TIDMELIX
RNS Number : 0600H
Elixirr International PLC
04 April 2022
ELIXIRR INTERNATIONAL PLC
("Elixirr", the "Company" or the "Group")
Final Results for the Year Ended 31 December 2021
Elixirr International plc (AIM: ELIX), an established, global
award-winning challenger consultancy, is pleased to announce its
final results for the year ended 31 December 2021.
Financial Highlights
-- Revenue increased by 67% to GBP50.6m (2020: GBP30.3 m)
-- Adjusted EBITDA* increased by 62% to GBP15.7m (2020: GBP9.7 m)
-- Adjusted EBITDA* margin of 31% (2020: 32%)
-- Profit before tax increased by 109% to GBP12.2m (2020: GBP5.8 m)
-- Adjusted diluted earnings per share* increased by 58% to 24.2p (2020: 15.3p)
-- Net cash position of GBP31.8m (2020: GBP17.5 m)
-- FY 22 expectations of GBP70-75m revenue at an Adjusted EBITDA
margin of 27-28%, including c.9 months' impact of the iOLAP
acquisition
* 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 and non-recurring exceptional items and their
related tax impacts.
Operating Highlights
-- Continued progress executing the four-pillar growth strategy, including:
1. Stretching existing Partners - organic revenue growth of 35%,
including 100% growth in the US business. Continued growth in
revenue per client-facing Partner.
2. Promoting Partners from within - two Principals, with a
combined tenure of nearly twenty years, were promoted in the
year.
3. Hiring new Partners - a further six new Partner hires into
the team during the year (four in the US), with the former UK Chair
of KPMG also joining as a Strategic Advisor.
4. Inorganic growth - acquisition of The Retearn Group Limited
in April 2021, alongside the post period-end acquisition of iOLAP
Inc., demonstrating our ability to execute successful M&A
activity. The iOLAP acquisition, which was made at an initial
consideration multiple of 6x FY 21 Adjusted EBITDA, adds specialist
data and analytics capabilities and accelerates the growth of our
US business. We continue to search for potential acquisition
targets to enhance one or more of our capabilities, industries or
geographical coverage.
-- Multiple awards received including a place on the 'Global
Outsourcing 100' by the International Association for Outsourcing
Professionals, multiple Drum awards for our digital marketing
credentials as well as being listed as a leading management
consultant by the Financial Times for our operations & supply
chain services.
-- In 2021 the Group brought on over 80 new clients, maintaining
high levels of client retention - of the 2021 client base, 50% were
repeat business.
Commenting on the results, Founder & CEO, Stephen Newton
said:
"2021 has been another phenomenal year for Elixirr. We have
stayed resolute in our commitment to provide a bespoke and
high-quality service to our clients, all made possible by the
dedication and talent of our teams. This has contributed to our
fantastic performance in the market this year and consistent growth
since listing."
For further Information please contact:
Elixirr International plc
Stephen Newton, CEO
Graham Busby, CFO
Public and Investor Relations contacts:
Caroline Pitt investor-relations@elixirr.com
finnCap Ltd (Nominated Adviser & Sole
Broker)
Christopher Raggett / Kate Bannatyne
(Corporate Finance)
Alice Lane / Sunila De Silva (ECM) +44 (0)20 7220 0500
About Elixirr International plc
Elixirr is an established global award-winning management
consultancy, challenging the larger consultancies by delivering
innovative and bespoke solutions to a repeat, globally-recognised
client base.
Elixirr was founded in 2009, by Stephen Newton, Graham Busby,
Ian Ferguson, Andy Curtis and Mark Goodyear, experienced business
advisors who identified a market opportunity to provide bespoke,
personal services as a 'challenger' to the traditional consultancy
businesses in the market. Elixirr guides its clients to overcome
challenges such as: future-proofing against technological
disruption; development and roll-out of new propositions, products
and services; incubating new businesses; navigating a more complex
and multinational regulatory environment; and project management
and implementation of major change programmes.
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the company's obligations under Article 17 of MAR.
Non-Executive Chairman's Report
OVERVIEW
I am pleased to introduce Elixirr's 2021 annual report. The
business has performed exceptionally well in the last twelve
months, with growth across capabilities and geographies whilst
breaking into new industries, and it continues to prove its robust
and differentiated proposition.
The Group delivered strong revenues over the year of GBP50.6
million, a 67% increase from GBP30.3 million in the year ended
31(st) December 2020, with eight record months of revenue achieved
during the year. Profitability continues to be strong with FY 21
Adjusted EBITDA of GBP15.7 million representing a 31% EBITDA
margin.
This year Elixirr continued to support its clients to tackle
their toughest challenges in a disruptive market, helping them to
adapt, transform and innovate to stay ahead of competition and we
have seen growth in existing accounts whilst also bringing in a
plethora of new clients. Despite the COVID-19 pandemic, the
consulting industry sustained growth in 2021, and we continue to
see the impact of this with strong, growing client demand.
Our performance can be attributed to strong organic traction
across the Group, particularly in the US market, whilst continuing
to strengthen and grow the Partner team across all geographies. The
Group has also seen further opportunities through acquisition and
leveraging the capabilities within acquired businesses.
We have continued to see growth in digital opportunities and
utilised the procurement and self-funded transformation
capabilities of our new acquisition, The Retearn Group Limited
('Retearn'), alongside our core consulting work. Elixirr's recent
acquisition in March 2022 of US firm, iOLAP, is significant for the
Group - bringing specialist data and analytics capabilities,
including artificial intelligence (AI) and machine learning (ML)
for which there is increasing market demand. We are looking forward
to the positive impact iOLAP will have across the Group in FY
22.
In accordance with the high standards we uphold throughout our
business, we are also committed to continually looking to improve
both our own and our clients' ESG commitments. In our Annual Report
we cover both the mandatory reporting of our direct emissions as
well as information on our sustainability initiatives.
STRATEGY
The Board continues to observe the positive impact from the
Group's four pillar growth strategy - a strategy that has been
central to key activities during 2021. This Annual Report will
explain the growth and advances we have delivered in each aspect of
the strategy over the course of the year. The Board believes this
diversified strategy positions the firm well for FY 22 and
continued future growth.
GOVERNANCE
The Board recognises the importance of operating within a robust
governance framework. Throughout the period the Group has continued
to comply with the corporate governance code of the Quoted
Companies Alliance (QCA). This includes ensuring that we have an
appropriate balance of diverse skills and experience to deliver our
strategic vision and objectives. The Board and its subcommittees
include independent non-executive members with varying backgrounds
and experience. The Board continues to monitor this on a regular
basis.
OUTLOOK
Elixirr enters the new financial year in a strong position. The
Board believes the Group is well positioned as it continues to grow
and to exceed the expectations of its clients. The Board continues
to work to ensure sustained success for the shareholders, clients
and employees of the Group and it looks to the future with
optimism.
Gavin Patterson
Non-Executive Chairman
1(st) April 2022
CEO's Report
OVERVIEW
In 2021 we worked across the value chain from strategy to
execution whilst evolving our offering to meet market demands -
continuing to get to the crux of our clients' key board room
issues. Our team of consultants across the globe worked on more
projects than ever before for business leaders and C-suite
executives, helping them to solve critical business challenges with
future-first innovation and strategy-led thinking.
Organic growth continues to underpin the business's success, and
this was sustained in 2021 by expanding existing key accounts and
maintaining high levels of client retention - of the 2021 client
base, 50% were repeat business. We pride ourselves on a reputation
of quality and building long-term relationships with clients, and
our growth this year is testament to the excellence of our people
and the lasting impact we make each day. In 2021 we continued to
focus on deepening existing relationships, growing the value of
multiple key accounts, so that we now have more than a dozen
clients where each generates more than GBP1m of revenue for the
Group. This continues to be a major focus for the Group in
2022.
Another crucial element of our organic growth is bringing on new
clients and expanding into new markets. In 2021 we brought on over
80 new clients. We have also increased our penetration in growing
industries, expanding our work in the healthcare, insurance and
public sector areas as we continue to diversify the business
alongside our traditional strengths in financial services, retail
and digital.
As the fastest growing consulting market by spend in the world,
the US continues to be our biggest focus area of growth
geographically. Proving the commitment of the team there, we have
seen incredible traction in this market over the past few years,
and 2021 was no different. Our annual growth of 100% in the US in
2021 can be attributed to increasing revenues from existing clients
and bringing in new logos - nearly doubling our US clients
year-on-year. This was all supported by growth in both our US
Partner team and the number of chargeable consultants joining the
US team.
The importance of sustainability continues to grow, and in 2021
we have been guiding our clients in this space more than ever
before, helping them to reduce their carbon footprints
substantially. We have put sustainability at the centre within the
spectrum of our capabilities - from helping clients reduce their
digital carbon emissions, to supply chain assessments, helping to
ensure businesses are equipped to make a real, maintainable impact
into the future.
Our reputation in the market and amongst our clients is
ever-increasing, and we were delighted to be recognised with
multiple industry accolades in 2021. As a Group, we were nominated
for 14 awards in a variety of categories and sectors. We were proud
to earn a place on the 'Global Outsourcing 100' by the
International Association for Outsourcing Professionals, also
winning multiple Drum awards for our digital marketing credentials
and being listed as a leading management consultant by the FT for
our operations & supply chain services. I was also very proud
personally to be recognised as a 'Global Leader in Consulting' by
US Consulting Magazine again for 'Excellence in Execution'.
PERFORMANCE
I am delighted with the performance of Elixirr in the last
twelve months. The Group delivered a record revenue result over the
year of GBP50.6 million, a 67% increase from FY 20. In 2021, we
delivered eight record months of revenue as the business grew
throughout the year. I am particularly pleased that we have
continued to achieve exceptional growth in the US market with a
100% increase in revenues compared with FY 20 - the US is a focal
market for the Group.
Our Adjusted EBITDA of GBP15.7 million in FY 21 represented 31%
of revenue, demonstrating Elixirr's positioning as a high value,
high returns business.
GROWTH STRATEGY
We have made great progress over 2021 across all three organic
elements of our four-pillar growth strategy - increasing revenue
per Partner, bringing multiple new Partners into the business, and
promoting Partners from within.
2021 saw exceptional progress of hires into our Partner team,
with six new appointments into the team. All were selected based on
their extensive networks, and respective industry expertise
spanning financial services, media, TMT and healthcare.
We were also delighted to promote two Principals, both who truly
embody the culture of Elixirr having been with the firm for almost
a decade each, bringing huge value to the Partner team. Together,
they set a great example of the potential career opportunities for
those at junior grades, with one of those promoted having
progressed through the business all the way from Analyst, our entry
grade.
Whilst our roots remain in core strategy consulting, we are
constantly seeking to add to the breadth and depth of our services.
Therefore, our fourth growth pillar - acquiring new businesses -
remained a key part of our strategy in 2021. Having expanded our
digital capabilities in recent years, we were looking to further
deepen our specialisms in 2021 and were delighted to announce the
acquisition of Retearn in April 2021. Their procurement and
self-funded transformation expertise has been hugely valuable
alongside our traditional consulting work, and we have seen
multiple cross-sell opportunities with clients across the
Group.
One of the key strategic geographies for Elixirr is the US, and
our dedicated internal M&A team has had an acute focus on this
geography since our IPO. In March 2022 we were pleased to announce
the acquisition of US firm iOLAP, and the scale and offering of the
firm make this one of Elixirr's most significant milestones to
date. Combining iOLAP's expertise in data and analytics with
Elixirr's deep strategic and business consulting experience will
continue to ensure we stay at the heart of key boardroom
challenges, and I expect it to hugely influence our traction in the
market in FY 22 and beyond.
OUR PEOPLE
We have continued to grow our team across the globe in the past
year, more than doubling the number of hires we made from 2020 to
2021. We are committed to creating a firm of equal opportunity,
with individuals measured purely by the work they do. 60% of our
promotions in 2021 were female employees and over half of our hires
last year were people from ethnic minority backgrounds. Diversity
of thought is what truly matters to us, and that means diversity of
people. It is with this attitude that we build a world-class team.
