REG - Elixirr Intnl PLC - Final Results
04/04/2022 07:00
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RNS Number : 0600H Elixirr International PLC 04 April 2022
ELIXIRR INTERNATIONAL PLC
("Elixirr", the "Company" or the "Group")
Final Results for the Year Ended 31 December 2021
Elixirr International plc (AIM: ELIX), an established, global award-winning
challenger consultancy, is pleased to announce its final results for the year
ended 31 December 2021.
Financial Highlights
· Revenue increased by 67% to £50.6m (2020: £30.3m)
· Adjusted EBITDA* increased by 62% to £15.7m (2020: £9.7m)
· Adjusted EBITDA* margin of 31% (2020: 32%)
· Profit before tax increased by 109% to £12.2m (2020: £5.8m)
· Adjusted diluted earnings per share* increased by 58% to 24.2p
(2020: 15.3p)
· Net cash position of £31.8m (2020: £17.5m)
· FY 22 expectations of £70-75m revenue at an Adjusted EBITDA
margin of 27-28%, including c.9 months' impact of the iOLAP acquisition
* Adjusted EBITDA excludes the following items from operating profit: non-cash
depreciation and amortisation charges, share-based payments and non-recurring
exceptional costs. Adjusted EPS excludes the following items from profit after
tax: amortisation charges, share-based payments and non-recurring exceptional
items and their related tax impacts.
Operating Highlights
· Continued progress executing the four-pillar growth strategy,
including:
1. Stretching existing Partners - organic revenue growth of 35%, including
100% growth in the US business. Continued growth in revenue per client-facing
Partner.
2. Promoting Partners from within - two Principals, with a combined tenure
of nearly twenty years, were promoted in the year.
3. Hiring new Partners - a further six new Partner hires into the team
during the year (four in the US), with the former UK Chair of KPMG also
joining as a Strategic Advisor.
4. Inorganic growth - acquisition of The Retearn Group Limited in April
2021, alongside the post period-end acquisition of iOLAP Inc., demonstrating
our ability to execute successful M&A activity. The iOLAP acquisition,
which was made at an initial consideration multiple of 6x FY 21 Adjusted
EBITDA, adds specialist data and analytics capabilities and accelerates the
growth of our US business. We continue to search for potential acquisition
targets to enhance one or more of our capabilities, industries or geographical
coverage.
· Multiple awards received including a place on the 'Global Outsourcing
100' by the International Association for Outsourcing Professionals, multiple
Drum awards for our digital marketing credentials as well as being listed as a
leading management consultant by the Financial Times for our operations &
supply chain services.
· In 2021 the Group brought on over 80 new clients, maintaining high
levels of client retention - of the 2021 client base, 50% were repeat
business.
Commenting on the results, Founder & CEO, Stephen Newton said:
"2021 has been another phenomenal year for Elixirr. We have stayed resolute in
our commitment to provide a bespoke and high-quality service to our clients,
all made possible by the dedication and talent of our teams. This has
contributed to our fantastic performance in the market this year and
consistent growth since listing."
For further Information please contact:
Elixirr International plc investor-relations@elixirr.com (mailto:investor-relations@elixirr.com)
Stephen Newton, CEO
Graham Busby, CFO
Public and Investor Relations contacts:
Caroline Pitt
finnCap Ltd (Nominated Adviser & Sole Broker) +44 (0)20 7220 0500
Christopher Raggett / Kate Bannatyne (Corporate Finance)
Alice Lane / Sunila De Silva (ECM)
About Elixirr International plc
Elixirr is an established global award-winning management consultancy,
challenging the larger consultancies by delivering innovative and bespoke
solutions to a repeat, globally-recognised client base.
Elixirr was founded in 2009, by Stephen Newton, Graham Busby, Ian Ferguson,
Andy Curtis and Mark Goodyear, experienced business advisors who identified a
market opportunity to provide bespoke, personal services as a 'challenger' to
the traditional consultancy businesses in the market. Elixirr guides its
clients to overcome challenges such as: future-proofing against technological
disruption; development and roll-out of new propositions, products and
services; incubating new businesses; navigating a more complex and
multinational regulatory environment; and project management and
implementation of major change programmes.
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the company's obligations under Article 17 of
MAR.
Non-Executive Chairman's Report
OVERVIEW
I am pleased to introduce Elixirr's 2021 annual report. The business has
performed exceptionally well in the last twelve months, with growth across
capabilities and geographies whilst breaking into new industries, and it
continues to prove its robust and differentiated proposition.
The Group delivered strong revenues over the year of £50.6 million, a 67%
increase from £30.3 million in the year ended 31(st) December 2020, with
eight record months of revenue achieved during the year. Profitability
continues to be strong with FY 21 Adjusted EBITDA of £15.7 million
representing a 31% EBITDA margin.
This year Elixirr continued to support its clients to tackle their toughest
challenges in a disruptive market, helping them to adapt, transform and
innovate to stay ahead of competition and we have seen growth in existing
accounts whilst also bringing in a plethora of new clients. Despite the
COVID-19 pandemic, the consulting industry sustained growth in 2021, and we
continue to see the impact of this with strong, growing client demand.
Our performance can be attributed to strong organic traction across the Group,
particularly in the US market, whilst continuing to strengthen and grow the
Partner team across all geographies. The Group has also seen further
opportunities through acquisition and leveraging the capabilities within
acquired businesses.
We have continued to see growth in digital opportunities and utilised the
procurement and self-funded transformation capabilities of our new
acquisition, The Retearn Group Limited ('Retearn'), alongside our core
consulting work. Elixirr's recent acquisition in March 2022 of US firm, iOLAP,
is significant for the Group - bringing specialist data and analytics
capabilities, including artificial intelligence (AI) and machine learning (ML)
for which there is increasing market demand. We are looking forward to the
positive impact iOLAP will have across the Group in FY 22.
In accordance with the high standards we uphold throughout our business, we
are also committed to continually looking to improve both our own and our
clients' ESG commitments. In our Annual Report we cover both the mandatory
reporting of our direct emissions as well as information on our sustainability
initiatives.
STRATEGY
The Board continues to observe the positive impact from the Group's four
pillar growth strategy - a strategy that has been central to key activities
during 2021. This Annual Report will explain the growth and advances we have
delivered in each aspect of the strategy over the course of the year. The
Board believes this diversified strategy positions the firm well for FY 22 and
continued future growth.
GOVERNANCE
The Board recognises the importance of operating within a robust governance
framework. Throughout the period the Group has continued to comply with the
corporate governance code of the Quoted Companies Alliance (QCA). This
includes ensuring that we have an appropriate balance of diverse skills and
experience to deliver our strategic vision and objectives. The Board and its
subcommittees include independent non-executive members with varying
backgrounds and experience. The Board continues to monitor this on a regular
basis.
OUTLOOK
Elixirr enters the new financial year in a strong position. The Board believes
the Group is well positioned as it continues to grow and to exceed the
expectations of its clients. The Board continues to work to ensure sustained
success for the shareholders, clients and employees of the Group and it looks
to the future with optimism.
Gavin Patterson
Non-Executive Chairman
1(st) April 2022
CEO's Report
OVERVIEW
In 2021 we worked across the value chain from strategy to execution whilst
evolving our offering to meet market demands - continuing to get to the crux
of our clients' key board room issues. Our team of consultants across the
globe worked on more projects than ever before for business leaders and
C-suite executives, helping them to solve critical business challenges with
future-first innovation and strategy-led thinking.
Organic growth continues to underpin the business's success, and this was
sustained in 2021 by expanding existing key accounts and maintaining high
levels of client retention - of the 2021 client base, 50% were repeat
business. We pride ourselves on a reputation of quality and building long-term
relationships with clients, and our growth this year is testament to the
excellence of our people and the lasting impact we make each day. In 2021 we
continued to focus on deepening existing relationships, growing the value of
multiple key accounts, so that we now have more than a dozen clients where
each generates more than £1m of revenue for the Group. This continues to be a
major focus for the Group in 2022.
Another crucial element of our organic growth is bringing on new clients and
expanding into new markets. In 2021 we brought on over 80 new clients. We have
also increased our penetration in growing industries, expanding our work in
the healthcare, insurance and public sector areas as we continue to diversify
the business alongside our traditional strengths in financial services, retail
and digital.
As the fastest growing consulting market by spend in the world, the US
continues to be our biggest focus area of growth geographically. Proving the
commitment of the team there, we have seen incredible traction in this market
over the past few years, and 2021 was no different. Our annual growth of 100%
in the US in 2021 can be attributed to increasing revenues from existing
clients and bringing in new logos - nearly doubling our US clients
year-on-year. This was all supported by growth in both our US Partner team and
the number of chargeable consultants joining the US team.
The importance of sustainability continues to grow, and in 2021 we have been
guiding our clients in this space more than ever before, helping them to
reduce their carbon footprints substantially. We have put sustainability at
the centre within the spectrum of our capabilities - from helping clients
reduce their digital carbon emissions, to supply chain assessments, helping to
ensure businesses are equipped to make a real, maintainable impact into the
future.
Our reputation in the market and amongst our clients is ever-increasing, and
we were delighted to be recognised with multiple industry accolades in 2021.
As a Group, we were nominated for 14 awards in a variety of categories and
sectors. We were proud to earn a place on the 'Global Outsourcing 100' by the
International Association for Outsourcing Professionals, also winning multiple
Drum awards for our digital marketing credentials and being listed as a
leading management consultant by the FT for our operations & supply chain
services. I was also very proud personally to be recognised as a 'Global
Leader in Consulting' by US Consulting Magazine again for 'Excellence in
Execution'.
PERFORMANCE
I am delighted with the performance of Elixirr in the last twelve months. The
Group delivered a record revenue result over the year of £50.6 million, a 67%
increase from FY 20. In 2021, we delivered eight record months of revenue as
the business grew throughout the year. I am particularly pleased that we have
continued to achieve exceptional growth in the US market with a 100% increase
in revenues compared with FY 20 - the US is a focal market for the Group.
Our Adjusted EBITDA of £15.7 million in FY 21 represented 31% of revenue,
demonstrating Elixirr's positioning as a high value, high returns business.
GROWTH STRATEGY
We have made great progress over 2021 across all three organic elements of our
four-pillar growth strategy - increasing revenue per Partner, bringing
multiple new Partners into the business, and promoting Partners from within.
2021 saw exceptional progress of hires into our Partner team, with six new
appointments into the team. All were selected based on their extensive
networks, and respective industry expertise spanning financial services,
media, TMT and healthcare.
We were also delighted to promote two Principals, both who truly embody the
culture of Elixirr having been with the firm for almost a decade each,
bringing huge value to the Partner team. Together, they set a great example of
the potential career opportunities for those at junior grades, with one of
those promoted having progressed through the business all the way from
Analyst, our entry grade.
Whilst our roots remain in core strategy consulting, we are constantly seeking
to add to the breadth and depth of our services. Therefore, our fourth growth
pillar - acquiring new businesses - remained a key part of our strategy in
2021. Having expanded our digital capabilities in recent years, we were
looking to further deepen our specialisms in 2021 and were delighted to
announce the acquisition of Retearn in April 2021. Their procurement and
self-funded transformation expertise has been hugely valuable alongside our
traditional consulting work, and we have seen multiple cross-sell
opportunities with clients across the Group.
One of the key strategic geographies for Elixirr is the US, and our dedicated
internal M&A team has had an acute focus on this geography since our IPO.
In March 2022 we were pleased to announce the acquisition of US firm iOLAP,
and the scale and offering of the firm make this one of Elixirr's most
significant milestones to date. Combining iOLAP's expertise in data and
analytics with Elixirr's deep strategic and business consulting experience
will continue to ensure we stay at the heart of key boardroom challenges, and
I expect it to hugely influence our traction in the market in FY 22 and
beyond.
OUR PEOPLE
We have continued to grow our team across the globe in the past year, more
than doubling the number of hires we made from 2020 to 2021. We are committed
to creating a firm of equal opportunity, with individuals measured purely by
the work they do. 60% of our promotions in 2021 were female employees and over
half of our hires last year were people from ethnic minority backgrounds.
Diversity of thought is what truly matters to us, and that means diversity of
people. It is with this attitude that we build a world-class team. Our
male-to-female ratio across the firm is 58/42, and we speak over 28 languages.
We welcome analysts from the best universities and business schools in the
world and a plethora of previous careers, be it in industry, consulting,
start-ups, or professional sport. This strategy continues to be complemented
by our inorganic growth strategy, as we acquire businesses and their diverse
teams.
With the challenges COVID-19 presented during 2020 in travel and gatherings,
we were pleased in 2021 to finally bring our teams together from across the
world for our yearly 'Indaba' event - a cultural immersion for new joiners
across the Group to understand and experience Elixirr's core values.
