setting a great example for our junior team. The other promotion,
Danielle Croucher, joined us with prior consulting experience and
has grown through the firm at pace. Having relocated to the States
two years ago, she has contributed to Elixirr's strong growth in
this market, most recently growing and managing our largest US
account.
The promotions of Sam Parker and Oliver Bishop in FY 21 were
formalised in January 2022 and both individuals have played a key
role in the firm's growth this year to date. With a background akin
to the expertise of Retearn, Sam has been helping to solidify their
position in the market and build out their growth potential for the
future. Oliver has continued to focus on our inorganic growth
strategy, helping to secure the acquisition of iOLAP in the first
half of the year - financially Elixirr's most significant to date,
while pursuing other targets in the US and beyond.
Our Principal grade has continued to expand in H1 22, providing
the funnel for future Partners. We promoted four Managers to
Principal level in H1 22, who are now managing some of the firm's
largest accounts.
During the period, we reduced the reliance on contractors and
retained our core teams during a volatile recruitment period for
the market, helping to maintain the high-quality bar that our
clients expect. Increased team retention has been supported by our
market-leading equity schemes, as our employees increasingly see
the long-term value potential within the Group.
3. Hiring new Partners
Bringing in new Partners remains a key focus for the business,
helping to grow our client base and enter new markets. In H1 22 we
focused on referrals through some of our recent high calibre hires
to ensure cultural alignment and quality. Having spoken to multiple
candidates over the course of the six-month period, we hired three
new Partners to our team, effective H2 22 in August and September
respectively.
Each of these hires have been highly strategic. We welcomed the
KIT consulting team, based in Jersey as a purpose-led
sustainability consultancy, adding to our existing expertise in a
growing area of importance. Their Founder and CEO Emiko
Caerlewy-Smith, joined our Partner team, bringing with her a
Manager and Principal who will help to supercharge innovative,
growth-led sustainability for our clients. The second hire is Denis
Orrock, a former client, who is based in Australia - a geography
where we see great potential and have already invested as a
business. Joining our existing team in this location, he brings a
highly desirable network and extensive financial services
experience from his work across the APAC region. Thirdly, we hired
a UK based Partner, Sam Subesinghe to grow our existing financial
services expertise, bringing an expansive UK network and knowledge
from his established career at KPMG that we expect to be hugely
additive to our growing Partner team.
Embedding this new talent and setting them up for success will
be a huge focus for H2 22, and collectively they have brought
multiple opportunities to the firm already through their respective
networks.
4. Acquiring new businesses
A major part of the Group's continued growth is successfully
bringing in entrepreneurial, ambitious leaders and new capabilities
to fuel the firms' inorganic growth. Our dedicated M&A team
continue to scout the highest calibre firms that are complementary
to the culture of Elixirr, and each adds a new competence or bring
geographical expansion to the business.
In March 2022 we welcomed iOLAP to the firm, our largest
acquisition to date in a key strategic geographic growth area - the
US. Their data capabilities and insights are increasingly important
to clients to stay market-leading and have proven to be highly
complementary when combined with our strategy expertise. The
business was acquired for initial consideration of US$25.2 million,
at a multiple of 6x normalised FY 21 EBITDA. Maximum consideration
including that contingent on earn-out targets is US$40 million, a
multiple of 9.6x normalised FY 21 EBITDA. The transaction was
immediately earnings enhancing for the Group. The revenue
opportunity has been proven in the months since iOLAP's
acquisition, with multiple opportunities identified and in train
before the deal was finalised, resulting in the performance targets
set for iOLAP being exceeded in Q2.
As well as the integration of iOLAP and continued focus on
revenue cross-sell of existing acquisitions, our M&A team have
maintained their focus on building and nurturing new opportunities.
There were an additional 350+ targets screened in H1 22 - including
US and European firms, with capabilities spanning purpose-led
strategies, product innovation, cybersecurity and ESG. This
activity will continue for the remainder of the year, with an
uncompromising focus on quality and high-performing businesses that
complement the Group's existing brands.
Outlook
The Board remains confident in the Group's outlook for full year
FY 22, with revenue expected to be in the range of GBP70-75
million, and adjusted EBITDA expected to be at least GBP20.0
million - above the market expectation of GBP19.9 million. We are
well placed to adapt to changing market demands, with an
established, proven growth strategy and growing Partner team and,
despite the challenging economic environment, look to the future
with cautious optimism.
Gavin Patterson Stephen Newton
Chairman Chief Executive Officer
Interim Condensed Consolidated Statement of Comprehensive
Income
For the six months ended 30 June 2022
Six months Six months
ended ended
30 June 30 June 2021
2022 Unaudited
Unaudited
Note GBP'000s GBP'000s
Revenue 33,368 24,046
Cost of sales (22,016) (14,840)
-------------------- -------------------
Gross profit 11,352 9,206
Administration expenses (3,093) (2,546)
Operating profit before exceptional
items 8,259 6,660
Depreciation 477 333
Amortisation of intangible assets 904 730
Share-based payments 13 741 394
Adjusted EBITDA 10,381 8,117
Exceptional items 4 530 (142)
Operating profit 8,789 6,518
Net finance expense (366) (109)
-------------------- -------------------
Profit before tax 8,423 6,409
Taxation (1,749) (1,294)
Profit for the period 6,674 5,115
-------------------- -------------------
Exchange differences on translation
of foreign operations 1,843 18
Total comprehensive income for
the period 8,517 5,133
==================== ===================
Basic earnings per Ordinary share
(p) 5 14.5 11.1
Diluted earnings per Ordinary
share (p) 5 12.9 10.3
Adjusted basic earnings per Ordinary
share (p) 5 16.9 13.5
Adjusted diluted earnings per
Ordinary share (p) 5 15.1 12.5
All results relate to continuing operations.
The attached notes form part of these interim condensed
consolidated financial statements.
