TIDMELIX
RNS Number : 0352V
Elixirr International PLC
03 April 2023
ELIXIRR INTERNATIONAL PLC
("Elixirr", the "Company" or the "Group")
Final Results for the Year Ended 31 December 2022
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 2022.
Financial Highlights
-- Revenue increased by 40% to GBP70.7m (FY 21: GBP50.6 m)
-- Adjusted EBITDA* increased by 30% to GBP20.5m (FY 21: GBP15.7 m)
-- Adjusted EBITDA* margin of 29% (FY 21: 31%)
-- Profit before tax increased by 29% to GBP15.7m (FY 21: GBP12.2 m)
-- Adjusted diluted earnings per share* increased by 26% to 30.5p (FY 21: 24.2p)
-- Net cash position of GBP20.4m (FY 21: GBP31.8 m)
-- Final dividend increased by 163% to 10.8p per Ordinary share (FY 21: 4.1p)
* Adjusted EBITDA excludes the following items from operating
profit: non-cash depreciation and amortisation charges, share-based
payments and non-recurring M&A-related items. Adjusted EPS
excludes the following items from profit after tax: amortisation
charges, share-based payments, non-recurring M&A-related items,
M&A-related non-cash finance costs and their related tax
impacts.
Current Trading & Outlook
-- FY 22 momentum has accelerated during Q1 2023, with three
record revenue months, absolute revenue growth of 52% and
underlying organic revenue growth of 19%
-- Strong pipeline for the remainder of FY 23
-- FY 23 expectations upgraded to GBP85m-GBP90m revenue at an Adjusted EBITDA margin of 28-30%
Operating Highlights
-- Continued progress executing our four-pillar growth strategy, including:
1. Stretching our current Partner team - we achieved underlying
organic revenue growth of 18%, and increased revenue per Partner by
13% to GBP3.57m in FY 22 (FY 21: GBP3.15m).
2. Promoting Partners from within the firm - we have promoted
two experienced Principals to Partner in January 2023. A further
two Principals will join the Partner team in October 2023, with our
first promotion to Partner in one of our acquired businesses
effective January 2024.
3. Hiring new Partners - we made two successful Partner hires in
2022, who both brought new clients to Elixirr and are now working
with clients that have the potential to become gold clients.
4. Inorganic growth - we completed the acquisition of iOLAP in
March 2022, our biggest acquisition to date, furthering our US
growth and bringing key data expertise that we are cross-selling to
our clients across the Group. We remain focused on inorganic growth
with a strong pipeline and dedicated M&A team. We are rigorous
with our screening and diligence processes to ensure that we only
complete high-quality transactions that fit the Company's growth
strategy.
-- Multiple accolades received including being listed as one of
Consulting Magazine's 'Fastest Growing Firms 2022', being selected
for the 2022 Global Outsourcing 100(R), the annual list of the
world's best outsourcing service providers and advisors, and two
team members recognised as "Rising Stars of the Profession".
-- Brand increasingly recognised in the consulting industry. Our
'Con-sulting' campaign was nominated for 'Best B2B Brand Campaign'
at the 2022 Drum Awards. The Company saw an increase of over 100%
in marketing leads resulting in a record year of revenue generated
from this source.
Commenting on the results, Founder & CEO, Stephen Newton
said:
"2022 proved Elixirr's consistent ability to perform from both a
revenue and profit perspective. This year we continued to leverage,
and further invest in, our four-pillar growth strategy, enabling us
to deliver exceptional growth despite challenging market
conditions. Our equity incentive model is reinforcing an
entrepreneurial culture of exceptional quality as we scale and
this, combined with the breadth of our capabilities, will continue
to set us apart from our industry in FY 23 and beyond."
For further Information please contact:
Elixirr International plc
Public and Investor Relations contact: investor-relations@elixirr.com
Caroline Pitt
Stephen Newton, CEO
Graham Busby, CFO
finnCap Ltd (Nominated Adviser & Sole
Broker)
Christopher Raggett, Charlie Beeson
(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 2022 Annual Results, a year
which demonstrated another robust period of growth for the Group.
Despite market volatility in the last twelve months, under a strong
and experienced leadership team, the Group has continued to
deliver.
Elixirr's diverse offering made it well-placed to adapt to the
changing needs of its clients, and as a result, combined with its
growing industry reputation, the business performed well in both
attracting new business alongside scaling its existing client-base.
This continues to position the Group strategically as a client-led
consultancy that can address a broad spectrum of key boardroom
challenges.
Whilst continuing to expand in all its key geographies, the
Group achieved its goal of increasing its US footprint
substantially with the acquisition of data, technology and
analytics consultancy, iOLAP, in March 2022. This significant
acquisition has proven to be highly complementary to Elixirr's core
consulting offering and provides the Group with additional services
where there is high client demand.
STRATEGY
The Board continues to be fully supportive of the Group's
four-pillar growth strategy which has proven its value in FY 22. By
continuing to make strategic investments in new people and
acquisitions, in parallel with organic growth, the overall success
of this strategy has been well demonstrated throughout the
year.
Through a well-structured Partner incentivisation model, the
selling of additional services across the wider client base has
been firmly established throughout the Group, utilising services
from Elixirr Digital, The Retearn Group Limited ('Retearn') and the
addition of iOLAP during the year. Clients have benefited from our
ability to support them from strategy through to execution which
has enabled scalability both in size and duration of projects for
the business - and this is something we expect to increase with
further inorganic growth.
Going forward, we see clear pathways to further success in each
of the four growth pillars with increased Partner targets, a
pipeline of talent of both new Partner hires and promotions, as
well as the continued pursuit of high-quality acquisition targets
from our dedicated M&A team.
DIVID
Given the strong performance of the business in FY 22 and the
year-end cash position, the Board is pleased to recommend a final
dividend for FY 22 of 10.8p per share. This will be recommended to
shareholders at the AGM in June 2023. The FY 22 final dividend
represents an increase of 163% on the FY 21 final dividend with a
total cash cost of GBP5.0 million, which will be met from the
Group's existing cash reserves.
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
The Board is optimistic about the outlook for FY 23, given the
Group's strong foundations and a variety of opportunities for
further growth. The performance of the business to date, combined
with the support of our shareholders, clients and people position
Elixirr well to continue on its growth trajectory.
Gavin Patterson
Non-Executive Chairman
31 March 2023
CEO's Report
OVERVIEW
Our performance in FY 22 has again displayed Elixirr's ability
to consistently deliver strong revenue and profitability growth -
despite challenging market conditions. I'd like to thank our teams
across the globe for their contribution to these results and their
continued dedication in providing the excellent service that our
firm has become renowned for.
The consulting industry grew at 8% CAGR from 2017 to 2021
(source: Gartner). We have proven our ability to gain market share
since listing, with revenue growing at a CAGR of 42% from 2019 to
2022, an acceleration of our long term CAGR of 32% since 2012. This
can be attributed to the broadening of our offering and ability to
address a widening spectrum of key boardroom challenges, whilst
retaining the bespoke, high-quality approach we have always had
with clients since starting the firm in 2009.
In 2022, Elixirr's strong performance in both organic and
inorganic growth was the result of progress in all the pillars of
our four-pillar growth strategy. This has enabled us to further our
goal of building a business that is resilient to turbulent market
conditions, while providing our clients with exceptional service
that evolves with their changing demands.
FY 22 PERFORMANCE
In FY 22, the business performed strongly, resulting in record
revenue of GBP70.7 million - a 40% increase from the prior year
(GBP50.6 million). We continued to focus both on bringing in new
clients and building on our existing relationships, increasing
client retention year-on-year. We have seen an increase in the
number of 'gold' accounts - accounts with annual revenue of over
GBP1 million - and, through focus on building out our services to
these clients, have also seen an increase in the number of GBP2+
million revenue accounts.
Trading during the year was strong, with Elixirr's 20+ services
making it well placed to support clients with a range of
challenges, including business transformation and cost-reduction
which have become increasingly critical to clients as the
macro-economic environment has worsened.
The revenue bridge above shows the elements of the growth in
revenue from GBP50.6 million in FY 21 to GBP70.7 million in FY
22.
The acquisition of iOLAP in March 2022 added GBP15.1 million to
revenue. In addition, management made the decision to exit lower
margin revenue in Retearn and Elixirr Digital to sustain the
quality of the Group's earnings (-GBP2.0 million) and two clients
were subject to take overs which impacted progress in those
accounts (-GBP1.9 million).
Underlying organic revenue growth was 18% year on year (net
+GBP8.9 million revenue), with GBP10.0 million growth from existing
clients and GBP10.5 million growth from new clients, partially
offset by an abnormally high value of end of life projects
(-GBP11.6 million). This included the impact of one major client
change programme coming to an end, without which organic growth
would have been 29%.
FY 22 saw us maintain consistently strong levels of
profitability, demonstrating the value that clients see from our
premium service and delivery quality. Each of our Partners are
required to manage their project profitability margins closely, and
the wider business continued to deliver on this front. This
resulted in Adjusted EBITDA of GBP20.5 million, above market
expectations and an increase in absolute terms of 30% from FY 21
(GBP15.7 million). The Adjusted EBITDA margin continued to be
market-leading at 29% (FY 21: 31%).
DELIVERING OUR FOUR-PILLAR GROWTH STRATEGY
Our four-pillar growth strategy has a proven track record, with
the capacity to support our long-term ambitions for the Group, and
in FY 22 Elixirr made great momentum in each facet of stretching
existing Partners, bringing new Partners into the business,
promoting Partners from within and acquiring new businesses.
This resulted in revenue per Partner increasing by 13% from
GBP3.15 million in FY 21 to GBP3.57 million in FY 22, as set out in
the Partner revenue bridge below. This continues the growth in this
metric in every year since listing.
