REG - Elixirr Intnl PLC - Interim Results
23/09/2024 07:00
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RNS Number : 1349F Elixirr International PLC 23 September 2024
Elixirr International plc
("Elixirr", the "Company" or the "Group")
RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024
Record first half revenue performance with expectations unchanged for FY 24
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 2024 (H1 24). Comparative results are presented
for the six months ended 30 June 2023 (H1 23).
Financial Highlights
· 28% increase in revenue compared to H1 23, with revenue totalling £53.0m (H1
23: £41.6m) and Group record revenue in four of the six months in the period
· Organic revenue growth of 14% compared to H1 23
· 23% increase in adjusted EBITDA ( 1 ) compared to H1 23, totalling £15.1m,
with an adjusted EBITDA margin of 29%, at the top-end of the guidance range
( 2 )
· 22% increase in profit before tax, totalling £12.0m (H1 23: £9.9m)
· 16% increase in adjusted diluted EPS ( 1 ) compared to H1 23
· Strong period-end balance sheet, with net cash of £22.1m (H1 23: £19.5m)
( 3 )
H1 24 H1 23 Change
Revenue £53.0m £41.6m +28%
Adjusted EBITDA ( 1 ) £15.1m £12.3m +23%
Adjusted EBITDA margin 29% 30% -1pp
Profit before tax £12.0m £9.9m +22%
Adjusted diluted EPS ( 1 ) 21.5p 18.5p +16%
( )
( 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 ) Guidance range of 27-29% for FY 24.
( 3 ) No debt other than office leases capitalised under IFRS16, which are not
included in the definition of net cash.
Operating Highlights
· H1 24 saw us progress our strong growth trajectory as a business and continue
to outperform the wider consulting market.
· There has been continued growth across each pillar of our four-pillar strategy
which highlights the increasing demand for our broad suite of services across
the Group.
· Creation of additional value from our previous acquisitions, with £8m+
cross-sell revenue having been achieved in H1 24 - 82% growth on the
cross-sell revenue generated in H1 23.
· One new UK Partner hired in H1 24 with experience founding, scaling and
exiting multiple businesses. Two new Partners have joined us since the end of
the period - one to build out our cybersecurity practice, and the second to
enhance our financial services expertise. One Partner promotion took effect at
the beginning of the year, marking the firm's first Partner promotion from
within an acquired business. This underscores Elixirr's ongoing integration of
acquired companies and demonstrates our commitment to developing talent across
the Group.
· Following these investments in our Partner team, we have still delivered
average revenue per client-facing Partner of £2.09m in H1 24 (+2% increase
compared to H1 23).
· Increase in number of £1m+ clients from 18 in H1 23 to 22 in H1 24( 1 ),
demonstrating our ability to deepen and maintain relationships with clients.
· Bringing on 30+ new clients across the Elixirr Group through our improving
brand visibility and networks.
· The first vest of options for longstanding employees that were in the business
pre-IPO occurred in July 2024 - highlighting the value of Elixirr's equity
incentive schemes for our team without any dilution of existing shareholders.
The holders of 97% of the options chose to continue to hold their equity
rather than sell.
· Recognised for the first time on the World's Best Management Consulting Firms
2024 list by Forbes, demonstrating our growing reputation and brand value.
( 1 ) On a 12-month trailing basis.
Current Trading and Outlook
Our strong momentum has continued into the start of the second half and our
expectations for the full year remain unchanged. The Board continues to expect
to report revenue within the guidance range of £104-110m and profitability
remains strong - full year EBITDA margin is expected to be within the 27-29%
guidance range.
Commenting on the results, Stephen Newton, Chief Executive Officer said:
"We do things differently at Elixirr and our performance in the first half of
the year further proves that our strategy and model is working. I am so proud
of our talented team who continue to help our clients tackle the toughest
boardroom issues in new ways. I would also like to thank our clients, both old
and new, for trusting in us as partners in their journey to building more
innovative businesses worldwide.
