TIDMELIX
RNS Number : 6657M
Elixirr International PLC
18 September 2023
Elixirr International plc
("Elixirr", the "Company" or the "Group")
RESULTS FOR THE SIX MONTHSED 30 JUNE 2023
Elixirr International plc (AIM:ELIX), an established, global
award-winning challenger consultancy, is pleased to report its
unaudited interim results for the six months ended 30 June 2023 (H1
23). Comparative results are presented for the six months ended 30
June 2022 (H1 22).
Financial Highlights
Elixirr is pleased to report the following financial highlights
for the Group for H1 23:
-- 23% increase in revenue compared to H1 22, with revenue
totalling GBP41.1m and Group record revenue in three of the six
months in the period
-- Underlying organic revenue growth of 14% compared to H1 22
-- 19% increase in adjusted EBITDA ([1]) compared to H1 22,
totalling GBP12.3m, maintaining our strong track record of
profitability with an adjusted EBITDA margin of 30%
-- 17% increase in profit before tax, totalling GBP9.9m (H1 22: GBP8.4m)
-- 23% increase in adjusted diluted EPS ([1]) compared to H1 22
-- Net cash of GBP19.5m with no debt ([2])
H1 23 H1 22 Change
-------
Revenue GBP41.1m GBP33.4m +23%
Adjusted EBITDA ([1]) GBP12.3m GBP10.4m +19%
Adjusted EBITDA margin 30% 31% -1pp
Profit before tax GBP9.9m GBP8.4m +17%
Adjusted diluted EPS
([1]) 18.5p 15.1p +23%
------------------------- ---------- ---------- -------
([1]) In order to provide better clarity to the underlying
performance of the Group, Elixirr uses adjusted EBITDA and adjusted
earnings per share as alternative performance measures ('APMs').
Please refer to note 2 of the Group's interim condensed
consolidated financial statements.
([2]) No debt other than office leases capitalised under
IFRS16.
Operating Highlights
-- Double-digit underlying organic growth, proving our
consistent ability to perform against our strategy
-- Growth through all pillars of the firm's four-pillar strategy:
-- Excellent progress in stretching the Partner team, with a 24%
increase in revenue per Partner compared to H1 22
-- Promoting our first Principal from one of our acquisitions to
Partner, as well as two from the consulting team and a further two
promotions effective in H2 23
-- Two new UK Partners hired in H1 23 with networks and
expertise spanning healthcare, life sciences, manufacturing and
sports & media, plus a new US Partner hired in H2 23 with
strong retail experience
-- Creation of additional value from our previous acquisitions
with significant growth in cross-sell revenue into those
businesses
-- Further progress on inorganic growth, with the acquisition of
Generative AI firm Responsum, bringing key AI capabilities
in-house, highly complementary to iOLAP's data expertise
-- Maintained our strong profit margins due to our high-quality
offering, premium market positioning and operational
effectiveness
-- Strong client retention, proving our ability to deepen
relationships as we scale with growth in key accounts, having grown
the number of GBP1m+ and GBP2m+ clients *
-- Bringing on new clients, including notable brands across a
range of industries as a result of our growing networks and
increasing brand presence
-- Maintaining our strong reputation receiving multiple industry
recognitions, including being listed as one of the Financial Times'
Leading Management Consultancies for 2023
* On a 12-month trailing basis compared with FY 22.
Commenting on the results, Stephen Newton, Chief Executive
Officer said:
"We began this year with great momentum, and have continued our
progress through the period, leveraging our previous acquisitions
to maximise the firm's overall performance. Our ambition is to
become the best digital, data, AI and strategy consultancy in the
world, and the diversification we have built into Elixirr over time
has proved effective in helping us achieve this. We continue to
explore both organic and inorganic opportunities to support this
ambition, whether that be through new capabilities, industries or
geographies.
Our ability to deliver such a relevant range of services,
coupled with a growing reputation in the market, has contributed to
another set of strong results for the first half of 2023, and we
expect to see this performance continue for the remainder of the
year."
Enquiries:
For enquiries, please refer to our Investor Contacts page:
https://www.elixirr.com/investors/investor-contacts
Elixirr International plc +44 (0)20 7220 5410
Stephen Newton, Chief Executive Officer
Graham Busby, Chief Financial Officer
investor-relations@elixirr.com
Cavendish Capital Markets Ltd (Nominated Adviser & Joint Broker) +44 (0)20 7220 0500
Christopher Raggett
Investec Bank plc (Joint Broker)
Carlton Nelson, Henry Reast (Corporate Broking) +44 (0) 20 7597
4000
Notes to editors
Elixirr International plc (AIM: ELIX) is an established, global,
award-winning management consultancy. The Company challenges the
larger consultancies by delivering innovative and bespoke solutions
to a repeat, globally-recognised client base.
This announcement is released by Elixirr International plc and
contains inside information for the purposes of Article 7 of the
Market Abuse Regulation (EU) 596/2014 (MAR). It is disclosed in
accordance with Elixirr's obligations under Article 17 of MAR. For
the purposes of MAR and Article 2 of Commission Implementing
Regulation (EU) 2016/1055, this announcement is being made on
behalf of the Company by Graham Busby, Chief Financial Officer.
The Company also announces that its Nominated Adviser and Joint
Broker has changed its name to Cavendish Capital Markets Ltd
following completion of its own corporate merger.
Disclaimer
This announcement contains certain statements that are, or may
be, forward looking statements with respect to the financial
condition, results of operations, business achievements and/or
investment strategy of the Company. Such forward looking statements
are based on the Board's expectations of external conditions and
events, current business strategy, plans and the other objectives
of management for future operations, and estimates and projections
of the Company's financial performance. Though the Board believes
these expectations to be reasonable at the date of this document
they may prove to be erroneous. Forward looking statements involve
known and unknown risks, uncertainties and other factors which may
cause the actual results, achievements or performance of the Group,
or the industry in which the Group operates, to be materially
different from any future results, achievements or performance
expressed or implied by such forward looking statements.
INTERIM MANAGEMENT REPORT
Financial Performance Review
H1 23 H1 22 Change
-------
Revenue GBP41.1m GBP33.4m +23%
Gross profit GBP14.3m GBP11.4m +26%
Adjusted EBITDA ([1]) GBP12.3m GBP10.4m +19%
Adjusted EBITDA margin 30% 31% -1pp
Profit before tax GBP9.9m GBP8.4m +17%
Adjusted diluted EPS
([1]) 18.5p 15.1p +23%
Net cash ([2]) GBP19.5m GBP11.1m +76%
------------------------- ---------- ---------- -------
([1]) In order to provide better clarity to the underlying
performance of the Group, Elixirr uses adjusted EBITDA and adjusted
earnings per share as alternative performance measures ("APMs").