Stretching Existing Partners
As we grow our Partner team, we are looking for each member of
the team to maximise their revenue contribution, supporting the
Group's overall performance. The established Partners in our firm
generated average revenue of GBP4.0 million each in FY 22, an
increase of 20% compared to GBP3.4 million in FY 21. The additional
capabilities provided by our acquisitions have expanded the range
of services that our Partners can sell to their clients.
We have increased Partner revenue targets for FY 23, reflecting
our expectations for further growth in this metric.
Hiring New Partners
Bringing new talent into the Partner team is an important pillar
in the Group's overall growth - a great route to bringing on board
new clients and entering new, or increasing the penetration of,
existing markets. We successfully hired two Partners who have
established a great base in two clients that we expect to become
gold clients during FY 23. Both these candidates came through the
existing network of our Partner team and had extensive prior
consulting experience, factors which have contributed to their
strong performance since joining.
As a high-performing business we expect each of our Partners to
meet a minimum threshold for revenue performance. As a consequence,
we exit Partners who underperform - with their equity position
forfeited. We will continue to take decisive action to protect the
overall business and quality of earnings.
We continue to use our networks to bring in new talent and in
April 2023 we will welcome a new Partner to the team. He brings
extensive experience in change management and transformation
programmes, with an impressive network including major clients in
the healthcare industry. We continually progress a warm pipeline of
potential Partner candidates.
Promoting Partners from Within
Growing talent from within is of great importance to the firm -
ensuring that we retain our existing culture and quality as we
scale. Our strategy is to give promoted Partners a 'runway' to
develop their Partner-level experience before officially joining
the Partner team which has proven to be of great success in FY 22,
with our promoted client-facing Partner achieving GBP3.5 million
revenue.
2023 saw two further promoted Partners officially join the
Partner team, Danielle Croucher and Ben Gower. We expect both to
play roles in expanding key areas of the business - Danielle
supporting our ambitions to further scale Elixirr's US business and
Ben helping to increase our presence in the insurance space, both
in the UK and globally.
Later in the year, we will welcome two more of our own to the
Partner team, Dan Coral and Rory Farquharson, effective October
2023. Both have been instrumental in our expansion in the US in
recent years and, as Partners, they will continue contributing to
the Group's success worldwide. We are also particularly pleased to
have just made our first promotion to Partner in one of our
acquired businesses - Nick Larsen is a longstanding member of the
iOLAP team where he leads the AWS practice, providing data services
to a number of major clients, and he will join the Partner team
from January 2024.
Acquiring New Businesses
Buying new businesses with expertise and experience in growing
markets that are complementary to the Group's existing capabilities
remains a key part of Elixirr's growth strategy.
In March 2022 our acquisition of iOLAP marked our biggest deal
to date, bringing in a capability of key importance in the current
business landscape. Data is a more leveraged service than strategy
consulting and iOLAP added the annual equivalent of GBP7.6 million
of revenue per acquisition Partner. This highlights an additional
opportunity for our organic Partners to get more leverage from this
data proposition - as well as future acquisitions.
In addition to bringing in a key service offering, the
acquisition of iOLAP has brought strong leaders into our business.
Given the calibre of iOLAP leadership, we have mutually agreed to
change their earn-out targets for FY 23 onwards to target them on
growth in our overall US business including iOLAP, rather than on
the performance of iOLAP alone. This again proves the
entrepreneurial way our partners work together for mutual
benefit.
We were pleased to complete the acquisition of iOLAP from the
internal cash resources of the Group, without any dilution of
shareholders' equity. In FY 23, we have settled 50% of the iOLAP
earn-out consideration, again from our internal cash resources
without any dilution of shareholders. We continue to protect
shareholders from dilution where possible and have not had a
dilution event since April 2021.
Our internal M&A team continue to generate a pipeline of
strong prospects, focused on bringing in additional capabilities
that will help us to support clients in their key boardroom issues.
They remain focused on bringing in businesses of the highest
quality that meet our exacting criteria, having scouted 3,000+
firms since Elixirr's IPO.
OUR FIRM
Whilst I am very pleased to see the mechanisms we have put in
place result in the growth Elixirr has enjoyed in FY 22, it is the
nature of our people and boldness of our clients that truly set our
firm apart in the market.
Our equity scheme is continuing to fulfil our objectives of
building a high performing team with long-term commitment to the
business. Our Employee Share Purchase Plan ("ESPP") had high levels
of participation again for the new financial year - over 50% for
the Group and over 75% for the consulting business for FY 23,
highlighting the longevity and conviction our teams have as part of
the firm. This is further proven by the increases we have seen in
employee retention, particularly pleasing given employment market
conditions.
Our pool of talent continues to be highly diverse in skillset
and experience, and we remain committed to creating a firm of equal
opportunity, with individuals measured purely by the quality of the
work that they do. We continue to source talent through the world's
best universities, start-ups and from industry to sustain our
high-performing global team. This strategy continues to be enhanced
by the talent we bring in from acquisitions, and we were delighted
to welcome the expertise of iOLAP's data engineers and consultants
earlier this year.
During the year we continued to uphold our company values, one
of which; "Beyond expectations" is crucially important - helping to
maintain the quality of delivery and industry expertise as we scale
and deliver our growth ambitions. In 2022 we were pleased to
receive multiple accolades including being listed as one of
Consulting Magazine's 'Fastest Growing Firms 2022', being selected
for the 2022 Global Outsourcing 100(R), the annual list of the
world's best outsourcing service providers and advisors, and two
team members recognised as "Rising Stars of the Profession".
In addition to industry accolades our brand is becoming
increasingly recognised as a challenger in the consulting industry.
Our 'Con-sulting' campaign was nominated for 'Best B2B Brand
Campaign' at the 2022 Drum Awards. This campaign helped to support
an overall increase in brand awareness and leads. In FY 22, the
business saw an increase of over 100% in marketing leads resulting
in a record year of revenue generated from this source. It is
fantastic to see the investment we have made in building a great
brand paying off.
OUTLOOK
This year Elixirr has again proven both its resilience and
growth potential, notwithstanding a turbulent macroeconomic
backdrop. Our positioning in the market and ability to address
clients' key challenges have continued to result in our services
being in high demand.
The momentum we built in FY 22 has accelerated in the first
quarter of 2023. In Q1 2023, we have had three record revenue
months with absolute revenue growth of 52% and underlying organic
revenue growth of 19%.
Combined with a strong pipeline thereafter, and a proven
four-pillar growth strategy, I am incredibly bullish about FY 23
and beyond. We are therefore pleased to upgrade our target revenue
for FY 23 to GBP85m-GBP90m, whilst maintaining our Adjusted EBITDA
margin in the range of 28-30%.
Stephen Newton
Founder & Chief Executive Officer
31 March 2023
Financial Review
FY 22 FY 21 % change
---------
Revenue GBP70.7m GBP50.6m +40%
Gross profit GBP23.2m GBP17.7m +31%
Adjusted EBITDA* GBP20.5m GBP15.7m +30%
Adjusted EBITDA margin* 29% 31% -7%
Profit before tax GBP15.7m GBP12.2m +29%
Adjusted diluted earnings
per share* 30.5p 24.2p +26%
Dividend per share 10.8p 4.1p +163%
Free cash flow GBP14.6m GBP13.6m +7%
Net cash GBP20.4m GBP31.8m -36%
---------------------------- ---------- ---------- ---------
* In order to provide better clarity to the underlying
performance of the Group, Elixirr uses adjusted EBITDA and adjusted
earnings per share ('EPS') as alternative performance measures
('APMs'). Please refer to note 3 of the Group and Company Financial
Statements for further details.
GROUP RESULTS
The Board is pleased to report that the Group has delivered an
exceptionally strong year, continuing to grow revenue and profits
despite global macro uncertainty. The growth has demonstrated the
continued effectiveness of our four-pillar growth strategy which
enables the Group to deliver robust performance in all market
conditions.
The Group delivered strong growth in FY 22, both organically and
through the acquisition of iOLAP. Our full range of services
positioned us optimally to adapt to the changing needs of our
clients, as we continued to deliver high-quality client service to
a growing customer base. The Group successfully acquired iOLAP in
FY 22, integrating their product offerings and teams into the Group
and delivering 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 22 the Group delivered
revenue of GBP70.7 million and profitability continues to be strong
with Adjusted EBITDA of GBP20.5 million at a 29% margin.
REVENUE
Revenue increased by 40% to GBP70.7 million in FY 22 compared
with GBP50.6 million in FY 21, with four record months of revenue
achieved during the year. Revenue growth was driven by both
underlying organic revenue growth of 18% and the impact of the
acquisition of iOLAP.
Revenue growth was achieved across all geographic regions (UK,
USA and Rest of World) in which the Group operates, and we have
significantly increased our US footprint, having more than doubled
revenues in FY 22 following the acquisition of iOLAP. US revenue
now accounts for 44% of Group revenue (FY 21: 25%). We are also
pleased to report that revenue per client-facing Partner grew by
13% during the year, despite the difficult market environment,
reflecting the quality and resilience of our Partner team and how
the additional capabilities provided by our acquisitions have
expanded the range of services that our Partners can sell to their
clients.
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 acquisitions.
The iOLAP business has proven to be highly complementary to
Elixirr's core consulting offering and provides the Group with
additional services where there is high client demand.
GROUP PROFITABILITY
The Group's revenue growth was matched with strong growth in
profits too. Group gross profit was GBP23.2 million (FY 21: GBP17.7
million), increasing by GBP5.5 million or 31% over the previous
year. The gross profit margin decreased slightly to 33% from 35% in
FY 21. The decrease was driven by the resumption of travel and
business development activities to normalised levels compared to
the unusual lockdown environment in FY 21.
Administrative expenses increased by 33% to GBP6.9 million,
principally reflecting the acquisition of iOLAP and the resulting
non-cash acquired intangible asset amortisation.