Alongside our exceptional results, I am delighted that earlier this year the
first tranche of pre-IPO options became exercisable for some of our team,
which we satisfied through the EBT rather than diluting our shareholders. They
are the first group of employees to realise the benefit of our collective work
in profitably growing the firm over the last 4 years. Shared ownership is key
to Elixirr's entrepreneurial culture, and I am particularly delighted by this
milestone. Additionally, for the first time, Elixirr has recently been
recognised on the World's Best Management Consulting Firms 2024 list by
Forbes. This is based on our performance within 13 industries, including
healthcare, banking and technology, as well as 14 functional consulting areas
such as strategy and digital transformation. Such recognition further
validates our progress so far and reinforces that Elixirr is firmly on the
journey to becoming the best consulting firm in the world.
We expect this strong performance to continue for the rest 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
Stephen Keys, Callum Davidson (Corporate Finance)
Sunila De Silva (ECM)
Investec Bank plc (Joint
Broker)
+44 (0) 20 7597 4000
Carlton Nelson, Henry Reast (Corporate Broking)
Notes to editors
Elixirr is an award-winning global consulting firm working with clients across
a diverse range of industries, markets and geographies.
Founded in 2009, the firm set out to be the 'challenger consultancy' and do
things differently than the large corporate consultancies dominating the
industry: working openly and collaboratively with clients from start to
finish, delivering outcomes based on innovative thinking, not methodology, and
treating each client's business like their own. Elixirr has been quoted on the
AIM market of the London Stock Exchange since 2020. In addition to strong
organic growth, Elixirr has acquired six boutique firms - Den Creative, Coast
Digital, The Retearn Group, iOLAP, Responsum and Insigniam - to grow the
Group's capabilities, diversity the business, expand into new geographies and
access new clients.
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.
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 24 H1 23 Change
Revenue £53.0m £41.6m +28%
Gross profit £17.4m £14.3m +21%
Adjusted EBITDA ( 1 ) £15.1m £12.3m +23%
Adjusted EBITDA margin 29% 30% -1pp
Profit before tax £12.0m £9.9m +22%
Adjusted diluted EPS ( 1 ) 21.5p 18.5p +16%
Net cash ( 2 ) £22.1m £19.5m +14%
( 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, which are not
included in the definition of net cash.
The Board is pleased to report that the Group delivered a strong performance
in H1 24, with continued growth in revenue and adjusted EBITDA, in line with
our ambition to build the best digital, data, AI and strategy consultancy in
the world. We have continued to deliver a broad range of exceptional services
to our client base, leveraging the acquisitions made and Partners hired and
promoted in FY 23.
During H1 24, Group revenue increased to £53.0m with four record revenue
months. This represents 28% absolute revenue growth compared to H1 23. Organic
revenue growth was 14%, with £4.1m growth from expanding existing client
accounts. Growth from new clients has increased significantly from £4.3m in
H1 23 to £6.4m in H1 24. The growth in new and existing clients is testament
to our growing brand reputation and ability to win new work, expanding key
accounts whilst maintaining high client retention and utilising the networks
of our new Partners hired from the market and those who joined us through
acquisitions.
The following revenue bridge displays the elements of the growth in revenue
from £41.6m in H1 23 to £53.0m in H1 24.
The Group's revenue growth was accompanied by industry leading profitability.
Group gross profit increased by 21% to £17.4m (H1 23: £14.3m) and was
delivered at a 33% gross profit margin (H1 23: 34%).
Group adjusted EBITDA increased by 23% compared to H1 23, totalling £15.1m
(H1 23: £12.3m), and maintaining our consistent track record of profitability
with an adjusted EBITDA margin of 29% (H1 23: 30%), which is in line with the
FY 24 guidance of 27-29% adjusted EBITDA margin.
Profit before tax increased by 22% to £12.0m (H1 23: £9.9m), with growth in
EBITDA having flowed through to profit before tax.
Adjusted diluted earnings per share increased by 16% to 21.5p (H1 23: 18.5p).
This increase was less than the growth in profit before tax given the higher
effective tax rate during H1 24 (UK corporation tax main rate increased from
19% to 25% with effect from 1 April 2023).
