REG - Elixirr Intnl PLC - Final Results
03/04/2023 07:00
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RNS Number : 0352V Elixirr International PLC 03 April 2023
ELIXIRR INTERNATIONAL PLC
("Elixirr", the "Company" or the "Group")
Final Results for the Year Ended 31 December 2022
Elixirr International plc (AIM:ELIX), an established, global award-winning
challenger consultancy, is pleased to announce its final results for the year
ended 31 December 2022.
Financial Highlights
· Revenue increased by 40% to £70.7m (FY 21: £50.6m)
· Adjusted EBITDA* increased by 30% to £20.5m (FY 21: £15.7m)
· Adjusted EBITDA* margin of 29% (FY 21: 31%)
· Profit before tax increased by 29% to £15.7m (FY 21: £12.2m)
· Adjusted diluted earnings per share* increased by 26% to 30.5p
(FY 21: 24.2p)
· Net cash position of £20.4m (FY 21: £31.8m)
· Final dividend increased by 163% to 10.8p per Ordinary share (FY
21: 4.1p)
* Adjusted EBITDA excludes the following items from operating profit: non-cash
depreciation and amortisation charges, share-based payments and non-recurring
M&A-related items. Adjusted EPS excludes the following items from profit
after tax: amortisation charges, share-based payments, non-recurring
M&A-related items, M&A-related non-cash finance costs and their
related tax impacts.
Current Trading & Outlook
· FY 22 momentum has accelerated during Q1 2023, with three record
revenue months, absolute revenue growth of 52% and underlying organic revenue
growth of 19%
· Strong pipeline for the remainder of FY 23
· FY 23 expectations upgraded to £85m-£90m revenue at an Adjusted
EBITDA margin of 28-30%
Operating Highlights
· Continued progress executing our four-pillar growth strategy,
including:
1. Stretching our current Partner team - we achieved underlying organic
revenue growth of 18%, and increased revenue per Partner by 13% to £3.57m in
FY 22 (FY 21: £3.15m).
2. Promoting Partners from within the firm - we have promoted two
experienced Principals to Partner in January 2023. A further two Principals
will join the Partner team in October 2023, with our first promotion to
Partner in one of our acquired businesses effective January 2024.
3. Hiring new Partners - we made two successful Partner hires in 2022,
who both brought new clients to Elixirr and are now working with clients that
have the potential to become gold clients.
4. Inorganic growth - we completed the acquisition of iOLAP in March 2022,
our biggest acquisition to date, furthering our US growth and bringing key
data expertise that we are cross-selling to our clients across the Group. We
remain focused on inorganic growth with a strong pipeline and dedicated
M&A team. We are rigorous with our screening and diligence processes to
ensure that we only complete high-quality transactions that fit the Company's
growth strategy.
· Multiple accolades received including being listed as one of
Consulting Magazine's 'Fastest Growing Firms 2022', being selected for the
2022 Global Outsourcing 100®, the annual list of the world's best outsourcing
service providers and advisors, and two team members recognised as "Rising
Stars of the Profession".
· Brand increasingly recognised in the consulting industry. Our
'Con-sulting' campaign was nominated for 'Best B2B Brand Campaign' at the 2022
Drum Awards. The Company saw an increase of over 100% in marketing leads
resulting in a record year of revenue generated from this source.
Commenting on the results, Founder & CEO, Stephen Newton said:
"2022 proved Elixirr's consistent ability to perform from both a revenue and
profit perspective. This year we continued to leverage, and further invest in,
our four-pillar growth strategy, enabling us to deliver exceptional growth
despite challenging market conditions. Our equity incentive model is
reinforcing an entrepreneurial culture of exceptional quality as we scale and
this, combined with the breadth of our capabilities, will continue to set us
apart from our industry in FY 23 and beyond."
For further Information please contact:
Elixirr International plc
Public and Investor Relations contact: investor-relations@elixirr.com
Caroline Pitt
Stephen Newton, CEO
Graham Busby, CFO
finnCap Ltd (Nominated Adviser & Sole Broker)
Christopher Raggett, Charlie Beeson (Corporate Finance) +44 (0) 20 7220 0500
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 2022 Annual Results, a year which
demonstrated another robust period of growth for the Group. Despite market
volatility in the last twelve months, under a strong and experienced
leadership team, the Group has continued to deliver.
Elixirr's diverse offering made it well-placed to adapt to the changing needs
of its clients, and as a result, combined with its growing industry
reputation, the business performed well in both attracting new business
alongside scaling its existing client-base. This continues to position the
Group strategically as a client-led consultancy that can address a broad
spectrum of key boardroom challenges.
Whilst continuing to expand in all its key geographies, the Group achieved its
goal of increasing its US footprint substantially with the acquisition of
data, technology and analytics consultancy, iOLAP, in March 2022. This
significant acquisition has proven to be highly complementary to Elixirr's
core consulting offering and provides the Group with additional services where
there is high client demand.
STRATEGY
The Board continues to be fully supportive of the Group's four-pillar growth
strategy which has proven its value in FY 22. By continuing to make strategic
investments in new people and acquisitions, in parallel with organic growth,
the overall success of this strategy has been well demonstrated throughout the
year.
Through a well-structured Partner incentivisation model, the selling of
additional services across the wider client base has been firmly established
throughout the Group, utilising services from Elixirr Digital, The Retearn
Group Limited ('Retearn') and the addition of iOLAP during the year. Clients
have benefited from our ability to support them from strategy through to
execution which has enabled scalability both in size and duration of projects
for the business - and this is something we expect to increase with further
inorganic growth.
Going forward, we see clear pathways to further success in each of the four
growth pillars with increased Partner targets, a pipeline of talent of both
new Partner hires and promotions, as well as the continued pursuit of
high-quality acquisition targets from our dedicated M&A team.
DIVIDEND
Given the strong performance of the business in FY 22 and the year-end cash
position, the Board is pleased to recommend a final dividend for FY 22 of
10.8p per share. This will be recommended to shareholders at the AGM in June
2023. The FY 22 final dividend represents an increase of 163% on the FY 21
final dividend with a total cash cost of £5.0 million, which will be met from
the Group's existing cash reserves.
GOVERNANCE
The Board recognises the importance of operating within a robust governance
framework. Throughout the period the Group has continued to comply with the
corporate governance code of the Quoted Companies Alliance (QCA). This
includes ensuring that we have an appropriate balance of diverse skills and
experience to deliver our strategic vision and objectives. The Board and its
subcommittees include independent non-executive members with varying
backgrounds and experience. The Board continues to monitor this on a regular
basis.
OUTLOOK
The Board is optimistic about the outlook for FY 23, given the Group's strong
foundations and a variety of opportunities for further growth. The performance
of the business to date, combined with the support of our shareholders,
clients and people position Elixirr well to continue on its growth trajectory.
Gavin Patterson
Non-Executive Chairman
31 March 2023
CEO's Report
OVERVIEW
Our performance in FY 22 has again displayed Elixirr's ability to consistently
deliver strong revenue and profitability growth - despite challenging market
conditions. I'd like to thank our teams across the globe for their
contribution to these results and their continued dedication in providing the
excellent service that our firm has become renowned for.
The consulting industry grew at 8% CAGR from 2017 to 2021 (source: Gartner).
We have proven our ability to gain market share since listing, with revenue
growing at a CAGR of 42% from 2019 to 2022, an acceleration of our long term
CAGR of 32% since 2012. This can be attributed to the broadening of our
offering and ability to address a widening spectrum of key boardroom
challenges, whilst retaining the bespoke, high-quality approach we have always
had with clients since starting the firm in 2009.
In 2022, Elixirr's strong performance in both organic and inorganic growth was
the result of progress in all the pillars of our four-pillar growth strategy.
This has enabled us to further our goal of building a business that is
resilient to turbulent market conditions, while providing our clients with
exceptional service that evolves with their changing demands.
FY 22 PERFORMANCE
In FY 22, the business performed strongly, resulting in record revenue of
£70.7 million - a 40% increase from the prior year (£50.6 million). We
continued to focus both on bringing in new clients and building on our
existing relationships, increasing client retention year-on-year. We have seen
an increase in the number of 'gold' accounts - accounts with annual revenue of
over £1 million - and, through focus on building out our services to these
clients, have also seen an increase in the number of £2+ million revenue
accounts.
Trading during the year was strong, with Elixirr's 20+ services making it well
placed to support clients with a range of challenges, including business
transformation and cost-reduction which have become increasingly critical to
clients as the macro-economic environment has worsened.
The revenue bridge above shows the elements of the growth in revenue from
£50.6 million in FY 21 to £70.7 million in FY 22.
The acquisition of iOLAP in March 2022 added £15.1 million to revenue. In
addition, management made the decision to exit lower margin revenue in Retearn
and Elixirr Digital to sustain the quality of the Group's earnings (-£2.0
million) and two clients were subject to take overs which impacted progress in
those accounts (-£1.9 million).
Underlying organic revenue growth was 18% year on year (net +£8.9 million
revenue), with £10.0 million growth from existing clients and £10.5 million
growth from new clients, partially offset by an abnormally high value of end
of life projects (-£11.6 million). This included the impact of one major
client change programme coming to an end, without which organic growth would
have been 29%.
FY 22 saw us maintain consistently strong levels of profitability,
demonstrating the value that clients see from our premium service and delivery
quality. Each of our Partners are required to manage their project
profitability margins closely, and the wider business continued to deliver on
this front. This resulted in Adjusted EBITDA of £20.5 million, above market
expectations and an increase in absolute terms of 30% from FY 21 (£15.7
million). The Adjusted EBITDA margin continued to be market-leading at 29% (FY
21: 31%).
DELIVERING OUR FOUR-PILLAR GROWTH STRATEGY
Our four-pillar growth strategy has a proven track record, with the capacity
to support our long-term ambitions for the Group, and in FY 22 Elixirr made
great momentum in each facet of stretching existing Partners, bringing new
Partners into the business, promoting Partners from within and acquiring new
businesses.
This resulted in revenue per Partner increasing by 13% from £3.15 million in
FY 21 to £3.57 million in FY 22, as set out in the Partner revenue bridge
below. This continues the growth in this metric in every year since listing.
Stretching Existing Partners
As we grow our Partner team, we are looking for each member of the team to
maximise their revenue contribution, supporting the Group's overall
performance. The established Partners in our firm generated average revenue of
£4.0 million each in FY 22, an increase of 20% compared to £3.4 million in
FY 21. The additional capabilities provided by our acquisitions have expanded
the range of services that our Partners can sell to their clients.
We have increased Partner revenue targets for FY 23, reflecting our
expectations for further growth in this metric.
Hiring New Partners
Bringing new talent into the Partner team is an important pillar in the
Group's overall growth - a great route to bringing on board new clients and
entering new, or increasing the penetration of, existing markets. We
successfully hired two Partners who have established a great base in two
clients that we expect to become gold clients during FY 23. Both these
candidates came through the existing network of our Partner team and had
extensive prior consulting experience, factors which have contributed to their
strong performance since joining.
As a high-performing business we expect each of our Partners to meet a minimum
threshold for revenue performance. As a consequence, we exit Partners who
underperform - with their equity position forfeited. We will continue to take
decisive action to protect the overall business and quality of earnings.
We continue to use our networks to bring in new talent and in April 2023 we
will welcome a new Partner to the team. He brings extensive experience in
change management and transformation programmes, with an impressive network
including major clients in the healthcare industry. We continually progress a
warm pipeline of potential Partner candidates.
Promoting Partners from Within
Growing talent from within is of great importance to the firm - ensuring that
we retain our existing culture and quality as we scale. Our strategy is to
give promoted Partners a 'runway' to develop their Partner-level experience
before officially joining the Partner team which has proven to be of great
success in FY 22, with our promoted client-facing Partner achieving £3.5
million revenue.
2023 saw two further promoted Partners officially join the Partner team,
Danielle Croucher and Ben Gower. We expect both to play roles in expanding key
areas of the business - Danielle supporting our ambitions to further scale
Elixirr's US business and Ben helping to increase our presence in the
insurance space, both in the UK and globally.