Our culture has been formed on the premise of building a firm of entrepreneurs
- a team who think and act like business owners, rather than traditional
employees. Listing the firm allowed us to enable our team to become
shareholders in Elixirr, and in June 2021 we introduced an optional Employee
Share Purchase Plan ('ESPP') in addition to our existing employee option
schemes. This really highlighted the commitment our people have and the tenure
they expect with the business, as we had an uptake of over 50% for the ESPP
scheme in its first year. Those who joined the ESPP enjoyed an average gain of
21% on their investment during FY 21. The recent ESPP enrolment for FY 22 has
increased to 73% of the team, demonstrating huge commitment to the firm by the
vast majority of our team.
OUTLOOK
Despite the challenges presented by the pandemic, macro-economic and more
recently geo-political conditions since we listed in 2020, we have continued
to demonstrate strong financial performance and have not only realised but
exceeded our growth ambitions. The combination of keeping our clients central
to our services, offering a unique proposition in the market, with relentless
ambition and a focus on our strategy, puts us in a strong position as a Group.
Despite the current geo-political uncertainty, the Directors expect further
growth in revenue and Adjusted EBITDA during FY 22. Including the impact of
the acquisition of iOLAP, the Board's current expectation is that full year FY
22 revenue will be in the range of £70 million - £75 million with an
Adjusted EBITDA margin in the range of 27 - 28%.
Stephen Newton
Founder & Chief Executive Officer
1(st) April 2022
Financial Review
Year ended Year ended % change
31 December 2021 31 December 2020
Revenue £50.6m £30.3m +67%
Gross profit £17.7m £11.2m +58%
Adjusted EBITDA* £15.7m £9.7m +62%
Adjusted EBITDA margin* 31% 32% -3%
Profit before tax £12.2m £5.8m +109%
Adjusted diluted earnings per share* 24.2p 15.3p +58%
Dividend per share 4.1p 2.2p +86%
Free cash flow £13.6m £11.2m +21%
Net cash £31.8m £17.5m +82%
* In order to provide better clarity to the underlying performance of the
Group, Elixirr uses adjusted EBITDA and adjusted earnings per share as
alternative performance measures ('APMs').
GROUP RESULTS
The Board is pleased to report that the Group has performed exceptionally well
this financial year, continuing to grow revenue despite global macro
uncertainty. The Group has seen organic growth in new and existing client
accounts, delivering high-quality client service, as we continue to build
long-term, trusted relationships with our clients. The Group successfully
acquired Retearn in FY 21, integrating their product offerings and teams into
the Group and delivering on enhanced capabilities to our client base. The
Group has maintained healthy margins and good cash generation, ending the year
in a strong financial position. In FY 21 the Group delivered revenue of £50.6
million and profitability continues to be strong with an Adjusted EBITDA of
£15.7 million at a 31% margin.
REVENUE
Revenue increased by 67% to £50.6 million in FY 21 compared with £30.3
million in FY 20, with eight record months of revenue achieved during the
year. Revenue growth was driven by both organic revenue growth of 35% and the
impact of the acquisitions of Coast Digital Limited ('Coast Digital') and
Retearn of 32%.
The double-digit growth in revenues is testament to the Group's relentless
focus on continuing to build long-term, trusted relationships with our clients
by consistently delivering innovative, impactful solutions to solve our
clients' key business challenges. The Group's revenue growth is reflective of
continuing strong demand for its existing service offering as well as the
leveraging of new service capability to clients from the acquisitions of Coast
Digital and Retearn.
Revenue growth was achieved in all geographic regions (UK, USA and Rest of
World) in which the Group operates, and we have continued to achieve
exceptional growth in the US market, having doubled revenues compared with FY
20. We are also pleased to report that revenue per client-facing Partner grew
during the year, despite the difficult market environment, reflecting the
quality and resilience of our Partner team.
GROUP PROFITABILITY
Group gross profit increased by 58% to £17.7 million (FY 20: £11.2 million),
reflecting revenue growth, strong consultant utilisation and investment in the
team. The investment in the team included an increase in the average team
headcount to deliver revenue, implementation of the ESPP, granting of share
options and promotion-related pay increases.
Administrative expenses increased by 27%, principally reflecting the increased
share-based payment costs in FY 21 as a result of share option grants. Further
detail of share-based payments is set out in note 24 of the Group and Company
Financial Statements of this report.
Group Adjusted EBITDA grew 62% and was delivered at a 31% margin (FY 20: 32%).
The increased costs associated with the resumption of travel and business
development activities were partially offset by improved profitability as a
result of improved utilisation of consultants.
Profit before tax (after exceptional items) grew 109% to £12.2 million (FY
20: £5.8 million) and was delivered at an improved margin of 24.0% (FY 20:
19%). Further detail of exceptional items is set out in note 5 of the Group
and Company Financial Statements of this report.
NET FINANCE EXPENSE
Net finance expense of £0.22 million for FY 21 includes interest on the Group
lease liability. The net finance expense decreased by 67% due to not having
incurred preference dividends in FY 21 as a result of the 10% non-redeemable
cumulative preference shares having been extinguished in FY 20 as part of the
Group restructure transactions explained further in note 22 of the Group and
Company Financial Statements. As at 31(st) December 2021 the Group has no
interest rate risk exposure.
TAXATION
The Group's tax charge for FY 21 was £2.0 million, reflecting a lower
effective tax rate of 17% compared with 18% in FY 20. This was largely due to
research and development tax relief claimed for prior periods and allowable
trademark amortisation deductions. The Group's cash tax payment in the year
was £2.5 million (FY 20: £1.2 million). For further detail on taxation see
notes 8 and 9 of the Group and Company Financial Statements. Adjusted profit
after tax, used in calculating adjusted earnings per share, is shown after
adjustments for the applicable tax on adjusting items as set out in note 6.
EARNINGS PER SHARE
Adjusted diluted earnings per share increased by 58% to 24.2p. Adjusting items
and their tax impacts are set out in note 6. As at 31(st) December 2021,
11,339,056 share options (excluding acquisition options for fixed monetary
amounts and ESPP matching grants) were outstanding.
CASH FLOW
The Group's net cash position increased by 82% to £31.8 million (FY 20:
£17.5 million) with a 21% increase in free cash flow due to improved
operating cash flow generation driven by business growth and efficient working
capital management. The Group enjoyed strong cash generation with net cash
flow generated from operations of £14.3 million in FY 21 (FY 20: £12.2
million), including some working capital timing benefit. The Group continues
to see conversion of adjusted EBITDA less tax to operating cash of c.100%.
Net cash utilised in investing activities reflects £2.9 million cash
consideration for the acquisition of Retearn plus additional cash
consideration of £0.4 million for surplus cash on acquisition, net of cash of
£0.7 million acquired on acquisition. A further £0.6 million for surplus
cash on acquisition of Coast Digital was also paid in FY 21.
Net cash generated from financing activities of £3.1 million represents net
inflow for Employee Benefit Trust ('EBT') share sales less purchases of £2.1
million plus net Partner loan repayments (net of associated section 455 tax
charge) of £2.7 million, less dividend payment of £1.0 million and office
lease payments of £0.7 million.
STATEMENT OF FINANCIAL POSITION
Net assets as at 31(st) December 2021 totalled £86.0 million (FY 20: £70.7
million). The increase in net assets is as a result of share premium of £5.2
million for Ordinary shares issued as consideration for the acquisition of
Retearn and gain on sale of shares by the EBT, retained profit for the year of
£11.0 million (after FY 20 final dividend of £1.0 million offset by £1.2
million add back of share-based payments charge), partially offset by net EBT
share purchases of £0.9 million.
DIVIDENDS
No interim Ordinary share dividends were paid in relation to FY 20 or FY 21.
The Company paid a final Ordinary share dividend in respect of FY 20 of 2.2
pence per Ordinary share in August 2021. The Directors are proposing a final
Ordinary share dividend in respect of FY 21 of 4.1 pence per Ordinary share,
representing an 86% increase in dividend per share compared with FY 20.
Group Statement of Comprehensive Income
For the year ended 31(st) December 2021
Year ended Year ended
31 December 2021
31 December 2020
Note £'000s £'000s
Revenue 4 50,611 30,318
Cost of sales (32,913) (19,128)
Gross profit 17,698 11,190
Administrative expenses (5,161) (3,982)
Operating profit before exceptional items 5 12,537 7,208
Depreciation 670 730
Amortisation of intangible assets 1,378 1,741
Share-based payments 1,152 47
Adjusted EBITDA 6 15,737 9,726
Exceptional items 5 (154) (730)
Operating profit 5 12,383 6,478
Finance income 29 20
Finance costs (246) (680)
Net finance expense 7 (217) (660)
Profit before taxation 5 12,166 5,818
Taxation 8 (2,022) (1,024)
Profit for the period 10,144 4,794
Other comprehensive income
Items that may be subsequently reclassified to profit and loss:
Currency translation on foreign currency net investments 123 (26)
Other comprehensive income, net of tax 123 (26)
Total comprehensive income 10,267 4,768
Basic earnings per Ordinary share (p) 11 22.04 11.73
Diluted earnings per Ordinary share (p) 11 20.01 10.75
All results relate to continuing operations.
The notes form part of these accounts.
Group and Company Statements of Financial Position
As at 31(st) December 2021
Group Company
31 December 2021 31 December 2020 31 December 2021 31 December 2020
Note £'000s £'000s £'000s £'000s
Assets
Non-current assets
Intangible assets 13 56,193 51,188 - -
Property, plant and equipment 15 5,496 5,545 - -
Investments 16 - - 63,807 55,156
Other receivables 17 1,535 596 1,104 -
Loans to shareholders 17 3,991 7,784 3,991 6,672
Deferred tax asset 9 1,197 161 - 161
Total non-current assets 68,412 65,274 68,902 61,989
Current assets
Trade and other receivables 17 6,963 4,220 1,928 3,000
Cash and cash equivalents 18 31,795 17,503 13,576 10,678
Total current assets 38,758 21,723 15,504 13,678
Total assets 107,170 86,997 84,406 75,667
Liabilities
Current liabilities
Trade and other payables 19 12,055 8,107 134 403
Loans and borrowings 20 485 448 - -
Corporation tax 1,150 1,157 11 61
Other creditors 21 436 612 436 612
Total current liabilities 14,126 10,324 581 1,076
Net current assets 24,632 11,399 14,923 12,602
Non-current liabilities
Loans and borrowings 20 4,760 4,837 - -
Deferred tax liability 9 623 547 - -
Other non-current liabilities 21 1,620 601 1,370 406
Total non-current liabilities 7,003 5,985 1,370 406
Total liabilities 21,129 16,309 1,951 1,482
Net assets 86,041 70,688 82,455 74,185
Equity
Share capital 22 52 52 52 52
Share premium 22 24,952 19,729 24,952 19,729
Capital redemption reserve 2 2 2 2
EBT share reserve 23 (2,193) (1,248) (2,193) (1,248)
Merger relief reserve 22 46,870 46,870 46,870 46,870
Foreign currency translation reserve 51 (72) - -
Retained earnings 16,307 5,355 12,772 8,780
Total shareholders' equity 86,041 70,688 82,455 74,185
As permitted by section 408 of the Companies Act 2006, a separate statement of
comprehensive income of the parent Company has not been presented. The
Company's profit for the year was £4,006,320 (FY 20: £9,397,979).
The notes form part of these accounts.
The Financial Statements were approved by the Board of Directors on 1(st)
April 2022 and were signed on its behalf by:
Stephen Newton
Director
Group Statement of Changes in Equity
For the year ended 31(st) December 2021
Share capital Share premium Capital redemption reserve EBT share reserve Merger relief reserve Foreign currency translation reserve Retained earnings Total
Group £'000s £'000s £'000s £'000s £'000s £'000s £'000s £'000s
As at 31 December 2019 and 01 January 2020 3 - - - 43,497 (46) 1,182 44,636
Comprehensive income
Profit for the period - - - - - - 4,794 4,794
Other comprehensive income - - - - - (26) - (26)
Transactions with owners
Share issues 1 23 - - - - - 24
Contributions of equity, net of transaction costs - 18,583 - - - - - 18,583
Share issue as consideration for a business combination - 1,123 - - - - - 1,123
Preference shares reclassified from loans and borrowings 50 - - - - - - 50
Share buy-backs at par and cancelled (2) - 2 - (3,127) - (820) (3,947)
Acquisition of Ordinary shares - - - (1,198) - - - (1,198)
Acquisition of Redeemable Preference shares - - - (50) - - - (50)
Redesignation/conversion of shares - - - - 6,500 - - 6,500
Share-based payments - - - - - - 47 47
Deferred tax recognised in equity - - - - - - 152 152
As at 31 December 2020 and 52 19,729 2 (1,248) 46,870 (72) 5,355 70,688
01 January 2021
Comprehensive income
Profit for the period - - - - - - 10,144 10,144
Other comprehensive income - - - - - 123 - 123
Transactions with owners
Share issue as consideration for a business combination - 2,154 - - - - - 2,154
Dividends - - - - - - (1,014) (1,014)
Share-based payments - - - - - - 1,152 1,152
Deferred tax recognised in equity - - - - - - 670 670
Sale of Ordinary shares - 3,069 - 2,705 - - - 5,774
Acquisition of Ordinary shares - - - (3,650) - - - (3,650)
As at 52 24,952 2 (2,193) 46,870 51 16,307 86,041
31 December 2021
The notes form part of these accounts. Please refer to note 29 for
explanations of reserve accounts.
