REG - Elixirr Intnl PLC - Interim Results
18/09/2023 07:00
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RNS Number : 6657M Elixirr International PLC 18 September 2023
Elixirr International plc
("Elixirr", the "Company" or the "Group")
RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2023
Elixirr International plc (AIM:ELIX), an established, global award-winning
challenger consultancy, is pleased to report its unaudited interim results for
the six months ended 30 June 2023 (H1 23). Comparative results are presented
for the six months ended 30 June 2022 (H1 22).
Financial Highlights
Elixirr is pleased to report the following financial highlights for the Group
for H1 23:
· 23% increase in revenue compared to H1 22, with revenue totalling
£41.1m and Group record revenue in three of the six months in the period
· Underlying organic revenue growth of 14% compared to H1 22
· 19% increase in adjusted EBITDA ( 1 ) compared to H1 22, totalling
£12.3m, maintaining our strong track record of profitability with an adjusted
EBITDA margin of 30%
· 17% increase in profit before tax, totalling £9.9m (H1 22:
£8.4m)
· 23% increase in adjusted diluted EPS ( 1 ) compared to H1 22
· Net cash of £19.5m with no debt ( 2 )
H1 23 H1 22 Change
Revenue £41.1m £33.4m +23%
Adjusted EBITDA ( 1 ) £12.3m £10.4m +19%
Adjusted EBITDA margin 30% 31% -1pp
Profit before tax £9.9m £8.4m +17%
Adjusted diluted EPS ( 1 ) 18.5p 15.1p +23%
( )
( 1 ) In order to provide better clarity to the underlying performance of the
Group, Elixirr uses adjusted EBITDA and adjusted earnings per share as
alternative performance measures ('APMs'). Please refer to note 2 of the
Group's interim condensed consolidated financial statements.
( 2 ) No debt other than office leases capitalised under IFRS16.
Operating Highlights
· Double-digit underlying organic growth, proving our consistent
ability to perform against our strategy
· Growth through all pillars of the firm's four-pillar strategy:
· Excellent progress in stretching the Partner team, with a 24%
increase in revenue per Partner compared to H1 22
· Promoting our first Principal from one of our acquisitions to
Partner, as well as two from the consulting team and a further two promotions
effective in H2 23
· Two new UK Partners hired in H1 23 with networks and expertise
spanning healthcare, life sciences, manufacturing and sports & media, plus
a new US Partner hired in H2 23 with strong retail experience
· Creation of additional value from our previous acquisitions with
significant growth in cross-sell revenue into those businesses
· Further progress on inorganic growth, with the acquisition of
Generative AI firm Responsum, bringing key AI capabilities in-house, highly
complementary to iOLAP's data expertise
· Maintained our strong profit margins due to our high-quality offering,
premium market positioning and operational effectiveness
· Strong client retention, proving our ability to deepen relationships
as we scale with growth in key accounts, having grown the number of £1m+ and
£2m+ clients *
· Bringing on new clients, including notable brands across a range
of industries as a result of our growing networks and increasing brand
presence
· Maintaining our strong reputation receiving multiple industry
recognitions, including being listed as one of the Financial Times' Leading
Management Consultancies for 2023
* On a 12-month trailing basis compared with FY 22.
Commenting on the results, Stephen Newton, Chief Executive Officer said:
"We began this year with great momentum, and have continued our progress
through the period, leveraging our previous acquisitions to maximise the
firm's overall performance. Our ambition is to become the best digital, data,
AI and strategy consultancy in the world, and the diversification we have
built into Elixirr over time has proved effective in helping us achieve this.
We continue to explore both organic and inorganic opportunities to support
this ambition, whether that be through new capabilities, industries or
geographies.
Our ability to deliver such a relevant range of services, coupled with a
growing reputation in the market, has contributed to another set of strong
results for the first half of 2023, and we expect to see this performance
continue for the remainder of the year."
Enquiries:
For enquiries, please refer to our Investor Contacts page:
https://www.elixirr.com/investors/investor-contacts
Elixirr International
plc
+44 (0)20 7220 5410
Stephen Newton, Chief Executive Officer
Graham Busby, Chief Financial Officer
investor-relations@elixirr.com
Cavendish Capital Markets Ltd (Nominated Adviser & Joint Broker) +44
(0)20 7220 0500
Christopher Raggett
Investec Bank plc (Joint Broker)
Carlton Nelson, Henry Reast (Corporate
Broking)
+44 (0) 20 7597 4000
Notes to editors
Elixirr International plc (AIM: ELIX) is an established, global,
award-winning management consultancy. The Company challenges the larger
consultancies by delivering innovative and bespoke solutions to a repeat,
globally-recognised client base.
This announcement is released by Elixirr International plc and contains
inside information for the purposes of Article 7 of the Market Abuse
Regulation (EU) 596/2014 (MAR). It is disclosed in accordance with Elixirr's
obligations under Article 17 of MAR. For the purposes of MAR and Article 2 of
Commission Implementing Regulation (EU) 2016/1055, this announcement is being
made on behalf of the Company by Graham Busby, Chief Financial Officer.
The Company also announces that its Nominated Adviser and Joint Broker has
changed its name to Cavendish Capital Markets Ltd following completion of its
own corporate merger.
Disclaimer
This announcement contains certain statements that are, or may be, forward
looking statements with respect to the financial condition, results of
operations, business achievements and/or investment strategy of the Company.
Such forward looking statements are based on the Board's expectations of
external conditions and events, current business strategy, plans and the other
objectives of management for future operations, and estimates and projections
of the Company's financial performance. Though the Board believes these
expectations to be reasonable at the date of this document they may prove to
be erroneous. Forward looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
achievements or performance of the Group, or the industry in which the Group
operates, to be materially different from any future results, achievements or
performance expressed or implied by such forward looking statements.
INTERIM MANAGEMENT REPORT
Financial Performance Review
H1 23 H1 22 Change
Revenue £41.1m £33.4m +23%
Gross profit £14.3m £11.4m +26%
Adjusted EBITDA ( 1 ) £12.3m £10.4m +19%
Adjusted EBITDA margin 30% 31% -1pp
Profit before tax £9.9m £8.4m +17%
Adjusted diluted EPS ( 1 ) 18.5p 15.1p +23%
Net cash ( 2 ) £19.5m £11.1m +76%
( 1 ) In order to provide better clarity to the underlying performance of the
Group, Elixirr uses adjusted EBITDA and adjusted earnings per share as
alternative performance measures ("APMs"). Please refer to note 2 of the
Group's interim condensed consolidated financial statements.
( 2 ) The Group has no debt other than office leases capitalised under IFRS16.
Net cash excludes capitalised office leases.
The Board is pleased to report that the Group performed well in H1 23,
continuing to grow revenue and adjusted EBITDA against our ambition to build
the best digital, data, AI and strategy consultancy in the world. The
investments we made in FY 22, including Partner hires and leveraging the
capabilities of our acquisitions, meant we have continued to deliver on
expanded services to our clients, with strong momentum going into H1 23.
During H1 23, Group revenue increased to £41.1m with three record revenue
months. This represents 23% absolute revenue growth compared to H1 22.