Later in the year, we will welcome two more of our own to the Partner team,
Dan Coral and Rory Farquharson, effective October 2023. Both have been
instrumental in our expansion in the US in recent years and, as Partners, they
will continue contributing to the Group's success worldwide. We are also
particularly pleased to have just made our first promotion to Partner in one
of our acquired businesses - Nick Larsen is a longstanding member of the iOLAP
team where he leads the AWS practice, providing data services to a number of
major clients, and he will join the Partner team from January 2024.
Acquiring New Businesses
Buying new businesses with expertise and experience in growing markets that
are complementary to the Group's existing capabilities remains a key part of
Elixirr's growth strategy.
In March 2022 our acquisition of iOLAP marked our biggest deal to date,
bringing in a capability of key importance in the current business landscape.
Data is a more leveraged service than strategy consulting and iOLAP added the
annual equivalent of £7.6 million of revenue per acquisition Partner. This
highlights an additional opportunity for our organic Partners to get more
leverage from this data proposition - as well as future acquisitions.
In addition to bringing in a key service offering, the acquisition of iOLAP
has brought strong leaders into our business. Given the calibre of iOLAP
leadership, we have mutually agreed to change their earn-out targets for FY 23
onwards to target them on growth in our overall US business including iOLAP,
rather than on the performance of iOLAP alone. This again proves the
entrepreneurial way our partners work together for mutual benefit.
We were pleased to complete the acquisition of iOLAP from the internal cash
resources of the Group, without any dilution of shareholders' equity. In FY
23, we have settled 50% of the iOLAP earn-out consideration, again from our
internal cash resources without any dilution of shareholders. We continue to
protect shareholders from dilution where possible and have not had a dilution
event since April 2021.
Our internal M&A team continue to generate a pipeline of strong prospects,
focused on bringing in additional capabilities that will help us to support
clients in their key boardroom issues. They remain focused on bringing in
businesses of the highest quality that meet our exacting criteria, having
scouted 3,000+ firms since Elixirr's IPO.
OUR FIRM
Whilst I am very pleased to see the mechanisms we have put in place result in
the growth Elixirr has enjoyed in FY 22, it is the nature of our people and
boldness of our clients that truly set our firm apart in the market.
Our equity scheme is continuing to fulfil our objectives of building a high
performing team with long-term commitment to the business. Our Employee Share
Purchase Plan ("ESPP") had high levels of participation again for the new
financial year - over 50% for the Group and over 75% for the consulting
business for FY 23, highlighting the longevity and conviction our teams have
as part of the firm. This is further proven by the increases we have seen in
employee retention, particularly pleasing given employment market conditions.
Our pool of talent continues to be highly diverse in skillset and experience,
and we remain committed to creating a firm of equal opportunity, with
individuals measured purely by the quality of the work that they do. We
continue to source talent through the world's best universities, start-ups and
from industry to sustain our high-performing global team. This strategy
continues to be enhanced by the talent we bring in from acquisitions, and we
were delighted to welcome the expertise of iOLAP's data engineers and
consultants earlier this year.
During the year we continued to uphold our company values, one of which;
"Beyond expectations" is crucially important - helping to maintain the quality
of delivery and industry expertise as we scale and deliver our growth
ambitions. In 2022 we were pleased to receive multiple accolades including
being listed as one of Consulting Magazine's 'Fastest Growing Firms 2022',
being selected for the 2022 Global Outsourcing 100®, the annual list of the
world's best outsourcing service providers and advisors, and two team members
recognised as "Rising Stars of the Profession".
In addition to industry accolades our brand is becoming increasingly
recognised as a challenger in the consulting industry. Our 'Con-sulting'
campaign was nominated for 'Best B2B Brand Campaign' at the 2022 Drum Awards.
This campaign helped to support an overall increase in brand awareness and
leads. In FY 22, the business saw an increase of over 100% in marketing leads
resulting in a record year of revenue generated from this source. It is
fantastic to see the investment we have made in building a great brand paying
off.
OUTLOOK
This year Elixirr has again proven both its resilience and growth potential,
notwithstanding a turbulent macroeconomic backdrop. Our positioning in the
market and ability to address clients' key challenges have continued to result
in our services being in high demand.
The momentum we built in FY 22 has accelerated in the first quarter of 2023.
In Q1 2023, we have had three record revenue months with absolute revenue
growth of 52% and underlying organic revenue growth of 19%.
Combined with a strong pipeline thereafter, and a proven four-pillar growth
strategy, I am incredibly bullish about FY 23 and beyond. We are therefore
pleased to upgrade our target revenue for FY 23 to £85m-£90m, whilst
maintaining our Adjusted EBITDA margin in the range of 28-30%.
Stephen Newton
Founder & Chief Executive Officer
31 March 2023
Financial Review
FY 22 FY 21 % change
Revenue £70.7m £50.6m +40%
Gross profit £23.2m £17.7m +31%
Adjusted EBITDA* £20.5m £15.7m +30%
Adjusted EBITDA margin* 29% 31% -7%
Profit before tax £15.7m £12.2m +29%
Adjusted diluted earnings per share* 30.5p 24.2p +26%
Dividend per share 10.8p 4.1p +163%
Free cash flow £14.6m £13.6m +7%
Net cash £20.4m £31.8m -36%
* In order to provide better clarity to the underlying performance of the
Group, Elixirr uses adjusted EBITDA and adjusted earnings per share ('EPS') as
alternative performance measures ('APMs'). Please refer to note 3 of the Group
and Company Financial Statements for further details.
GROUP RESULTS
The Board is pleased to report that the Group has delivered an exceptionally
strong year, continuing to grow revenue and profits despite global macro
uncertainty. The growth has demonstrated the continued effectiveness of our
four-pillar growth strategy which enables the Group to deliver robust
performance in all market conditions.
The Group delivered strong growth in FY 22, both organically and through the
acquisition of iOLAP. Our full range of services positioned us optimally to
adapt to the changing needs of our clients, as we continued to deliver
high-quality client service to a growing customer base. The Group successfully
acquired iOLAP in FY 22, integrating their product offerings and teams into
the Group and delivering enhanced capabilities to our client base. The Group
has maintained healthy margins and good cash generation, ending the year in a
strong financial position. In FY 22 the Group delivered revenue of £70.7
million and profitability continues to be strong with Adjusted EBITDA of
£20.5 million at a 29% margin.
REVENUE
Revenue increased by 40% to £70.7 million in FY 22 compared with £50.6
million in FY 21, with four record months of revenue achieved during the year.
Revenue growth was driven by both underlying organic revenue growth of 18% and
the impact of the acquisition of iOLAP.
Revenue growth was achieved across all geographic regions (UK, USA and Rest of
World) in which the Group operates, and we have significantly increased our US
footprint, having more than doubled revenues in FY 22 following the
acquisition of iOLAP. US revenue now accounts for 44% of Group revenue (FY 21:
25%). We are also pleased to report that revenue per client-facing Partner
grew by 13% during the year, despite the difficult market environment,
reflecting the quality and resilience of our Partner team and how the
additional capabilities provided by our acquisitions have expanded the range
of services that our Partners can sell to their clients.
The double-digit growth in revenues is testament to the Group's relentless
focus on continuing to build long-term, trusted relationships with our clients
by consistently delivering innovative, impactful solutions to solve our
clients' key business challenges. The Group's revenue growth is reflective of
continuing strong demand for its existing service offering as well as the
leveraging of new service capability to clients from acquisitions. The iOLAP
business has proven to be highly complementary to Elixirr's core consulting
offering and provides the Group with additional services where there is high
client demand.
GROUP PROFITABILITY
The Group's revenue growth was matched with strong growth in profits too.
Group gross profit was £23.2 million (FY 21: £17.7 million), increasing by
£5.5 million or 31% over the previous year. The gross profit margin decreased
slightly to 33% from 35% in FY 21. The decrease was driven by the resumption
of travel and business development activities to normalised levels compared to
the unusual lockdown environment in FY 21.
Administrative expenses increased by 33% to £6.9 million, principally
reflecting the acquisition of iOLAP and the resulting non-cash acquired
intangible asset amortisation.
Group Adjusted EBITDA grew 30% and was delivered at a 29% margin (FY 21: 31%).
The Adjusted EBITDA margin reflects the increased costs referred to in
relation to gross profit above.
Group profit before tax grew by 29% to £15.7 million (FY 21: £12.2 million)
and was in line with the growth in Adjusted EBITDA.
NET FINANCE EXPENSE
Net finance expense of £1.2 million for FY 22 includes interest on the
contingent consideration discount unwinding for iOLAP of £0.9 million and
£0.3 million for the Group office leases liability. The increase in net
finance expense was principally driven by the iOLAP contingent consideration
discount unwinding. As at 31 December 2022 the Group has no interest rate risk
exposure.
TAXATION
The Group's tax charge for FY 22 was £2.9 million, reflecting a marginally
higher effective tax rate of 18% compared with 17% in FY 21. The increase was
largely driven by higher tax rates in the US as, following the acquisition of
iOLAP, the US business comprised a larger proportion of profit before tax.
The Group's cash tax payment in the year was £3.8 million (FY 21: £2.5
million), with the increase partly due to certain subsidiary companies
becoming liable to pay corporation tax on a quarterly basis rather than
annually in arrears. For further detail on taxation see notes 7 and 8 of the
Group and Company Financial Statements. Adjusted profit after tax, used in
calculating adjusted EPS, is shown after adjustments for the applicable tax on
adjusting items as set out in note 3.
EARNINGS PER SHARE
Adjusted diluted EPS increased by 26% to 30.5p, with the calculation
reflecting potential additional dilution from shares that could be issued as
contingent consideration for the iOLAP acquisition. As reported in note 13 of
the Group and Company Financial Statements of this report, the Group retains
the option to satisfy this consideration through a cash payment with a
commitment to buy shares from the EBT in order to minimise dilution. Adjusting
items and their tax impacts are set out in note 3 of the Group and Company
Financial Statements.
CASH FLOW
The Group's net cash position decreased to £20.4 million (FY 21: £31.8
million) primarily due to the initial consideration paid for the acquisition
of iOLAP (£18.1 million) and net purchases of shares for the EBT (£4.4
million) which can be used to settle future deferred consideration
obligations. As stated above, the Group retains the option to satisfy the
remaining iOLAP contingent consideration through cash payments with a
commitment of the sellers to buy shares from the EBT in order to minimise
dilution. Free cash flow increased by 7% due to improved operating cash flow
generation driven by business growth and efficient working capital management.
The Group enjoyed strong cash generation with net cash flow generated from
operations of £15.7 million in FY 22 (FY 21: £14.3 million). The increase in
operating cash flow compared to FY 21 was less than the increase in EBITDA due
to the increase in cash tax (as explained above) and lower payables (on a like
for like basis excluding iOLAP) compared with FY 21.
Net cash utilised for acquisitions reflects £18.1 million net initial cash
consideration for the acquisition of iOLAP (net of cash of £0.8 million
acquired on acquisition) plus contingent consideration of £0.2 million for
Coast Digital Limited ('Coast Digital').
Net cash utilised in financing activities of £8.9 million represents net
purchases of shares for the EBT of £4.4 million, net Partner loans (including
associated section 455 tax) of £0.5 million, dividend payment of £1.9
million, repayment of iOLAP bank loans on acquisition of £1.1 million and
office lease payments of £0.9 million.
STATEMENT OF FINANCIAL POSITION
Net assets as at 31 December 2022 totalled £95.9 million (FY 21: £86.0
million). The increase in net assets is as a result of foreign currency
translation benefit of £1.8 million, share premium of £0.6 million for gains
on sale of shares by the EBT, retained profit for the year of £12.4 million
(after FY 21 final dividend of £1.8 million offset by £1.3 million add back
of share-based payments charge and related tax), partially offset by net EBT
share purchases of £5.0 million.
DIVIDENDS
No interim Ordinary share dividends were paid in relation to FY 21 or FY 22.
The Company paid a final Ordinary share dividend in respect of FY 21 of 4.1
pence per Ordinary share in August 2022. The Directors are proposing a final
Ordinary share dividend in respect of FY 22 of 10.8 pence per Ordinary share,
representing a 163% increase in dividend per share compared with FY 21.