Please refer to note 2 of the Group's interim condensed
consolidated financial statements.
([2]) The Group has no debt other than office leases capitalised
under IFRS16. Net cash excludes capitalised office leases.
The Board is pleased to report that the Group performed well in
H1 23, continuing to grow revenue and adjusted EBITDA against our
ambition to build the best digital, data, AI and strategy
consultancy in the world. The investments we made in FY 22,
including Partner hires and leveraging the capabilities of our
acquisitions, meant we have continued to deliver on expanded
services to our clients, with strong momentum going into H1 23.
During H1 23, Group revenue increased to GBP41.1m with three
record revenue months. This represents 23% absolute revenue growth
compared to H1 22. Underlying organic revenue growth was 14%, with
GBP5.3m growth from scaling existing clients and GBP4.3m growth
from new clients. The strong organic growth is testament to our
focus on growing key accounts, good client retention and deepening
of relationships, utilising newly hired Partners' networks and our
growing brand reputation.
The following revenue bridge displays the elements of the growth
in revenue from GBP33.4m in H1 22 to GBP41.1m in H1 23.
Group gross profit increased by 26% to GBP14.3m (H1 22:
GBP11.4m), slightly ahead of the growth in revenue, given an
increase in revenue per Partner.
Group adjusted EBITDA grew by 19% compared to H1 22, totalling
GBP12.3m, and maintaining our track record of profitability with an
adjusted EBITDA margin of 30% (H1 22: 31%), slightly ahead of the
adjusted EBITDA margin of 29% achieved in full year FY 22.
Profit before tax increased by 17% to GBP9.9m (H1 22: GBP8.4m).
Excluding the impact of the M&A-related net credit of GBP0.5m
in H1 22, this represented an increase of 25%. Further details of
M&A-related items are set out in note 4 of the Group's interim
condensed consolidated financial statements.
Adjusted diluted earnings per share increased by 23% to 18.5p
(H1 22: 15.1p), reflecting the strong growth in adjusted EBITDA.
The dilution calculation includes the potential additional dilution
from shares that could be issued to satisfy the FY 23 and FY 24
contingent consideration for the acquisition of iOLAP (US$7.4m).
The Group retains the option to satisfy this consideration through
a cash payment with a commitment to buy shares from the EBT to
minimise dilution.
The Group's net cash position decreased by GBP0.6m from GBP20.4m
at 31 December 2022 to GBP19.5m at 30 June 2023, primarily due to
the settlement of Coast (GBP0.2m) and iOLAP FY 22 contingent
consideration (US$7.4m) and the payment of iOLAP initial
consideration held back for warranties (US$0.5m). The iOLAP sellers
used the after-tax amount of the contingent consideration to
purchase shares from the EBT. The higher operating cash flow in H1
23 compared to H1 22 was due to higher EBITDA as well as improved
working capital performance.
Net assets as at 30 June 2023 totalled GBP102m (31 December
2022: GBP95.9m). The increase in net assets during H1 23 includes
the retained profit for the period of GBP3.7m (after accrual of the
FY 22 final dividend of GBP4.9m partially offset by a credit for
the share-based payments charge of GBP0.7m), sale of shares by the
EBT of GBP7.1m, less purchases of shares by the EBT of GBP3.4m and
foreign currency losses of GBP1.4m following weakening of the US
dollar.
Operational Review
In the first half of FY 23, Elixirr continued to position itself
strongly with global clients, facilitated by our four-pillar growth
strategy:
-- The depth of our C-suite relationships and breadth of
offering has ensured continued growth in revenue through the
period
-- Increased cross-sell across the Group with particular success
in significantly increasing cross-sell of the services of our
acquisitions
-- Deepening of our data and AI capabilities through a
partnership with, and post-period end acquisition of, Responsum
Inc.
-- Growing our market presence and brand, launching our biggest
campaign to date and more than doubling our FY 22 marketing
leads
-- Strong equity participation in our 2023 ESPP, with 75%+ of
the consulting team opting in and over 50% at a Group level,
highlighting the continued commitment of our teams
During the period, we carried out a range of strategic client
engagements including:
-- We partnered with one of the world's largest investment
management firms to explore innovative ways to further its ESG
focus and compliance surrounding its shareholder voting and
investee company rating processes utilising AI-powered
technologies
-- Accelerated the global finance transformation of a luxury
fashion house - a lead generated by Elixirr's marketing team,
refreshing their strategic communications, supporting an effective
programme delivery and establishing robust governance and
reporting
-- Utilised cross-brand expertise to deliver a target operating
model for a global services standards firm alongside digital
transformation including website redesign
-- Supported an independent European Bank, a new client in 2023,
to strategically review their project management office then set up
their Cyber Security vision and roadmap - growing the account from
one initial engagement to become a GBP1m+ revenue gold client
-- Using our strategy, digital and data expertise, we worked
with a major US industrials firm to automate and enhance their
enterprise sales reporting tool, designing a bespoke
customer-journey aligned IT operating model, and building a
forward-focused enterprise digital vision aligned to growth
aspirations
Our work over H1 23 has again been recognised through numerous
awards and accolades including:
-- We were recognised by the Financial Times as one of the UK's
leading management consultants in 2023
-- Listed again on the Global Outsourcing 100(R) in 2023, the
annual list of the world's best outsourcing service providers and
advisors compiled by the International Association of Outsourcing
Professionals (IAOP(R))
-- Stephen Newton, CEO and Founder, honoured by Consulting
Magazine for Lifetime Achievement in the Top Consultant 2023
Awards
-- Recognised by Consultancy.UK as one of the Top Consulting
Firms in the UK with platinum and gold rankings in nine service
areas including Finance, Strategy, Innovation and Outsourcing &
Shared Services
Growth Strategy
Elixirr's overarching growth strategy continues to be focused
through the following pillars:
1. Stretching our existing Partners
2. Promoting Partners from within
3. Hiring new Partners
4. Acquiring new businesses
1. Stretching our existing Partners
As set out in the table below, there were significant increases
in average revenue per Partner from GBP1.65m of revenue in H1 22 to
GBP2.04m for H1 23, highlighting the overall strength and quality
of the Partner team. This performance is also a reflection of the
continued extension of Elixirr's capabilities, with data, digital
and AI being further embedded into projects over the period.
Established Partners achieved revenue of GBP2.18m, increasing
from GBP1.99m in H1 22. We retained our focus of growing key
accounts resulting in increased client retention and through recent
and new Partner hires and their respective networks brought on new
logos, including potential gold clients.
2. Promoting Partners from within
Two Partner promotions became effective at the start of the year
- Benjamin Gower, with strong insurance credentials who has
continued to expand our biggest account in this space, and Danielle
Croucher who has been a key contributor in growing our US business,
one of Elixirr's key geographical focuses. Their average revenue
contribution of GBP1.77m for the half year can be seen in the graph
above.