Company Statement of Changes in Equity
For the year ended 31(st) December 2021
Share capital Share premium Capital redemption reserve EBT share reserve Merger relief reserve Retained earnings Total
Company £'000s £'000s £'000s £'000s £'000s £'000s £'000s
As at 31 December 2019 and 3 - - - 43,497 4 43,504
01 January 2020
Comprehensive income
Profit for the period - - - - - 9,397 9,397
Other comprehensive income - - - - - - -
Transactions with owners
Share issues 1 23 - - - - 24
Contributions of equity, net of transaction costs - 18,583 - - - - 18,583
Share issue as consideration for a business combination - 1,123 - - - - 1,123
Preference shares reclassified from loans and borrowings 50 - - - - - 50
Share buy-backs at par and cancelled (2) - 2 - (3,127) (820) (3,947)
Acquisition of Ordinary shares - - - (1,198) - - (1,198)
Acquisition of Redeemable Preference shares - - - (50) - - (50)
Redesignation/conversion of shares - - - - 6,500 - 6,500
Share-based payments - - - - - 47 47
Deferred tax recognised in equity - - - - - 152 152
As at 31 December 2020 and 52 19,729 2 (1,248) 46,870 8,780 74,185
01 January 2021
Comprehensive income
Profit for the period - - - - - 4,006 4,006
Transactions with owners
Share issue as consideration for a business combination - 2,154 - - - - 2,154
Dividends - - - - - (1,014) (1,014)
Share-based payments - - - - - 1,152 1,152
Deferred tax recognised in equity - - - - - (152) (152)
Sale of Ordinary shares - 3,069 - 2,705 - - 5,774
Acquisition of Ordinary shares - - - (3,650) - - (3,650)
As at 52 24,952 2 (2,193) 46,870 12,772 82,455
31 December 2021
The notes form part of these accounts. Please refer to note 29 for
explanations of reserve accounts.
Group and Company Cash Flow Statements
For the year ended 31(st) December 2021
Group Company
31 December 2021 31 December 2020 31 December 2021 31 December 2020
Note £'000s £'000s £'000s £'000s
Cash flows from operating activities:
Cash generated from operations 25 16,856 13,309 4,265 7,127
Taxation paid (2,527) (1,156) (86) -
Net cash generated from operating activities 14,329 12,153 4,179 7,127
Cash flows from investing activities:
Purchase of property, plant and (98) (33) - -
equipment
Payment for acquisition of subsidiary, net of cash acquired (3,179) (1,449) (4,000) (2,710)
Interest received 33 17 32 8
Net cash utilised in investing activities (3,244) (1,465) (3,968) (2,702)
Cash flows from financing activities:
Issue of Ordinary share capital - 18,607 - 18,607
Issue of Redeemable Preference shares - 50 - 50
Non-redeemable Preference share dividend - (518) - (518)
Capital reduction and share buy-backs - (626) - (3,946)
EBT Ordinary share purchases (3,649) (1,198) (3,649) (1,198)
EBT Ordinary share sales 5,774 - 5,774 -
Redeemable Preference shares repurchased - (50) - (50)
Loans to shareholders (4,500) (9,839) (4,500) (6,673)
Loans repaid by shareholders 8,293 - 7,181 -
s455 tax paid re loans to shareholders (1,104) - (1,104) -
Repayment of borrowings - (1,625) - -
Lease liability payments (448) (623) - -
Interest paid (246) (293) - (20)
Ordinary share dividends paid to shareholders (1,014) - (1,014) -
Net cash generated from financing activities 3,106 3,885 2,688 6,252
Net increase in cash and cash equivalents 14,191 14,573 2,898 10,678
Cash and cash equivalents at beginning 17,503 3,001 10,678 -
of the period
Effects of exchange rate changes on 101 (71) - -
cash and cash equivalents
Cash and cash equivalents at end 31,795 17,503 13,576 10,678
of the period
The notes form part of these accounts.
Notes to the Financial Statements
1. BASIS OF PREPARATION
1.1. General information
Elixirr International PLC (the "Company") and its subsidiaries' (together the
"Group") principal activities are the provision of consultancy services.
The Company is a limited company incorporated in England and Wales and
domiciled in the UK. The address of the registered office is 12 Helmet Row,
London, EC1V 3QJ and the Company number is 11723404.
1.2. Basis of preparation
The financial statements have been prepared in accordance with UK adopted
international accounting standards.
The presentational currency of these financial statements and the functional
currency of the Group is pounds sterling.
1.3. Basis of consolidation
These financial statements consolidate the financial statements of the Company
and its subsidiary undertakings as at 31(st) December 2021.
Subsidiaries are fully consolidated from the date of acquisition, being the
date on which the Group obtains control, and continue to be consolidated until
the date that such control ceases. The acquisition method of accounting has
been adopted. The financial statements of subsidiaries are prepared for the
same reporting period as the parent Company, using consistent accounting
policies.
All intra-group balances, income and expenses and unrealised gains and losses
resulting from intra-group transactions are eliminated in full.
1.4. Measurement convention
The consolidated financial information has been prepared under the historical
cost convention. Historical cost is generally based on the fair value of the
consideration given in exchange for assets.
The preparation of the consolidated financial information in compliance with
IFRS requires the use of certain critical accounting estimates and management
judgements in applying the accounting policies. The significant estimates and
judgements that have been made and their effect is disclosed in note 2.1.
1.5. Going concern
The Directors have, at the time of approving the financial statements, a
reasonable expectation that the Company and the Group have adequate resources
to continue in operation for the foreseeable future. The Group's forecasts and
projections, taking into account reasonable possible changes in trading
performance, show that the Group has sufficient financial resources, together
with assets that are expected to generate cash flow in the normal course of
business. Accordingly, the Directors have adopted the going concern basis in
preparing these consolidated financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial
statements of the Group and Company, which have been applied consistently to
the period presented, are set out below.
2.1. Judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make
estimates and judgements that affect the reported amounts of assets,
liabilities, costs and revenue in the financial statements. Actual results
could differ from these estimates. The judgements, estimates and associated
assumptions are based on historical experience and other factors that are
considered to be relevant.
In the process of applying the Group's accounting policies, the Directors have
made no judgements (excluding those involving estimations), which are
considered to have a significant effect on the amounts recognised in the
financial statements for the year ending 31(st) December 2021.
The key sources of estimation uncertainty that could cause an adjustment to be
required to the carrying amount of assets or liabilities within the next
accounting period are:
· Revenue is recognised in line with time worked on a project unless the
engagement is conditional or contingent. Management review accrued revenue to
determine whether there is any likelihood of any amendments or provisions
required based on project progress and relationship with the client.
· Full provision is made for loss making projects in the period in
which the loss is first foreseen, and for the cost of conditional or
contingent engagements prior to the event occurring. Estimation is required of
costs to complete and the provision necessary.
· The Group's policy on recognising an impairment of the trade
receivables balance is based on a review of individual receivable balances,
their ageing and management's assessment of realisation. This review and
assessment is conducted on a continuing basis and any material change in
management's assessment of trade receivable impairment is reflected in the
carrying value of the asset.
· Provisions for dilapidations are accrued based on estimation of the
cost expected to crystallise on vacating leased premises.
· In determining the fair value of intangible assets arising on
business combinations, management is required to estimate the timing and
amount of future cash flows applicable to the intangible assets being
acquired.
· Amortisation period of trademarks and customer relationships is an
estimate based on the expected useful life and is assessed annually for any
changes based on current circumstances.
· Management has estimated the share-based payments expense under
IFRS 2. In determining the fair value of share-based payments, management has
considered several internal and external factors in order to judge the
probability that management and employee share incentives may vest and to
assess the fair value of share options at the date of grant. Such assumptions
involve estimating a number of future performance and other factors.
· The Coast Digital and Retearn contingent consideration calculations
under IFRS 3 contain estimation uncertainty, as the earn-out potentially
payable in each case is linked to the future performance of the acquiree. In
estimating the fair value of the contingent consideration, at both the
acquisition date and financial year end, management has estimated the
potential future cash flows of the acquirees and assessed the likelihood of an
earn-out payment being made. These estimates could potentially change as a
result of events over the coming years.
2.2. Revenue recognition
Revenue is measured as the fair value of consideration received or receivable
for satisfying performance obligations contained in contracts with clients,
excluding discounts and Value Added Tax. Variable consideration is included in
revenue only to the extent that it is highly probable that a significant
reversal will not be required when the uncertainties determining the level of
variable consideration are resolved. This occurs as follows for the Group's
various contract types:
· Time-and-materials contracts are recognised over time as services
are provided at the fee rate agreed with the client where there is an
enforceable right to payment for performance completed to date.
· Fixed-fee contracts are recognised over time based on the actual
service provided to the end of the reporting period as a proportion of the
total services to be provided where there is an enforceable right to payment
for performance completed to date. This is determined based on the actual
inputs of time and expenses relative to total expected inputs.
· Performance-fee contracts are recognised when the right to
consideration arises on having met the relevant performance-related elements.
· Contingent-fee contracts, over and above any agreed minimum fee, are
recognised at the point in time that the contingent event occurs and the Group
has become entitled to the revenue.
Where contracts include multiple performance obligations, the transaction
price is allocated to each performance obligation based on its stand-alone
selling price. Where these are not directly observable, they are estimated
based on expected cost-plus margin. Adjustments are made to allocate discounts
proportionately relative to the stand-alone selling price of each performance
obligation.
Estimates of revenues, costs or extent of progress toward completion are
revised if circumstances change. Any resulting increase or decrease in
estimated revenues or costs are reflected in the statement of comprehensive
income in the period in which the circumstances that give rise to the revision
became known.
For time-and-materials and fixed-fee contracts, fees are normally billed on a
monthly basis. For performance-fee and contingent-fee contracts, fees are
normally billed and paid when entitlement to the revenue has been established.
If the revenue recognised by the Group exceeds the amounts billed, a contract
asset is recognised. If the amounts billed exceed the revenue recognised, a
contract liability is recognised. Contract assets are reclassified as
receivables when billed and the consideration has become unconditional because
only the passage of time is required before payment is due.
The Group's standard payment terms require settlement of invoices within 30
days of receipt.
The Group does not adjust the transaction price for the time value of money as
it does not expect to have any contracts where the period between the transfer
of the promised services to the client and the payment by the client exceeds
one year.
2.3. Business combinations, goodwill and consideration
Business combinations
The Group applies the acquisition method of accounting to account for business
combinations in accordance with IFRS 3, 'Business Combinations'.
The consideration transferred for the acquisition of a subsidiary is the fair
value of the assets transferred, the liabilities incurred and the equity
interests issued by the Group. The consideration transferred includes the fair
value of any asset or liability resulting from a contingent consideration
arrangement. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date. The excess of the consideration
transferred over the fair value of the Group's share of the identifiable net
assets acquired is recorded as goodwill. All transaction related costs are
expensed in the period they are incurred as operating expenses. If the
consideration is lower than the fair value of the net assets of the subsidiary
acquired, the difference is recognised in the income statement.
The Group acquired the trade and some of the assets of Elixirr Partners LLP,
an entity under common control, on 1(st) July 2019.
Transactions with entities under common control are not within the scope of
IFRS 3 "Business Combinations". In these circumstances IAS 8 requires the
Directors to develop a policy that is relevant to the decision-making needs of
the users and that is reliable as there is no specific applicable standard or
interpretation.
Having considered the nature of the transaction, noting that some assets were
not transferred with the business and the anticipation of a future corporate
transaction, the Directors chose to apply IFRS 3 as this was considered to be
the most appropriate method to reflect the acquisition.
On 28(th) October 2020 the Group acquired 100% of the share capital and voting
interests of Coast Digital, a digital marketing business. The difference
between the fair value of the purchase consideration of £4,999,521 and the
fair value of the identifiable assets acquired and liabilities assumed of
£2,143,683 was recognised as goodwill of £2,855,838. The goodwill is
attributable to the company's workforce and working methodologies and it is
not deductible for tax purposes.
On 9(th) April 2021 the Group acquired 100% of the share capital and voting
interest of Retearn, a procurement, transformation and insights consultancy
firm. The difference between the fair value of the purchase consideration of
£7,361,052 and the fair value of the identifiable assets acquired and
liabilities assumed of £2,103,563 was recognised as goodwill of
£5,257,489. The goodwill is attributable to the company's workforce and
working methodologies and it is not deductible for tax purposes. Please refer
to note 14 for further details.
