TIDMELIX
RNS Number : 9641M
Elixirr International PLC
27 September 2021
Elixirr International plc
("Elixirr", the "Company" or the "Group")
RESULTS FOR THE SIX MONTHSED 30 JUNE 2021
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 2021 (H1
21). Comparative results are presented for the six months ended 30
June 2020 (H1 20).
Financial Highlights
Elixirr is pleased to report the following financial highlights
for the Group for H1 21:
-- A 77% increase in revenue compared to H1 2020, with revenue
totalling GBP24.0m and record revenue in five of the six months in
the period
-- Strong organic revenue growth of 45%, including growth in
excess of 100% in our US business, and material contributions from
the two acquisitions made in H2 20 and H1 21
-- A 78% increase in Adjusted EBITDA([1]) compared to H1 20,
totalling GBP8.1m, and maintaining our strong track record of
profitability with an Adjusted EBITDA margin of 33.8%
-- A 145% increase in profit before tax, totalling GBP6.4m (H1 20: GBP2.6m)
-- Robust and healthy balance sheet with net cash of GBP21.1m and no debt([2])
-- Strong pipeline for the remainder of the year leading to the
second upgrade in board expectations for FY 21 of c.GBP47m-GBP50m
of revenue with an Adjusted EBITDA([1]) margin in the 30-32%
range
6 months 6 months
to to
30-June-21 30-June-20 Change
(H1 21) (H1 20)
------------------------ ------------- ------------- --------
Revenue GBP24.0m GBP13.5m +77%
Adjusted EBITDA([1]) GBP8.1m GBP4.6m +78%
Adjusted EBITDA margin 33.8% 33.6% +0.5%
Profit before tax GBP6.4m GBP2.6m +145%
------------------------ ------------- ------------- --------
([1]) Adjusted EBITDA represents operating profit, adjusted for
depreciation, amortisation, exceptional items and share-based
payments.
([2]) No debt other than office lease capitalised under
IFRS16.
Operating Highlights
-- Strong organic growth through both consistently growing
existing relationships and bringing in 42 new logos, supported by a
growing brand presence and strong market reputation for high
quality delivery
-- Expanding our US business with revenue growth in excess of
100% and a significant expansion in our US Partner team
-- Enhancing and expanding the services we can offer through our
House of Brands, both to our core client base and to the expanded
client base that has come through our acquisitions, resulting in
strong inorganic growth and increased performance of each brand
individually
-- Maintaining consistently strong gross profit and Adjusted
EBITDA margins through focus on delivery of high value to clients,
accountability to project profitability, resource utilisation and
tight control of the cost base
-- Strengthening the alignment between the employees of the
Group and its overall success through the launch of an Employee
Share Purchase Plan (ESPP), open to all employees
-- Progress on all four elements of our four-pillar growth strategy, including:
- Stretching existing partners - increased revenue per
client-facing Partner in H1 21, while continuing to grow the
Partner team
- Promoting Partners from within - one Partner promotion was
effective as of January 2021 with two new Partner promotions made
to take effect from January 2022, with continued focus on nurturing
and developing our Principal grade
- Hiring new Partners globally - six new Partners, four hires in
the US and two in Europe, bringing new global networks and
noteworthy experience from a variety of industries and previous
high calibre roles
- Inorganic growth through acquisitions - acquisition of The
Retearn Group Limited (Retearn) completed in April 2021 following
the acquisition of Coast Digital Limited (Coast Digital) in H2 20.
Continued focus on intensive scouting and detailed discussions with
multiple potential acquisition targets throughout H1 21 to identify
and execute further value-enhancing acquisitions
Commenting on the results, Stephen Newton, Chief Executive
Officer said:
"After a hugely successful 2020 supported by our admission to
the AIM market of the London Stock Exchange, I am delighted with
our progress in the first six months of 2021. We have continued to
demonstrate a proven growth formula that positions us very strongly
in a competitive market - highlighted by our strong financial
results.
Our clients remain at the core of what we do, and we are
uncompromising in the service we provide to them as we continue to
help them navigate their toughest business challenges - something
that truly differentiates us in the consulting market.
The progress across all four pillars of our growth strategy has
been fantastic in the first half of the year with a particular
highlight being our US growth, which is a key market for our
business, and I'm delighted with the developments over H1 21. Our
inorganic growth has also been immensely successful as we have
continued to prove the significance of our unique House of Brands
model, which continues to be value enhancing across the entire
spectrum of our business.
Overall, our growing team across the globe - from entry level,
through to Partner grade has never been more aligned with the
vision of the Company. The introduction of our Employee Share
Purchase Plan has further strengthened the ownership mentality and
entrepreneurial nature of our people, which truly differentiates us
in the market. I'm really proud to be able to offer each and every
team member a unique platform for their long-term growth - all of
which will continue to positively impact our clients, and the
success of Elixirr as a whole."
Enquiries:
For enquiries, please refer to our Investor Contacts page:
https://www.elixirr.com/investors/investor-contacts
Elixirr International plc +44 (0)20 7220 5410
Stephen Newton, Chief Executive Officer
Graham Busby, Chief Financial Officer
Public and Investor Relations investor-relations@elixirr.com
Caroline Pitt
finnCap Ltd (Nominated Adviser & Sole Broker) +44 (0)20 7220 0500
Christopher Raggett
Simon Hicks
Kate Bannatyne
Notes to editors
Elixirr International plc (AIM: ELIX) is an established, global,
award-winning management consultancy. The Company challenges the
larger consultancies by delivering innovative and bespoke solutions
to a repeat, globally-recognised client base.
This announcement is released by Elixirr International plc and
contains inside information for the purposes of Article 7 of the
Market Abuse Regulation (EU) 596/2014 (MAR). It is disclosed in
accordance with Elixirr's obligations under Article 17 of MAR. For
the purposes of MAR and Article 2 of Commission Implementing
Regulation (EU) 2016/1055, this announcement is being made on
behalf of the Company by Graham Busby, Chief Financial Officer.
Disclaimer
This announcement contains certain statements that are, or may
be, forward looking statements with respect to the financial
condition, results of operations, business achievements and/or
investment strategy of the Company. Such forward looking statements
are based on the Board's expectations of external conditions and
events, current business strategy, plans and the other objectives
of management for future operations, and estimates and projections
of the Company's financial performance. Though the Board believes
these expectations to be reasonable at the date of this document
they may prove to be erroneous. Forward looking statements involve
known and unknown risks, uncertainties and other factors which may
cause the actual results, achievements or performance of the Group,
or the industry in which the Group operates, to be materially
different from any future results, achievements or performance
expressed or implied by such forward looking statements.
INTERIM MANAGEMENT REPORT
We are delighted with the progress of the Group over H1 21 as we
continue to see the positive results of our overarching strategic
growth strategy. Having proven our resilience in a turbulent market
in FY20 with a strong set of results, our breadth of offering, and
distinct way of working with clients continues to be successful as
we report a significant increase in revenue and profit for the
six-month period ended 30 June 2021.
Financial Performance Review
In the six-month period ended 30 June 2021 the Group delivered
revenue of GBP24.0m and Adjusted EBITDA of GBP8.1m representing a
33.8% margin.