Group Statement of Comprehensive Income
For the year ended 31 December 2022
Year ended Year ended
31 December 2022
31 December 2021
Note £'000s £'000s
Revenue 4 70,703 50,611
Cost of sales (47,547) (32,913)
Gross profit 23,156 17,698
Administrative expenses (6,852) (5,161)
Operating profit before M&A-related items 5 16,304 12,537
Depreciation 1,061 670
Amortisation of intangible assets 2,004 1,378
Share-based payments 1,159 1,152
Adjusted EBITDA 3 20,528 15,737
M&A-related items 5 600 (154)
Operating profit 5 16,904 12,383
Finance income 54 29
Finance costs (1,213) (246)
Net finance expense 6 (1,159) (217)
Profit before taxation 5 15,745 12,166
Taxation 7 (2,876) (2,022)
Profit for the period 12,869 10,144
Other comprehensive income
Items that may be subsequently reclassified to profit and loss:
Currency translation on foreign currency net investments 1,827 123
1,827 123
Total comprehensive income 14,696 10,267
Basic earnings per Ordinary share (p) 10 27.86 22.04
Diluted earnings per Ordinary share (p) 10 24.78 20.01
All results relate to continuing operations.
The notes form part of these accounts.
Group and Company Statements of Financial Position
As at 31 December 2022
Group Company
31 December 2022 31 December 2021 31 December 2022 31 December 2021
Note £'000s £'000s £'000s £'000s
Assets
Non-current assets
Intangible assets 12 83,581 56,193 - -
Property, plant and equipment 14 5,662 5,496 - -
Investments 15 - - 85,426 63,807
Other receivables 16 1,293 1,535 876 1,104
Loans to shareholders 16 4,734 3,991 4,723 3,991
Deferred tax asset 8 1,719 1,197 - -
Total non-current assets 96,989 68,412 91,025 68,902
Current assets
Trade and other receivables 16 11,234 6,963 403 1,928
Cash and cash equivalents 17 20,433 31,795 6,340 13,576
Total current assets 31,667 38,758 6,743 15,504
Total assets 128,656 107,170 97,768 84,406
Liabilities
Current liabilities
Trade and other payables 18 13,304 12,055 7,215 134
Loans and borrowings 19 750 485 - -
Corporation tax 381 1,150 - 11
Other creditors 20 6,765 436 203 436
Total current liabilities 21,200 14,126 7,418 581
Net current assets 10,467 24,632 (675) 14,923
Non-current liabilities
Loans and borrowings 19 4,393 4,760 - -
Deferred tax liability 8 1,435 623 - -
Other non-current liabilities 20 5,713 1,620 - 1,370
Total non-current liabilities 11,541 7,003 - 1,370
Total liabilities 32,741 21,129 7,418 1,951
Net assets 95,915 86,041 90,350 82,455
Equity
Share capital 21 52 52 52 52
Share premium 21 25,599 24,952 25,599 24,952
Capital redemption reserve 2 2 2 2
EBT share reserve 22 (7,147) (2,193) (7,147) (2,193)
Merger relief reserve 21 46,870 46,870 46,870 46,870
Foreign currency translation reserve 1,878 51 - -
Retained earnings 28,661 16,307 24,974 12,772
Total shareholders' equity 95,915 86,041 90,350 82,455
As permitted by section 408 of the Companies Act 2006, a separate statement of
comprehensive income of the parent Company has not been presented. The
Company's profit for the year was £13.1 million (FY 21: £4.0 million).
The notes form part of these accounts.
The Financial Statements were approved by the Board of Directors on 31 March
2023 and were signed on its behalf by:
Stephen Newton
Director
Group Statement of Changes in Equity
For the year ended 31 December 2022
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 2020 and 01 January 2021 52 19,729 2 (1,248) 46,870 (72) 5,355 70,688
Comprehensive income
Profit for the period - - - - - - 10,144 10,144
Other comprehensive income - - - - - 123 - 123
Transactions with owners
Share issue as consideration for a business combination - 2,154 - - - - - 2,154
Dividends - - - - - - (1,014) (1,014)
Share-based payments - - - - - - 1,152 1,152
Deferred tax recognised in equity - - - - - - 670 670
Sale of Ordinary shares - 3,069 - 2,705 - - - 5,774
Acquisition of Ordinary shares - - - (3,650) - - - (3,650)
As at 31 December 2021 and 52 24,952 2 (2,193) 46,870 51 16,307 86,041
01 January 2022
Comprehensive income
Profit for the period - - - - - - 12,869 12,869
Other comprehensive income - - - - - 1,827 - 1,827
Transactions with owners
Dividends - - - - - - (1,855) (1,855)
Share-based payments - - - - - - 975 975
Deferred tax recognised in equity - - - - - - 365 365
Sale of Ordinary shares - 647 - 9,743 - - - 10,390
Acquisition of Ordinary shares - - - (14,697) - - - (14,697)
As at 52 25,599 2 (7,147) 46,870 1,878 28,661 95,915
31 December 2022
The notes form part of these accounts. Please refer to note 28 for
explanations of reserve accounts.
Company Statement of Changes in Equity
For the year ended 31 December 2022
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 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 31 December 2021 and 52 24,952 2 (2,193) 46,870 12,772 82,455
01 January 2022
Comprehensive income
Profit for the period - - - - - 13,082 13,082
Transactions with owners
Dividends - - - - - (1,855) (1,855)
Share-based payments - - - - - 975 975
Deferred tax recognised in equity - - - - - - -
Sale of Ordinary shares - 647 - 9,743 - - 10,390
Acquisition of Ordinary shares - - - (14,697) - - (14,697)
As at 52 25,599 2 (7,147) 46,870 24,974 90,350
31 December 2022
The notes form part of these accounts. Please refer to note 28 for
explanations of reserve accounts.
Group and Company Cash Flow Statements
For the year ended 31 December 2022
Group Company
31 December 2022 31 December 2021 31 December 2022 31 December 2021
Note £'000s £'000s £'000s £'000s
Cash flows from operating activities:
Cash generated from operations 24 19,583 16,856 20,364 4,265
Taxation paid (3,855) (2,527) (18) (86)
Net cash generated from operating 15,728 14,329 20,346 4,179
activities
Cash flows from investing activities:
Purchase of property, plant and equipment (329) (98) - -
Payment for acquisition of subsidiary, net of cash acquired (18,276) (3,179) (203) (4,000)
Investment in subsidiary - - (20,643) -
Interest received 71 33 59 32
Net cash utilised in investing (18,534) (3,244) (20,787) (3,968)
activities
Cash flows from financing activities:
EBT Ordinary share purchases (14,697) (3,649) (14,697) (3,649)
EBT Ordinary share sales 10,257 5,774 10,257 5,774
Loans to shareholders (3,011) (4,500) (3,000) (4,500)
Loans repaid by shareholders 2,268 8,293 2,268 7,181
s455 tax refunded/(paid) re loans to shareholders 245 (1,104) 232 (1,104)
Repayment of borrowings (1,143) - - -
Lease liability payments (651) (448) - -
Interest paid (262) (246) - -
Ordinary share dividends paid to shareholders (1,855) (1,014) (1,855) (1,014)
Net cash (utilised)/generated from (8,849) 3,106 (6,795) 2,688
financing activities
Net (decrease)/increase in cash and cash equivalents (11,655) 14,191 (7,236) 2,898
Cash and cash equivalents at beginning 31,795 17,503 13,576 10,678
of the period
Effects of exchange rate changes on 293 101 - -
cash and cash equivalents
Cash and cash equivalents at end 20,433 31,795 6,340 13,576
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 public limited company incorporated in England and Wales and
domiciled in the UK. The address of the registered office is 12 Helmet Row,
London, EC1V 3QJ and the Company number is 11723404.
1.2. Basis of preparation
The financial statements have been prepared in accordance with UK adopted
international accounting standards.
1.3. Basis of consolidation
These financial statements consolidate the financial statements of the Company
and its subsidiary undertakings as at 31 December 2022.
Subsidiaries are fully consolidated from the date of acquisition, being the
date on which the Group obtains control, and continue to be consolidated until
the date that such control ceases. The acquisition method of accounting has
been adopted. The financial statements of subsidiaries are prepared for the
same reporting period as the parent Company, using consistent accounting
policies.
All intra-group balances, income and expenses and unrealised gains and losses
resulting from intra-group transactions are eliminated in full.
1.4. Measurement convention
The financial statements have been prepared under the historical cost convention, except as otherwise described in the accounting policies.
The preparation of the consolidated financial information in compliance with
UK adopted international accounting standards requires the use of certain
critical accounting estimates and management judgements in applying the
accounting policies. The significant estimates and judgements that have been
made and their effect is disclosed in note 2.1.
1.5. Going concern
The Directors have, at the time of approving the financial statements, a
reasonable expectation that the Company and the Group have adequate resources
to continue in operation for the foreseeable future. The Group's forecasts and
projections, taking into account reasonable possible changes in trading
performance, show that the Group has sufficient financial resources, together
with assets that are expected to generate cash flow in the normal course of
business. Accordingly, the Directors have adopted the going concern basis in
preparing these consolidated financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements of the Group and Company, which have been applied consistently to the period presented, are set out below.
2.1. Judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make
estimates and judgements that affect the reported amounts of assets,
liabilities, costs and revenue in the financial statements. Actual results
could differ from these estimates. The judgements, estimates and associated
assumptions are based on historical experience and other factors that are
considered to be relevant.
In the process of applying the Group's accounting policies, the Directors have
made no judgements (excluding those involving estimations), which are
considered to have a significant effect on the amounts recognised in the
financial statements for the year ending 31 December 2022.
The key sources of estimation uncertainty that could cause an adjustment to be
required to the carrying amount of assets or liabilities within the next
accounting period are:
• Revenue is recognised in line with time worked on a project unless
the engagement is conditional or contingent. Management review accrued revenue
to determine whether there is any likelihood of any amendments or provisions
required based on project progress and relationship with the client.
• Full provision is made for loss making projects in the period in
which the loss is first foreseen, and for the cost of conditional or
contingent engagements prior to the event occurring. Estimation is required of
costs to complete and the provision necessary.
• The Group's policy on recognising an impairment of the trade
receivables balance is based on a review of individual receivable balances,
their ageing and management's assessment of realisation. This review and
assessment is conducted on a continuing basis and any material change in
management's assessment of trade receivable impairment is reflected in the
carrying value of the asset.
• Provisions for dilapidations are accrued based on estimation of the
cost expected to crystallise on vacating leased premises.
• In determining the fair value of intangible assets arising on
business combinations, management is required to estimate the timing and
amount of future cash flows applicable to the intangible assets being
acquired.
• Amortisation periods of trademarks, customer relationships and
order book intangibles are estimates based on the expected useful lives and
are assessed annually for any changes based on current circumstances.
• Management has estimated the share-based payments expense under
IFRS 2. In determining the fair value of share-based payments, management has
considered several internal and external factors in order to judge the
probability that management and employee share incentives may vest and to
assess the fair value of share options at the date of grant. Such assumptions
involve estimating a number of future performance and other factors.
• The Coast Digital and iOLAP contingent consideration calculations
under IFRS 3 contain estimation uncertainty, as the earn-out potentially
payable in each case is linked to the future performance of the acquiree. In
estimating the fair value of the contingent consideration, at both the
acquisition date and financial year end, management has estimated the
potential future cash flows of the acquirees and assessed the likelihood of an
earn-out payment being made. These estimates could potentially change as a
result of events over the coming years.
2.2. Revenue recognition
Revenue is measured as the fair value of consideration received or receivable
for satisfying performance obligations contained in contracts with clients,
excluding discounts and Value Added Tax. Variable consideration is included in
revenue only to the extent that it is highly probable that a significant
reversal will not be required when the uncertainties determining the level of
variable consideration are resolved. This occurs as follows for the Group's
various contract types:
• Time-and-materials contracts are recognised over time as services
are provided at the fee rate agreed with the client where there is an
enforceable right to payment for performance completed to date.
• Fixed-fee contracts are recognised over time based on the actual
service provided to the end of the reporting period as a proportion of the
total services to be provided where there is an enforceable right to payment
for performance completed to date. This is determined based on the actual
inputs of time and expenses relative to total expected inputs.
• Performance-fee contracts are recognised when the right to
consideration arises on having met the relevant performance-related elements.
