REG - Elixirr Intnl PLC - Final Results
22/04/2024 07:00
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RNS Number : 3681L Elixirr International PLC 22 April 2024
ELIXIRR INTERNATIONAL PLC
("Elixirr", the "Company" or the "Group")
Final Results for the Year Ended 31 December 2023
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 2023.
Financial Highlights
· Revenue increased by 20% to £85.9m (FY 22: £71.7m)
· Adjusted EBITDA* increased by 24% to £25.4m (FY 22: £20.5m)
· Adjusted EBITDA* margin of 30% (FY 22: 29%)
· Profit before tax increased by 40% to £22.1m (FY 22: £15.7m)
· Adjusted diluted earnings per share* increased by 22% to 37.2p
(FY 22: 30.5p)
· Year-end net cash of £18.1m (FY 22: £20.4m)
· Total dividend increased by 37% to 14.8p per Ordinary share (FY
22: 10.8p)
* 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 23 momentum has continued into FY 24, with three record
revenue months in Q1 2024 and a strong pipeline for the remainder of FY 24
· Momentum is expected to continue throughout the remainder of the
year, with FY 24 revenue expected to be in the range of £104-110 million
· Adjusted EBITDA margin expected to be in the range of 27-29%
after factoring in the impact of Insigniam's lower margins at acquisition
Operating Highlights
· Continued progress executing our four-pillar growth strategy,
including:
1. Stretching Existing Partners - revenue per Partner increased by 7%
during the year to £3.9m per Partner (FY 22: £3.6m). This continues the
growth in this metric in each year since listing.
2. Hiring new Partners - we made three successful Partner hires in FY
23. These individuals have expanded the Group's presence in key markets and
geographies and ensure that diversity of thought is maintained throughout the
Partner grade.
3. Promoting Partners from Within - two experienced Principals were
promoted to Partner in January 2023, with a further two Principals promoted to
Partner in October 2023. January 2024 saw our first promotion to Partner in
one of our acquired businesses, reflecting its successful integration within
the Elixirr Group.
4. Inorganic Growth - the acquisition of the Artificial Intelligence
firm, Responsum, in September 2023 has positioned the Group at the forefront
of cutting-edge technology, whilst the acquisition of organisational change
and transformation firm, Insigniam, in December 2023 enables us to support
clients, innovate and drive large-scale change. Inorganic growth remains a key
component of our strategy, and our internal M&A team continues to generate
a pipeline of strong prospects that will help us further support clients with
key boardroom issues and maximise the growth opportunity for the Group.
· Multiple accolades received including being named in the Financial
Times' 2023 'UK Leading Management Consultants' list, earning a place on the
Global Outsourcing 100® by the International Association of Outsourcing
Professionals, being recognised as a Top Consulting Firm by Consultancy.UK and
being shortlisted for the In-house Recruitment Awards 2023.
Commenting on the results, Founder & CEO, Stephen Newton said:
"2023 highlighted Elixirr's ability to thrive, outperforming both competitors
and the global Consulting market. Our continued growth is a testament to the
quality of our team, and the value we deliver to our clients. This year we
continued to invest in our four-pillar growth strategy, further diversifying
our offering and enabling us to solve new and interesting challenges for our
clients. Our equity incentive model continues to disrupt the market,
solidifying our reputation as the Challenger Consultancy and setting us up for
continued success."
For further information please contact:
Elixirr International plc
Stephen Newton, CEO
Graham Busby, CFO
Public and Investor Relations contacts:
investor-relations@elixirr.com
Cavendish Capital Markets Ltd (Nominated Adviser & Joint Broker)
Stephen Keys, Charlie Beeson (Corporate Finance), +44 (0) 20 7220 0500
Sunila De Silva (ECM)
Investec Bank plc (Joint Broker)
Carlton Nelson, Henry Reast (Corporate Broking) +44 (0) 20 7597 4000
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
innovative 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 2023 Annual Results, a year which
highlighted the strength and resilience of the Group. Through its broad and
diversified service offering, the Group has continued to deliver exceptional
results.
Elixirr solved a variety of complex client challenges during 2023, facilitated
by its broad service offering and foundation in data, technology, and
innovation. The Group performed particularly well in scaling its existing
client base, and its strong level of client retention demonstrates how in
demand its expertise continues to be.
The Group grew both organically and inorganically in 2023, benefiting from its
positioning in the market and increasing market awareness of the brand. The
acquisition of the Artificial Intelligence firm, Responsum, in September 2023
has positioned the Group at the forefront of cutting-edge technology, whilst
the acquisition of organisational change and transformation firm, Insigniam,
in December 2023, enables us to support clients innovate and drive large-scale
change. These acquisitions are highly complementary to the Group's existing
offering, having driven further expansion into the US - a key growth market
for the Group - and position the firm well to help clients address current and
future disruptive market trends.
STRATEGY
The Board continues to have confidence in the Group's four-pillar growth
strategy which has further demonstrated its value in FY 23. Through driving
both organic and inorganic growth, the strategy has again proven highly
successful despite challenging market conditions.
The Group's incentivisation model encourages the Partner team to act like
entrepreneurs, with the team motivated to achieve growth for the Group, rather
than solely at an individual level. As such, emphasis has been placed on
selling services across the Elixirr Group, increasing client penetration,
breadth of service and longevity of relationship as a result. Through future
organic and inorganic growth, we expect to increase the breadth of services
offered to clients even further.
We remain confident that the four-pillar growth strategy will drive future
growth for the Group, as we have a team that is highly incentivised to achieve
organic growth, together with a strong pipeline of new acquisition targets.
DIVIDEND
Given the continued growth of the business and in line with comparable
companies, the Board has decided to declare two dividends per year, with an
interim dividend payable shortly after the end of the financial year and a
final dividend payable in August. As a result of the strong performance in FY
23 and the year-end cash position, the Company paid an interim Ordinary share
dividend of 5.3p per share on 15 February 2024.
The Board is pleased to recommend a final Ordinary share dividend for FY 23 of
9.5p per share, making a total dividend of 14.8p for the FY 23 financial year,
a 37% increase on the FY 22 dividend.
The final dividend will be recommended to shareholders at the AGM in June
2024. The FY 23 final dividend will have a total cash cost of £4.5 million,
which will be funded from the Group's existing cash reserves.
GOVERNANCE
The Board operates within a robust governance framework and throughout FY 23,
has ensured that the Group complies with the corporate governance code of the
Quoted Companies Alliance (QCA). This includes ensuring that the Group has a
balance of diverse skills and experience to deliver our strategy and growth
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 24, given the Group's track
record of achieving its ambitions and its commitment to further growth. The
growth of the business to date, underpinned by the support of our
shareholders, clients and people, positions Elixirr well to continue its
strong performance.
Gavin Patterson
Non-Executive Chairman
19 April 2024
Chief Executive Officer's Report
OVERVIEW
Elixirr's performance in FY 23 has again highlighted the firm's ability to
grow profitably in both bull and bear markets. As always, our firm's key
differentiator is the quality of our people, and I would like to thank our
growing teams across the globe for their continued dedication and commitment.
Elixirr continued to perform well in FY 23, with revenue growing at a CAGR of
37% from 2019 to 2023. This sustained growth can be attributed to the
increasing breadth of our services and a truly differentiated proposition,
centred around the technology of tomorrow, which ensures that we continue to
outperform the global consulting market (2019 to 2022 CAGR of 8.4%, source:
Statista).
Our four-pillar growth strategy continues to provide the foundation for
Elixirr's performance, ensuring a balance of both organic and inorganic
growth. The acquisitions of Insigniam and Responsum brought new in-demand
capabilities to the Group in FY 23, and enhanced Elixirr's presence in
additive industries and geographies. Such acquisitions diversify our existing
offering, increasing our resilience in all market conditions, and enable us to
solve new and exciting challenges for our clients.
FY 23 PERFORMANCE
In FY 23, the business generated revenue of £85.9 million - a 20% increase
from the prior year (£71.7 million). We focused on both winning new clients
across the Group and deepening existing client relationships. This resulted in
a 12% increase in the number of 'gold' client accounts - clients from which we
receive annual revenue of over £1 million.