Goodwill
Goodwill is initially measured at cost and any previous interest held over the
net identifiable assets acquired and liabilities assumed. If the fair value of
the net assets acquired is in excess of the aggregate consideration
transferred, the Group re-assesses whether it has correctly identified all of
the assets acquired and all of the liabilities assumed and reviews the
procedures used to measure the amounts to be recognised at the acquisition
date. If the reassessment still results in an excess of the fair value of net
assets acquired over the aggregate consideration transferred, then the gain is
recognised in the income statement.
After initial recognition, goodwill is measured at cost less any accumulated
impairment losses. For the purposes of impairment testing, goodwill is
allocated to each of the Group's cash-generating units expected to benefit
from the synergies of the combination. Cash-generating units to which goodwill
has been allocated are tested for impairment annually, or more frequently when
there is an indication that the unit may be impaired.
The Group performs impairment reviews at the reporting period end to identify
any goodwill or intangible assets that have a carrying value that is in excess
of its recoverable amount. Determining the recoverability of goodwill and the
intangible assets requires judgement in both the methodology applied and the
key variables within that methodology. Where it is determined that an asset is
impaired, the carrying value of the asset will be reduced to its recoverable
amount with the difference recorded as an impairment charge in the income
statement.
In accordance with IAS 36, the Group has tested goodwill for impairment at the
reporting date. No goodwill impairment was deemed necessary as at 31(st)
December 2021. For further details on the impairment review please refer to
note 13.
Contingent and non-contingent deferred consideration on acquisition
Contingent and non-contingent deferred consideration may arise on
acquisitions. Non-contingent deferred consideration may arise when settlement
of all or part of the cost of the business combination falls due after the
acquisition date. Contingent deferred consideration may arise when the
consideration is dependent on future performance of the acquired company.
Deferred consideration associated with business combinations settled in cash
is assessed in line with the agreed contractual terms. Consideration payable
is recognised as capital investment cost when the deferred or contingent
consideration is not employment-linked. Alternatively, consideration is
recognised as remuneration expense over the deferral or contingent performance
period, where the consideration is also contingent upon future employment.
Where the consideration is settled in shares, the consideration is classified
as equity, it is not re-measured, and settlement is accounted for within
equity. Otherwise, subsequent changes to fair value of the deferred
consideration are recognised in the statement of comprehensive income.
2.4. Taxation
Income tax expense represents the sum of the tax currently payable and
deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profits as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group's and Company's liability for current tax is calculated using tax rates
that have been enacted or substantially enacted by the reporting end date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary differences arise from goodwill or from the
initial recognition of other assets and liabilities in a transaction that
affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered. Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is realised.
Deferred tax is charged or credited in the income statement, except when it
relates to items charged or credited directly to equity, in which case the
deferred tax is also dealt with in equity. Deferred tax assets and liabilities
are offset when the company has a legally enforceable right to offset current
tax assets and liabilities and the deferred tax assets and liabilities relate
to taxes levied by the same tax authority.
2.5. Foreign currency translation
Functional and presentational currency
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates ('the functional currency'). The financial statements are
presented in 'sterling', which is the Group's and Company's functional
currency and presentation currency.
On consolidation, the results of overseas operations are translated into
sterling at rates approximating to those ruling when the transactions took
place. All assets and liabilities of overseas operations are translated at the
rate ruling at the reporting date. Exchange differences arising on translating
the opening net assets at opening rate and the results of overseas operations
at actual rate are recognised in other comprehensive income.
Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the income
statement.
2.6. Intangible assets
Intangible assets are measured at cost less accumulated amortisation and any
accumulated impairment losses. Intangible assets acquired in a business
combination are initially measured at their fair value (which is regarded as
their cost). Subsequent to initial recognition, intangible assets acquired in
a business combination are reported at cost less accumulated amortisation and
any accumulated impairment losses.
Intangible assets acquired in a business combination are identified and
recognised separately from goodwill where they satisfy the definition of an
intangible asset under IAS 38. Such assets are only recognised if either:
· They are capable of being separated or divided from the company and
sold, transferred, licensed, rented or exchanged, either individually or
together with a related contract, identifiable asset or liability, regardless
of whether the company intends to do so; or
· They arise from contractual or other legal rights, regardless of
whether those rights are transferable or separable from the entity or from
other rights and obligations.
The cost of such intangible assets is the fair value at the acquisition date.
All intangible assets acquired through business combinations are amortised
over their estimated useful lives. The significant intangibles recognised by
the Group, their useful economic lives and the methods used to determine the
cost of the intangibles acquired in business combinations are as follows:
Intangible asset Useful economic life Valuation method
Trademark 33.33% reducing balance method Relief from Royalty method
Customer relationships 10% reducing balance method Multi-Period Excess Earnings method
2.7. Tangible assets
Tangible fixed assets are stated at cost net of accumulated depreciation and
accumulated impairment losses.
Costs comprise purchase costs together with any incidental costs of
acquisition.
Depreciation is provided to write down the cost less the estimated residual
value of all tangible fixed assets by equal instalments over their estimated
useful economic lives on a straight-line basis. The following rates are
applied:
Tangible fixed asset Useful economic life
Leasehold improvements Over the life of the lease
Computer equipment 3 years
Fixtures and fittings 3 years
The assets' residual values, useful lives and depreciation methods are
reviewed, and adjusted prospectively if appropriate, if there is an indication
of a significant change since the last reporting date. Low value equipment
including computers is expensed as incurred.
2.8. Impairments of tangible and intangible assets
At each reporting end date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any). Where it is not possible to
estimate the recoverable amount of an individual asset, the Group estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
The recoverable amount is the higher of fair value less costs to sell and
value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific
to the asset for which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised immediately in profit and loss, unless the relevant asset is
carried at a revalued amount, in which case the impairment loss is treated as
a revaluation decrease.
Where an impairment subsequently reverses, the carrying amount of the asset
(or cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss
been recognised for the asset (or cash-generating unit) in prior years. A
reversal of an impairment loss is recognised immediately in profit and loss.
2.9. Employee benefits
Post-retirement benefits
The Group pays into defined contribution pension schemes on behalf of
employees that are operated by third parties. The assets of the schemes are
held separately from those of the Group in independently administered funds.
The amount charged to the income statement represents the contributions
payable to the scheme in respect of the accounting period.
Share-based payments
The cost of share-based employee compensation arrangements, whereby employees
receive remuneration in the form of share options, is recognised as an
employee benefit expense in the statement of profit and loss.
The total expense to be apportioned over the vesting period of the benefit is
determined by reference to the fair value (excluding the effect of non-market
based vesting conditions) at the grant date. Fair value is measured by use of
Black Scholes option valuation model.
At the end of each reporting period the assumptions underlying the number of
awards expected to vest are adjusted for the effects of non-market based
vesting conditions to reflect conditions prevailing at that date. The impact
of any revisions to the original estimates is recognised in the statement of
profit or loss, with a corresponding adjustment to equity.
Please refer to note 24 for further details.
2.10. Earnings per share
The Group presents basic and diluted earnings per share on an IFRS basis. In
calculating the weighted average number of shares outstanding during the
period, any share restructuring is adjusted to allow comparability with other
periods.
Basic earnings per share is calculated by dividing the profit attributable to
the Group's Ordinary shareholders by the weighted average number of Ordinary
shares outstanding during the period.
The calculation of diluted earnings per share assumes conversion of all
potentially dilutive Ordinary shares, which arise from share options
outstanding. A calculation is performed to determine the number of share
options that are potentially dilutive based on the number of shares that could
have been acquired at fair value from the future assumed proceeds of the
outstanding share options.
2.11. Financial instruments
The Group classifies financial instruments, or their component parts, on
initial recognition as a financial asset, a financial liability or an equity
instrument in accordance with the substance of the contractual arrangement.
Financial instruments are recognised on trade date when the Group becomes a
party to the contractual provisions of the instrument. Financial instruments
are recognised initially at fair value plus, in the case of a financial
instrument not a fair value through profit and loss, transaction costs that
are directly attributable to the acquisition or issue of the financial
instrument. Financial instruments are de-recognised on the trade date when the
Group is no longer a party to the contractual provisions of the instrument.
Non-derivative financial instruments comprise trade and other receivables,
cash and cash equivalents, loans and borrowings and trade and other payables.
Trade and other receivables and trade and other payables
Trade and other receivables are recognised initially at transaction price less
attributable transaction costs. Trade and other payables are recognised
initially at transaction price plus attributable transaction costs. Subsequent
to initial recognition they are measured at amortised cost using the effective
interest method, less any expected credit losses in the case of trade
receivables. If the arrangement constitutes a financing transaction, for
example if payment is deferred beyond normal business terms, then it is
measured at the present value of future payments discounted at a market rate
of interest for a similar debt instrument.
Unbilled revenue
Unbilled revenue is recognised at the fair value of consultancy services
provided at the reporting date reflecting the stage of completion (determined
by costs incurred to date as a percentage of the total anticipated costs) of
each assignment. This is included in contract assets.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at the present value of
future payments discounted at a market rate of interest. Subsequent to initial
recognition, interest-bearing borrowings are stated at amortised cost using
the effective interest method, less any impairment losses.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank
overdrafts that are repayable on demand and form an integral part of the
Group's cash management are included as a component of cash and cash
equivalents for the purpose only on the cash flow statement.
Preference shares
Preference shares, which are non-redeemable with non-discretionary dividends,
have both equity and liability elements.
The liability element is calculated as the present value of the future
contractual cash flows, discounted at a market rate of interest, estimated at
10%. This amount is recorded as a liability on an amortised cost basis until
extinguished or converted. The equity element is calculated as the residual
value (i.e. the difference between the proceeds from the issue of the shares
less the liability component) and is recognised and included in shareholders'
equity.
The dividends on the preference shares are recognised in the profit or loss as
finance costs.
Contingent consideration
Contingent deferred consideration may arise on acquisitions where the
consideration is dependent on the future performance of the acquired company.
In circumstances where the acquiree will receive contingent consideration in a
variable number of shares and is not employment-linked, the Group has
recognised a financial liability at the fair value of the contingent
consideration. Subsequent changes to the fair value of the contingent
consideration are recognised in the statement of comprehensive income.
At the balance sheet date the contingent consideration liability represents
the fair value of the remaining contingent consideration valued at
acquisition. The contingent consideration liability for acquisitions under
IFRS 3 contains estimation uncertainty as they relate to future expected
performance of the acquired business. In estimating the fair value of the
contingent consideration, management have assessed the potential future cash
flows of the acquired business and the likelihood of an earn-out payment being
made.
2.12. Provisions
A provision is recognised in the statement of financial position when the
Group has a present legal or constructive obligation as a result of a past
event, that can be reliably measured and it is probable that an outflow of
economic benefits will be required to settle the obligation. Provisions are
determined by discounting the expected future cash flows at a pre-tax rate
that reflects risks specific to the liability.
2.13. Right-of-use assets: Leases
The Group leases two properties in the UK from which it operates.
All leases are accounted for by recognising a right-of-use asset and a lease
liability except for:
· Leases of low value assets; and
· Leases with a duration of twelve months or less.
Lease liabilities are measured at the present value of contractual payments
due to the lessor over the lease term, with the discount rate determined by
reference to the rate inherent in the lease unless (as is typically the case)
this is not readily determinable, in which case the Group's incremental
borrowing rate on commencement of the lease is used. This has been estimated
at 5.0 percent. Variable lease payments are only included in the measurement
of the lease liability if they depend on an index or rate. In such cases, the
initial measurement of the lease liability assumes the variable element will
remain unchanged throughout the lease term. Other variable lease payments are
expensed in the period to which they relate.
Right-of-use assets are initially measured at the amount of the lease
liability, reduced for any lease incentives received, and increased for:
· Lease payments made at or before commencement of the lease;
· Initial direct costs incurred; and
· The amount of any provision recognised where the Group is
contractually required to dismantle, remove or restore the leased asset
(typically leasehold dilapidations).
Subsequent to initial measurement lease liabilities increase as a result of
interest charged at a constant rate on the balance outstanding and are reduced
for lease payments made. Right-of-use assets are amortised on a straight-line
basis over the remaining term of the lease or over the remaining economic life
of the asset if, rarely, this is judged to be shorter than the lease term.
When the Group revises its estimate of the term of any lease (because, for
example, it re-assesses the probability of a lessee extension or termination
option being exercised), it adjusts the carrying amount of the lease liability
to reflect the payments to be made over the revised term, which are discounted
at the same discount rate that applied on lease commencement. An equivalent
adjustment is made to the carrying value of the right-of-use asset, with the
revised carrying amount being amortised over the remaining (revised) lease
term.
2.14. Financing income and expenses
Financing expenses comprise interest payable, finance charges on shares
classified as liabilities, finance leases recognised in the income statement
using the effective interest method and the unwinding of the discount on
provisions.