The Group's net cash position increased by 14% from £19.5m at 30 June 2023 to
£22.1m at 30 June 2024. The increase resulted from higher operating cash flow
in H1 24 compared to H1 23, due to growth in EBITDA as well as improved
working capital performance. The increase in cash generated from operating
activities was partially offset by our interim dividend payment for FY 23 of
£2.5m paid in February 2024.
Net assets as at 30 June 2024 totalled £122.6m (31 December 2023: £119.6m).
The increase in net assets during H1 24 includes: the retained profit for the
period of £3.5m (after the FY 23 final and interim dividends totalling £6.9m
and partially offset by a credit for the share-based payments charge and
related deferred tax of £1.5m); the sale of shares by the EBT of £0.9m less
purchases of shares by the EBT of £1.6m; and foreign currency gains of £0.2m
following the strengthening of the US dollar.
Operational Review
In the first half of FY 24, Elixirr leveraged its broad offering across the
Group to provide exceptional services for clients, enhancing existing
relationships and developing relationships with new clients:
· Scaled relationships with existing clients, growing our 'gold clients'
(clients with £1m+ revenue) by 22% whilst simultaneously generating new
client relationships (30+ new clients added across the Group)
· Increased cross-sell across the Group with particular focus on leveraging the
networks of the Insigniam Partner team
· Transitioned to an internal model across all capabilities, aligned to industry
verticals, geographies and capabilities to better support Partners selling to
clients
· More than doubled revenue generated from marketing leads from H1 23 to H1 24,
and increased website traffic by 32%, reflecting our growing brand
· Launched a Data and AI Academy in South Africa, aimed at helping recent
graduates gain hands-on exposure to the IT industry. These programmes ensure
that we continue to grow our own expert talent pool and diversify our Centre
of Excellence beyond Croatia, while contributing back to the countries and
communities that have helped to make Elixirr successful
During the period, we helped our clients tackle a variety of challenges,
including:
· We supported the day 1 readiness for a $2 billion acquisition for a global
industrials firm. Defined the plan and methodology required to manage the
complex integration activities and TSA Exit of IT Services
· Implemented a Generative AI-powered dashboard and ChatBot for a US
telecommunications company, increasing sales prospecting productivity by 90%+
· We supported a major nonprofit to redefine its technology operating model by
designing the capabilities needed to support the organisation's broader
scaling strategy. This included enhancing data and analytics, cybersecurity,
business partnering, and IT risk management capabilities
· Successfully launched a new brand, website, customer portal and mobile app for
a major US industrials firm, integrating everything with SAP and Salesforce to
enhance the digital experience. This digital transformation used cross-brand
experience from across the Elixirr Group
· We partnered with a leading global pharmaceutical company to align and
strengthen the senior leadership team of their manufacturing and supply
division, in preparation to drive the next phase of a new target operating
model
· Redefined the data strategy and data programme for a leading global
reinsurance broker, and utilised cross-brand expertise to deliver this
programme of work. This included the design and implementation of multiple,
innovative broking and analytics tools and business processes
Elixirr has been acknowledged in H1 24 through multiple awards and accolades,
including:
· Being recognised for the first time on the World's Best Management Consulting
Firms 2024 list by Forbes
· Listed as one of the UK's Leading Management Consultants 2024 by the Financial
Times for our work across Data, IT & Technology, Finance, Innovation and
Marketing
· Recognised again by Consultancy.UK as a Top Consulting Firm in the UK, earning
platinum and gold rankings in eleven service areas, including Strategy,
Digital and Data Science
· Listed again on the Global Outsourcing 100® in 2024, the annual list of the
world's best outsourcing service providers and advisors compiled by the
International Association of Outsourcing Professionals (IAOP®)
· Recognised as one of the fastest-growing alumni-led businesses by Longhorn 100
- an organisation promoting the entrepreneurial success of University of Texas
Alumni
Growth Strategy
Elixirr's growth strategy remains centred around the following pillars:
1. Stretching our existing Partners
2. Promoting Partners from within
3. Hiring new Partners
4. Acquiring new businesses
H1 24 average revenue per client-facing Partner of £2.09m is largely
consistent with H1 23 (+2% increase), as set out in the Partner revenue bridge
below. This continues growth in this metric at the same time as making
investments in growing the Partner team, reflecting the impact of promoted
Partners becoming accountable for client revenue, and the addition of acquired
Partners. This performance highlights the ability of the entire Elixirr
Partner team to maintain a consistently high-quality bar across engagements.