Interim Condensed Consolidated Statement of Financial
Position
As at 30 June 2022
As at As at As at
30 June 31 December 30 June
2022 2021 2021
Unaudited Audited Unaudited
Note GBP'000s GBP'000s GBP'000s
Assets
Non-current assets
Intangible assets 6 84,403 56,193 56,842
Property, plant and equipment 5,989 5,496 5,261
Other receivables 1,521 1,535 431
Loans to shareholders 4,213 3,991 7,237
Deferred tax asset 1,327 1,197 161
-------------------- ------------------- ------------------
Total non-current assets 97,453 68,412 69,932
Current assets
Trade and other receivables 8 12,752 6,963 8,641
Cash and cash equivalents 11,072 31,795 21,081
-------------------- ------------------- ------------------
Total current assets 23,824 38,758 29,722
Total assets 121,277 107,170 99,654
-------------------- ------------------- ------------------
Liabilities
Non-current liabilities
Loans and borrowings 4,766 4,760 4,604
Deferred tax liability 1,411 623 697
Other non-current liabilities 10 7,257 1,620 1,564
-------------------- ------------------- ------------------
Total non-current liabilities 13,434 7,003 6,865
Current liabilities
Trade and other payables 9 10,986 12,055 8,720
Loans and borrowings 940 485 459
Corporation tax 1,045 1,150 1,716
Other creditors 10 4,862 436 1,909
-------------------- ------------------- ------------------
Total current liabilities 17,833 14,126 12,804
Total liabilities 31,267 21,129 19,669
-------------------- ------------------- ------------------
Net assets 90,010 86,041 79,985
-------------------- ------------------- ------------------
Equity
Share capital 11 52 52 52
Share premium 11 25,673 24,952 23,562
Capital redemption reserve 2 2 2
EBT share reserve 12 (6,196) (2,193) (297)
Merger relief reserve 11 46,870 46,870 46,870
Foreign currency translation reserve 1,894 51 (54)
Retained earnings 21,715 16,307 9,850
-------------------- ------------------- ------------------
Total shareholders' equity 90,010 86,041 79,985
-------------------- ------------------- ------------------
Interim Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2022
Six months Six months
ended ended
30 June 30 June 2021
2022 Unaudited
Unaudited
Note GBP'000s GBP'000s
Cash flows from operating activities:
Cash generated from operations 15 2,667 3,892
Taxation paid (1,961) (748)
------------------- --------------------
Net cash generated from operating
activities 706 3,144
Cash flows from investing activities:
Purchase of property, plant and
equipment (74) (33)
Payment for acquisition of subsidiary,
net of cash acquired (17,152) (1,473)
Payment of deferred consideration
for acquisition of subsidiary - (792)
Interest received 54 16
------------------- --------------------
Net cash utilised from investing
activities (17,172) (2,282)
Cash flows from financing activities:
EBT Ordinary share purchases (11,294) (370)
EBT Ordinary share sales 8,012 3,000
Loans to shareholders (1,500) (3,000)
Loans repaid by shareholders 1,291 3,545
Repayment of borrowings (1,143) -
Lease liability payments (179) (326)
Interest paid (58) (125)
------------------- --------------------
Net cash (utilised)/generated
from financing activities (4,871) 2,724
Net increase/(decrease) in cash
and cash equivalents (21,337) 3,586
------------------- --------------------
Cash and cash equivalents at beginning
of the period 31,795 17,503
Effects of exchange rate changes
on cash and cash equivalents 614 (8)
Cash and cash equivalents at
end of the period 11,072 21,081
------------------- --------------------
Interim Condensed Consolidated Statement of Changes in
Equity
For the six months ended 30 June 2022
Foreign
Capital EBT share Merger currency
Share Share redemption reserve relief translation Retained
capital premium reserve GBP'000s reserve reserve earnings Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
As at 01
January
2021 52 19,729 2 (1,248) 46,870 (72) 5,355 70,688
Comprehensive
income
Profit for the
period - - - - - - 5,115 5,115
Other
comprehensive
income - - - - - 18 - 18
Transactions
with
owners
Share issue as
consideration
for
a business
combination - 2,154 - - - - - 2,154
Dividends - - - - - - (1,014) (1,014)
Share-based
payments - - - - - - 394 394
Sale of
Ordinary
shares - 1,679 - 1,321 - - - 3,000
Acquisition of
Ordinary
shares - - - (370) - - - (370)
As at 30 June
2021 52 23,562 2 (297) 46,870 (54) 9,850 79,985
---------- ---------- ------------- ----------- ---------- ------------- ---------- ----------
Comprehensive
income
Profit for the
period - - - - - - 5,029 5,029
Other
comprehensive
income - - - - - 105 - 105
Transactions
with
owners
Share-based
payments - - - - - - 758 758
Deferred tax
recognised
in equity - - - - - - 670 670
Sale of
Ordinary
shares - 1,390 - 1,384 - - - 2,774
Acquisition of
Ordinary
shares - - - (3,280) - - - (3,280)
As at 31
December
2021 and 01
January
2022 52 24,952 2 (2,193) 46,870 51 16,307 86,041
---------- ---------- ------------- ----------- ---------- ------------- ---------- ----------
Comprehensive
income
Profit for the
period - - - - - - 6,674 6,674
Other
comprehensive
income - - - - - 1,843 - 1,843
Transactions
with
owners
Dividends - - - - - - (1,855) (1,855)
Share-based
payments - - - - - - 535 535
Deferred tax
recognised
in equity - - - - - - 54 54
Sale of
Ordinary
shares - 721 - 7,291 - - - 8,012
Acquisition of
Ordinary
shares - - - (11,294) - - - (11,294)
As at 30 June
2022 52 25,673 2 (6,196) 46,870 1,894 21,715 90,010
---------- ---------- ------------- ----------- ---------- ------------- ---------- ----------
Share capital
Share capital represents the nominal value of share capital
subscribed.
Share premium
The share premium account is used to record the aggregate amount
or value of premiums paid when the Company's shares are issued at a
premium, net of associated share issue costs. It also records gains
on the sale of shares by the EBT.
Capital redemption reserve
The capital redemption reserve is a non-distributable reserve
into which amounts are transferred following the redemption or
purchase of the Company's own shares.
EBT share reserve
The EBT share reserve represents the cost of shares repurchased
and held in the EBT.
Merger relief reserve
The merger relief reserve records the amounts above the nominal
value received for shares sold, less transaction costs in
accordance with section 610 of the Companies Act 2006.
Foreign currency translation reserve
The foreign currency translation reserve represents exchange
differences that arise on consolidation from the translation of the
financial statements of foreign subsidiaries.
Retained earnings
The retained earnings reserve represents cumulative net gains
and losses recognised in the statement of comprehensive income and
equity-settled share-based payment reserves and related deferred
tax on share-based payments.
Notes to the Group's Interim Condensed Consolidated Financial
Statements
1. Basis of Preparation and Significant Accounting Policies
1.1. General information
Elixirr International plc (the "Company") and its subsidiaries'
(together the "Group") principal activities are the provision of
consultancy services.