Financing income includes interest receivable on funds invested.
Interest income and interest payable are recognised in the statement of
comprehensive income as they accrue, using the effective interest method.
2.15. Standards issued but not yet effective
At the date of authorisation of these financial statements, there is expected
to be no material impact to the Group or Company's financial statements from
IFRSs, IFRICs or other standards or interpretations that have been issued but
which are not yet effective.
At the date of authorisation of these financial statements, the Group has not
applied the following new and revised IFRSs that have been issued but are not
yet effective:
· IAS 1 Presentation of liabilities as current or non-current
· IAS 1 Disclosure of accounting policies
· IAS 8 Definition of accounting estimates
The new standards, listed above, are not expected to have a material impact on
the Group or Company in the current or future reporting periods and on
foreseeable future transactions.
3. ALTERNATIVE PERFORMANCE MEASURES
In order to provide better clarity to the underlying performance of the Group,
Elixirr uses adjusted EBITDA and adjusted earnings per share as alternative
performance measures. These measures are not defined under IFRS. These
non-GAAP measures are not intended to be a substitute for, or superior to, any
IFRS measures of performance, but have been included as the Directors consider
adjusted EBITDA and adjusted earnings per share to be key measures used within
the business for assessing the underlying performance of the Group's ongoing
business across periods. Adjusted EBITDA excludes the following items from
operating profit: non-cash depreciation and amortisation charges, share-based
payments and non-recurring exceptional costs. Adjusted EPS excludes the
following items from profit after tax: amortisation charges, share-based
payments and non-recurring exceptional items and their related tax impacts.
Please refer to note 6 for reconciliations to Alternative Performance Measures
('APMs').
4. SEGMENT REPORTING
FY 21 FY 20
Group £'000s £'000s
Revenue from contracts with customers arises from:
United Kingdom 22,375 10,077
USA 12,588 6,305
Rest of World 15,648 13,936
50,611 30,318
IFRS 8 requires that operating segments be identified on the basis of internal
reporting and decision-making. The Group is operated as one global business by
its executive team, with key decisions being taken by the same leaders
irrespective of the geography where work for clients is carried out.
Management therefore consider that the Group has one operating segment. As
such, no additional disclosure has been provided under IFRS 8.
The Company is a holding Company operating in the UK with its assets and
liabilities given in the Company Statement of Financial Position. Other
Company information is provided in the other notes to the accounts.
5. PROFIT BEFORE TAXATION
The following items have been included in arriving at profit before taxation:
FY 21 FY 20
Group £'000s £'000s
Depreciation of property, plant and equipment:
- Owned assets 138 147
- Leased assets 532 583
Amortisation of intangible assets 1,378 1,741
Share-based payments 1,152 47
Foreign exchange (gains)/losses (16) 44
Exceptional items 154 730
The exceptional items totaling £153,707 in FY 21 include non-recurring costs
associated with the acquisition of Retearn, Coast Digital and other merger and
acquisition activities. The exceptional items totaling £729,573 in FY 20
include non-recurring costs associated with the pre-initial public offering
('IPO') capital restructuring, IPO on the Alternative Investment Market
('AIM') and EMI share option scheme (refer to note 24).
During the year the Group obtained the following services from the Company's
auditors as detailed below:
FY 21 FY 20
Group £'000s £'000s
Services provided by the Company's auditors:
Audit fees - parent Company and consolidated accounts 22 20
Audit fees - subsidiary companies 67 58
Other services:
Due diligence 36 21
IPO fees - 144
6. RECONCILIATIONS TO ALTERNATIVE PERFORMANCE MEASURES ("APMS")
As set out in note 3, Elixirr uses adjusted EBITDA and adjusted earnings per
share as alternative performance measures.
The table below sets out the reconciliation of the Group's adjusted EBITDA and
adjusted profit before tax from profit before tax:
FY 21 FY 20
Group £'000s £'000s
Profit before tax 12,166 5,818
Adjusting items:
Exceptional items (note 5) 154 730
Amortisation of intangible assets 1,378 1,741
Share-based payments 1,152 47
Adjusted profit before tax 14,850 8,336
Depreciation 670 730
Net finance expense (note 7) 217 660
Adjusted EBITDA 15,737 9,726
The table below sets out the reconciliation of the Group's adjusted profit
after tax to adjusted profit before tax:
FY 21 FY 20
Group £'000s £'000s
Adjusted profit before tax 14,850 8,336
Tax charge (2,022) (1,024)
Tax impact of adjusting items (566) (478)
Adjusted profit after tax 12,262 6,834
Adjusted profit after tax is used in calculating adjusted basic and adjusted
diluted EPS. Adjusted profit after tax is stated before adjusting items and
their associated tax effects.
Adjusted EPS is calculated by dividing the adjusted profit after tax for the
period attributable to Ordinary shareholders by the weighted average number of
Ordinary shares outstanding during the period. Adjusted diluted EPS is
calculated by dividing adjusted profit after tax by the weighted average
number of shares adjusted for the impact of potential Ordinary shares.
Potential Ordinary shares are treated as dilutive when their conversion to
Ordinary shares would decrease EPS. Please refer to note 11 for further
details.
FY 21 FY 20
Group p p
Adjusted EPS 26.64 16.72
Adjusted diluted EPS 24.19 15.32
7. NET FINANCE EXPENSE
FY 21 FY 20
Group £'000s £'000s
Finance income:
On short term deposits and investments 29 20
29 20
Finance costs:
On bank loans and overdrafts at amortised cost - (31)
Preference share dividend - (387)
On lease liability (246) (262)
(246) (680)
Net finance expense (217) (660)
8. Taxation on profit on ordinary activities
Analysis of tax charge:
FY 21 FY 20
Group £'000s £'000s
Current tax
In respect of the current year 2,926 1,248
Adjustments in respect of prior periods (398) (75)
Total current tax 2,528 1,173
Deferred tax
In respect of the current year (506) (149)
Total deferred tax (506) (149)
Income tax expense 2,022 1,024
Numerical reconciliation of income tax expense:
The tax assessed on the profit on ordinary activities for the year is lower
than the standard rate of corporation tax in the UK of 19%.
FY 21 FY 20
Group £'000s £'000s
Profit before taxation 12,166 5,818
Profit on ordinary activities multiplied 2,312 1,105
by rate of corporation tax in UK of 19% (FY 20: 19%)
Effects of:
Exceptional items not deductible 29 139
Expenses not deductible 65 98
Difference in overseas tax rates 125 -
Adjustments in respect of prior periods 51 (75)
R&D tax relief in respect of prior periods (450) -
Deferred tax release re trademarks (110) (138)
Utilisation of foreign losses from prior periods - (105)
Total taxation 2,022 1,024
9. Deferred tax
Net deferred tax asset/(liability):
The balances comprise temporary differences attributable to:
Group Company
FY 21 FY 20 FY 21 FY 20
£'000s £'000s £'000s £'000s
Deferred tax liability
Property, plant and equipment (52) (64) - -
Intangible assets (571) (483) - -
Total deferred tax liability (623) (547) - -
Deferred tax asset
Share-based payments 966 161 - 161
Short-term timing differences 231 - - -
Total deferred tax asset 1,197 161 - 161
Net deferred tax asset/(liability) 574 (386) - 161
The deferred tax liability on intangible assets relates to trademarks and
customer relationships and those on property, plant and equipment relate to
accelerated capital allowances.
The deferred tax asset recognised represents the future tax effect of
share-based payment charges in respect of options that are yet to vest.
Deductions in excess of the cumulative share-based payment charge recognised
in the statement of comprehensive income are recognised in equity.
Movements in deferred tax:
Property, plant and equipment Intangible assets Share-based payments Short-term timing differences Total
£'000s £'000s £'000s £'000s £'000s
At 31 December 2019 (57) (481) - - (538)
Acquisition of business (7) (142) - - (149)
Credited to equity - - 152 - 152
Credited to profit and loss - 140 9 - 149
At 31 December 2020 (64) (483) 161 - (386)
Acquisition of business (2) (214) - - (216)
Credited to equity - - 670 - 670
Credited to profit and loss 14 126 135 231 506
At 31 December 2021 (52) (571) 966 231 574
10. Ordinary dividends
No interim Ordinary share dividends were paid in relation to FY 20 or FY 21.
The Company paid a final Ordinary share dividend in respect of FY 20 of 2.2
pence per Ordinary share on 13(th) August 2021.
The Directors are proposing a final Ordinary share dividend in respect of FY
21. Please refer to post balance sheet events note 28 for final Ordinary share
dividend proposed.
11. Earnings per share
The Group presents non-adjusted and adjusted basic and diluted earnings per
share ('EPS') for its Ordinary shares. Basic EPS is calculated by dividing the
profit for the period attributable to Ordinary shareholders by the weighted
average number of Ordinary shares outstanding during the period.
Diluted EPS takes into consideration the Company's dilutive contingently
issuable shares. The weighted average number of Ordinary shares used in the
diluted EPS calculation is inclusive of the number of share options that are
expected to vest subject to performance criteria, as appropriate, being met.
The profits and weighted average number of shares used in the calculations are
set out below:
FY 21 FY 20
Basic and Diluted EPS
Profit attributable to the Ordinary equity holders of the Group used in 10,144 4,794
calculating basic and diluted EPS (£'000s)
Basic earnings per Ordinary share (p) 22.04 11.73
Diluted earnings per Ordinary share (p) 20.01 10.75
FY 21 FY 20
Adjusted Basic and Diluted EPS
Profit attributable to the Ordinary equity holders of the Group used in 12,262 6,834
calculating adjusted basic and diluted EPS (note 6) (£'000s)
Adjusted basic earnings per Ordinary share (p) 26.64 16.72
Adjusted diluted earnings per Ordinary share (p) 24.19 15.32
FY 21 FY 20
Number Number
Weighted average number of shares
Weighted average number of Ordinary shares used as the denominator in 46,031,070 40,871,621
calculating non-adjusted and adjusted basic EPS
Number of dilutive shares 4,655,445 3,746,287
Weighted average number of Ordinary shares used as the denominator in 50,686,515 44,617,908
calculating non-adjusted and adjusted diluted EPS
12. Employees and directors
The monthly average number of persons employed by the Group during the year,
analysed by category, was as follows:
FY 21 FY 20
Group Number Number
Directors, management and partners 25 18
Provision of services 180 92
Administration 20 12
225 122
The average number of persons employed and staff costs includes both executive
and non-executive directors.
The aggregate payroll costs of these persons were as follows:
FY 21 FY 20
Group £'000s £'000s
Wages and salaries 22,085 12,867
Social security costs 2,748 1,724
Pension costs 453 251
Share-based payment charge 1,152 47
26,438 14,889
Defined contribution pension schemes are operated by third parties on behalf
of the employees of the Group. The assets of the schemes are held separately
from those of the Group in independently administered funds. The pension
charge represents contributions payable by the Group to the funds and amount
to £453,023 for FY 21 (FY 20: £251,467). Contributions amounting to £55,897
(FY 20: £36,162) were payable to the fund as at 31(st) December 2021 and are
included in creditors.
Key management personnel include the Directors and senior managers across the
Group who together have authority and responsibility for planning, directing
and controlling the activities of the Group. The total compensation (including
employers' national insurance) paid in respect of key management personnel for
services provided to the Group is as follows:
Group Company
FY 21 FY 20 FY 21 FY 20
£'000s £'000s £'000s £'000s
Aggregate emoluments including short term employee benefits 4,773 4,095 144 72
4,773 4,095 144 72
The share-based payment charge in respect of key management personnel was
£162,640 (FY 20: Nil).
Details of the Directors' remuneration, including salary, bonus, share option
awards, pension and other benefits are included in the tables within the
Directors' Report.
13. Goodwill and intangible fixed assets
Goodwill Trademarks Customer relationships Total
Group £'000s £'000s £'000s £'000s
Cost
At 31 December 2019 43,299 7,135 - 50,434
Acquisition of business 2,856 - 748 3,604
At 31 December 2020 46,155 7,135 748 54,038
Acquisition of business (note 14) 5,257 - 1,126 6,383
At 31 December 2021 51,412 7,135 1,874 60,421
Amortisation
At 31 December 2019 - (1,110) - (1,110)
Charge for the period - (1,728) (12) (1,740)
At 31 December 2020 - (2,838) (12) (2,850)
Charge for the year - (1,233) (145) (1,378)
At 31 December 2021 - (4,071) (157) (4,228)
Net book value
At 31 December 2020 46,155 4,297 736 51,188
At 31 December 2021 51,412 3,064 1,717 56,193
The Company has no intangible assets.
Goodwill
Goodwill arising on the acquisition of a business in FY 20 relates to the
acquisition of Coast Digital on 28(th) October 2020.
Goodwill arising on the acquisition of a business in FY 21 relates to the
acquisition of Retearn and was calculated as the fair value of initial
consideration paid less the fair value of the net identifiable assets at the
date of the acquisition (see note 14).