• Contingent-fee contracts, over and above any agreed minimum fee, are
recognised at the point in time that the contingent event occurs and the Group
has become entitled to the revenue.
Where contracts include multiple performance obligations, the transaction
price is allocated to each performance obligation based on its stand-alone
selling price. Where these are not directly observable, they are estimated
based on expected cost-plus margin. Adjustments are made to allocate discounts
proportionately relative to the stand-alone selling price of each performance
obligation.
Estimates of revenues, costs or extent of progress toward completion are
revised if circumstances change. Any resulting increase or decrease in
estimated revenues or costs are reflected in the statement of comprehensive
income in the period in which the circumstances that give rise to the revision
became known.
For time-and-materials and fixed-fee contracts, fees are normally billed on a
monthly basis. For performance-fee and contingent-fee contracts, fees are
normally billed and paid when entitlement to the revenue has been established.
If the revenue recognised by the Group exceeds the amounts billed, a contract
asset is recognised. If the amounts billed exceed the revenue recognised, a
contract liability is recognised. Contract assets are reclassified as
receivables when billed and the consideration has become unconditional because
only the passage of time is required before payment is due.
The Group's standard payment terms require settlement of invoices within 30
days of receipt.
The Group does not adjust the transaction price for the time value of money as
it does not expect to have any contracts where the period between the transfer
of the promised services to the client and the payment by the client exceeds
one year.
2.3. Business combinations, goodwill and consideration
Business combinations
The Group applies the acquisition method of accounting to account for business combinations in accordance with IFRS 3, 'Business Combinations'.
The consideration transferred for the acquisition of a subsidiary is the fair
value of the assets transferred, the liabilities incurred and the equity
interests issued by the Group. The consideration transferred includes the fair
value of any asset or liability resulting from a contingent consideration
arrangement. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date. The excess of the consideration
transferred over the fair value of the Group's share of the identifiable net
assets acquired is recorded as goodwill. All transaction related costs are
expensed in the period they are incurred as operating expenses. If the
consideration is lower than the fair value of the net assets of the subsidiary
acquired, the difference is recognised in the income statement.
On 17 March 2022, the Group acquired 100% of the share capital and voting
interests of iOLAP, a US-headquartered technology and data firm. The
acquisition brings specialist data and analytics capabilities, including
artificial intelligence (AI) and machine learning (ML), into the Group where
there is existing demand for these services. The difference between the fair
value of the purchase consideration of £28.4 million and the fair value of
the identifiable assets acquired and liabilities assumed of £5.0 million was
recognised as goodwill of £23.4 million. The goodwill is attributable to the
company's workforce and working methodologies. The tax cost base of the
goodwill is deductible for tax purposes. Please refer to note 13 for further
details.
On 9 April 2021 the Group acquired 100% of the share capital and voting
interests of Retearn, a procurement, transformation and insights consultancy
firm. The difference between the fair value of the purchase consideration of
£7.4 million and the fair value of the identifiable assets acquired and
liabilities assumed of £2.1 million was recognised as goodwill of £5.3
million. The goodwill is attributable to the company's workforce and working
methodologies and it is not deductible for tax purposes.
Goodwill
Goodwill is initially measured at cost and any previous interest held over the
net identifiable assets acquired and liabilities assumed. If the fair value of
the net assets acquired is in excess of the aggregate consideration
transferred, the Group re-assesses whether it has correctly identified all of
the assets acquired and all of the liabilities assumed and reviews the
procedures used to measure the amounts to be recognised at the acquisition
date. If the reassessment still results in an excess of the fair value of net
assets acquired over the aggregate consideration transferred, then the gain is
recognised in the income statement.
After initial recognition, goodwill is measured at cost less any accumulated
impairment losses. For the purposes of impairment testing, goodwill is
allocated to each of the Group's cash-generating units expected to benefit
from the synergies of the combination. Cash-generating units to which goodwill
has been allocated are tested for impairment annually, or more frequently when
there is an indication that the unit may be impaired.
The Group performs impairment reviews at the reporting period end to identify
any goodwill or intangible assets that have a carrying value that is in excess
of its recoverable amount. Determining the recoverability of goodwill and the
intangible assets requires judgement in both the methodology applied and the
key variables within that methodology. Where it is determined that an asset is
impaired, the carrying value of the asset will be reduced to its recoverable
amount with the difference recorded as an impairment charge in the income
statement.
In accordance with IAS 36, the Group has tested goodwill for impairment at the
reporting date. No goodwill impairment was deemed necessary as at 31 December
2022. For further details on the impairment review please refer to note 12.
Contingent and non-contingent deferred consideration on acquisition
Contingent and non-contingent deferred consideration may arise on acquisitions. Non-contingent deferred consideration may arise when settlement of all or part of the cost of the business combination falls due after the acquisition date. Contingent deferred consideration may arise when the consideration is dependent on future performance of the acquired company.
Deferred consideration associated with business combinations settled in cash
is assessed in line with the agreed contractual terms. Consideration payable
is recognised as capital investment cost when the deferred or contingent
consideration is not employment-linked. Alternatively, consideration is
recognised as remuneration expense over the deferral or contingent performance
period, where the consideration is also contingent upon future employment.
Where the contingent consideration is settled in a variable number of shares
or cash, the consideration is classified as a liability and measured at fair
value through profit and loss.
2.4. Taxation
Income tax expense represents the sum of the tax currently payable and
deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profits as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group's and Company's liability for current tax is calculated using tax rates
that have been enacted or substantially enacted by the reporting end date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary differences arise from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered. Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is realised.
Deferred tax is charged or credited in the income statement, except when it
relates to items charged or credited directly to equity, in which case the
deferred tax is also dealt with in equity. Deferred tax assets and liabilities
are offset when the company has a legally enforceable right to offset current
tax assets and liabilities and the deferred tax assets and liabilities relate
to taxes levied by the same tax authority.
2.5. Foreign currency translation
The presentational currency of these financial statements and the functional
currency of the Group is pounds sterling.
Functional and presentational currency
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The financial statements are presented in 'sterling', which is the Group's and Company's functional currency and presentation currency.
On consolidation, the results of overseas operations are translated into
sterling at rates approximating to those ruling when the transactions took
place. All assets and liabilities of overseas operations are translated at the
rate ruling at the reporting date. Exchange differences arising on translating
the opening net assets at opening rate and the results of overseas operations
at actual rate are recognised in other comprehensive income.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
2.6. Intangible assets
Intangible assets are measured at cost less accumulated amortisation and any
accumulated impairment losses. Intangible assets acquired in a business
combination are initially measured at their fair value (which is regarded as
their cost). Subsequent to initial recognition, intangible assets acquired in
a business combination are reported at cost less accumulated amortisation and
any accumulated impairment losses.
Intangible assets acquired in a business combination are identified and
recognised separately from goodwill where they satisfy the definition of an
intangible asset under IAS 38. Such assets are only recognised if either:
• They are capable of being separated or divided from the company and
sold, transferred, licensed, rented or exchanged, either individually or
together with a related contract, identifiable asset or liability, regardless
of whether the company intends to do so; or
• They arise from contractual or other legal rights, regardless of
whether those rights are transferable or separable from the entity or from
other rights and obligations.
The cost of such intangible assets is the fair value at the acquisition date.
All intangible assets acquired through business combinations are amortised
over their estimated useful lives. The significant intangibles recognised by
the Group, their useful economic lives and the methods used to determine the
cost of the intangibles acquired in business combinations are as
follows:
Intangible Asset Useful Economic Life Valuation Method
Trademark 33.33% reducing balance Relief from Royalty method
Customer relationships 10 - 25% reducing balance Multi-Period Excess Earnings method
Order book Over order term Multi-Period Excess Earnings method
2.7. Tangible assets
Tangible fixed assets are stated at cost net of accumulated depreciation and
accumulated impairment losses.
Costs comprise purchase costs together with any incidental costs of
acquisition.
Depreciation is provided to write down the cost less the estimated residual
value of all tangible fixed assets by equal instalments over their estimated
useful economic lives on a straight-line basis. The following rates are
applied:
Tangible fixed 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 (other than goodwill) to determine whether
there is any indication that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is estimated
in order to determine the extent of the impairment loss (if any). Where it is
not possible to estimate the recoverable amount of an individual asset, the
Group estimates the recoverable amount of the cash-generating unit to which
the asset belongs.
The recoverable amount is the higher of fair value less costs to sell and
value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific
to the asset for which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised immediately in profit and loss.
Where an impairment subsequently reverses, the carrying amount of the asset
(or cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss
been recognised for the asset (or cash-generating unit) in prior years. A
reversal of an impairment loss is recognised immediately in profit and loss.
2.9. Employee benefits
Post-retirement benefits
The Group pays into defined contribution pension schemes on behalf of employees that are operated by third parties. The assets of the schemes are held separately from those of the Group in independently administered funds.
The amount charged to the income statement represents the contributions
payable to the scheme in respect of the accounting period.
Share-based payments
The cost of share-based employee compensation arrangements, whereby employees receive remuneration in the form of share options, is recognised as an employee benefit expense in the statement of profit and loss.
The total expense to be apportioned over the vesting period of the benefit is
determined by reference to the fair value (excluding the effect of non-market
based vesting conditions) at the grant date. Fair value is measured by use of
Black Scholes option valuation model.
At the end of each reporting period the assumptions underlying the number of
awards expected to vest are adjusted for the effects of non-market based
vesting conditions to reflect conditions prevailing at that date. The impact
of any revisions to the original estimates is recognised in the statement of
profit or loss, with a corresponding adjustment to equity.
The Group has the obligation to pay employers' national insurance on the
exercise of certain UK employee options. The Group has opted to account for
the tax obligation under IFRS 2 as a cash-settled share-based payment
arrangement as the amount of employers' national insurance due at the time of
exercise is based on the share price of the equity instruments of the Company.
The cash-settled share-based payment liability is estimated at each period end
using the closing share price of the Company and the prevailing employers'
national insurance rate. The number of awards expected to vest are consistent
with the treatment for equity-settled share-based payments. The cost of
employers' national insurance is included within share-based payments expense
in the statement of comprehensive income.
Please refer to note 23 for further details.
2.10. Earnings per share
The Group presents basic and diluted EPS on an IFRS basis. In calculating the
weighted average number of shares outstanding during the period, any share
restructuring is adjusted to allow comparability with other periods.
Basic EPS is calculated by dividing the profit attributable to the Group's
Ordinary shareholders by the weighted average number of Ordinary shares
outstanding during the period.
The calculation of diluted EPS assumes conversion of all potentially dilutive
Ordinary shares, which arise from share options outstanding. A calculation is
performed to determine the number of share options that are potentially
dilutive based on the number of shares that could have been acquired at fair
value from the future assumed proceeds of the outstanding share options.
2.11. Financial instruments
The Group classifies financial instruments, or their component parts, on
initial recognition as a financial asset, a financial liability or an equity
instrument in accordance with the substance of the contractual arrangement.
Financial instruments are recognised on trade date when the Group becomes a
party to the contractual provisions of the instrument. Financial instruments
are recognised initially at fair value plus, in the case of a financial
instrument not a fair value through profit and loss, transaction costs that
are directly attributable to the acquisition or issue of the financial
instrument. Financial instruments are de-recognised on the trade date when the
Group is no longer a party to the contractual provisions of the instrument.
Non-derivative financial instruments comprise trade and other receivables,
cash and cash equivalents, loans and borrowings and trade and other payables.
Trade and other receivables and trade and other payables
Trade and other receivables are recognised initially at transaction price less attributable transaction costs. Trade and other payables are recognised initially at transaction price plus attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any expected credit losses in the case of trade receivables. If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments discounted at a market rate of interest for a similar debt instrument.
Unbilled revenue
Unbilled revenue is recognised at the fair value of consultancy services
provided at the reporting date reflecting the stage of completion (determined
by costs incurred to date as a percentage of the total anticipated costs) of
each assignment. This is included in contract assets.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at the present value of
future payments discounted at a market rate of interest. Subsequent to initial
recognition, interest-bearing borrowings are stated at amortised cost using
the effective interest method, less any impairment losses.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with terms
up to 95 days. Bank overdrafts that are repayable on demand and form an
integral part of the Group's cash management are included as a component of
cash and cash equivalents for the purpose only on the cash flow statement.