Throughout FY 23, Elixirr delivered a diverse range of solutions to our
clients, across numerous industries and geographies. As a result of our
continued growth, the firm now has a presence in six key geographies with
eight offices across the globe, and diversification of revenue across nine
core industries. Due to our broad service offering and deep knowledge of
emerging technologies, we continue to be well placed to support clients with a
wide range of business-critical challenges.
The revenue bridge above shows the elements of the growth in revenue from
£71.7 million in FY 22 to £85.9 million in FY 23.
Underlying organic revenue growth was 15% year on year (net +£10.4 million
revenue), with £11.5 million growth from existing clients and £10.4 million
growth from new clients. This was partially offset by end-of-life projects
which accounted for £11.5 million of lost revenue, including the impact of
one very large, 5-year change programme successfully coming to an end.
The acquisition of Insigniam in December 2023 and iOLAP's revenue from the
early part of the year (2.5 months in Q1) added £5.4 million to revenue
overall in FY 23. In order to protect the overall profitability of the Group,
management exited legacy lower margin revenue in acquired companies (-£1.6
million).
Elixirr achieved Adjusted EBITDA of £25.4 million in FY 23 - an increase in
absolute terms of 24% from FY 22 (£20.5 million). This FY 23 Adjusted EBITDA
represented 30% of revenue (FY 22: 29%), highlighting our ability to maintain
market-leading levels of profitability and validating our position as a high
value, high returns business.
We have been able to maintain this high level of profitability, despite
acquiring businesses with historically lower margins, through increasing the
value we deliver to our clients alongside removing inefficiencies. For the
first time, both Elixirr Digital and iOLAP achieved margins similar to the
core Consulting business in FY 23.
DELIVERING OUR FOUR-PILLAR GROWTH STRATEGY
Our aim is to become the best digital, data and AI consultancy in the world,
and we have a clear and focussed four-pillar growth strategy that will enable
us to achieve this goal. Progress has been made in each area of this strategy,
including organic growth delivered by a collaborative Partner team that is
heavily invested in Elixirr's growth journey, and inorganic growth resulting
from the firm's mature acquisition strategy, process and pipeline.
In FY 23, revenue per Partner increased by 7% from £3.6 million in FY 22 to
£3.9 million in FY 23, as set out in the Partner revenue bridge below. This
continues the growth in this metric in each year since listing.
Stretching Existing Partners
A key component of our growth strategy is ensuring that established Partners
maintain and improve their revenue contributions to the Elixirr Group. In FY
23, the established Partners in our firm generated average revenue of £4.8
million each - this was a 17% increase on the £4.1m achieved in FY 22.
Elixirr Partners are heavily incentivised to grow revenue and maintain margins
and have been supported in doing so by an internal reorganisation into an
industry vertical model. This makes us even more client-focussed. The senior
members of the Partner team are accountable for growing specific industries,
geographies, and capabilities, which will facilitate continued progress in
this organic growth pillar.
We have also increased Partner revenue targets for FY 24, reflecting our
expectations for further growth in this metric.
Hiring New Partners
Hiring external Partners with existing networks and consulting industry
expertise is a key part of our growth strategy - bringing in individuals who
expand the Group's presence in key markets and geographies. We successfully
hired three new Partners in FY 23: a career consultant with experience
founding a boutique consulting firm, a former managing director at Boston
Consulting Group, and a former South African rugby captain turned
entrepreneur. These candidates came through the network of the existing
Partner team, and their respective backgrounds help to ensure that diversity
of thought is maintained throughout the Partner grade.
In order to maintain the quality bar for which we are known, underperforming
Partners were exited, with their equity positions forfeited. Management
continues to take decisive action to protect the overall business and quality
of our earnings.
In January 2024, we welcomed a new Partner to the team who brings
award-winning expertise in growing and scaling companies and orchestrating
successful exits. She will focus on driving growth for our clients,
particularly in the technology and cybersecurity space, as well as generating
new business development opportunities for the Group. We continually progress
a warm pipeline of potential Partner candidates.
Promoting Partners from Within
Growing talent from within ensures that we retain our culture and quality as
we scale, and we have embraced 'growing our own timber' since the day we were
founded. Our strategy of giving promoted Partners a 'runway' to develop their
Partner-level experience continued to pay off, with the promoted Partner team
achieving £7.2 million revenue in FY 23.
In January 2023, Danielle Croucher and Ben Gower joined the Partner team,
followed by Dan Coral and Rory Farquharson in October 2023. Each promoted
Partner has been instrumental in our continued growth, both in the UK and US,
and we have confidence that they will continue contributing to the Group's
success worldwide as we scale.
In January 2024, Nick Larsen joined the Partner team. Nick is a longstanding
member of the iOLAP team and is our first promotion to Partner in one of our
acquired businesses. This is a significant milestone in our acquisition
strategy, reflecting the successful integration of iOLAP within the Elixirr
Group.
Acquiring New Businesses
Buying new businesses in key growth markets with additive capabilities to
Elixirr's existing offering remains a key part of our growth strategy. In
2023, the acquisitions of Responsum and Insigniam opened doors to new clients,
markets, and capabilities, and have generated significant growth potential.
In September 2023, Elixirr completed the acquisition of Responsum - a
US-headquartered firm which has developed proprietary Artificial Intelligence
("AI") software. This acquisition brought specialist services in emerging
technology, large language model and generative AI into the Group,
complementing our existing service offering and iOLAP's data and analytics
capabilities. This is a compelling opportunity for the Group, given that the
global AI market is forecast to grow from US$208 billion in 2023 to US$1.8
trillion by 2030 (source: Statista). Consequently, we are well-positioned to
capitalise upon the growing demand from clients for support in understanding
how to implement and benefit from AI. Since the acquisition of Responsum was
announced in September, several joint client engagements have been won and
delivered, with most looking likely to extend, and multiple other active
conversations are being closed out.
In December 2023, Elixirr completed the acquisition of Insigniam - a US and
France headquartered consultancy firm, specialising in supporting clients and
executives to define and navigate large scale change and transformation. This
acquisition brought specialist services in transformation, leadership
alignment, cultural change and executive coaching to Elixirr, complementing
the Group's existing service offerings. Insigniam also has deep expertise in
additive industries for Elixirr and has built a reputation as a market leader
within the healthcare, biopharmaceuticals and life sciences industries.
Insigniam's top clients include Fortune 500 companies and household brands,
providing significant opportunities for the cross sell of services across the
Elixirr Group.
We have a dedicated internal M&A team that continues to generate a
pipeline of strong prospects, based on strict criteria, focused on bringing in
additional capabilities that will help us to support clients with key
boardroom issues. They remain focused on bringing in high-quality businesses
that will maximise the growth opportunity for the Group.
OUR FIRM
I am truly proud of our team of bold entrepreneurs who have consistently
delivered high-calibre work and value for our clients throughout the year.
The equity schemes offered by Elixirr instil a culture of entrepreneurship in
our people, with everyone working together for, and able to benefit from, the
growth of the Group. Our Employee Share Purchase Plan ("ESPP") had high levels
of participation again for the new financial year - over 45% for the Group and
over 75% for the consulting business for FY 24, highlighting the commitment
that our teams have to the Elixirr growth story. We are particularly pleased
that 70% of Insigniam employees elected to participate in the ESPP in the
first year following the acquisition, indicating how strongly this proposition
resonates for all employees across the Elixirr Group.
Our team continues to be diverse in skillset and experience, sourced from the
world's best universities, industry roles and start-ups. We pride ourselves on
the diversity of thought present within the Group, with more than 120 distinct
University degrees studied within the Consulting team alone.
Elixirr's focus on cutting edge technologies differentiates us from
traditional incumbents in the Consulting industry. Our broad range of
capabilities and platform model offers our talent the opportunity to develop
different expertise across multiple industries, geographies and service lines.
In FY 23, we received over 10,000 job applications across the Elixirr Group,
evidencing the strength of our employee proposition.