Our male-to-female ratio across the firm is 58/42, and we speak
over 28 languages. We welcome analysts from the best universities
and business schools in the world and a plethora of previous
careers, be it in industry, consulting, start-ups, or professional
sport. This strategy continues to be complemented by our inorganic
growth strategy, as we acquire businesses and their diverse
teams.
With the challenges COVID-19 presented during 2020 in travel and
gatherings, we were pleased in 2021 to finally bring our teams
together from across the world for our yearly 'Indaba' event - a
cultural immersion for new joiners across the Group to understand
and experience Elixirr's core values.
Our culture has been formed on the premise of building a firm of
entrepreneurs - a team who think and act like business owners,
rather than traditional employees. Listing the firm allowed us to
enable our team to become shareholders in Elixirr, and in June 2021
we introduced an optional Employee Share Purchase Plan ('ESPP') in
addition to our existing employee option schemes. This really
highlighted the commitment our people have and the tenure they
expect with the business, as we had an uptake of over 50% for the
ESPP scheme in its first year. Those who joined the ESPP enjoyed an
average gain of 21% on their investment during FY 21. The recent
ESPP enrolment for FY 22 has increased to 73% of the team,
demonstrating huge commitment to the firm by the vast majority of
our team.
OUTLOOK
Despite the challenges presented by the pandemic, macro-economic
and more recently geo-political conditions since we listed in 2020,
we have continued to demonstrate strong financial performance and
have not only realised but exceeded our growth ambitions. The
combination of keeping our clients central to our services,
offering a unique proposition in the market, with relentless
ambition and a focus on our strategy, puts us in a strong position
as a Group.
Despite the current geo-political uncertainty, the Directors
expect further growth in revenue and Adjusted EBITDA during FY 22.
Including the impact of the acquisition of iOLAP, the Board's
current expectation is that full year FY 22 revenue will be in the
range of GBP70 million - GBP75 million with an Adjusted EBITDA
margin in the range of 27 - 28%.
Stephen Newton
Founder & Chief Executive Officer
1(st) April 2022
Financial Review
Year ended Year ended
31 December 31 December
2021 2020 % change
---------------------------- ------------- ------------- ---------
Revenue GBP50.6m GBP30.3m +67%
Gross profit GBP17.7m GBP11.2m +58%
Adjusted EBITDA* GBP15.7m GBP9.7m +62%
Adjusted EBITDA margin* 31% 32% -3%
Profit before tax GBP12.2m GBP5.8m +109%
Adjusted diluted earnings
per share* 24.2p 15.3p +58%
Dividend per share 4.1p 2.2p +86%
Free cash flow GBP13.6m GBP11.2m +21%
Net cash GBP31.8m GBP17.5m +82%
---------------------------- ------------- ------------- ---------
* 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').
GROUP RESULTS
The Board is pleased to report that the Group has performed
exceptionally well this financial year, continuing to grow revenue
despite global macro uncertainty. The Group has seen organic growth
in new and existing client accounts, delivering high-quality client
service, as we continue to build long-term, trusted relationships
with our clients. The Group successfully acquired Retearn in FY 21,
integrating their product offerings and teams into the Group and
delivering on enhanced capabilities to our client base. The Group
has maintained healthy margins and good cash generation, ending the
year in a strong financial position. In FY 21 the Group delivered
revenue of GBP50.6 million and profitability continues to be strong
with an Adjusted EBITDA of GBP15.7 million at a 31% margin.
REVENUE
Revenue increased by 67% to GBP50.6 million in FY 21 compared
with GBP30.3 million in FY 20, with eight record months of revenue
achieved during the year. Revenue growth was driven by both organic
revenue growth of 35% and the impact of the acquisitions of Coast
Digital Limited ('Coast Digital') and Retearn of 32%.
The double-digit growth in revenues is testament to the Group's
relentless focus on continuing to build long-term, trusted
relationships with our clients by consistently delivering
innovative, impactful solutions to solve our clients' key business
challenges. The Group's revenue growth is reflective of continuing
strong demand for its existing service offering as well as the
leveraging of new service capability to clients from the
acquisitions of Coast Digital and Retearn.
Revenue growth was achieved in all geographic regions (UK, USA
and Rest of World) in which the Group operates, and we have
continued to achieve exceptional growth in the US market, having
doubled revenues compared with FY 20. We are also pleased to report
that revenue per client-facing Partner grew during the year,
despite the difficult market environment, reflecting the quality
and resilience of our Partner team.
GROUP PROFITABILITY
Group gross profit increased by 58% to GBP17.7 million (FY 20:
GBP11.2 million), reflecting revenue growth, strong consultant
utilisation and investment in the team. The investment in the team
included an increase in the average team headcount to deliver
revenue, implementation of the ESPP, granting of share options and
promotion-related pay increases.
Administrative expenses increased by 27%, principally reflecting
the increased share-based payment costs in FY 21 as a result of
share option grants. Further detail of share-based payments is set
out in note 24 of the Group and Company Financial Statements of
this report.
Group Adjusted EBITDA grew 62% and was delivered at a 31% margin
(FY 20: 32%). The increased costs associated with the resumption of
travel and business development activities were partially offset by
improved profitability as a result of improved utilisation of
consultants.
Profit before tax (after exceptional items) grew 109% to GBP12.2
million (FY 20: GBP5.8 million) and was delivered at an improved
margin of 24.0% (FY 20: 19%). Further detail of exceptional items
is set out in note 5 of the Group and Company Financial Statements
of this report.
NET FINANCE EXPENSE
Net finance expense of GBP0.22 million for FY 21 includes
interest on the Group lease liability. The net finance expense
decreased by 67% due to not having incurred preference dividends in
FY 21 as a result of the 10% non-redeemable cumulative preference
shares having been extinguished in FY 20 as part of the Group
restructure transactions explained further in note 22 of the Group
and Company Financial Statements. As at 31(st) December 2021 the
Group has no interest rate risk exposure.
TAXATION
The Group's tax charge for FY 21 was GBP2.0 million, reflecting
a lower effective tax rate of 17% compared with 18% in FY 20. This
was largely due to research and development tax relief claimed for
prior periods and allowable trademark amortisation deductions. The
Group's cash tax payment in the year was GBP2.5 million (FY 20:
GBP1.2 million). For further detail on taxation see notes 8 and 9
of the Group and Company Financial Statements. Adjusted profit
after tax, used in calculating adjusted earnings per share, is
shown after adjustments for the applicable tax on adjusting items
as set out in note 6.
EARNINGS PER SHARE
Adjusted diluted earnings per share increased by 58% to 24.2p.
Adjusting items and their tax impacts are set out in note 6. As at
31(st) December 2021, 11,339,056 share options (excluding
acquisition options for fixed monetary amounts and ESPP matching
grants) were outstanding.
CASH FLOW
The Group's net cash position increased by 82% to GBP31.8
million (FY 20: GBP17.5 million) with a 21% increase in free cash
flow due to improved operating cash flow generation driven by
business growth and efficient working capital management. The Group
enjoyed strong cash generation with net cash flow generated from
operations of GBP14.3 million in FY 21 (FY 20: GBP12.2 million),
including some working capital timing benefit. The Group continues
to see conversion of adjusted EBITDA less tax to operating cash of
c.100%.
Net cash utilised in investing activities reflects GBP2.9
million cash consideration for the acquisition of Retearn plus
additional cash consideration of GBP0.4 million for surplus cash on
acquisition, net of cash of GBP0.7 million acquired on acquisition.
A further GBP0.6 million for surplus cash on acquisition of Coast
Digital was also paid in FY 21.
Net cash generated from financing activities of GBP3.1 million
represents net inflow for Employee Benefit Trust ('EBT') share
sales less purchases of GBP2.1 million plus net Partner loan
repayments (net of associated section 455 tax charge) of GBP2.7
million, less dividend payment of GBP1.0 million and office lease
payments of GBP0.7 million.
STATEMENT OF FINANCIAL POSITION
Net assets as at 31(st) December 2021 totalled GBP86.0 million
(FY 20: GBP70.7 million). The increase in net assets is as a result
of share premium of GBP5.2 million for Ordinary shares issued as
consideration for the acquisition of Retearn and gain on sale of
shares by the EBT, retained profit for the year of GBP11.0 million
(after FY 20 final dividend of GBP1.0 million offset by GBP1.2
million add back of share-based payments charge), partially offset
by net EBT share purchases of GBP0.9 million.
DIVIDS
No interim Ordinary share dividends were paid in relation to FY
20 or FY 21. The Company paid a final Ordinary share dividend in
respect of FY 20 of 2.2 pence per Ordinary share in August 2021.
The Directors are proposing a final Ordinary share dividend in
respect of FY 21 of 4.1 pence per Ordinary share, representing an
86% increase in dividend per share compared with FY 20.
Group Statement of Comprehensive Income
For the year ended 31(st) December 2021
Year ended Year ended
31 December 2021 31 December 2020
Note GBP'000s GBP'000s
------------------------------------------------------ ---- -------------------------- ----------------------------
Revenue 4 50,611 30,318
Cost of sales (32,913) (19,128)
------------------------------------------------------ ---- -------------------------- ----------------------------
Gross profit 17,698 11,190
Administrative expenses (5,161) (3,982)
------------------------------------------------------ ---- -------------------------- ----------------------------
Operating profit before exceptional items 5 12,537 7,208
Depreciation 670 730
Amortisation of intangible assets 1,378 1,741
Share-based payments 1,152 47
Adjusted EBITDA 6 15,737 9,726
---- --------------------------
Exceptional items 5 (154) (730)
------------------------------------------------------ ---- -------------------------- ----------------------------
Operating profit 5 12,383 6,478
Finance income 29 20
Finance costs (246) (680)
------------------------------------------------------ ---- -------------------------- ----------------------------
Net finance expense 7 (217) (660)
Profit before taxation 5 12,166 5,818
Taxation 8 (2,022) (1,024)
------------------------------------------------------ ---- -------------------------- ----------------------------
Profit for the period 10,144 4,794
------------------------------------------------------ ---- -------------------------- ----------------------------
Other comprehensive income
Items that may be subsequently reclassified to profit
and loss:
Currency translation on foreign currency net
investments 123 (26)
Other comprehensive income, net of tax 123 (26)
Total comprehensive income 10,267 4,768
------------------------------------------------------ ---- -------------------------- ----------------------------
Basic earnings per Ordinary share (p) 11 22.04 11.73
Diluted earnings per Ordinary share (p) 11 20.01 10.75
All results relate to continuing operations.
The notes form part of these accounts.