Group Adjusted EBITDA grew 30% and was delivered at a 29% margin
(FY 21: 31%). The Adjusted EBITDA margin reflects the increased
costs referred to in relation to gross profit above.
Group profit before tax grew by 29% to GBP15.7 million (FY 21:
GBP12.2 million) and was in line with the growth in Adjusted
EBITDA.
NET FINANCE EXPENSE
Net finance expense of GBP1.2 million for FY 22 includes
interest on the contingent consideration discount unwinding for
iOLAP of GBP0.9 million and GBP0.3 million for the Group office
leases liability. The increase in net finance expense was
principally driven by the iOLAP contingent consideration discount
unwinding. As at 31 December 2022 the Group has no interest rate
risk exposure.
TAXATION
The Group's tax charge for FY 22 was GBP2.9 million, reflecting
a marginally higher effective tax rate of 18% compared with 17% in
FY 21. The increase was largely driven by higher tax rates in the
US as, following the acquisition of iOLAP, the US business
comprised a larger proportion of profit before tax. The Group's
cash tax payment in the year was GBP3.8 million (FY 21: GBP2.5
million), with the increase partly due to certain subsidiary
companies becoming liable to pay corporation tax on a quarterly
basis rather than annually in arrears. For further detail on
taxation see notes 7 and 8 of the Group and Company Financial
Statements. Adjusted profit after tax, used in calculating adjusted
EPS, is shown after adjustments for the applicable tax on adjusting
items as set out in note 3.
EARNINGS PER SHARE
Adjusted diluted EPS increased by 26% to 30.5p, with the
calculation reflecting potential additional dilution from shares
that could be issued as contingent consideration for the iOLAP
acquisition. As reported in note 13 of the Group and Company
Financial Statements of this report, the Group retains the option
to satisfy this consideration through a cash payment with a
commitment to buy shares from the EBT in order to minimise
dilution. Adjusting items and their tax impacts are set out in note
3 of the Group and Company Financial Statements.
CASH FLOW
The Group's net cash position decreased to GBP20.4 million (FY
21: GBP31.8 million) primarily due to the initial consideration
paid for the acquisition of iOLAP (GBP18.1 million) and net
purchases of shares for the EBT (GBP4.4 million) which can be used
to settle future deferred consideration obligations. As stated
above, the Group retains the option to satisfy the remaining iOLAP
contingent consideration through cash payments with a commitment of
the sellers to buy shares from the EBT in order to minimise
dilution. Free cash flow increased by 7% 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 GBP15.7 million in FY 22 (FY 21:
GBP14.3 million). The increase in operating cash flow compared to
FY 21 was less than the increase in EBITDA due to the increase in
cash tax (as explained above) and lower payables (on a like for
like basis excluding iOLAP) compared with FY 21.
Net cash utilised for acquisitions reflects GBP18.1 million net
initial cash consideration for the acquisition of iOLAP (net of
cash of GBP0.8 million acquired on acquisition) plus contingent
consideration of GBP0.2 million for Coast Digital Limited ('Coast
Digital').
Net cash utilised in financing activities of GBP8.9 million
represents net purchases of shares for the EBT of GBP4.4 million,
net Partner loans (including associated section 455 tax) of GBP0.5
million, dividend payment of GBP1.9 million, repayment of iOLAP
bank loans on acquisition of GBP1.1 million and office lease
payments of GBP0.9 million.
STATEMENT OF FINANCIAL POSITION
Net assets as at 31 December 2022 totalled GBP95.9 million (FY
21: GBP86.0 million). The increase in net assets is as a result of
foreign currency translation benefit of GBP1.8 million, share
premium of GBP0.6 million for gains on sale of shares by the EBT,
retained profit for the year of GBP12.4 million (after FY 21 final
dividend of GBP1.8 million offset by GBP1.3 million add back of
share-based payments charge and related tax), partially offset by
net EBT share purchases of GBP5.0 million.
DIVIDS
No interim Ordinary share dividends were paid in relation to FY
21 or FY 22. The Company paid a final Ordinary share dividend in
respect of FY 21 of 4.1 pence per Ordinary share in August 2022.
The Directors are proposing a final Ordinary share dividend in
respect of FY 22 of 10.8 pence per Ordinary share, representing a
163% increase in dividend per share compared with FY 21.
Group Statement of Comprehensive Income
For the year ended 31 December 2022
Year ended Year ended
31 December 31 December
2022 2021
Note GBP'000s GBP'000s
Revenue 4 70,703 50,611
Cost of sales (47,547) (32,913)
------------------------------------ ---- ------------ ------------
Gross profit 23,156 17,698
Administrative expenses (6,852) (5,161)
------------------------------------ ---- ------------ ------------
Operating profit before M&A-related
items 5 16,304 12,537
Depreciation 1,061 670
Amortisation of intangible assets 2,004 1,378
Share-based payments 1,159 1,152
Adjusted EBITDA 3 20,528 15,737
---- ------------
M&A-related items 5 600 (154)
------------------------------------ ---- ------------ ------------
Operating profit 5 16,904 12,383
Finance income 54 29
Finance costs (1,213) (246)
------------------------------------ ---- ------------ ------------
Net finance expense 6 (1,159) (217)
Profit before taxation 5 15,745 12,166
Taxation 7 (2,876) (2,022)
------------------------------------ ---- ------------ ------------
Profit for the period 12,869 10,144
------------------------------------ ---- ------------ ------------
Other comprehensive income
Items that may be subsequently
reclassified to profit and loss:
Currency translation on foreign
currency net investments 1,827 123
------------------------------------ ---- ------------ ------------
1,827 123
Total comprehensive income 14,696 10,267
------------------------------------ ---- ------------ ------------
Basic earnings per Ordinary share
(p) 10 27.86 22.04
Diluted earnings per Ordinary
share (p) 10 24.78 20.01
All results relate to continuing operations.
The notes form part of these accounts.
Group and Company Statements of Financial Position
As at 31 December 2022
Group Company
--------------- --------- -------------------------------------------- --------------------------------------------
31 December 2022 31 December 2021 31 December 2022 31 December 2021
Note GBP'000s GBP'000s GBP'000s GBP'000s
--------------- --------- --------------------- --------------------- --------------------- ---------------------
Assets
Non-current
assets
Intangible
assets 12 83,581 56,193 - -
Property, plant
and equipment 14 5,662 5,496 - -
Investments 15 - - 85,426 63,807
Other
receivables 16 1,293 1,535 876 1,104
Loans to
shareholders 16 4,734 3,991 4,723 3,991
Deferred tax
asset 8 1,719 1,197 - -
Total
non-current
assets 96,989 68,412 91,025 68,902
--------------- --------- --------------------- --------------------- --------------------- ---------------------
Current assets
Trade and other
receivables 16 11,234 6,963 403 1,928
Cash and cash
equivalents 17 20,433 31,795 6,340 13,576
Total current
assets 31,667 38,758 6,743 15,504
--------------- --------- --------------------- --------------------- --------------------- ---------------------
Total assets 128,656 107,170 97,768 84,406
--------------- --------- --------------------- --------------------- --------------------- ---------------------
Liabilities
Current
liabilities
Trade and other
payables 18 13,304 12,055 7,215 134
Loans and
borrowings 19 750 485 - -
Corporation tax 381 1,150 - 11
Other creditors 20 6,765 436 203 436
Total current
liabilities 21,200 14,126 7,418 581
--------------- --------- --------------------- --------------------- --------------------- ---------------------
Net current
assets 10,467 24,632 (675) 14,923
--------------- --------- --------------------- --------------------- --------------------- ---------------------
Non-current
liabilities
Loans and
borrowings 19 4,393 4,760 - -
Deferred tax
liability 8 1,435 623 - -
Other
non-current
liabilities 20 5,713 1,620 - 1,370
Total
non-current
liabilities 11,541 7,003 - 1,370
--------------- --------- --------------------- --------------------- --------------------- ---------------------
Total
liabilities 32,741 21,129 7,418 1,951
--------------- --------- --------------------- --------------------- --------------------- ---------------------
Net assets 95,915 86,041 90,350 82,455
--------------- --------- --------------------- --------------------- --------------------- ---------------------
Equity
Share capital 21 52 52 52 52
Share premium 21 25,599 24,952 25,599 24,952
Capital
redemption
reserve 2 2 2 2
EBT share
reserve 22 (7,147) (2,193) (7,147) (2,193)
Merger relief
reserve 21 46,870 46,870 46,870 46,870
Foreign
currency
translation
reserve 1,878 51 - -
Retained
earnings 28,661 16,307 24,974 12,772
Total
shareholders'
equity 95,915 86,041 90,350 82,455
--------------- --------- --------------------- --------------------- --------------------- ---------------------
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
GBP13.1 million (FY 21: GBP4.0 million).
The notes form part of these accounts.
The Financial Statements were approved by the Board of Directors
on 31 March 2023 and were signed on its behalf by:
Stephen Newton
Director
Group Statement of Changes in Equity
For the year ended 31 December 2022
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
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 and
01 January 2022 52 24,952 2 (2,193) 46,870 51 16,307 86,041
------------------------ -------- -------- ----------- --------- -------- ------------ --------- --------
Comprehensive
income
Profit for the
period - - - - - - 12,869 12,869
Other comprehensive
income - - - - - 1,827 - 1,827
Transactions with
owners
Dividends - - - - - - (1,855) (1,855)
Share-based payments - - - - - - 975 975
Deferred tax recognised
in equity - - - - - - 365 365
Sale of Ordinary
shares - 647 - 9,743 - - - 10,390
Acquisition of
Ordinary shares - - - (14,697) - - - (14,697)
As at
31 December 2022 52 25,599 2 (7,147) 46,870 1,878 28,661 95,915
------------------------ -------- -------- ----------- --------- -------- ------------ --------- --------
The notes form part of these accounts. Please refer to note 28
for explanations of reserve accounts.