Underlying organic revenue growth was 14%, with £5.3m growth from scaling
existing clients and £4.3m growth from new clients. The strong organic growth
is testament to our focus on growing key accounts, good client retention and
deepening of relationships, utilising newly hired Partners' networks and our
growing brand reputation.
The following revenue bridge displays the elements of the growth in revenue
from £33.4m in H1 22 to £41.1m in H1 23.
Group gross profit increased by 26% to £14.3m (H1 22: £11.4m), slightly
ahead of the growth in revenue, given an increase in revenue per Partner.
Group adjusted EBITDA grew by 19% compared to H1 22, totalling £12.3m, and
maintaining our track record of profitability with an adjusted EBITDA margin
of 30% (H1 22: 31%), slightly ahead of the adjusted EBITDA margin of 29%
achieved in full year FY 22.
Profit before tax increased by 17% to £9.9m (H1 22: £8.4m). Excluding the
impact of the M&A-related net credit of £0.5m in H1 22, this represented
an increase of 25%. Further details of M&A-related items are set out in
note 4 of the Group's interim condensed consolidated financial statements.
Adjusted diluted earnings per share increased by 23% to 18.5p (H1 22: 15.1p),
reflecting the strong growth in adjusted EBITDA. The dilution calculation
includes the potential additional dilution from shares that could be issued to
satisfy the FY 23 and FY 24 contingent consideration for the acquisition of
iOLAP (US$7.4m). The Group retains the option to satisfy this consideration
through a cash payment with a commitment to buy shares from the EBT to
minimise dilution.
The Group's net cash position decreased by £0.6m from £20.4m at 31 December
2022 to £19.5m at 30 June 2023, primarily due to the settlement of Coast
(£0.2m) and iOLAP FY 22 contingent consideration (US$7.4m) and the payment of
iOLAP initial consideration held back for warranties (US$0.5m). The iOLAP
sellers used the after-tax amount of the contingent consideration to purchase
shares from the EBT. The higher operating cash flow in H1 23 compared to H1 22
was due to higher EBITDA as well as improved working capital performance.
Net assets as at 30 June 2023 totalled £102m (31 December 2022: £95.9m). The
increase in net assets during H1 23 includes the retained profit for the
period of £3.7m (after accrual of the FY 22 final dividend of £4.9m
partially offset by a credit for the share-based payments charge of £0.7m),
sale of shares by the EBT of £7.1m, less purchases of shares by the EBT of
£3.4m and foreign currency losses of £1.4m following weakening of the US
dollar.
Operational Review
In the first half of FY 23, Elixirr continued to position itself strongly with
global clients, facilitated by our four-pillar growth strategy:
· The depth of our C-suite relationships and breadth of offering has
ensured continued growth in revenue through the period
· Increased cross-sell across the Group with particular success in
significantly increasing cross-sell of the services of our acquisitions
· Deepening of our data and AI capabilities through a partnership with,
and post-period end acquisition of, Responsum Inc.
· Growing our market presence and brand, launching our biggest
campaign to date and more than doubling our FY 22 marketing leads
· Strong equity participation in our 2023 ESPP, with 75%+ of the
consulting team opting in and over 50% at a Group level, highlighting the
continued commitment of our teams
During the period, we carried out a range of strategic client engagements
including:
· We partnered with one of the world's largest investment management
firms to explore innovative ways to further its ESG focus and compliance
surrounding its shareholder voting and investee company rating processes
utilising AI-powered technologies
· Accelerated the global finance transformation of a luxury fashion
house - a lead generated by Elixirr's marketing team, refreshing their
strategic communications, supporting an effective programme delivery and
establishing robust governance and reporting
· Utilised cross-brand expertise to deliver a target operating model
for a global services standards firm alongside digital transformation
including website redesign
· Supported an independent European Bank, a new client in 2023, to
strategically review their project management office then set up their Cyber
Security vision and roadmap - growing the account from one initial engagement
to become a £1m+ revenue gold client
· Using our strategy, digital and data expertise, we worked with a
major US industrials firm to automate and enhance their enterprise sales
reporting tool, designing a bespoke customer-journey aligned IT operating
model, and building a forward-focused enterprise digital vision aligned to
growth aspirations
Our work over H1 23 has again been recognised through numerous awards and
accolades including:
· We were recognised by the Financial Times as one of the UK's
leading management consultants in 2023
· Listed again on the Global Outsourcing 100® in 2023, the annual
list of the world's best outsourcing service providers and advisors compiled
by the International Association of Outsourcing Professionals (IAOP®)
· Stephen Newton, CEO and Founder, honoured by Consulting Magazine
for Lifetime Achievement in the Top Consultant 2023 Awards
· Recognised by Consultancy.UK as one of the Top Consulting Firms
in the UK with platinum and gold rankings in nine service areas including
Finance, Strategy, Innovation and Outsourcing & Shared Services
Growth Strategy
Elixirr's overarching growth strategy continues to be focused through the
following pillars:
1. Stretching our existing Partners
2. Promoting Partners from within
3. Hiring new Partners
4. Acquiring new businesses
1. Stretching our existing Partners
As set out in the table below, there were significant increases in average
revenue per Partner from £1.65m of revenue in H1 22 to £2.04m for H1 23,
highlighting the overall strength and quality of the Partner team. This
performance is also a reflection of the continued extension of Elixirr's
capabilities, with data, digital and AI being further embedded into projects
over the period.
Established Partners achieved revenue of £2.18m, increasing from £1.99m in
H1 22. We retained our focus of growing key accounts resulting in increased
client retention and through recent and new Partner hires and their respective
networks brought on new logos, including potential gold clients.
2. Promoting Partners from within
Two Partner promotions became effective at the start of the year - Benjamin
Gower, with strong insurance credentials who has continued to expand our
biggest account in this space, and Danielle Croucher who has been a key
contributor in growing our US business, one of Elixirr's key geographical
focuses. Their average revenue contribution of £1.77m for the half year can
be seen in the graph above.
Three additional Principals were promoted to Partner in Q1 and Q2 - two
effective October 2023, and one effective January 2024.
Dan Coral, US based Principal joined the firm in 2021 from Accenture and is
currently based out of the firm's New York office. He has over 12 years of
consulting experience, with deep expertise across data strategy and mergers
and acquisitions. Rory Farquharson has grown with the firm, having joined
Elixirr in 2015 and has worked in 4 of the firm's central geographies:
Johannesburg, San Francisco, New York and London - his success building out
the US business contributed to him being named one of Consulting Magazine's
Rising Stars of the Profession for 2022.
Nick Larsen has been with iOLAP for 18 years and has fulfilled every role
across the value chain, including data engineering and solution architecture,
giving him an end-to-end understanding of how to solve clients' most pressing
data and technology challenges. This marks the first promotion to Partner from
one of Elixirr's acquisitions and demonstrates the career opportunities
available to talented members of our acquisitions' teams.
All three of these new Partner appointments will be key in contributing to the
firm's success worldwide.
Principal talent has developed strongly during the first half of the year with
four external hires, bringing SME expertise across insurance and data, and a
further five Managers promoted to Principal, bringing our Principal team to
35+.
3. Hiring new Partners
Our third growth pillar, hiring Partners continued to progress in 2023. To
date this year, four additional Partners have been hired into the team, all
via referrals from existing team members, making us confident that they have
the attributes to be successful at Elixirr. They bring networks spanning a
range of industries and geographies, supporting continued diversification into
key markets.