Group and Company Statements of Financial Position
As at 31(st) December 2021
Group Company
31 December 2021 31 December 2020 31 December 2021 31 December 2020
Note GBP'000s GBP'000s GBP'000s GBP'000s
-------------------- -------- ------------------- ----------------- --------------------------- -----------------
Assets
Non-current assets
Intangible assets 13 56,193 51,188 - -
Property, plant and
equipment 15 5,496 5,545 - -
Investments 16 - - 63,807 55,156
Other receivables 17 1,535 596 1,104 -
Loans to
shareholders 17 3,991 7,784 3,991 6,672
Deferred tax asset 9 1,197 161 - 161
Total non-current
assets 68,412 65,274 68,902 61,989
-------------------- -------- ------------------- ----------------- --------------------------- -----------------
Current assets
Trade and other
receivables 17 6,963 4,220 1,928 3,000
Cash and cash
equivalents 18 31,795 17,503 13,576 10,678
Total current assets 38,758 21,723 15,504 13,678
-------------------- -------- ------------------- ----------------- --------------------------- -----------------
Total assets 107,170 86,997 84,406 75,667
-------------------- -------- ------------------- ----------------- --------------------------- -----------------
Liabilities
Current liabilities
Trade and other
payables 19 12,055 8,107 134 403
Loans and borrowings 20 485 448 - -
Corporation tax 1,150 1,157 11 61
Other creditors 21 436 612 436 612
Total current
liabilities 14,126 10,324 581 1,076
-------------------- -------- ------------------- ----------------- --------------------------- -----------------
Net current assets 24,632 11,399 14,923 12,602
-------------------- -------- ------------------- ----------------- --------------------------- -----------------
Non-current
liabilities
Loans and borrowings 20 4,760 4,837 - -
Deferred tax
liability 9 623 547 - -
Other non-current
liabilities 21 1,620 601 1,370 406
Total non-current
liabilities 7,003 5,985 1,370 406
-------------------- -------- ------------------- ----------------- --------------------------- -----------------
Total liabilities 21,129 16,309 1,951 1,482
-------------------- -------- ------------------- ----------------- --------------------------- -----------------
Net assets 86,041 70,688 82,455 74,185
-------------------- -------- ------------------- ----------------- --------------------------- -----------------
Equity
Share capital 22 52 52 52 52
Share premium 22 24,952 19,729 24,952 19,729
Capital redemption
reserve 2 2 2 2
EBT share reserve 23 (2,193) (1,248) (2,193) (1,248)
Merger relief
reserve 22 46,870 46,870 46,870 46,870
Foreign currency
translation reserve 51 (72) - -
Retained earnings 16,307 5,355 12,772 8,780
Total shareholders'
equity 86,041 70,688 82,455 74,185
-------------------- -------- ------------------- ----------------- --------------------------- -----------------
As permitted by section 408 of the Companies Act 2006, a
separate statement of comprehensive income of the parent Company
has not been presented. The Company's profit for the year was
GBP4,006,320 (FY 20: GBP9,397,979).
The notes form part of these accounts.
The Financial Statements were approved by the Board of Directors
on 1(st) April 2022 and were signed on its behalf by:
Stephen Newton
Director
Group Statement of Changes in Equity
For the year ended 31(st) December 2021
Foreign
Capital Merger currency
Share Share redemption EBT share relief translation Retained
capital premium reserve reserve reserve reserve earnings Total
Group GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
------------------------- -------- -------- ----------- --------- -------- ------------ --------- --------
As at 31 December
2019 and 01 January
2020 3 - - - 43,497 (46) 1,182 44,636
Comprehensive income
Profit for the
period - - - - - - 4,794 4,794
Other comprehensive
income - - - - - (26) - (26)
Transactions with
owners
Share issues 1 23 - - - - - 24
Contributions of
equity, net of
transaction costs - 18,583 - - - - - 18,583
Share issue as
consideration for
a business combination - 1,123 - - - - - 1,123
Preference shares
reclassified from
loans and borrowings 50 - - - - - - 50
Share buy-backs
at par and cancelled (2) - 2 - (3,127) - (820) (3,947)
Acquisition of
Ordinary shares - - - (1,198) - - - (1,198)
Acquisition of
Redeemable Preference
shares - - - (50) - - - (50)
Redesignation/conversion
of shares - - - - 6,500 - - 6,500
Share-based payments - - - - - - 47 47
Deferred tax recognised
in equity - - - - - - 152 152
As at 31 December
2020 and
01 January 2021 52 19,729 2 (1,248) 46,870 (72) 5,355 70,688
------------------------- -------- -------- ----------- --------- -------- ------------ --------- --------
Comprehensive income
Profit for the
period - - - - - - 10,144 10,144
Other comprehensive
income - - - - - 123 - 123
Transactions with
owners
Share issue as
consideration for
a business combination - 2,154 - - - - - 2,154
Dividends - - - - - - (1,014) (1,014)
Share-based payments - - - - - - 1,152 1,152
Deferred tax recognised
in equity - - - - - - 670 670
Sale of Ordinary
shares - 3,069 - 2,705 - - - 5,774
Acquisition of
Ordinary shares - - - (3,650) - - - (3,650)
As at
31 December 2021 52 24,952 2 (2,193) 46,870 51 16,307 86,041
------------------------- -------- -------- ----------- --------- -------- ------------ --------- --------
The notes form part of these accounts. Please refer to note 29
for explanations of reserve accounts.
Company Statement of Changes in Equity
For the year ended 31(st) December 2021
Capital Merger
Share Share redemption EBT share relief Retained
capital premium reserve reserve reserve earnings Total
Company GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
----------------------------- -------- -------- ----------- --------- -------- --------- --------
As at 31 December
2019 and
01 January 2020 3 - - - 43,497 4 43,504
Comprehensive income
Profit for the period - - - - - 9,397 9,397
Other comprehensive - - - - - - -
income
Transactions with
owners
Share issues 1 23 - - - - 24
Contributions of
equity, net of transaction
costs - 18,583 - - - - 18,583
Share issue as consideration
for a business combination - 1,123 - - - - 1,123
Preference shares
reclassified from
loans and borrowings 50 - - - - - 50
Share buy-backs
at par and cancelled (2) - 2 - (3,127) (820) (3,947)
Acquisition of Ordinary
shares - - - (1,198) - - (1,198)
Acquisition of Redeemable
Preference shares - - - (50) - - (50)
Redesignation/conversion
of shares - - - - 6,500 - 6,500
Share-based payments - - - - - 47 47
Deferred tax recognised
in equity - - - - - 152 152
As at 31 December
2020 and
01 January 2021 52 19,729 2 (1,248) 46,870 8,780 74,185
----------------------------- -------- -------- ----------- --------- -------- --------- --------
Comprehensive income
Profit for the period - - - - - 4,006 4,006
Transactions with
owners
Share issue as consideration
for a business combination - 2,154 - - - - 2,154
Dividends - - - - - (1,014) (1,014)
Share-based payments - - - - - 1,152 1,152
Deferred tax recognised
in equity - - - - - (152) (152)
Sale of Ordinary
shares - 3,069 - 2,705 - - 5,774
Acquisition of Ordinary
shares - - - (3,650) - - (3,650)
As at
31 December 2021 52 24,952 2 (2,193) 46,870 12,772 82,455
----------------------------- -------- -------- ----------- --------- -------- --------- --------
The notes form part of these accounts. Please refer to note 29
for explanations of reserve accounts.
Group and Company Cash Flow Statements
For the year ended 31(st) December 2021
Group Company
31 December 31 December 31 December 31 December
2021 2020 2021 2020
Note GBP'000s GBP'000s GBP'000s GBP'000s
------------- ---- ----------------------- ----------------------------- ------------------------------- ---------------------------
Cash flows
from
operating
activities:
Cash
generated
from
operations 25 16,856 13,309 4,265 7,127
Taxation paid (2,527) (1,156) (86) -
Net cash generated
from
operating
activities 14,329 12,153 4,179 7,127
------------------- ----------------------- ----------------------------- ------------------------------- ---------------------------
Cash flows
from
investing
activities:
Purchase of
property,
plant and
equipment (98) (33) - -
Payment for
acquisition
of
subsidiary,
net
of cash
acquired (3,179) (1,449) (4,000) (2,710)
Interest
received 33 17 32 8
Net cash utilised
in investing
activities (3,244) (1,465) (3,968) (2,702)
------------------- ----------------------- ----------------------------- ------------------------------- ---------------------------
Cash flows
from
financing
activities:
Issue of
Ordinary
share
capital - 18,607 - 18,607
Issue of
Redeemable
Preference
shares - 50 - 50
Non-redeemable
Preference
share dividend - (518) - (518)
Capital
reduction
and
share
buy-backs - (626) - (3,946)
EBT Ordinary
share
purchases (3,649) (1,198) (3,649) (1,198)
EBT Ordinary
share
sales 5,774 - 5,774 -
Redeemable
Preference
shares repurchased - (50) - (50)
Loans to
shareholders (4,500) (9,839) (4,500) (6,673)
Loans repaid
by
shareholders 8,293 - 7,181 -
s455 tax paid
re loans
to
shareholders (1,104) - (1,104) -
Repayment of - (1,625) - -
borrowings
Lease
liability
payments (448) (623) - -
Interest paid (246) (293) - (20)
Ordinary
share
dividends
paid to
shareholders (1,014) - (1,014) -
Net cash generated
from
financing
activities 3,106 3,885 2,688 6,252
------------------- ----------------------- ----------------------------- ------------------------------- ---------------------------
Net increase in
cash and
cash equivalents 14,191 14,573 2,898 10,678
------------------- ----------------------- ----------------------------- ------------------------------- ---------------------------
Cash and cash
equivalents
at beginning
of the period 17,503 3,001 10,678 -
Effects of exchange
rate
changes on
cash and cash
equivalents 101 (71) - -
Cash and cash
equivalents
at end
of the period 31,795 17,503 13,576 10,678
------------------- ----------------------- ----------------------------- ------------------------------- ---------------------------
The notes form part of these accounts.
Notes to the Financial Statements
1. BASIS OF PREPARATION
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.
1.2. Basis of preparation
The financial statements have been prepared in accordance with
UK adopted international accounting standards.
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 31(st)
December 2021.
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 2.1.
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.
2. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of
the financial statements of the Group and Company, which have been
applied consistently to the period presented, are set out
below.
2.1. 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 year
ending 31(st) December 2021.
The 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.
-- Amortisation period of trademarks and customer relationships
is an estimate based on the expected useful life and is 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 and Retearn 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 year 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.
2.2. Revenue recognition
Revenue is measured as the fair value of consideration received
or receivable for satisfying performance obligations contained in
contracts with clients, 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.
2.3. 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.
The Group acquired the trade and some of the assets of Elixirr
Partners LLP, an entity under common control, on 1(st) July
2019.
Transactions with entities under common control are not within
the scope of IFRS 3 "Business Combinations". In these circumstances
IAS 8 requires the Directors to develop a policy that is relevant
to the decision-making needs of the users and that is reliable as
there is no specific applicable standard or interpretation.
Having considered the nature of the transaction, noting that
some assets were not transferred with the business and the
anticipation of a future corporate transaction, the Directors chose
to apply IFRS 3 as this was considered to be the most appropriate
method to reflect the acquisition.
On 28(th) October 2020 the Group acquired 100% of the share
capital and voting interests of Coast Digital, a digital marketing
business. The difference between the fair value of the purchase
consideration of GBP4,999,521 and the fair value of the
identifiable assets acquired and liabilities assumed of
GBP2,143,683 was recognised as goodwill of GBP2,855,838. The
goodwill is attributable to the company's workforce and working
methodologies and it is not deductible for tax purposes.
On 9(th) April 2021 the Group acquired 100% of the share capital
and voting interest of Retearn, a procurement, transformation and
insights consultancy firm. The difference between the fair value of
the purchase consideration of GBP7,361,052 and the fair value of
the identifiable assets acquired and liabilities assumed of
GBP2,103,563 was recognised as goodwill of GBP5,257,489. The
goodwill is attributable to the company's workforce and working
methodologies and it is not deductible for tax purposes. Please
refer to note 14 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.
In accordance with IAS 36, the Group has tested goodwill for
impairment at the reporting date. No goodwill impairment was deemed
necessary as at 31(st) December 2021. For further details on the
impairment review please refer to note 13.
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.
2.4. Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profits as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group's
and Company's liability for current tax is calculated using tax
rates that have been enacted or substantially enacted by the
reporting end date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary differences arise
from goodwill or from the initial recognition of other assets and
liabilities in a transaction that affects neither the tax profit
nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each
reporting end date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered. Deferred tax is
calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised.
Deferred tax is charged or credited in the income statement, except
when it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in equity. Deferred
tax assets and liabilities are offset when the company has a
legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority.
2.5. 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
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income
statement.
2.6. 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 method
Customer relationships 10% reducing balance Multi-Period Excess
method Earnings method
----------------------- ------------------------ --------------------
2.7. 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.
2.8. 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.
2.9. 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 profit and loss.
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.
Please refer to note 24 for further details.
2.10. 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.
Basic earnings per share is calculated by dividing the profit
attributable to the Group's Ordinary shareholders by the weighted
average number of Ordinary shares outstanding during the
period.
The calculation of diluted earnings per share assumes conversion
of all potentially dilutive Ordinary shares, which arise from share
options outstanding. A calculation is performed to determine the
number of share options that are potentially dilutive based on the
number of shares that could have been acquired at fair value from
the future assumed proceeds of the outstanding share options.