1. Stretching our existing Partners
In H1 24, the established Partners in our firm generated average revenue of
£2.56m each - this was an 18% increase on the £2.18m achieved in H1 23 and
reflects the increase in Partner revenue targets for FY 24 as well as a focus
on strengthening client relationships through providing more value-adding
services from our acquisitions, all of which has resulted in an increase in
the number of clients generating >£1.0m revenue to 22 from 18 in H1 23.
2. Promoting Partners from within
Our strategy of giving promoted Partners a 'runway' to develop their
Partner-level experience continued to pay off, with the promoted Partner team
achieving £4.6m revenue in H1 24.
In January 2024 Nick Larsen joined the Partner team and he is the firm's first
Partner promotion from within one of our acquisitions, bringing deep technical
data and analytics expertise into the leadership team. This was a significant
milestone in our acquisition strategy, reflecting the successful integration
of Elixirr Digital Inc (formerly iOLAP) within the Elixirr Group. In this
role, based out of Elixirr's Dallas office, Nick will continue his focus on
growing the Group's Amazon Web Services practice and helping clients navigate
their cloud journeys.
Nick has spent his career in consulting and professional services firms and
has worked with leading global organisations, running the delivery of complex,
high-tech data platforms across sectors from telecom to CPG. His appointment
to Partner is and will continue to be key in contributing to Elixirr's future
success.
Of Elixirr's current Partner team, ten have been promoted from the Principal
grade. Growing our own talent is also key to our future success, and we have
remained focused on developing Principal talent during the first half of the
year with two external hires and a further three Managers promoted to
Principal, bringing our client-facing Principal team to 38.
3. Hiring new Partners
We have continued to progress our third growth pillar, hiring new Partners in
2024. We continually progress a pipeline of potential Partner candidates and
anticipate that several new Partners will be joining us in the coming months.
Nicola Hartland joined in Q1, boasting previous experience as an entrepreneur
and having founded, scaled and exited multiple businesses. Her focus is
primarily on business development, and she has made excellent progress, having
sourced over 50 introductions for the firm since joining the Partner team.
In addition, we continue to build a pipeline of future Partner hires in key
strategic focus areas and geographies. Two new Partners have joined us since
the end of the period - one to build out our cybersecurity practice, and the
second to enhance our financial services expertise, facilitating further
penetration into key markets. We are very excited at the impact both will have
on our firm, alongside our future planned Partner hires who are in the
pipeline.
4. Acquiring new businesses
Our dedicated mergers and acquisitions team screened a further 700+ targets in
the first half of 2024, with several potential acquisition opportunities
across the various stages of the pipeline. In H2 24 we will focus on maturing
later stage opportunities that meet the Elixirr quality bar and our exacting
criteria for target firms.
During H1 24 we were very pleased with the performance of both our recent
acquisitions, Elixirr AI (formerly Responsum) and Insigniam. Insigniam
complements the Group's existing service offerings by bringing specialist
services in transformation, leadership alignment, cultural change and
executive coaching to Elixirr, as well as additive industries such as
healthcare, pharma and biotech. Elixirr AI provides us with cutting-edge
generative AI technology, and we are seeing strong and growing demand from
current and new clients for our AI strategy and execution capabilities.
Acquiring top-quality businesses remains a key priority of our growth
strategy. Looking across all our acquisitions saw the creation of additional
value for our clients in H1 24, with £8m+ cross-sell revenue having been
achieved in the period - an 82% growth on the cross-sell revenue generated in
H1 23. Through this proven growth, we will continue to add to our suite of
capabilities and enhance our service offering for our clients, bringing new
entrepreneurial leaders into our existing Partner team.
Outlook
The Board remains confident in the Group's outlook for FY 24. The Board
continues to expect to report revenue within the guidance range of £104-110m
and profitability remains strong. We also expect the full year EBITDA margin
to be within the 27-29% guidance range.