Ian Stuart joined in Q2, bringing a wealth of consulting experience, and
strong connections in pharma and healthcare - as a previous founder he is a
natural market maker, making him a strong fit for Elixirr culturally. Bob
Skinstad, the former South Africa rugby captain, joined in Q3, and with over
20 years of business experience across South Arica and Europe brings a unique
network across sectors, with specific expertise in the sports and media
industries. The recent hire of John Kalil, based in the US, marks an exciting
hire in this geography, as he has extensive experience in management
consulting and retail apparel.
As part of today's acquisition announcement, Steve Steinberg joins with
Responsum, bringing deep expertise across AI, technology and e-commerce to
Elixirr. Having already collaborated on multiple engagements over the last few
months, Steve's transition to join the Partner team will drive a seamless
go-to-market approach for Responsum's AI technology.
Ensuring these team members are set up for success will be a key focus for the
remainder of 2023 and beyond, utilising their respective capabilities and
networks in the business. In addition, we continue to build a pipeline of
future Partner hires.
4. Acquiring new businesses
Bringing on entrepreneurial leaders and additive and expansive services
continues to be a core focus. This increases the range of services that all
Partners can sell to clients, ensuring we can continue to provide a broad
range of strategy and execution services.
Today, following on from our partnership earlier this quarter, we announce the
acquisition of Responsum which brings in-depth AI expertise to the Group. This
exciting and highly strategic acquisition is key for Elixirr and valuable for
our clients, as we continue to explore and adopt the growth opportunities that
global emerging technologies present.
Our dedicated M&A team scouted a further 500+ targets in the first half of
2023, with a number of potential acquisition targets currently
well-progressed. We have a strong overall acquisition pipeline going into the
remainder of the year but continue to have stringent criteria to ensure that
we only complete acquisitions that meet our focus around quality, performance
and value.
Outlook
The Board remains confident in the Group's outlook for full year FY 23, having
just achieved a record revenue month in August 2023. We expect to report
revenue within the guidance range of £85-90 million and profitability remains
strong - we expect the full year adjusted EBITDA margin to also be within the
28-30% guidance range.
Gavin
Patterson Stephen
Newton
Chairman
Chief Executive Officer
Interim Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2023
Six months ended Six months ended
30 June 2023 30 June 2022
Unaudited Unaudited
Note £'000s £'000s
Revenue 41,139 33,368
Cost of sales (26,859) (22,016)
Gross profit 14,280 11,352
Administration expenses (4,089) (3,093)
Operating profit before exceptional items 10,191 8,259
Depreciation 575 477
Amortisation of intangible assets 871 904
Share-based payments 12 712 741
Adjusted EBITDA 12,349 10,381
M&A-related items 4 (55) 530
Operating profit 10,136 8,789
Net finance expense (263) (366)
Profit before tax 9,873 8,423
Taxation (2,206) (1,749)
Profit for the period 7,667 6,674
Exchange differences on translation of foreign operations (1,367) 1,843
Total comprehensive income for the period 6,300 8,517
Basic earnings per Ordinary share (p) 5 16.6 14.5
Diluted earnings per Ordinary share (p) 5 15.0 12.9
Adjusted basic earnings per Ordinary share (p) 5 20.5 16.9
Adjusted diluted earnings per Ordinary share (p) 5 18.5 15.1
All results relate to continuing operations.
The attached notes form part of these interim condensed consolidated financial
statements.
Interim Condensed Consolidated Statement of Financial Position
As at 30 June 2023
As at As at As at
30 June 2023 31 December 2022 30 June 2022
Unaudited Audited Unaudited
Note £'000s £'000s £'000s
Assets
Non-current assets
Intangible assets 6 81,215 83,581 84,403
Property, plant and equipment 5,108 5,662 5,989
Other receivables 7 1,293 1,293 1,521
Loans to shareholders 7 6,094 4,734 4,213
Deferred tax asset 2,051 1,719 1,327
Total non-current assets 95,761 96,989 97,453
Current assets
Trade and other receivables 7 13,838 11,234 12,752
Corporation tax 175 - -
Cash and cash equivalents 19,494 20,433 11,072
Total current assets 33,507 31,667 23,824
Total assets 129,268 128,656 121,277
Liabilities
Current liabilities
Trade and other payables 8 15,440 13,304 10,986
Loans and borrowings 749 750 940
Corporation tax - 381 1,045
Other creditors 9 2,749 6,765 4,862
Total current liabilities 18,938 21,200 17,833
Non-current liabilities
Loans and borrowings 3,993 4,393 4,766
Deferred tax liability 1,406 1,435 1,411
Other non-current liabilities 9 2,963 5,713 7,257
Total non-current liabilities 8,362 11,541 13,434
Total liabilities 27,300 32,741 31,267
Net assets 101,968 95,915 90,010
Equity
Share capital 10 52 52 52
Share premium 10 24,512 25,599 25,673
Capital redemption reserve 2 2 2
EBT share reserve 11 (2,384) (7,147) (6,196)
Merger relief reserve 10 46,870 46,870 46,870
Foreign currency translation reserve 511 1,878 1,894
Retained earnings 32,405 28,661 21,715
Total shareholders' equity 101,968 95,915 90,010
Interim Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2023
Share capital Share premium Merger relief reserve Foreign currency translation reserve Retained earnings
£'000s £'000s £'000s £'000s £'000s
Capital redemption reserve EBT share reserve
£'000s
£'000s
Total
£'000s
As at 31 December 2021 and 01 January 2022 52 24,952 2 (2,193) 46,870 51 16,307 86,041
Comprehensive income
Profit for the period - - - - - - 6,674 6,674
Other comprehensive income - - - - - 1,843 - 1,843
Transactions with owners
Dividends - - - - - - (1,855) (1,855)
Share-based payments - - - - - - 535 535
Deferred tax recognised in equity - - - - - - 54 54
Sale of Ordinary shares - 721 - 7,291 - - - 8,012
Acquisition of Ordinary shares - - - (11,294) - - - (11,294)
As at 30 June 2022 52 25,673 2 (6,196) 46,870 1,894 21,715 90,010
Comprehensive income
Profit for the period - - - - - - 6,195 6,195
Other comprehensive income - - - - - (16) - (16)
Transactions with owners
Share-based payments - - - - - - 440 440
Deferred tax recognised in equity - - - - - - 311 311
Sale of Ordinary shares - (74) - 2,452 - - - 2,378
Acquisition of Ordinary shares - - - (3,403) - - - (3,403)
As at 31 December 2022 and 01 January 2023 52 25,599 2 (7,147) 46,870 1,878 28,661 95,915
Comprehensive income
Profit for the period - - - - - - 7,667 7,667
Other comprehensive income - - - - - (1,367) - (1,367)
Transactions with owners
Dividends - - - - - - (4,940) (4,940)
Share-based payments - - - - - - 662 662
Deferred tax recognised in equity - - - - - - 355 355
Sale of Ordinary shares - (1,087) - 8,160 - - - 7,073
Acquisition of Ordinary shares - - - (3,397) - - - (3,397)
As at 30 June 2023 52 24,512 2 (2,384) 46,870 511 32,405 101,968
Share capital
Share capital represents the nominal value of share capital subscribed.