Profit before tax increased by 145% to GBP6.4m and adjusted
basic earnings per share increased by 64% to 13.5p.
At 30 June 2021, the Group held net cash of GBP21.1m.
6 months 6 months
to to
30-June-21 30-June-20 Change
(H1 21) (H1 20)
-------------------------- ------------- ------------- --------
Revenue GBP24.0m GBP13.6m +77%
Gross Profit GBP9.2m GBP5.3m +74%
Gross Profit margin 38.3% 39.1% -2%
Adjusted EBITDA GBP8.1m GBP4.6m +78%
Adjusted EBITDA margin 33.8% 33.6% +0.5%
Profit before tax GBP6.4m GBP2.6m +145%
Adjusted basic earnings
per share([3]) 13.5p 8.2p +64%
Basic earnings per share 11.1p 5.4p +106%
Net cash at period end GBP21.1m GBP1.9m N/A
-------------------------- ------------- ------------- --------
([3]) Adjusted basic earnings per share is calculated using
profit after tax, adjusted for amortisation, exceptional items,
share-based payments and their related tax impacts.
During H1 21, Group revenue increased to GBP24.0m. This
represents 77% growth compared to H1 20 and includes the impact of
both strong organic growth (+45%) and the contribution from the
acquisitions of Coast Digital and Retearn (together +32%).
The Group generated gross profit of GBP9.2m at a gross profit
margin of 38.3%. The margin achieved was similar to that achieved
in H1 20, reflecting a continued focus throughout the business on
the delivery of value to our clients, utilisation and control of
the cost base.
Adjusted EBITDA increased by 78% to GBP8.1m. The Adjusted EBITDA
margin of 33.8% was similar to that achieved in H1 20 with no
material changes in the overhead cost base.
Profit before tax (after exceptional items) increased by 145% to
GBP6.4m (H1 20: GBP2.6m). Further detail of exceptional items is
set out in note 3.
Adjusted basic earnings per share increased by 64% to 13.5p (H1
20: 8.2p) and basic earnings per share increased by 106% to 11.1p
(H1 20: 5.4p).
Net assets as at 30 June 2021 totalled GBP80.0m (31 December
2020: GBP70.7m). The GBP9.3m increase in net assets during H1 21
includes the retained profit for the period (GBP5.1m), the shares
issued as consideration for the acquisition of Retearn (GBP2.2m),
net sales of shares by the Elixirr employee benefit trust (EBT)
(GBP2.6m), less the accrual of the final 2020 dividend
(GBP1.0m).
The Group continues to generate strong cashflow. Net cash
increased from GBP17.5m at 31 December 2020 to GBP21.1m at 30 June
2021. The increase in cash of GBP3.6m during H1 21 reflected:
-- Operating cash inflows of GBP3.1m, with working capital
movements during the period reflecting the timing of annual bonus
payments in Q1 and the timing of debtor receipts
-- Financing cash inflows of GBP2.7m, principally loan
repayments made to the Group by Partners
-- Cash utilised for investing activities of GBP2.3m,
representing net cash consideration for the acquisition of Retearn
less cash acquired with the business (GBP1.7m) and a final payment
for surplus cash on the acquisition of Coast Digital (GBP0.6m)
Operational Review
Elixirr continues to be well positioned to assist our clients in
solving their toughest business challenges. Some of our recent
activity during the period includes:
-- Development of both existing accounts and new client
relationships, resulting in continued growth in revenue through the
period, working with numerous repeat clients and bringing on board
42 new clients across the Group in H1 21
-- Continued scaling in the US market and growing our most
strategic growth accounts in this geography with US revenue
increasing by over 100% compared to H1 20
-- Strengthening our House of Brands with increased year on year
financial performance from both Coast Digital and Retearn,
following on from the successful growth of our pre-IPO acquisition
Den Creative
-- Bolstering our "challenger" positioning, launching new
branding in April 2021, increasing our digital following and
creating more direct inbound commercial opportunities
-- Utilisation of our new procurement and digital marketing
House of Brands capabilities across some of our biggest strategic
growth accounts, creating new opportunities for the Group that were
not possible for the individual brands alone
-- Multiple notable client engagements including:
- Launching a bank's Mobile and Online digital banking solution
- Designing and building a customisable client-facing portal for a global real estate company
- Transforming a UK insurer's digital user journey, utilising
our creative expertise in strategy, digital marketing and user
experience
- Advising an international healthcare group on a billion-dollar
healthcare acquisition - evaluating M&A opportunities against
alternative growth options
- Contracting and commercial support for the extension of an
automation company's global TMT network services deal
-- Winning numerous awards and accolades including:
- Winning two awards ('Advisory Firm of the Year' and 'Financial
Services Project of the Year') at the 2021 Global Sourcing
Association Awards
- Listed as a Global Outsourcing 100(R), the annual list of the
world's best outsourcing service providers and advisors
- Our Founder & CEO, Stephen Newton, recognised as a 2021
Global Leader in Consulting again by Consulting Magazine for
'Excellence in Execution'
- Our latest acquisition Retearn, listed as a Leading Management
Consultant by the Financial Times and shortlisted at the CIPS
Excellence in Procurement Awards 2021
Growth Strategy
Elixirr's overarching growth strategy continues to be centred
around the four pillars of:
1. Stretching our existing Partners
2. Promoting Partners from within
3. Hiring new Partners
4. Acquiring new businesses
1. Stretching our existing Partners
We have continued to motivate our Partner team to grow sales,
strengthen existing client relationships and shape new
opportunities across both our organic business and cross-selling
our acquired capabilities. We are pleased to report revenue per
client-facing partner increased in H1 21 compared to H1 20.
Our Partners continue to be incentivised both through a
financial year bonus scheme and equity incentives. In H1 21, the
Group introduced additional profitability targets for the Partner
team as part of the financial year bonus scheme, ensuring that
Partners are accountable for the profitable delivery of all aspects
of the business they generate.
To ensure total alignment with the goals of the business, upon
joining the team, all new Partners acquire equity in the firm
through purchases of Ordinary shares, financed by loans from the
Company.
This equity alignment is also important for our team below
Partner level. Following the successful implementation of our share
option scheme in May 2020, in June 2021 we established an ESPP
which is open to all of our employees at all grades. It gives every
individual within the Group the opportunity to invest a proportion
of their salary in shares, 100% matched by the Company, which vest
over a five-year period. This enables us to retain the quality team
we have, while creating an attractive proposition for new joiners.
Offering our people an equity stake in Elixirr is deeply rooted in
our firm's entrepreneurial culture as we continue to build and
scale a firm of people who have an ownership mentality, positively
impacting our clients, and ultimately everyone as shareholders of
the firm.
2. Promoting Partners from within
We continue to dedicate much of our focus on 'growing our own
timber' - our existing team are already culturally integrated
within Elixirr and through the exposure they get from junior grades
can start establishing client relationships early on - something
that is hugely valuable to take forward as they progress within the
firm.
One of our new Partners who was promoted from Principal last
year officially joined the Partner team in January 2021, with a
particular focus on continuing to grow our South African business.