Three additional Principals were promoted to Partner in Q1 and
Q2 - two effective October 2023, and one effective January
2024.
Dan Coral, US based Principal joined the firm in 2021 from
Accenture and is currently based out of the firm's New York office.
He has over 12 years of consulting experience, with deep expertise
across data strategy and mergers and acquisitions. Rory Farquharson
has grown with the firm, having joined Elixirr in 2015 and has
worked in 4 of the firm's central geographies: Johannesburg, San
Francisco, New York and London - his success building out the US
business contributed to him being named one of Consulting
Magazine's Rising Stars of the Profession for 2022.
Nick Larsen has been with iOLAP for 18 years and has fulfilled
every role across the value chain, including data engineering and
solution architecture, giving him an end-to-end understanding of
how to solve clients' most pressing data and technology challenges.
This marks the first promotion to Partner from one of Elixirr's
acquisitions and demonstrates the career opportunities available to
talented members of our acquisitions' teams.
All three of these new Partner appointments will be key in
contributing to the firm's success worldwide.
Principal talent has developed strongly during the first half of
the year with four external hires, bringing SME expertise across
insurance and data, and a further five Managers promoted to
Principal, bringing our Principal team to 35+.
3. Hiring new Partners
Our third growth pillar, hiring Partners continued to progress
in 2023. To date this year, four additional Partners have been
hired into the team, all via referrals from existing team members,
making us confident that they have the attributes to be successful
at Elixirr. They bring networks spanning a range of industries and
geographies, supporting continued diversification into key
markets.
Ian Stuart joined in Q2, bringing a wealth of consulting
experience, and strong connections in pharma and healthcare - as a
previous founder he is a natural market maker, making him a strong
fit for Elixirr culturally. Bob Skinstad, the former South Africa
rugby captain, joined in Q3, and with over 20 years of business
experience across South Arica and Europe brings a unique network
across sectors, with specific expertise in the sports and media
industries. The recent hire of John Kalil, based in the US, marks
an exciting hire in this geography, as he has extensive experience
in management consulting and retail apparel.
As part of today's acquisition announcement, Steve Steinberg
joins with Responsum, bringing deep expertise across AI, technology
and e-commerce to Elixirr. Having already collaborated on multiple
engagements over the last few months, Steve's transition to join
the Partner team will drive a seamless go-to-market approach for
Responsum's AI technology.
Ensuring these team members are set up for success will be a key
focus for the remainder of 2023 and beyond, utilising their
respective capabilities and networks in the business. In addition,
we continue to build a pipeline of future Partner hires.
4. Acquiring new businesses
Bringing on entrepreneurial leaders and additive and expansive
services continues to be a core focus. This increases the range of
services that all Partners can sell to clients, ensuring we can
continue to provide a broad range of strategy and execution
services.
Today, following on from our partnership earlier this quarter,
we announce the acquisition of Responsum which brings in-depth AI
expertise to the Group. This exciting and highly strategic
acquisition is key for Elixirr and valuable for our clients, as we
continue to explore and adopt the growth opportunities that global
emerging technologies present.
Our dedicated M&A team scouted a further 500+ targets in the
first half of 2023, with a number of potential acquisition targets
currently well-progressed. We have a strong overall acquisition
pipeline going into the remainder of the year but continue to have
stringent criteria to ensure that we only complete acquisitions
that meet our focus around quality, performance and value.
Outlook
The Board remains confident in the Group's outlook for full year
FY 23, having just achieved a record revenue month in August 2023.
We expect to report revenue within the guidance range of GBP85-90
million and profitability remains strong - we expect the full year
adjusted EBITDA margin to also be within the 28-30% guidance
range.
Gavin Patterson Stephen Newton
Chairman Chief Executive Officer
Interim Condensed Consolidated Statement of Comprehensive
Income
For the six months ended 30 June 2023
Six months Six months
ended ended
30 June 30 June 2022
2023 Unaudited
Unaudited
Note GBP'000s GBP'000s
Revenue 41,139 33,368
Cost of sales (26,859) (22,016)
-------------------- -------------------
Gross profit 14,280 11,352
Administration expenses (4,089) (3,093)
Operating profit before exceptional
items 10,191 8,259
Depreciation 575 477
Amortisation of intangible assets 871 904
Share-based payments 12 712 741
Adjusted EBITDA 12,349 10,381
M&A-related items 4 (55) 530
Operating profit 10,136 8,789
Net finance expense (263) (366)
-------------------- -------------------
Profit before tax 9,873 8,423
Taxation (2,206) (1,749)
Profit for the period 7,667 6,674
-------------------- -------------------
Exchange differences on translation
of foreign operations (1,367) 1,843
Total comprehensive income for
the period 6,300 8,517
==================== ===================
Basic earnings per Ordinary share
(p) 5 16.6 14.5
Diluted earnings per Ordinary
share (p) 5 15.0 12.9
Adjusted basic earnings per Ordinary
share (p) 5 20.5 16.9
Adjusted diluted earnings per
Ordinary share (p) 5 18.5 15.1
All results relate to continuing operations.
The attached notes form part of these interim condensed
consolidated financial statements.