Goodwill impairment review
The breakdown of goodwill by acquisition is listed below:
FY 21 FY 20
£'000s £'000s
Elixirr Consulting Limited 43,299 43,299
Coast Digital Limited 2,856 2,856
The Retearn Group Limited 5,257 -
51,412 46,155
Following initial recognition, goodwill is subject to impairment reviews, at
least annually, and measured at fair value less accumulated impairment losses.
Any impairment is recognised immediately in the consolidated statement of
comprehensive income and is not subsequently reversed.
Key assumptions used in value in use calculation
The key assumptions for the value in use calculation are those regarding:
· number of years of cash flows used and budgeted EBITDA growth
rate;
· discount rate; and
· terminal growth rate.
The carrying values of goodwill for Elixirr Consulting Limited, Coast Digital
and Retearn are reflected in the above table and are calculated as the fair
value of the consideration payable for the acquisition less the net assets on
acquisition. No impairment is indicated for Elixirr Consulting Limited, Coast
Digital or Retearn using the value in use calculation.
Number of years of cash flows used and budgeted growth rate
The recoverable amount of the CGU is based on a value in use calculation using
specific cash flow projections over a five-year period and a terminal growth
rate thereafter.
The budget for the following financial year forms the basis for the cash flow
projections for a CGU. The cashflow projections for the four years subsequent
to the budget year reflect the Directors' expectations based on market
knowledge, numbers of new engagements and the pipeline of
opportunities.
Discount rate
The Group's post-tax weighted average cost of capital has been used to
calculate a discount rate of 10% for the Group and 17% for Coast Digital and
Retearn. This reflects current market assessments of the time value of money
for the period under review and the risks specific to the Group and company
acquired.
Terminal growth rate
An appropriate terminal growth rate is selected, based on the Directors'
expectations of growth beyond the five-year period. The terminal growth rate
used is 2%.
Sensitivity to changes in assumptions
With regard to the value in use assumptions, the Directors believe that
reasonably possible changes in any of the above key assumptions would not
cause the carrying value of the unit to exceed its recoverable amount. In
forming this view, the Directors have considered the following:
Elixirr Consulting Limited Coast Digital Limited The Retearn Group Limited
FY 21 FY 20 FY 21 FY 20 FY 21 FY 20
£'000s £'000s £'000s £'000s £'000s £'000s
On current cash flow projections, the discount rate would need to exceed the % 27.1% 26.0% 33.9% 25.1% 24.6% -
alongside for there to be any impairment; and
In the case of no increase in future cash flows above those projected for the 23.6% 15.6% 29.9% 22.0% 23.4% -
following year, the discount rate would have to exceed the % alongside for
there to be any impairment.
Customer relationships
FY 20 additions represent the fair value of customer relationships from the
acquisition of Coast Digital.
FY 21 additions represent the fair value of customer relationships from the
acquisition of Retearn. Refer to note 14 for further details.
The fair value has been determined by applying the Multi-Period Excess
Earnings method to the cash flows expected to be earned from customer
relationships. The key management assumptions are in relation to forecast
revenues, margins and discount factors. The fair value represents the present
value of the earnings the customer relationships generate.
A useful economic life of 10 years for Coast Digital and 11 years for Retearn
has been deemed appropriate based on the average realisation rate of
cumulative cash flows. The projected cash flows have been discounted over this
period. The amortisation charge since acquisition is recognised within
administrative expenses.
14. Business combinations
On 9(th) April 2021 the Group acquired 100% of the share capital and voting
interests of Retearn, a UK-based procurement, transformation and insights
consultancy firm. Their services enable clients to self-fund their
transformation and growth aspirations through savings elsewhere in the
business.
The acquisition brings specialists in self-funded transformation, and allows
the Group to meet demand from clients to find savings to fund strategic
initiatives.
The Group acquired Retearn for a total consideration of approximately £7.4
million, consisting of:
· An initial cash consideration of £2.15 million;
· The issue of 543,939 Ordinary shares of 0.005 pence each in the
capital of the Company ("Ordinary shares") at a price of 396 pence per
Ordinary share (being the closing mid-market price of an Ordinary Share on
8(th) April 2021), equating to an additional £2.15 million;
· Potential earn-out payments of up to £0.73 million in cash and up to
£1.96 million in Ordinary shares totalling a maximum of £2.7 million which
are contingent on Retearn achieving revenue growth and EBITDA margin targets
in periods up to 30(th) June 2024;
· An additional surplus cash consideration of £0.4 million based on the
working capital of Retearn at completion.
Of the £7.4 million consideration, £2.89 million was paid in cash during the
year, £2.15 million was satisfied through the issue of new Ordinary shares
and £0.56 million was satisfied through shares sold from the EBT. The
remaining £1.4 million is recorded within liabilities, of which £0.23
million is recorded within current liabilities and £1.17 million in
non-current liabilities (refer to note 21). The remaining earn out
consideration of £1.4 million has been estimated by management based on
anticipated future revenue growth and EBITDA and the impact of discounting is
considered to be immaterial.
The Ordinary shares issued pursuant to the acquisition are subject to the same
restrictions as certain other shareholders of the Company, as described in the
Company's IPO Admission Document. These restrictions consisted of a lock-in
arrangement until 8(th) July 2021 and certain further limitations to the sale
of shares until 8(th) July 2024.
Included within exceptional items is an amount of £139,633 for stamp duty,
legal and advisory fees in relation to the acquisition. Retearn contributed
£5.89 million to the Group's revenue and £1.22 million to the Group's profit
before tax for the period from the date of acquisition to 31(st) December
2021. If the acquisition of Retearn had been completed on 1(st) January 2021,
Group revenues for FY 21 would have been £52.62 million and Group profit
before tax would have been £12.48 million.
In calculating the goodwill arising, the fair value of the net assets of
Retearn have been assessed, and there were no fair value adjustments deemed
necessary, other than for the recognition of customer relationship intangibles
and the related deferred tax. Customer relationships were assessed to be
separately identifiable assets, recognised at fair value and are included
within intangible assets below. Refer to note 13 for further details.
The table below sets out the amounts recognised as of the acquisition date for
each major class of assets acquired and liabilities assumed, the consideration
and goodwill on the acquisition of Retearn:
Fair value
£'000s
Assets
Non-current assets
Intangible assets 1,126
Property, plant and equipment 14
Total non-current assets 1,140
Current assets
Trade and other receivables 1,407
Cash and cash equivalents 681
Total current assets 2,088
Total assets 3,228
Liabilities
Current liabilities
Trade and other payables 754
Corporation tax 155
Loans and borrowings -
Total current liabilities 909
Non-current liabilities
Loans and borrowings -
Deferred tax liability 215
Other non-current liabilities -
Total non-current liabilities 215
Total liabilities 1,125
Fair value of net assets acquired 2,104
Goodwill (note 13) 5,257
Fair value of purchase consideration 7,361
Cash and cash equivalents in subsidiaries acquired 681
15. Property, plant and equipment
Right of use asset Furniture and Fittings Leasehold Improvements Computer Equipment Total
Group £'000s £'000s £'000s £'000s £'000s
Cost
At 31 December 2019 5,918 65 499 58 6,540
Acquisition of business - 7 - 25 32
Disposals - - (5) (2) (7)
Additions - - 11 27 38
At 31 December 2020 5,918 72 505 108 6,603
Acquisition of business (note 14) - - - 14 14
Disposals - - - (15) (15)
Additions 509 17 - 81 607
At 31 December 2021 6,427 89 505 188 7,209
Depreciation
At 31 December 2019 (263) (25) (29) (18) (335)
Disposals - - 5 2 7
Charge for the year (526) (38) (125) (41) (730)
At 31 December 2020 (789) (63) (149) (57) (1,058)
Disposals - - - 15 15
Charge for the year (532) (7) (76) (55) (670)
At 31 December 2021 (1,321) (70) (225) (97) (1,713)
Net book value
At 31 December 2020 5,129 9 356 51 5,545
At 31 December 2021 5,106 19 280 91 5,496
The Company has no property, plant and equipment.
The lease liability in respect of the right-of-use asset was £5,245,110 (FY
20: £5,285,741) and relates to property leases.
16. Investments
Group companies
Company £'000s
Cost/carrying value
At 31 December 2019 50,000
Acquisition of business 5,156
At 31 December 2020 55,156
Acquisition of business 7,499
Group companies share-based payments 1,152
At 31 December 2021 63,807
The Group has no investments.
The undertakings in which the Company's interest at the year-end is 20 percent
or more are as follows:
Subsidiary undertakings Country of incorporation Principal activity Registered office FY 21 FY 20
Elixirr Consulting Limited England and Wales Consultancy 12 Helmet Row, London, EC1V 3QJ 100% 100%
Elix-IRR Consulting Services Limited (indirect)** England and Wales Services to the Group 12 Helmet Row, London, EC1V 3QJ 100% 100%
Elix-IRR Consulting Services (South Africa) Limited (indirect) England and Wales Services to the Group 12 Helmet Row, London, EC1V 3QJ 100% 100%
Elixirr LLC (indirect) United States Consultancy 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808 100% 100%
Elixirr Consulting AI Limited (indirect)* England and Wales Dormant activities 12 Helmet Row, London, EC1V 3QJ - 100%
Elixirr Creative Limited (indirect)** England and Wales Information technology consultancy 12 Helmet Row, London, EC1V 3QJ 100% 100%
Den Creative Limited (indirect) England and Wales Information technology consultancy 12 Helmet Row, London, EC1V 3QJ 100% 100%
Elixirr Services Limited (indirect) England and Wales Dormant activities 12 Helmet Row, London, EC1V 3QJ 100% 100%
Coast Digital Limited England and Wales Information technology consultancy 12 Helmet Row, London, EC1V 3QJ 100% 100%
The Retearn Group Limited England and Wales Consultancy 12 Helmet Row, London, EC1V 3QJ 100% -
* Elixirr Consulting AI Limited applied to be struck off the Companies House
register on 19(th) October 2021 and was dissolved on 26(th) January 2021.
** Elix-IRR Consulting Services Limited and Elixirr Creative Limited applied
to be struck off the Companies House register on 23(rd) December 2021 and were
dissolved on 22(nd) March 2022.
17. Receivables
Group Company
FY 21 FY 20 FY 21 FY 20
£'000s £'000s £'000s £'000s
Non-current assets
Loans to shareholders 3,991 7,784 3,991 6,672
Other receivables 1,535 596 1,104 -
5,526 8,380 5,095 6,672
Current assets
Trade receivables 6,432 3,790 - -
Less: allowance for doubtful debts - (20) - -
Trade receivables - net 6,432 3,770 - -
Prepayments and deposits 487 373 18 22
Contract assets 12 39 - -
Amounts owed by group companies - - 1,908 2,975
Other receivables 33 38 2 3
6,963 4,220 1,928 3,000
The Company was due £1,907,873 as at 31(st) December 2021 from Elixirr
Consulting Limited for management charges net of costs incurred by Elixirr
Consulting Limited on behalf of the Company. As at 31(st) December 2020, the
Company was due £2,975,118 from other Group companies including £10,000 from
Elix-IRR Consulting Services (South Africa) Limited and £2,965,118 from
Elixirr Consulting Limited for preference share dividend, management charges
and an Ordinary share dividend net of costs incurred by Elixirr Consulting
Limited on behalf of the Company for the year.
Loans to shareholders represent amounts owed to the Company in FY 21, and
amounts owed to the Company and Elixirr Consulting Limited in FY 20 by
shareholders, who are senior employees of the Group. The loans to shareholders
are interest-free and expected to be repaid beyond one year.
Non-current other receivables include property deposits and section 455 tax
receivable.
Trade receivables are non-interest bearing and receivable under normal
commercial terms. Management considers that the carrying value of trade and
other receivables approximates to their fair value. The carrying value of
non-current other receivables and loans to shareholders is considered to be a
reasonable approximation of their fair value, but has not been discounted to
present value.
The impairment loss included in administrative expenses in the statement of
comprehensive income for the period in respect of bad and doubtful trade
receivables was nil (FY 20: £20,416).
The expected credit loss on trade and other receivables was not material at
the current or prior year ends. For analysis of the maximum exposure to credit
risk, please refer to note 26.
The ageing of trade receivables of the Group as at 31(st) December 2021:
Gross carrying amount Loss allowance Net carrying amount
Group £'000s £'000s £'000s
< 31 days 4,599 - 4,599
31-60 days 1,299 - 1,299
61-90 days 444 - 444
91-120 days 90 - 90
121+ days - - -
At 31 December 2021 6,432 - 6,432
The ageing of trade receivables of the Group as at 31(st) December 2020:
Gross carrying amount Loss allowance Net carrying amount
Group £'000s £'000s £'000s
< 31 days 2,201 - 2,201
31-60 days 1,318 - 1,318
61-90 days 225 - 225
91-120 days 26 - 26
121+ days 20 (20) -
At 31 December 2020 3,790 (20) 3,770
18. Cash and cash equivalents
Group Company
FY 21 FY 20 FY 21 FY 20
£'000s £'000s £'000s £'000s
Cash at bank and in hand 31,795 17,503 13,576 10,678
31,795 17,503 13,576 10,678
Cash at bank includes £4,003,457 (FY 20: £6,005,550) on 95-day notice
deposit and £4,003,092 (FY 20: £4,002,055) on 50% instant and 50% 32-day
notice deposit which earned interest at an average of 0.45% and 0.25%
respectively during the year.