We have recently announced the promotion of another two Principals
to our Partner team, effective from 1 January 2022. One of these
new Partners originally joined the firm from university as an
Analyst (our entry level grade), demonstrating the very real
opportunity for talented individuals to progress the entire way
through the firm. This Principal represents the first person to
grow all the way from graduate to Partner within Elixirr - truly
'growing our own timber', of which we are extremely proud, and we
hope plots a path for many others to follow.
We have made good progress in expanding our Principal grade over
H1 21 with five additional team members, a combination of
promotions and external hires. While this grade is incentivised
with specific targets in preparation for Partner level, our entire
team have performance related bonuses and equity incentives. These
targets are designed to encourage an individual's progression
within the firm and maintain the high standards we expect -
integral to the impact we can make for clients, and the overall
performance of the Group.
3. Hiring new Partners
Hiring external Partners with existing networks and industry
expertise continues to be a key part of our organic growth
strategy, and we invest heavily in ensuring an individual's
suitability to Elixirr to ensure they add value from day one with
the firm. In H1 21 we continued to focus on scouting candidates
with diverse backgrounds with an emphasis on the US as it remains
the largest global consulting market, with optimal opportunities
for our advisory services. We also focused on continually driving
business development in our talent search, aiming to bring in
individuals with expansive networks of potential clients across the
globe.
In the first six months of the year, we made great progress in
this growth pillar with five new partner hires in the period.
Between January and June 2021, we hired four US based Partners with
widespread experience in a variety of industries including media,
healthcare and advertising and a diverse range of skill sets. The
team have already established themselves in the market, growing
existing accounts and bringing in valuable new logos - one example
being a Fortune 100 technology company. A new European partner
joined in June bringing a wealth of industry experience including
TMT, IT and retail, and over 25 years of executive experience at
CXO level. He has already brought in new logos and revenue into the
Group.
We have continued to make great progress in this space during H2
21 to date, having hired another UK based partner in August 2021.
With a proven entrepreneurial background, over the course of his
career he established a global advisory consulting practice,
guiding the evolution of a team of over 300 people across 13
countries. He has held a number of notable leadership positions
with over 15 years of experience, engaging with large
multinationals and blue-chip clients worldwide.
4. Acquiring new businesses
A key part of the Group's inorganic growth is building on our
in-house expertise and expanding the variety of services we can
offer to clients. Our House of Brands strategy was formed in 2017,
designed to give boutique businesses and their passionate founders
a unique platform for growth while retaining their client base,
brand and culture.
Our first acquisition (pre-IPO), Den Creative, has continued to
be a fantastic case study for our future acquisitions, with revenue
growing by over 700% since joining our House of Brands in 2017. The
business continues to strengthen with a consistent pipeline of
creative and digital opportunities, complemented by our wider
consulting offering.
Following this success, the Group acquired Coast Digital in
October 2020. Digital growth has continued to be at the top of our
clients' agendas and, combined with our existing capabilities, the
acquisition of Coast Digital has already made a huge impact to our
offering. Alongside the additive value in service offering for our
clients, the platform we have been able to offer Coast Digital has
made a substantive impact to its own business performance.
Throughout H1 21 we continued to scout multiple acquisition
opportunities, and in April 2021 we were pleased to announce the
acquisition of Retearn. The business was acquired for a maximum
consideration of GBP7.0m (including an element contingent on earn
out targets) at a multiple of 7x EBITDA and was immediately
earnings enhancing for the Group. Retearn has an outstanding
reputation in the market - its clients rated it 51% higher than the
competition and it featured in the FT's list of the UK's Leading
Management Consultants for 2021.
Retearn's expertise across transformation and procurement -
intended to support businesses on their biggest operational
challenges - has already begun to generate high demand across our
Group client base. Since joining our House of Brands five months
ago, Retearn's capabilities have already been utilised across,
amongst others, two of our biggest strategic growth accounts,
adding over 20% to Retearn's contracted revenue for H2 21, and we
see a strong pipeline of additional opportunities going
forward.
Growing our House of Brands continues to be one of the Group's
major strategic focuses and we have continued to actively scout new
suitable targets across the globe. Having engaged with over 150
firms since our IPO, 85 were pursued in H1 21 and we continue to
develop a compelling pipeline of targets going into the remainder
of the year. Our dedicated M&A team are disciplined in their
approach, and consistent with our client work in this space, remain
uncompromising on the quality and value of any deals they
pursue.
Outlook
The Group has continued to trade well since the end of H1 21,
with further year on year revenue and Adjusted EBITDA growth in
July and August 2021.
Given the H1 21 results and the strong pipeline that we see for
the remainder of FY21, the Board's current expectation is that full
year FY21 revenue will now be in the range of GBP47m-GBP50m with an
Adjusted EBITDA margin in the 30-32% range. Previously our
expectation was to achieve revenues at the upper end of the
GBP44m-47m range, at c.29% EBITDA margin. We are pleased to update
this.
By sustaining focus on exceptional delivery for our clients and
progressing all elements of our four-pillar growth strategy, the
Board believes that the Group is well positioned for further growth
and success for the remainder of the year and beyond.