Interim Condensed Consolidated Statement of Financial
Position
As at 30 June 2023
As at As at As at
30 June 31 December 30 June
2023 2022 2022
Unaudited Audited Unaudited
Note GBP'000s GBP'000s GBP'000s
Assets
Non-current assets
Intangible assets 6 81,215 83,581 84,403
Property, plant and equipment 5,108 5,662 5,989
Other receivables 7 1,293 1,293 1,521
Loans to shareholders 7 6,094 4,734 4,213
Deferred tax asset 2,051 1,719 1,327
-------------------- ---------------- -----------------
Total non-current assets 95,761 96,989 97,453
Current assets
Trade and other receivables 7 13,838 11,234 12,752
Corporation tax 175 - -
Cash and cash equivalents 19,494 20,433 11,072
-------------------- ---------------- -----------------
Total current assets 33,507 31,667 23,824
Total assets 129,268 128,656 121,277
-------------------- ---------------- -----------------
Liabilities
Current liabilities
Trade and other payables 8 15,440 13,304 10,986
Loans and borrowings 749 750 940
Corporation tax - 381 1,045
Other creditors 9 2,749 6,765 4,862
-------------------- ---------------- -----------------
Total current liabilities 18,938 21,200 17,833
Non-current liabilities
Loans and borrowings 3,993 4,393 4,766
Deferred tax liability 1,406 1,435 1,411
Other non-current liabilities 9 2,963 5,713 7,257
-------------------- ---------------- -----------------
Total non-current liabilities 8,362 11,541 13,434
Total liabilities 27,300 32,741 31,267
-------------------- ---------------- -----------------
Net assets 101,968 95,915 90,010
-------------------- ---------------- -----------------
Equity
Share capital 10 52 52 52
Share premium 10 24,512 25,599 25,673
Capital redemption reserve 2 2 2
EBT share reserve 11 (2,384) (7,147) (6,196)
Merger relief reserve 10 46,870 46,870 46,870
Foreign currency translation reserve 511 1,878 1,894
Retained earnings 32,405 28,661 21,715
-------------------- ---------------- -----------------
Total shareholders' equity 101,968 95,915 90,010
-------------------- ---------------- -----------------
Interim Condensed Consolidated Statement of Changes in
Equity
For the six months ended 30 June 2023
Foreign
Capital EBT share Merger currency
Share Share redemption reserve relief translation Retained
capital premium reserve GBP'000s reserve reserve earnings Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
As at 31
December
2021 and 01
January
2022 52 24,952 2 (2,193) 46,870 51 16,307 86,041
Comprehensive
income
Profit for the
period - - - - - - 6,674 6,674
Other
comprehensive
income - - - - - 1,843 - 1,843
Transactions
with
owners
Dividends - - - - - - (1,855) (1,855)
Share-based
payments - - - - - - 535 535
Deferred tax
recognised
in equity - - - - - - 54 54
Sale of
Ordinary
shares - 721 - 7,291 - - - 8,012
Acquisition of
Ordinary
shares - - - (11,294) - - - (11,294)
As at 30 June
2022 52 25,673 2 (6,196) 46,870 1,894 21,715 90,010
---------- ---------- ------------- ----------- ---------- ------------- ---------- ----------
Comprehensive
income
Profit for the
period - - - - - - 6,195 6,195
Other
comprehensive
income - - - - - (16) - (16)
Transactions
with
owners
Share-based
payments - - - - - - 440 440
Deferred tax
recognised
in equity - - - - - - 311 311
Sale of
Ordinary
shares - (74) - 2,452 - - - 2,378
Acquisition of
Ordinary
shares - - - (3,403) - - - (3,403)
As at 31
December
2022 and 01
January
2023 52 25,599 2 (7,147) 46,870 1,878 28,661 95,915
---------- ---------- ------------- ----------- ---------- ------------- ---------- ----------
Comprehensive
income
Profit for the
period - - - - - - 7,667 7,667
Other
comprehensive
income - - - - - (1,367) - (1,367)
Transactions
with
owners
Dividends - - - - - - (4,940) (4,940)
Share-based
payments - - - - - - 662 662
Deferred tax
recognised
in equity - - - - - - 355 355
Sale of
Ordinary
shares - (1,087) - 8,160 - - - 7,073
Acquisition of
Ordinary
shares - - - (3,397) - - - (3,397)
As at 30 June
2023 52 24,512 2 (2,384) 46,870 511 32,405 101,968
---------- ---------- ------------- ----------- ---------- ------------- ---------- ----------
Share capital
Share capital represents the nominal value of share capital
subscribed.
Share premium
The share premium account is used to record the aggregate amount
or value of premiums paid when the Company's shares are issued at a
premium, net of associated share issue costs. It also records gains
on the sale of shares by the EBT.
Capital redemption reserve
The capital redemption reserve is a non-distributable reserve
into which amounts are transferred following the redemption or
purchase of the Company's own shares.
EBT share reserve
The EBT share reserve represents the cost of shares repurchased
and held in the EBT.
Merger relief reserve
The merger relief reserve records the amounts above the nominal
value received for shares sold, less transaction costs in
accordance with section 610 of the Companies Act 2006.
Foreign currency translation reserve
The foreign currency translation reserve represents exchange
differences that arise on consolidation from the translation of the
financial statements of foreign subsidiaries.
Retained earnings
The retained earnings reserve represents cumulative net gains
and losses recognised in the statement of comprehensive income and
equity-settled share-based payment reserves and related deferred
tax on share-based payments.
Interim Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2023
Six months Six months
ended ended
30 June 30 June 2022
2023 Unaudited
Unaudited
Note GBP'000s GBP'000s
Cash flows from operating activities:
Cash generated from operations 14 6,535 2,667
Taxation paid (2,666) (1,961)
--------------------- ------------------
Net cash generated from operating
activities 3,869 706
Cash flows from investing activities:
Purchase of property, plant and
equipment (42) (74)
Payment for acquisition of subsidiary (6,610) (17,152)
Interest received 148 54
--------------------- ------------------
Net cash utilised from investing
activities (6,504) (17,172)
Cash flows from financing activities:
EBT Ordinary share purchases (3,397) (11,294)
EBT Ordinary share sales 7,202 8,012
Loans to shareholders (2,000) (1,500)
Loans repaid by shareholders 645 1,291
Repayment of borrowings - (1,143)
Lease liability payments (361) (179)
Interest paid (124) (58)
--------------------- ------------------
Net cash generated/(utilised)
from financing activities 1,965 (4,871)
Net decrease in cash and cash
equivalents (670) (21,337)
--------------------- ------------------
Cash and cash equivalents at beginning
of the period 20,433 31,795
Effects of exchange rate changes
on cash and cash equivalents (269) 614
Cash and cash equivalents at
the end of the period 19,494 11,072
--------------------- ------------------
Notes to the Group's Interim Condensed Consolidated Financial
Statements
1. Basis of Preparation and Significant Accounting Policies
1.1. General information
Elixirr International plc (the "Company") and its subsidiaries'
(together the "Group") principal activities are the provision of
consultancy services.
The Company is a limited company incorporated in England and
Wales and domiciled in the UK. The address of the registered office
is 12 Helmet Row, London, EC1V 3QJ and the company number is
11723404.
The consolidated financial statements were authorised for issue
in accordance with a resolution of the Directors on 15 September
2023.
1.2. Basis of preparation
These interim financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting and should be
read in conjunction with the Group's last annual consolidated
financial statements, as at and for the year ended 31 December
2022. They do not include all of the information required for a
complete set of IFRS financial statements, however, selected
explanatory notes are included to explain events and transactions
that are significant to an understanding of the changes in the
Group's financial position and performance since the last annual
financial statements.
Statutory accounts
Financial information contained in this document does not
constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006 ("the Act").
The financial information provided for the current six-month
period ended 30 June 2023 and comparative period ended 30 June 2022
is unaudited. The financial information provided for the
comparative period ended 31 December 2022 was audited.
The presentational currency of these financial statements and
the functional currency of the Group is pounds sterling.
1.3 Basis of consolidation
These financial statements consolidate the financial statements
of the Company and its subsidiary undertakings as at 30 June
2023.