In 2023 we were pleased to receive multiple accolades including being named in
the Financial Times' 2023 'UK Leading Management Consultants' list, earning a
place on the Global Outsourcing 100® by the International Association of
Outsourcing Professionals, being recognised as a Top Consulting Firm by
Consultancy.UK and being shortlisted for the In-house Recruitment Awards 2023.
These awards highlight our unwavering commitment to delivering value for our
clients in addition to the quality of our internal functions.
OUTLOOK
Elixirr's continued growth in FY 23, despite challenging market conditions,
once again highlights the resilience of our firm, talent of our people, and
strength of our model.
As we look to the future, it is clear that emerging technology will have a
significant impact on the Consulting industry and the evolution of services
that clients will demand in the future. Given our focus on the technology of
tomorrow, this provides a huge growth opportunity for Elixirr's core service
offering, and our investments in this space to date position us well for
future success.
Momentum has continued into FY 24, with three record revenue months in Q1
2024. We expect this momentum to continue over the rest of the year and,
therefore, are targeting FY 24 revenue in the range of £104-110 million.
After factoring in the impact of Insigniam's lower margins at acquisition, we
expect our Adjusted EBITDA margin to be in the range of 27-29%.
Stephen Newton
Founder & Chief Executive Officer
19 April 2024
Financial Review
FY 23 FY 22 % change
Revenue £85.9m £71.7m +20%
Gross profit £29.3m £23.2m +26%
Adjusted EBITDA* £25.4m £20.5m +24%
Adjusted EBITDA margin* 30% 29% +1PP
Profit before tax £22.1m £15.7m +40%
Adjusted diluted earnings per share* 37.2p 30.5p +22%
Dividend per share 14.8p 10.8p +37%
Free cash flow £16.1m £14.6m +11%
Net cash £18.1m £20.4m -11%
* 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 another strong year of growth for the Group,
both organically and as a result of the FY 23 acquisitions of Responsum and
Insigniam and the FY22 acquisition of iOLAP. The Group achieved double-digit
growth in both revenue and profits and this is testament to the continued
effectiveness of our four-pillar growth strategy.
Our broad service offering and deep knowledge of emerging technologies meant
we continued to be well placed to support an expanding client base with a wide
range of business-critical challenges. During FY 23 we delivered a diverse
range of solutions to our clients, across numerous industries and geographies,
and successfully acquired Responsum and Insigniam, integrating their service
offerings and teams into the Group. The acquisitions opened doors to new
clients, markets, and capabilities, and have generated significant growth
potential for future years.
The Group delivered healthy, industry-leading margins and strong cash
generation, closing out the year in a financially sound position. In FY 23 the
Group delivered revenue of £85.9 million (FY 22: £71.7 million), with
profitability continuing to be strong. Adjusted EBITDA was £25.4 million,
reflecting a 30% margin (FY 22: £20.5 million at a 29% margin).
REVENUE
Revenue increased by 20% to £85.9 million in FY 23 compared with £71.7
million in FY 22, with five record months of revenue achieved during the year.
Revenue growth was driven by both underlying organic revenue growth of 15% and
the impact of the acquisitions.
Double-digit revenue growth was achieved across all geographic regions (UK,
USA and Rest of World) in which the Group operates, having increased our US
footprint further following the acquisitions of Responsum and Insigniam. US
revenue continues to account for 44% of Group revenue (FY 22: 44%). We are
also pleased to report that revenue per client-facing Partner grew by 7%
during the year, with established Partners having increased by 17%. This
reflects the quality and resilience of our Partner team and how the growing
suite of capabilities provided by our acquisitions have expanded the range of
services that our Partners can sell to their clients.
The sustained increase in the Group's revenue highlights persistent high
demand for its current service portfolio, coupled with the strategic
integration of new service capabilities acquired through acquisitions. The
Responsum and Insigniam businesses have complemented Elixirr's core consulting
services, offering a range of additional solutions that meet client needs.
GROUP PROFITABILITY
The Group's revenue growth was accompanied by robust profit expansion. Group
gross profit reached £29.3 million in the year, marking a notable £6.1
million increase or 26% growth compared to the previous year's £23.2 million.
The gross profit margin increased to 34% from 32% in FY 22. These enhanced
margins were evident in the growth in revenue per client-facing Partner and
underscore our efficacy in increasing the profitability of acquired
businesses.
Administrative expenses increased by 26% to £8.6 million, principally
reflecting the inclusion of iOLAP for a full year and the non-cash acquired
intangible asset amortisation from iOLAP and Insigniam.
Group Adjusted EBITDA grew 24% and was delivered at a 30% margin (FY 22: 29%).
The enhanced Adjusted EBITDA margin reflects the improvement in gross profit
margin, partially offset by the increase in administrative expenses referred
to above.
Group profit before tax grew by 40% to £22.1 million (FY 22: £15.7 million)
and was driven by the increase in Adjusted EBITDA and the £2.0 million
M&A-related net credit for adjustments to contingent consideration
associated with the acquisition of iOLAP.
NET FINANCE EXPENSE
Net finance expense of £0.5 million for FY 23 includes the finance cost of
contingent consideration (£0.6 million) and the Group office leases liability
(£0.3 million). The decrease in net finance expense was principally driven by
finance income on short-term deposits given the rising interest rate
environment experienced during FY 23. As at 31 December 2023, the Group has no
interest rate risk exposure.
TAXATION
The Group's tax charge for FY 23 was £4.7 million, reflecting a higher
effective tax rate of 22% compared with 18% in FY 22. The increase was largely
driven by an increase in the UK corporate tax rate from 19% to 25% (effective
April 2023 onwards). 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 22% to 37.2p. This was the result of the 18%
increase in Adjusted profit after tax, plus a reduction in the weighted
average number of shares used as the denominator (due to the settlement of the
FY 22 iOLAP earn-out without any dilution of shareholders and FY 23 share
price performance). 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 £18.1 million (FY 22: £20.4
million), as a result of the Responsum and Insigniam acquisitions, and
earn-out payments for iOLAP and Coast Digital.
The Group continued to benefit from strong cash generation with increased net
cash flow generated from operations of £16.8 million in FY 23 (FY 22: £15.7
million). The increase in operating cash flow compared to FY 22 was less than
the increase in EBITDA due to the increase in tax paid (as explained above)
and working capital timing differences (which reversed in January 2024).
Net cash utilised for acquisitions reflects a total of £15.1 million, which
is comprised of £7.3 million initial cash consideration for the acquisition
of Insigniam (net of cash of £1.1 million acquired on acquisition), £1.3
million initial cash consideration for the acquisition of Responsum, £6.4
million iOLAP earn-out satisfied through shares sold from the EBT in order to
minimise dilution plus the final contingent consideration payment of £0.2
million for Coast Digital.
Net cash utilised in financing activities of £4.1 million represents a
dividend payment of £4.9 million, net Partner loans (including associated
section 455 tax) of £2.0 million, repayment of Responsum debt on acquisition
of £0.7 million, office lease payments of £1.0 million, partially offset by
net sales of shares from the EBT of £4.6 million.
STATEMENT OF FINANCIAL POSITION
Net assets as at 31 December 2023 totalled £119.6 million (FY 22: £95.9
million). The increase in net assets is as a result of a £4.3 million
increase in share premium for share issues for Responsum, Insigniam and the
sale of shares at market price to promoted Partners, net of loss on sale of
shares by EBT, retained profit for the year of £15.4 million, net EBT share
sales of £5.4 million and foreign currency translation losses of £1.5
million.
DIVIDENDS
The Company paid a final Ordinary share dividend in respect of FY 22 of 10.8
pence per share on 18 August 2023.
An interim Ordinary share dividend in respect of FY 23 of 5.3 pence per share
was paid on 15 February 2024. The Board is pleased to recommend a final
dividend for FY 23 of 9.5 pence per Ordinary share, making a total dividend of
14.8p for the FY 23 financial year, a 37% increase on the FY 22 dividend.
The final dividend will be recommended to shareholders at the AGM in June
2024. The FY 23 final dividend will have a total cash cost of £4.5 million,
which will be funded from the Group's existing cash reserves.