Gavin Patterson Stephen Newton
Chairman Chief Executive Officer
Interim condensed consolidated statement of comprehensive
income
For the six months ended 30 June 2021
Six months Six months
ended ended
30 June 2021 30 June 2020
Unaudited Unaudited
Note GBP 000's GBP 000's
Revenue 24,046 13,550
Cost of sales (14,840) (8,245)
------------------------ -----------------------
Gross profit 9,206 5,305
Administration expenses (2,546) (2,081)
Exceptional items (142) (263)
------------------------ -----------------------
Operating profit 6,518 2,961
Depreciation 333 391
Amortisation of intangible assets 730 938
Share-based payments 6 394 -
Exceptional items 3 142 263
------------------------ -----------------------
Adjusted EBITDA 8,117 4,553
Net finance expense (109) (344)
------------------------ -----------------------
Profit before tax 6,409 2,617
Taxation (1,294) (624)
Profit for the period 5,115 1,993
------------------------ -----------------------
Exchange differences on translation
of foreign operations 18 134
Total comprehensive income for
the period 5,133 2,127
======================== =======================
Basic earnings per Ordinary share
(p) 5 11.1 5.4
Diluted earnings per Ordinary
share (p) 5 10.3 5.2
Adjusted basic earnings per Ordinary
share (p) 5 13.5 8.2
Adjusted diluted earnings per
Ordinary share (p) 5 12.5 7.9
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 2021
As at As at As at
30 June 2021 31 December 30 June
Unaudited 2020 2020
Audited Unaudited
Note GBP 000's GBP 000's GBP 000's
Assets
Non-current assets
Intangible assets 7 56,842 51,188 48,386
Property, plant and equipment 5,261 5,545 5,828
Other receivables 431 596 416
Loans to shareholders 7,237 7,784 7,408
Deferred tax asset 161 161 -
------------------- ------------------- -----------
Total non-current assets 69,932 65,274 62,038
Current assets
Trade and other receivables 10 8,641 4,220 5,187
Cash and cash equivalents 21,081 17,503 1,915
------------------- ------------------- -----------
Total current assets 29,722 21,723 7,102
Total assets 99,654 86,997 60,140
------------------- ------------------- -----------
Liabilities
Non-current liabilities
Loans and borrowings 4,604 4,837 7,976
Deferred tax liability 697 547 463
Other non-current liabilities 9 1,564 601 148
------------------- ------------------- -----------
Total non-current liabilities 6,865 5,985 8,587
Current liabilities
Trade and other payables 11 8,720 8,107 7,353
Loans and borrowings 459 448 2,441
Corporation tax 1,716 1,157 1,421
Other creditors 9 1,909 612 -
------------------- ------------------- -----------
Total current liabilities 12,804 10,324 11,215
Total liabilities 19,669 16,309 19,802
------------------- ------------------- -----------
Net assets 79,985 70,688 49,338
------------------- ------------------- -----------
Equity
Share capital 12 52 52 2
Share premium 12 23,562 19,729 23
Capital redemption reserve 2 2 2
EBT share reserve (297) (1,248) -
Merger relief reserve 12 46,870 46,870 46,870
Foreign currency translation reserve (54) (72) 88
Retained earnings 9,850 5,355 2,355
------------------- ------------------- -----------
Total shareholders' equity 79,985 70,688 49,338
------------------- ------------------- -----------
Interim condensed consolidated statement of cash flows
For the six months ended 30 June 2021
Six months Six months
ended ended
30 June 2021 30 June 2020
Unaudited Unaudited
GBP 000's GBP 000's
Cash flows from operating activities:
Cash generated from operations 13 3,892 6,259
Taxation paid (748) (88)
--------------------- ----------------------
Net cash generated from operating
activities 3,144 6,171
Cash flows from investing activities:
Purchase of property, plant and
equipment (33) (11)
Payment for acquisition of subsidiary,
net of cash acquired (1,473) -
Payment of deferred consideration (792) -
for acquisition of subsidiary
Interest received 16 2
--------------------- ----------------------
Net cash utilised from investing
activities (2,282) (9)
Cash flows from financing activities:
Issue of ordinary share capital - 23
Issue of redeemable preference
shares - 50
Capital reduction and share buy-backs - (626)
EBT Ordinary share purchases (370) -
EBT Ordinary share sales 3,000 -
Loans to shareholders (3,000) (5,944)
Loans repaid by shareholders 3,545 -
Repayment of borrowings - (375)
Lease liability payments (326) (301)
Interest paid (125) (152)
--------------------- ----------------------
Net cash generated/(utilised)
from financing activities 2,724 (7,325)
Net increase/(decrease) in cash
and cash equivalents 3,586 (1,163)
--------------------- ----------------------
Cash and cash equivalents at beginning
of the period 17,503 3,001
Effects of exchange rate changes
on cash and cash equivalents (8) 77
Cash and cash equivalents at end
of the period 21,081 1,915
--------------------- ----------------------
Interim condensed consolidated statement of changes in
equity
For the six months ended 30 June 2021
Unaudited Capital EBT Merger Foreign
Share Share redemption share relief currency Retained
capital premium reserve reserve reserve translation earnings Total
GBP GBP GBP 000's GBP GBP reserve GBP GBP
000's 000's 000's 000's GBP 000's 000's 000's
As at 01 January
2020 3 - - - 43,497 (46) 1,182 44,636
Comprehensive income
Profit for the
period - - - - - - 1,993 1,993
Other comprehensive
income - - - - - 134 - 134
Transactions with
owners
Share issues 1 23 - - - - - 24
Share buy-backs
at par and cancelled (2) - 2 - (3,127) - (820) (3,947)
Redesignation/conversion
of shares - - - - 6,500 - - 6,500
As at 30 June 2020 2 23 2 - 46,870 88 2,355 49,338
--------- -------- ------------ -------- --------- ------------ --------- ---------
Comprehensive income
Profit for the
period - - - - - - 2,801 2,801
Other comprehensive
income - - - - - (160) - (160)
Transactions with
owners
Share issues - - - - - - - -
Contributions of
equity, net of
transaction costs - 18,583 - - - - - 18,583
Share issue as
consideration for
a business combination - 1,123 - - - - - 1,123
Preference shares
reclassified from
loans and borrowings 50 - - - - - - 50
Share buy-backs - - - - - - - -
at par and cancelled
Acquisition of
Ordinary shares - - - (1,198) - - - (1,198)
Acquisition of
Redeemable Preference
shares - - - (50) - - - (50)
Share-based payments - - - - - - 47 47
Deferred tax recognised
in equity - - - - - - 152 152
As at 31 December
2020 and 01 January
2021 52 19,729 2 (1,248) 46,870 (72) 5,355 70,688
--------- -------- ------------ -------- --------- ------------ --------- ---------
-
Comprehensive income
Profit for the
period - - - - - - 5,115 5,115
Other comprehensive
income - - - - - 18 - 18
Transactions with
owners
Share issue as
consideration for
a business combination - 2,154 - - - - - 2,154
Dividends - - - - - - (1,014) (1,014)
Share-based payments - - - - - - 394 394
Sale of Ordinary
shares - 1,679 - 1,321 - - - 3,000
Acquisition of
Ordinary shares - - - (370) - - - (370)
As at 30 June 2021 52 23,562 2 (297) 46,870 (54) 9,850 79,985
--------- -------- ------------ -------- --------- ------------ --------- ---------
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 employee benefit trust.
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.
Notes to the 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 24 September
2021.
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
2020. 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 2021 and comparative period ended 30 June 2020
is unaudited. The financial information provided in comparative
period ended 31 December 2020 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
2021.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date that such control
ceases. The acquisition method of accounting has been adopted. The
financial statements of subsidiaries are prepared for the same
reporting period as the parent company, using consistent accounting
policies.
All intra-group balances, income and expenses and unrealised
gains and losses resulting from intra-group transactions are
eliminated in full.
1.4. Measurement convention
The consolidated financial information has been prepared under
the historical cost convention. Historical cost is generally based
on the fair value of the consideration given in exchange for
assets.
The preparation of the consolidated financial information in
compliance with IFRS requires the use of certain critical
accounting estimates and management judgements in applying the
accounting policies. The significant estimates and judgements that
have been made and their effect is disclosed in note 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 disclosures 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. Significant judgements and estimates
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.
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.
- The amortisation periods of intangible assets are estimates
based on the expected useful life and are assessed annually for any
changes based on current circumstances.
1.6.2. Revenue recognition
Revenue is measured as the fair value of consideration received
or receivable for satisfying performance obligations contained in
contracts with clients, including expenses and disbursements but
excluding discounts and Value Added Tax. Variable consideration is
included in revenue only to the extent that it is highly probable
that a significant reversal will not be required when the
uncertainties determining the level of variable consideration are
resolved. This occurs as follows for the Group's various contract
types:
- Time-and-materials contracts are recognised over time as
services are provided at the fee rate agreed with the client where
there is an enforceable right to payment for performance completed
to date.
- Fixed-fee contracts are recognised over time based on the
actual service provided to the end of the reporting period as a
proportion of the total services to be provided where there is an
enforceable right to payment for performance completed to date.
This is determined based on the actual inputs of time and expenses
relative to total expected inputs.