Company Statement of Changes in Equity
For the year ended 31 December 2022
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
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 and
01 January 2022 52 24,952 2 (2,193) 46,870 12,772 82,455
----------------------------- -------- -------- ----------- --------- -------- --------- --------
Comprehensive income
Profit for the period - - - - - 13,082 13,082
Transactions with
owners
Dividends - - - - - (1,855) (1,855)
Share-based payments - - - - - 975 975
Deferred tax recognised - - - - - - -
in equity
Sale of Ordinary shares - 647 - 9,743 - - 10,390
Acquisition of Ordinary
shares - - - (14,697) - - (14,697)
As at
31 December 2022 52 25,599 2 (7,147) 46,870 24,974 90,350
----------------------------- -------- -------- ----------- --------- -------- --------- --------
The notes form part of these accounts. Please refer to note 28
for explanations of reserve accounts.
Group and Company Cash Flow Statements
For the year ended 31 December 2022
Group Company
----------------------------- ---- -------------------------- --------------------------
31 December 31 December 31 December 31 December
2022 2021 2022 2021
Note GBP'000s GBP'000s GBP'000s GBP'000s
----------------------------- ---- ------------ ------------ ------------ ------------
Cash flows from operating
activities:
Cash generated from
operations 24 19,583 16,856 20,364 4,265
Taxation paid (3,855) (2,527) (18) (86)
Net cash generated from
operating
activities 15,728 14,329 20,346 4,179
----------------------------------- ------------ ------------ ------------ ------------
Cash flows from investing
activities:
Purchase of property, plant
and equipment (329) (98) - -
Payment for acquisition
of subsidiary, net
of cash acquired (18,276) (3,179) (203) (4,000)
Investment in subsidiary - - (20,643) -
Interest received 71 33 59 32
Net cash utilised in investing
activities (18,534) (3,244) (20,787) (3,968)
----------------------------------- ------------ ------------ ------------ ------------
Cash flows from financing
activities:
EBT Ordinary share
purchases (14,697) (3,649) (14,697) (3,649)
EBT Ordinary share
sales 10,257 5,774 10,257 5,774
Loans to shareholders (3,011) (4,500) (3,000) (4,500)
Loans repaid by shareholders 2,268 8,293 2,268 7,181
s455 tax refunded/(paid)
re loans to shareholders 245 (1,104) 232 (1,104)
Repayment of borrowings (1,143) - - -
Lease liability payments (651) (448) - -
Interest paid (262) (246) - -
Ordinary share dividends
paid to shareholders (1,855) (1,014) (1,855) (1,014)
Net cash (utilised)/generated
from
financing activities (8,849) 3,106 (6,795) 2,688
----------------------------------- ------------ ------------ ------------ ------------
Net (decrease)/increase
in cash and cash equivalents (11,655) 14,191 (7,236) 2,898
----------------------------------- ------------ ------------ ------------ ------------
Cash and cash equivalents
at beginning
of the period 31,795 17,503 13,576 10,678
Effects of exchange rate
changes on
cash and cash equivalents 293 101 - -
Cash and cash equivalents
at end
of the period 20,433 31,795 6,340 13,576
----------------------------------- ------------ ------------ ------------ ------------
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 public 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.
1.3. Basis of consolidation
These financial statements consolidate the financial statements
of the Company and its subsidiary undertakings as at 31 December
2022.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date that such control
ceases. The acquisition method of accounting has been adopted. The
financial statements of subsidiaries are prepared for the same
reporting period as the parent Company, using consistent accounting
policies.
All intra-group balances, income and expenses and unrealised
gains and losses resulting from intra-group transactions are
eliminated in full.
1.4. Measurement convention
The financial statements have been prepared under the historical
cost convention, except as otherwise described in the accounting
policies.
The preparation of the consolidated financial information in
compliance with UK adopted international accounting standards
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 December 2022.
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 periods of trademarks, customer relationships
and order book intangibles are estimates based on the expected
useful lives and are assessed annually for any changes based on
current circumstances.
-- Management has estimated the share-based payments expense
under IFRS 2. In determining the fair value of share-based
payments, management has considered several internal and external
factors in order to judge the probability that management and
employee share incentives may vest and to assess the fair value of
share options at the date of grant. Such assumptions involve
estimating a number of future performance and other factors.
-- The Coast Digital and iOLAP contingent consideration
calculations under IFRS 3 contain estimation uncertainty, as the
earn-out potentially payable in each case is linked to the future
performance of the acquiree. In estimating the fair value of the
contingent consideration, at both the acquisition date and
financial 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.
On 17 March 2022, the Group acquired 100% of the share capital
and voting interests of iOLAP, a US-headquartered technology and
data firm. The acquisition brings specialist data and analytics
capabilities, including artificial intelligence (AI) and machine
learning (ML), into the Group where there is existing demand for
these services. The difference between the fair value of the
purchase consideration of GBP28.4 million and the fair value of the
identifiable assets acquired and liabilities assumed of GBP5.0
million was recognised as goodwill of GBP23.4 million. The goodwill
is attributable to the company's workforce and working
methodologies. The tax cost base of the goodwill is deductible for
tax purposes. Please refer to note 13 for further details.
On 9 April 2021 the Group acquired 100% of the share capital and
voting interests of Retearn, a procurement, transformation and
insights consultancy firm. The difference between the fair value of
the purchase consideration of GBP7.4 million and the fair value of
the identifiable assets acquired and liabilities assumed of GBP2.1
million was recognised as goodwill of GBP5.3 million. The goodwill
is attributable to the company's workforce and working
methodologies and it is not deductible for tax purposes.
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 December 2022. For further details on the
impairment review please refer to note 12.
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 contingent consideration is settled in a
variable number of shares or cash, the consideration is classified
as a liability and measured at fair value through profit and
loss.
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
The presentational currency of these financial statements and
the functional currency of the Group is pounds sterling.
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 Valuation Method
Life
----------------------- ------------------ -----------------------------
Trademark 33.33% reducing Relief from Royalty method
balance
Customer relationships 10 - 25% reducing Multi-Period Excess Earnings
balance method
Order book Over order term Multi-Period Excess 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 (other than goodwill)
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.
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.
The Group has the obligation to pay employers' national
insurance on the exercise of certain UK employee options. The Group
has opted to account for the tax obligation under IFRS 2 as a
cash-settled share-based payment arrangement as the amount of
employers' national insurance due at the time of exercise is based
on the share price of the equity instruments of the Company. The
cash-settled share-based payment liability is estimated at each
period end using the closing share price of the Company and the
prevailing employers' national insurance rate. The number of awards
expected to vest are consistent with the treatment for
equity-settled share-based payments. The cost of employers'
national insurance is included within share-based payments expense
in the statement of comprehensive income.
Please refer to note 23 for further details.
2.10. Earnings per share
The Group presents basic and diluted EPS 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 EPS 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 EPS 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 with terms up to 95 days. 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.
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
and iOLAP has a further two properties outside the UK that it
leases.
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 lessee's incremental borrowing rate
on commencement of the lease is used. This has been estimated at
5.0 per cent.
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 leases
recognised in the income statement using the effective interest
method and the unwinding of the discount on contingent
consideration.
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 are no standards that are issued but not yet effective that
would be expected to have a material impact on the Group or
Company's financial statements 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 EPS 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 EPS 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 M&A-related items. Adjusted EPS
excludes the following items from profit after tax: amortisation
charges, share-based payments, non-recurring M&A-related items,
M&A-related non-cash finance costs and their related tax
impacts.
The table below sets out the reconciliation of the Group's
adjusted EBITDA and adjusted profit before tax from profit before
tax:
FY 22 FY 21
Group GBP'000s GBP'000s
----------------------------------------------- --------------------------------- ----------------------------------
Profit before tax 15,745 12,166
----------------------------------------------- --------------------------------- ----------------------------------
Adjusting items:
M&A-related items (note 5) (600) 154
Amortisation of intangible assets 2,004 1,378
Share-based payments 1,159 1,152
Finance cost - iOLAP contingent consideration 951 -
Adjusted profit before tax 19,259 14,850
----------------------------------------------- --------------------------------- ----------------------------------
Depreciation 1,061 670
Net finance cost (excluding iOLAP contingent
consideration) 208 217
Adjusted EBITDA 20,528 15,737
----------------------------------------------- --------------------------------- ----------------------------------
The table below sets out the reconciliation of the Group's
adjusted profit after tax to adjusted profit before tax:
FY 22 FY 21
Group GBP'000s GBP'000s
------------------------------ -------- --------
Adjusted profit before tax 19,259 14,850
------------------------------ -------- --------
Tax charge (2,876) (2,022)
Tax impact of adjusting items (531) (566)
Adjusted profit after tax 15,852 12,262
------------------------------ -------- --------
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 10 for further details.
FY 22 FY 21
Group p p
--------------------- ------------------------------- -------------------------------
Adjusted EPS 34.32 26.64
Adjusted diluted EPS 30.53 24.19
--------------------- ------------------------------- -------------------------------
4. Segment reporting
FY 22 FY 21
Group GBP'000s GBP'000s
-------------------------------------- ------------------------------ ------------------------------
Revenue from contracts with customers
arises from:
United Kingdom 23,643 22,375
USA 31,088 12,588
Rest of World 15,972 15,648
70,703 50,611
-------------------------------------- ------------------------------ ------------------------------
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 22 FY 21
Group GBP'000s GBP'000s
----------------------------------------------- -------- --------
Depreciation of property, plant and equipment:
- Owned assets 213 138
- Leased assets 848 532
Amortisation of intangible assets 2,004 1,378
Share-based payments 1,159 1,152
Foreign exchange gains (392) (16)
M&A-related items (600) 154
----------------------------------------------- -------- --------
- Transaction costs 486 154
- Adjustment to contingent consideration (1,086) -
----------------------------------------------- -------- --------
The M&A-related net credit of GBP0.6 million in FY 22
includes adjustments to contingent consideration associated with
the acquisition of Retearn and iOLAP, less non-recurring costs
associated with the acquisition of iOLAP. The M&A-related items
totalling GBP0.2 million in FY 21 include non-recurring costs
associated with the acquisitions of Retearn and Coast Digital.