Share premium
The share premium account is used to record the aggregate amount or value of
premiums paid when the Company's shares are issued at a premium, net of
associated share issue costs. It also records gains on the sale of shares by
the EBT.
Capital redemption reserve
The capital redemption reserve is a non-distributable reserve into which
amounts are transferred following the redemption or purchase of the Company's
own shares.
EBT share reserve
The EBT share reserve represents the cost of shares repurchased and held in
the EBT.
Merger relief reserve
The merger relief reserve records the amounts above the nominal value received
for shares sold, less transaction costs in accordance with section 610 of the
Companies Act 2006.
Foreign currency translation reserve
The foreign currency translation reserve represents exchange differences that
arise on consolidation from the translation of the financial statements of
foreign subsidiaries.
Retained earnings
The retained earnings reserve represents cumulative net gains and losses
recognised in the statement of comprehensive income and equity-settled
share-based payment reserves and related deferred tax on share-based payments.
Interim Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2023
Six months ended Six months ended
30 June 2023 30 June 2022
Unaudited Unaudited
Note £'000s £'000s
Cash flows from operating activities:
Cash generated from operations 14 6,535 2,667
Taxation paid (2,666) (1,961)
Net cash generated from operating activities 3,869 706
Cash flows from investing activities:
Purchase of property, plant and equipment (42) (74)
Payment for acquisition of subsidiary (6,610) (17,152)
Interest received 148 54
Net cash utilised from investing activities (6,504) (17,172)
Cash flows from financing activities:
EBT Ordinary share purchases (3,397) (11,294)
EBT Ordinary share sales 7,202 8,012
Loans to shareholders (2,000) (1,500)
Loans repaid by shareholders 645 1,291
Repayment of borrowings - (1,143)
Lease liability payments (361) (179)
Interest paid (124) (58)
Net cash generated/(utilised) from financing activities 1,965 (4,871)
Net decrease in cash and cash equivalents (670) (21,337)
Cash and cash equivalents at beginning of the period 20,433 31,795
Effects of exchange rate changes on cash and cash equivalents (269) 614
Cash and cash equivalents at the end of the period 19,494 11,072
Notes to the Group's Interim Condensed Consolidated Financial Statements
1. Basis of Preparation and Significant Accounting Policies
1.1. General information
Elixirr International plc (the "Company") and its subsidiaries' (together the
"Group") principal activities are the provision of consultancy services.
The Company is a limited company incorporated in England and Wales and
domiciled in the UK. The address of the registered office is 12 Helmet Row,
London, EC1V 3QJ and the company number is 11723404.
The consolidated financial statements were authorised for issue in accordance
with a resolution of the Directors on 15 September 2023.
1.2. Basis of preparation
These interim financial statements have been prepared in accordance with IAS
34 Interim Financial Reporting and should be read in conjunction with the
Group's last annual consolidated financial statements, as at and for the year
ended 31 December 2022. They do not include all of the information required
for a complete set of IFRS financial statements, however, selected explanatory
notes are included to explain events and transactions that are significant to
an understanding of the changes in the Group's financial position and
performance since the last annual financial statements.
Statutory accounts
Financial information contained in this document does not constitute statutory
accounts within the meaning of section 434 of the Companies Act 2006 ("the
Act").
The financial information provided for the current six-month period ended 30
June 2023 and comparative period ended 30 June 2022 is unaudited. The
financial information provided for the comparative period ended 31 December
2022 was audited.
The presentational currency of these financial statements and the functional
currency of the Group is pounds sterling.
1.3 Basis of consolidation
These financial statements consolidate the financial statements of the Company
and its subsidiary undertakings as at 30 June 2023.
Subsidiaries are fully consolidated from the date of acquisition, being the
date on which the Group obtains control, and continue to be consolidated until
the date that such control ceases. The acquisition method of accounting has
been adopted. The financial statements of subsidiaries are prepared for the
same reporting period as the parent company, using consistent accounting
policies.
All intra-group balances, income and expenses and unrealised gains and losses
resulting from intra-group transactions are eliminated in full.
1.4. Measurement convention
These financial statements have been prepared under the historical cost
convention, except as otherwise described in the accounting policies.
The preparation of the consolidated financial information in compliance with
IFRS requires the use of certain critical accounting estimates and management
judgements in applying the accounting policies. The significant estimates and
judgements that have been made and their effect is disclosed in note 1.6.1.
1.5. Going concern
The Directors have, at the time of approving the financial statements, a
reasonable expectation that the Company and the Group have adequate resources
to continue in operation for the foreseeable future. The Group's forecasts and
projections, taking into account reasonable possible changes in trading
performance, show that the Group has sufficient financial resources, together
with assets that are expected to generate cash flow in the normal course of
business. Accordingly, the Directors have adopted the going concern basis in
preparing these consolidated financial statements.
1.6. Principal accounting policies
Please refer to the Group's last annual consolidated financial statements for
full disclosure of the principal accounting policies that have been adopted in
the preparation of these interim condensed consolidated financial statements.
The key accounting policies that affected the Group in the period are
documented below.
1.6.1. Judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make
estimates and judgements that affect the reported amounts of assets,
liabilities, costs and revenue in the financial statements. Actual results
could differ from these estimates. The judgements, estimates and associated
assumptions are based on historical experience and other factors that are
considered to be relevant.
In the process of applying the Group's accounting policies, the Directors have
made no judgements (excluding those involving estimations), which are
considered to have a significant effect on the amounts recognised in the
financial statements for the period ending 30 June 2023.
The key sources of estimation uncertainty that could cause an adjustment to be
required to the carrying amount of assets or liabilities within the next
accounting period are:
· Revenue is recognised in line with time worked on a project unless
the engagement is conditional or contingent. Management review accrued revenue
to determine whether there is any likelihood of any amendments or provisions
required based on project progress and relationship with the client.
· Full provision is made for loss making projects in the period in
which the loss is first foreseen, and for the cost of conditional or
contingent engagements prior to the event occurring. Estimation is required of
costs to complete and the provision necessary.
· The Group's policy on recognising an impairment of the trade
receivables balance is based on a review of individual receivable balances,
their ageing and management's assessment of realisation. This review and
assessment is conducted on a continuing basis and any material change in
management's assessment of trade receivable impairment is reflected in the
carrying value of the asset.
· Provisions for dilapidations are accrued based on estimation of the
cost expected to crystallise on vacating leased premises.
· In determining the fair value of intangible assets arising on
business combinations, management is required to estimate the timing and
amount of future cash flows applicable to the intangible assets being
acquired.
· Amortisation periods of trademarks, customer relationships and order
book intangibles are estimates based on the expected useful lives and are
assessed annually for any changes based on current circumstances.
· Management has estimated the share-based payments expense under
IFRS 2. In determining the fair value of share-based payments, management has
considered several internal and external factors in order to judge the
probability that management and employee share incentives may vest and to
assess the fair value of share options at the date of grant. Such assumptions
involve estimating a number of future performance and other factors.
· The iOLAP contingent consideration calculations under IFRS 3
contain estimation uncertainty, as the earn-out potentially payable in each
case is linked to the future performance of the acquiree. In estimating the
fair value of the contingent consideration, at both the acquisition date and
financial year end, management has estimated the potential future cash flows
of the acquirees and assessed the likelihood of an earn-out payment being
made. These estimates could potentially change as a result of events over the
coming years.