19. Trade and other payables
Group Company
FY 21 FY 20 FY 21 FY 20
£'000s £'000s £'000s £'000s
Trade payables 825 526 32 58
Other taxes and social security costs 1,138 1,577 5 6
Accruals 8,081 4,962 97 33
Contract liabilities 2,007 935 - -
Other payables 3 106 - -
Amounts owed to group companies - - - 306
12,055 8,107 134 403
As at 31(st) December 2020, the Company owed £306,492 to other Group
companies including £1,564 owed to Elixirr LLC and £304,928 to Coast Digital
for a portion of the cash consideration on acquisition paid by Coast Digital
to selling shareholders.
The fair value of trade and other payables approximates to book value at the
year end. Trade payables are non-interest bearing and are normally settled
monthly.
Trade payables comprise amounts outstanding for trade purchases and ongoing
costs.
Contract liabilities arise from the Group's revenue generating activities
relating to payments received in advance of performance delivered under a
contract. These contract liabilities typically arise on short-term timing
differences between performance obligations in some milestone or fixed fee
contracts and their respective contracted payment schedules.
20. Loans and borrowings
Group Company
FY 21 FY 20 FY 21 FY 20
£'000s £'000s £'000s £'000s
Current liabilities
Right of use lease liability 485 448 - -
485 448 - -
Non-current liabilities
Right of use lease liability 4,760 4,837 - -
4,760 4,837 - -
The movement in the right of use lease liability was as follows:
Right of use lease liability
Group £'000s
At 31 December 2019 5,908
Interest payable 262
Repayment of lease liabilities (885)
At 31 December 2020 5,285
Additions 407
Interest payable 246
Repayment of lease liabilities (694)
At 31 December 2021 5,245
The additions in FY 21 relate to a new property lease entered into by Coast
Digital.
As disclosed in the summary of significant accounting policies, the discount
rate used in determining the present value of the lease liability was 5%.
Maturity analysis of contracted undiscounted cashflows of the right of use
lease liability are as follows:
FY 21 FY 20
£'000s £'000s
Lease liability less than one year 727 694
Lease liability greater than one year and less than five years 3,031 2,775
Lease liability greater than five years 2,632 3,122
Total liability 6,390 6,591
Finance charges included above (1,145) (1,306)
5,245 5,285
21. Other creditors and other non-current liabilities
Group Company
FY 21 FY 20 FY 21 FY 20
£'000s £'000s £'000s £'000s
Other creditors
Contingent consideration 436 612 436 612
436 612 436 612
Other non-current liabilities
Dilapidations 250 195 - -
Contingent consideration 1,370 406 1,370 406
1,620 601 1,370 406
Other creditors and other non-current liabilities include earn-out payments
which are contingent on performance and arose from the acquisition of Retearn
and Coast Digital.
Other non-current liability payments fall due beyond 12 months from the
reporting date.
22. Share capital, share premium and merger relief reserve
FY 21
Issued shares Par value Merger relief reserve Share premium
Group and Company Number £ £'000s £'000s
£0.00005 Ordinary shares 46,186,481 2,309 46,870 24,952
£1 Redeemable Preference shares 50,001 50,001 - -
46,236,482 52,310 46,870 24,952
FY 20
Issued shares Par value Merger relief reserve Share premium
Group and Company Number £ £'000s £'000s
£0.00005 Ordinary shares 45,642,542 2,282 46,870 19,729
£1 Redeemable Preference shares 50,001 50,001 - -
45,692,543 52,283 46,870 19,729
The total number of voting rights in the Company at 31(st) December 2021 was
46,186,481 (FY 20: 45,642,542).
In FY 20 there was some restructuring of share classes. Different classes of
shares (Class A Ordinary shares, Class B Ordinary shares, Class B Founder
Ordinary shares, Class C Ordinary shares, Deferred shares and Non-redeemable
Preference shares) were in existence during FY 20, but these were
re-designated or bought back and cancelled during FY 20 and there were none in
issue at 31(st) December 2020 or 31(st) December 2021. Please refer to FY 20
annual financial statements for further information regarding the
restructuring of these share classes.
Initial Public Offering and Listing
In FY 20 the Admission Document for the Company's IPO and admission to AIM
market was published on 6(th) July 2020. The Company placed 9,216,590 new
Ordinary shares and selling shareholders placed 2,304,148 existing shares at
217 pence per share. The Company received net proceeds of approximately
£18.2m (after deduction of estimated commissions, fees and expenses payable
by the Company).
The Company's Ordinary shares were admitted to trading on the AIM market of
the London Stock Exchange on 9(th) July 2020, under the ticker "ELIX" and the
ISIN GB00BLPHTX84.
Immediately following Admission, the Company's issued share capital (including
the additional Ordinary shares issued pursuant to the Placing) were as
follows:
· £2,260, comprising 45,197,790 Ordinary shares of £0.00005 each
(all of which is fully paid or credited as fully paid);
· £50,001, comprising 50,001 Redeemable preference shares of
£1.00 each.
Ordinary shares
On a show of hands every holder of Ordinary shares present at a meeting, in
person or by proxy, is entitled to one vote, and on a poll each share is
entitled to one vote. The shares entitle the holder to participate in
dividends, and to share in the proceeds of winding up the Company in
proportion to the number of and amounts paid on the shares held. These rights
are subject to the prior entitlements of the Redeemable Preference
shareholders.
Movements in Ordinary shares:
Issued shares Par value Merger relief reserve Share premium
Group and Company Number £ £'000s £'000s
At 31 December 2019 - - - -
Redesignation/conversion 35,981,200 1,799 46,870 23
IPO share issue, net of transaction costs 9,216,590 461 - 18,583
Share issue as consideration for a business combination 444,752 22 - 1,123
At 31 December 2020 45,642,542 2,282 46,870 19,729
Share issue as consideration for a business combination (note 14) 543,939 27 - 2,154
Sale of Ordinary shares from the EBT - - - 3,069
At 31 December 2021 46,186,481 2,309 46,870 24,952
Redeemable Preference shares
On 22(nd) June 2020, 50,001 Redeemable Preference shares with a nominal value
of £1.00 each were issued. There are no voting rights attached to the
Redeemable Preference shares. The Redeemable Preference shares were
initially classified as a financial liability at date of issue. The shares
were reclassified from loans and borrowings to share capital when the Company
bought back the shares in FY 20 and are held in the EBT. The Redeemable
Preference shares are entitled to dividends at a rate of 1% per annum of paid
up nominal value. The shares have preferential right, before any other class
of share, to a return of capital on winding-up or reduction of capital or
otherwise of the Company. The Redeemable Preference shares are redeemable
100 years from the date of issue or at any time prior at the option of the
Company.
Movements in Redeemable Preference shares:
Issued shares Par value Merger relief reserve Share premium
Group and Company Number £ £'000s £'000s
At 31 December 2019 - - - -
Reclassified from loans and borrowings 50,001 50,001 - -
At 31 December 2020 and 31 December 2021 50,001 50,001 - -
23. EBT share reserve
The Employee Benefit Trust ('EBT') is accounted for under IFRS 10 and is
consolidated on the basis that the parent has control, thus the assets and
liabilities of the EBT are included on the Company and Group statement of
financial position and shares held by the EBT in the Company are presented as
a deduction from equity. The EBT share reserve comprises of Ordinary and
Redeemable Preference shares bought and held in the Group's EBT.
The below table sets out the number of EBT shares held and their weighted
average cost:
FY 21
Shares held in EBT Weighted average cost Total cost
Group and Company Number £ £'000s
Ordinary shares 547,225 3.92 2,143
Redeemable Preference shares 50,001 1.01 50
597,226 2,193
FY 20
Shares held in EBT Weighted average cost Total cost
Group and Company Number £ £'000s
Ordinary shares 704,667 1.70 1,198
Redeemable Preference shares 50,001 1.01 50
754,668 1,248
24. Share-based payments
Share Option Plans
During FY 21, a total of 7,700,430 (FY 20: 6,519,000) share options were
granted to employees and senior management.
Details of share option awards made are as follows:
Number of share options Weighted average exercise price
Outstanding at the beginning of the year 5,836,200 0.71
Granted during the year 7,700,430 4.52
Forfeited during the year (2,197,574) 2.88
Outstanding at the year end 11,339,056 2.87
Exercisable at the year end - -
No share options were exercisable in the year.
The options outstanding as at 31(st) December 2021 had a weighted average
remaining contractual life of 4 years (FY 20: 4 years) and a weighted average
exercise price of £2.87 (FY 20: £0.71) per share. The weighted average of
the estimated fair values of the options outstanding as at 31(st) December
2021 is £2.95 (FY 20: £2.45) per share.
The options were fair valued at the grant date using the Black Scholes option
valuation model. The inputs into the model were as follows:
FY 21 FY 20
Weighted average share price at grant date (£) 5.07 0.68
Weighted average exercise price (£) 4.52 0.68
Volatility (%) 21.69% 15.00%
Weighted average vesting period (years) 5 5
Risk free rate (%) 0.34% 0.05%
Expected dividend yield (%) 1.14% 1.50%
Reasonable changes in the above inputs do not have a material impact on the
share-based payment charge in FY 21.
On 28(th) October 2020, in conjunction with the acquisition of Coast Digital,
share options were issued to certain management of Coast Digital. These
options are employment-linked and vesting is contingent on Coast Digital
achieving EBITDA targets in FY 21, FY 22 and FY 23. The options have a fair
value of £1.1 million and was determined using the share price at the date of
grant of £2.50. The Coast Digital options outstanding at 31(st) December
2021 had a weighted average remaining contractual life of 2.5 years and a
weighted average exercise price of £0.00005 per share.
On 12(th) April 2021, in conjunction with the acquisition of Retearn (refer to
note 14), share options were issued to selling shareholders. These options are
employment-linked and vesting is contingent on Retearn and individual selling
shareholders achieving revenue growth targets in FY 21, FY 22, FY 23 and FY
24. The options have a fair value of £1.3 million and were issued at an
exercise price of £0.00005 per share. The fair value of the options was
determined using the share price at the date of grant of £4.70. The options
outstanding at 31(st) December 2021 had a weighted average remaining
contractual life of 2.5 years and a weighted average exercise price of
£0.00005 per share.
The Coast Digital and Retearn share options referred to above are excluded
from the reconciliation set out above of the number of options outstanding.
The share options are for a fixed monetary consideration where the number of
share options is variable and determined with reference to the share price at
the date of vesting.
Employee Share Purchase Plan ('ESPP')
On 16(th) June 2021, an ESPP was implemented for FY 21. Under the scheme all
of the employees of the Group (excluding Partners) are eligible to contribute
a percentage of their gross salary (5% - 20%) to purchase shares in the
Company and the Company awarded the employees with matching shares on the
basis of one matching share for every one employee share held on 1(st) January
2022. The matching shares vest equally over a 5 year period with the first
share vesting on 31(st) January 2023.
25. Cash flow information
Cash generated from operations:
Group Company
FY 21 FY 20 FY 21 FY 20
£'000s £'000s £'000s £'000s
Profit before taxation 12,166 5,818 4,051 9,450
Adjustments for:
Depreciation and amortisation 2,048 2,471 - -
Net finance expense/(income) 217 660 (20) 8
Share-based payments 1,152 47 - 47
(Increase)/decrease in trade and other receivables (1,336) 1,558 531 (2,474)
Increase/(decrease) in trade and other payables 2,625 2,712 (295) 96
Foreign exchange (16) 44 (2) -
16,856 13,309 4,265 7,127
Reconciliation of liabilities from financing activities:
Borrowings Non-redeemable Preference Shares Leases Total
Group £'000s £'000s £'000s £'000s
At 31 December 2019 1,625 6,631 5,908 14,164
Cash flows (1,656) (518) (885) (3,059)
Other changes 31 (6,113) 262 (5,820)
Balance 31 December 2020 - - 5,285 5,285
Cash flows - - (694) (694)
Other changes - - 654 654
Balance 31 December 2021 - - 5,245 5,245
Borrowings Non-redeemable Total
Preference Shares
Company £'000s £'000s £'000s
At 31 December 2019 - 6,631 6,631
Cash flows (20) (518) (538)
Other changes 20 (6,113) (6,093)
Balance 31 December 2020 and 31 December 2021 - - -
Other changes in FY 21 include non-cash movements, including accrued interest
expense and an additional property lease. Other changes in FY 20 include
non-cash movements, including accrued interest expense and Non-redeemable
Preference Shares treated as a financial liability.