During the year the Group obtained the following services from
the Company's auditors as detailed below:
FY 22 FY 21
Group GBP'000s GBP'000s
----------------------------------- ---------------------------------- --------
Services provided by the Company's
auditors:
Audit fees - parent Company
and consolidated accounts 40 22
Audit fees - subsidiary companies 89 67
Other services:
Due diligence - 36
----------------------------------- ---------------------------------- --------
6. Net finance expense
FY 22 FY 21
Group GBP'000s GBP'000s
--------------------------------------------- ----------------------------------- ----------------------------------
Finance income:
On short term deposits and investments 54 29
54 29
--------------------------------------------- ----------------------------------- ----------------------------------
Finance costs:
Finance cost - iOLAP contingent consideration (951) -
On lease liability (262) (246)
--------------------------------------------- ----------------------------------- ----------------------------------
(1,213) (246)
Net finance expense (1,159) (217)
--------------------------------------------- ----------------------------------- ----------------------------------
7. Taxation on profit on ordinary activities
Analysis of tax charge:
FY 22 FY 21
Group GBP'000s GBP'000s
---------------------------------------- ---------------------------------- ----------------------------
Current tax
In respect of the current year 3,466 2,926
Adjustments in respect of prior periods (334) (398)
---------------------------------------- ---------------------------------- ----------------------------
Total current tax 3,132 2,528
---------------------------------------- ---------------------------------- ----------------------------
Deferred tax
In respect of the current year (324) (506)
Change in tax rates 68 -
---------------------------------------- ---------------------------------- ----------------------------
Total deferred tax (256) (506)
---------------------------------------- ---------------------------------- ----------------------------
Income tax expense 2,876 2,022
---------------------------------------- ---------------------------------- ----------------------------
The change in deferred tax rates reflects an increase from 19%
to 25% for UK corporation tax main rate with effect from 1 April
2023, as announced at the UK Spring Budget 2021.
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 22 FY 21
Group GBP'000s GBP'000s
---------------------------------------------------- ---------------------------------- ----------------------------
Profit before taxation 15,745 12,166
---------------------------------------------------- ---------------------------------- ----------------------------
Profit on ordinary activities multiplied
by rate of corporation tax in UK of 19% (FY 21:
19%) 2,992 2,312
---------------------------------------------------- ---------------------------------- ----------------------------
Effects of:
M&A-related items not deductible - 29
Expenses not deductible 193 65
Difference in overseas tax rates 201 125
Change in deferred tax rate 68 -
Adjustments in respect of prior periods (62) 51
R&D tax relief in respect of prior periods (271) (450)
Deferred tax release re trademarks (245) (110)
Total taxation 2,876 2,022
---------------------------------------------------- ---------------------------------- ----------------------------
8. Deferred tax
Net deferred tax asset/(liability):
The balances comprise temporary differences attributable to:
Group Company
FY 22 FY 21 FY 22 FY 21
GBP'000s GBP'000s GBP'000s GBP'000s
----------------------------------- -------- -------- -------- --------
Deferred tax liability
Property, plant and equipment (105) (52) - -
Intangible assets (1,330) (571) - -
Total deferred tax liability (1,435) (623) - -
----------------------------------- -------- -------- -------- --------
Deferred tax asset
Share-based payments 1,400 966 - -
Short-term timing differences 319 231 - -
Total deferred tax asset 1,719 1,197 - -
----------------------------------- -------- -------- -------- --------
Net deferred tax asset/(liability) 284 574 - -
----------------------------------- -------- -------- -------- --------
The deferred tax liability on intangible assets relates to
goodwill, customer relationships and order book 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 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
------------------------- ---------- ------------------ ------------ ------------- --------
Acquisition of business - (858) - - (858)
Credited to equity - - 365 - 365
Credited/(charged)
to profit and loss (53) 182 69 58 256
Exchange rate difference - (83) - 30 (53)
At 31 December 2022 (105) (1,330) 1,400 319 284
------------------------- ---------- ------------------ ------------ ------------- --------
9. Ordinary dividends
No interim Ordinary share dividends were paid in relation to FY
21 or FY 22. The Company paid a final Ordinary share dividend in
respect of FY 21 of 4.1 pence per Ordinary share on 22 August
2022.
The Directors are proposing a final Ordinary share dividend in
respect of FY 22. Please refer to post balance sheet events note 27
for final Ordinary share dividend proposed.
10. Earnings per share
The Group presents non-adjusted and adjusted basic and diluted
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 and ESPP matching awards that are
expected to vest (subject to the relevant criteria being met) and
the number of shares that may be issued to satisfy contingent
M&A deferred consideration.
The profits and weighted average number of shares used in the
calculations are set out below:
FY 22 FY 21
---------------------------------------------- ------ ------
Basic and Diluted EPS
Profit attributable to the Ordinary
equity holders of the Group used in
calculating basic and diluted EPS (GBP'000s) 12,869 10,144
---------------------------------------------- ------ ------
Basic earnings per Ordinary share (p) 27.86 22.04
Diluted earnings per Ordinary share
(p) 24.78 20.01
---------------------------------------------- ------ ------
FY 22 FY 21
----------------------------------------------- ---------- ----------
Adjusted Basic and Diluted EPS
Profit attributable to the Ordinary
equity holders of the Group used in
calculating adjusted basic and diluted
EPS (note 3) (GBP'000s) 15,852 12,262
----------------------------------------------- ---------- ----------
Adjusted basic earnings per Ordinary
share (p) 34.32 26.64
Adjusted diluted earnings per Ordinary
share (p) 30.53 24.19
----------------------------------------------- ---------- ----------
FY 22 FY 21
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 46,186,481 46,031,070
----------------------------------------------- ---------- ----------
Number of dilutive shares 5,740,587 4,655,445
Weighted average number of Ordinary
shares used as the denominator in calculating
non-adjusted and adjusted diluted EPS 51,927,068 50,686,515
----------------------------------------------- ---------- ----------
11. Employees and directors
The monthly average number of persons employed by the Group
during the year, analysed by category, was as follows:
FY 22 FY 21
Group Number Number
----------------------------------- ---------------------------------- -----------------------------
Directors, management and partners 31 25
Provision of services 373 180
Administration 46 20
450 225
----------------------------------- ---------------------------------- -----------------------------
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 22 FY 21
Group GBP'000s GBP'000s
--------------------------- --------------------------------- ------------------------
Wages and salaries 32,702 22,085
Social security costs 3,910 2,748
Pension costs 755 453
Share-based payment charge 1,159 1,152
38,526 26,438
--------------------------- --------------------------------- ------------------------
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
GBP0.8 million for FY 22 (FY 21: GBP0.5 million). Contributions
amounting to GBP0.1 million (FY 21: GBP0.1 million) were payable to
the fund as at 31 December 2022 and are included in payables.
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 22 FY 21 FY 22 FY 21
GBP'000s GBP'000s GBP'000s GBP'000s
------------------------------------- -------- -------- -------- --------
Aggregate emoluments including short
term employee benefits 4,872 4,773 167 144
4,872 4,773 167 144
------------------------------------- -------- -------- -------- --------
The share-based payment charge in respect of key management
personnel was GBP0.2 million (FY 21: GBP0.2 million).
Details of the Directors' remuneration, including salary, bonus,
share option awards, pension and other benefits are included in the
tables within the Directors' Report.
12. Goodwill and intangible fixed assets
Goodwill Trademarks Customer Order book
relationships Total
Group GBP'000s GBP'000s GBP'000s GBP 000's GBP'000s
----------------------- -------- ---------- -------------- ---------- --------
Cost
At 31 December
2020 46,155 7,135 748 - 54,038
Acquisition of
business 5,257 - 1,126 - 6,383
At 31 December
2021 51,412 7,135 1,874 - 60,421
----------------------- -------- ---------- -------------- ---------- --------
Acquisition of
business (note
13) 23,391 - 2,453 1,051 26,895
Gains/(losses)
from foreign exchange 2,172 - 227 98 2,497
At 31 December
2022 76,975 7,135 4,554 1,149 89,813
----------------------- -------- ---------- -------------- ---------- --------
Amortisation
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)
----------------------- -------- ---------- -------------- ---------- --------
Charge for the
year - (879) (620) (505) (2,004)
Gains/(losses)
from foreign exchange - - 1 (1) -
At 31 December
2022 - (4,950) (776) (506) (6,232)
----------------------- -------- ---------- -------------- ---------- --------
Net book value
At 31 December
2021 51,412 3,064 1,717 - 56,193
At 31 December
2022 76,975 2,185 3,778 643 83,581
----------------------- -------- ---------- -------------- ---------- --------
The Company has no intangible assets.
Goodwill
Goodwill arising on the acquisition of a business in FY 22
relates to the acquisition of iOLAP 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
13).
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.
Goodwill impairment review
The breakdown of goodwill by cash-generating unit ('CGU') is
listed below:
FY 22 FY 21
GBP'000s GBP'000s
---------------- ------------------------------- ----------------------------------
Consulting 48,556 48,556
Elixirr Digital 2,856 2,856
iOLAP 25,563 -
76,975 51,412
---------------- ------------------------------- ----------------------------------
During FY 22 there was a reorganisation of the Group's reporting
structure resulting in a change in the composition of one or more
of the Group's CGUs to which goodwill has been allocated. The
Consulting CGU comprises goodwill and other assets of Elixirr
Consulting Limited and The Retearn Group Limited, the Elixirr
Digital CGU comprises goodwill and other assets of Coast Digital
Limited and the iOLAP CGU comprises goodwill and other assets of
iOLAP.