Group Statement of Comprehensive Income
For the year ended 31 December 2023
Year ended Year ended
31 December 2023
31 December 2022
Note £'000s £'000s
Revenue 4 85,885 71,745
Cost of sales 4 (56,621) (48,589)
Gross profit 29,264 23,156
Administrative expenses (8,607) (6,852)
Operating profit before M&A-related items 5 20,657 16,304
Depreciation 1,140 1,061
Amortisation of intangible assets 1,652 2,004
Share-based payments 1,967 1,159
Adjusted EBITDA 3 25,416 20,528
M&A-related items 5 1,966 600
Operating profit 5 22,623 16,904
Finance income 365 54
Finance costs (889) (1,213)
Net finance expense 6 (524) (1,159)
Profit before taxation 5 22,099 15,745
Taxation 7 (4,861) (2,876)
Profit for the year 17,238 12,869
Other comprehensive income
Items that may be subsequently reclassified to profit and loss:
Currency translation on foreign currency net investments (1,500) 1,827
Other comprehensive income, net of tax (1,500) 1,827
Total comprehensive income 15,738 14,696
Basic earnings per Ordinary share (p) 10 37.53 27.86
Diluted earnings per Ordinary share (p) 10 34.16 24.78
All results relate to continuing operations.
The notes form part of these accounts.
Group And Company Statements of Financial Position
As at 31 December 2023
Group Company
31 December 2023 31 December 2022 31 December 2023 31 December 2022
Note £'000s £'000s £'000s £'000s
Assets
Non-current assets
Intangible assets 12 100,905 83,581 - -
Property, plant and equipment 14 5,612 5,662 - -
Investments 15 - - 95,287 85,426
Other receivables 16 1,985 1,293 1,520 876
Loans to shareholders 16 7,604 4,734 7,604 4,723
Deferred tax asset 8 3,477 1,719 - -
Total non-current assets 119,583 96,989 104,411 91,025
Current assets
Trade and other receivables 16 16,686 11,234 261 403
Cash and cash equivalents 17 18,130 20,433 6,659 6,340
Total current assets 34,816 31,667 6,920 6,743
Total assets 154,399 128,656 111,331 97,768
Liabilities
Current liabilities
Trade and other payables 18 19,056 13,304 6,909 7,215
Lease liabilities 19 1,150 750 - -
Corporation tax 268 381 3 -
Other creditors 20 1,144 6,765 - 203
Total current liabilities 21,618 21,200 6,912 7,418
Net current assets 13,198 10,467 8 (675)
Non-current liabilities
Lease liabilities 19 4,214 4,393 - -
Deferred tax liability 8 2,000 1,435 - -
Other non-current liabilities 20 7,005 5,713 - -
Total non-current liabilities 13,219 11,541 - -
Total liabilities 34,837 32,741 6,912 7,418
Net assets 119,562 95,915 104,419 90,350
Equity
Share capital 21 52 52 52 52
Share premium 21 29,922 25,599 29,922 25,599
Capital redemption reserve 2 2 2 2
EBT share reserve 22 (1,745) (7,147) (1,745) (7,147)
Merger relief reserve 21 46,870 46,870 46,870 46,870
Foreign currency translation reserve 378 1,878 - -
Retained earnings 44,083 28,661 29,318 24,974
Total shareholders' equity 119,562 95,915 104,419 90,350
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 £7.6 million (FY 22: £13.1 million).
The notes form part of these accounts.
The Financial Statements were approved by the Board of Directors on 19 April
2024 and were signed on its behalf by:
Stephen Newton
Director
Group Statement of Changes in Equity
For the year ended 31 December 2023
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 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 31 December 2022 52 25,599 2 (7,147) 46,870 1,878 28,661 95,915
and 01 January 2023
Comprehensive income
Profit for the period - - - - - - 17,238 17,238
Other comprehensive income - - - - - (1,500) - (1,500)
Transactions with owners
Ordinary share issues - 5,417 - - - - - 5,417
Dividends - - - - - - (4,940) (4,940)
Share-based payments - - - - - - 1,694 1,694
Deferred tax recognised in equity - - - - - - 1,430 1,430
Sale of Ordinary shares - (1,094) - 9,322 - - - 8,228
Acquisition of Ordinary shares - - - (3,920) - - - (3,920)
As at 31 December 2023 52 29,922 2 (1,745) 46,870 378 44,083 119,562
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 2023
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 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
Sale of Ordinary shares - 647 - 9,743 - - 10,390
Acquisition of Ordinary shares - - - (14,697) - - (14,697)
As at 31 December 2022 52 25,599 2 (7,147) 46,870 24,974 90,350
and 01 January 2023
Comprehensive income
Profit for the period - - - - - 7,590 7,590
Transactions with owners
Ordinary share issues - 5,417 - - - - 5,417
Dividends - - - - - (4,940) (4,940)
Share-based payments - - - - - 1,694 1,694
Sale of Ordinary shares - (1,094) - 9,322 - - 8,228
Acquisition of Ordinary shares - - - (3,920) - - (3,920)
As at 31 December 2023 52 29,922 2 (1,745) 46,870 29,318 104,419
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 2023
Group Company
31 December 2023 31 December 2022 31 December 2023 31 December 2022
Note £'000s £'000s £'000s £'000s
Cash flows from operating activities:
Cash generated from operations 24 21,988 19,583 7,080 20,364
Taxation paid (5,195) (3,855) (22) (18)
Net cash generated from operating 16,793 15,728 7,058 20,346
activities
Cash flows from investing activities:
Purchase of property, plant and equipment (62) (329) - -
Software development costs (65) - - -
Payment for acquisition of subsidiary, net of cash acquired (15,063) (18,276) - (203)
Investment in subsidiary - - (4,621) (20,643)
Interest received 365 71 253 59
Net cash utilised in investing (14,825) (18,534) (4,368) (20,787)
activities
Cash flows from financing activities:
EBT Ordinary share purchases (3,773) (14,697) (3,773) (14,697)
EBT Ordinary share sales 8,356 10,257 8,356 10,257
Loans to shareholders (2,500) (3,011) (2,500) (3,000)
Loans repaid by shareholders 1,130 2,268 1,130 2,268
s455 tax refunded/(paid) re loans to shareholders (644) 245 (644) 232
Repayment of borrowings (687) (1,143) - -
Lease liability payments (770) (651) - -
Interest paid (236) (262) - -
Ordinary share dividends paid to shareholders (4,940) (1,855) (4,940) (1,855)
Net cash utilised in financing (4,064) (8,849) (2,371) (6,795)
activities
Net (decrease)/increase in cash and cash equivalents (2,096) (11,655) 319 (7,236)
Cash and cash equivalents at beginning 20,433 31,795 6,340 13,576
of the period
Effects of exchange rate changes on (207) 293 - -
cash and cash equivalents
Cash and cash equivalents at the end 18,130 20,433 6,659 6,340
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 company limited by shares 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 2023.
Subsidiaries are fully consolidated from the date of acquisition, being the
date on which the Group obtains control, and continue to be consolidated until
the date that such control ceases. The acquisition method of accounting has
been adopted. The financial statements of subsidiaries are prepared for the
same reporting period as the parent Company, using consistent accounting
policies.
All intra-group balances, income and expenses and unrealised gains and losses
resulting from intra-group transactions are eliminated in full.
1.4. Measurement convention
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. MATERIAL 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 and recognition of
intangibles on acquisitions), which are considered to have a significant
effect on the amounts recognised in the financial statements for the year
ending 31 December 2023.
The key sources of estimation uncertainty that could cause an adjustment to be
required to the carrying amount of assets or liabilities within the next
accounting period are:
• Revenue is recognised in line with time worked on a project unless
the engagement is conditional or contingent. Management review accrued revenue
to determine whether there is any likelihood of any amendments or provisions
required based on project progress and relationship with the client.
• 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.
• 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 Responsum and Insigniam 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 or performance-related elements
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.
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.
Fees are normally billed on a monthly basis. 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. 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. 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.