Contingent consideration
Contingent deferred consideration may arise on acquisitions where the
consideration is dependent on the future performance of the acquired company.
In circumstances where the acquiree will receive contingent consideration in a
variable number of shares and is not employment-linked, the Group has
recognised a financial liability at the fair value of the contingent
consideration. Subsequent changes to the fair value of the contingent
consideration are recognised in the statement of comprehensive income.
At the balance sheet date the contingent consideration liability represents
the fair value of the remaining contingent consideration valued at
acquisition. The contingent consideration liability for acquisitions under
IFRS 3 contains estimation uncertainty as they relate to future expected
performance of the acquired business. In estimating the fair value of the
contingent consideration, management have assessed the potential future cash
flows of the acquired business and the likelihood of an earn-out payment being
made.
2.12. Provisions
A provision is recognised in the statement of financial position when the
Group has a present legal or constructive obligation as a result of a past
event, that can be reliably measured and it is probable that an outflow of
economic benefits will be required to settle the obligation. Provisions are
determined by discounting the expected future cash flows at a pre-tax rate
that reflects risks specific to the liability.
2.13. Right-of-use assets: Leases
The Group leases two properties in the UK from which it operates and iOLAP has
a further two properties outside the UK that it leases.
All leases are accounted for by recognising a right-of-use asset and a lease
liability except for:
• Leases of low value assets; and
• Leases with a duration of twelve months or less.
Lease liabilities are measured at the present value of contractual payments
due to the lessor over the lease term, with the discount rate determined by
reference to the rate inherent in the lease unless (as is typically the case)
this is not readily determinable, in which case the lessee's incremental
borrowing rate on commencement of the lease is used. This has been estimated
at 5.0 per cent.
Right-of-use assets are initially measured at the amount of the lease
liability, reduced for any lease incentives received, and increased for:
• Lease payments made at or before commencement of the lease;
• Initial direct costs incurred; and
• The amount of any provision recognised where the Group is
contractually required to dismantle, remove or restore the leased asset
(typically leasehold dilapidations).
Subsequent to initial measurement lease liabilities increase as a result of
interest charged at a constant rate on the balance outstanding and are reduced
for lease payments made. Right-of-use assets are amortised on a straight-line
basis over the remaining term of the lease or over the remaining economic life
of the asset if, rarely, this is judged to be shorter than the lease term.
When the Group revises its estimate of the term of any lease (because, for
example, it re-assesses the probability of a lessee extension or termination
option being exercised), it adjusts the carrying amount of the lease liability
to reflect the payments to be made over the revised term, which are discounted
at the same discount rate that applied on lease commencement. An equivalent
adjustment is made to the carrying value of the right-of-use asset, with the
revised carrying amount being amortised over the remaining (revised) lease
term.
2.14. Financing income and expenses
Financing expenses comprise interest payable, finance leases recognised in the
income statement using the effective interest method and the unwinding of the
discount on contingent consideration.
Financing income includes interest receivable on funds invested.
Interest income and interest payable are recognised in the statement of
comprehensive income as they accrue, using the effective interest method.
2.15. Standards issued but not yet effective
At the date of authorisation of these financial statements, there are no
standards that are issued but not yet effective that would be expected to have
a material impact on the Group or Company's financial statements in the
current or future reporting periods and on foreseeable future transactions.
3. Alternative performance measures
In order to provide better clarity to the underlying performance of the Group,
Elixirr uses adjusted EBITDA and adjusted EPS as alternative performance
measures. These measures are not defined under IFRS. These non-GAAP measures
are not intended to be a substitute for, or superior to, any IFRS measures of
performance, but have been included as the Directors consider adjusted EBITDA
and adjusted EPS to be key measures used within the business for assessing the
underlying performance of the Group's ongoing business across periods.
Adjusted EBITDA excludes the following items from operating profit: non-cash
depreciation and amortisation charges, share-based payments and non-recurring
M&A-related items. Adjusted EPS excludes the following items from profit
after tax: amortisation charges, share-based payments, non-recurring
M&A-related items, M&A-related non-cash finance costs and their
related tax impacts.
The table below sets out the reconciliation of the Group's adjusted EBITDA and
adjusted profit before tax from profit before tax:
FY 22 FY 21
Group £'000s £'000s
Profit before tax 15,745 12,166
Adjusting items:
M&A-related items (note 5) (600) 154
Amortisation of intangible assets 2,004 1,378
Share-based payments 1,159 1,152
Finance cost - iOLAP contingent consideration 951 -
Adjusted profit before tax 19,259 14,850
Depreciation 1,061 670
Net finance cost (excluding iOLAP contingent consideration) 208 217
Adjusted EBITDA 20,528 15,737
The table below sets out the reconciliation of the Group's adjusted profit
after tax to adjusted profit before tax:
FY 22 FY 21
Group £'000s £'000s
Adjusted profit before tax 19,259 14,850
Tax charge (2,876) (2,022)
Tax impact of adjusting items (531) (566)
Adjusted profit after tax 15,852 12,262
Adjusted profit after tax is used in calculating adjusted basic and adjusted
diluted EPS. Adjusted profit after tax is stated before adjusting items and
their associated tax effects.
Adjusted EPS is calculated by dividing the adjusted profit after tax for the
period attributable to Ordinary shareholders by the weighted average number of
Ordinary shares outstanding during the period. Adjusted diluted EPS is
calculated by dividing adjusted profit after tax by the weighted average
number of shares adjusted for the impact of potential Ordinary shares.
Potential Ordinary shares are treated as dilutive when their conversion to
Ordinary shares would decrease EPS. Please refer to note 10 for further
details.
FY 22 FY 21
Group p p
Adjusted EPS 34.32 26.64
Adjusted diluted EPS 30.53 24.19
4. Segment reporting
FY 22 FY 21
Group £'000s £'000s
Revenue from contracts with customers arises from:
United Kingdom 23,643 22,375
USA 31,088 12,588
Rest of World 15,972 15,648
70,703 50,611
IFRS 8 requires that operating segments be identified on the basis of internal
reporting and decision-making. The Group is operated as one global business by
its executive team, with key decisions being taken by the same leaders
irrespective of the geography where work for clients is carried out.
Management therefore consider that the Group has one operating segment. As
such, no additional disclosure has been provided under IFRS 8.
The Company is a holding Company operating in the UK with its assets and
liabilities given in the Company Statement of Financial Position. Other
Company information is provided in the other notes to the accounts.
5. Profit before taxation
The following items have been included in arriving at profit before taxation:
FY 22 FY 21
Group £'000s £'000s
Depreciation of property, plant and equipment:
- Owned assets 213 138
- Leased assets 848 532
Amortisation of intangible assets 2,004 1,378
Share-based payments 1,159 1,152
Foreign exchange gains (392) (16)
M&A-related items (600) 154
- Transaction costs 486 154
- Adjustment to contingent consideration (1,086) -
The M&A-related net credit of £0.6 million in FY 22 includes adjustments
to contingent consideration associated with the acquisition of Retearn and
iOLAP, less non-recurring costs associated with the acquisition of iOLAP. The
M&A-related items totalling £0.2 million in FY 21 include non-recurring
costs associated with the acquisitions of Retearn and Coast Digital.
During the year the Group obtained the following services from the Company's
auditors as detailed below:
FY 22 FY 21
Group £'000s £'000s
Services provided by the Company's auditors:
Audit fees - parent Company and consolidated accounts 40 22
Audit fees - subsidiary companies 89 67
Other services:
Due diligence - 36
6. Net finance expense
FY 22 FY 21
Group £'000s £'000s
Finance income:
On short term deposits and investments 54 29
54 29
Finance costs:
Finance cost - iOLAP contingent consideration (951) -
On lease liability (262) (246)
(1,213) (246)
Net finance expense (1,159) (217)
7. Taxation on profit on ordinary activities
Analysis of tax charge:
FY 22 FY 21
Group £'000s £'000s
Current tax
In respect of the current year 3,466 2,926
Adjustments in respect of prior periods (334) (398)
Total current tax 3,132 2,528
Deferred tax
In respect of the current year (324) (506)
Change in tax rates 68 -
Total deferred tax (256) (506)
Income tax expense 2,876 2,022
The change in deferred tax rates reflects an increase from 19% to 25% for UK
corporation tax main rate with effect from 1 April 2023, as announced at the
UK Spring Budget 2021.
Numerical reconciliation of income tax expense:
The tax assessed on the profit on ordinary activities for the year is lower
than the standard rate of corporation tax in the UK of 19%.
FY 22 FY 21
Group £'000s £'000s
Profit before taxation 15,745 12,166
Profit on ordinary activities multiplied 2,992 2,312
by rate of corporation tax in UK of 19% (FY 21: 19%)
Effects of:
M&A-related items not deductible - 29
Expenses not deductible 193 65
Difference in overseas tax rates 201 125
Change in deferred tax rate 68 -
Adjustments in respect of prior periods (62) 51
R&D tax relief in respect of prior periods (271) (450)
Deferred tax release re trademarks (245) (110)
Total taxation 2,876 2,022
8. Deferred tax
Net deferred tax asset/(liability):
The balances comprise temporary differences attributable to:
Group Company
FY 22 FY 21 FY 22 FY 21
£'000s £'000s £'000s £'000s
Deferred tax liability
Property, plant and equipment (105) (52) - -
Intangible assets (1,330) (571) - -
Total deferred tax liability (1,435) (623) - -
Deferred tax asset
Share-based payments 1,400 966 - -
Short-term timing differences 319 231 - -
Total deferred tax asset 1,719 1,197 - -
Net deferred tax asset/(liability) 284 574 - -
The deferred tax liability on intangible assets relates to goodwill, customer
relationships and order book and those on property, plant and equipment relate
to accelerated capital allowances.
The deferred tax asset recognised represents the future tax effect of
share-based payment charges in respect of options that are yet to vest.
Deductions in excess of the cumulative share-based payment charge recognised
in the statement of comprehensive income are recognised in equity.
Movements in deferred tax:
Property, plant and equipment Intangible assets Share-based payments Short-term timing differences Total
£'000s £'000s £'000s £'000s £'000s
At 31 December 2020 (64) (483) 161 - (386)
Acquisition of business (2) (214) - - (216)
Credited to equity - - 670 - 670
Credited to profit and loss 14 126 135 231 506
At 31 December 2021 (52) (571) 966 231 574
Acquisition of business - (858) - - (858)
Credited to equity - - 365 - 365
Credited/(charged) to profit and loss (53) 182 69 58 256
Exchange rate difference - (83) - 30 (53)
At 31 December 2022 (105) (1,330) 1,400 319 284
9. Ordinary dividends
No interim Ordinary share dividends were paid in relation to FY 21 or FY 22.
The Company paid a final Ordinary share dividend in respect of FY 21 of 4.1
pence per Ordinary share on 22 August 2022.
The Directors are proposing a final Ordinary share dividend in respect of FY
22. Please refer to post balance sheet events note 27 for final Ordinary share
dividend proposed.
10. Earnings per share
The Group presents non-adjusted and adjusted basic and diluted EPS for its
Ordinary shares. Basic EPS is calculated by dividing the profit for the period
attributable to Ordinary shareholders by the weighted average number of
Ordinary shares outstanding during the period.
Diluted EPS takes into consideration the Company's dilutive contingently
issuable shares. The weighted average number of Ordinary shares used in the
diluted EPS calculation is inclusive of the number of share options and ESPP
matching awards that are expected to vest (subject to the relevant criteria
being met) and the number of shares that may be issued to satisfy contingent
M&A deferred consideration.