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.
No impairment is indicated for any of the CGUs 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 12% for the Group and
Consulting, 12% for iOLAP and 13% for Elixirr Digital. 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:
Consulting Elixirr Digital iOLAP
----------------------- ------------------ ------------------ -------- --------
FY 22 FY 21 FY 22 FY 21 FY 22 FY 21
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 30.5% 26.7% 50.0% 30.1% 23.7% -
----------------------- -------- -------- -------- -------- -------- --------
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. 25.0% 23.6% 42.7% 26.4% 19.0% -
----------------------- -------- -------- -------- -------- -------- --------
Customer relationships
FY 22 additions represent the fair value of customer
relationships from the acquisition of iOLAP. Refer note 13 for
further details.
FY 21 additions represent the fair value of customer
relationships from the acquisition of Retearn.
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 has been deemed appropriate
based on the average realisation rate of cumulative cash flows. The
projected cash flows have been discounted over this period. The
amortisation charge since acquisition is recognised within
administrative expenses.
Order Book
Current period additions represent the fair value of the order
book from the acquisition of iOLAP. Refer note 13 for further
details.
The fair value has been determined by applying the Multi-Period
Excess Earnings method to the cash flows earned from the order
book.
The key management assumptions relate to forecast margins and
discount factors. A useful economic life of 3 years and nine months
has been deemed appropriate based on the relevant contractual
period. Projected cash flows have been discounted over this period.
The amortisation charge is recognised within administrative
expenses.
13. Business combinations
On 17 March 2022, the Group acquired 100% of the share capital
and voting interests of iOLAP, a US-headquartered technology and
data firm. The acquisition brings specialist data and analytics
capabilities, including artificial intelligence (AI) and machine
learning (ML), into the Group where there is existing demand for
these services.
On 3 March 2022, Elixirr Inc. was incorporated in Delaware as a
direct subsidiary of Elixirr International Plc. Elixirr Inc. was
used as the acquisition vehicle for iOLAP.
The Group acquired iOLAP for a maximum consideration payable of
US$40.0 million (GBP30.4 million). The consideration 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 31
December 2024. This consideration will be satisfied, at Elixirr's
option, either from the EBT, subject to sufficient available
supply, or otherwise by way of a subscription for new Ordinary
shares from Elixirr, or a combination of both.
Of the US$25.2 million (GBP19.2 million) initial cash
consideration, US$13.5 million (GBP10.2 million) was paid to the
selling shareholders free of restrictions with US$0.5 million
(GBP0.4 million) held back for warranties under the sale and
purchase agreement. The remaining balance of US$11.2 million
(GBP8.5 million) was subject to a contractual commitment to use the
after-tax amount (US$8.5 million) to purchase Ordinary shares in
Elixirr at a price per share of GBP6.425. 941,172 Ordinary shares
were purchased from the EBT on 11 May 2022. The balance of this
element of the cash consideration (US$2.7 million) was paid to the
sellers to settle their tax obligations relating to it.
The total fair value of the contingent consideration payable
recognised on the date of acquisition was $13.2 million (GBP10.0
million), of which US$0.5 million (GBP0.4 million) was the hold
back for warranties and US$12.7 million (GBP9.7 million) related to
the present value of the maximum potential earn-out payments.
The contingent consideration for potential earn-out payments is
discounted to fair value and has been estimated by management based
on anticipated future revenue growth and EBITDA. Discount unwinding
is recognised in finance costs proportionately across the periods
until final settlement. During the period, GBP1.0 million of
discount unwinding was expensed as finance costs in relation to the
iOLAP acquisition consideration.
On 16 December 2022, the sale and purchase agreement was amended
to accelerate US$2.5 million of the potential earn-out payments
given the over achievement of targets for FY 22 and agreement to
revise earn-out targets for FY 23 and FY 24 to be based on the
combined results of iOLAP and the wider Elixirr US business, rather
than on iOLAP alone.
Included within M&A-related items is an amount of GBP0.3
million for an adjustment to the fair value of the contingent
consideration in relation to the accelerated earn-out payments.
As at 31 December 2022, a GBP11.8 million liability is recorded,
of which GBP6.6 million is a current and GBP5.2 million is a
non-current liability.
Included within M&A-related items is an amount of GBP0.4
million for legal and advisory fees in relation to the
acquisition.
The Ordinary shares purchased by the sellers from the EBT
pursuant to the acquisition are subject to a one-year lock-in
arrangement and limitations on the Ordinary shares that each seller
can sell in each of the following three years.
iOLAP contributed GBP17.9 million to the Group's revenue and
GBP2.2 million to the Group's profit before tax for the period from
the date of acquisition to 31 December 2022.
If the acquisition of iOLAP had been completed on 1 January
2022, Group revenues for the year ended 31 December 2022 would have
been GBP75.1 million and Group profit before tax would have been
GBP16.8 million.
In calculating the goodwill arising, the fair value of the net
assets of iOLAP have been assessed, and fair value adjustments were
required for the recognition of customer relationship and order
book intangibles and the related deferred tax.
Customer relationships and order book intangibles were assessed
to be separately identifiable assets, recognised at fair value and
are included within intangible assets below. Refer note 12 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 iOLAP:
Fair value
GBP'000s
--------------------------------------------------- ----------
Assets
Non-current assets
Intangible assets 3,504
Property, plant and equipment 827
Loans to shareholders 308
Total non-current assets 4,639
--------------------------------------------------- ----------
Current assets
Trade and other receivables 6,524
Cash and cash equivalents 779
Total current assets 7,303
--------------------------------------------------- ----------
Total assets 11,942
--------------------------------------------------- ----------
Liabilities
Current liabilities
Trade and other payables 2,567
Loans and borrowings 1,692
Other creditors 1,406
Total current liabilities 5,665
--------------------------------------------------- ----------
Non-current liabilities
Loans and borrowings 315
Deferred tax liability 858
Other non-current liabilities 122
Total non-current liabilities 1,295
--------------------------------------------------- ----------
Total liabilities 6,960
--------------------------------------------------- ----------
Fair value of net assets acquired 4,982
Goodwill (note 12) 23,391
--------------------------------------------------- ----------
Fair value of purchase consideration 28,373
Cash and cash equivalents in subsidiaries acquired 779
14. 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 2020 5,918 72 505 108 6,603
Acquisition of business - - - 14 14
Disposals - - - (15) (15)
Additions 509 17 - 81 607
At 31 December 2021 6,427 89 505 188 7,209
------------------------------------- ------------------ ---------------------- ------------- ---------- --------
Acquisition of business (note 13) 655 56 26 90 827
Disposals - - - - -
Additions - 131 134 64 329
Gains/(losses) from foreign exchange 51 5 2 5 63
At 31 December 2022 7,133 281 667 347 8,428
------------------------------------- ------------------ ---------------------- ------------- ---------- --------
Depreciation
At 31 December 2020 (789) (63) (149) (57) (1,058)
Disposals - - - - -
Charge for the year (532) (7) (76) (40) (655)
At 31 December 2021 (1,321) (70) (225) (97) (1,713)
------------------------------------- ------------------ ---------------------- ------------- ---------- --------
Disposals - - - - -
Charge for the year (848) (29) (86) (98) (1,061)
Gains/(losses) from foreign exchange 7 - - 1 8
At 31 December 2022 (2,162) (99) (311) (194) (2,766)
------------------------------------- ------------------ ---------------------- ------------- ---------- --------
Net book value
At 31 December 2021 5,106 19 280 91 5,496
At 31 December 2022 4,971 182 356 153 5,662
------------------------------------- ------------------ ---------------------- ------------- ---------- --------
The Company has no property, plant and equipment.
The lease liability in respect of the right-of-use asset was
GBP5.1 million (FY 21: GBP5.2 million) and relates to property
leases.
15. Investments
Group companies
Company GBP'000s
------------------------------------- ---------------------------------
Cost/carrying value
At 31 December 2020 55,156
Acquisition of business 7,499
Group companies share-based payments 1,152
At 31 December 2021 63,807
------------------------------------- ---------------------------------
Capitalisation of subsidiary 20,643
Group companies share-based payments 975
At 31 December 2022 85,426
------------------------------------- ---------------------------------
The Group has no investments.
The undertakings in which the Company's interest at the year-end
is 20 per cent or more are as follows:
Subsidiary undertakings Country of incorporation Principal activity Registered office FY FY
22 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%
------------------------ ------------------------- ------------------------- ------------------------ ----- -----
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 Creative Information technology 12 Helmet Row, London,
Limited (indirect)* England and Wales consultancy EC1V 3QJ - 100%
------------------------ ------------------------- ------------------------- ------------------------ ----- -----
Information technology 12 Helmet Row, London,
Den Creative Limited 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 12 Helmet Row, London,
Limited England and Wales Consultancy EC1V 3QJ 100% 100%
------------------------ ------------------------- ------------------------- ------------------------ ----- -----
Elixirr Consulting Jersey Consultancy 3rd Floor, 44 100% -
(Jersey) Limited Esplanade, St Helier,
Jersey, JE4 9WG
------------------------ ------------------------- ------------------------- ------------------------ ----- -----
Elixirr Inc. United States Consultancy 2600 Network Blvd Suite 100% -
570 Frisco, TX 75034
------------------------ ------------------------- ------------------------- ------------------------ ----- -----
iOLAP Inc. (indirect) United States Consultancy 2600 Network Blvd Suite 100% -
570 Frisco, TX 75034
------------------------ ------------------------- ------------------------- ------------------------ ----- -----
iOLAP d.o.o. (indirect) Croatia Consultancy Prolaz Marije 100% -
Krucifikse
Kozulić 1, 51000,
Rijeka
------------------------ ------------------------- ------------------------- ------------------------ ----- -----
* Elix-IRR Consulting Services Limited and Elixirr Creative
Limited applied to be struck off the Companies House register on 23
December 2021 and were dissolved on 22 March 2022.