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
2023. 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; and at the time of
the transaction, does not give rise to equal taxable and deductible temporary
differences.
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.
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.
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 90 days.
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 and five properties outside the UK.
All leases are accounted for by recognising a right-of-use asset and a lease
liability, except for leases of low value assets.
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.
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, interest on lease liabilities
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 23 FY 22
Group £'000s £'000s
Profit before tax 22,099 15,745
Adjusting items:
M&A-related items (note 5) (1,966) (600)
Amortisation of intangible assets 1,652 2,004
Share-based payments 1,967 1,159
Finance cost - contingent consideration 636 951
Adjusted profit before tax 24,388 19,259
Depreciation 1,140 1,061
Net finance (income)/cost (excluding contingent consideration) (112) 208
Adjusted EBITDA 25,416 20,528
The table below sets out the reconciliation of the Group's adjusted profit
after tax to adjusted profit before tax:
FY 23 FY 22
Group £'000s £'000s
Adjusted profit before tax 24,388 19,259
Tax charge (4,861) (2,876)
Tax impact of adjusting items (761) (531)
Adjusted profit after tax 18,766 15,852
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 23 FY 22
Group p p
Adjusted EPS 40.86 34.32
Adjusted diluted EPS 37.19 30.53
4. Segment reporting & RESTATEMENT
FY 23 FY 22
Group £'000s £'000s
Revenue from contracts with customers arises from:
United Kingdom 28,520 23,837
USA 37,533 31,703
Rest of World 19,832 16,205
Total Revenue 85,885 71,745
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.
FY 23 revenue includes £0.8m of reimbursable expenses. FY 22 revenue and cost
of sales have been restated to reclassify reimbursable expenses as revenue,
which was previously reported in cost of sales. The reimbursable expenses
revenue was reclassified by restating each of the affected financial statement
line items for the prior period as follows:
FY 22 Increase FY 22 (Restated)
Group £'000s £'000s £'000s
Statement of Comprehensive Income (extract):
Revenue 70,703 1,042 71,745
Cost of sales (47,547) (1,042) (48,589)
5. Profit before taxation
The following items have been included in arriving at profit before taxation:
FY 23 FY 22
Group £'000s £'000s
Depreciation of property, plant and equipment:
- Owned assets 233 213
- Leased assets 907 848
Amortisation of intangible assets 1,652 2,004
Share-based payments 1,967 1,159
Foreign exchange losses/(gains) 388 (392)
M&A-related items (1,966) (600)
- Transaction costs 956 486
- Adjustment to contingent consideration (2,922) (1,086)
The M&A-related net credit of £2.0 million in FY 23 includes adjustments
to contingent consideration associated with the acquisition of iOLAP, less
non-recurring costs associated with the acquisitions of Insigniam and
Responsum as well as other M&A activity. The M&A-related net credit of
£0.6 million in FY 22 includes adjustments to contingent consideration
associated with the acquisitions of Retearn and iOLAP, less non-recurring
costs associated with the acquisition of iOLAP.
During the year the Group obtained the following services from the Company's
auditors as detailed below:
FY 23 FY 22
Group £'000s £'000s
Services provided by the Company's auditors:
Audit fees - parent Company and consolidated accounts 43 40
Audit fees - subsidiary companies 107 89
6. Net finance expense
FY 23 FY 22
Group £'000s £'000s
Finance income:
On short term deposits and investments 365 54
365 54
Finance costs:
Finance cost - contingent consideration (640) (951)
On lease liability (249) (262)
(889) (1,213)
Net finance expense (524) (1,159)
7. Taxation on profit on ordinary activities
Analysis of tax charge:
FY 23 FY 22
Group £'000s £'000s
Current tax
In respect of the current year 5,035 3,466
Adjustments in respect of prior periods 47 (334)
Total current tax 5,082 3,132
Deferred tax
In respect of the current year (221) (324)
Change in tax rates - 68
Total deferred tax (221) (256)
Income tax expense 4,861 2,876
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 25%.
FY 23 FY 22
Group £'000s £'000s
Profit before taxation 22,099 15,745
Profit on ordinary activities multiplied by the weighted average rate of 5,193 2,992
corporation tax in UK of 23.5% (FY 22: 19%)
Effects of:
M&A-related items not taxable (606) -
Expenses not deductible 324 193
Difference in overseas tax rates (97) 201
Change in deferred tax rate - 68
Adjustments in respect of prior periods 147 (62)
R&D tax relief in respect of prior periods (100) (271)
Deferred tax release re trademarks - (245)
Total taxation 4,861 2,876
8. Deferred tax
Net deferred tax asset/(liability):
The balances comprise temporary differences attributable to:
Group Company
FY 23 FY 22 FY 23 FY 22
£'000s £'000s £'000s £'000s
Deferred tax liability
Property, plant and equipment (78) (105) - -
Intangible assets (1,922) (1,330) - -
Total deferred tax liability (2,000) (1,435) - -
Deferred tax asset
Share-based payments 3,117 1,400 - -
Short-term timing differences 360 319 - -
Total deferred tax asset 3,477 1,719 - -
Net deferred tax asset 1,477 284 - -
The deferred tax liability on intangible assets relates to trademarks and
customer relationships and those on property, plant and equipment relate to
accelerated capital allowances.
The deferred tax asset recognised represents the future tax effect of
share-based payment charges in respect of options that are yet to vest.
Deductions in excess of the cumulative share-based payment charge recognised
in the statement of comprehensive income are recognised in equity.
Movements in deferred tax:
Property, plant and equipment Intangible assets Share-based payments Short-term timing differences Total
£'000s £'000s £'000s £'000s £'000s
At 31 December 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
Acquisition of business - (493) - - (493)
Credited to equity - - 1,429 - 1,429
Credited/(charged) to profit and loss 27 (152) 288 58 221
Exchange rate difference - 53 - (17) 36
At 31 December 2023 (78) (1,922) 3,117 360 1,477
9. Ordinary dividends
The Company paid a final Ordinary share dividend in respect of FY 22 of 10.8
pence per Ordinary share on 18 August 2023. No interim Ordinary share
dividends were paid during FY 22 or FY 23.
An interim Ordinary share dividend in respect of FY 23 of 5.3 pence per
Ordinary share was paid on 15 February 2024.
The Board is pleased to recommend a final dividend for FY 23 of 9.5p per
share, making a total dividend of 14.8p for FY 23.
The final dividend will be recommended to shareholders at the AGM in June
2024. The FY 23 final dividend will have a total cash cost of £4.5 million,
which will be funded from the Group's existing cash reserves.
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 23 FY 22
Basic and Diluted EPS
Profit attributable to the Ordinary equity holders of the Group used in 17,238 12,869
calculating basic and diluted EPS (£'000s)
Basic earnings per Ordinary share (p) 37.53 27.86
Diluted earnings per Ordinary share (p) 34.16 24.78
FY 23 FY 22
Adjusted Basic and Diluted EPS
Profit attributable to the Ordinary equity holders of the Group used in 18,766 15,852
calculating adjusted basic and diluted EPS (note 3) (£'000s)
Adjusted basic earnings per Ordinary share (p) 40.86 34.32
Adjusted diluted earnings per Ordinary share (p) 37.19 30.53
FY 23 FY 22
Number Number
Weighted average number of shares
Weighted average number of Ordinary shares used as the denominator in 45,933,062 46,186,481
calculating non-adjusted and adjusted basic EPS
Number of dilutive shares 4,531,375 5,740,587
Weighted average number of Ordinary shares used as the denominator in 50,464,437 51,927,068
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 23 FY 22
Group Number Number
Directors, management and Partners 32 31
Provision of services 397 373
Administration 55 46
484 450
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 23 FY 22
Group £'000s £'000s
Wages and salaries 37,830 32,702
Social security costs 4,334 3,910
Pension costs 862 755
Share-based payment charge 1,967 1,159
44,993 38,526
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 £0.9 million for FY 23 (FY 22: £0.8 million). Contributions amounting to
£0.1 million (FY 22: £0.1 million) were payable to the fund as at 31
December 2023 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 23 FY 22 FY 23 FY 22
£'000s £'000s £'000s £'000s
Aggregate emoluments including short term employee benefits 5,511 4,872 200 167
5,511 4,872 200 167
The share-based payment charge in respect of key management personnel was
£0.3 million (FY 22: £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 Software Total
Group £'000s £'000s £'000s £ 000's £ 000's £'000s
Cost
At 31 December 2021 51,412 7,135 1,874 - - 60,421
Acquisition of business 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
Acquisition of business (note 13) 18,312 - 1,546 466 364 20,688
Additions - - - - 65 65
Gains/(losses) from foreign exchange (1,626) - (161) (67) 4 (1,850)
At 31 December 2023 93,661 7,135 5,939 1,548 433 108,716
Amortisation
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)
Charge for the year - (627) (653) (372) - (1,652)
Gains/(losses) from foreign exchange - - 37 36 - 73
At 31 December 2023 - (5,577) (1,392) (842) - (7,811)
Net book value
At 31 December 2022 76,975 2,185 3,778 643 - 83,581
At 31 December 2023 93,661 1,558 4,547 706 433 100,905
The Company has no intangible assets.