The Company is a limited company incorporated in England and
Wales and domiciled in the UK. The address of the registered office
is 12 Helmet Row, London, EC1V 3QJ and the company number is
11723404.
The consolidated financial statements were authorised for issue
in accordance with a resolution of the Directors on 16 September
2022.
1.2. Basis of preparation
These interim financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting and should be
read in conjunction with the Group's last annual consolidated
financial statements, as at and for the year ended 31 December
2021. They do not include all of the information required for a
complete set of IFRS financial statements, however, selected
explanatory notes are included to explain events and transactions
that are significant to an understanding of the changes in the
Group's financial position and performance since the last annual
financial statements.
Statutory accounts
Financial information contained in this document does not
constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006 ("the Act").
The financial information provided for the current six-month
period ended 30 June 2022 and comparative period ended 30 June 2021
is unaudited. The financial information provided for the
comparative period ended 31 December 2021 was audited.
The presentational currency of these financial statements and
the functional currency of the Group is pounds sterling.
1.3. Basis of consolidation
These financial statements consolidate the financial statements
of the Company and its subsidiary undertakings as at 30 June
2022.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date that such control
ceases. The acquisition method of accounting has been adopted. The
financial statements of subsidiaries are prepared for the same
reporting period as the parent company, using consistent accounting
policies.
All intra-group balances, income and expenses and unrealised
gains and losses resulting from intra-group transactions are
eliminated in full.
1.4. Measurement convention
The consolidated financial information has been prepared under
the historical cost convention. Historical cost is generally based
on the fair value of the consideration given in exchange for
assets.
The preparation of the consolidated financial information in
compliance with IFRS requires the use of certain critical
accounting estimates and management judgements in applying the
accounting policies. The significant estimates and judgements that
have been made and their effect is disclosed in note 1.6.1.
1.5. Going concern
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Company and the Group
have adequate resources to continue in operation for the
foreseeable future. The Group's forecasts and projections, taking
into account reasonable possible changes in trading performance,
show that the Group has sufficient financial resources, together
with assets that are expected to generate cash flow in the normal
course of business. Accordingly, the Directors have adopted the
going concern basis in preparing these consolidated financial
statements.
1.6. Principal accounting policies
Please refer to the Group's last annual consolidated financial
statements for full disclosure of the principal accounting policies
that have been adopted in the preparation of these interim
condensed consolidated financial statements. The key accounting
policies that affected the Group in the period are documented
below.
1.6.1. Judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management
to make estimates and judgements that affect the reported amounts
of assets, liabilities, costs and revenue in the financial
statements. Actual results could differ from these estimates. The
judgements, estimates and associated assumptions are based on
historical experience and other factors that are considered to be
relevant.
In the process of applying the Group's accounting policies, the
Directors have made no judgements (excluding those involving
estimations), which are considered to have a significant effect on
the amounts recognised in the financial statements for the period
ending 30 June 2022.
Key sources of estimation uncertainty that could cause an
adjustment to be required to the carrying amount of assets or
liabilities within the next accounting period are:
-- Revenue is recognised in line with time worked on a project
unless the engagement is conditional or contingent. Management
review accrued revenue to determine whether there is any likelihood
of any amendments or provisions required based on project progress
and relationship with the client.
-- Full provision is made for loss making projects in the period
in which the loss is first foreseen, and for the cost of
conditional or contingent engagements prior to the event occurring.
Estimation is required of costs to complete and the provision
necessary.
-- The Group's policy on recognising an impairment of the trade
receivables balance is based on a review of individual receivable
balances, their ageing and management's assessment of realisation.
This review and assessment is conducted on a continuing basis and
any material change in management's assessment of trade receivable
impairment is reflected in the carrying value of the asset.
-- Provisions for dilapidations are accrued based on estimation
of the cost expected to crystallise on vacating leased
premises.
-- In determining the fair value of intangible assets arising on
business combinations, management is required to estimate the
timing and amount of future cash flows applicable to the intangible
assets being acquired.
-- The amortisation periods of trademarks, customer
relationships and order backlogs are estimates based on the
expected useful life and are assessed annually for any changes
based on current circumstances.
-- Management has estimated the share-based payments expense
under IFRS 2. In determining the fair value of share-based
payments, management has considered several internal and external
factors in order to judge the probability that management and
employee share incentives may vest and to assess the fair value of
share options at the date of grant. Such assumptions involve
estimating a number of future performance and other factors.
-- The Coast Digital, Retearn and iOLAP contingent consideration
calculations under IFRS 3 contain estimation uncertainty, as the
earn-out potentially payable in each case is linked to the future
performance of the acquiree. In estimating the fair value of the
contingent consideration, at both the acquisition date and
financial period end, management has estimated the potential future
cash flows of the acquirees and assessed the likelihood of an
earn-out payment being made. These estimates could potentially
change as a result of events over the coming years.
1.6.2. Revenue recognition
Revenue is measured as the fair value of consideration received
or receivable for satisfying performance obligations contained in
contracts with clients, including expenses and disbursements but
excluding discounts and Value Added Tax. Variable consideration is
included in revenue only to the extent that it is highly probable
that a significant reversal will not be required when the
uncertainties determining the level of variable consideration are
resolved. This occurs as follows for the Group's various contract
types:
-- Time-and-materials contracts are recognised over time as
services are provided at the fee rate agreed with the client where
there is an enforceable right to payment for performance completed
to date.
-- Fixed-fee contracts are recognised over time based on the
actual service provided to the end of the reporting period as a
proportion of the total services to be provided where there is an
enforceable right to payment for performance completed to date.
This is determined based on the actual inputs of time and expenses
relative to total expected inputs.
-- Performance-fee contracts are recognised when the right to
consideration arises on having met the relevant performance-related
elements.
-- Contingent-fee contracts, over and above any agreed minimum
fee, are recognised at the point in time that the contingent event
occurs and the Group has become entitled to the revenue.
Where contracts include multiple performance obligations, the
transaction price is allocated to each performance obligation based
on its stand-alone selling price. Where these are not directly
observable, they are estimated based on expected cost-plus margin.
Adjustments are made to allocate discounts proportionately relative
to the stand-alone selling price of each performance
obligation.
Estimates of revenues, costs or extent of progress toward
completion are revised if circumstances change. Any resulting
increase or decrease in estimated revenues or costs are reflected
in the statement of comprehensive income in the period in which the
circumstances that give rise to the revision became known.