1.6.2. Revenue recognition
Revenue is measured as the fair value of consideration received or receivable
for satisfying performance obligations contained in contracts with clients,
excluding discounts and Value Added Tax. Variable consideration is included in
revenue only to the extent that it is highly probable that a significant
reversal will not be required when the uncertainties determining the level of
variable consideration are resolved.
This occurs as follows for the Group's various contract types:
· Time-and-materials contracts are recognised over time as services
are provided at the fee rate agreed with the client where there is an
enforceable right to payment for performance completed to date.
· Fixed-fee contracts are recognised over time based on the actual
service provided to the end of the reporting period as a proportion of the
total services to be provided where there is an enforceable right to payment
for performance completed to date. This is determined based on the actual
inputs of time and expenses relative to total expected inputs.
· Performance-fee contracts are recognised when the right to
consideration arises on having met the relevant performance-related elements.
· Contingent-fee contracts, over and above any agreed minimum fee,
are recognised at the point in time that the contingent event occurs and the
Group has become entitled to the revenue.
Where contracts include multiple performance obligations, the transaction
price is allocated to each performance obligation based on its stand-alone
selling price. Where these are not directly observable, they are estimated
based on expected cost-plus margin. Adjustments are made to allocate discounts
proportionately relative to the stand-alone selling price of each performance
obligation.
Estimates of revenues, costs or extent of progress toward completion are
revised if circumstances change. Any resulting increase or decrease in
estimated revenues or costs are reflected in the statement of comprehensive
income in the period in which the circumstances that give rise to the revision
became known.
For time-and-materials and fixed-fee contracts, fees are normally billed on a
monthly basis. For performance-fee and contingent-fee contracts, fees are
normally billed and paid when entitlement to the revenue has been established.
If the revenue recognised by the Group exceeds the amounts billed, a contract
asset is recognised. If the amounts billed exceed the revenue recognised, a
contract liability is recognised. Contract assets are reclassified as
receivables when billed and the consideration has become unconditional because
only the passage of time is required before payment is due.
The Group's standard payment terms require settlement of invoices within 30
days of receipt.
The Group does not adjust the transaction price for the time value of money as
it does not expect to have any contracts where the period between the transfer
of the promised services to the client and the payment by the client exceeds
one year.
1.6.3. Business combinations, goodwill and consideration
Business combinations
The Group applies the acquisition method of accounting to account for business
combinations in accordance with IFRS 3, 'Business Combinations'.
The consideration transferred for the acquisition of a subsidiary is the fair
value of the assets transferred, the liabilities incurred and the equity
interests issued by the Group. The consideration transferred includes the fair
value of any asset or liability resulting from a contingent consideration
arrangement. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date. The excess of the consideration
transferred over the fair value of the Group's share of the identifiable net
assets acquired is recorded as goodwill. All transaction related costs are
expensed in the period they are incurred as operating expenses. If the
consideration is lower than the fair value of the net assets of the subsidiary
acquired, the difference is recognised in the income statement.
Goodwill
Goodwill is initially measured at cost and any previous interest held over the
net identifiable assets acquired and liabilities assumed. If the fair value of
the net assets acquired is in excess of the aggregate consideration
transferred, the Group re-assesses whether it has correctly identified all of
the assets acquired and all of the liabilities assumed and reviews the
procedures used to measure the amounts to be recognised at the acquisition
date. If the reassessment still results in an excess of the fair value of net
assets acquired over the aggregate consideration transferred, then the gain is
recognised in the income statement.
After initial recognition, goodwill is measured at cost less any accumulated
impairment losses. For the purposes of impairment testing, goodwill is
allocated to each of the Group's cash-generating units expected to benefit
from the synergies of the combination. Cash-generating units to which goodwill
has been allocated are tested for impairment annually, or more frequently when
there is an indication that the unit may be impaired.
The Group performs impairment reviews at the reporting period end to identify
any goodwill or intangible assets that have a carrying value that is in excess
of its recoverable amount. Determining the recoverability of goodwill and the
intangible assets requires judgement in both the methodology applied and the
key variables within that methodology. Where it is determined that an asset is
impaired, the carrying value of the asset will be reduced to its recoverable
amount with the difference recorded as an impairment charge in the income
statement.
Contingent and non-contingent deferred consideration on acquisition
Contingent and non-contingent deferred consideration may arise on
acquisitions. Non-contingent deferred consideration may arise when settlement
of all or part of the cost of the business combination falls due after the
acquisition date. Contingent deferred consideration may arise when the
consideration is dependent on future performance of the acquired company.
Deferred consideration associated with business combinations settled in cash
is assessed in line with the agreed contractual terms. Consideration payable
is recognised as capital investment cost when the deferred or contingent
consideration is not employment-linked. Alternatively, consideration is
recognised as remuneration expense over the deferral or contingent performance
period, where the consideration is also contingent upon future employment.
Where the contingent consideration is settled in a variable number of shares
or cash, the consideration is classified as a liability and measured at fair
value through profit and loss.
1.6.4. Foreign currency translation
Functional and presentational currency
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates ('the functional currency'). The financial statements are
presented in 'sterling', which is the Group's and Company's functional
currency and presentation currency.
On consolidation, the results of overseas operations are translated into
sterling at rates approximating to those ruling when the transactions took
place. All assets and liabilities of overseas operations are translated at the
rate ruling at the reporting date. Exchange differences arising on translating
the opening net assets at opening rate and the results of overseas operations
at actual rate are recognised in other comprehensive income.
Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the income
statement.
1.6.5. Intangible assets
Intangible assets are measured at cost less accumulated amortisation and any
accumulated impairment losses. Intangible assets acquired in a business
combination are initially measured at their fair value (which is regarded as
their cost). Subsequent to initial recognition, intangible assets acquired in
a business combination are reported at cost less accumulated amortisation and
any accumulated impairment losses.
Intangible assets acquired in a business combination are identified and
recognised separately from goodwill where they satisfy the definition of an
intangible asset under IAS 38. Such assets are only recognised if either:
· They are capable of being separated or divided from the company and
sold, transferred, licensed, rented or exchanged, either individually or
together with a related contract, identifiable asset or liability, regardless
of whether the company intends to do so; or
· They arise from contractual or other legal rights, regardless of
whether those rights are transferable or separable from the entity or from
other rights and obligations.
The cost of such intangible assets is the fair value at the acquisition date.
All intangible assets acquired through business combinations are amortised
over their estimated useful lives. The significant intangibles recognised by
the Group, their useful economic lives and the methods used to determine the
cost of the intangibles acquired in business combinations are as
follows:
Intangible Asset Useful Economic 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
1.6.6. Tangible assets
Tangible fixed assets are stated at cost net of accumulated depreciation and
accumulated impairment losses.
Costs comprise purchase costs together with any incidental costs of
acquisition.
Depreciation is provided to write down the cost less the estimated residual
value of all tangible fixed assets by equal instalments over their estimated
useful economic lives on a straight-line basis. The following rates are
applied:
Tangible fixed 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.