- Performance-fee contracts are recognised when the right to
consideration arises on having met the relevant performance-related
elements.
- Contingent-fee contracts, over and above any agreed minimum
fee, are recognised at the point in time that the contingent event
occurs and the Group has become entitled to the revenue.
Where contracts include multiple performance obligations, the
transaction price is allocated to each performance obligation based
on its stand-alone selling price. Where these are not directly
observable, they are estimated based on expected cost-plus margin.
Adjustments are made to allocate discounts proportionately relative
to the stand-alone selling price of each performance
obligation.
Estimates of revenues, costs or extent of progress toward
completion are revised if circumstances change. Any resulting
increase or decrease in estimated revenues or costs are reflected
in the statement of comprehensive income in the period in which the
circumstances that give rise the revision became known.
For time-and-materials, and fixed-fee contracts, fees are
normally billed on a monthly basis. For performance-fee and
contingent-fee contracts, fees are normally billed and paid when
entitlement to the revenue has been established. If the revenue
recognised by the Group exceeds the amounts billed, a contract
asset is recognised. If the amounts billed exceed the revenue
recognised, a contract liability is recognised. Contract assets are
reclassified as receivables when billed and the consideration has
become unconditional because only the passage of time is required
before payment is due.
The Group's standard payment terms require settlement of
invoices within 30 days of receipt.
The Group does not adjust the transaction price for the time
value of money as it does not expect to have any contracts where
the period between the transfer of the promised services to the
client and the payment by the client exceeds one year.
1.6.3. Business combinations, goodwill and consideration
Business combinations
The Group applies the acquisition method of accounting to
account for business combinations in accordance with IFRS 3,
'Business Combinations'.
The consideration transferred for the acquisition of a
subsidiary is the fair value of the assets transferred, the
liabilities incurred and the equity interests issued by the Group.
The consideration transferred includes the fair value of any asset
or liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date. The excess
of the consideration transferred over the fair value of the Group's
share of the identifiable net assets acquired is recorded as
goodwill. All transaction related costs are expensed in the period
they are incurred as operating expenses. If the consideration is
lower than the fair value of the net assets of the subsidiary
acquired, the difference is recognised in the income statement.
On 9th April 2021 the Group acquired 100% of the share capital
and voting interests of The Retearn Group Limited, a UK-based
procurement, transformation and insights consultancy firm. Their
services enable clients to self-fund their transformation and
growth aspirations through savings elsewhere in the business. The
difference between the fair value of the purchase consideration of
GBP7,361,052 and the fair value of the identifiable assets acquired
and liabilities assumed of GBP2,103,563 was recognised as goodwill
of GBP5,257,489. The goodwill is attributable to the company's
workforce and working methodologies and it is not deductible for
tax purposes. Please refer to note 8 for further details.
Goodwill
Goodwill is initially measured at cost and any previous interest
held over the net identifiable assets acquired and liabilities
assumed. If the fair value of the net assets acquired is in excess
of the aggregate consideration transferred, the Group re-assesses
whether it has correctly identified all of the assets acquired and
all of the liabilities assumed and reviews the procedures used to
measure the amounts to be recognised at the acquisition date. If
the reassessment still results in an excess of the fair value of
net assets acquired over the aggregate consideration transferred,
then the gain is recognised in the income statement.
After initial recognition, goodwill is measured at cost less any
accumulated impairment losses. For the purposes of impairment
testing, goodwill is allocated to each of the Group's
cash-generating units expected to benefit from the synergies of the
combination. Cash-generating units to which goodwill has been
allocated are tested for impairment annually, or more frequently
when there is an indication that the unit may be impaired.
The Group performs impairment reviews at the reporting period
end to identify any goodwill or intangible assets that have a
carrying value that is in excess of its recoverable amount.
Determining the recoverability of goodwill and the intangible
assets requires judgement in both the methodology applied and the
key variables within that methodology. Where it is determined that
an asset is impaired, the carrying value of the asset will be
reduced to its recoverable amount with the difference recorded as
an impairment charge in the income statement.
Contingent and non-contingent deferred consideration on
acquisition
Contingent and non-contingent deferred consideration may arise
on acquisitions. Non-contingent deferred consideration may arise
when settlement of all or part of the cost of the business
combination falls due after the acquisition date. Contingent
deferred consideration may arise when the consideration is
dependent on future performance of the acquired company.
Deferred consideration associated with business combinations
settled in cash is assessed in line with the agreed contractual
terms. Consideration payable is recognised as capital investment
cost when the deferred or contingent consideration is not
employment-linked. Alternatively, consideration is recognised as
remuneration expense over the deferral or contingent performance
period, where the consideration is also contingent upon future
employment. Where the consideration is settled in shares, the
consideration is classified as equity, it is not re-measured, and
settlement is accounted for within equity. Otherwise, subsequent
changes to fair value of the deferred consideration are recognised
in the statement of comprehensive income.
1.6.4. Foreign currency translation
Functional and presentational currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ('the functional
currency'). The financial statements are presented in 'sterling',
which is the Group's and Company's functional currency and
presentation currency.
On consolidation, the results of overseas operations are
translated into sterling at rates approximating to those ruling
when the transactions took place. All assets and liabilities of
overseas operations are translated at the rate ruling at the
reporting date. Exchange differences arising on translating the
opening net assets at opening rate and the results of overseas
operations at actual rate are recognised in other comprehensive
income.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income
statement.
1.6.5. Intangible assets
Intangible assets are measured at cost less accumulated
amortisation and any accumulated impairment losses. Intangible
assets acquired in a business combination are initially measured at
their fair value (which is regarded as their cost). Subsequent to
initial recognition, intangible assets acquired in a business
combination are reported at cost less accumulated amortisation and
any accumulated impairment losses.
Intangible assets acquired in a business combination are
identified and recognised separately from goodwill where they
satisfy the definition of an intangible asset under IAS 38. Such
assets are only recognised if either:
- They are capable of being separated or divided from the
company and sold, transferred, licensed, rented or exchanged,
either individually or together with a related contract,
identifiable asset or liability, regardless of whether the company
intends to do so; or
- They arise from contractual or other legal rights, regardless
of whether those rights are transferable or separable from the
entity or from other rights and obligations.
The cost of such intangible assets is the fair value at the
acquisition date. All intangible assets acquired through business
combinations are amortised over their estimated useful lives. The
significant intangibles recognised by the Group, their useful
economic lives and the methods used to determine the cost of the
intangibles acquired in business combinations are as follows:
Intangible asset Useful economic life Valuation method
----------------------- ------------------------ --------------------
Trademark 33.33% reducing balance Relief from Royalty
method method
Customer relationships 10% reducing balance Multi-Period Excess
method Earnings method
----------------------- ------------------------ --------------------
1.6.6. Tangible assets
Tangible fixed assets are stated at cost net of accumulated
depreciation and accumulated impairment losses.
Costs comprise purchase costs together with any incidental costs
of acquisition.