16. Receivables
Group Company
FY 22 FY 21 FY 22 FY 21
GBP'000s GBP'000s GBP'000s GBP'000s
-------- -------- -------- --------
Non-current assets
Loans to shareholders 4,734 3,991 4,723 3,991
Other receivables 1,293 1,535 876 1,104
6,027 5,526 5,599 5,095
----------------------------------- -------- -------- -------- --------
Current assets
Trade receivables 10,355 6,432 - -
Less: allowance for doubtful debts (8) - - -
-------- -------- -------- --------
Trade receivables - net 10,347 6,432 - -
Prepayments and deposits 653 487 62 18
Contract assets 26 12 - -
Amounts owed by group companies - - 199 1,908
Other receivables 208 33 142 2
11,234 6,963 403 1,928
----------------------------------- -------- -------- -------- --------
The Company was due GBP0.2 million as at 31 December 2022 from
Elixirr Inc. for costs relating to the acquisition of iOLAP. As at
31 December 2021, the Company was due GBP1.9 million from Elixirr
Consulting Limited for management charges net of costs incurred by
Elixirr Consulting Limited on behalf of the Company.
Loans to shareholders represent amounts owed to the Company and
Elixirr Consulting Limited in FY 22, and amounts owed to the
Company in FY 21 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 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 25.
The ageing of trade receivables of the Group as at 31 December
2022:
Gross carrying amount Loss allowance Net carrying amount
Group GBP'000s GBP'000s GBP'000s
-------------------- ---------------------- -------------------------- ----------------------------
< 31 days 6,171 - 6,171
31-60 days 3,607 - 3,607
61-90 days 450 - 450
91-120 days 1 - 1
121+ days 126 (8) 118
At 31 December 2022 10,355 (8) 10,347
-------------------- ---------------------- -------------------------- ----------------------------
The ageing of trade receivables of the Group as at 31 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
-------------------- ---------------------- -------------------------- --------------------------
17. Cash and cash equivalents
Group Company
--------- ------------------------------------------------------ ---------------------------------------------------
FY 22 FY 21 FY 22 FY 21
GBP'000s GBP'000s GBP'000s GBP'000s
--------- -------------------------- -------------------------- ------------------------ -------------------------
Cash at
bank and
in hand 20,433 31,795 6,340 13,576
20,433 31,795 6,340 13,576
--------- -------------------------- -------------------------- ------------------------ -------------------------
Cash at bank includes GBP3.0 million (FY 21: GBP4.0 million) on
95-day notice deposit, GBP1.0 million on 32-day notice deposit and
GBP2.0 million (FY 21: GBP4.0 million) on 50% instant and 50%
32-day notice deposit, which earned interest at average rates of
1.7%, 2.9% and 1.2% respectively during the year.
18. Trade and other payables
Group Company
------------ ---------------------------------------------------------- ------------------------------------------------------------
FY 22 FY 21 FY 22 FY 21
GBP'000s GBP'000s GBP'000s GBP'000s
------------ ---------------------------- ---------------------------- ------------------------------- ---------------------------
Trade
payables 1,178 825 55 32
Other taxes
and social
security
costs 1,540 1,138 7 5
Accruals 8,599 8,081 156 97
Contract
liabilities 1,983 2,007 - -
Other
payables 4 3 - -
Amounts owed - - 6,997 -
to group
companies
13,304 12,055 7,215 134
------------ ---------------------------- ---------------------------- ------------------------------- ---------------------------
As at 31 December 2022, the Company owed GBP7.0 million to
Elixirr Consulting Limited.
The fair value of trade and other payables approximates to book
value at the period end. Trade payables are non-interest bearing
and are normally settled monthly.
Trade payables comprise amounts outstanding for trade purchases
and ongoing costs.
Contract liabilities arise from the Group's revenue generating
activities relating to payments received in advance of performance
delivered under a contract. These contract liabilities typically
arise on short-term timing differences between performance
obligations in some milestone or fixed fee contracts and their
respective contracted payment schedules.
19. Loans and borrowings
Group Company
------------ ---------------------------------------------------------- -------------------------------------------------------
FY 22 FY 21 FY 22 FY 21
GBP'000s GBP'000s GBP'000s GBP'000s
---------------------------- ---------------------------- --------------------------- --------------------------
Current
liabilities
Right of use
lease
liability 750 485 - -
750 485 - -
------------ ---------------------------- ---------------------------- --------------------------- --------------------------
Non-current
liabilities
Right of use
lease
liability 4,393 4,760 - -
4,393 4,760 - -
------------ ---------------------------- ---------------------------- --------------------------- --------------------------
The movement in the right of use lease liability was as
follows:
Right of use lease liability
Group GBP'000s
------------------------------------- ----------------------------
At 31 December 2020 5,285
Additions 407
Interest payable 246
Repayment of lease liabilities (694)
At 31 December 2021 5,245
------------------------------------- ----------------------------
Acquisition of business (note 13) 555
Additions -
Interest payable 262
Repayment of lease liabilities (913)
Gains/(losses) from foreign exchange (6)
At 31 December 2022 5,143
------------------------------------- ----------------------------
The acquisition of business in FY 22 relates to the acquisition
of iOLAP. The additions in FY 21 relate to a new property lease
signed for 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 22 FY 21
GBP'000s GBP'000s
---------------------------------------------------------- ---------------------------- ----------------------------
Lease liability less than one year 932 727
Lease liability greater than one year and less than five
years 3,270 3,031
Lease liability greater than five years 1,871 2,632
---------------------------- ----------------------------
Total liability 6,073 6,390
Finance charges included above (930) (1,145)
5,143 5,245
---------------------------------------------------------- ---------------------------- ----------------------------
20. Other creditors and other non-current liabilities
Group Company
-------------- -------------------------------------------------------- --------------------------------------------------
FY 22 FY 21 FY 22 FY 21
GBP'000s GBP'000s GBP'000s GBP'000s
-------------- --------------------------- --------------------------- ---------------------- --------------------------
Other
creditors
Contingent
consideration 6,765 436 203 436
6,765 436 203 436
-------------- --------------------------- --------------------------- ---------------------- --------------------------
Other
non-current
liabilities
Dilapidations 380 250 - -
Cash-settled
share-based
payments 139 - - -
Contingent
consideration 5,194 1,370 - 1,370
5,713 1,620 - 1,370
-------------- --------------------------- --------------------------- ---------------------- --------------------------
Other creditors and other non-current liabilities in FY 22
include earn-out payments which are contingent on performance and
arose from the acquisition of Coast Digital and iOLAP.
Other creditors and other non-current liabilities in FY 21
include earn-out payments which are contingent on performance and
arose from the acquisition of Coast Digital and Retearn.
Other non-current liabilities include cash-settled share-based
payment obligations for the Group's employers' national insurance
on options that are yet to vest. Refer note 23 for further
details.
Other non-current liability payments fall due beyond 12 months
from the reporting date.
21. Share capital, share premium and merger relief reserve
FY 22
----------- --------------------------------------------------------------------------------------------------------------
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 25,599
GBP1
Redeemable
Preference
shares 50,001 50,001 - -
46,236,482 52,310 46,870 25,599
----------- -------------------------- ------------------------- --------------------------- --------------------------
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
----------- -------------------------- ------------------------- --------------------------- --------------------------
The total number of voting rights in the Company at 31 December
2022 was 46,186,481 (FY 21: 46,186,481).
Ordinary shares
On a show of hands every holder of Ordinary shares present at a
meeting, in person or by proxy, is entitled to one vote, and on a
poll each share is entitled to one vote. The shares entitle the
holder to participate in dividends, and to share in the proceeds of
winding up the Company in proportion to the number of and amounts
paid on the shares held. These rights are subject to the prior
entitlements of the Redeemable Preference shareholders.
Movements in Ordinary shares:
Merger relief
Issued shares Par value reserve Share premium
Group and Number GBP GBP'000s GBP'000s
Company
-------------- ---------------------------- --------------------------- --------------------------- -------------------------
At 31 December
2020 45,642,542 2,282 46,870 19,729
Share issue as
consideration
for a
business
combination 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
-------------- ---------------------------- --------------------------- --------------------------- -------------------------
Sale of
Ordinary
shares
from the EBT - - - 647
At 31 December
2022 46,186,481 2,309 46,870 25,599
-------------- ---------------------------- --------------------------- --------------------------- -------------------------
Redeemable Preference shares
The Redeemable Preference shares are entitled to dividends at a
rate of 1% per annum of paid up nominal value. The shares have
preferential right, before any other class of share, to a return of
capital on winding-up or reduction of capital or otherwise of the
Company.
The Redeemable Preference shares are redeemable 100 years from
the date of issue or at any time prior at the option of the
Company.
22. 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 22
----------------------------- ----------------------------------------------------------------------------
Weighted average
Shares held in EBT cost Total cost
Group and Company Number GBP GBP'000s
----------------------------- ------------------- -------------------------- ---------------------------
Ordinary shares 1,204,965 5.89 7,097
Redeemable Preference shares 50,001 1.01 50
1,254,966 7,147
----------------------------- ------------------- -------------------------- ---------------------------
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
----------------------------- ------------------- -------------------------- ---------------------------
23. Share-based payments
The Group recognised a total share-based payment expense of
GBP1.2 million (FY 21: GBP1.2 million) in the current year,
comprising GBP1.0 million (FY 21: GBP1.2 million) in relation to
equity settled share-based payments, and GBP0.2 million relating to
relevant social security taxes.
A cash-settled share-based payment liability is recognised
relating to social security tax on share options (refer note 20).