1.6.7. Impairments of tangible and intangible assets
At each reporting end date, the Group reviews the carrying amounts of its
tangible and intangible assets (other than goodwill) to determine whether
there is any indication that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is estimated
in order to determine the extent of the impairment loss (if any). Where it is
not possible to estimate the recoverable amount of an individual asset, the
Group estimates the recoverable amount of the cash-generating unit to which
the asset belongs.
The recoverable amount is the higher of fair value less costs to sell and
value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific
to the asset for which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised immediately in profit and loss.
Where an impairment subsequently reverses, the carrying amount of the asset
(or cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss
been recognised for the asset (or cash-generating unit) in prior years. A
reversal of an impairment loss is recognised immediately in profit and loss.
1.6.8. Employee benefits
Post-retirement benefits
The Group pays into defined contribution pension schemes on behalf of
employees, that are operated by third parties. The assets of the schemes are
held separately from those of the Group in independently administered funds.
The amount charged to the income statement represents the contributions
payable to the scheme in respect of the accounting period.
Share-based payments
The cost of share-based employee compensation arrangements, whereby employees
receive remuneration in the form of share options, is recognised as an
employee benefit expense in the statement of profit and loss.
The total expense to be apportioned over the vesting period of the benefit is
determined by reference to the fair value (excluding the effect of non-market
based vesting conditions) at the grant date. Fair value is measured by use of
Black Scholes option valuation model.
At the end of each reporting period the assumptions underlying the number of
awards expected to vest are adjusted for the effects of non-market based
vesting conditions to reflect conditions prevailing at that date. The impact
of any revisions to the original estimates is recognised in the statement of
profit or loss, with a corresponding adjustment to equity.
The Group recognises the effects of modifications, to the terms and conditions
on which equity instruments were granted, that increase the total fair value
of share-based payment arrangements or are otherwise beneficial to the
employee. The Group includes the incremental fair value granted in the
measurement of the amount recognised for services received as consideration
for the equity instruments granted. The incremental fair value granted is the
measured as the difference between the fair value of the modified equity
instrument and that of the original equity instrument, both estimated as at
the date of the modification. If the modification occurs during the vesting
period, the incremental fair value granted is included in the measurement of
the amount recognised for services received over the period from the
modification date until the date when the modified equity instruments vest, in
addition to the amount based on the grant date fair value of the original
equity instruments, which is recognised over the remainder of the original
vesting period.
The Group has the obligation to pay employers' national insurance on the
exercise of certain UK employee options. The Group has opted to account for
the tax obligation under IFRS 2 as a cash-settled share-based payment
arrangement as the amount of employers' national insurance due at the time of
exercise is based on the share price of the equity instruments of the Company.
The cash-settled share-based payment liability is estimated at each period end
using the closing share price of the Company and the prevailing employers'
national insurance rate. The number of awards expected to vest are consistent
with the treatment for equity-settled share-based payments. The cost of
employers' national insurance is included within share-based payments expense
in the statement of comprehensive income.
Please refer to note 12 for further details.
1.6.9. Earnings per share
The Group presents basic and diluted earnings per share on an IFRS basis. In
calculating the weighted average number of shares outstanding during the
period, any share restructuring is adjusted to allow comparability with other
periods.
Basic EPS is calculated by dividing the profit attributable to the Group's
Ordinary shareholders by the weighted average number of Ordinary shares
outstanding during the period.
The calculation of diluted EPS assumes conversion of all potentially dilutive
Ordinary shares, which arise from share options outstanding. A calculation is
performed to determine the number of share options that are potentially
dilutive based on the number of shares that could have been acquired at fair
value from the future assumed proceeds of the outstanding share options.
2. Alternative Performance Measures ("APMs")
In order to provide better clarity to the underlying performance of the Group,
Elixirr uses adjusted EBITDA and adjusted EPS as alternative performance
measures. These measures are not defined under IFRS. These non-GAAP measures
are not intended to be a substitute for, or superior to, any IFRS measures of
performance, but have been included as the Directors consider adjusted EBITDA
and adjusted EPS to be key measures used within the business for assessing the
underlying performance of the Group's ongoing business across periods.
Adjusted EBITDA excludes the following items from operating profit: non-cash
depreciation and amortisation charges, share-based payments and non-recurring
M&A-related items. Adjusted EPS excludes the following items from profit
after tax: amortisation charges, share-based payments, non-recurring
M&A-related items, M&A-related non-cash finance costs and their
related tax impacts.
The table below sets out the reconciliation of the Group's adjusted EBITDA and
adjusted profit before tax from profit before tax:
H1 23 H1 22
£'000s £'000s
Profit before tax 9,873 8,423
Adjusting items:
M&A-related items (note 4) 55 (530)
Amortisation of intangible assets 871 904
Share-based payments 712 741
Finance cost - iOLAP contingent consideration (note 9) 293
254
Adjusted profit before tax 11,804 9,792
Depreciation 575 477
Finance (income)/cost (excluding iOLAP contingent consideration) (30) 112
Adjusted EBITDA 12,349 10,381
The table below sets out the reconciliation of the Group's adjusted profit
after tax to adjusted profit before tax:
H1 23 H1 22
£'000s £'000s
Adjusted profit before tax 11,804 9,792
Tax charge (2,206) (1,749)
Tax impact of adjusting items (140) (228)
Adjusted profit after tax 9,458 7,815
Adjusted profit after tax is used in calculating adjusted basic and adjusted
diluted EPS. Adjusted profit after tax is stated before adjusting items and
their associated tax effects.
Adjusted EPS is calculated by dividing the adjusted profit after tax for the
period attributable to Ordinary shareholders by the weighted average number of
Ordinary shares outstanding during the period. Adjusted diluted EPS is
calculated by dividing adjusted profit after tax by the weighted average
number of shares adjusted for the impact of potential Ordinary shares.
Potential Ordinary shares are treated as dilutive when their conversion to
Ordinary shares would decrease EPS. Please refer to note 5 for further detail.
H1 23 H1 22
p p
Adjusted EPS 20.5 16.9
Adjusted diluted EPS 18.5 15.1
3. Segmental Reporting
IFRS 8 requires that operating segments be identified on the basis of internal
reporting and decision-making. The Group is operated as one global business by
its executive team, with key decisions being taken by the same leaders
irrespective of the geography where work for clients is carried out. The
Directors therefore consider that the Group has one operating segment. As
such, no additional disclosure has been recorded under IFRS 8.
4. M&A-related Items
H1 23 H1 22
£'000s £'000s
M&A-related items 55 (530)
- Transaction costs 55 403
- Adjustment to contingent consideration - (933)
The M&A-related items in H1 23 include non-recurring costs associated with
M&A activity. The M&A-related net credit of £0.5m in H1 22 include
adjustments to contingent consideration associated with the acquisition of
Retearn and iOLAP, less non-recurring costs associated with the acquisition of
iOLAP.
5. Earnings Per Share
The Group presents non-adjusted and adjusted basic and diluted EPS for its
Ordinary shares. Basic EPS is calculated by dividing the profit for the period
attributable to Ordinary shareholders by the weighted average number of
Ordinary shares outstanding during the period.
Diluted EPS takes into consideration the Company's dilutive contingently
issuable shares. The weighted average number of Ordinary shares used in the
diluted EPS calculation is inclusive of the number of share options and ESPP
matching awards that are expected to vest (subject to performance criteria
being met) and the number of shares that may be issued to satisfy contingent
M&A deferred consideration.