Depreciation is provided to write down the cost less the
estimated residual value of all tangible fixed assets by equal
instalments over their estimated useful economic lives on a
straight-line basis. The following rates are applied:
Tangible fixed Useful economic life
asset
----------------------- ---------------------
Leasehold improvements Over the life of the
lease
Computer equipment 3 years
Fixtures and fittings 3 years
----------------------- ---------------------
The assets' residual values, useful lives and depreciation
methods are reviewed, and adjusted prospectively if appropriate, if
there is an indication of a significant change since the last
reporting date. Low value equipment including computers is expensed
as incurred.
1.6.7. Impairments of tangible and intangible assets
At each reporting end date, the Group reviews the carrying
amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where it is not possible to
estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
The recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in
profit and loss, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a
revaluation decrease.
Where an impairment subsequently reverses, the carrying amount
of the asset (or cash-generating unit) is increased to the revised
estimate of its recoverable amount, but so that the increased
carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the
asset (or cash-generating unit) in prior years. A reversal of an
impairment loss is recognised immediately in profit and loss.
1.6.8. Employee benefits
Post-retirement benefits
The Group pays into defined contribution pension schemes on
behalf of employees, that are operated by third parties. The assets
of the schemes are held separately from those of the Group in
independently administered funds.
The amount charged to the income statement represents the
contributions payable to the scheme in respect of the accounting
period.
Share-based payments
The cost of share-based employee compensation arrangements,
whereby employees receive remuneration in the form of share
options, is recognised as an employee benefit expense in the
statement of comprehensive income.
The total expense to be apportioned over the vesting period of
the benefit is determined by reference to the fair value (excluding
the effect of non-market based vesting conditions) at the grant
date. Fair value is measured by use of Black Scholes option
valuation model.
At the end of each reporting period the assumptions underlying
the number of awards expected to vest are adjusted for the effects
of non-market based vesting conditions to reflect conditions
prevailing at that date. The impact of any revisions to the
original estimates is recognised in the statement of profit or
loss, with a corresponding adjustment to equity.
Please refer to note 6 for further details.
1.6.9. Earnings per share
The Group presents basic and diluted earnings per share on an
IFRS basis. In calculating the weighted average number of shares
outstanding during the period, any share restructuring is adjusted
to allow comparability with other periods.
The calculation of diluted earnings per share assumes conversion
of all potentially dilutive Ordinary shares, which arise from share
options outstanding.
1.7. Alternative performance measures
In order to provide better clarity to the underlying performance
of the Group, Elixirr uses adjusted EBITDA and adjusted earnings
per share as alternative performance measures. These measures are
not defined under IFRS. These non-GAAP measures are not intended to
be a substitute for, or superior to, any IFRS measures of
performance, but have been included as the Directors consider
adjusted EBITDA and adjusted earnings per share to be key measures
used within the business for assessing the underlying performance
of the Group.
Adjusted EBITDA excludes the following from operating profit:
share-based payment costs, non-cash depreciation and amortisation
charges and non-recurring exceptional costs. Adjusted EPS excludes
the following from profit after tax: share-based payment costs,
amortisation charges and non-recurring exceptional items and their
related tax impacts.
2. 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.
3. Exceptional items
Period ended Period ended
30 June 2021 30 June 2020
GBP 000's GBP 000's
Exceptional items 142 263
The exceptional items in the current period relate to costs
associated with the acquisition of Retearn (refer note 8). The
exceptional items during the six-month period ended 30 June 2020
related to non-recurring costs associated with the pre-initial
public offering (IPO) capital restructuring, IPO on AIM, the market
of that name operated by the London Stock Exchange (AIM), and EMI
share option scheme.
4. Ordinary dividends
The Board proposed a final Ordinary share dividend in respect of
the financial year ended 31 December 2020 of 2.2 pence per Ordinary
share, which was approved by shareholders at the Annual General
Meeting on 16 June 2021.
5. Earnings per share and adjusted earnings per share
The Group presents non-adjusted and adjusted basic and diluted
earnings per share (EPS) for its Ordinary shares. Basic EPS is
calculated by dividing the profit for the period attributable to
Ordinary shareholders by the weighted average number of Ordinary
shares outstanding during the period.
Diluted EPS takes into consideration the Company's dilutive
contingently issuable shares. The weighted average number of
Ordinary shares used in the diluted EPS calculation is inclusive of
the number of share options that are expected to vest subject to
performance criteria, as appropriate, being met.
The profits and weighted average number of shares used in the
calculations are set out below:
Period ended Period ended
30 June 30 June 2020
2021
Basic and diluted EPS GBP 000's GBP 000's
Profit attributable to the Ordinary
equity holders of the Group used
in calculating basic and diluted
EPS 5,115 1,993
Basic earnings per Ordinary share
(p) 11.1 5.4
Diluted earnings per Ordinary share
(p) 10.3 5.2
Period ended Period ended
30 June 30 June 2020
2021
Adjusted basic and diluted EPS GBP 000's GBP 000's
Reconciliation of earnings used
in calculating adjusted EPS:
Profit attributable to the Ordinary
equity holders of the Group used
in calculating basic and diluted
EPS 5,115 1,993
Adjusting items:
Amortisation of intangible assets 730 938
Exceptional items (note 3) 142 263
Share-based payments 394 -
Tax impact of adjusting items (192) (174)
Profit attributable to the Ordinary
equity holders of the Group used
in calculating adjusted basic and
diluted EPS 6,189 3,019
Adjusted basic earnings per ordinary
share (p) 13.5 8.2
Adjusted diluted earnings per ordinary
share (p) 12.5 7.9
Period ended Period ended
30 June 2021 30 June 2020
Number (000's) Number (000's)
Weighted average number of shares
Weighted average number of Ordinary
shares used as the denominator
in calculating non-adjusted and
adjusted basic EPS 45,889 36,787
Number of dilutive Ordinary shares 3,788 1,682
--------------- --------------
Weighted average number of Ordinary
shares used as the denominator
in calculating non-adjusted and
adjusted diluted EPS 49,677 38,469
6. Share-based payments
Share Option Plans
During the period ended 30 June 2021, a total of 5,830,430 share
options were granted to employees and senior management.
Details of share option awards made are as follows:
Number of Weighted average
share options exercise price
Number (000's) GBP
Outstanding at the beginning
of the period 5,836 0.71
Granted during the period 5,830 4.00
Forfeited during the period (640) 1.95
--------------- ----------------
Outstanding at the period end 11,026 2.38
--------------- ----------------
Exercisable at the period end - -
--------------- ----------------
No share options were exercisable in the period ended 30 June
2021.
The options outstanding at 30 June 2021 had a weighted average
remaining contractual life of 4 years and a weighted average
exercise price of GBP2.38 per share.
The weighted average of the estimated fair values of the options
outstanding as at 30 June 2021 is GBP3.21 per share.
At the grant date of the EMI Share Option Plan in 2020 the
market price of the options was aligned to the exercise price hence
the share-based payment charge calculated under IFRS 2 was
immaterial for the period ended 30 June 2020.
The options granted in the period ended 30 June 2021 were fair
valued at the grant date using the Black Scholes option valuation
model.
The inputs into the model were as follows:
Period ended
30 June
2021
-------------
Weighted average share price
at grant date (GBP) 4.73
Weighted average exercise price
(GBP) 4.00
Volatility 21.33%
Weighted average vesting period
(years) 4.56
Risk free rate 0.30%
Expected dividend yield 1.18%
-------------
Reasonable changes in the above inputs do not have a material
impact on the share-based payment charge in the period ended 30
June 2021.