Gavin
Patterson
Stephen Newton
Chairman
Chief Executive Officer
Interim Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2024
Six months ended Six months ended
30 June 2024 30 June 2023
Unaudited Unaudited
Note £'000s £'000s
Revenue 53,034 41,550
Cost of sales (35,684) (27,270)
Gross profit 17,350 14,280
Administrative expenses (5,065) (4,089)
Operating profit before M&A-related items 12,285 10,191
Depreciation 710 575
Amortisation of intangible assets 1,031 871
Share-based payments 12 1,112 712
Adjusted EBITDA 15,138 12,349
M&A-related items 4 (15) (55)
Operating profit 12,270 10,136
Net finance expense (252) (263)
Profit before tax 12,018 9,873
Taxation (3,179) (2,206)
Profit for the period 8,839 7,667
Exchange differences on translation of foreign operations 166 (1,367)
Total comprehensive income for the period 9,005 6,300
Basic earnings per Ordinary share (p) 5 18.9 16.6
Diluted earnings per Ordinary share (p) 5 17.1 15.0
Adjusted basic earnings per Ordinary share (p) 5 23.7 20.5
Adjusted diluted earnings per Ordinary share (p) 5 21.5 18.5
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 2024
As at As at As at
30 June 2024 31 December 2023 30 June 2023
Unaudited Audited Unaudited
Note £'000s £'000s £'000s
Assets
Non-current assets
Intangible assets 6 100,335 100,905 81,215
Property, plant and equipment 4,941 5,612 5,108
Other receivables 7 1,968 1,985 1,293
Loans to shareholders 7 7,316 7,604 6.094
Deferred tax asset 4,147 3,477 2,051
Total non-current assets 118,707 119,583 95,761
Current assets
Trade and other receivables 7 17,839 16,686 13,838
Corporation tax - - 175
Cash and cash equivalents 22,148 18,130 19,494
Total current assets 39,987 34,816 33,507
Total assets 158,694 154,399 129,268
Liabilities
Current liabilities
Trade and other payables 8 20,481 19,056 15,440
Lease liabilities 1,197 1,150 749
Corporation tax 382 268 -
Other creditors 9 4,405 1,144 2,749
Total current liabilities 26,465 21,618 18,938
Non-current liabilities
Lease liabilities 3,588 4,214 3,993
Deferred tax liability 2,132 2,000 1,406
Other non-current liabilities 9 3,940 7,005 2,963
Total non-current liabilities 9,660 13,219 8,362
Total liabilities 36,125 34,837 27,300
Net assets 122,569 119,562 101,968
Equity
Share capital 10 52 52 52
Share premium 10 29,557 29,922 24,512
Capital redemption reserve 2 2 2
EBT share reserve 11 (2,001) (1,745) (2,384)
Merger relief reserve 10 46,870 46,870 46,870
Foreign currency translation reserve 544 378 511
Retained earnings 47,545 44,083 32,405
Total shareholders' equity 122,569 119,562 101,968
Interim Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2024
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 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
Comprehensive income
Profit for the period - - - - - - 9,571 9,571
Other comprehensive income - - - - - (133) - (133)
Transactions with owners
Ordinary share issues - 5,417 - - - - - 5,417
Share-based payments - - - - - - 1,032 1,032
Deferred tax recognised in equity - - - - - - 1,075 1,075
Sale of Ordinary shares - (7) - 1,162 - - - 1,155
Acquisition of Ordinary shares - - - (523) - - - (523)
As at 31 December 2023 and 01 January 2024 52 29,922 2 (1,745) 46,870 378 44,083 119,562
Comprehensive income
Profit for the period - - - - - - 8,839 8,839
Other comprehensive income - - - - - 166 - 166
Transactions with owners
Dividends - - - - - - (6,907) (6,907)
Share-based payments - - - - - - 960 960
Deferred tax recognised in equity - - - - - - 570 570
Sale of Ordinary shares - (365) - 1,295 - - - 930
Acquisition of Ordinary shares - - - (1,551) - - - (1,551)
As at 30 June 2024 52 29,557 2 (2,001) 46,870 544 47,545 122,569
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 Employee Benefit Trust ("EBT") share reserve represents the cost of shares
repurchased and held in the 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.