The profits and weighted average number of shares used in the calculations are
set out below:
H1 23 H1 22
Basic and Diluted EPS
Profit attributable to the Ordinary equity holders of the Group used in 7,667 6,674
calculating basic and diluted EPS (£'000s)
Basic earnings per Ordinary share (p) 16.6 14.5
Diluted earnings per Ordinary share (p) 15.0 12.9
H1 23 H1 22
Adjusted Basic and Diluted EPS
Profit attributable to the ordinary equity holders of the Group used in 9,458 7,815
calculating adjusted basic and diluted EPS (note 2) (£'000s)
Adjusted basic earnings per Ordinary share (p) 20.5 16.9
Adjusted diluted earnings per Ordinary share (p) 18.5 15.1
H1 23 H1 22
Number Number
Weighted average number of shares
Weighted average number of ordinary shares used as the denominator in 46,186,481 46,186,481
calculating non-adjusted and adjusted basic EPS
Number of dilutive Ordinary shares 4,940,924 5,614,589
Weighted average number of ordinary shares used as the denominator in 51,127,405 51,801,070
calculating non-adjusted and adjusted diluted EPS
6. Goodwill and Intangible Fixed Assets
Goodwill Trademarks Customer relationships Order book Total
£'000s £'000s £'000s £'000s £'000s
Cost
At 31 December 2021 and 51,412 7,135 1,874 - 60,421
01 January 2022
Acquisition of business 23,391 - 2,452 1,051 26,894
Gains from foreign exchange 1,942 - 205 89 2,236
At 30 June 2022 76,745 7,135 4,531 1,140 89,551
Gains from foreign exchange 230 - 23 9 262
At 31 December 2022 76,975 7,135 4,554 1,149 89,813
Losses from foreign exchange (1,356) - (143) (60) (1,559)
At 30 June 2023 75,619 7,135 4,411 1,089 88,254
Amortisation
At 31 December 2021 and - (4,071) (157) - (4,228)
01 January 2022
Charge for the period - (477) (235) (192) (904)
Losses from foreign exchange - - (7) (9) (16)
At 30 June 2022 - (4,548) (399) (201) (5,148)
Charge for the period - (402) (385) (313) (1,100)
Gains from foreign exchange - - 8 8 16
At 31 December 2022 - (4,950) (776) (506) (6,232)
Charge for the period - (339) (330) (202) (871)
Gains from foreign exchange - - 32 32 64
At 30 June 2023 - (5,289) (1,074) (676) (7,039)
Net book value
At 30 June 2022 76,745 2,587 4,132 939 84,403
At 31 December 2022 76,975 2,185 3,778 643 83,581
At 30 June 2023 75,619 1,846 3,337 413 81,215
Goodwill
Goodwill arising on acquisition of a business in H1 22 relates to the
acquisition of iOLAP and was calculated as the fair value of the consideration
less the fair value of the net identifiable assets at the date of the
acquisition.
In line with IAS 36, the carrying value of goodwill is not subject to
systematic amortisation but is reviewed at least annually for impairment. The
Group performs an annual impairment assessment. At 30 June 2023, the Directors
determined that there are no indications that the assets held are at risk of
impairment.
Customer Relationships and Order Book
Additions in H1 22 represent the fair value of customer relationships and the
order book from the acquisition of iOLAP.
The fair values were determined by applying the Multi-Period Excess Earnings
method. The amortisation charge is recognised within administrative expenses.
7. Receivables
H1 23 FY 22
£'000s £'000s
Non-current assets
Loans to shareholders 6,094 4,734
Other receivables 1,293 1,293
7,387 6,027
Current assets
Trade receivables 12,797 10,355
Less: allowance for doubtful debts (6) (8)
Trade receivables - net 12,791 10,347
Prepayments and deposits 839 653
Contract assets 127 26
Other receivables 81 208
13,838 11,234
Loans to shareholders represent amounts owed by shareholders, who are senior
employees of the Group. The loans to shareholders are interest-free and
expected to be repaid beyond one year.
Non-current other receivables include property deposits and s455 tax
receivable.
The carrying value of non-current other receivables and loans to shareholders
is considered to be a reasonable approximation of their fair value, but has
not been discounted to present value.
Trade receivables are non-interest bearing and receivable under normal
commercial terms. Management consider that the carrying value of trade and
other receivables approximates to their fair value. The expected credit loss
on trade and other receivables was not material at the current or prior year
ends.
8. Trade and Other Payables
H1 23 FY 22
£'000s £'000s
Trade payables 1,180 1,178
Other taxes and social security costs 1,758 1,540
Accruals 6,327 8,599
Dividend payable 4,940 -
Contract liabilities 1,233 1,983
Other payables 2 4
15,440 13,304
The fair value of trade and other payables approximates to book value at the
period end. Trade payables are non-interest bearing and are normally settled
monthly.
Trade payables comprise amounts outstanding for trade purchases and ongoing
costs.
Contract liabilities arise from the Group's revenue generating activities
relating to payments received in advance of performance delivered under a
contract. These contract liabilities typically arise on short-term timing
differences between performance obligations in some milestone or fixed fee
contracts and their respective contracted payment schedules.
9. Other Creditors and Other Non-current Liabilities
H1 23 FY 22
£'000s £'000s
Other creditors
Contingent consideration 2,749 6,765
2,749 6,765
Other non-current liabilities
Dilapidations 375 380
Cash-settled share-based payments 135 139
Contingent consideration 2,453 5,194
2,963 5,713
Other creditors and other non-current liabilities at 30 June 2023 include
earn-out payments which are contingent on performance and arose from the
acquisition of iOLAP.
During H1 23, £6.0m of the iOLAP contingent consideration and £0.4m of
initial consideration held back for warranties under the sale and purchase
agreement was settled through a cash payment to the former shareholders of
iOLAP. The former shareholders of iOLAP used £4.3m of the proceeds (the
after-tax amount) to purchase 789,996 Ordinary shares in Elixirr from the EBT
at a price of £5.50.
Other creditors and other non-current liabilities at 31 December 2022 include
earn-out payments which are contingent on performance and arose from the
acquisition of Coast Digital and iOLAP.
Other non-current liabilities include cash-settled share-based payment
obligations for the Group's employers' national insurance on options that are
yet to vest. Refer to note 12 for further details.
Other non-current liability payments fall due beyond 12 months from the
reporting date.
10. Share capital, Share premium and Merger Relief Reserve
H1 23
Issued shares Par value Merger relief reserve Share premium
Number £ £'000s £'000s
£0.00005 Ordinary shares 46,186,481 2,309 46,870 24,512
£1 Redeemable Preference shares 50,001 50,001 - -
46,236,482 52,310 46,870 24,512
FY 22
Issued shares Par value Merger relief reserve Share premium
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 30 June 2023 was
46,186,481.
Ordinary shares
On a show of hands every holder of Ordinary shares present at a meeting, in
person or by proxy, is entitled to one vote, and on a poll each share is
entitled to one vote. The shares entitle the holder to participate in
dividends, and to share in the proceeds of winding up the Company in
proportion to the number of and amounts paid on the shares held. These rights
are subject to the prior entitlements of the Redeemable Preference
shareholders.