The liability has been estimated using a closing share price of
GBP5.10 and employers' national insurance at 13.8%. The carrying
value of the liability as at 31 December 2022 is GBP0.1 million,
with GBP0.2 million recognised in the P&L and payments
amounting to GBP0.1 million made in the year.
Share Option Plans
The Group operates EMI and unapproved share option plans with
time-based and performance-based vesting conditions.
During FY 22, a total of 3,687,080 (FY 21: 7,700,430) share
options were granted to employees and senior management. The
weighted average fair value of the options awarded in the year is
GBP1.66 per share (FY 21: GBP1.12)
Details of share option awards made are as follows:
Number of share options Weighted average exercise price
(000's)
----------------------------------------- ----------------------------- -------------------------------
Outstanding at the beginning of the year 11,339 2.87
Granted during the year 3,687 6.48
Forfeited during the year (4,140) 4.38
Outstanding at the year end 10,886 3.47
----------------------------------------- ----------------------------- -------------------------------
Exercisable at the year end 121 5.45
----------------------------------------- ----------------------------- -------------------------------
No share options were exercised during FY 22.
The options outstanding as at 31 December 2022 had a weighted
average remaining contractual life of 3 years (FY 21: 4 years) and
a weighted average exercise price of GBP3.47 (FY 21: GBP2.87) 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 22 FY 21
------------------------------------------------- ----------------------------- -----------------------------
Weighted average share price at grant date (GBP) 5.90 5.07
Weighted average exercise price (GBP) 6.32 4.52
Volatility (%) 26.54% 21.69%
Weighted average vesting period (years) 5 5
Risk free rate (%) 1.73% 0.34%
Expected dividend yield (%) 0.71% 1.14%
------------------------------------------------- ----------------------------- -----------------------------
Expected volatility was determined by calculating the historic
volatility of comparable companies in the market in which the Group
operates. The expected expense calculated in the model has been
adjusted, based on management's best estimate, for the effects of
non-market-based performance conditions and employee attrition.
Reasonable changes in the above inputs do not have a material
impact on the share-based payment charge in FY 22.
Fixed Consideration Options
In addition to the share options set out in the table above,
share options with an exercise price of GBP0.00005 were issued in
connection with the acquisitions of Coast Digital and Retearn.
These share options are for a fixed monetary consideration where
the number of share options is variable and determined with
reference to the share price at the date of vesting.
The monetary value of such share options is as follows:
Value
GBP'000s
----------------------------- ---------
Outstanding at the beginning
of the period 2,494
Forfeited during the year (1,400)
Exercised during the year (297)
----------------------------- ---------
Outstanding at the year end 797
----------------------------- ---------
Exercisable at the year end -
----------------------------- ---------
The share price at the date of exercise of the Coast Digital
options during FY 22 was GBP6.05.
The weighted average remaining contractual life of such options
at 31 December 2022 was 1.5 years (FY 21: 2.5 years).
Employee Share Purchase Plan ('ESPP')
On 16 June 2021 an ESPP was implemented. Under the scheme all of
the employees of the Group (excluding Partners) are eligible to
contribute a percentage of their gross salary to purchase shares in
the Company. The Company makes a matching award of shares that will
vest over time dependent on continued employment. During FY 22, the
Company awarded 89,841 matching shares on the basis of one matching
share for every one employee share held on 15 January 2022. The
matching shares vest equally over a 5-year period with the first
tranche vesting on 31 January 2023.
Details of ESPP awards made are as follows:
Number
of ESPP
awards
(000's)
----------------------------- --------
Outstanding at the beginning -
of the period
Granted during the year 90
Forfeited during the year (12)
----------------------------- --------
Outstanding at the year end 78
----------------------------- --------
Exercisable at the year end -
----------------------------- --------
24. Cash flow information
Cash generated from operations:
Group Company
FY 22 FY 21 FY 22 FY 21
GBP'000s GBP'000s GBP'000s GBP'000s
------------------------ --------------------------- ------------------------ --------------------------- --------
Profit before taxation 15,745 12,166 13,078 4,051
Adjustments for:
Depreciation and
amortisation 3,065 2,048 - -
Net finance
expense/(income) 1,159 217 (55) (20)
Share-based payments 1,159 1,152 - -
Adjustment to contingent
consideration (1,086) - (1,400) -
Foreign exchange (392) (16) - (2)
Decrease/(increase)
in trade and other
receivables 975 (1,336) 1,660 531
(Decrease)/increase
in trade and other
payables (1,042) 2,625 7,081 (295)
19,583 16,856 20,364 4,265
------------------------ --------------------------- ------------------------ --------------------------- --------
Reconciliation of liabilities from financing activities:
Borrowings Leases Total
Group GBP'000s GBP'000s GBP'000s
------------------------- ------------ ------------ --------
At 31 December 2020 - 5,285 5,285
Cash flows - (694) (694)
Other changes - 654 654
Balance 31 December 2021 - 5,245 5,245
------------------------- ------------ ------------ --------
Cash flows (1,143) (913) (2,056)
Other changes 1,143 811 1,954
Balance 31 December 2022 - 5,143 5,143
------------------------- ------------ ------------ --------
Other changes in FY 22 include non-cash movements, including
borrowings and additional property leases on acquisition of iOLAP
and accrued interest expense on leases. Other changes in FY 21
include non-cash movements, including accrued interest expense and
an additional property lease.
25. 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 22 FY 21 FY 22 FY 21
GBP'000s GBP'000s GBP'000s GBP'000s
Financial
assets
Financial
assets that
are debt
instruments
measured at
amortised
cost 37,027 43,795 12,327 20,579
Financial
liabilities
Financial
liabilities
measured at
amortised
cost 16,907 16,162 7,208 129
Financial
liabilities
at fair
value
through
profit and
loss 11,959 1,806 203 1,806
------------ -------------------------- ------------------------ ------------------------- ------------------------
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 on acquisition of iOLAP and Coast
Digital.
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 22 FY 21 FY 22 FY 21
GBP'000s GBP'000s GBP'000s GBP'000s
Trade
receivables 10,347 6,432 - -
Contract
assets 26 12 - -
Other
receivables 6,221 5,557 5,784 7,001
Cash and
cash
equivalents 20,433 31,795 6,340 13,576
------------ ---------------------------- --------------------------- --------------------------- --------------------------
37,027 43,796 12,124 20,577
------------ ---------------------------- --------------------------- --------------------------- --------------------------
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.
Cash and cash equivalents is split across multiple
counterparties and the Group actively monitors the exposure to
different financial institutions.
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 December 2022:
Less 1 - 2 2 - 5 Over 5 Carrying
than 6-12 years years years Total contractual amount of
6 months months cashflows liabilities
------------------ ----------- ------- ------ ------ ------ ----------------- ------------
Trade payables 1,178 - - - - 1,178 1,178
Lease liabilities 496 436 875 2,395 1,871 6,073 5,143
Financial
liabilities
at fair value
through profit
and loss 6,765 - 3,073 3,073 - 12,911 11,959
8,439 436 3,948 5,468 1,871 20,162 18,280
------------------ ----------- ------- ------ ------ ------ ----------------- ------------
Contractual maturities of financial liabilities of the Group as
at 31 December 2021:
Less 1 - 2 2 - 5 Over 5 Carrying
than 6-12 years years years Total contractual amount of
6 months months 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
------------------ ----------- ------- ------ ------ ------ ----------------- ------------
Interest rate risk
As at 31 December 2022 the Group has no material interest rate
risk exposure.
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 22 FY 21
USD EUR ZAR CAD HRK USD '000s EUR '000s ZAR '000s
'000s '000s '000s '000s '000s
------------------ ------ ------ ------ ------ ------ --------- --------- ---------
Cash & cash
equivalents 6,906 1 1,257 313 270 11,900 2 1,739
Trade receivables 6,709 72 - 28 149 1,450 101 -
Trade payables (124) (7) (132) - (649) (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 22 FY 21
GBP'000s GBP'000s
----------------------------------------- ---------------------------- ----------------------------
10% weakening of functional currency 219 925
10% strengthening of functional currency (219) (925)
----------------------------------------- ---------------------------- ----------------------------
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 GBP95.9 million as at 31 December 2022
(FY 21: GBP86.0 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.
26. 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 11 for key
management personnel compensation disclosures. The Directors'
Report contains details of Board remuneration.
On 8 April 2022 certain Directors and key management personnel
of the Group sold 812,106 Ordinary shares to the EBT at a price of
765 pence (being the closing mid-market share price on 5 April
2022). The purpose of this transaction was to provide the EBT with
sufficient shares to satisfy the initial share consideration for
the acquisition of iOLAP without any dilution of existing
shareholders. Refer note 13 for further details.
Gavin Patterson, independent non-executive chairman of the
Board, provided consulting services to the Company totalling
GBP17,708 in FY 22 (FY 21: GBP25,000). Gavin Patterson's consulting
services arrangement terminated on 31 August 2022.
In FY 22, travel and marketing costs include GBP43,956 (FY 21:
NIL) for the hire of an aeroplane from Aviation E LLP. Stephen
Newton, a member of the Board, is a member of Aviation E LLP.
Company related party transactions are disclosed in notes 16 and
18.
27. Events after the reporting date
In January and February 2023, US$6.8 million of the iOLAP
deferred consideration was settled through a cash payment to the
former shareholders of iOLAP, who used US$5.1 million of the
proceeds (the after-tax amount) to purchase 743,400 Ordinary shares
in Elixirr from the EBT at a price of GBP5.50.
The Directors are proposing a final Ordinary share dividend in
respect of the financial year ended 31 December 2022 of 10.8 pence
per share.
As at 31 March 2023, 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.
28. 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.
29. Ultimate controlling party
There is no ultimate controlling party as at 31 December
2022.
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END
FR JBMPTMTAJBBJ
(END) Dow Jones Newswires
April 03, 2023 02:00 ET (06:00 GMT)
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