26. Financial instruments and financial risk management
Carrying amount of financial instruments
The Group's and Company's financial instruments may be analysed as follows:
Group Company
FY 21 FY 20 FY 21 FY 20
£'000s £'000s £'000s £'000s
Financial assets
Financial assets that are debt instruments measured at amortised cost 43,795 29,726 20,579 20,325
Financial liabilities
Financial liabilities measured at amortised cost 16,162 11,815 129 398
Financial liabilities at fair value through profit and loss 1,806 406 1,806 406
Financial assets measured at amortised cost comprise cash, trade receivables
and other receivables.
Financial liabilities measured at amortised cost comprise loans and
borrowings, trade payables and other payables.
Financial liabilities at fair value through profit and loss comprise
contingent consideration arising on acquisitions.
The Group is exposed to a variety of financial risks through its use of
financial instruments which result from its operating activities. All of the
Group's financial instruments are classified as loans and receivables.
The Group does not actively engage in the trading of financial assets for
speculative purposes. The most significant financial risks to which the Group
is exposed are described below:
Credit risk
Generally the Group's and Company's maximum exposure to credit risk is limited
to the carrying amount of the financial assets recognised at the reporting
date, as summarised below:
Group Company
FY 21 FY 20 FY 21 FY 20
£'000s £'000s £'000s £'000s
Trade receivables 6,432 3,770 - -
Contract assets 12 39 - -
Other receivables 5,557 8,414 7,001 9,647
Cash and cash equivalents 31,795 17,503 13,576 10,678
43,796 29,726 20,577 20,325
Credit risk is the risk of financial risk to the Group if a counter party to a
financial instrument fails to meet its contractual obligation. The nature of
the Group's debtor balances, the time taken for payment by clients and the
associated credit risk are dependent on the type of engagement.
The Group's trade and other receivables are actively monitored. The ageing
profit of trade receivables is monitored regularly by management. Any debtors
over 30 days are reviewed by the entire management group every week and
explanations sought for any balances that have not been recovered.
Unbilled revenue is recognised by the Group only when all conditions for
revenue recognition have been met in line with the Group's accounting policy.
Other receivables include amounts owed by senior employees for the acquisition
of shares in the Company. The EBT holds legal title to these shares which will
not be released to the beneficial owner prior to the repayment of the loan.
The Directors are of the opinion that there is no material credit risk at
Group level.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting
its obligations associated with its financial liabilities. The Group seeks to
manage financial risks to ensure sufficient liquidity is available to meet
foreseeable needs and to invest cash assets safely and profitably.
The table below analyses the Group's financial liabilities into relevant
maturity groupings based on their contractual maturities. The amounts
disclosed in the tables are the contractual undiscounted cash flows. Balances
due within 12 months equal their carrying balances, because the impact of
discounting is not significant.
Contractual maturities of financial liabilities of the Group as at 31(st)
December 2021:
Less than 6 months 6-12 months Between 1 and 2 years Between 2 and 5 years Over 5 years Total contractual cashflows Carrying amount of liabilities
Trade payables 825 - - - - 825 825
Lease liabilities 347 380 761 2,270 2,632 6,390 5,245
Financial liabilities at fair value through profit and loss 436 - 670 700 - 1,806 1,806
1,608 380 1,431 2,970 2,632 9,021 7,876
Contractual maturities of financial liabilities of the Group as at 31(st)
December 2020:
Less than 6 months 6-12 months Between 1 and 2 years Between 2 and 5 years Over 5 years Total contractual cashflows Carrying amount of liabilities
Trade payables 526 - - - - 526 526
Lease liabilities 347 347 1,388 3,469 1,735 7,286 5,286
Financial liabilities at fair value through profit and loss - 203 203 - - 406 406
872 550 1,591 3,469 1,735 8,218 6,218
Interest rate risk
As at 31(st) December 2021 the Group has no interest rate risk exposure as
following the IPO, on 15(th) July 2020, the Group's bank loan was repaid in
full from the proceeds of the Placing.
The Group has used a sensitivity analysis technique that measured the
estimated change to the statement of comprehensive income and equity of a 1%
increase or decrease in interest rates for each class of financial instrument,
with other variables remaining unchanged. The sensitivity analysis is based on
the assumptions that changes in market interest rates affect the interest of
variable interest financial instruments. Under these assumptions, a 1%
increase or decrease in market interest rate for all financial liabilities
held by the Group would have an immaterial impact on the profit before tax and
equity of the Group.
Foreign currency risk
The Group operates internationally and is exposed to foreign exchange risk
arising from various currency exposures, primarily US Dollars. The Group
monitors exchange rate movements closely and ensures adequate funds are
maintained in appropriate currencies to meet known liabilities.
The Group's exposure to foreign currency risk at the end of the reporting
period, expressed in Currency Units, was as follows:
FY 21 FY 20
USD '000s EUR '000s ZAR '000s USD '000s EUR '000s ZAR '000s
Cash & cash equivalents 11,900 2 1,739 2,630 175 -
Trade receivables 1,450 101 - - - -
Trade payables (5) (5) (63) - - -
The Group is exposed to foreign currency risk on the relationship between the
functional currencies of the Group companies and the other currencies in which
the Group's material assets and liabilities are denominated. The table below
summaries the effect on profit and loss had the functional currencies of the
Group weakened or strengthened against these other currencies, with all other
variables held constant.
FY 21 FY 20
£'000s £'000s
10% weakening of functional currency 925 208
10% strengthening of functional currency (925) (208)
The impact of a change of 10% has been selected as this has been considered
reasonable given the current level of exchange rates and the volatility
observed both on a historical basis and market expectations for future
movements.
Fair value of financial instruments
The fair values of all financial assets and liabilities approximates to their
carrying value.
Capital risk management
The Group defines capital as being share capital plus all reserves, which
amounted to £86.0 million as at 31(st) December 2021 (FY 20: £70.7 million)
The Group's objectives when managing capital are to:
· Safeguard their ability to continue as a going concern, so that they
can continue to provide returns for shareholders and benefits for other
stakeholders; and
· Maintain an optimal capital structure to reduce the cost of
capital.
In order to maintain or adjust the capital structure, the Group may adjust the
amount of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt.
27. Related party disclosures
Related parties, following the definitions in IAS 24, are the Group's
subsidiary companies, members of the Board, key management personnel and their
families, and shareholders who have control or significant influence over the
Group. Refer to note 12 for key management personnel compensation
disclosures. The Directors' Report contains details of Board remuneration.
On 27(th) April 2021 a total of 604,524 options over Ordinary shares were
granted to Directors and PDMRs of the Company at an exercise price of 545
pence. The options have a five year vesting period.
On 12(th) May 2021 certain Directors and PDMRs of the Company sold 457,515
shares at a price of 500 pence in order to satisfy strong institutional
demand. Each of the selling shareholders applied the proceeds to satisfy in
part or in full the loans provided to them by the Group to acquire Ordinary
shares prior to the Company's IPO.
On 13(th) October 2021 certain Directors and PDMRs of the Company sold 553,643
shares at a price of 630 pence in order to satisfy strong institutional
demand. Each of the selling shareholders with a loan balance outstanding to
the Company applied the proceeds to satisfy in part or in full the loans
provided to them by the Company to acquire Ordinary shares prior to the
Company's IPO.
In FY 20, the Group offset £949,771 of amounts lent to shareholders to settle
amounts owed to the Group by Elixirr Partners LLP. There was an outstanding
liability with Elixirr Partners LLP of £105,074 included in current
liabilities as at 31(st) December 2020. The outstanding liability was settled
with Elixirr Partners LLP in FY 21.
Gavin Patterson, independent non-executive chairman of the Board, provided
consulting services to the Company totalling £25,000 (FY 20: £45,021) in FY
21.
In FY 20, travel and marketing costs include the hire of an aeroplane from
Aviation E LLP, Stephen Newton a member of the Board is a member of Aviation E
LLP. The total expense incurred was £19,845 with £6,696 outstanding as at
31(st) December 2020. In FY 21 the £6,696 owing to Aviation E LLP was
settled.
In FY 20 interest-free loans were made to key management personnel to acquire
shares in the Company and to settle their liability to a related party,
Elixirr Partners LLP. The loans were repaid along with repayment of the
opening balance during FY 21. A reconciliation of the loans to key management
personnel is shown below:
£'000s
At 31 December 2019 170
Loans advanced 6,230
Loan repayments (2,544)
At 31 December 2020 3,856
Loan repayments (3,856)
At 31 December 2021 -
Company related party transactions are disclosed in notes 17 and 19.
28. Events after the reporting date
On 17(th) March 2022, the Group acquired 100% of the share capital and voting
interests of iOLAP Inc. ('iOLAP'), a US-headquartered technology and data
firm. The acquisition brings specialist data and analytics capabilities,
including artificial intelligence (AI) and machine learning (ML), into the
Group where there is existing demand for these services.
The Group acquired iOLAP for a maximum consideration payable of US$40.0
million (£30.4 million). The consideration consists of:
· An initial cash consideration of US$25.2 million (£19.2
million);
· Potential earn out payments of up to US$14.8 million (£11.3 million)
in Ordinary shares which are contingent on iOLAP achieving revenue growth and
EBITDA margin targets in periods up to 31st December 2024. This consideration
will be satisfied at Elixirr's option to use either one or a combination of
both approaches set out below in relation to the initial
consideration.
Of the US$25.2 million (£19.2 million) initial cash consideration, US$14.0
million (£10.6 million) was paid to the selling shareholders free of
restrictions. The remaining balance of US$11.2 million (£8.5 million) is
subject to a contractual commitment to use the after-tax amount (US$8.5
million) to purchase Ordinary shares in Elixirr at a price per share of
£6.425 by 29(th) April 2022. The Ordinary shares will be purchased, at
Elixirr's option, either from the EBT, subject to sufficient available supply,
or otherwise by way of a subscription for new Ordinary shares from Elixirr, or
a combination of both. The balance of this element of the cash consideration
(US$2.7 million) was paid to the sellers to settle their tax obligations
relating to it.
The Ordinary shares purchased pursuant to the acquisition will be subject to a
one-year lock-in arrangement and limitations on the Ordinary shares that each
seller can sell in each of the following three years.
As part of the transaction, iOLAP's largest shareholder has agreed to sign up
to a bonus and commitment agreement through which he will share a portion of
the value of his consideration to a further six senior leaders in the firm.
The sellers have also agreed to three-year restrictive covenant
agreements.
If the acquisition of iOLAP had been completed on 1 January 2021, Group
revenues for the period would have been £66.8 million and Group profit before
tax would have been £14.9 million.
Disclosure of the amounts recognised as of the acquisition date for each major
class of assets acquired and liabilities assumed, fair value adjustments and
goodwill on the acquisition of iOLAP has not be made given the limited amount
of time available between the acquisition date and the date this annual report
was authorised for issue.
On 3(rd) March 2022, Elixirr Inc. was incorporated in Delaware as a direct
subsidiary of Elixirr International Plc. Elixirr Inc. was used as the
acquisition vehicle for iOLAP.
The Directors are proposing a final Ordinary dividend in respect of the
financial year ended 31(st) December 2021 of 4.1 pence per share.
As at 1(st) April 2022, in accordance with the Financial Conduct Authority's
Disclosure and Transparency Rules, the Company continues to have 46,186,481
Ordinary shares in issue, of which none are held in Treasury.
The total number of voting rights in the Company is 46,186,481. This figure of
46,186,481 may be used by shareholders in the Company as the denominator for
the calculations by which they will determine if they are required to notify
their interest in, or a change in their interest in, the share capital of the
Company under the FCA's Disclosure and Transparency Rules.
29. Reserves
Share capital
Share capital represents the nominal value of share capital subscribed.
Share premium
The share premium account is used to record the aggregate amount or value of
premiums paid when the Company's shares are issued at a premium, net of
associated share issue costs.
Capital redemption reserve
The capital redemption reserve is a non-distributable reserve into which
amounts are transferred following the redemption or purchase of the Company's
own shares.
EBT share reserve
The EBT share reserve represents the cost of shares repurchased and held in
the employee benefit trust ("EBT").
Merger relief reserve
This reserve records the amounts above the nominal value received for shares
sold, less transaction costs in accordance with section 610 of the Companies
Act 2006.
Foreign currency translation reserve
The foreign currency translation reserve represents exchange differences that
arise on consolidation from the translation of the financial statements of
foreign subsidiaries.
Retained earnings
The retained earnings reserve represents cumulative net gains and losses
recognised in the statement of comprehensive income and equity-settled
share-based payment reserves and related deferred tax on share-based payments.
30. Ultimate controlling party
There is no ultimate controlling party as at 31(st) December 2021.
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