Redeemable Preference shares
The Redeemable Preference shares are entitled to dividends at a rate of 1% per
annum of paid up nominal value. The shares have preferential right, before any
other class of share, to a return of capital on winding-up or reduction of
capital or otherwise of the Company. The Redeemable Preference shares are
redeemable 100 years from the date of issue or at any time prior at the option
of the Company.
11. Employee Benefit Trust ("EBT") Share Reserve
The Employee Benefit Trust ("'EBT") is accounted for under IFRS 10 and is
consolidated on the basis that the parent has control, thus the assets and
liabilities of the EBT are included in the Group statement of financial
position and shares held by the EBT in the Company are presented as a
deduction from equity.
The EBT share reserve comprises of Ordinary and Redeemable Preference shares
bought and held in the Group's EBT.
At 30 June 2023, the Group EBT held 469,682 (FY 22: 1,204,965) Ordinary shares
and 50,001 Preference shares (FY 22: 50,001) at a weighted average cost of
£4.97 (FY 22: £5.89) and £1.01 (FY 22: £1.01) respectively.
12. Share-based Payments
Share Option Plans
The Group operates EMI and unapproved share option plans with time-based and
performance-based vesting conditions.
During H1 23, a total of 2,112,139 (H1 22: 1,268,329) share options were
granted to employees and senior management. The weighted average fair value of
the options awarded in the period is £1.23 per share.
During H1 23, options issued since April 2021 were repriced to an exercise
price of £5.20. The weighted average incremental fair value granted as a
result of this modification was £0.32. The incremental fair value was
measured as the difference between the fair value of the repriced share option
and that of the original share option, both estimated as at the date of the
modification. The incremental fair value is recognised as an expense over the
remaining vesting period from the modification date.
Details of share option awards made are as follows:
Number of share options (000's) Weighted average exercise price (£)
Outstanding at 31 December 2022 10,886 3.47
Granted during the period 2,112 5.15
Exercised during the period (57) 2.34
Forfeited during the period (1,147) 4.51
Outstanding at 30 June 2023 11,794 3.37
Exercisable at 30 June 2023 281 5.45
The options outstanding at 30 June 2023 had a weighted average remaining
contractual life of 2 years and 8 months (H1 22: 3 years and 3 months) and a
weighted average exercise price of £3.37 (H1 22: £3.16) per share.
For the options exercised during H1 23, the weighted average share price at
the date of exercise was £5.05.
The options were fair valued at the grant date using the Black Scholes option
valuation model. The inputs into the model were as follows:
H1 23 H1 22
Weighted average share price at grant date (£) 4.93 7.24
Weighted average exercise price (£) 5.15 7.28
Volatility (%) 27.0% 25.7%
Weighted average vesting period (years) 4.3 4.9
Risk free rate (%) 3.7% 1.5%
Expected dividend yield (%) 2.3% 0.6%
Expected volatility was determined by calculating the historic volatility of
comparable companies in the market in which the Group operates. The expected
expense calculated in the model has been adjusted, based on management's best
estimate, for the effects of non market-based performance conditions and
employee attrition.
Reasonable changes in the above inputs do not have a material impact on the
share-based payment charge in H1 23.
Fixed Consideration Options
In addition to the share options set out in the table above, share options
with an exercise price of £0.00005 were issued in connection with the
acquisition of Coast Digital. These share options are for a fixed monetary
consideration where the number of share options is variable and determined
with reference to the share price at the date of vesting.
The monetary value of such share options is as follows:
Value (£'000s)
Outstanding at 31 December 2022 797
Exercised during the period (297)
Outstanding at 30 June 2023 500
Exercisable at 30 June 2023 -
The share price at the date of exercise of the Coast Digital options was
£4.74.
The weighted average remaining contractual life of such options at 30 June
2023 was 1 year (H1 22: 2 years).
Employee Share Purchase Plan ("ESPP")
The Group operates an employee share purchase plan where the employees of the
Group (excluding Partners) are eligible to contribute a percentage of their
gross salary to purchase shares in the Company. The Company makes a matching
award of shares that will vest over time dependent on continued employment.
During H1 23, the Company awarded 185,075 (H1 22: 89,841) matching shares on
the basis of one matching share for every one employee share purchased during
FY 22. The matching shares vest equally over a 5-year period with the first
tranche vesting on 31 January 2024.
Details of ESPP awards made are as follows:
Number of ESPP awards (000's)
Outstanding at 31 December 2022 78
Granted during the period 185
Vested and converted to shares during the period (15)
Forfeited during the period (28)
Outstanding at 30 June 2023 220
13. Ordinary Dividends
The Board proposed a final Ordinary share dividend in respect of the financial
year ended 31 December 2022 of 10.8 pence per Ordinary share, which was
approved by shareholders at the Annual General Meeting on 13 June 2023.
14. Cash Flow Information
Cash generated from operations:
H1 23 H1 22
£'000s £'000s
Profit before taxation 9,873 8,423
Adjustments for:
Depreciation and amortisation 1,446 1,381
Net finance expense 263 366
Share-based payments 712 741
Adjustment to contingent consideration - (933)
Increase in trade and other receivables (2,982) (1,710)
Decrease in trade and other payables (3,038) (5,329)
Foreign exchange 261 (272)
6,535 2,667
15. Events After the Reporting Date
On 18 August 2023 the Company paid the final Ordinary share dividend in
respect of the financial year ended 31 December 2022. The amount paid of
£4.9m represented 10.8 pence per Ordinary share.
On 15 September 2023, the Group acquired 100% of the share capital and voting
rights of Responsum Inc. ("Responsum"), a US-headquartered firm which has
developed proprietary artificial intelligence (AI) software. The Group was
already working closely with Responsum prior to the acquisition and sees a
significant opportunity to offer iOLAP's data consulting services in
conjunction with Responsum's AI platform to our client base.
The Group acquired Responsum for a maximum enterprise value of US$7.4 million.
The maximum equity consideration is US$6.4m, which consists of:
· Initial consideration of US$2.0m in cash;
· Initial consideration of US$3.4m to be settled through the issue in
September 2023 of 505,196 Elixirr International plc Ordinary shares at a price
of £5.40 per share;
· Potential earn-out payments of up to US$1.0 million in cash which are
contingent on iOLAP Inc. and Responsum Inc. together achieving EBIT margin
targets in periods up to 31 December 2026.
Disclosure of the amounts recognised as of the acquisition date for each major
class of assets acquired and liabilities assumed, fair value adjustments and
goodwill on the acquisition of Responsum has not be made given the limited
amount of time available between the acquisition date and the date this
interim report was authorised for issue.
As at 15 September 2023, in accordance with the Financial Conduct Authority's
Disclosure and Transparency Rules, the Company continues to have 46,186,481
Ordinary shares in issue, of which none are held in Treasury. The total number
of voting rights in the Company is 46,186,481. This figure of 46,186,481 may
be used by shareholders in the Company as the denominator for the calculations
by which they will determine if they are required to notify their interest in,
or a change in their interest in, the share capital of the Company under the
FCA's Disclosure and Transparency Rules.
After the issue of 505,196 shares as initial consideration for the acquisition
of Responsum (as detailed above in this note 15), the total number of Ordinary
shares in issue and voting rights in the Company will be 46,691,677.
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