The profits and weighted average number of shares used in the calculations are
set out below:
FY 22 FY 21
Basic and Diluted EPS
Profit attributable to the Ordinary equity holders of the Group used in 12,869 10,144
calculating basic and diluted EPS (£'000s)
Basic earnings per Ordinary share (p) 27.86 22.04
Diluted earnings per Ordinary share (p) 24.78 20.01
FY 22 FY 21
Adjusted Basic and Diluted EPS
Profit attributable to the Ordinary equity holders of the Group used in 15,852 12,262
calculating adjusted basic and diluted EPS (note 3) (£'000s)
Adjusted basic earnings per Ordinary share (p) 34.32 26.64
Adjusted diluted earnings per Ordinary share (p) 30.53 24.19
FY 22 FY 21
Number Number
Weighted average number of shares
Weighted average number of Ordinary shares used as the denominator in 46,186,481 46,031,070
calculating non-adjusted and adjusted basic EPS
Number of dilutive shares 5,740,587 4,655,445
Weighted average number of Ordinary shares used as the denominator in 51,927,068 50,686,515
calculating non-adjusted and adjusted diluted EPS
11. Employees and directors
The monthly average number of persons employed by the Group during the year,
analysed by category, was as follows:
FY 22 FY 21
Group Number Number
Directors, management and partners 31 25
Provision of services 373 180
Administration 46 20
450 225
The average number of persons employed and staff costs includes both executive
and non-executive directors.
The aggregate payroll costs of these persons were as follows:
FY 22 FY 21
Group £'000s £'000s
Wages and salaries 32,702 22,085
Social security costs 3,910 2,748
Pension costs 755 453
Share-based payment charge 1,159 1,152
38,526 26,438
Defined contribution pension schemes are operated by third parties on behalf
of the employees of the Group. The assets of the schemes are held separately
from those of the Group in independently administered funds. The pension
charge represents contributions payable by the Group to the funds and amount
to £0.8 million for FY 22 (FY 21: £0.5 million). Contributions amounting to
£0.1 million (FY 21: £0.1 million) were payable to the fund as at 31
December 2022 and are included in payables.
Key management personnel include the Directors and senior managers across the
Group who together have authority and responsibility for planning, directing
and controlling the activities of the Group. The total compensation (including
employers' national insurance) paid in respect of key management personnel for
services provided to the Group is as follows:
Group Company
FY 22 FY 21 FY 22 FY 21
£'000s £'000s £'000s £'000s
Aggregate emoluments including short term employee benefits 4,872 4,773 167 144
4,872 4,773 167 144
The share-based payment charge in respect of key management personnel was
£0.2 million (FY 21: £0.2 million).
Details of the Directors' remuneration, including salary, bonus, share option
awards, pension and other benefits are included in the tables within the
Directors' Report.
12. Goodwill and intangible fixed assets
Goodwill Trademarks Customer relationships Order book Total
Group £'000s £'000s £'000s £ 000's £'000s
Cost
At 31 December 2020 46,155 7,135 748 - 54,038
Acquisition of business 5,257 - 1,126 - 6,383
At 31 December 2021 51,412 7,135 1,874 - 60,421
Acquisition of business (note 13) 23,391 - 2,453 1,051 26,895
Gains/(losses) from foreign exchange 2,172 - 227 98 2,497
At 31 December 2022 76,975 7,135 4,554 1,149 89,813
Amortisation
At 31 December 2020 - (2,838) (12) - (2,850)
Charge for the year - (1,233) (145) - (1,378)
At 31 December 2021 - (4,071) (157) - (4,228)
Charge for the year - (879) (620) (505) (2,004)
Gains/(losses) from foreign exchange - - 1 (1) -
At 31 December 2022 - (4,950) (776) (506) (6,232)
Net book value
At 31 December 2021 51,412 3,064 1,717 - 56,193
At 31 December 2022 76,975 2,185 3,778 643 83,581
The Company has no intangible assets.
Goodwill
Goodwill arising on the acquisition of a business in FY 22 relates to the
acquisition of iOLAP and was calculated as the fair value of initial
consideration paid less the fair value of the net identifiable assets at the
date of the acquisition (see note 13).
Goodwill arising on the acquisition of a business in FY 21 relates to the
acquisition of Retearn and was calculated as the fair value of initial
consideration paid less the fair value of the net identifiable assets at the
date of the acquisition.
Goodwill impairment review
The breakdown of goodwill by cash-generating unit ('CGU') is listed below:
FY 22 FY 21
£'000s £'000s
Consulting 48,556 48,556
Elixirr Digital 2,856 2,856
iOLAP 25,563 -
76,975 51,412
During FY 22 there was a reorganisation of the Group's reporting structure
resulting in a change in the composition of one or more of the Group's CGUs to
which goodwill has been allocated. The Consulting CGU comprises goodwill and
other assets of Elixirr Consulting Limited and The Retearn Group Limited, the
Elixirr Digital CGU comprises goodwill and other assets of Coast Digital
Limited and the iOLAP CGU comprises goodwill and other assets of iOLAP.
Following initial recognition, goodwill is subject to impairment reviews, at
least annually, and measured at fair value less accumulated impairment losses.
Any impairment is recognised immediately in the consolidated statement of
comprehensive income and is not subsequently reversed.
Key assumptions used in value in use calculation
The key assumptions for the value in use calculation are those regarding:
• number of years of cash flows used and budgeted EBITDA growth
rate;
• discount rate; and
• terminal growth rate.
No impairment is indicated for any of the CGUs using the value in use
calculation.
Number of years of cash flows used and budgeted growth rate
The recoverable amount of the CGU is based on a value in use calculation
using specific cash flow projections over a five-year period and a terminal
growth rate thereafter.
The budget for the following financial year forms the basis for the cash flow
projections for a CGU. The cashflow projections for the four years subsequent
to the budget year reflect the Directors' expectations based on market
knowledge, numbers of new engagements and the pipeline of
opportunities.
Discount rate
The Group's post-tax weighted average cost of capital has been used to
calculate a discount rate of 12% for the Group and Consulting, 12% for iOLAP
and 13% for Elixirr Digital. This reflects current market assessments of the
time value of money for the period under review and the risks specific to the
Group and company acquired.
Terminal growth rate
An appropriate terminal growth rate is selected, based on the Directors'
expectations of growth beyond the five-year period. The terminal growth rate
used is 2%.
Sensitivity to changes in assumptions
With regard to the value in use assumptions, the Directors believe that
reasonably possible changes in any of the above key assumptions would not
cause the carrying value of the unit to exceed its recoverable amount. In
forming this view, the Directors have considered the following:
Consulting Elixirr Digital iOLAP
FY 22 FY 21 FY 22 FY 21 FY 22 FY 21
£'000s £'000s £'000s £'000s £'000s £'000s
On current cash flow projections, the discount rate would need to exceed the % 30.5% 26.7% 50.0% 30.1% 23.7% -
alongside for there to be any impairment; and
In the case of no increase in future cash flows above those projected for the 25.0% 23.6% 42.7% 26.4% 19.0% -
following year, the discount rate would have to exceed the % alongside for
there to be any impairment.
Customer relationships
FY 22 additions represent the fair value of customer relationships from the
acquisition of iOLAP. Refer note 13 for further details.
FY 21 additions represent the fair value of customer relationships from the
acquisition of Retearn.
The fair value has been determined by applying the Multi-Period Excess
Earnings method to the cash flows expected to be earned from customer
relationships. The key management assumptions are in relation to forecast
revenues, margins and discount factors. The fair value represents the present
value of the earnings the customer relationships generate.
A useful economic life of 10 years has been deemed appropriate based on the
average realisation rate of cumulative cash flows. The projected cash flows
have been discounted over this period. The amortisation charge since
acquisition is recognised within administrative expenses.
Order Book
Current period additions represent the fair value of the order book from the
acquisition of iOLAP. Refer note 13 for further details.
The fair value has been determined by applying the Multi-Period Excess
Earnings method to the cash flows earned from the order book.
The key management assumptions relate to forecast margins and discount
factors. A useful economic life of 3 years and nine months has been deemed
appropriate based on the relevant contractual period. Projected cash flows
have been discounted over this period. The amortisation charge is recognised
within administrative expenses.
13. Business combinations
On 17 March 2022, the Group acquired 100% of the share capital and voting
interests of iOLAP, a US-headquartered technology and data firm. The
acquisition brings specialist data and analytics capabilities, including
artificial intelligence (AI) and machine learning (ML), into the Group where
there is existing demand for these services.
On 3 March 2022, Elixirr Inc. was incorporated in Delaware as a direct
subsidiary of Elixirr International Plc. Elixirr Inc. was used as the
acquisition vehicle for iOLAP.
The Group acquired iOLAP for a maximum consideration payable of US$40.0
million (£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 31 December 2024. This
consideration will be satisfied, at Elixirr's option, either from the EBT,
subject to sufficient available supply, or otherwise by way of a subscription
for new Ordinary shares from Elixirr, or a combination of both.
Of the US$25.2 million (£19.2 million) initial cash consideration, US$13.5
million (£10.2 million) was paid to the selling shareholders free of
restrictions with US$0.5 million (£0.4 million) held back for warranties
under the sale and purchase agreement. The remaining balance of US$11.2
million (£8.5 million) was subject to a contractual commitment to use the
after-tax amount (US$8.5 million) to purchase Ordinary shares in Elixirr at a
price per share of £6.425. 941,172 Ordinary shares were purchased from the
EBT on 11 May 2022. The balance of this element of the cash consideration
(US$2.7 million) was paid to the sellers to settle their tax obligations
relating to it.
The total fair value of the contingent consideration payable recognised on the
date of acquisition was $13.2 million (£10.0 million), of which US$0.5
million (£0.4 million) was the hold back for warranties and US$12.7 million
(£9.7 million) related to the present value of the maximum potential earn-out
payments.
The contingent consideration for potential earn-out payments is discounted to
fair value and has been estimated by management based on anticipated future
revenue growth and EBITDA. Discount unwinding is recognised in finance costs
proportionately across the periods until final settlement. During the period,
£1.0 million of discount unwinding was expensed as finance costs in relation
to the iOLAP acquisition consideration.
On 16 December 2022, the sale and purchase agreement was amended to accelerate
US$2.5 million of the potential earn-out payments given the over achievement
of targets for FY 22 and agreement to revise earn-out targets for FY 23 and FY
24 to be based on the combined results of iOLAP and the wider Elixirr US
business, rather than on iOLAP alone.
Included within M&A-related items is an amount of £0.3 million for an
adjustment to the fair value of the contingent consideration in relation to
the accelerated earn-out payments.
As at 31 December 2022, a £11.8 million liability is recorded, of which £6.6
million is a current and £5.2 million is a non-current liability.
Included within M&A-related items is an amount of £0.4 million for legal
and advisory fees in relation to the acquisition.
The Ordinary shares purchased by the sellers from the EBT pursuant to the
acquisition are subject to a one-year lock-in arrangement and limitations on
the Ordinary shares that each seller can sell in each of the following three
years.
iOLAP contributed £17.9 million to the Group's revenue and £2.2 million to
the Group's profit before tax for the period from the date of acquisition to
31 December 2022.
If the acquisition of iOLAP had been completed on 1 January 2022, Group
revenues for the year ended 31 December 2022 would have been £75.1 million
and Group profit before tax would have been £16.8 million.
In calculating the goodwill arising, the fair value of the net assets of iOLAP
have been assessed, and fair value adjustments were required for the
recognition of customer relationship and order book intangibles and the
related deferred tax.
Customer relationships and order book intangibles were assessed to be
separately identifiable assets, recognised at fair value and are included
within intangible assets below. Refer note 12 for further details.