On 28 October 2020, as part of the acquisition of Coast Digital
Limited, share options were issued to selling shareholders which
are employment-linked and vesting is contingent on Coast Digital
Limited achieving EBITDA targets in 2021, 2022 and 2023. The Coast
Digital Limited options outstanding at 30 June 2021 had a weighted
average remaining contractual life of 3 years and a weighted
average exercise price of GBP0.00005 per share.
On 9 April 2021, as part of the acquisition of The Retearn Group
Limited (please refer note 8), share options were issued to selling
shareholders which are employment-linked and vesting is contingent
on The Retearn Group Limited and individual selling shareholders
achieving revenue growth targets in 2021, 2022, 2023 and 2024. The
options have a fair value of GBP1.3 million and were issued at an
exercise price of GBP0.00005 per share. The value will be expensed
in the income statement per IFRS 3 proportionately over the vesting
period. The options outstanding at 30 June 2021 had a weighted
average remaining contractual life of 3 years and a weighted
average exercise price of GBP0.00005 per share.
The Coast Digital Limited and The Retearn Group Limited share
options referred to above are excluded from the reconciliation set
out above of the number of options outstanding. These share options
are for a fixed consideration where the number of share options is
variable and dependent on the share price at the time of
vesting.
Employee Share Purchase Plan ('ESPP')
On 16 June 2021, an ESPP was implemented for the 2021 financial
year.
Under the scheme, Group employees can contribute a percentage of
their gross salary (in the range of 5% to 20%) to purchase shares
in the Company and the Company will award the employees with
matching shares on the basis of one matching share for every one
employee share held on 1 January 2022.
The matching shares vest equally over a five-year period with
the first share vesting on 31 January 2023.
7. Goodwill and intangible fixed assets
Customer
Goodwill Trademarks relationships Total
GBP 000's GBP 000's GBP 000's GBP 000's
Cost
At 31 December 2019 and 01
January 2020 43,299 7,135 - 50,434
----------- ----------- ---------------- -----------
At 30 June 2020 43,299 7,135 - 50,434
Acquisition of business 2,856 - 748 3,604
----------- ----------- ---------------- -----------
At 31 December 2020 46,155 7,135 748 54,038
Acquisition of business (note
8) 5,257 - 1,126 6,383
----------- ----------- ---------------- -----------
At 30 June 2021 51,412 7,135 1,874 60,421
Amortisation
At 31 December 2019 and 01
January 2020 - (1,110) - (1,110)
Charge for the period - (938) - (938)
----------- ----------- ---------------- -----------
At 30 June 2020 - (2,048) - (2,048)
Charge for the period - (790) (12) (802)
----------- ----------- ---------------- -----------
At 31 December 2020 - (2,838) (12) (2850)
Charge for the period - (668) (61) (729)
----------- ----------- ---------------- -----------
At 30 June 2021 - (3,506) (73) (3,579)
Net book value
At 30 June 2020 43,299 5,087 - 48,386
----------- ----------- ---------------- -----------
At 31 December 2020 46,155 4,297 736 51,188
----------- ----------- ---------------- -----------
At 30 June 2021 51,412 3,629 1,801 56,842
----------- ----------- ---------------- -----------
Goodwill
Goodwill represents the excess of the cost of an acquisition
over the fair value of the Group's share of the net identifiable
assets of the acquired subsidiary at the date of the acquisition.
Goodwill is represented by the assets that do not qualify for
separate recognition.
Goodwill on acquisition of a business in the six months ended 30
June 2021 represents the goodwill on acquisition of The Retearn
Group Limited 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 8).
In line with IAS 36, the carrying value of goodwill is not
subject to systematic amortisation but is reviewed at least
annually for impairment. In line with IAS 36, the Group performs an
annual impairment assessment. At 30 June 2021, the Directors
determined that there are no indications that the assets held are
at risk of impairment.
The trading performance in the six months to 30 June 2021 has
been significantly above the downside sensitivity levels applied in
the last full impairment assessment at 31 December 2020. As such,
there is not considered to be an indicator that an additional
impairment assessment is required for this interim period.
Customer relationships
Current period additions represent the fair value of customer
relationships from the acquisition of The Retearn Group Limited.
Refer to note 8 for further details. The fair value has been
determined by applying the Multi-Period Excess Earnings method to
the cash flows expected to be earned from customer
relationships.
The key management assumptions are around 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.
8. Business combinations
On 9 April 2021, the Group acquired 100% of the share capital
and voting interests of The Retearn Group Limited, a UK-based
procurement, transformation and insights consultancy firm. Their
services enable clients to self-fund their transformation and
growth aspirations through savings elsewhere in the business. The
acquisition brings specialists in procurement and self-funded
transformation, and allows the Group to meet demand from clients to
find savings to fund strategic initiatives.
The Group acquired The Retearn Group Limited for a total
consideration of approximately GBP7.4 million, consisting of:
- An initial cash consideration of GBP2.15 million;
- The issue of 543,939 ordinary shares of 0.005 pence each in
the capital of the Company ("Ordinary shares") at a price of 396
pence per Ordinary share (being the closing mid-market price of an
Ordinary Share on 8 April 2021), equating to an additional GBP2.15
million;
- Potential earn out payments of up to GBP0.65 million in cash
and up to GBP2.05 million in new Ordinary shares totalling a
maximum of GBP2.7 million which are contingent on The Retearn Group
Limited achieving revenue growth and EBITDA margin targets in
periods up to 30 June 2024;
- Additional cash consideration of GBP0.4 million based on the
working capital of The Retearn Group Limited at completion.
Of the GBP7.4 million consideration, GBP2.35 million was paid
during the period ended 30 June 2021 and GBP2.15 million was
satisfied through the issue of Ordinary shares. The remaining
GBP2.9 million is recorded within liabilities, of which GBP1.7
million is recorded within current liabilities and GBP1.2 million
in non-current liabilities (refer note 9).
The earn out consideration of GBP2.7 million has been estimated
by management based on anticipated future revenue and EBITDA and
the impact of discounting is considered to be immaterial.
The Ordinary shares issued pursuant to the acquisition will be
subject to the same restrictions as certain other shareholders of
the Company, as described in the Company's IPO Admission Document.
These restrictions consisted of a lock-in arrangement until 8 July
2021 and certain limitations to the sale of shares until 8 July
2024.
Included within exceptional items is an amount of GBP134,534 for
stamp duty, legal and advisory fees in relation to the
acquisition.
The Retearn Group Limited contributed GBP1.7 million to the
Group's revenue and GBP0.3 million to the Group's profit before tax
for the period from the date of acquisition to 30 June 2021.
If the acquisition of the Retearn Group Limited had been
completed on 1 January 2021, Group revenues for the period ended 30
June 2021 would have been GBP26.1 million and Group profit before
tax would have been GBP6.7 million.
In calculating the goodwill arising, the fair value of the net
assets of The Retearn Group Limited have been assessed, and there
were no fair value adjustments deemed necessary, other than for the
recognition of customer relationship intangibles and the related
deferred tax.