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
These 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 IFRS requires the use of certain critical
accounting estimates and management judgements in applying the
accounting policies. The significant estimates and judgements that
have been made and their effect is disclosed in note 1.6.1.
1.5. Going concern
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Company and the Group
have adequate resources to continue in operation for the
foreseeable future. The Group's forecasts and projections, taking
into account reasonable possible changes in trading performance,
show that the Group has sufficient financial resources, together
with assets that are expected to generate cash flow in the normal
course of business. Accordingly, the Directors have adopted the
going concern basis in preparing these consolidated financial
statements.
1.6. Principal accounting policies
Please refer to the Group's last annual consolidated financial
statements for full disclosure of the principal accounting policies
that have been adopted in the preparation of these interim
condensed consolidated financial statements. The key accounting
policies that affected the Group in the period are documented
below.
1.6.1. Judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management
to make estimates and judgements that affect the reported amounts
of assets, liabilities, costs and revenue in the financial
statements. Actual results could differ from these estimates. The
judgements, estimates and associated assumptions are based on
historical experience and other factors that are considered to be
relevant.
In the process of applying the Group's accounting policies, the
Directors have made no judgements (excluding those involving
estimations), which are considered to have a significant effect on
the amounts recognised in the financial statements for the period
ending 30 June 2023.
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 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.
1.6.2. Revenue recognition
Revenue is measured as the fair value of consideration received
or receivable for satisfying performance obligations contained in
contracts with clients, excluding discounts and Value Added Tax.
Variable consideration is included in revenue only to the extent
that it is highly probable that a significant reversal will not be
required when the uncertainties determining the level of variable
consideration are resolved.
This occurs as follows for the Group's various contract
types:
-- Time-and-materials contracts are recognised over time as
services are provided at the fee rate agreed with the client where
there is an enforceable right to payment for performance completed
to date.
-- Fixed-fee contracts are recognised over time based on the
actual service provided to the end of the reporting period as a
proportion of the total services to be provided where there is an
enforceable right to payment for performance completed to date.
This is determined based on the actual inputs of time and expenses
relative to total expected inputs.
-- Performance-fee contracts are recognised when the right to
consideration arises on having met the relevant performance-related
elements.
-- Contingent-fee contracts, over and above any agreed minimum
fee, are recognised at the point in time that the contingent event
occurs and the Group has become entitled to the revenue.
Where contracts include multiple performance obligations, the
transaction price is allocated to each performance obligation based
on its stand-alone selling price. Where these are not directly
observable, they are estimated based on expected cost-plus margin.
Adjustments are made to allocate discounts proportionately relative
to the stand-alone selling price of each performance
obligation.
Estimates of revenues, costs or extent of progress toward
completion are revised if circumstances change. Any resulting
increase or decrease in estimated revenues or costs are reflected
in the statement of comprehensive income in the period in which the
circumstances that give rise to the revision became known.
For time-and-materials and fixed-fee contracts, fees are
normally billed on a monthly basis. For performance-fee and
contingent-fee contracts, fees are normally billed and paid when
entitlement to the revenue has been established. If the revenue
recognised by the Group exceeds the amounts billed, a contract
asset is recognised. If the amounts billed exceed the revenue
recognised, a contract liability is recognised. Contract assets are
reclassified as receivables when billed and the consideration has
become unconditional because only the passage of time is required
before payment is due.
The Group's standard payment terms require settlement of
invoices within 30 days of receipt.
The Group does not adjust the transaction price for the time
value of money as it does not expect to have any contracts where
the period between the transfer of the promised services to the
client and the payment by the client exceeds one year.
1.6.3. Business combinations, goodwill and consideration
Business combinations
The Group applies the acquisition method of accounting to
account for business combinations in accordance with IFRS 3,
'Business Combinations'.
The consideration transferred for the acquisition of a
subsidiary is the fair value of the assets transferred, the
liabilities incurred and the equity interests issued by the Group.
The consideration transferred includes the fair value of any asset
or liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date. The excess
of the consideration transferred over the fair value of the Group's
share of the identifiable net assets acquired is recorded as
goodwill. All transaction related costs are expensed in the period
they are incurred as operating expenses. If the consideration is
lower than the fair value of the net assets of the subsidiary
acquired, the difference is recognised in the income statement.
Goodwill
Goodwill is initially measured at cost and any previous interest
held over the net identifiable assets acquired and liabilities
assumed. If the fair value of the net assets acquired is in excess
of the aggregate consideration transferred, the Group re-assesses
whether it has correctly identified all of the assets acquired and
all of the liabilities assumed and reviews the procedures used to
measure the amounts to be recognised at the acquisition date. If
the reassessment still results in an excess of the fair value of
net assets acquired over the aggregate consideration transferred,
then the gain is recognised in the income statement.
After initial recognition, goodwill is measured at cost less any
accumulated impairment losses. For the purposes of impairment
testing, goodwill is allocated to each of the Group's
cash-generating units expected to benefit from the synergies of the
combination. Cash-generating units to which goodwill has been
allocated are tested for impairment annually, or more frequently
when there is an indication that the unit may be impaired.
The Group performs impairment reviews at the reporting period
end to identify any goodwill or intangible assets that have a
carrying value that is in excess of its recoverable amount.
Determining the recoverability of goodwill and the intangible
assets requires judgement in both the methodology applied and the
key variables within that methodology. Where it is determined that
an asset is impaired, the carrying value of the asset will be
reduced to its recoverable amount with the difference recorded as
an impairment charge in the income statement.
Contingent and non-contingent deferred consideration on
acquisition
Contingent and non-contingent deferred consideration may arise
on acquisitions. Non-contingent deferred consideration may arise
when settlement of all or part of the cost of the business
combination falls due after the acquisition date. Contingent
deferred consideration may arise when the consideration is
dependent on future performance of the acquired company.
Deferred consideration associated with business combinations
settled in cash is assessed in line with the agreed contractual
terms. Consideration payable is recognised as capital investment
cost when the deferred or contingent consideration is not
employment-linked. Alternatively, consideration is recognised as
remuneration expense over the deferral or contingent performance
period, where the consideration is also contingent upon future
employment. Where the 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.
1.6.4. Foreign currency translation
Functional and presentational currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ('the functional
currency'). The financial statements are presented in 'sterling',
which is the Group's and Company's functional currency and
presentation currency.
On consolidation, the results of overseas operations are
translated into sterling at rates approximating to those ruling
when the transactions took place. All assets and liabilities of
overseas operations are translated at the rate ruling at the
reporting date. Exchange differences arising on translating the
opening net assets at opening rate and the results of overseas
operations at actual rate are recognised in other comprehensive
income.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income
statement.