2.11. Financial instruments
The Group classifies financial instruments, or their component
parts, on initial recognition as a financial asset, a financial
liability or an equity instrument in accordance with the substance
of the contractual arrangement. Financial instruments are
recognised on trade date when the Group becomes a party to the
contractual provisions of the instrument. Financial instruments are
recognised initially at fair value plus, in the case of a financial
instrument not a fair value through profit and loss, transaction
costs that are directly attributable to the acquisition or issue of
the financial instrument. Financial instruments are de-recognised
on the trade date when the Group is no longer a party to the
contractual provisions of the instrument.
Non-derivative financial instruments comprise trade and other
receivables, cash and cash equivalents, loans and borrowings and
trade and other payables.
Trade and other receivables and trade and other payables
Trade and other receivables are recognised initially at
transaction price less attributable transaction costs. Trade and
other payables are recognised initially at transaction price plus
attributable transaction costs. Subsequent to initial recognition
they are measured at amortised cost using the effective interest
method, less any expected credit losses in the case of trade
receivables. If the arrangement constitutes a financing
transaction, for example if payment is deferred beyond normal
business terms, then it is measured at the present value of future
payments discounted at a market rate of interest for a similar debt
instrument.
Unbilled revenue
Unbilled revenue is recognised at the fair value of consultancy
services provided at the reporting date reflecting the stage of
completion (determined by costs incurred to date as a percentage of
the total anticipated costs) of each assignment. This is included
in contract assets.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at the
present value of future payments discounted at a market rate of
interest. Subsequent to initial recognition, interest-bearing
borrowings are stated at amortised cost using the effective
interest method, less any impairment losses.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits. Bank overdrafts that are repayable on demand and form an
integral part of the Group's cash management are included as a
component of cash and cash equivalents for the purpose only on the
cash flow statement.
Preference shares
Preference shares, which are non-redeemable with
non-discretionary dividends, have both equity and liability
elements.
The liability element is calculated as the present value of the
future contractual cash flows, discounted at a market rate of
interest, estimated at 10%. This amount is recorded as a liability
on an amortised cost basis until extinguished or converted. The
equity element is calculated as the residual value (i.e. the
difference between the proceeds from the issue of the shares less
the liability component) and is recognised and included in
shareholders' equity.
The dividends on the preference shares are recognised in the
profit or loss as finance costs.
Contingent consideration
Contingent deferred consideration may arise on acquisitions
where the consideration is dependent on the future performance of
the acquired company. In circumstances where the acquiree will
receive contingent consideration in a variable number of shares and
is not employment-linked, the Group has recognised a financial
liability at the fair value of the contingent consideration.
Subsequent changes to the fair value of the contingent
consideration are recognised in the statement of comprehensive
income.
At the balance sheet date the contingent consideration liability
represents the fair value of the remaining contingent consideration
valued at acquisition. The contingent consideration liability for
acquisitions under IFRS 3 contains estimation uncertainty as they
relate to future expected performance of the acquired business. In
estimating the fair value of the contingent consideration,
management have assessed the potential future cash flows of the
acquired business and the likelihood of an earn-out payment being
made.
2.12. Provisions
A provision is recognised in the statement of financial position
when the Group has a present legal or constructive obligation as a
result of a past event, that can be reliably measured and it is
probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are determined by discounting the
expected future cash flows at a pre-tax rate that reflects risks
specific to the liability.
2.13. Right-of-use assets: Leases
The Group leases two properties in the UK from which it
operates.
All leases are accounted for by recognising a right-of-use asset
and a lease liability except for:
-- Leases of low value assets; and
-- Leases with a duration of twelve months or less.
Lease liabilities are measured at the present value of
contractual payments due to the lessor over the lease term, with
the discount rate determined by reference to the rate inherent in
the lease unless (as is typically the case) this is not readily
determinable, in which case the Group's incremental borrowing rate
on commencement of the lease is used. This has been estimated at
5.0 percent. Variable lease payments are only included in the
measurement of the lease liability if they depend on an index or
rate. In such cases, the initial measurement of the lease liability
assumes the variable element will remain unchanged throughout the
lease term. Other variable lease payments are expensed in the
period to which they relate.
Right-of-use assets are initially measured at the amount of the
lease liability, reduced for any lease incentives received, and
increased for:
-- Lease payments made at or before commencement of the lease;
-- Initial direct costs incurred; and
-- The amount of any provision recognised where the Group is
contractually required to dismantle, remove or restore the leased
asset (typically leasehold dilapidations).
Subsequent to initial measurement lease liabilities increase as
a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right-of-use
assets are amortised on a straight-line basis over the remaining
term of the lease or over the remaining economic life of the asset
if, rarely, this is judged to be shorter than the lease term.
When the Group revises its estimate of the term of any lease
(because, for example, it re-assesses the probability of a lessee
extension or termination option being exercised), it adjusts the
carrying amount of the lease liability to reflect the payments to
be made over the revised term, which are discounted at the same
discount rate that applied on lease commencement. An equivalent
adjustment is made to the carrying value of the right-of-use asset,
with the revised carrying amount being amortised over the remaining
(revised) lease term.
2.14. Financing income and expenses
Financing expenses comprise interest payable, finance charges on
shares classified as liabilities, finance leases recognised in the
income statement using the effective interest method and the
unwinding of the discount on provisions.
Financing income includes interest receivable on funds
invested.
Interest income and interest payable are recognised in the
statement of comprehensive income as they accrue, using the
effective interest method.
2.15. Standards issued but not yet effective
At the date of authorisation of these financial statements,
there is expected to be no material impact to the Group or
Company's financial statements from IFRSs, IFRICs or other
standards or interpretations that have been issued but which are
not yet effective.
At the date of authorisation of these financial statements, the
Group has not applied the following new and revised IFRSs that have
been issued but are not yet effective:
-- IAS 1 Presentation of liabilities as current or non-current
-- IAS 1 Disclosure of accounting policies
-- IAS 8 Definition of accounting estimates
The new standards, listed above, are not expected to have a
material impact on the Group or Company in the current or future
reporting periods and on foreseeable future transactions.
3. ALTERNATIVE PERFORMANCE MEASURES
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 and non-recurring exceptional items and their
related tax impacts. Please refer to note 6 for reconciliations to
Alternative Performance Measures ('APMs').
4. SEGMENT REPORTING
FY 21 FY 20
Group GBP'000s GBP'000s
-------------------------------------- ------------------- -------------------
Revenue from contracts with customers
arises from:
United Kingdom 22,375 10,077
USA 12,588 6,305
Rest of World 15,648 13,936
50,611 30,318
-------------------------------------- ------------------- -------------------
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. Management
therefore consider that the Group has one operating segment. As
such, no additional disclosure has been provided under IFRS 8.
The Company is a holding Company operating in the UK with its
assets and liabilities given in the Company Statement of Financial
Position. Other Company information is provided in the other notes
to the accounts.
5. PROFIT BEFORE TAXATION
The following items have been included in arriving at profit
before taxation:
FY 21 FY 20
Group GBP'000s GBP'000s
----------------------------------------------- -------- --------
Depreciation of property, plant and equipment:
- Owned assets 138 147
- Leased assets 532 583
Amortisation of intangible assets 1,378 1,741
Share-based payments 1,152 47
Foreign exchange (gains)/losses (16) 44
Exceptional items 154 730
----------------------------------------------- -------- --------
The exceptional items totaling GBP153,707 in FY 21 include
non-recurring costs associated with the acquisition of Retearn,
Coast Digital and other merger and acquisition activities. The
exceptional items totaling GBP729,573 in FY 20 include
non-recurring costs associated with the pre-initial public offering
('IPO') capital restructuring, IPO on the Alternative Investment
Market ('AIM') and EMI share option scheme (refer to note 24).
During the year the Group obtained the following services from
the Company's auditors as detailed below:
FY 21 FY 20
Group GBP'000s GBP'000s
------------------------------------------------------ -------- --------
Services provided by the Company's auditors:
Audit fees - parent Company and consolidated accounts 22 20
Audit fees - subsidiary companies 67 58
Other services:
Due diligence 36 21
IPO fees - 144
------------------------------------------------------ -------- --------
6. RECONCILIATIONS TO ALTERNATIVE PERFORMANCE MEASURES ("APMS")
As set out in note 3, Elixirr uses adjusted EBITDA and adjusted
earnings per share as alternative performance measures.
The table below sets out the reconciliation of the Group's
adjusted EBITDA and adjusted profit before tax from profit before
tax:
FY 21 FY 20
Group GBP'000s GBP'000s
---------------------------------- -------- --------
Profit before tax 12,166 5,818
---------------------------------- -------- --------
Adjusting items:
Exceptional items (note 5) 154 730
Amortisation of intangible assets 1,378 1,741
Share-based payments 1,152 47
Adjusted profit before tax 14,850 8,336
---------------------------------- -------- --------
Depreciation 670 730
Net finance expense (note 7) 217 660
Adjusted EBITDA 15,737 9,726
---------------------------------- -------- --------
The table below sets out the reconciliation of the Group's
adjusted profit after tax to adjusted profit before tax:
FY 21 FY 20
Group GBP'000s GBP'000s
------------------------------ -------- --------
Adjusted profit before tax 14,850 8,336
------------------------------ -------- --------
Tax charge (2,022) (1,024)
Tax impact of adjusting items (566) (478)
Adjusted profit after tax 12,262 6,834
------------------------------ -------- --------
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 11 for further details.
FY 21 FY 20
Group p p
--------------------- -------------------------- --------------------------
Adjusted EPS 26.64 16.72
Adjusted diluted EPS 24.19 15.32
--------------------- -------------------------- --------------------------
7. NET FINANCE EXPENSE
FY 21 FY 20
Group GBP'000s GBP'000s
----------------------------------------------- -------- --------
Finance income:
On short term deposits and investments 29 20
29 20
----------------------------------------------- -------- --------
Finance costs:
On bank loans and overdrafts at amortised cost - (31)
Preference share dividend - (387)
On lease liability (246) (262)
(246) (680)
----------------------------------------------- -------- --------
Net finance expense (217) (660)
----------------------------------------------- -------- --------
8. Taxation on profit on ordinary activities
Analysis of tax charge:
FY 21 FY 20
Group GBP'000s GBP'000s
---------------------------------------- ---------------------------- ----------------------------
Current tax
In respect of the current year 2,926 1,248
Adjustments in respect of prior periods (398) (75)
---------------------------------------- ---------------------------- ----------------------------
Total current tax 2,528 1,173
---------------------------------------- ---------------------------- ----------------------------
Deferred tax
In respect of the current year (506) (149)
---------------------------------------- ---------------------------- ----------------------------
Total deferred tax (506) (149)
---------------------------------------- ---------------------------- ----------------------------
Income tax expense 2,022 1,024
---------------------------------------- ---------------------------- ----------------------------
Numerical reconciliation of income tax expense:
The tax assessed on the profit on ordinary activities for the
year is lower than the standard rate of corporation tax in the UK
of 19%.
FY 21 FY 20
Group GBP'000s GBP'000s
------------------------------------------------------ ---------------------------- ---------------------------
Profit before taxation 12,166 5,818
------------------------------------------------------ ---------------------------- ---------------------------
Profit on ordinary activities multiplied
by rate of corporation tax in UK of 19% (FY 20: 19%) 2,312 1,105
------------------------------------------------------ ---------------------------- ---------------------------
Effects of:
Exceptional items not deductible 29 139
Expenses not deductible 65 98
Difference in overseas tax rates 125 -
Adjustments in respect of prior periods 51 (75)
R&D tax relief in respect of prior periods (450) -
Deferred tax release re trademarks (110) (138)
Utilisation of foreign losses from prior periods - (105)
------------------------------------------------------ ----------------------------
Total taxation 2,022 1,024
------------------------------------------------------ ---------------------------- ---------------------------
9. Deferred tax
Net deferred tax asset/(liability):
The balances comprise temporary differences attributable to:
Group Company
FY 21 FY 20 FY 21 FY 20
GBP'000s GBP'000s GBP'000s GBP'000s
----------------------------------- -------- -------- -------- --------
Deferred tax liability
Property, plant and equipment (52) (64) - -
Intangible assets (571) (483) - -
Total deferred tax liability (623) (547) - -
----------------------------------- -------- -------- -------- --------
Deferred tax asset
Share-based payments 966 161 - 161
Short-term timing differences 231 - - -
Total deferred tax asset 1,197 161 - 161
----------------------------------- -------- -------- -------- --------
Net deferred tax asset/(liability) 574 (386) - 161
----------------------------------- -------- -------- -------- --------
The deferred tax liability on intangible assets relates to
trademarks and customer relationships and those on property, plant
and equipment relate to accelerated capital allowances.