For time-and-materials and fixed-fee contracts, fees are
normally billed on a monthly basis. For performance-fee and
contingent-fee contracts, fees are normally billed and paid when
entitlement to the revenue has been established. If the revenue
recognised by the Group exceeds the amounts billed, a contract
asset is recognised. If the amounts billed exceed the revenue
recognised, a contract liability is recognised. Contract assets are
reclassified as receivables when billed and the consideration has
become unconditional because only the passage of time is required
before payment is due.
The Group's standard payment terms require settlement of
invoices within 30 days of receipt.
The Group does not adjust the transaction price for the time
value of money as it does not expect to have any contracts where
the period between the transfer of the promised services to the
client and the payment by the client exceeds one year.
1.6.3. Business combinations, goodwill and consideration
Business combinations
The Group applies the acquisition method of accounting to
account for business combinations in accordance with IFRS 3,
'Business Combinations'.
The consideration transferred for the acquisition of a
subsidiary is the fair value of the assets transferred, the
liabilities incurred and the equity interests issued by the Group.
The consideration transferred includes the fair value of any asset
or liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date. The excess
of the consideration transferred over the fair value of the Group's
share of the identifiable net assets acquired is recorded as
goodwill. All transaction related costs are expensed in the period
they are incurred as operating expenses. If the consideration is
lower than the fair value of the net assets of the subsidiary
acquired, the difference is recognised in the income statement.
On 17 March 2022, the Group acquired 100% of the share capital
and voting interests of iOLAP, a US-headquartered technology and
data firm. The acquisition brings specialist data and analytics
capabilities, including artificial intelligence (AI) and machine
learning (ML), into the Group where there is existing demand for
these services. The difference between the fair value of the
purchase consideration of GBP28.4 million and the fair value of the
identifiable assets acquired and liabilities assumed of GBP5.0
million was recognised as goodwill of GBP23.4 million. The goodwill
is attributable to the company's workforce and working
methodologies. The tax cost base of the goodwill is deductible for
tax purposes. Please refer to note 7 for further details.
Goodwill
Goodwill is initially measured at cost and any previous interest
held over the net identifiable assets acquired and liabilities
assumed. If the fair value of the net assets acquired is in excess
of the aggregate consideration transferred, the Group re-assesses
whether it has correctly identified all of the assets acquired and
all of the liabilities assumed and reviews the procedures used to
measure the amounts to be recognised at the acquisition date. If
the reassessment still results in an excess of the fair value of
net assets acquired over the aggregate consideration transferred,
then the gain is recognised in the income statement.
After initial recognition, goodwill is measured at cost less any
accumulated impairment losses. For the purposes of impairment
testing, goodwill is allocated to each of the Group's
cash-generating units expected to benefit from the synergies of the
combination. Cash-generating units to which goodwill has been
allocated are tested for impairment annually, or more frequently
when there is an indication that the unit may be impaired.
The Group performs impairment reviews at the reporting period
end to identify any goodwill or intangible assets that have a
carrying value that is in excess of its recoverable amount.
Determining the recoverability of goodwill and the intangible
assets requires judgement in both the methodology applied and the
key variables within that methodology. Where it is determined that
an asset is impaired, the carrying value of the asset will be
reduced to its recoverable amount with the difference recorded as
an impairment charge in the income statement.
Contingent and non-contingent deferred consideration on
acquisition
Contingent and non-contingent deferred consideration may arise
on acquisitions. Non-contingent deferred consideration may arise
when settlement of all or part of the cost of the business
combination falls due after the acquisition date. Contingent
deferred consideration may arise when the consideration is
dependent on future performance of the acquired company.
Deferred consideration associated with business combinations
settled in cash is assessed in line with the agreed contractual
terms. Consideration payable is recognised as capital investment
cost when the deferred or contingent consideration is not
employment-linked. Alternatively, consideration is recognised as
remuneration expense over the deferral or contingent performance
period, where the consideration is also contingent upon future
employment. Where the consideration is settled in shares, the
consideration is classified as equity, it is not re-measured, and
settlement is accounted for within equity. Otherwise, subsequent
changes to fair value of the deferred consideration are recognised
in the statement of comprehensive income.
1.6.4. Foreign currency translation
Functional and presentational currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ('the functional
currency'). The financial statements are presented in 'sterling',
which is the Group's and Company's functional currency and
presentation currency.
On consolidation, the results of overseas operations are
translated into sterling at rates approximating to those ruling
when the transactions took place. All assets and liabilities of
overseas operations are translated at the rate ruling at the
reporting date. Exchange differences arising on translating the
opening net assets at opening rate and the results of overseas
operations at actual rate are recognised in other comprehensive
income.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income
statement.
1.6.5. Intangible assets
Intangible assets are measured at cost less accumulated
amortisation and any accumulated impairment losses. Intangible
assets acquired in a business combination are initially measured at
their fair value (which is regarded as their cost). Subsequent to
initial recognition, intangible assets acquired in a business
combination are reported at cost less accumulated amortisation and
any accumulated impairment losses.
Intangible assets acquired in a business combination are
identified and recognised separately from goodwill where they
satisfy the definition of an intangible asset under IAS 38. Such
assets are only recognised if either:
-- They are capable of being separated or divided from the
company and sold, transferred, licensed, rented or exchanged,
either individually or together with a related contract,
identifiable asset or liability, regardless of whether the company
intends to do so; or
-- They arise from contractual or other legal rights, regardless
of whether those rights are transferable or separable from the
entity or from other rights and obligations.
The cost of such intangible assets is the fair value at the
acquisition date. All intangible assets acquired through business
combinations are amortised over their estimated useful lives. The
significant intangibles recognised by the Group, their useful
economic lives and the methods used to determine the cost of the
intangibles acquired in business combinations are as follows:
Intangible Asset Useful Economic Life Valuation Method
----------------------- -------------------------- --------------------
Trademark 33.33% reducing balance Relief from Royalty
method
Customer relationships 10 - 25% reducing balance Multi-Period Excess
Earnings method
Order backlog Over order term Multi-Period Excess
Earnings method
----------------------- -------------------------- --------------------
1.6.6. Tangible assets
Tangible fixed assets are stated at cost net of accumulated
depreciation and accumulated impairment losses.
Costs comprise purchase costs together with any incidental costs
of acquisition.
Depreciation is provided to write down the cost less the
estimated residual value of all tangible fixed assets by equal
instalments over their estimated useful economic lives on a
straight-line basis. The following rates are applied:
Tangible Fixed Useful Economic Life
Asset
----------------------- ---------------------
Leasehold improvements Over the life of the
lease
Computer equipment 3 years
Fixtures and fittings 3 years
----------------------- ---------------------
The assets' residual values, useful lives and depreciation
methods are reviewed, and adjusted prospectively if appropriate, if
there is an indication of a significant change since the last
reporting date. Low value equipment including computers is expensed
as incurred.