1.6.5. Intangible assets
Intangible assets are measured at cost less accumulated
amortisation and any accumulated impairment losses. Intangible
assets acquired in a business combination are initially measured at
their fair value (which is regarded as their cost). Subsequent to
initial recognition, intangible assets acquired in a business
combination are reported at cost less accumulated amortisation and
any accumulated impairment losses.
Intangible assets acquired in a business combination are
identified and recognised separately from goodwill where they
satisfy the definition of an intangible asset under IAS 38. Such
assets are only recognised if either:
-- They are capable of being separated or divided from the
company and sold, transferred, licensed, rented or exchanged,
either individually or together with a related contract,
identifiable asset or liability, regardless of whether the company
intends to do so; or
-- They arise from contractual or other legal rights, regardless
of whether those rights are transferable or separable from the
entity or from other rights and obligations.
The cost of such intangible assets is the fair value at the
acquisition date. All intangible assets acquired through business
combinations are amortised over their estimated useful lives. The
significant intangibles recognised by the Group, their useful
economic lives and the methods used to determine the cost of the
intangibles acquired in business combinations are as follows:
Intangible Asset Useful Economic 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
----------------------- ------------------ -----------------------------
1.6.6. Tangible assets
Tangible fixed assets are stated at cost net of accumulated
depreciation and accumulated impairment losses.
Costs comprise purchase costs together with any incidental costs
of acquisition.
Depreciation is provided to write down the cost less the
estimated residual value of all tangible fixed assets by equal
instalments over their estimated useful economic lives on a
straight-line basis. The following rates are applied:
Tangible fixed Useful economic life
asset
----------------------- ---------------------
Leasehold improvements Over the life of the
lease
Computer equipment 3 years
Fixtures and fittings 3 years
----------------------- ---------------------
The assets' residual values, useful lives and depreciation
methods are reviewed, and adjusted prospectively if appropriate, if
there is an indication of a significant change since the last
reporting date. Low value equipment including computers is expensed
as incurred.
1.6.7. Impairments of tangible and intangible assets
At each reporting end date, the Group reviews the carrying
amounts of its tangible and intangible assets (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.
1.6.8. Employee benefits
Post-retirement benefits
The Group pays into defined contribution pension schemes on
behalf of employees, that are operated by third parties. The assets
of the schemes are held separately from those of the Group in
independently administered funds.
The amount charged to the income statement represents the
contributions payable to the scheme in respect of the accounting
period.
Share-based payments
The cost of share-based employee compensation arrangements,
whereby employees receive remuneration in the form of share
options, is recognised as an employee benefit expense in the
statement of 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 recognises the effects of modifications, to the terms
and conditions on which equity instruments were granted, that
increase the total fair value of share-based payment arrangements
or are otherwise beneficial to the employee. The Group includes the
incremental fair value granted in the measurement of the amount
recognised for services received as consideration for the equity
instruments granted. The incremental fair value granted is the
measured as the difference between the fair value of the modified
equity instrument and that of the original equity instrument, both
estimated as at the date of the modification. If the modification
occurs during the vesting period, the incremental fair value
granted is included in the measurement of the amount recognised for
services received over the period from the modification date until
the date when the modified equity instruments vest, in addition to
the amount based on the grant date fair value of the original
equity instruments, which is recognised over the remainder of the
original vesting period.
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 12 for further details.
1.6.9. Earnings per share
The Group presents basic and diluted earnings per share on an
IFRS basis. In calculating the weighted average number of shares
outstanding during the period, any share restructuring is adjusted
to allow comparability with other periods.
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. Alternative Performance Measures ("APMs")
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:
H1 23 H1 22
GBP'000s GBP'000s
-------------------------------------------------------- -------------------------- -------------------------
Profit before tax 9,873 8,423
-------------------------------------------------------- -------------------------- -------------------------
Adjusting items:
M&A-related items (note 4) 55 (530)
Amortisation of intangible assets 871 904
Share-based payments 712 741
Finance cost - iOLAP contingent consideration (note 9) 293 254
Adjusted profit before tax 11,804 9,792
-------------------------------------------------------- -------------------------- -------------------------
Depreciation 575 477
Finance (income)/cost (excluding
iOLAP contingent consideration) (30) 112
Adjusted EBITDA 12,349 10,381
-------------------------------------------------------- -------------------------- -------------------------
The table below sets out the reconciliation of the Group's
adjusted profit after tax to adjusted profit before tax:
H1 23 H1 22
GBP'000s GBP'000s
------------------------------- -------------------------- -------------------------
Adjusted profit before tax 11,804 9,792
------------------------------- -------------------------- -------------------------
Tax charge (2,206) (1,749)
Tax impact of adjusting items (140) (228)
Adjusted profit after tax 9,458 7,815
------------------------------- -------------------------- -------------------------
Adjusted profit after tax is used in calculating adjusted basic
and adjusted diluted EPS. Adjusted profit after tax is stated
before adjusting items and their associated tax effects.
Adjusted EPS is calculated by dividing the adjusted profit after
tax for the period attributable to Ordinary shareholders by the
weighted average number of Ordinary shares outstanding during the
period. Adjusted diluted EPS is calculated by dividing adjusted
profit after tax by the weighted average number of shares adjusted
for the impact of potential Ordinary shares.
Potential Ordinary shares are treated as dilutive when their
conversion to Ordinary shares would decrease EPS. Please refer to
note 5 for further detail.
H1 23 H1 22
p p
---------------------- ------------------------- -------------------------
Adjusted EPS 20.5 16.9
Adjusted diluted EPS 18.5 15.1
---------------------- ------------------------- -------------------------
3. Segmental Reporting
IFRS 8 requires that operating segments be identified on the
basis of internal reporting and decision-making. The Group is
operated as one global business by its executive team, with key
decisions being taken by the same leaders irrespective of the
geography where work for clients is carried out. The Directors
therefore consider that the Group has one operating segment. As
such, no additional disclosure has been recorded under IFRS 8.
4. M&A-related Items
H1 23 H1 22
GBP'000s GBP'000s
------------------------------------------------- ----------------------- -------------------------
M&A-related items 55 (530)
------------------------------------------------- ----------------------- -------------------------
* Transaction costs 55 403
* Adjustment to contingent consideration - (933)
------------------------------------------------- ----------------------- -------------------------
The M&A-related items in H1 23 include non-recurring costs
associated with M&A activity. The M&A-related net credit of
GBP0.5m in H1 22 include adjustments to contingent consideration
associated with the acquisition of Retearn and iOLAP, less
non-recurring costs associated with the acquisition of iOLAP.