Customer relationships were assessed to be separately
identifiable assets, recognised at fair value and are included
within intangible assets. Refer note 7 for further details.
The table below sets out the amounts recognised as at the
acquisition date for each major class of assets acquired and
liabilities assumed, the consideration and goodwill on the
acquisition of The Retearn Group Limited:
Fair
value
GBP 000's
Assets
Non-current assets
Intangible assets 1,126
Property, plant and equipment 14
-----------
Total non-current assets 1,140
Current assets
Trade and other receivables 1,407
Cash and cash equivalents 681
-----------
Total current assets 2,088
Total assets 3,228
-----------
Liabilities
Current liabilities
Trade and other payables 754
Corporation tax 155
-----------
Total current liabilities 909
Non-current liabilities
Deferred tax liability 215
-----------
Total non-current liabilities 215
Total liabilities 1,124
-----------
Fair value of net assets acquired 2,104
-----------
Goodwill (note 7) 5,257
-----------
Fair value of purchase consideration 7,361
Cash and cash equivalents in subsidiaries
acquired 681
9. Other creditors and other non-current liabilities
As at As at
30 June 31 December
2021 2020
GBP 000's GBP 000's
Other non-current liabilities
Dilapidations 195 195
Contingent consideration 1,369 406
---------- ------------
1,564 601
Other creditors
Deferred consideration 181 612
Contingent consideration 1,728 -
---------- ------------
1,909 612
Other non-current liabilities include earn-out share payments
arising from the acquisition of The Retearn Group Limited and Coast
Digital Limited. These share payments are contingent on performance
and fall due beyond 12 months from the balance sheet date.
Other creditors include contingent share and cash consideration
from the acquisition of The Retearn Group Limited and contingent
share consideration on Coast Digital Limited that fall due within
12 months from the balance sheet date. Other creditors also include
deferred consideration which represents surplus cash payable to
selling shareholders of The Retearn Group Limited.
10. Trade and other receivables
As at As at
30 June 31 December
2021 2020
GBP 000's GBP 000's
Trade receivables 7,555 3,770
Prepayments and deposits 771 373
Contract assets 282 39
Other receivables 33 38
---------- ------------
8,641 4,220
Trade receivables are non-interest bearing and receivable under
normal commercial terms. Management consider that the carrying
value of trade and other receivables approximates to their fair
value.
The expected credit loss on trade and other receivables was not
material at the current or prior period ends.
11. Trade and other payables
As at As at
30 June 31 December
2021 2020
GBP 000's GBP 000's
Trade payables 1,057 526
Other taxes and social security
costs 1,462 1,577
Accruals 4,471 4,963
Dividend payable 1,014 -
Contract liabilities 561 935
Other payables 155 106
---------- ------------
8,720 8,107
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.
12. Share capital, share premium and merger relief reserve
As at 30 June 2021
----------------- -------------------------------- --------------
Issued Merger relief
shares Par value reserve Share premium
Number (000's) GBP 000's GBP 000's GBP 000's
----------------- -------------- ---------------- --------------
GBP0.00005 Ordinary shares 46,187 2 46,870 23,562
GBP1 Redeemable Preference
shares 50 50 - -
----------------- -------------- ---------------- --------------
46,237 52 46,870 23,562
----------------- -------------- ---------------- --------------
As at 31 December
2020
----------------- ----------------------------- --------------
Merger relief
Issued shares Par value reserve Share premium
Number (000's) GBP 000's GBP 000's GBP 000's
----------------- ----------- ---------------- --------------
GBP0.00005 Ordinary shares 45,643 2 46,870 19,729
GBP1 Redeemable Preference
shares 50 50 - -
----------------- ----------- ---------------- --------------
45,693 52 46,870 19,729
----------------- ----------- ---------------- --------------
The total number of voting rights in the Company at 30 June 2021
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.
Movements in Ordinary shares:
Merger relief
Issued shares Par value reserve Share premium
Number (000's) GBP 000's GBP 000's GBP 000's
At 31 December 2020 45,643 2 46,870 19,729
Share issue as consideration
for a business combination
(note 8) 544 - - 2,154
Sale of Ordinary shares
from the EBT - - - 1,679
------------------ ------------- ---------------- -----------------
At 30 June 2021 46,187 2 46,870 23,562
------------------ ------------- ---------------- -----------------
Redeemable Preference shares
On 22 June 2020, 50,001 Redeemable Preference shares with a
nominal value of GBP1.00 each were issued. There are no voting
rights attached to the Redeemable Preference shares.
The Redeemable Preference shares were initially classified as a
financial liability at date of issue. The shares were reclassified
from loans and borrowings to share capital when the EBT acquired
the shares during H2 2020. They continue to be held by the EBT at
30 June 2021.
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.
Employee Benefit Trust ('EBT')
The EBT is accounted for under IFRS 10 and is consolidated on
the basis that the parent has control, thus the assets and
liabilities of the EBT are included in the Group statement of
financial position and shares held by the EBT in the Company are
presented as a deduction from equity.
The EBT share reserve comprises of Ordinary and Redeemable
Preference shares bought and held in the Group's EBT.
At 30 June 2021, the Group EBT held 117,289 (30 June 2020: Nil)
Ordinary shares and 50,001 Preference shares (30 June 2020: Nil) at
a weighted average cost of GBP2.11 and GBP1.01 respectively.
13. Cash flow information
Cash generated from operations
Period Period ended
ended 30 June 2020
30 June
2021
GBP 000's GBP 000's
Profit before taxation 6,409 2,617
Adjustments for:
Depreciation and amortisation 1,063 1,329
Net finance expense 109 343
Share-based payments 394 -
Increase in trade and other receivables (3,017) (514)
(Decrease)/increase in trade
and other payables (1,138) 2,445
Foreign exchange 72 39
---------- -------------
3,892 6,259
14. Related party transactions
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.
On 27 April 2021, a total of 604,524 options over Ordinary
shares were granted to Directors and Persons Discharging Managerial
Responsibilities ("PDMRs") of the Company at an exercise price of
545 pence. The options have a five-year vesting period.
On 12 May 2021, certain Directors and PDMRs of the Company sold
457,515 shares at a price of 500 pence in order to satisfy strong
institutional demand. Each of the selling shareholders applied the
proceeds to satisfy in part/full loans provided to them by the
Company to acquire Ordinary shares prior to the Company's IPO in
July 2020.
15. Events after the reporting date
On 13 August 2021, the Company paid the final Ordinary share
dividend in respect of the financial year ended 31 December 2020 of
GBP1,014,173 which represented 2.2 pence per Ordinary share.
As at 24 September 2021, the Company continues to have
46,186,481 Ordinary shares in issue, of which none are held in
Treasury. The total number of voting rights in the Company is
46,186,481. This figure of 46,186,481 may be used by shareholders
in the Company as the denominator for the calculations by which
they will determine if they are required to notify their interest
in, or a change in their interest in, the share capital of the
Company under the Financial Conduct Authority's Disclosure and
Transparency Rules.
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END
IR DKQBPPBKDOCB
(END) Dow Jones Newswires
September 27, 2021 02:00 ET (06:00 GMT)
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