The deferred tax asset recognised represents the future tax
effect of share-based payment charges in respect of options that
are yet to vest. Deductions in excess of the cumulative share-based
payment charge recognised in the statement of comprehensive income
are recognised in equity.
Movements in deferred tax:
Property, Short-term
plant and Share-based timing
equipment Intangible assets payments differences Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
------------------------ ---------- ------------------ ------------ ------------- --------
At 31 December 2019 (57) (481) - - (538)
Acquisition of business (7) (142) - - (149)
Credited to equity - - 152 - 152
Credited to profit
and loss - 140 9 - 149
At 31 December 2020 (64) (483) 161 - (386)
------------------------ ---------- ------------------ ------------ ------------- --------
Acquisition of business (2) (214) - - (216)
Credited to equity - - 670 - 670
Credited to profit
and loss 14 126 135 231 506
At 31 December 2021 (52) (571) 966 231 574
------------------------ ---------- ------------------ ------------ ------------- --------
10. Ordinary dividends
No interim Ordinary share dividends were paid in relation to FY
20 or FY 21. The Company paid a final Ordinary share dividend in
respect of FY 20 of 2.2 pence per Ordinary share on 13(th) August
2021.
The Directors are proposing a final Ordinary share dividend in
respect of FY 21. Please refer to post balance sheet events note 28
for final Ordinary share dividend proposed.
11. 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:
FY 21 FY 20
---------------------------------------------- ------ -----
Basic and Diluted EPS
Profit attributable to the Ordinary
equity holders of the Group used in
calculating basic and diluted EPS (GBP'000s) 10,144 4,794
---------------------------------------------- ------ -----
Basic earnings per Ordinary share (p) 22.04 11.73
Diluted earnings per Ordinary share
(p) 20.01 10.75
---------------------------------------------- ------ -----
FY 21 FY 20
----------------------------------------------- ---------- ----------
Adjusted Basic and Diluted EPS
Profit attributable to the Ordinary
equity holders of the Group used in
calculating adjusted basic and diluted
EPS (note 6) (GBP'000s) 12,262 6,834
----------------------------------------------- ---------- ----------
Adjusted basic earnings per Ordinary
share (p) 26.64 16.72
Adjusted diluted earnings per Ordinary
share (p) 24.19 15.32
----------------------------------------------- ---------- ----------
FY 21 FY 20
Number Number
----------------------------------------------- ---------- ----------
Weighted average number of shares
Weighted average number of Ordinary
shares used as the denominator in calculating
non-adjusted and adjusted basic EPS 46,031,070 40,871,621
----------------------------------------------- ---------- ----------
Number of dilutive shares 4,655,445 3,746,287
Weighted average number of Ordinary
shares used as the denominator in calculating
non-adjusted and adjusted diluted EPS 50,686,515 44,617,908
----------------------------------------------- ---------- ----------
12. Employees and directors
The monthly average number of persons employed by the Group
during the year, analysed by category, was as follows:
FY 21 FY 20
Group Number Number
----------------------------------- ----------------------------- --------------------------
Directors, management and partners 25 18
Provision of services 180 92
Administration 20 12
225 122
----------------------------------- ----------------------------- --------------------------
The average number of persons employed and staff costs includes
both executive and non-executive directors.
The aggregate payroll costs of these persons were as
follows:
FY 21 FY 20
Group GBP'000s GBP'000s
--------------------------- ------------------------ ---------------------------
Wages and salaries 22,085 12,867
Social security costs 2,748 1,724
Pension costs 453 251
Share-based payment charge 1,152 47
26,438 14,889
--------------------------- ------------------------ ---------------------------
Defined contribution pension schemes are operated by third
parties on behalf of the employees of the Group. The assets of the
schemes are held separately from those of the Group in
independently administered funds. The pension charge represents
contributions payable by the Group to the funds and amount to
GBP453,023 for FY 21 (FY 20: GBP251,467). Contributions amounting
to GBP55,897 (FY 20: GBP36,162) were payable to the fund as at
31(st) December 2021 and are included in creditors.
Key management personnel include the Directors and senior
managers across the Group who together have authority and
responsibility for planning, directing and controlling the
activities of the Group. The total compensation (including
employers' national insurance) paid in respect of key management
personnel for services provided to the Group is as follows:
Group Company
FY 21 FY 20 FY 21 FY 20
GBP'000s GBP'000s GBP'000s GBP'000s
------------------------------------------------------------ -------- -------- -------- --------
Aggregate emoluments including short term employee benefits 4,773 4,095 144 72
4,773 4,095 144 72
------------------------------------------------------------ -------- -------- -------- --------
The share-based payment charge in respect of key management
personnel was GBP162,640 (FY 20: Nil).
Details of the Directors' remuneration, including salary, bonus,
share option awards, pension and other benefits are included in the
tables within the Directors' Report.
13. Goodwill and intangible fixed assets
Customer
Goodwill Trademarks relationships Total
Group GBP'000s GBP'000s GBP'000s GBP'000s
---------------------------------- -------- ---------- -------------- --------
Cost
At 31 December 2019 43,299 7,135 - 50,434
Acquisition of business 2,856 - 748 3,604
At 31 December 2020 46,155 7,135 748 54,038
---------------------------------- -------- ---------- -------------- --------
Acquisition of business (note 14) 5,257 - 1,126 6,383
At 31 December 2021 51,412 7,135 1,874 60,421
---------------------------------- -------- ---------- -------------- --------
Amortisation
At 31 December 2019 - (1,110) - (1,110)
Charge for the period - (1,728) (12) (1,740)
At 31 December 2020 - (2,838) (12) (2,850)
---------------------------------- -------- ---------- -------------- --------
Charge for the year - (1,233) (145) (1,378)
At 31 December 2021 - (4,071) (157) (4,228)
---------------------------------- -------- ---------- -------------- --------
Net book value
At 31 December 2020 46,155 4,297 736 51,188
At 31 December 2021 51,412 3,064 1,717 56,193
---------------------------------- -------- ---------- -------------- --------
The Company has no intangible assets.
Goodwill
Goodwill arising on the acquisition of a business in FY 20
relates to the acquisition of Coast Digital on 28(th) October
2020.
Goodwill arising on the acquisition of a business in FY 21
relates to the acquisition of Retearn and was calculated as the
fair value of initial consideration paid less the fair value of the
net identifiable assets at the date of the acquisition (see note
14).
Goodwill impairment review
The breakdown of goodwill by acquisition is listed below:
FY 21 FY 20
GBP'000s GBP'000s
--------------------------- -------------------- ------------------------------
Elixirr Consulting Limited 43,299 43,299
Coast Digital Limited 2,856 2,856
The Retearn Group Limited 5,257 -
51,412 46,155
--------------------------- -------------------- ------------------------------
Following initial recognition, goodwill is subject to impairment
reviews, at least annually, and measured at fair value less
accumulated impairment losses. Any impairment is recognised
immediately in the consolidated statement of comprehensive income
and is not subsequently reversed.
Key assumptions used in value in use calculation
The key assumptions for the value in use calculation are those
regarding:
-- number of years of cash flows used and budgeted EBITDA growth rate;
-- discount rate; and
-- terminal growth rate.
The carrying values of goodwill for Elixirr Consulting Limited,
Coast Digital and Retearn are reflected in the above table and are
calculated as the fair value of the consideration payable for the
acquisition less the net assets on acquisition. No impairment is
indicated for Elixirr Consulting Limited, Coast Digital or Retearn
using the value in use calculation.
Number of years of cash flows used and budgeted growth rate
The recoverable amount of the CGU is based on a value in use
calculation using specific cash flow projections over a five-year
period and a terminal growth rate thereafter.
The budget for the following financial year forms the basis for
the cash flow projections for a CGU. The cashflow projections for
the four years subsequent to the budget year reflect the Directors'
expectations based on market knowledge, numbers of new engagements
and the pipeline of opportunities.
Discount rate
The Group's post-tax weighted average cost of capital has been
used to calculate a discount rate of 10% for the Group and 17% for
Coast Digital and Retearn. This reflects current market assessments
of the time value of money for the period under review and the
risks specific to the Group and company acquired.
Terminal growth rate
An appropriate terminal growth rate is selected, based on the
Directors' expectations of growth beyond the five-year period. The
terminal growth rate used is 2%.
Sensitivity to changes in assumptions
With regard to the value in use assumptions, the Directors
believe that reasonably possible changes in any of the above key
assumptions would not cause the carrying value of the unit to
exceed its recoverable amount. In forming this view, the Directors
have considered the following:
Elixirr Consulting Coast Digital Limited The Retearn Group
Limited Limited
----------
FY 21 FY 20 FY 21 FY 20 FY 21 FY 20
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
On current cash
flow projections,
the discount
rate would need
to exceed the
% alongside for
there to be any
impairment; and 27.1% 26.0% 33.9% 25.1% 24.6% -
----------------------- --------- --------- -------- -------------------- ----------------- ----------
In the case of
no increase in
future cash flows
above those projected
for the following
year, the discount
rate would have
to exceed the
% alongside for
there to be any
impairment. 23.6% 15.6% 29.9% 22.0% 23.4% -
----------------------- --------- --------- -------- -------------------- ----------------- ----------
Customer relationships
FY 20 additions represent the fair value of customer
relationships from the acquisition of Coast Digital.
FY 21 additions represent the fair value of customer
relationships from the acquisition of Retearn. Refer to note 14 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 are in
relation 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 for Coast Digital and 11
years for Retearn 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.
14. Business combinations
On 9(th) April 2021 the Group acquired 100% of the share capital
and voting interests of Retearn, a UK-based procurement,
transformation and insights consultancy firm. Their services enable
clients to self-fund their transformation and growth aspirations
through savings elsewhere in the business.
The acquisition brings specialists in self-funded
transformation, and allows the Group to meet demand from clients to
find savings to fund strategic initiatives.
The Group acquired Retearn for a total consideration of
approximately GBP7.4 million, consisting of:
-- An initial cash consideration of GBP2.15 million;
-- The issue of 543,939 Ordinary shares of 0.005 pence each in
the capital of the Company ("Ordinary shares") at a price of 396
pence per Ordinary share (being the closing mid-market price of an
Ordinary Share on 8(th) April 2021), equating to an additional
GBP2.15 million;
-- Potential earn-out payments of up to GBP0.73 million in cash
and up to GBP1.96 million in Ordinary shares totalling a maximum of
GBP2.7 million which are contingent on Retearn achieving revenue
growth and EBITDA margin targets in periods up to 30(th) June
2024;
-- An additional surplus cash consideration of GBP0.4 million
based on the working capital of Retearn at completion.
Of the GBP7.4 million consideration, GBP2.89 million was paid in
cash during the year, GBP2.15 million was satisfied through the
issue of new Ordinary shares and GBP0.56 million was satisfied
through shares sold from the EBT. The remaining GBP1.4 million is
recorded within liabilities, of which GBP0.23 million is recorded
within current liabilities and GBP1.17 million in non-current
liabilities (refer to note 21). The remaining earn out
consideration of GBP1.4 million has been estimated by management
based on anticipated future revenue growth and EBITDA and the
impact of discounting is considered to be immaterial.