5. 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 performance 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:
H1 23 H1 22
-------------------------------------- ------------------------- -------------------------
Basic and Diluted EPS
Profit attributable to the Ordinary
equity holders of the Group used
in calculating basic and diluted
EPS (GBP'000s) 7,667 6,674
-------------------------------------- ------------------------- -------------------------
Basic earnings per Ordinary share
(p) 16.6 14.5
Diluted earnings per Ordinary
share (p) 15.0 12.9
-------------------------------------- ------------------------- -------------------------
H1 23 H1 22
-------------------------------------- ------------------------- -------------------------
Adjusted Basic and Diluted EPS
Profit attributable to the ordinary
equity holders of the Group used
in calculating adjusted basic
and diluted EPS (note 2) (GBP'000s) 9,458 7,815
-------------------------------------- ------------------------- -------------------------
Adjusted basic earnings per Ordinary
share (p) 20.5 16.9
Adjusted diluted earnings per
Ordinary share (p) 18.5 15.1
-------------------------------------- ------------------------- -------------------------
H1 23 H1 22
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 46,186,481
-------------------------------------- ------------------------- -------------------------
Number of dilutive Ordinary shares 4,940,924 5,614,589
Weighted average number of ordinary
shares used as the denominator
in calculating non-adjusted and
adjusted diluted EPS 51,127,405 51,801,070
-------------------------------------- ------------------------- -------------------------
6. Goodwill and Intangible Fixed Assets
Customer Order
Goodwill Trademarks relationships book Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
------------------------- --------- ----------- --------------- --------- ---------
Cost
At 31 December 2021
and
01 January 2022 51,412 7,135 1,874 - 60,421
Acquisition of business 23,391 - 2,452 1,051 26,894
Gains from foreign
exchange 1,942 - 205 89 2,236
At 30 June 2022 76,745 7,135 4,531 1,140 89,551
Gains from foreign
exchange 230 - 23 9 262
At 31 December 2022 76,975 7,135 4,554 1,149 89,813
Losses from foreign
exchange (1,356) - (143) (60) (1,559)
At 30 June 2023 75,619 7,135 4,411 1,089 88,254
Amortisation
At 31 December 2021
and
01 January 2022 - (4,071) (157) - (4,228)
Charge for the period - (477) (235) (192) (904)
Losses from foreign
exchange - - (7) (9) (16)
At 30 June 2022 - (4,548) (399) (201) (5,148)
Charge for the period - (402) (385) (313) (1,100)
Gains from foreign
exchange - - 8 8 16
At 31 December 2022 - (4,950) (776) (506) (6,232)
Charge for the period - (339) (330) (202) (871)
Gains from foreign
exchange - - 32 32 64
At 30 June 2023 - (5,289) (1,074) (676) (7,039)
Net book value
At 30 June 2022 76,745 2,587 4,132 939 84,403
------------------------- --------- ----------- --------------- --------- ---------
At 31 December 2022 76,975 2,185 3,778 643 83,581
At 30 June 2023 75,619 1,846 3,337 413 81,215
------------------------- --------- ----------- --------------- --------- ---------
Goodwill
Goodwill arising on acquisition of a business in H1 22 relates
to the acquisition of iOLAP and was calculated as the fair value of
the consideration less the fair value of the net identifiable
assets at the date of the acquisition.
In line with IAS 36, the carrying value of goodwill is not
subject to systematic amortisation but is reviewed at least
annually for impairment. The Group performs an annual impairment
assessment. At 30 June 2023, the Directors determined that there
are no indications that the assets held are at risk of
impairment.
Customer Relationships and Order Book
Additions in H1 22 represent the fair value of customer
relationships and the order book from the acquisition of iOLAP.
The fair values were determined by applying the Multi-Period
Excess Earnings method. The amortisation charge is recognised
within administrative expenses.
7. Receivables
H1 23 FY 22
GBP'000s GBP'000s
Non-current assets
Loans to shareholders 6,094 4,734
Other receivables 1,293 1,293
------------------------------------ ---------- ---------
7,387 6,027
------------------------------------ ---------- ---------
Current assets
Trade receivables 12,797 10,355
Less: allowance for doubtful debts (6) (8)
---------- ---------
Trade receivables - net 12,791 10,347
Prepayments and deposits 839 653
Contract assets 127 26
Other receivables 81 208
------------------------------------
13,838 11,234
Loans to shareholders represent amounts owed 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 s455
tax receivable.
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.
Trade receivables are non-interest bearing and receivable under
normal commercial terms. Management consider that the carrying
value of trade and other receivables approximates to their fair
value. The expected credit loss on trade and other receivables was
not material at the current or prior year ends.
8. Trade and Other Payables
H1 23 FY 22
GBP'000s GBP'000s
Trade payables 1,180 1,178
Other taxes and social security
costs 1,758 1,540
Accruals 6,327 8,599
Dividend payable 4,940 -
Contract liabilities 1,233 1,983
Other payables 2 4
---------------------------------- --------- ----------
15,440 13,304
---------------------------------- --------- ----------
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.
9. Other Creditors and Other Non-current Liabilities
H1 23 FY 22
GBP'000s GBP'000s
Other creditors
Contingent consideration 2,749 6,765
------------------------------------ ---------- ----------
2,749 6,765
------------------------------------ ---------- ----------
Other non-current liabilities
Dilapidations 375 380
Cash-settled share-based payments 135 139
Contingent consideration 2,453 5,194
------------------------------------ ---------- ----------
2,963 5,713
------------------------------------ ---------- ----------
Other creditors and other non-current liabilities at 30 June
2023 include earn-out payments which are contingent on performance
and arose from the acquisition of iOLAP.
During H1 23, GBP6.0m of the iOLAP contingent consideration and
GBP0.4m of initial consideration held back for warranties under the
sale and purchase agreement was settled through a cash payment to
the former shareholders of iOLAP. The former shareholders of iOLAP
used GBP4.3m of the proceeds (the after-tax amount) to purchase
789,996 Ordinary shares in Elixirr from the EBT at a price of
GBP5.50.
Other creditors and other non-current liabilities at 31 December
2022 include earn-out payments which are contingent on performance
and arose from the acquisition of Coast Digital and iOLAP.
Other non-current liabilities include cash-settled share-based
payment obligations for the Group's employers' national insurance
on options that are yet to vest. Refer to note 12 for further
details.
Other non-current liability payments fall due beyond 12 months
from the reporting date.
10. Share capital, Share premium and Merger Relief Reserve
H1 23
---------------------------- ----------------------------------------------------------
Merger relief
Issued shares Par value reserve Share premium
Number GBP GBP'000s GBP'000s
GBP0.00005 Ordinary shares 46,186,481 2,309 46,870 24,512
GBP1 Redeemable Preference
shares 50,001 50,001 - -
46,236,482 52,310 46,870 24,512
FY 22
----------------------------------------------------------
Merger relief
Issued shares Par value reserve Share premium
Number GBP GBP'000s GBP'000s
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
---------------------------- -------------- ---------- -------------- --------------
The total number of voting rights in the Company at 30 June 2023
was 46,186,481.