Goodwill
Goodwill arising on the acquisition of a business in FY 23 relates to the
acquisitions of Responsum and Insigniam 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 22 relates to the
acquisition of iOLAP.
Goodwill impairment review
The breakdown of goodwill by cash-generating unit ('CGU') is listed below:
FY 23 FY 22
£'000s £'000s
Consulting 61,700 48,556
Elixirr Digital 2,856 2,856
iOLAP and Responsum 29,105 25,563
93,661 76,975
The Consulting CGU comprises goodwill and other assets of Elixirr Consulting
Limited, The Retearn Group Limited and the acquisition of Insigniam in FY 23
(refer note 13). The Elixirr Digital CGU comprises goodwill and other assets
of Elixirr Digital Limited. The iOLAP CGU comprises goodwill and other assets
of iOLAP and the acquisition of Responsum in FY 23 (refer note 13).
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 Responsum, 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 23 FY 22 FY 23 FY 22 FY 23 FY 22
£'000s £'000s £'000s £'000s £'000s £'000s
On current cash flow projections, the discount rate would need to exceed the % 28.1% 30.5% 71.4% 50.0% 21.9% 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 22.7% 25.0% 58.8% 42.7% 17.9% 19.0%
following year, the discount rate would have to exceed the % alongside for
there to be any impairment.
Customer relationships
FY 23 additions represent the fair value of customer relationships from the
acquisition of Insigniam. Refer to note 13 for further details.
The fair value has been determined by applying the Multi-Period Excess
Earnings method to the cash flows expected to be earned from customer
relationships. The key management assumptions are in relation to forecast
revenues, margins and discount factors. The fair value represents the present
value of the earnings the customer relationships generate.
A useful economic life of 10 years 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.
FY 22 additions represent the fair value of customer relationships from the
acquisition of iOLAP.
Order Book
FY 23 additions represent the fair value of the order book from the
acquisition of Insigniam. Refer to 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 1 year 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.
FY 22 additions represent the fair value of the order book from the
acquisition of iOLAP.
13. Business combinations
On 15 September 2023, the Group, through its US subsidiary iOLAP, acquired
100% of the share capital and voting interests of Responsum, Inc. a
US-headquartered firm which has developed proprietary artificial intelligence
software. The acquisition brings specialist services in emerging technology,
large language models ("LLM") and generative AI into the Group, complementing
the Group's existing service offering and iOLAP Inc.'s ("iOLAP") data and
analytics capabilities in particular.
The Group acquired Responsum for a maximum consideration payable of £5.1
million (US$6.4 million). The consideration consists of:
• An initial consideration of £1.6 million (US$2.0 million) in
cash;
• An initial consideration of £2.7 million (US$3.4 million)
settled through the issue of 505,196 Ordinary shares at a price of £5.40 per
share;
• Potential earn-out payments of up to £0.8 million (US$1.0
million) in cash which are contingent on iOLAP and Responsum together
achieving EBIT margin targets in periods up to 31 December 2026.
The Ordinary shares purchased pursuant to the acquisition are subject to
restrictions on sale for a total period of up to four years. The sellers also
agreed to three-year restrictive covenants.
The difference between the fair value of the purchase consideration of £4.6
million and the fair value of the identifiable assets acquired and liabilities
assumed was recognised as goodwill of £5.0 million. The goodwill is
attributable to the company's workforce and working methodologies.
The total fair value of the contingent consideration payable recognised on the
date of acquisition was £0.4 million (US$0.5 million), of which £0.1 million
(US$0.2 million) was the hold back for warranties and £0.3million (US$0.3
million) related to the present value of 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 EBIT. Discount unwinding is recognised in finance costs
proportionately across the periods until final settlement. During the period,
£9k of discount unwinding was expensed as finance costs in relation to the
Responsum acquisition consideration.
As at 31 December 2023, a £0.4 million liability is recorded, of which £0.1
million is a current and £0.3 million is a non-current liability.
Included within M&A-related items is an amount of £0.1 million for legal
and advisory fees in relation to the acquisition.
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 Responsum:
Fair value
£'000s
Assets
Non-current assets
Intangible assets 364
Total non-current assets 364
Total assets 364
Liabilities
Current liabilities
Trade and other payables 80
Total current liabilities 80
Non-current liabilities
Loans and borrowings 687
Total non-current liabilities 687
Total liabilities 767
Fair value of net assets acquired (403)
Goodwill (note 12) 5,044
Fair value of purchase consideration 4,641
Cash and cash equivalents in subsidiary acquired -
On 8 December 2023, the Group's US subsidiary, Elixirr, Inc. acquired all of
the issued and outstanding membership interests of Insigniam LLC, and Elixirr
International plc acquired the entire issued and outstanding shares of
Insigniam SAS (Insigniam SAS together with Insigniam LLC, "Insigniam").
Insigniam is a US-headquartered consultancy firm specialising in supporting
clients and executives to define and navigate large scale change and
transformation. The acquisition brings specialist services in transformation,
leadership alignment, cultural change, and executive coaching, complementing
the Group's existing service offerings.
The Group acquired Insigniam for a maximum consideration payable of £14.7
million (US$18.5 million). The consideration consists of:
• An initial consideration of £9.2 million (US$11.6 million) in
cash;
• An initial consideration of £1.2 million (US$1.5 million)
settled through the issue of 258,553 Ordinary shares at a price of £4.60 per
share;
• Contingent consideration of up to £4.3 million (US$5.4 million) in
either cash or Ordinary shares with, at a minimum, 33% of the contingent
consideration being satisfied in cash. This is contingent on Insigniam
achieving both revenue growth and EBITDA margin targets in financial periods
up to 31 December 2026.
The difference between the fair value of the purchase consideration of £13.8
million and the fair value of the identifiable assets acquired and liabilities
assumed of £0.5 million was recognised as goodwill of £13.3 million. The
goodwill is attributable to the company's workforce and working methodologies
and is deductible for tax purposes.
The total fair value of the contingent consideration payable recognised on the
date of acquisition was £4.2 million (US$5.3 million), of which £0.8 million
(US$1.0 million) was the hold back for warranties and £3.4million (US$4.3
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,
£24k of discount unwinding was expensed as finance costs in relation to the
Insigniam acquisition consideration.
As at 31 December 2023, a £4.2 million liability is recorded, of which £0.8
million is a current and £3.4 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.
Insigniam contributed £0.9 million to the Group's revenue and £0.1 million
to the Group's profit before tax for the period from the date of acquisition
to 31 December 2023.
If the acquisition of Insigniam had been completed on 1 January 2023, Group
revenues for the year ended 31 December 2023 would have been £95.9 million
and Group profit before tax would have been £23.8 million.
In calculating the goodwill arising, the fair value of the net assets of
Insigniam 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 to note 12 for further details.
The fair value of trade and other receivables approximates carrying value and
there is no material difference between fair value and the gross contractual
amounts at the acquisition date.