Interim Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2024
Six months ended Six months ended
30 June 2024 30 June 2023
Unaudited Unaudited
Note £'000s £'000s
Cash flows from operating activities:
Cash generated from operations 14 10,650 6,535
Taxation paid (3,018) (2,666)
Net cash generated from operating activities 7,632 3,869
Cash flows from investing activities:
Purchase of property, plant and equipment (32) (42)
Software development costs (132) -
Payment for acquisition of subsidiary, net of cash acquired (162) (6,610)
Interest received 191 148
Net cash utilised in investing activities (135) (6,504)
Cash flows from financing activities:
EBT Ordinary share purchases (1,796) (3,397)
EBT Ordinary share sales 1,295 7,202
Loans to shareholders (500) (2,000)
Loans repaid by shareholders 765 645
Ordinary share dividends paid to shareholders (2,485) -
Lease liability payments (536) (361)
Interest paid (123) (124)
Net cash (utilised)/generated from financing activities (3,380) 1,965
Net increase/(decrease) in cash and cash equivalents 4,117 (670)
Cash and cash equivalents at beginning of the period 18,130 20,433
Effects of exchange rate changes on cash and cash equivalents (99) (269)
Cash and cash equivalents at the end of the period 22,148 19,494
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 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.
The consolidated financial statements were authorised for issue in accordance
with a resolution of the Directors on 20 September 2024.
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 2023. 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 2024 and comparative period ended 30 June 2023 is unaudited. The
financial information provided for the comparative period ended 31 December
2023 was audited.
1.3. Basis of consolidation
These financial statements consolidate the financial statements of the Company
and its subsidiary undertakings as at 30 June 2024.
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. Material 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 2024.
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 Elixirr Digital Inc (formerly iOLAP), Elixirr AI Inc (formerly 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 the period
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.
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.
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
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.
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, which 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 12 for further details.
1.6.9. Earnings per share
The Group presents basic and diluted earnings per share.
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 24 H1 23
£'000s £'000s
Profit before tax 12,018 9,873
Adjusting items:
M&A-related items (note 4) 15 55
Amortisation of intangible assets 1,031 871
Share-based payments 1,112 712
Finance cost - contingent consideration 367 293
Adjusted profit before tax 14,543 11,804
Depreciation 710 575
Net finance income (excluding contingent consideration) (115) (30)
Adjusted EBITDA 15,138 12,349
The table below sets out the reconciliation of the Group's adjusted profit
after tax to adjusted profit before tax:
H1 24 H1 23
£'000s £'000s
Adjusted profit before tax 14,543 11,804
Tax charge (3,179) (2,206)
Tax impact of adjusting items (272) (140)
Adjusted profit after tax 11,092 9,458
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 24 H1 23
p p
Adjusted EPS 23.7 20.5
Adjusted diluted EPS 21.5 18.5
3. Segment Reporting & Restatement
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.
H1 24 revenue includes £0.4m of reimbursable expenses. H1 23 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:
H1 23 Increase H1 23 (Restated)
£'000s £'000s £'000s
Statement of Comprehensive Income (extract)
Revenue 41,139 411 41,550
Cost of Sales (26,859) (411) (27,270)
4. M&A-related Items
H1 24 H1 23
£'000s £'000s
M&A-related items 15 55
The M&A-related items include non-recurring costs associated with M&A
activity.