The Ordinary shares issued pursuant to the acquisition are
subject to the same restrictions as certain other shareholders of
the Company, as described in the Company's IPO Admission Document.
These restrictions consisted of a lock-in arrangement until 8(th)
July 2021 and certain further limitations to the sale of shares
until 8(th) July 2024.
Included within exceptional items is an amount of GBP139,633 for
stamp duty, legal and advisory fees in relation to the acquisition.
Retearn contributed GBP5.89 million to the Group's revenue and
GBP1.22 million to the Group's profit before tax for the period
from the date of acquisition to 31(st) December 2021. If the
acquisition of Retearn had been completed on 1(st) January 2021,
Group revenues for FY 21 would have been GBP52.62 million and Group
profit before tax would have been GBP12.48 million.
In calculating the goodwill arising, the fair value of the net
assets of Retearn have been assessed, and there were no fair value
adjustments deemed necessary, other than for the recognition of
customer relationship intangibles and the related deferred tax.
Customer relationships were assessed to be separately identifiable
assets, recognised at fair value and are included within intangible
assets below. Refer to note 13 for further details.
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 Retearn:
Fair value
GBP'000s
--------------------------------------------------- ----------
Assets
Non-current assets
Intangible assets 1,126
Property, plant and equipment 14
Total non-current assets 1,140
--------------------------------------------------- ----------
Current assets
Trade and other receivables 1,407
Cash and cash equivalents 681
Total current assets 2,088
--------------------------------------------------- ----------
Total assets 3,228
--------------------------------------------------- ----------
Liabilities
Current liabilities
Trade and other payables 754
Corporation tax 155
Loans and borrowings -
Total current liabilities 909
--------------------------------------------------- ----------
Non-current liabilities
Loans and borrowings -
Deferred tax liability 215
Other non-current liabilities -
Total non-current liabilities 215
--------------------------------------------------- ----------
Total liabilities 1,125
--------------------------------------------------- ----------
Fair value of net assets acquired 2,104
Goodwill (note 13) 5,257
--------------------------------------------------- ----------
Fair value of purchase consideration 7,361
Cash and cash equivalents in subsidiaries acquired 681
15. Property, plant and equipment
Leasehold Computer
Right of use asset Furniture and Fittings Improvements Equipment Total
Group GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
---------------------------------- ------------------ ---------------------- ------------- ---------- --------
Cost
At 31 December 2019 5,918 65 499 58 6,540
Acquisition of business - 7 - 25 32
Disposals - - (5) (2) (7)
Additions - - 11 27 38
At 31 December 2020 5,918 72 505 108 6,603
---------------------------------- ------------------ ---------------------- ------------- ---------- --------
Acquisition of business (note 14) - - - 14 14
Disposals - - - (15) (15)
Additions 509 17 - 81 607
At 31 December 2021 6,427 89 505 188 7,209
---------------------------------- ------------------ ---------------------- ------------- ---------- --------
Depreciation
At 31 December 2019 (263) (25) (29) (18) (335)
Disposals - - 5 2 7
Charge for the year (526) (38) (125) (41) (730)
At 31 December 2020 (789) (63) (149) (57) (1,058)
---------------------------------- ------------------ ---------------------- ------------- ---------- --------
Disposals - - - 15 15
Charge for the year (532) (7) (76) (55) (670)
At 31 December 2021 (1,321) (70) (225) (97) (1,713)
---------------------------------- ------------------ ---------------------- ------------- ---------- --------
Net book value
At 31 December 2020 5,129 9 356 51 5,545
At 31 December 2021 5,106 19 280 91 5,496
---------------------------------- ------------------ ---------------------- ------------- ---------- --------
The Company has no property, plant and equipment.
The lease liability in respect of the right-of-use asset was
GBP5,245,110 (FY 20: GBP5,285,741) and relates to property
leases.
16. Investments
Group companies
Company GBP'000s
------------------------------------- ---------------
Cost/carrying value
At 31 December 2019 50,000
Acquisition of business 5,156
At 31 December 2020 55,156
------------------------------------- ---------------
Acquisition of business 7,499
Group companies share-based payments 1,152
At 31 December 2021 63,807
------------------------------------- ---------------
The Group has no investments.
The undertakings in which the Company's interest at the year-end
is 20 percent or more are as follows:
Subsidiary undertakings Country of incorporation Principal activity Registered office FY FY 20
21
------------------------ ------------------------- ------------------------ ------------------------ ----- ------
Elixirr Consulting 12 Helmet Row, London,
Limited England and Wales Consultancy EC1V 3QJ 100% 100%
Elix-IRR Consulting
Services Limited 12 Helmet Row, London,
(indirect)** England and Wales Services to the Group EC1V 3QJ 100% 100%
------------------------ ------------------------- ------------------------ ------------------------ ----- ------
Elix-IRR Consulting
Services (South
Africa) Limited 12 Helmet Row, London,
(indirect) England and Wales Services to the Group EC1V 3QJ 100% 100%
2711 Centerville Road,
Suite 400, Wilmington,
Elixirr LLC (indirect) United States Consultancy Delaware 19808 100% 100%
------------------------ ------------------------- ------------------------ ------------------------ ----- ------
Elixirr Consulting AI 12 Helmet Row, London,
Limited (indirect)* England and Wales Dormant activities EC1V 3QJ - 100%
Elixirr Creative Information technology 12 Helmet Row, London,
Limited (indirect)** England and Wales consultancy EC1V 3QJ 100% 100%
------------------------ ------------------------- ------------------------ ------------------------ ----- ------
Den Creative Limited Information technology 12 Helmet Row, London,
(indirect) England and Wales consultancy EC1V 3QJ 100% 100%
Elixirr Services 12 Helmet Row, London,
Limited (indirect) England and Wales Dormant activities EC1V 3QJ 100% 100%
------------------------ ------------------------- ------------------------ ------------------------ ----- ------
Information technology 12 Helmet Row, London,
Coast Digital Limited England and Wales consultancy EC1V 3QJ 100% 100%
------------------------ ------------------------- ------------------------ ------------------------ ----- ------
The Retearn Group England and Wales Consultancy 12 Helmet Row, London, 100% -
Limited EC1V 3QJ
------------------------ ------------------------- ------------------------ ------------------------ ----- ------
* Elixirr Consulting AI Limited applied to be struck off the
Companies House register on 19(th) October 2021 and was dissolved
on 26(th) January 2021.
** Elix-IRR Consulting Services Limited and Elixirr Creative
Limited applied to be struck off the Companies House register on
23(rd) December 2021 and were dissolved on 22(nd) March 2022.
17. Receivables
Group Company
FY 21 FY 20 FY 21 FY 20
GBP'000s GBP'000s GBP'000s GBP'000s
--------------------------- ------------------------------ ------------------------------ ------------------------------
Non-current
assets
Loans to
shareholders 3,991 7,784 3,991 6,672
Other
receivables 1,535 596 1,104 -
5,526 8,380 5,095 6,672
------------- --------------------------- ------------------------------ ------------------------------ ------------------------------
Current
assets
Trade
receivables 6,432 3,790 - -
Less: - (20) - -
allowance for
doubtful
debts
--------------------------- ------------------------------ ------------------------------ ------------------------------
Trade
receivables
- net 6,432 3,770 - -
Prepayments
and deposits 487 373 18 22
Contract
assets 12 39 - -
Amounts owed
by group
companies - - 1,908 2,975
Other
receivables 33 38 2 3
6,963 4,220 1,928 3,000
------------- --------------------------- ------------------------------ ------------------------------ ------------------------------
The Company was due GBP1,907,873 as at 31(st) December 2021 from
Elixirr Consulting Limited for management charges net of costs
incurred by Elixirr Consulting Limited on behalf of the Company. As
at 31(st) December 2020, the Company was due GBP2,975,118 from
other Group companies including GBP10,000 from Elix-IRR Consulting
Services (South Africa) Limited and GBP2,965,118 from Elixirr
Consulting Limited for preference share dividend, management
charges and an Ordinary share dividend net of costs incurred by
Elixirr Consulting Limited on behalf of the Company for the
year.
Loans to shareholders represent amounts owed to the Company in
FY 21, and amounts owed to the Company and Elixirr Consulting
Limited in FY 20 by shareholders, who are senior employees of the
Group. The loans to shareholders are interest-free and expected to
be repaid beyond one year.
Non-current other receivables include property deposits and
section 455 tax receivable.
Trade receivables are non-interest bearing and receivable under
normal commercial terms. Management considers that the carrying
value of trade and other receivables approximates to their fair
value. The carrying value of non-current other receivables and
loans to shareholders is considered to be a reasonable
approximation of their fair value, but has not been discounted to
present value.
The impairment loss included in administrative expenses in the
statement of comprehensive income for the period in respect of bad
and doubtful trade receivables was nil (FY 20: GBP20,416).
The expected credit loss on trade and other receivables was not
material at the current or prior year ends. For analysis of the
maximum exposure to credit risk, please refer to note 26.
The ageing of trade receivables of the Group as at 31(st)
December 2021:
Gross carrying amount Loss allowance Net carrying amount
Group GBP'000s GBP'000s GBP'000s
-------------------- ---------------------- -------------------------- --------------------------
< 31 days 4,599 - 4,599
31-60 days 1,299 - 1,299
61-90 days 444 - 444
91-120 days 90 - 90
121+ days - - -
At 31 December 2021 6,432 - 6,432
-------------------- ---------------------- -------------------------- --------------------------
The ageing of trade receivables of the Group as at 31(st)
December 2020:
Gross carrying amount Loss allowance Net carrying amount
Group GBP'000s GBP'000s GBP'000s
-------------------- ---------------------- -------------------------- --------------------------
< 31 days 2,201 - 2,201
31-60 days 1,318 - 1,318
61-90 days 225 - 225
91-120 days 26 - 26
121+ days 20 (20) -
At 31 December 2020 3,790 (20) 3,770
-------------------- ---------------------- -------------------------- --------------------------
18. Cash and cash equivalents
Group Company
FY 21 FY 20 FY 21 FY 20
GBP'000s GBP'000s GBP'000s GBP'000s
----------- -------------------------- ------------------------ ------------------------- ------------------------
Cash at
bank and
in hand 31,795 17,503 13,576 10,678
31,795 17,503 13,576 10,678
----------- -------------------------- ------------------------ ------------------------- ------------------------
Cash at bank includes GBP4,003,457 (FY 20: GBP6,005,550) on
95-day notice deposit and GBP4,003,092 (FY 20: GBP4,002,055) on 50%
instant and 50% 32-day notice deposit which earned interest at an
average of 0.45% and 0.25% respectively during the year.
19. Trade and other payables
Group Company
FY 21 FY 20 FY 21 FY 20
GBP'000s GBP'000s GBP'000s GBP'000s
------------ ----------------------------- -------------------------- ----------------------------- ----------------------------
Trade
payables 825 526 32 58
Other taxes
and social
security
costs 1,138 1,577 5 6
Accruals 8,081 4,962 97 33
Contract
liabilities 2,007 935 - -
Other
payables 3 106 - -
Amounts owed
to group
companies - - - 306
12,055 8,107 134 403
------------ ----------------------------- -------------------------- ----------------------------- ----------------------------
As at 31(st) December 2020, the Company owed GBP306,492 to other
Group companies including GBP1,564 owed to Elixirr LLC and
GBP304,928 to Coast Digital for a portion of the cash consideration
on acquisition paid by Coast Digital to selling shareholders.
The fair value of trade and other payables approximates to book
value at the year 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.
20. Loans and borrowings
Group Company
FY 21 FY 20 FY 21 FY 20
GBP'000s GBP'000s GBP'000s GBP'000s
---------------------------- -------------------------- --------------------------- --------------------------
Current
liabilities
Right of use
lease
liability 485 448 - -
485 448 - -
------------ ---------------------------- -------------------------- --------------------------- --------------------------
Non-current
liabilities
Right of use
lease
liability 4,760 4,837 - -
4,760 4,837 - -
------------ ---------------------------- -------------------------- --------------------------- --------------------------
The movement in the right of use lease liability was as
follows:
Right of use lease liability
Group GBP'000s
------------------------------- ----------------------------
At 31 December 2019 5,908
Interest payable 262
Repayment of lease liabilities (885)
At 31 December 2020 5,285
------------------------------- ----------------------------
Additions 407
Interest payable 246
Repayment of lease liabilities (694)
At 31 December 2021 5,245
------------------------------- ----------------------------
The additions in FY 21 relate to a new property lease entered
into by Coast Digital.