The table below sets out the amounts recognised as of the acquisition date for
each major class of assets acquired and liabilities assumed, the consideration
and goodwill on the acquisition of iOLAP:
Fair value
£'000s
Assets
Non-current assets
Intangible assets 3,504
Property, plant and equipment 827
Loans to shareholders 308
Total non-current assets 4,639
Current assets
Trade and other receivables 6,524
Cash and cash equivalents 779
Total current assets 7,303
Total assets 11,942
Liabilities
Current liabilities
Trade and other payables 2,567
Loans and borrowings 1,692
Other creditors 1,406
Total current liabilities 5,665
Non-current liabilities
Loans and borrowings 315
Deferred tax liability 858
Other non-current liabilities 122
Total non-current liabilities 1,295
Total liabilities 6,960
Fair value of net assets acquired 4,982
Goodwill (note 12) 23,391
Fair value of purchase consideration 28,373
Cash and cash equivalents in subsidiaries acquired 779
14. Property, plant and equipment
Right of use asset Furniture and Fittings Leasehold Improvements Computer Equipment Total
Group £'000s £'000s £'000s £'000s £'000s
Cost
At 31 December 2020 5,918 72 505 108 6,603
Acquisition of business - - - 14 14
Disposals - - - (15) (15)
Additions 509 17 - 81 607
At 31 December 2021 6,427 89 505 188 7,209
Acquisition of business (note 13) 655 56 26 90 827
Disposals - - - - -
Additions - 131 134 64 329
Gains/(losses) from foreign exchange 51 5 2 5 63
At 31 December 2022 7,133 281 667 347 8,428
Depreciation
At 31 December 2020 (789) (63) (149) (57) (1,058)
Disposals - - - - -
Charge for the year (532) (7) (76) (40) (655)
At 31 December 2021 (1,321) (70) (225) (97) (1,713)
Disposals - - - - -
Charge for the year (848) (29) (86) (98) (1,061)
Gains/(losses) from foreign exchange 7 - - 1 8
At 31 December 2022 (2,162) (99) (311) (194) (2,766)
Net book value
At 31 December 2021 5,106 19 280 91 5,496
At 31 December 2022 4,971 182 356 153 5,662
The Company has no property, plant and equipment.
The lease liability in respect of the right-of-use asset was £5.1 million (FY
21: £5.2 million) and relates to property leases.
15. Investments
Group companies
Company £'000s
Cost/carrying value
At 31 December 2020 55,156
Acquisition of business 7,499
Group companies share-based payments 1,152
At 31 December 2021 63,807
Capitalisation of subsidiary 20,643
Group companies share-based payments 975
At 31 December 2022 85,426
The Group has no investments.
The undertakings in which the Company's interest at the year-end is 20 per
cent or more are as follows:
Subsidiary undertakings Country of incorporation Principal activity Registered office FY 22 FY 21
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%
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 Creative Limited (indirect)* England and Wales Information technology consultancy 12 Helmet Row, London, EC1V 3QJ - 100%
Den Creative Limited 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% 100%
Elixirr Consulting (Jersey) Limited Jersey Consultancy 3rd Floor, 44 Esplanade, St Helier, Jersey, JE4 9WG 100% -
Elixirr Inc. United States Consultancy 2600 Network Blvd Suite 570 Frisco, TX 75034 100% -
iOLAP Inc. (indirect) United States Consultancy 2600 Network Blvd Suite 570 Frisco, TX 75034 100% -
iOLAP d.o.o. (indirect) Croatia Consultancy Prolaz Marije Krucifikse Kozulić 1, 51000, Rijeka 100% -
* Elix-IRR Consulting Services Limited and Elixirr Creative Limited applied to
be struck off the Companies House register on 23 December 2021 and were
dissolved on 22 March 2022.
16. Receivables
Group Company
FY 22 FY 21 FY 22 FY 21
£'000s £'000s £'000s £'000s
Non-current assets
Loans to shareholders 4,734 3,991 4,723 3,991
Other receivables 1,293 1,535 876 1,104
6,027 5,526 5,599 5,095
Current assets
Trade receivables 10,355 6,432 - -
Less: allowance for doubtful debts (8) - - -
Trade receivables - net 10,347 6,432 - -
Prepayments and deposits 653 487 62 18
Contract assets 26 12 - -
Amounts owed by group companies - - 199 1,908
Other receivables 208 33 142 2
11,234 6,963 403 1,928
The Company was due £0.2 million as at 31 December 2022 from Elixirr Inc. for
costs relating to the acquisition of iOLAP. As at 31 December 2021, the
Company was due £1.9 million from Elixirr Consulting Limited for management
charges net of costs incurred by Elixirr Consulting Limited on behalf of the
Company.
Loans to shareholders represent amounts owed to the Company and Elixirr
Consulting Limited in FY 22, and amounts owed to the Company in FY 21 by
shareholders, who are senior employees of the Group. The loans to shareholders
are interest-free and expected to be repaid beyond one year. Non-current other
receivables include property deposits and section 455 tax receivable.
Trade receivables are non-interest bearing and receivable under normal
commercial terms. Management considers that the carrying value of trade and
other receivables approximates to their fair value. The carrying value of
non-current other receivables and loans to shareholders is considered to be a
reasonable approximation of their fair value, but has not been discounted to
present value.
The expected credit loss on trade and other receivables was not material at
the current or prior year ends. For analysis of the maximum exposure to credit
risk, please refer to note 25.
The ageing of trade receivables of the Group as at 31 December 2022:
Gross carrying amount Loss allowance Net carrying amount
Group £'000s £'000s £'000s
< 31 days 6,171 - 6,171
31-60 days 3,607 - 3,607
61-90 days 450 - 450
91-120 days 1 - 1
121+ days 126 (8) 118
At 31 December 2022 10,355 (8) 10,347
The ageing of trade receivables of the Group as at 31 December 2021:
Gross carrying amount Loss allowance Net carrying amount
Group £'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
17. Cash and cash equivalents
Group Company
FY 22 FY 21 FY 22 FY 21
£'000s £'000s £'000s £'000s
Cash at bank and in hand 20,433 31,795 6,340 13,576
20,433 31,795 6,340 13,576
Cash at bank includes £3.0 million (FY 21: £4.0 million) on 95-day notice
deposit, £1.0 million on 32-day notice deposit and £2.0 million (FY 21:
£4.0 million) on 50% instant and 50% 32-day notice deposit, which earned
interest at average rates of 1.7%, 2.9% and 1.2% respectively during the
year.
18. Trade and other payables
Group Company
FY 22 FY 21 FY 22 FY 21
£'000s £'000s £'000s £'000s
Trade payables 1,178 825 55 32
Other taxes and social security costs 1,540 1,138 7 5
Accruals 8,599 8,081 156 97
Contract liabilities 1,983 2,007 - -
Other payables 4 3 - -
Amounts owed to group companies - - 6,997 -
13,304 12,055 7,215 134
As at 31 December 2022, the Company owed £7.0 million to Elixirr Consulting
Limited.
The fair value of trade and other payables approximates to book value at the
period end. Trade payables are non-interest bearing and are normally settled
monthly.
Trade payables comprise amounts outstanding for trade purchases and ongoing
costs.
Contract liabilities arise from the Group's revenue generating activities
relating to payments received in advance of performance delivered under a
contract. These contract liabilities typically arise on short-term timing
differences between performance obligations in some milestone or fixed fee
contracts and their respective contracted payment schedules.
19. Loans and borrowings
Group Company
FY 22 FY 21 FY 22 FY 21
£'000s £'000s £'000s £'000s
Current liabilities
Right of use lease liability 750 485 - -
750 485 - -
Non-current liabilities
Right of use lease liability 4,393 4,760 - -
4,393 4,760 - -
The movement in the right of use lease liability was as follows:
Right of use lease liability
Group £'000s
At 31 December 2020 5,285
Additions 407
Interest payable 246
Repayment of lease liabilities (694)
At 31 December 2021 5,245
Acquisition of business (note 13) 555
Additions -
Interest payable 262
Repayment of lease liabilities (913)
Gains/(losses) from foreign exchange (6)
At 31 December 2022 5,143
The acquisition of business in FY 22 relates to the acquisition of iOLAP. The
additions in FY 21 relate to a new property lease signed for Coast Digital.
As disclosed in the summary of significant accounting policies, the discount
rate used in determining the present value of the lease liability was 5%.
Maturity analysis of contracted undiscounted cashflows of the right of use
lease liability are as follows:
FY 22 FY 21
£'000s £'000s
Lease liability less than one year 932 727
Lease liability greater than one year and less than five years 3,270 3,031
Lease liability greater than five years 1,871 2,632
Total liability 6,073 6,390
Finance charges included above (930) (1,145)
5,143 5,245
20. Other creditors and other non-current liabilities
Group Company
FY 22 FY 21 FY 22 FY 21
£'000s £'000s £'000s £'000s
Other creditors
Contingent consideration 6,765 436 203 436
6,765 436 203 436
Other non-current liabilities
Dilapidations 380 250 - -
Cash-settled share-based payments 139 - - -
Contingent consideration 5,194 1,370 - 1,370
5,713 1,620 - 1,370
Other creditors and other non-current liabilities in FY 22 include earn-out
payments which are contingent on performance and arose from the acquisition of
Coast Digital and iOLAP.
Other creditors and other non-current liabilities in FY 21 include earn-out
payments which are contingent on performance and arose from the acquisition of
Coast Digital and Retearn.
Other non-current liabilities include cash-settled share-based payment
obligations for the Group's employers' national insurance on options that are
yet to vest. Refer note 23 for further details.
Other non-current liability payments fall due beyond 12 months from the
reporting date.
21. Share capital, share premium and merger relief reserve
FY 22
Issued shares Par value Merger relief reserve Share premium
Group and Company Number £ £'000s £'000s
£0.00005 Ordinary shares 46,186,481 2,309 46,870 25,599
£1 Redeemable Preference shares 50,001 50,001 - -
46,236,482 52,310 46,870 25,599
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
The total number of voting rights in the Company at 31 December 2022 was
46,186,481 (FY 21: 46,186,481).
Ordinary shares
On a show of hands every holder of Ordinary shares present at a meeting, in
person or by proxy, is entitled to one vote, and on a poll each share is
entitled to one vote. The shares entitle the holder to participate in
dividends, and to share in the proceeds of winding up the Company in
proportion to the number of and amounts paid on the shares held. These rights
are subject to the prior entitlements of the Redeemable Preference
shareholders.
Movements in Ordinary shares:
Issued shares Par value Merger relief reserve Share premium
Group and Company Number £ £'000s £'000s
At 31 December 2020 45,642,542 2,282 46,870 19,729
Share issue as consideration for a business combination 543,939 27 - 2,154
Sale of Ordinary shares from the EBT - - - 3,069
At 31 December 2021 46,186,481 2,309 46,870 24,952
Sale of Ordinary shares from the EBT - - - 647
At 31 December 2022 46,186,481 2,309 46,870 25,599
Redeemable Preference shares
The Redeemable Preference shares are entitled to dividends at a rate of 1% per
annum of paid up nominal value. The shares have preferential right, before any
other class of share, to a return of capital on winding-up or reduction of
capital or otherwise of the Company.
The Redeemable Preference shares are redeemable 100 years from the date of
issue or at any time prior at the option of the Company.
22. EBT share reserve
The Employee Benefit Trust ('EBT') is accounted for under IFRS 10 and is
consolidated on the basis that the parent has control, thus the assets and
liabilities of the EBT are included on the Company and Group statement of
financial position and shares held by the EBT in the Company are presented as
a deduction from equity. The EBT share reserve comprises of Ordinary and
Redeemable Preference shares bought and held in the Group's EBT.
The below table sets out the number of EBT shares held and their weighted
average cost:
FY 22
Shares held in EBT Weighted average cost Total cost
Group and Company Number £ £'000s
Ordinary shares 1,204,965 5.89 7,097
Redeemable Preference shares 50,001 1.01 50
1,254,966 7,147
FY 21
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
23. Share-based payments
The Group recognised a total share-based payment expense of £1.2 million (FY
21: £1.2 million) in the current year, comprising £1.0 million (FY 21: £1.2
million) in relation to equity settled share-based payments, and £0.2 million
relating to relevant social security taxes.
A cash-settled share-based payment liability is recognised relating to social
security tax on share options (refer note 20). The liability has been
estimated using a closing share price of £5.10 and employers' national
insurance at 13.8%. The carrying value of the liability as at 31 December 2022
is £0.1 million, with £0.2 million recognised in the P&L and payments
amounting to £0.1 million made in the year.
Share Option Plans
The Group operates EMI and unapproved share option plans with time-based and
performance-based vesting conditions.
During FY 22, a total of 3,687,080 (FY 21: 7,700,430) share options were
granted to employees and senior management. The weighted average fair value of
the options awarded in the year is £1.66 per share (FY 21: £1.12)
Details of share option awards made are as follows:
Number of share options Weighted average exercise price
(000's)
Outstanding at the beginning of the year 11,339 2.87
Granted during the year 3,687 6.48
Forfeited during the year (4,140) 4.38
Outstanding at the year end 10,886 3.47
Exercisable at the year end 121 5.45
No share options were exercised during FY 22.