1.6.7. Impairments of tangible and intangible assets
At each reporting end date, the Group reviews the carrying
amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where it is not possible to
estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
The recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in
profit and loss, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a
revaluation decrease.
Where an impairment subsequently reverses, the carrying amount
of the asset (or cash-generating unit) is increased to the revised
estimate of its recoverable amount, but so that the increased
carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the
asset (or cash-generating unit) in prior years. A reversal of an
impairment loss is recognised immediately in profit and loss.
1.6.8. Employee benefits
Post-retirement benefits
The Group pays into defined contribution pension schemes on
behalf of employees, that are operated by third parties. The assets
of the schemes are held separately from those of the Group in
independently administered funds.
The amount charged to the income statement represents the
contributions payable to the scheme in respect of the accounting
period.
Share-based payments
The cost of share-based employee compensation arrangements,
whereby employees receive remuneration in the form of share
options, is recognised as an employee benefit expense in the
statement of comprehensive income.
The total expense to be apportioned over the vesting period of
the benefit is determined by reference to the fair value (excluding
the effect of non-market based vesting conditions) at the grant
date. Fair value is measured by use of Black Scholes option
valuation model.
At the end of each reporting period the assumptions underlying
the number of awards expected to vest are adjusted for the effects
of non-market based vesting conditions to reflect conditions
prevailing at that date. The impact of any revisions to the
original estimates is recognised in the statement of profit or
loss, with a corresponding adjustment to equity.
The Group has the obligation to pay employers' national
insurance on the exercise of certain UK employee options. The Group
has opted to account for the tax obligation under IFRS 2 as a
cash-settled share-based payment arrangement as the amount of
employers' national insurance due at the time of exercise is based
on the share price of the equity instruments of the Company. The
cash-settled share-based payment liability is estimated at each
period end using the closing share price of the Company and the
prevailing employers' national insurance rate. The number of awards
expected to vest are consistent with the treatment for
equity-settled share-based payments. The cost of employers'
national insurance is included within share-based payments expense
in the statement of comprehensive income.
Please refer to note 13 for further details.
1.6.9. Earnings per share
The Group presents basic and diluted earnings per share on an
IFRS basis. In calculating the weighted average number of shares
outstanding during the period, any share restructuring is adjusted
to allow comparability with other periods.
The calculation of diluted earnings per share assumes conversion
of all potentially dilutive Ordinary shares, which arise from share
options outstanding or contingent consideration that may be settled
through equity.
2. Alternative Performance Measures ("APMs")
In order to provide better clarity to the underlying performance
of the Group, Elixirr uses adjusted EBITDA and adjusted earnings
per share as alternative performance measures. These measures are
not defined under IFRS. These non-GAAP measures are not intended to
be a substitute for, or superior to, any IFRS measures of
performance, but have been included as the Directors consider
adjusted EBITDA and adjusted earnings per share to be key measures
used within the business for assessing the underlying performance
of the Group's ongoing business across periods.
Adjusted EBITDA excludes the following items from operating
profit: non-cash depreciation and amortisation charges, share-based
payments and non-recurring exceptional costs. Adjusted EPS excludes
the following items from profit after tax: amortisation charges,
share-based payments, non-recurring exceptional items,
M&A-related finance costs and their related tax impacts.
The table below sets out the reconciliation of the Group's
adjusted EBITDA and adjusted profit before tax from profit before
tax:
Period ended Period ended
30 June 2022 30 June 2021
GBP'000s GBP'000s
------------------------------------------ -------------------------- --------------------------
Profit before tax 8,423 6,409
------------------------------------------ -------------------------- --------------------------
Adjusting items:
Exceptional items (note 4) (530) 142
Amortisation of intangible assets 904 730
Share-based payments 741 394
Finance cost - iOLAP contingent 254 -
consideration (note 7)
Adjusted profit before tax 9,792 7,675
------------------------------------------ -------------------------- --------------------------
Depreciation 477 333
Finance cost (excluding iOLAP contingent
consideration) 112 109
Adjusted EBITDA 10,381 8,117
------------------------------------------ -------------------------- --------------------------
The table below sets out the reconciliation of the Group's
adjusted profit after tax to adjusted profit before tax:
Period ended Period ended
30 June 2022 30 June 2021
GBP'000s GBP'000s
------------------------------- -------------------------- -------------------------
Adjusted profit before tax 9,792 7,675
------------------------------- -------------------------- -------------------------
Tax charge (1,749) (1,294)
Tax impact of adjusting items (228) (192)
Adjusted profit after tax 7,815 6,189
------------------------------- -------------------------- -------------------------
Adjusted profit after tax is used in calculating adjusted basic
and adjusted diluted EPS. Adjusted profit after tax is stated
before adjusting items and their associated tax effects.
Adjusted EPS is calculated by dividing the adjusted profit after
tax for the period attributable to Ordinary shareholders by the
weighted average number of Ordinary shares outstanding during the
period. Adjusted diluted EPS is calculated by dividing adjusted
profit after tax by the weighted average number of shares adjusted
for the impact of potential Ordinary shares.
Potential Ordinary shares are treated as dilutive when their
conversion to Ordinary shares would decrease EPS. Please refer to
note 5 for further detail.
Period ended Period ended
30 June 2022 30 June 2021
p p
---------------------- ------------------------- -------------------------
Adjusted EPS 16.9 13.5
Adjusted diluted EPS 15.1 12.5
---------------------- ------------------------- -------------------------
3. Segmental Reporting
IFRS 8 requires that operating segments be identified on the
basis of internal reporting and decision-making. The Group is
operated as one global business by its executive team, with key
decisions being taken by the same leaders irrespective of the
geography where work for clients is carried out. The Directors
therefore consider that the Group has one operating segment. As
such, no additional disclosure has been recorded under IFRS 8.
4. Exceptional Items
Period ended Period ended
30 June 2022 30 June 2021
GBP'000s GBP'000s
-------------------- -------------------------- -----------------------
Exceptional items (530) 142
-------------------- -------------------------- -----------------------
The exceptional net credit in the current period relates to an
adjustment to contingent consideration for Retearn (GBP933k), less
costs associated with the iOLAP acquisition (GBP403k; refer note
7). The exceptional costs during the six month period ended 30 June
2021 related to costs associated with the Retearn acquisition.