As disclosed in the summary of significant accounting policies,
the discount rate used in determining the present value of the
lease liability was 5%.
Maturity analysis of contracted undiscounted cashflows of the
right of use lease liability are as follows:
FY 21 FY 20
GBP'000s GBP'000s
------------------------------------------------------------ ---------------------------- --------------------------
Lease liability less than one year 727 694
Lease liability greater than one year and less than five
years 3,031 2,775
Lease liability greater than five years 2,632 3,122
---------------------------- --------------------------
Total liability 6,390 6,591
Finance charges included above (1,145) (1,306)
5,245 5,285
------------------------------------------------------------ ---------------------------- --------------------------
21. Other creditors and other non-current liabilities
Group Company
FY 21 FY 20 FY 21 FY 20
GBP'000s GBP'000s GBP'000s GBP'000s
-------------- ---------------------------- -------------------------- --------------------------- --------------------------
Other
creditors
Contingent
consideration 436 612 436 612
436 612 436 612
-------------- ---------------------------- -------------------------- --------------------------- --------------------------
Other
non-current
liabilities
Dilapidations 250 195 - -
Contingent
consideration 1,370 406 1,370 406
1,620 601 1,370 406
-------------- ---------------------------- -------------------------- --------------------------- --------------------------
Other creditors and other non-current liabilities include
earn-out payments which are contingent on performance and arose
from the acquisition of Retearn and Coast Digital.
Other non-current liability payments fall due beyond 12 months
from the reporting date.
22. Share capital, share premium and merger relief reserve
FY 21
--------------------------------------------------------------------------------------------------------------
Issued shares Par value Merger relief Share premium
reserve
Group and Number GBP GBP'000s GBP'000s
Company
----------- -------------------------- ------------------------- --------------------------- --------------------------
GBP0.00005
Ordinary
shares 46,186,481 2,309 46,870 24,952
GBP1
Redeemable
Preference
shares 50,001 50,001 - -
46,236,482 52,310 46,870 24,952
----------- -------------------------- ------------------------- --------------------------- --------------------------
FY 20
------------------------------------------------------------------------------------------------------------
Issued shares Par value Merger relief Share premium
reserve
Group and Number GBP GBP'000s GBP'000s
Company
----------- ------------------------- ------------------------- -------------------------- --------------------------
GBP0.00005
Ordinary
shares 45,642,542 2,282 46,870 19,729
GBP1
Redeemable
Preference
shares 50,001 50,001 - -
45,692,543 52,283 46,870 19,729
----------- ------------------------- ------------------------- -------------------------- --------------------------
The total number of voting rights in the Company at 31(st)
December 2021 was 46,186,481 (FY 20: 45,642,542).
In FY 20 there was some restructuring of share classes.
Different classes of shares (Class A Ordinary shares, Class B
Ordinary shares, Class B Founder Ordinary shares, Class C Ordinary
shares, Deferred shares and Non-redeemable Preference shares) were
in existence during FY 20, but these were re-designated or bought
back and cancelled during FY 20 and there were none in issue at
31(st) December 2020 or 31(st) December 2021. Please refer to FY 20
annual financial statements for further information regarding the
restructuring of these share classes.
Initial Public Offering and Listing
In FY 20 the Admission Document for the Company's IPO and
admission to AIM market was published on 6(th) July 2020. The
Company placed 9,216,590 new Ordinary shares and selling
shareholders placed 2,304,148 existing shares at 217 pence per
share. The Company received net proceeds of approximately GBP18.2m
(after deduction of estimated commissions, fees and expenses
payable by the Company).
The Company's Ordinary shares were admitted to trading on the
AIM market of the London Stock Exchange on 9(th) July 2020, under
the ticker "ELIX" and the ISIN GB00BLPHTX84.
Immediately following Admission, the Company's issued share
capital (including the additional Ordinary shares issued pursuant
to the Placing) were as follows:
-- GBP2,260, comprising 45,197,790 Ordinary shares of GBP0.00005
each (all of which is fully paid or credited as fully paid);
-- GBP50,001, comprising 50,001 Redeemable preference shares of GBP1.00 each.
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.
Movements in Ordinary shares:
Merger relief
Issued shares Par value reserve Share premium
Group and Company Number GBP GBP'000s GBP'000s
------------------------- ---------------------------- --------------------------- --------------------------- ---------------------------
At 31 December 2019 - - - -
Redesignation/conversion 35,981,200 1,799 46,870 23
IPO share issue, net
of transaction costs 9,216,590 461 - 18,583
Share issue as
consideration
for a business
combination 444,752 22 - 1,123
At 31 December 2020 45,642,542 2,282 46,870 19,729
------------------------- ---------------------------- --------------------------- --------------------------- ---------------------------
Share issue as
consideration
for a business
combination
(note 14) 543,939 27 - 2,154
Sale of Ordinary shares
from the EBT - - - 3,069
At 31 December 2021 46,186,481 2,309 46,870 24,952
------------------------- ---------------------------- --------------------------- --------------------------- ---------------------------
Redeemable Preference shares
On 22(nd) June 2020, 50,001 Redeemable Preference shares with a
nominal value of GBP1.00 each were issued. There are no voting
rights attached to the Redeemable Preference shares. The Redeemable
Preference shares were initially classified as a financial
liability at date of issue. The shares were reclassified from loans
and borrowings to share capital when the Company bought back the
shares in FY 20 and are held in the EBT. 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.
Movements in Redeemable Preference shares:
Issued shares Par value Merger relief reserve Share premium
Group and Number GBP GBP'000s GBP'000s
Company
At 31 - - - -
December 2019
------------- --------------------------- -------------------------- -------------------------- -------------------------
Reclassified
from loans
and
borrowings 50,001 50,001 - -
At 31
December
2020 and 31
December
2021 50,001 50,001 - -
------------- --------------------------- -------------------------- -------------------------- -------------------------
23. EBT share reserve
The Employee Benefit Trust ('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 on the
Company and 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.
The below table sets out the number of EBT shares held and their
weighted average cost:
FY 21
----------------------------------------------------------------------------
Weighted average
Shares held in EBT cost Total cost
Group and Company Number GBP GBP'000s
----------------------------- ------------------- -------------------------- ---------------------------
Ordinary shares 547,225 3.92 2,143
Redeemable Preference shares 50,001 1.01 50
597,226 2,193
----------------------------- ------------------- -------------------------- ---------------------------
FY 20
----------------------------------------------------------------------------
Weighted average
Shares held in EBT cost Total cost
Group and Company Number GBP GBP'000s
----------------------------- ------------------- -------------------------- ---------------------------
Ordinary shares 704,667 1.70 1,198
Redeemable Preference shares 50,001 1.01 50
754,668 1,248
----------------------------- ------------------- -------------------------- ---------------------------
24. Share-based payments
Share Option Plans
During FY 21, a total of 7,700,430 (FY 20: 6,519,000) share
options were granted to employees and senior management.
Details of share option awards made are as follows:
Number of share options Weighted average exercise price
----------------------------------------- --------------------------- -------------------------------
Outstanding at the beginning of the year 5,836,200 0.71
Granted during the year 7,700,430 4.52
Forfeited during the year (2,197,574) 2.88
Outstanding at the year end 11,339,056 2.87
----------------------------------------- --------------------------- -------------------------------
Exercisable at the year end - -
----------------------------------------- --------------------------- -------------------------------
No share options were exercisable in the year.
The options outstanding as at 31(st) December 2021 had a
weighted average remaining contractual life of 4 years (FY 20: 4
years) and a weighted average exercise price of GBP2.87 (FY 20:
GBP0.71) per share. The weighted average of the estimated fair
values of the options outstanding as at 31(st) December 2021 is
GBP2.95 (FY 20: GBP2.45) 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:
FY 21 FY 20
------------------------------------------------- ----------------------------- ----------------------------
Weighted average share price at grant date (GBP) 5.07 0.68
Weighted average exercise price (GBP) 4.52 0.68
Volatility (%) 21.69% 15.00%
Weighted average vesting period (years) 5 5
Risk free rate (%) 0.34% 0.05%
Expected dividend yield (%) 1.14% 1.50%
------------------------------------------------- ----------------------------- ----------------------------
Reasonable changes in the above inputs do not have a material
impact on the share-based payment charge in FY 21.
On 28(th) October 2020, in conjunction with the acquisition of
Coast Digital, share options were issued to certain management of
Coast Digital. These options are employment-linked and vesting is
contingent on Coast Digital achieving EBITDA targets in FY 21, FY
22 and FY 23. The options have a fair value of GBP1.1 million and
was determined using the share price at the date of grant of
GBP2.50. The Coast Digital options outstanding at 31(st) December
2021 had a weighted average remaining contractual life of 2.5 years
and a weighted average exercise price of GBP0.00005 per share.
On 12(th) April 2021, in conjunction with the acquisition of
Retearn (refer to note 14), share options were issued to selling
shareholders. These options are employment-linked and vesting is
contingent on Retearn and individual selling shareholders achieving
revenue growth targets in FY 21, FY 22, FY 23 and FY 24. The
options have a fair value of GBP1.3 million and were issued at an
exercise price of GBP0.00005 per share. The fair value of the
options was determined using the share price at the date of grant
of GBP4.70. The options outstanding at 31(st) December 2021 had a
weighted average remaining contractual life of 2.5 years and a
weighted average exercise price of GBP0.00005 per share.
The Coast Digital and Retearn share options referred to above
are excluded from the reconciliation set out above of the number of
options outstanding. The 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.
Employee Share Purchase Plan ('ESPP')
On 16(th) June 2021, an ESPP was implemented for FY 21. Under
the scheme all of the employees of the Group (excluding Partners)
are eligible to contribute a percentage of their gross salary (5% -
20%) to purchase shares in the Company and the Company awarded the
employees with matching shares on the basis of one matching share
for every one employee share held on 1(st) January 2022. The
matching shares vest equally over a 5 year period with the first
share vesting on 31(st) January 2023.
25. Cash flow information
Cash generated from operations:
Group Company
FY 21 FY 20 FY 21 FY 20
GBP'000s GBP'000s GBP'000s GBP'000s
-------------------- ----------------------------- ------------------------ ----------------------------- -------------------------
Profit before
taxation 12,166 5,818 4,051 9,450
Adjustments for:
Depreciation and
amortisation 2,048 2,471 - -
Net finance
expense/(income) 217 660 (20) 8
Share-based payments 1,152 47 - 47
(Increase)/decrease
in trade and other
receivables (1,336) 1,558 531 (2,474)
Increase/(decrease)
in trade and other
payables 2,625 2,712 (295) 96
Foreign exchange (16) 44 (2) -
16,856 13,309 4,265 7,127
-------------------- ----------------------------- ------------------------ ----------------------------- -------------------------
Reconciliation of liabilities from financing activities:
Non-redeemable
Preference
Borrowings Shares Leases Total
Group GBP'000s GBP'000s GBP'000s GBP'000s
------------------------- ------------ --------------------------- ------------ --------
At 31 December 2019 1,625 6,631 5,908 14,164
Cash flows (1,656) (518) (885) (3,059)
Other changes 31 (6,113) 262 (5,820)
Balance 31 December 2020 - - 5,285 5,285
------------------------- ------------ --------------------------- ------------ --------
Cash flows - - (694) (694)
Other changes - - 654 654
Balance 31 December 2021 - - 5,245 5,245
------------------------- ------------ --------------------------- ------------ --------
Borrowings Non-redeemable Total
Preference Shares
Company GBP'000s GBP'000s GBP'000s
----------------------------- ------------------ --------------------------- ---------------------------
At 31 December 2019 - 6,631 6,631
Cash flows (20) (518) (538)
Other changes 20 (6,113) (6,093)
Balance 31 December 2020 and - - -
31 December 2021
----------------------------- ------------------ --------------------------- ---------------------------
Other changes in FY 21 include non-cash movements, including
accrued interest expense and an additional property lease. Other
changes in FY 20 include non-cash movements, including accrued
interest expense and Non-redeemable Preference Shares treated as a
financial liability.