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 24 H1 23
Basic and Diluted EPS
Profit attributable to the Ordinary equity holders of the Group used in 8,839 7,667
calculating basic and diluted EPS (£'000s)
Basic earnings per Ordinary share (p) 18.9 16.6
Diluted earnings per Ordinary share (p) 17.1 15.0
H1 24 H1 23
Adjusted Basic and Diluted EPS
Profit attributable to the ordinary equity holders of the Group used in 11,092 9,458
calculating adjusted basic and diluted EPS (note 2) (£'000s)
Adjusted basic earnings per Ordinary share (p) 23.7 20.5
Adjusted diluted earnings per Ordinary share (p) 21.5 18.5
H1 24 H1 23
Number Number
Weighted average number of shares
Weighted average number of ordinary shares used as the denominator in 46,850,312 46,186,481
calculating non-adjusted and adjusted basic EPS
Number of dilutive Ordinary shares 4,735,999 4,940,924
Weighted average number of ordinary shares used as the denominator in 51,586,311 51,127,405
calculating non-adjusted and adjusted diluted EPS
6. Goodwill and Intangible Fixed Assets
Goodwill Trademarks Customer Relationships Order Book Software Total
£'000s £'000s £'000s £'000s £'000s £'000s
Cost
At 31 December 2022 and 76,975 7,135 4,554 1,149 - 89,813
01 January 2023
Losses from foreign exchange (1,356) - (143) (60) - (1,559)
At 30 June 2023 75,619 7,135 4,411 1,089 - 88,254
Acquisition of business 18,312 - 1,546 466 364 20,688
Additions - - - - 65 65
Gains/(losses) from foreign exchange (270) - (18) (7) 4 (291)
At 31 December 2023 93,661 7,135 5,939 1,548 433 108,716
Additions - - - - 172 172
Gains/(losses) from foreign exchange 263 - 28 10 (3) 298
At 30 June 2024 93,924 7,135 5,967 1,558 602 109,186
Amortisation
At 31 December 2022 and - (4,950) (776) (506) - (6,232)
01 January 2023
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)
Charge for the period (288) (323) (170) - (781)
Gains from foreign exchange - - 5 4 - 9
At 31 December 2023 - (5,577) (1,392) (842) - (7,811)
Charge for the period - (241) (441) (305) (44) (1,031)
Gains/(losses) from foreign exchange - - (7) (5) 3 (9)
At 30 June 2024 - (5,818) (1,840) (1,152) (41) (8,851)
Net book value
At 30 June 2023 75,619 1,846 3,337 413 - 81,215
At 31 December 2023 93,661 1,558 4,547 706 433 100,905
At 30 June 2024 93,924 1,317 4,127 406 562 100,335
Goodwill
Goodwill arising on acquisition of a business in H2 23 relates to the
acquisitions of Elixirr AI Inc (formerly Responsum) and Insigniam 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 2024, the Directors
determined that there are no indications that the assets held are at risk of
impairment.
Customer Relationships and Order Book
Additions in H2 23 represent the fair value of customer relationships and
order books from the acquisitions of Elixirr AI Inc (formerly Responsum) and
Insigniam.
The fair values were determined by applying the Multi-Period Excess Earnings
method. The amortisation charge is recognised within administrative expenses.
7. Receivables
H1 24 FY 23
£'000s £'000s
Non-current assets
Loans to shareholders 7,316 7,604
Other receivables 1,968 1,985
9,284 9,589
Current assets
Trade receivables 15,964 15,295
Less: allowance for doubtful debts - -
Trade receivables - net 15,964 15,295
Prepayments and deposits 1,477 840
Contract assets 256 288
Other receivables 142 263
17,839 16,686
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 considers 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 24 FY 23
£'000s £'000s
Trade payables 1,800 1,774
Other taxes and social security costs 2,254 1,899
Accruals 8,740 11,308
Dividend payable 4,421 -
Contract liabilities 3,266 3,938
Other payables - 137
20,481 19,056
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 24 FY 23
£'000s £'000s
Other creditors
Contingent consideration 4,405 1,144
4,405 1,144
Other non-current liabilities
Dilapidations 376 377
Cash-settled share-based payments 364 360
Contingent consideration 3,200 6,268
3,940 7,005
Contingent consideration in H1 24 includes earn-out payments which are
contingent on performance and arose from the acquisition of Elixirr Digital
Inc (formerly iOLAP), Elixirr AI Inc (formerly Responsum) and Insigniam.