5. Earnings Per Share
The Group presents non-adjusted and adjusted basic and diluted
earnings per share ('EPS') for its Ordinary shares. Basic EPS is
calculated by dividing the profit for the period attributable to
Ordinary shareholders by the weighted average number of Ordinary
shares outstanding during the period.
Diluted EPS takes into consideration the Company's dilutive
contingently issuable shares. The weighted average number of
Ordinary shares used in the diluted EPS calculation is inclusive of
the number of share options that are expected to vest subject to
performance criteria, as appropriate, being met.
The profits and weighted average number of shares used in the
calculations are set out below:
Period ended Period ended
30 June 2022 30 June 2021
-------------------------------------- ------------------------- -------------------------
Basic and Diluted EPS
Profit attributable to the Ordinary
equity holders of the Group used
in calculating basic and diluted
EPS (GBP'000s) 6,674 5,115
-------------------------------------- ------------------------- -------------------------
Basic earnings per Ordinary share
(p) 14.5 11.1
Diluted earnings per Ordinary
share (p) 12.9 10.3
-------------------------------------- ------------------------- -------------------------
Period ended Period ended
30 June 2022 30 June 2021
-------------------------------------- ------------------------- -------------------------
Adjusted Basic and Diluted EPS
Profit attributable to the ordinary
equity holders of the Group used
in calculating adjusted basic
and diluted EPS (note 2) (GBP'000s) 7,815 6,189
-------------------------------------- ------------------------- -------------------------
Adjusted basic earnings per ordinary
share (p) 16.9 13.5
Adjusted diluted earnings per
ordinary share (p) 15.1 12.5
-------------------------------------- ------------------------- -------------------------
Period ended Period ended
30 June 2022 30 June 2021
Number (000's) Number (000's)
Weighted average number of shares
Weighted average number of ordinary
shares used as the denominator
in calculating non-adjusted and
adjusted basic EPS 46,186 45,889
-------------------------------------- ------------------------- -------------------------
Number of dilutive Ordinary shares 5,615 3,788
Weighted average number of ordinary
shares used as the denominator
in calculating non-adjusted and
adjusted diluted EPS 51,801 49,677
-------------------------------------- ------------------------- -------------------------
6. Goodwill and Intangible Fixed Assets
Customer Order
Goodwill Trademarks relationships Backlog Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
------------------------- --------- ----------- --------------- --------- ---------
Cost
At 31 December 2020
and
01 January 2021 46,155 7,135 748 - 54,038
Acquisition of business 5,257 - 1,126 - 6,383
At 30 June 2021 51,412 7,135 1,874 - 60,421
At 31 December 2021 51,412 7,135 1,874 - 60,421
Acquisition of business
(note 7) 23,391 - 2,452 1,051 26,894
Gains/(losses) from
foreign exchange 1,942 - 205 89 2,236
At 30 June 2022 76,745 7,135 4,531 1,140 89,551
Amortisation
At 31 December 2020
and
01 January 2021 - (2,838) (12) - (2,850)
Charge for the period - (668) (61) - (729)
At 30 June 2021 - (3,506) (73) - (3,579)
Charge for the period - (565) (84) - (649)
At 31 December 2021 - (4,071) (157) - (4,228)
Charge for the period - (477) (235) (192) (904)
Gains/(losses) from
foreign exchange - - (7) (9) (16)
At 30 June 2022 - (4,548) (399) (201) (5,148)
Net book value
At 30 June 2021 51,412 3,629 1,801 - 56,842
------------------------- --------- ----------- --------------- --------- ---------
At 31 December 2021 51,412 3,064 1,717 - 56,193
At 30 June 2022 76,745 2,587 4,132 939 84,403
------------------------- --------- ----------- --------------- --------- ---------
Goodwill
Goodwill arising on acquisition of a business in the period
ended 30 June 2022 relates to the acquisition of iOLAP and was
calculated as the fair value of the consideration less the fair
value of the net identifiable assets at the date of the acquisition
(see note 7).
Goodwill arising on acquisition of a business in the six months
ended 30 June 2021 relates to the acquisition of Retearn on 9 April
2021.
In line with IAS 36, the carrying value of goodwill is not
subject to systematic amortisation but is reviewed at least
annually for impairment. In line with IAS 36, the Group performs an
annual impairment assessment. At 30 June 2022, the Directors
determined that there are no indications that the assets held are
at risk of impairment.
Customer relationships
Current period additions represent the fair value of customer
relationships from the acquisition of iOLAP. Refer to note 7 for
further details. The fair value has been determined by applying the
Multi-Period Excess Earnings method to the cash flows expected to
be earned from customer relationships.
The key management assumptions relate to forecast revenues,
margins and discount factors. The fair value represents the present
value of the earnings the customer relationships generate. A useful
economic life of 10 years has been deemed appropriate based on the
average realisation rate of cumulative cash flows. The projected
cash flows have been discounted over this period. The amortisation
charge since acquisition is recognised within administrative
expenses.
Order backlog
Current period additions represent the fair value of the order
backlog from the acquisition of iOLAP. Refer to note 7 for further
details. The fair value has been determined by applying the
Multi-Period Excess Earnings method to the cash flows earned from
the order backlog.
The key management assumptions relate to forecast margins and
discount factors. A useful economic life of 3 years and nine months
has been deemed appropriate based on the relevant contractual
period. Projected cash flows have been discounted over this period.
The amortisation charge is recognised within administrative
expenses.
7. Business Combinations
On 17 March 2022, the Group acquired 100% of the share capital
and voting interests of iOLAP, a US-headquartered technology and
data firm. The acquisition brings specialist data and analytics
capabilities, including artificial intelligence (AI) and machine
learning (ML), into the Group where there is existing demand for
these services. On 3 March 2022, Elixirr Inc. was incorporated in
Delaware as a direct subsidiary of Elixirr International Plc.
Elixirr Inc. was used as the acquisition vehicle for iOLAP.
The Group acquired iOLAP for a maximum consideration payable of
US$40.0 million (GBP30.4 million). The consideration consisted
of:
-- An initial cash consideration of US$25.2 million (GBP19.2 million)
-- Potential earn-out payments of up to US$14.8 million (GBP11.3
million) in Ordinary shares which are contingent on iOLAP achieving
revenue growth and EBITDA margin targets in periods up to 31
December 2024. This consideration will be satisfied, at Elixirr's
option, either from the EBT, subject to sufficient available
supply, or otherwise by way of a subscription for new Ordinary
shares from Elixirr, or a combination of both.