26. Financial instruments and financial risk management
Carrying amount of financial instruments
The Group's and Company's financial instruments may be analysed
as follows:
Group Company
FY 21 FY 20 FY 21 FY 20
GBP'000s GBP'000s GBP'000s GBP'000s
Financial
assets
Financial
assets that
are debt
instruments
measured at
amortised
cost 43,795 29,726 20,579 20,325
Financial
liabilities
Financial
liabilities
measured at
amortised
cost 16,162 11,815 129 398
Financial
liabilities
at fair
value
through
profit and
loss 1,806 406 1,806 406
------------ --------------------------- -------------------------- --------------------------- --------------------------
Financial assets measured at amortised cost comprise cash, trade
receivables and other receivables.
Financial liabilities measured at amortised cost comprise loans
and borrowings, trade payables and other payables.
Financial liabilities at fair value through profit and loss
comprise contingent consideration arising on acquisitions.
The Group is exposed to a variety of financial risks through its
use of financial instruments which result from its operating
activities. All of the Group's financial instruments are classified
as loans and receivables.
The Group does not actively engage in the trading of financial
assets for speculative purposes. The most significant financial
risks to which the Group is exposed are described below:
Credit risk
Generally the Group's and Company's maximum exposure to credit
risk is limited to the carrying amount of the financial assets
recognised at the reporting date, as summarised below:
Group Company
FY 21 FY 20 FY 21 FY 20
GBP'000s GBP'000s GBP'000s GBP'000s
Trade
receivables 6,432 3,770 - -
Contract
assets 12 39 - -
Other
receivables 5,557 8,414 7,001 9,647
Cash and
cash
equivalents 31,795 17,503 13,576 10,678
------------ ---------------------------- --------------------------- --------------------------- --------------------------
43,796 29,726 20,577 20,325
------------ ---------------------------- --------------------------- --------------------------- --------------------------
Credit risk is the risk of financial risk to the Group if a
counter party to a financial instrument fails to meet its
contractual obligation. The nature of the Group's debtor balances,
the time taken for payment by clients and the associated credit
risk are dependent on the type of engagement.
The Group's trade and other receivables are actively monitored.
The ageing profit of trade receivables is monitored regularly by
management. Any debtors over 30 days are reviewed by the entire
management group every week and explanations sought for any
balances that have not been recovered.
Unbilled revenue is recognised by the Group only when all
conditions for revenue recognition have been met in line with the
Group's accounting policy.
Other receivables include amounts owed by senior employees for
the acquisition of shares in the Company. The EBT holds legal title
to these shares which will not be released to the beneficial owner
prior to the repayment of the loan.
The Directors are of the opinion that there is no material
credit risk at Group level.
Liquidity risk
Liquidity risk is the risk that the Group will encounter
difficulty in meeting its obligations associated with its financial
liabilities. The Group seeks to manage financial risks to ensure
sufficient liquidity is available to meet foreseeable needs and to
invest cash assets safely and profitably.
The table below analyses the Group's financial liabilities into
relevant maturity groupings based on their contractual maturities.
The amounts disclosed in the tables are the contractual
undiscounted cash flows. Balances due within 12 months equal their
carrying balances, because the impact of discounting is not
significant.
Contractual maturities of financial liabilities of the Group as
at 31(st) December 2021:
Less Between Between Carrying
than 6-12 1 and 2 2 and 5 Over Total contractual amount of
6 months months years years 5 years cashflows liabilities
------------------ ----------- ------- -------- -------- -------- ----------------- ------------
Trade payables 825 - - - - 825 825
Lease liabilities 347 380 761 2,270 2,632 6,390 5,245
Financial
liabilities
at fair value
through profit
and loss 436 - 670 700 - 1,806 1,806
1,608 380 1,431 2,970 2,632 9,021 7,876
------------------ ----------- ------- -------- -------- -------- ----------------- ------------
Contractual maturities of financial liabilities of the Group as
at 31(st) December 2020:
Less Between Between Carrying
than 6-12 1 and 2 2 and 5 Over Total contractual amount of
6 months months years years 5 years cashflows liabilities
------------------ --------- ------- -------- -------- -------- ----------------- ------------
Trade payables 526 - - - - 526 526
Lease liabilities 347 347 1,388 3,469 1,735 7,286 5,286
Financial
liabilities
at fair value
through profit
and loss - 203 203 - - 406 406
872 550 1,591 3,469 1,735 8,218 6,218
------------------ --------- ------- -------- -------- -------- ----------------- ------------
Interest rate risk
As at 31(st) December 2021 the Group has no interest rate risk
exposure as following the IPO, on 15(th) July 2020, the Group's
bank loan was repaid in full from the proceeds of the Placing.
The Group has used a sensitivity analysis technique that
measured the estimated change to the statement of comprehensive
income and equity of a 1% increase or decrease in interest rates
for each class of financial instrument, with other variables
remaining unchanged. The sensitivity analysis is based on the
assumptions that changes in market interest rates affect the
interest of variable interest financial instruments. Under these
assumptions, a 1% increase or decrease in market interest rate for
all financial liabilities held by the Group would have an
immaterial impact on the profit before tax and equity of the
Group.
Foreign currency risk
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily US
Dollars. The Group monitors exchange rate movements closely and
ensures adequate funds are maintained in appropriate currencies to
meet known liabilities.
The Group's exposure to foreign currency risk at the end of the
reporting period, expressed in Currency Units, was as follows:
FY 21 FY 20
USD '000s EUR '000s ZAR '000s USD '000s EUR '000s ZAR '000s
------------------------ --------- --------- --------- --------- --------- ---------
Cash & cash equivalents 11,900 2 1,739 2,630 175 -
Trade receivables 1,450 101 - - - -
Trade payables (5) (5) (63) - - -
------------------------ --------- --------- --------- --------- --------- ---------
The Group is exposed to foreign currency risk on the
relationship between the functional currencies of the Group
companies and the other currencies in which the Group's material
assets and liabilities are denominated. The table below summaries
the effect on profit and loss had the functional currencies of the
Group weakened or strengthened against these other currencies, with
all other variables held constant.
FY 21 FY 20
GBP'000s GBP'000s
----------------------------------------- ---------------------------- ---------------------
10% weakening of functional currency 925 208
10% strengthening of functional currency (925) (208)
----------------------------------------- ---------------------------- ---------------------
The impact of a change of 10% has been selected as this has been
considered reasonable given the current level of exchange rates and
the volatility observed both on a historical basis and market
expectations for future movements.
Fair value of financial instruments
The fair values of all financial assets and liabilities
approximates to their carrying value.
Capital risk management
The Group defines capital as being share capital plus all
reserves, which amounted to GBP86.0 million as at 31(st) December
2021 (FY 20: GBP70.7 million)
The Group's objectives when managing capital are to:
-- Safeguard their ability to continue as a going concern, so
that they can continue to provide returns for shareholders and
benefits for other stakeholders; and
-- Maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group
may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce
debt.
27. Related party disclosures
Related parties, following the definitions in IAS 24, are the
Group's subsidiary companies, members of the Board, key management
personnel and their families, and shareholders who have control or
significant influence over the Group. Refer to note 12 for key
management personnel compensation disclosures. The Directors'
Report contains details of Board remuneration.
On 27(th) April 2021 a total of 604,524 options over Ordinary
shares were granted to Directors and PDMRs of the Company at an
exercise price of 545 pence. The options have a five year vesting
period.
On 12(th) May 2021 certain Directors and PDMRs of the Company
sold 457,515 shares at a price of 500 pence in order to satisfy
strong institutional demand. Each of the selling shareholders
applied the proceeds to satisfy in part or in full the loans
provided to them by the Group to acquire Ordinary shares prior to
the Company's IPO.
On 13(th) October 2021 certain Directors and PDMRs of the
Company sold 553,643 shares at a price of 630 pence in order to
satisfy strong institutional demand. Each of the selling
shareholders with a loan balance outstanding to the Company applied
the proceeds to satisfy in part or in full the loans provided to
them by the Company to acquire Ordinary shares prior to the
Company's IPO.
In FY 20, the Group offset GBP949,771 of amounts lent to
shareholders to settle amounts owed to the Group by Elixirr
Partners LLP. There was an outstanding liability with Elixirr
Partners LLP of GBP105,074 included in current liabilities as at
31(st) December 2020. The outstanding liability was settled with
Elixirr Partners LLP in FY 21.
Gavin Patterson, independent non-executive chairman of the
Board, provided consulting services to the Company totalling
GBP25,000 (FY 20: GBP45,021) in FY 21.
In FY 20, travel and marketing costs include the hire of an
aeroplane from Aviation E LLP, Stephen Newton a member of the Board
is a member of Aviation E LLP. The total expense incurred was
GBP19,845 with GBP6,696 outstanding as at 31(st) December 2020. In
FY 21 the GBP6,696 owing to Aviation E LLP was settled.
In FY 20 interest-free loans were made to key management
personnel to acquire shares in the Company and to settle their
liability to a related party, Elixirr Partners LLP. The loans were
repaid along with repayment of the opening balance during FY 21. A
reconciliation of the loans to key management personnel is shown
below:
GBP'000s
-------------------- ----------------------------
At 31 December 2019 170
Loans advanced 6,230
Loan repayments (2,544)
At 31 December 2020 3,856
-------------------- ----------------------------
Loan repayments (3,856)
At 31 December 2021 -
-------------------- ----------------------------
Company related party transactions are disclosed in notes 17 and
19.
28. Events after the reporting date
On 17(th) March 2022, the Group acquired 100% of the share
capital and voting interests of iOLAP Inc. ('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 Group acquired iOLAP for a maximum consideration payable of
US$40.0 million (GBP30.4 million). The consideration consists
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 31st
December 2024. This consideration will be satisfied at Elixirr's
option to use either one or a combination of both approaches set
out below in relation to the initial consideration.
Of the US$25.2 million (GBP19.2 million) initial cash
consideration, US$14.0 million (GBP10.6 million) was paid to the
selling shareholders free of restrictions. The remaining balance of
US$11.2 million (GBP8.5 million) is 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 by
29(th) April 2022. The Ordinary shares will be purchased, 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. 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 Ordinary shares purchased pursuant to the acquisition will
be 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.
As part of the transaction, iOLAP's largest shareholder has
agreed to sign up to a bonus and commitment agreement through which
he will share a portion of the value of his consideration to a
further six senior leaders in the firm. The sellers have also
agreed to three-year restrictive covenant agreements.
If the acquisition of iOLAP had been completed on 1 January
2021, Group revenues for the period would have been GBP66.8 million
and Group profit before tax would have been GBP14.9 million.
Disclosure of the amounts recognised as of the acquisition date
for each major class of assets acquired and liabilities assumed,
fair value adjustments and goodwill on the acquisition of iOLAP has
not be made given the limited amount of time available between the
acquisition date and the date this annual report was authorised for
issue.
On 3(rd) 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 Directors are proposing a final Ordinary dividend in respect
of the financial year ended 31(st) December 2021 of 4.1 pence per
share.
As at 1(st) April 2022, in accordance with the Financial Conduct
Authority's Disclosure and Transparency Rules, 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 FCA's Disclosure and Transparency Rules.
29. Reserves
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.
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 employee benefit trust ("EBT").
Merger relief reserve
This 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.
30. Ultimate controlling party
There is no ultimate controlling party as at 31(st) December
2021.
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END
FR IJMPTMTAMBMT
(END) Dow Jones Newswires
April 04, 2022 02:01 ET (06:01 GMT)
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