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 Insigniam:
Fair value
£'000s
Assets
Non-current assets
Intangible assets 2,012
Property, plant and equipment 400
Other receivables 67
Total non-current assets 2,479
Current assets
Trade and other receivables 1,914
Cash and cash equivalents 1,118
Total current assets 3,032
Total assets 5,511
Liabilities
Current liabilities
Trade and other payables 4,102
Total current liabilities 4,102
Non-current liabilities
Loans and borrowings 395
Deferred tax liability 493
Total non-current liabilities 888
Total liabilities 4,990
Fair value of net assets acquired 521
Goodwill (note 12) 13,268
Fair value of purchase consideration 13,789
Cash and cash equivalents in subsidiary acquired 1,118
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 2021 6,427 89 505 188 7,209
Acquisition of business (note 13) 655 56 26 90 827
Additions - 131 134 64 329
Gains from foreign exchange 51 5 2 5 63
At 31 December 2022 7,133 281 667 347 8,428
Acquisition of business (note 13) 400 - - - 400
Additions 639 3 4 55 701
Losses from foreign exchange (23) (4) - (14) (41)
At 31 December 2023 8,149 280 671 388 9,488
Depreciation
At 31 December 2021 (1,321) (70) (225) (97) (1,713)
Charge for the year (848) (29) (86) (98) (1,061)
Gains from foreign exchange 7 - - 1 8
At 31 December 2022 (2,162) (99) (311) (194) (2,766)
Charge for the year (907) (42) (98) (93) (1,140)
Gains from foreign exchange 11 5 - 14 30
At 31 December 2023 (3,058) (136) (409) (273) (3,876)
Net book value
At 31 December 2022 4,971 182 356 153 5,662
At 31 December 2023 5,091 144 262 115 5,612
The Company has no property, plant and equipment.
The lease liability in respect of the right-of-use asset was £5.4 million (FY
22: £5.1 million) and relates to property leases.
15. Investments
Group companies
Company £'000s
Cost/carrying value
At 31 December 2021 63,807
Capitalisation of subsidiary 20,643
Group companies share-based payments 975
At 31 December 2022 85,426
Acquisition of business 1,070
Capitalisation of subsidiary 7,098
Group companies share-based payments 1,693
At 31 December 2023 95,287
The Group has no investments.
The Company has the following subsidiary undertakings at the year-end:
Subsidiary undertakings Country of incorporation Principal activity Registered office FY 23 FY 22
Elixirr Consulting Limited England and Wales Consultancy 12 Helmet Row, London, EC1V 3QJ 100% 100%
Elix-IRR Consulting Services (South Africa) Limited (indirect) England and Wales Services to the Group 12 Helmet Row, London, EC1V 3QJ 100% 100%
Elixirr LLC (indirect) United States Consultancy 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808 100% 100%
Den Creative Limited England and Wales Consultancy 12 Helmet Row, London, EC1V 3QJ 100% 100%
Elixirr Services Limited (indirect) England and Wales Dormant 12 Helmet Row, London, EC1V 3QJ 100% 100%
Coast Digital Limited* England and Wales 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% 100%
Elixirr Inc. United States Holding Company 2600 Network Blvd Suite 570 Frisco, TX 75034 100% 100%
iOLAP Inc. (indirect) United States Consultancy 2600 Network Blvd Suite 570 Frisco, TX 75034 100% 100%
iOLAP d.o.o. (indirect) Croatia Consultancy Prolaz Marije Krucifikse Kozulić 1, 51000, Rijeka 100% 100%
Elixirr GmbH Germany Dormant Ronsbachweg 6, 36093, Kuenzell. Germany 100% -
Responsum, Inc. (indirect) United States Consultancy 2600 Network Blvd Suite 570 Frisco, TX 75034 100% -
Insigniam LLC (indirect) United States Consultancy 301 Woodbine Ave, Narberth, PA 19072 100% -
Insigniam SAS France Consultancy 36 Rue De Ponthieu, 75008, Paris 8 100% -
* On 2 January 2024 the name of Coast Digital Limited was changed to Elixirr
Digital Limited.
16. Receivables
Group Company
FY 23 FY 22 FY 23 FY 22
£'000s £'000s £'000s £'000s
Non-current assets
Loans to shareholders 7,604 4,734 7,604 4,723
Other receivables 1,985 1,293 1,520 876
9,589 6,027 9,124 5,599
Current assets
Trade receivables 15,295 10,355 - -
Less: allowance for doubtful debts - (8) - -
Trade receivables - net 15,295 10,347 - -
Prepayments and deposits 840 653 63 62
Contract assets 288 26 - -
Amounts owed by group companies - - - 199
Other receivables 263 208 198 142
16,686 11,234 261 403
The Company was due £0.2 million as at 31 December 2022 from Elixirr Inc. for
costs relating to the acquisition of iOLAP.
Loans to shareholders in FY 23 represent amounts owed to the Company 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 2023:
Gross carrying amount Loss allowance Net carrying amount
Group £'000s £'000s £'000s
< 31 days 9,916 - 9,916
31-60 days 3,451 - 3,451
61-90 days 1,662 - 1,662
91-120 days 36 - 36
121+ days 230 - 230
At 31 December 2023 15,295 - 15,295
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
17. Cash and cash equivalents
Group Company
FY 23 FY 22 FY 23 FY 22
£'000s £'000s £'000s £'000s
Cash at bank and in hand 18,130 20,433 6,659 6,340
18,130 20,433 6,659 6,340
Cash at bank includes £6.2 million on 32-day notice deposit which earned
interest at an average rate of 4.2% during the year.
18. Trade and other payables
Group Company
FY 23 FY 22 FY 23 FY 22
£'000s £'000s £'000s £'000s
Trade payables 1,774 1,178 241 55
Other taxes and social security costs 1,899 1,540 8 7
Accruals 11,308 8,599 450 156
Contract liabilities 3,938 1,983 - -
Other payables 137 4 116 -
Amounts owed to group companies - - 6,094 6,997
19,056 13,304 6,909 7,215
As at 31 December 2023, the Company owed £6.1 million (FY 22: £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. LEASE LIABILITIES
Group Company
FY 23 FY 22 FY 23 FY 22
£'000s £'000s £'000s £'000s
Current liabilities
Right of use lease liability 1,150 750 - -
1,150 750 - -
Non-current liabilities
Right of use lease liability 4,214 4,393 - -
4,214 4,393 - -
The movement in the right of use lease liability was as follows:
Right of use lease liability
Group £'000s
At 31 December 2021 5,245
Acquisition of business (note 13) 555
Interest payable 262
Repayment of lease liabilities (913)
Losses from foreign exchange (6)
At 31 December 2022 5,143
Acquisition of business (note 13) 395
Additions 639
Interest payable 249
Repayment of lease liabilities (1,006)
Losses from foreign exchange (56)
At 31 December 2023 5,364
The acquisition of business in FY 23 relates to the acquisition of Insigniam.
The additions in FY 23 relate to a new property lease signed by iOLAP d.o.o.
The acquisition of business in FY 22 relates to the acquisition of iOLAP.
Maturity analysis of contracted undiscounted cashflows of the right of use
lease liability are as follows:
FY 23 FY 22
£'000s £'000s
Lease liability less than one year 1,334 932
Lease liability greater than one year and less than five years 3,721 3,270
Lease liability greater than five years 1,092 1,871
Total liability 6,147 6,073
Finance charges included above (783) (930)
5,364 5,143
20. Other creditors and other non-current liabilities
Group Company
FY 23 FY 22 FY 23 FY 22
£'000s £'000s £'000s £'000s
Other creditors
Contingent consideration 1,144 6,765 - 203
1,144 6,765 - 203
Other non-current liabilities
Dilapidations 377 380 - -
Cash-settled share-based payments 360 139 - -
Contingent consideration 6,268 5,194 - -
7,005 5,713 - -
Contingent consideration in FY 23 include earn-out payments which are
contingent on performance and arose from the acquisition of iOLAP, Responsum
and Insigniam.
Contingent consideration in FY 22 include earn-out payments which are
contingent on performance and arose from the acquisition of Coast Digital and
iOLAP.