Cash-settled share-based payments include obligations for the Group's
employers' NI 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 24
Issued shares Par value Merger relief reserve Share premium
Number £ £'000s £'000s
£0.00005 Ordinary shares 47,272,811 2,364 46,870 29,557
£1 Redeemable Preference shares 50,001 50,001 - -
47,322,812 52,365 46,870 29,557
FY 23
Issued shares Par value Merger relief reserve Share premium
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
The total number of voting rights in the Company at 30 June 2024 was
47,272,811.
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 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 2024, the EBT held 381,892 (FY 23: 397,667) Ordinary shares and
50,001 Preference shares (FY 23: 50,001) at a weighted average cost of £5.11
(FY 23: £4.26) and £1.01 (FY 23: £1.01), respectively.
12. Share-based Payments
Share Option Plans
The Group operates EMI, CSOP and unapproved share option plans with time-based
and performance-based vesting conditions.
During H1 24, a total of 2,000,392 (H1 23: 2,112,139) share options were
granted to employees and senior management. The weighted average fair value of
the options awarded in the period is £1.68 (H1 23: £1.23) per share.
Details of share option awards made are as follows:
Number of share options (000's) Weighted average exercise price (£)
Outstanding at 31 December 2023 13,568 3.76
Granted during the period 2,000 5.82
Forfeited during the period (1,264) 3.39
Outstanding at 30 June 2024 14,304 4.08
Exercisable at 30 June 2024 532 5.48
The options outstanding at 30 June 2024 had a weighted average remaining
contractual life of 2.5 years (H1 23: 2.7 years) and a weighted average
exercise price of £4.08 (H1 23: £3.37) 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:
H1 24 H1 23
Weighted average share price at grant date (£) 5.63 4.93
Weighted average exercise price (£) 5.82 5.15
Volatility (%) 38.8% 27.0%
Weighted average vesting period (years) 4.5 4.3
Risk free rate (%) 4.0% 3.7%
Expected dividend yield (%) 2.3% 2.3%
Expected volatility was determined by calculating the historic volatility of
the Company's share price. 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 24.
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 Limited. 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 2023 500
Exercised during the period (500)
Outstanding at 30 June 2024 -
Exercisable at 30 June 2024 -
The share price at the date of exercise of the Elixirr Digital Limited options
was £5.85.
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 24, the Company awarded 233,690 (H1 23: 185,546) matching shares on
the basis of one matching share for every one employee share purchased during
FY 23. The matching shares vest equally over a 5-year period with the first
tranche vesting on 31 January 2025.
Details of ESPP awards made are as follows:
Number of ESPP awards (000's)
Outstanding at 31 December 2023 204
Granted during the period 234
Vested and converted to shares during the period (42)
Forfeited during the period (28)
Outstanding at 30 June 2024 368
13. Ordinary Dividends
An interim Ordinary share dividend in respect of the financial year ended 31
December 2023 of 5.3 pence per Ordinary share was paid on 15 February 2024.
The Board proposed a final Ordinary share dividend in respect of the financial
year ended 31 December 2023 of 9.5 pence per Ordinary share, which was
approved by shareholders at the Annual General Meeting in June 2024, and paid
on 20 August 2024.
14. Cash Flow Information
Cash generated from operations:
H1 24 H1 23
£'000s £'000s
Profit before taxation 12,018 9,873
Adjustments for:
Depreciation and amortisation 1,741 1,446
Net finance expense 252 263
Share-based payments 1,056 712
Increase in trade and other receivables (1,292) (2,982)
Decrease in trade and other payables (3,068) (3,038)
Foreign exchange (57) 261
10,650 6,535
15. Events After the Reporting Date
On 8 July 2024, the EBT purchased 1,419,890 Ordinary shares from certain
Directors, PDMRs, employees and shareholders of the Company at a price of 565
pence per share and for a total cost of £8.0m. The purchase was to ensure
that the EBT had sufficient shares to satisfy demand (including to satisfy
1,128,887 options that were exercised in July 2024) without dilution of
existing shareholders.
On 20 August 2024 the Company paid the final Ordinary share dividend in
respect of the financial year ended 31 December 2023. The amount paid of
£4.4m represented 9.5 pence per Ordinary share.
As at 20 September 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.
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