Of the US$25.2 million (GBP19.2 million) initial cash
consideration, US$13.5 million (GBP10.2 million) was paid to the
selling shareholders free of restrictions with US$0.5 million
(GBP0.4 million) held back for warranties under the sale and
purchase agreement. The remaining balance of US$11.2 million
(GBP8.5 million) was subject to a contractual commitment to use the
after-tax amount (US$8.5 million) to purchase Ordinary shares in
Elixirr at a price per share of GBP6.425. 941,172 Ordinary shares
were purchased from the EBT on 11 May 2022. The balance of this
element of the cash consideration (US$2.7 million) was paid to the
sellers to settle their tax obligations relating to it.
The total fair value of the potential earn-out payments
recognised on the date of acquisition was US$12.1 million (GBP9.2
million). The potential earn-out payments are discounted to fair
value and have been estimated by management based on anticipated
future revenue growth and EBITDA. Discount unwinding is recognised
in finance costs proportionately across the periods until final
settlement. During the period, GBP254,116 of discount unwinding was
expensed as finance costs in relation to the iOLAP acquisition
consideration.
As at 30 June 2022, a GBP10.7 million liability is recorded, of
which GBP4.2 million is a current and GBP6.5 million is a
non-current liability. Included within exceptional items is an
amount of GBP403,093 for legal and advisory fees in relation to the
acquisition.
The Ordinary shares purchased by the sellers from the EBT
pursuant to the acquisition are subject to a one-year lock-in
arrangement and limitations on the Ordinary shares that each seller
can sell in each of the following three years.
iOLAP contributed GBP7.2 million to the Group's revenue and
GBP1.7 million to the Group's profit before tax for the period from
the date of acquisition to 30 June 2022. If the acquisition of
iOLAP had been completed on 1 January 2022, Group revenues for the
period ended 30 June 2022 would have been GBP37.8 million and Group
profit before tax would have been GBP9.5 million.
In calculating the goodwill arising, the fair value of the net
assets of iOLAP have been assessed, and there were no fair value
adjustments deemed necessary, other than for the recognition of
customer relationship and order backlog intangibles and the related
deferred tax.
The table below sets out the amounts recognised as of the
acquisition date for each major class of assets acquired and
liabilities assumed, the consideration and goodwill on the
acquisition of iOLAP:
Fair value
GBP'000s
-------------------------------------- -------------------------
Assets
Non-current assets
Intangible assets 3,504
Property, plant and equipment 827
Loans to shareholders 308
Total non-current Assets 4,639
-------------------------------------- -------------------------
Current assets
Trade and other receivables 5,604
Cash and cash equivalents 1,699
Total current assets 7,303
-------------------------------------- -------------------------
Total assets 11,942
-------------------------------------- -------------------------
Liabilities
Current liabilities
Trade and other payables 2,567
Loans and borrowings 1,692
Other creditors 1,406
Total current liabilities 5,665
-------------------------------------- -------------------------
Non-current liabilities
Loans and borrowings 315
Deferred tax liability 858
Other non-current liabilities 122
Total non-current liabilities 1,295
-------------------------------------- -------------------------
Total liabilities 6,960
-------------------------------------- -------------------------
Fair value of net assets acquired 4,982
Goodwill (note 6) 23,391
-------------------------------------- -------------------------
Fair value of purchase consideration 28,373
Cash and cash equivalents
in subsidiaries acquired 1,699
8. Trade and Other Receivables
As at
As at 31 December
30 June 2022 2021
GBP'000s GBP'000s
Trade receivables 11,733 6,432
Prepayments and deposits 823 487
Contract assets 151 12
Other receivables 45 33
---------------------------
12,752 6,963
Trade receivables are non-interest bearing and receivable under
normal commercial terms. Management consider that the carrying
value of trade and other receivables approximates to their fair
value.
The expected credit loss on trade and other receivables was not
material at the current or prior period ends.
9. Trade and Other Payables
As at
As at 31 December
30 June 2022 2021
GBP'000s GBP'000s
Trade payables 1,229 825
Other taxes and social security
costs 1,138 1,138
Accruals 5,670 8,081
Dividend payable 1,855 -
Contract liabilities 1,092 2,007
Other payables 2 3
---------------------------------- --------------------------- ---------------------------
10,986 12,055
---------------------------------- --------------------------- ---------------------------
The fair value of trade and other payables approximates to book
value at the period end. Trade payables are non-interest bearing
and are normally settled monthly.
Trade payables comprise amounts outstanding for trade purchases
and ongoing costs.
Contract liabilities arise from the Group's revenue generating
activities relating to payments received in advance of performance
delivered under a contract. These contract liabilities typically
arise on short-term timing differences between performance
obligations in some milestone or fixed fee contracts and their
respective contracted payment schedules.
10. Other Creditors and Other Non-current Liabilities
As at
As at 31 December
30 June 2022 2021
GBP'000s GBP'000s
Other creditors
Contingent consideration 4,862 436
------------------------------------ ------------------------- --------------------------
4,862 436
------------------------------------ ------------------------- --------------------------
Other non-current liabilities
Dilapidations 377 250
Cash-settled share-based payments 206 -
Contingent consideration 6,674 1,370
------------------------------------ ------------------------- --------------------------
7,257 1,620
------------------------------------ ------------------------- --------------------------
Other creditors and other non-current liabilities include
earn-out payments which are contingent on performance and arose
from the acquisition of Retearn, Coast Digital and iOLAP.
Other non-current liabilities include cash-settled share-based
payment obligations for the Group's employers' national insurance
on options that are yet to vest. The cash-settled share based
payment liability has been estimated using a closing share price of
GBP6.10 and employers' national insurance at 15.05%.
Other non-current liability payments fall due beyond 12 months
from the reporting date.
11. Share capital, Share premium and Merger Relief Reserve
As at 30 June 2022
---------------------------- -----------------------------------------------------------
Merger relief
Issued shares Par value reserve Share premium
Number (000's) GBP'000s GBP'000s GBP'000s
GBP0.00005 Ordinary shares 46,186 2 46,870 25,673
GBP1 Redeemable Preference
shares 50 50 - -
46,236 52 46,870 25,673
As at 31 December 2021
-----------------------------------------------------------
Merger relief
Issued shares Par value reserve Share premium
Number (000's) GBP'000s GBP'000s GBP'000s
GBP0.00005 Ordinary shares 46,186 2 46,870 24,952
GBP1 Redeemable Preference
shares 50 50 - -
---------------------------- --------------- ---------- -------------- --------------
46,236 52 46,870 24,952
---------------------------- --------------- ---------- -------------- --------------
The total number of voting rights in the Company at 30 June 2022
was 46,186,481.