Ordinary shares
On a show of hands every holder of Ordinary shares present at a
meeting, in person or by proxy, is entitled to one vote, and on a
poll each share is entitled to one vote. The shares entitle the
holder to participate in dividends, and to share in the proceeds of
winding up the Company in proportion to the number of and amounts
paid on the shares held. These rights are subject to the prior
entitlements of the Redeemable Preference shareholders.
Redeemable Preference shares
The Redeemable Preference shares are 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.
11. Employee Benefit Trust ("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 in the
Group statement of financial position and shares held by the EBT in
the Company are presented as a deduction from equity.
The EBT share reserve comprises of Ordinary and Redeemable
Preference shares bought and held in the Group's EBT.
At 30 June 2023, the Group EBT held 469,682 (FY 22: 1,204,965)
Ordinary shares and 50,001 Preference shares (FY 22: 50,001) at a
weighted average cost of GBP4.97 (FY 22: GBP5.89) and GBP1.01 (FY
22: GBP1.01) respectively.
12. Share-based Payments
Share Option Plans
The Group operates EMI and unapproved share option plans with
time-based and performance-based vesting conditions.
During H1 23, a total of 2,112,139 (H1 22: 1,268,329) share
options were granted to employees and senior management. The
weighted average fair value of the options awarded in the period is
GBP1.23 per share.
During H1 23, options issued since April 2021 were repriced to
an exercise price of GBP5.20. The weighted average incremental fair
value granted as a result of this modification was GBP0.32. The
incremental fair value was measured as the difference between the
fair value of the repriced share option and that of the original
share option, both estimated as at the date of the modification.
The incremental fair value is recognised as an expense over the
remaining vesting period from the modification date.
Details of share option awards made are as follows:
Weighted
Number of share average exercise
options (000's) price (GBP)
--------------------------------- ------------------ -------------------
Outstanding at 31 December 2022 10,886 3.47
Granted during the period 2,112 5.15
Exercised during the period (57) 2.34
Forfeited during the period (1,147) 4.51
Outstanding at 30 June 2023 11,794 3.37
--------------------------------- ------------------ -------------------
Exercisable at 30 June 2023 281 5.45
--------------------------------- ------------------ -------------------
The options outstanding at 30 June 2023 had a weighted average
remaining contractual life of 2 years and 8 months (H1 22: 3 years
and 3 months) and a weighted average exercise price of GBP3.37 (H1
22: GBP3.16) per share.
For the options exercised during H1 23, the weighted average
share price at the date of exercise was GBP5.05.
The options were fair valued at the grant date using the Black
Scholes option valuation model. The inputs into the model were as
follows:
H1 23 H1 22
--------------------------------- ------- -------
Weighted average share price
at grant date (GBP) 4.93 7.24
Weighted average exercise price
(GBP) 5.15 7.28
Volatility (%) 27.0% 25.7%
Weighted average vesting period
(years) 4.3 4.9
Risk free rate (%) 3.7% 1.5%
Expected dividend yield (%) 2.3% 0.6%
--------------------------------- ------- -------
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 H1 23.
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 acquisition of Coast Digital. 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 31 December 2022 797
Exercised during the period (297)
Outstanding at 30 June 2023 500
--------------------------------- -----------------
Exercisable at 30 June 2023 -
--------------------------------- -----------------
The share price at the date of exercise of the Coast Digital
options was GBP4.74.
The weighted average remaining contractual life of such options
at 30 June 2023 was 1 year (H1 22: 2 years).
Employee Share Purchase Plan ("ESPP")
The Group operates an employee share purchase plan where 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 H1 23, the Company awarded 185,075 (H1 22: 89,841)
matching shares on the basis of one matching share for every one
employee share purchased during FY 22. The matching shares vest
equally over a 5-year period with the first tranche vesting on 31
January 2024.
Details of ESPP awards made are as follows:
Number of ESPP
awards (000's)
--------------------------------- ---------------------------
Outstanding at 31 December 2022 78
Granted during the period 185
Vested and converted to shares
during the period (15)
Forfeited during the period (28)
Outstanding at 30 June 2023 220
--------------------------------- ---------------------------
13. Ordinary Dividends
The Board proposed a final Ordinary share dividend in respect of
the financial year ended 31 December 2022 of 10.8 pence per
Ordinary share, which was approved by shareholders at the Annual
General Meeting on 13 June 2023.
14. Cash Flow Information
Cash generated from operations:
H1 23 H1 22
GBP'000s GBP'000s
Profit before taxation 9,873 8,423
Adjustments for:
Depreciation and amortisation 1,446 1,381
Net finance expense 263 366
Share-based payments 712 741
Adjustment to contingent consideration - (933)
Increase in trade and other receivables (2,982) (1,710)
Decrease in trade and other payables (3,038) (5,329)
Foreign exchange 261 (272)
------------------------------------------ --------- -------------------------
6,535 2,667
------------------------------------------ --------- -------------------------
15. Events After the Reporting Date
On 18 August 2023 the Company paid the final Ordinary share
dividend in respect of the financial year ended 31 December 2022.
The amount paid of GBP4.9m represented 10.8 pence per Ordinary
share.
On 15 September 2023, the Group acquired 100% of the share
capital and voting rights of Responsum Inc. ("Responsum"), a
US-headquartered firm which has developed proprietary artificial
intelligence (AI) software. The Group was already working closely
with Responsum prior to the acquisition and sees a significant
opportunity to offer iOLAP's data consulting services in
conjunction with Responsum's AI platform to our client base.
The Group acquired Responsum for a maximum enterprise value of
US$7.4 million. The maximum equity consideration is US$6.4m, which
consists of:
-- Initial consideration of US$2.0m in cash;
-- Initial consideration of US$3.4m to be settled through the
issue in September 2023 of 505,196 Elixirr International plc
Ordinary shares at a price of GBP5.40 per share;
-- Potential earn-out payments of up to US$1.0 million in cash
which are contingent on iOLAP Inc. and Responsum Inc. together
achieving EBIT margin targets in periods up to 31 December
2026.
Disclosure of the amounts recognised as of the acquisition date
for each major class of assets acquired and liabilities assumed,
fair value adjustments and goodwill on the acquisition of Responsum
has not be made given the limited amount of time available between
the acquisition date and the date this interim report was
authorised for issue.
As at 15 September 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.
After the issue of 505,196 shares as initial consideration for
the acquisition of Responsum (as detailed above in this note 15),
the total number of Ordinary shares in issue and voting rights in
the Company will be 46,691,677.
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END
IR NKPBPPBKDPCD
(END) Dow Jones Newswires
September 18, 2023 02:00 ET (06:00 GMT)
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