The options outstanding as at 31 December 2022 had a weighted average
remaining contractual life of 3 years (FY 21: 4 years) and a weighted average
exercise price of £3.47 (FY 21: £2.87) per share.
The options were fair valued at the grant date using the Black Scholes option
valuation model.
The inputs into the model were as follows:
FY 22 FY 21
Weighted average share price at grant date (£) 5.90 5.07
Weighted average exercise price (£) 6.32 4.52
Volatility (%) 26.54% 21.69%
Weighted average vesting period (years) 5 5
Risk free rate (%) 1.73% 0.34%
Expected dividend yield (%) 0.71% 1.14%
Expected volatility was determined by calculating the historic volatility of
comparable companies in the market in which the Group operates. The expected
expense calculated in the model has been adjusted, based on management's best
estimate, for the effects of non-market-based performance conditions and
employee attrition.
Reasonable changes in the above inputs do not have a material impact on the
share-based payment charge in FY 22.
Fixed Consideration Options
In addition to the share options set out in the table above, share options
with an exercise price of £0.00005 were issued in connection with the
acquisitions of Coast Digital and Retearn. These share options are for a fixed
monetary consideration where the number of share options is variable and
determined with reference to the share price at the date of vesting.
The monetary value of such share options is as follows:
Value
£'000s
Outstanding at the beginning of the period 2,494
Forfeited during the year (1,400)
Exercised during the year (297)
Outstanding at the year end 797
Exercisable at the year end -
The share price at the date of exercise of the Coast Digital options during FY
22 was £6.05.
The weighted average remaining contractual life of such options at 31 December
2022 was 1.5 years (FY 21: 2.5 years).
Employee Share Purchase Plan ('ESPP')
On 16 June 2021 an ESPP was implemented. Under the scheme all of the employees
of the Group (excluding Partners) are eligible to contribute a percentage of
their gross salary to purchase shares in the Company. The Company makes a
matching award of shares that will vest over time dependent on continued
employment. During FY 22, the Company awarded 89,841 matching shares on the
basis of one matching share for every one employee share held on 15 January
2022. The matching shares vest equally over a 5-year period with the first
tranche vesting on 31 January 2023.
Details of ESPP awards made are as follows:
Number of ESPP awards
(000's)
Outstanding at the beginning of the period -
Granted during the year 90
Forfeited during the year (12)
Outstanding at the year end 78
Exercisable at the year end -
24. Cash flow information
Cash generated from operations:
Group Company
FY 22 FY 21 FY 22 FY 21
£'000s £'000s £'000s £'000s
Profit before taxation 15,745 12,166 13,078 4,051
Adjustments for:
Depreciation and amortisation 3,065 2,048 - -
Net finance expense/(income) 1,159 217 (55) (20)
Share-based payments 1,159 1,152 - -
Adjustment to contingent consideration (1,086) - (1,400) -
Foreign exchange (392) (16) - (2)
Decrease/(increase) in trade and other receivables 975 (1,336) 1,660 531
(Decrease)/increase in trade and other payables (1,042) 2,625 7,081 (295)
19,583 16,856 20,364 4,265
Reconciliation of liabilities from financing activities:
Borrowings Leases Total
Group £'000s £'000s £'000s
At 31 December 2020 - 5,285 5,285
Cash flows - (694) (694)
Other changes - 654 654
Balance 31 December 2021 - 5,245 5,245
Cash flows (1,143) (913) (2,056)
Other changes 1,143 811 1,954
Balance 31 December 2022 - 5,143 5,143
Other changes in FY 22 include non-cash movements, including borrowings and
additional property leases on acquisition of iOLAP and accrued interest
expense on leases. Other changes in FY 21 include non-cash movements,
including accrued interest expense and an additional property lease.
25. Financial instruments and financial risk management
Carrying amount of financial instruments
The Group's and Company's financial instruments may be analysed as follows:
Group Company
FY 22 FY 21 FY 22 FY 21
£'000s £'000s £'000s £'000s
Financial assets
Financial assets that are debt instruments measured at amortised cost 37,027 43,795 12,327 20,579
Financial liabilities
Financial liabilities measured at amortised cost 16,907 16,162 7,208 129
Financial liabilities at fair value through profit and loss 11,959 1,806 203 1,806
Financial assets measured at amortised cost comprise cash, trade receivables
and other receivables.
Financial liabilities measured at amortised cost comprise loans and
borrowings, trade payables and other payables.
Financial liabilities at fair value through profit and loss comprise
contingent consideration on acquisition of iOLAP and Coast Digital.
The Group is exposed to a variety of financial risks through its use of
financial instruments which result from its operating activities. All of the
Group's financial instruments are classified as loans and receivables.
The Group does not actively engage in the trading of financial assets for
speculative purposes. The most significant financial risks to which the Group
is exposed are described below:
Credit risk
Generally, the Group's and Company's maximum exposure to credit risk is
limited to the carrying amount of the financial assets recognised at the
reporting date, as summarised below:
Group Company
FY 22 FY 21 FY 22 FY 21
£'000s £'000s £'000s £'000s
Trade receivables 10,347 6,432 - -
Contract assets 26 12 - -
Other receivables 6,221 5,557 5,784 7,001
Cash and cash equivalents 20,433 31,795 6,340 13,576
37,027 43,796 12,124 20,577
Credit risk is the risk of financial risk to the Group if a counter party to a
financial instrument fails to meet its contractual obligation. The nature of
the Group's debtor balances, the time taken for payment by clients and the
associated credit risk are dependent on the type of engagement.
The Group's trade and other receivables are actively monitored. The ageing
profit of trade receivables is monitored regularly by management. Any debtors
over 30 days are reviewed by the entire management group every week and
explanations sought for any balances that have not been recovered.
Unbilled revenue is recognised by the Group only when all conditions for
revenue recognition have been met in line with the Group's accounting policy.
Other receivables include amounts owed by senior employees for the acquisition
of shares in the Company. The EBT holds legal title to these shares which will
not be released to the beneficial owner prior to the repayment of the loan.
Cash and cash equivalents is split across multiple counterparties and the
Group actively monitors the exposure to different financial institutions.
The Directors are of the opinion that there is no material credit risk at
Group level.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting
its obligations associated with its financial liabilities. The Group seeks to
manage financial risks to ensure sufficient liquidity is available to meet
foreseeable needs and to invest cash assets safely and profitably.
The table below analyses the Group's financial liabilities into relevant
maturity groupings based on their contractual maturities. The amounts
disclosed in the tables are the contractual undiscounted cash flows. Balances
due within 12 months equal their carrying balances, because the impact of
discounting is not significant.
Contractual maturities of financial liabilities of the Group as at 31 December
2022:
Less than 6 months 6-12 months 1 - 2 years 2 - 5 years Over 5 years Total contractual cashflows Carrying amount of liabilities
Trade payables 1,178 - - - - 1,178 1,178
Lease liabilities 496 436 875 2,395 1,871 6,073 5,143
Financial liabilities at fair value through profit and loss 6,765 - 3,073 3,073 - 12,911 11,959
8,439 436 3,948 5,468 1,871 20,162 18,280
Contractual maturities of financial liabilities of the Group as at 31 December
2021:
Less than 6 months 6-12 months 1 - 2 years 2 - 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
Interest rate risk
As at 31 December 2022 the Group has no material interest rate risk exposure.
Foreign currency risk
The Group operates internationally and is exposed to foreign exchange risk
arising from various currency exposures, primarily US Dollars. The Group
monitors exchange rate movements closely and ensures adequate funds are
maintained in appropriate currencies to meet known liabilities.
The Group's exposure to foreign currency risk at the end of the reporting
period, expressed in Currency Units, was as follows:
FY 22 FY 21
USD '000s EUR '000s ZAR '000s CAD '000s HRK '000s USD '000s EUR '000s ZAR '000s
Cash & cash equivalents 6,906 1 1,257 313 270 11,900 2 1,739
Trade receivables 6,709 72 - 28 149 1,450 101 -
Trade payables (124) (7) (132) - (649) (5) (5) (63)
The Group is exposed to foreign currency risk on the relationship between the
functional currencies of the Group companies and the other currencies in which
the Group's material assets and liabilities are denominated. The table below
summaries the effect on profit and loss had the functional currencies of the
Group weakened or strengthened against these other currencies, with all other
variables held constant.
FY 22 FY 21
£'000s £'000s
10% weakening of functional currency 219 925
10% strengthening of functional currency (219) (925)
The impact of a change of 10% has been selected as this has been considered
reasonable given the current level of exchange rates and the volatility
observed both on a historical basis and market expectations for future
movements.
Fair value of financial instruments
The fair values of all financial assets and liabilities approximates to their
carrying value.
Capital risk management
The Group defines capital as being share capital plus all reserves, which
amounted to £95.9 million as at 31 December 2022 (FY 21: £86.0 million)
The Group's objectives when managing capital are to:
• Safeguard their ability to continue as a going concern, so that they
can continue to provide returns for shareholders and benefits for other
stakeholders; and
• Maintain an optimal capital structure to reduce the cost of
capital.
In order to maintain or adjust the capital structure, the Group may adjust the
amount of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt.
26. Related party disclosures
Related parties, following the definitions in IAS 24, are the Group's
subsidiary companies, members of the Board, key management personnel and their
families, and shareholders who have control or significant influence over the
Group. Refer to note 11 for key management personnel compensation disclosures.
The Directors' Report contains details of Board remuneration.
On 8 April 2022 certain Directors and key management personnel of the Group
sold 812,106 Ordinary shares to the EBT at a price of 765 pence (being the
closing mid-market share price on 5 April 2022). The purpose of this
transaction was to provide the EBT with sufficient shares to satisfy the
initial share consideration for the acquisition of iOLAP without any dilution
of existing shareholders. Refer note 13 for further details.
Gavin Patterson, independent non-executive chairman of the Board, provided
consulting services to the Company totalling £17,708 in FY 22 (FY 21:
£25,000). Gavin Patterson's consulting services arrangement terminated on 31
August 2022.
In FY 22, travel and marketing costs include £43,956 (FY 21: NIL) for the
hire of an aeroplane from Aviation E LLP. Stephen Newton, a member of the
Board, is a member of Aviation E LLP.
Company related party transactions are disclosed in notes 16 and 18.
27. Events after the reporting date
In January and February 2023, US$6.8 million of the iOLAP deferred
consideration was settled through a cash payment to the former shareholders of
iOLAP, who used US$5.1 million of the proceeds (the after-tax amount) to
purchase 743,400 Ordinary shares in Elixirr from the EBT at a price of £5.50.
The Directors are proposing a final Ordinary share dividend in respect of the
financial year ended 31 December 2022 of 10.8 pence per share.
As at 31 March 2023, in accordance with the Financial Conduct Authority's
Disclosure and Transparency Rules, the Company continues to have 46,186,481
Ordinary shares in issue, of which none are held in Treasury.
The total number of voting rights in the Company is 46,186,481. This figure of
46,186,481 may be used by shareholders in the Company as the denominator for
the calculations by which they will determine if they are required to notify
their interest in, or a change in their interest in, the share capital of the
Company under the FCA's Disclosure and Transparency Rules.
28. Reserves
Share capital
Share capital represents the nominal value of share capital subscribed.
Share premium
The share premium account is used to record the aggregate amount or value of
premiums paid when the Company's shares are issued at a premium, net of
associated share issue costs.
Capital redemption reserve
The capital redemption reserve is a non-distributable reserve into which
amounts are transferred following the redemption or purchase of the Company's
own shares.
EBT share reserve
The EBT share reserve represents the cost of shares repurchased and held in
the employee benefit trust ("EBT").
Merger relief reserve
This reserve records the amounts above the nominal value received for shares
sold, less transaction costs in accordance with section 610 of the Companies
Act 2006.
Foreign currency translation reserve
The foreign currency translation reserve represents exchange differences that
arise on consolidation from the translation of the financial statements of
foreign subsidiaries.
Retained earnings
The retained earnings reserve represents cumulative net gains and losses
recognised in the statement of comprehensive income and equity-settled
share-based payment reserves and related deferred tax on share-based payments.
29. Ultimate controlling party
There is no ultimate controlling party as at 31 December 2022.
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