Cash-settled share-based payments include obligations for the Group's
employers' NI on options that are yet to vest. Refer to 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 23
Issued shares Par value Merger relief reserve Share premium
Group and Company Number £ £'000s £'000s
£0.00005 Ordinary shares 47,272,811 2,364 46,870 29,922
£1 Redeemable Preference shares 50,001 50,001 - -
47,322,812 52,365 46,870 29,922
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
The total number of voting rights in the Company at 31 December 2023 was
47,272,811 (FY 22: 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 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
Share issues 1,086,330 54 - 5,417
Sale of Ordinary shares from the EBT - - - (1,094)
At 31 December 2023 47,272,811 2,364 46,870 29,922
Share issues in FY 23 represented consideration for the acquisitions of
Responsum and Insigniam as well as the sale of shares at market price to
promoted Partners.
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 23
Shares held in EBT Weighted average cost Total cost
Group and Company Number £ £'000s
Ordinary shares 397,667 4.26 1,695
Redeemable Preference shares 50,001 1.01 50
447,668 1,745
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
23. Share-based payments
The Group recognised a total share-based payment expense of £2.0 million (FY
22: £1.2 million) in the current year, comprising £1.7 million (FY 22: £1.0
million) in relation to equity settled share-based payments, and £0.3 million
(FY 22: £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 to note 20). The liability has been
estimated using a closing share price of £6.20 and employers' national
insurance at 13.8%. The carrying value of the liability as at 31 December 2023
is £0.4 million (FY 22: £0.1 million), with £0.3 million (FY 22: £0.2
million) recognised in the P&L and payments amounting to £0.1 million (FY
22: £0.1 million) made in the year.
Share Option Plans
The Group operates EMI, CSOP and unapproved share option plans with time-based
and performance-based vesting conditions.
During FY 23, a total of 5,614,145 (FY 22: 3,687,080) share options were
granted to employees and senior management. The weighted average fair value of
the options awarded in the year is £1.17 per share (FY 22: £1.66).
During FY 23, options issued between April 2021 and April 2023 were repriced
to an exercise price of £5.20. The weighted average incremental fair value
granted as a result of this modification was £0.30. The incremental fair
value was measured as the difference between the fair value of the repriced
share option and that of the original share option, both estimated as at the
date of the modification. The incremental fair value is recognised as an
expense over the remaining vesting period from the modification date.
Details of share option awards made are as follows:
Number of share options Weighted average exercise price
(000's)
Outstanding at the beginning of the year 10,886 3.47
Granted during the year 5,614 5.22
Exercised during the year (57) 2.34
Forfeited during the year (2,875) 4.28
Outstanding at the year end 13,568 3.76
Exercisable at the year end 293 5.54
For the options exercised during FY 23, the weighted average share price at
the date of exercise was £5.05.
The options outstanding as at 31 December 2023 had a weighted average
remaining contractual life of 2.6 years (FY 22: 3 years) and a weighted
average exercise price of £3.76 (FY 22: £3.47) 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 23 FY 22
Weighted average share price at grant date (£) 4.98 5.90
Weighted average exercise price (£) 5.22 6.32
Volatility (%) 27.00% 26.54%
Weighted average vesting period (years) 5 5
Risk free rate (%) 4.28% 1.73%
Expected dividend yield (%) 2.54% 0.71%
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 23.
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
acquisition of Elixirr Digital. These share options are for a fixed monetary
consideration where the number of share options is variable and determined
with reference to the share price at the date of vesting.
The monetary value of such share options is as follows:
Value
£'000s
Outstanding at the beginning of the period 797
Exercised during the year (297)
Outstanding at the year end 500
Exercisable at the year end -
The share price at the date of exercise of the Coast Digital options was
£4.74.
The weighted average remaining contractual life of such options at 31 December
2023 was 0.5 years (FY 22: 1.5 years).
Employee Share Purchase Plan ('ESPP')
The Group operates an employee share purchase plan where the employees of the
Group (excluding Partners) are eligible to contribute a percentage of their
gross salary to purchase shares in the Company. The Company makes a matching
award of shares that will vest over time dependent on continued employment.
During FY 23, the Company awarded 184,546 (FY 22: 89,841) matching shares on
the basis of one matching share for every one employee share purchased during
FY 22. The matching shares vest equally over a 5-year period with the first
tranche vesting on 31 January 2024.
Details of ESPP awards made are as follows:
Number of ESPP awards
(000's)
Outstanding at the beginning of the period 78
Granted during the year 185
Vested and converted to shares during the year (15)
Forfeited during the year (44)
Outstanding at the year end 204
Exercisable at the year end -
24. Cash flow information
Cash generated from operations:
Group Company
FY 23 FY 22 FY 23 FY 22
£'000s £'000s £'000s £'000s
Profit before taxation 22,099 15,745 7,617 13,078
Adjustments for:
Depreciation and amortisation 2,792 3,065 - -
Net finance expense/(income) 524 1,159 (253) (55)
Share-based payments 1,967 1,159 - -
Adjustment to contingent consideration (2,922) (1,086) - (1,400)
Foreign exchange 388 (392) (4) -
(Increase)/decrease in trade and other receivables (3,812) 975 186 1,660
Increase/(decrease) in trade and other payables 952 (1,042) (422) 7,081
21,988 19,583 7,124 20,364
Reconciliation of liabilities from financing activities:
Borrowings Leases Total
Group £'000s £'000s £'000s
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
Cash flows (687) (1,006) (1,693)
Other changes 687 1,227 1,914
Balance 31 December 2023 - 5,364 5,364
Other changes in FY 23 include non-cash movements, additional property leases
on acquisition of Insigniam and accrued interest expense on leases. 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.
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 23 FY 22 FY 23 FY 22
£'000s £'000s £'000s £'000s
Financial assets
Financial assets that are debt instruments measured at amortised cost 43,367 37,027 15,956 12,327
Financial liabilities
Financial liabilities measured at amortised cost 11,213 16,907 6,451 7,208
Financial liabilities at fair value through profit and loss 8,149 11,959 - 203
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 the acquisitions of iOLAP, Responsum and
Insigniam.
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 23 FY 22 FY 23 FY 22
£'000s £'000s £'000s £'000s
Trade receivables 15,295 10,347 - -
Contract assets 288 26 - -
Other receivables 9,654 6,221 9,283 5,784
Cash and cash equivalents 18,130 20,433 6,659 6,340
43,367 37,027 15,942 12,124
Credit risk is the 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 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
2023:
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 1,774 - - - - 1,774 1,774
Lease liabilities 676 658 1,040 2,681 1,092 6,147 5,364
Financial liabilities at fair value through profit and loss 1,144 - 4,680 3,597 - 9,421 8,149
3,594 658 5,720 6,278 1,092 17,342 15,287
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
Interest rate risk
As at 31 December 2023 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:
FY23 FY22
USD '000s EUR '000s ZAR '000s USD '000s EUR '000s ZAR '000s CAD '000s HRK '000s
Cash & cash equivalents 5,025 1,031 9 6,906 1 1,257 313 270
Trade receivables 7,308 829 - 6,709 72 - 28 149
Trade payables (631) (206) (178) (124) (7) (132) 0 (649)
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 23 FY 22
£'000s £'000s
10% weakening of functional currency 230 219
10% strengthening of functional currency (230) (219)
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 £119.6 million as at 31 December 2023 (FY 22: £95.9 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 provide a
capital-efficient return to shareholders.
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.
In FY 23, travel and marketing costs include £6,550 (FY 22: £43,956) 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
An interim Ordinary share dividend in respect of FY 23 of 5.3 pence per
Ordinary share was paid on 15 February 2024.
The Directors are proposing a final Ordinary share dividend in respect of FY
23 of 9.5 pence per share.
As at 19 April 2024, in accordance with the Financial Conduct Authority's
Disclosure and Transparency Rules, the Company continues to have 47,272,811
Ordinary shares in issue, of which none are held in Treasury.
The total number of voting rights in the Company is 47,272,811. This figure of
47,272,811 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 2023.
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