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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Elixirr International Plc | LSE:ELIX | London | Ordinary Share | GB00BLPHTX84 | ORD 0.005P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 8.00 | 1.40% | 580.00 | 570.00 | 590.00 | 580.00 | 572.00 | 572.00 | 14,431 | 14:15:16 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Management Consulting Svcs | 70.7M | 12.87M | 0.2786 | 20.82 | 267.88M |
From Apr 2022 to Apr 2024
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
Hot Features
Premium
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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END
IR BKABNOBKDPCD
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September 20, 2022 02:00 ET (06:00 GMT)
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