Ordinary shares
On a show of hands every holder of Ordinary shares present at a
meeting, in person or by proxy, is entitled to one vote, and on a
poll each share is entitled to one vote. The shares entitle the
holder to participate in dividends, and to share in the proceeds of
winding up the Company in proportion to the number of and amounts
paid on the shares held. These rights are subject to the prior
entitlements of the Redeemable Preference shareholders.
Redeemable Preference shares
The Redeemable Preference Shares are held by the EBT. There are
no voting rights attached to the Redeemable Preference shares. The
Redeemable Preference shares are entitled to dividends at a rate of
1% per annum of paid up nominal value. The shares have preferential
right, before any other class of share, to a return of capital on
winding-up or reduction of capital or otherwise of the Company. The
Redeemable Preference shares are redeemable 100 years from the date
of issue or at any time prior at the option of the Company.
12. Employee Benefit Trust ("EBT") Share Reserve
The EBT is accounted for under IFRS 10 and is consolidated on
the basis that the parent has control, thus the assets and
liabilities of the EBT are included in the Group statement of
financial position and shares held by the EBT in the Company are
presented as a deduction from equity.
The EBT share reserve comprises of Ordinary and Redeemable
Preference shares bought and held in the Group's EBT.
At 30 June 2022, the Group EBT held 1,014,688 (H1 21: 117,289)
Ordinary shares and 50,001 Preference shares (H1 21: 50,001) at a
weighted average cost of GBP6.06 (H1 21: GBP2.11) and GBP1.01 (H1
21: GBP1.01) respectively.
13. Share-based Payments
Share Option Plans
During the period ended 30 June 2022, a total of 1,268,329 (H1
21: 5,830,430) share options were granted to employees and senior
management.
Details of share option awards made are as follows:
Weighted
Number of share average exercise
options (000's) price (GBP)
--------------------------------- ------------------------- -------------------------
Outstanding at the beginning of
the period 11,339 2.87
Granted during the period 1,268 7.28
Forfeited during the period (1,776) 4.26
Outstanding at the period end 10,831 3.16
--------------------------------- ------------------------- -------------------------
Exercisable at the period end 146 5.45
--------------------------------- ------------------------- -------------------------
145,709 share options were exercisable in the period ended 30
June 2022.
The options outstanding at 30 June 2022 had a weighted average
remaining contractual life of 3 years and 3 months (H1 21: 4 years)
and a weighted average exercise price of GBP3.16 (H1 21: GBP2.38)
per share.
The weighted average of the estimated fair values of the options
outstanding as at 30 June 2022 is GBP3.74 (H1 21: GBP3.21) per
share.
The options were fair valued at the grant date using the Black
Scholes option valuation model. The inputs into the model were as
follows:
Period ended Period ended
30 June 2022 30 June 2021
--------------------------------- ------------------------- -------------------------
Weighted average share price at
grant date (GBP) 7.24 4.73
Weighted average exercise price
(GBP) 7.28 4.00
Volatility (%) 25.7% 21.3%
Weighted average vesting period
(years) 4.87 4.56
Risk free rate (%) 1.49% 0.30%
Expected dividend yield (%) 0.65% 1.18%
--------------------------------- ------------------------- -------------------------
Reasonable changes in the above inputs do not have a material
impact on the share-based payment charge in the period ended 30
June 2022.
In addition to the share options set out in the table above,
share options with an exercise price of GBP0.00005 were issued in
connection with the acquisitions of Coast Digital and Retearn.
These share options are for a fixed monetary consideration where
the number of share options is variable and determined with
reference to the share price at the date of vesting. The monetary
value of such share options are as follows:
Value (GBP'000s)
--------------------------------- -----------------
Outstanding at the beginning of
the period 2,494
Forfeited during the period (933)
Outstanding at the period end 1,561
--------------------------------- -----------------
Exercisable at the period end 297
--------------------------------- -----------------
The weighted average remaining contractual life of such options
at 30 June 2022 was 2 years (H1 21: 3 years) and the fair value was
GBP1.5 million.
Employee Share Purchase Plan ("ESPP")
On 16 June 2021, an ESPP was implemented.
Under the scheme all of the employees of the Group (excluding
Partners) are eligible to contribute a percentage of their gross
salary to purchase shares in the Company. The Company makes a
matching award of shares that will vest over time dependent on
continued employment.
During the period, the Company awarded 83,720 matching shares on
the basis of one matching share for every one employee share held
on 15 January 2022. The matching shares vest equally over a 5 year
period with the first tranche vesting on 31 January 2023.
14. Ordinary Dividends
The Board proposed a final Ordinary share dividend in respect of
the financial year ended 31 December 2021 of 4.1 pence per Ordinary
share, which was approved by shareholders at the Annual General
Meeting on 13 June 2022.
15. Cash Flow Information
Cash generated from operations
Period ended Period ended
30 June 2022 30 June 2021
GBP'000s GBP'000s
Profit before taxation 8,423 6,409
Adjustments for:
Depreciation and amortisation 1,381 1,063
Net finance expense 366 109
Share-based payments 741 394
Adjustment to deferred consideration (933) -
Increase in trade and other receivables (1,710) (3,017)
Decrease in trade and other payables (5,329) (1,138)
Foreign exchange (272) 72
------------------------------------------ -------------------------- --------------------------
2,667 3,892
------------------------------------------ -------------------------- --------------------------
16. Events After the Reporting Date
Elixirr Consulting (Jersey) Limited was incorporated on 22 July
2022. The Jersey-based team of KIT Consulting Limited were employed
by the Group on 1 August 2022.
On 12 August 2022 the Company paid the final Ordinary share
dividend in respect of the financial year ended 31 December 2021.
The amount paid of GBP1,854,719 represented 4.1 pence per Ordinary
share.
As at 16 September 2022, the Company continues to have
46,186,481 Ordinary shares in issue, of which none are held in
Treasury. The total number of voting rights in the Company is
46,186,481. This figure of 46,186,481 may be used by shareholders
in the Company as the denominator for the calculations by which
they will determine if they are required to notify their interest
in, or a change in their interest in, the share capital of the
Company under the Financial Conduct Authority's Disclosure and
Transparency Rules.
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