ELIXIRR INTERNATIONAL PLC

("Elixirr", the "Company" or the "Group")

Final Results for the Year Ended 31 December 2021

 

Elixirr International plc (AIM: ELIX), an established, global award-winning challenger consultancy, is pleased to announce its final results for the year ended 31 December 2021.

 

 

Financial Highlights

 

·      Revenue increased by 67% to £50.6m (2020: £30.3m)

 

·      Adjusted EBITDA* increased by 62% to £15.7m (2020: £9.7m)

 

·      Adjusted EBITDA* margin of 31% (2020: 32%)

 

·      Profit before tax increased by 109% to £12.2m (2020: £5.8m)

 

·      Adjusted diluted earnings per share* increased by 58% to 24.2p (2020: 15.3p)

 

·      Net cash position of £31.8m (2020: £17.5m)

 

·     FY 22 expectations of £70-75m revenue at an Adjusted EBITDA margin of 27-28%, including c.9 months' impact of the iOLAP acquisition

 

* Adjusted EBITDA excludes the following items from operating profit: non-cash depreciation and amortisation charges, share-based payments and non-recurring exceptional costs. Adjusted EPS excludes the following items from profit after tax: amortisation charges, share-based payments and non-recurring exceptional items and their related tax impacts.

 

Operating Highlights

 

·      Continued progress executing the four-pillar growth strategy, including:

 

1.   Stretching existing Partners - organic revenue growth of 35%, including 100% growth in the US business. Continued growth in revenue per client-facing Partner.

 

2.   Promoting Partners from within - two Principals, with a combined tenure of nearly twenty years, were promoted in the year.

 

3.   Hiring new Partners - a further six new Partner hires into the team during the year (four in the US), with the former UK Chair of KPMG also joining as a Strategic Advisor.

 

4.  Inorganic growth - acquisition of The Retearn Group Limited in April 2021, alongside the post period-end acquisition of iOLAP Inc., demonstrating our ability to execute successful M&A activity. The iOLAP acquisition, which was made at an initial consideration multiple of 6x FY 21 Adjusted EBITDA, adds specialist data and analytics capabilities and accelerates the growth of our US business. We continue to search for potential acquisition targets to enhance one or more of our capabilities, industries or geographical coverage.

 

·    Multiple awards received including a place on the 'Global Outsourcing 100' by the International Association for Outsourcing Professionals, multiple Drum awards for our digital marketing credentials as well as being listed as a leading management consultant by the Financial Times for our operations & supply chain services.

 

·     In 2021 the Group brought on over 80 new clients, maintaining high levels of client retention - of the 2021 client base, 50% were repeat business.

 

 

Commenting on the results, Founder & CEO, Stephen Newton said:

 

"2021 has been another phenomenal year for Elixirr. We have stayed resolute in our commitment to provide a bespoke and high-quality service to our clients, all made possible by the dedication and talent of our teams. This has contributed to our fantastic performance in the market this year and consistent growth since listing."

 

 

For further Information please contact:

Elixirr International plc   Stephen Newton, CEO   Graham Busby, CFO   Public and Investor Relations contacts: Caroline Pitt	investor-relations@elixirr.com
finnCap Ltd (Nominated Adviser & Sole Broker)   Christopher Raggett / Kate Bannatyne (Corporate Finance)   Alice Lane / Sunila De Silva (ECM)	+44 (0)20 7220 0500

 

 

About Elixirr International plc

Elixirr is an established global award-winning management consultancy, challenging the larger consultancies by delivering innovative and bespoke solutions to a repeat, globally-recognised client base.

Elixirr was founded in 2009, by Stephen Newton, Graham Busby, Ian Ferguson, Andy Curtis and Mark Goodyear, experienced business advisors who identified a market opportunity to provide bespoke, personal services as a 'challenger' to the traditional consultancy businesses in the market. Elixirr guides its clients to overcome challenges such as: future-proofing against technological disruption; development and roll-out of new propositions, products and services; incubating new businesses; navigating a more complex and multinational regulatory environment; and project management and implementation of major change programmes.

 

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the company's obligations under Article 17 of MAR.

 

 

Non-Executive Chairman's Report

 

OVERVIEW

 

I am pleased to introduce Elixirr's 2021 annual report. The business has performed exceptionally well in the last twelve months, with growth across capabilities and geographies whilst breaking into new industries, and it continues to prove its robust and differentiated proposition.

 

The Group delivered strong revenues over the year of £50.6 million, a 67% increase from £30.3 million in the year ended 31^st December 2020, with eight record months of revenue achieved during the year. Profitability continues to be strong with FY 21 Adjusted EBITDA of £15.7 million representing a 31% EBITDA margin.

 

This year Elixirr continued to support its clients to tackle their toughest challenges in a disruptive market, helping them to adapt, transform and innovate to stay ahead of competition and we have seen growth in existing accounts whilst also bringing in a plethora of new clients. Despite the COVID-19 pandemic, the consulting industry sustained growth in 2021, and we continue to see the impact of this with strong, growing client demand.

 

Our performance can be attributed to strong organic traction across the Group, particularly in the US market, whilst continuing to strengthen and grow the Partner team across all geographies. The Group has also seen further opportunities through acquisition and leveraging the capabilities within acquired businesses.

 

We have continued to see growth in digital opportunities and utilised the procurement and self-funded transformation capabilities of our new acquisition, The Retearn Group Limited ('Retearn'), alongside our core consulting work. Elixirr's recent acquisition in March 2022 of US firm, iOLAP, is significant for the Group - bringing specialist data and analytics capabilities, including artificial intelligence (AI) and machine learning (ML) for which there is increasing market demand. We are looking forward to the positive impact iOLAP will have across the Group in FY 22.

 

In accordance with the high standards we uphold throughout our business, we are also committed to continually looking to improve both our own and our clients' ESG commitments. In our Annual Report we cover both the mandatory reporting of our direct emissions as well as information on our sustainability initiatives.

 

STRATEGY

 

The Board continues to observe the positive impact from the Group's four pillar growth strategy - a strategy that has been central to key activities during 2021. This Annual Report will explain the growth and advances we have delivered in each aspect of the strategy over the course of the year. The Board believes this diversified strategy positions the firm well for FY 22 and continued future growth.

 

GOVERNANCE

 

The Board recognises the importance of operating within a robust governance framework. Throughout the period the Group has continued to comply with the corporate governance code of the Quoted Companies Alliance (QCA). This includes ensuring that we have an appropriate balance of diverse skills and experience to deliver our strategic vision and objectives. The Board and its subcommittees include independent non-executive members with varying backgrounds and experience. The Board continues to monitor this on a regular basis.

 

OUTLOOK

 

Elixirr enters the new financial year in a strong position. The Board believes the Group is well positioned as it continues to grow and to exceed the expectations of its clients. The Board continues to work to ensure sustained success for the shareholders, clients and employees of the Group and it looks to the future with optimism.

 

Gavin Patterson

 

Non-Executive Chairman

 

1^st April 2022

 

 

CEO's Report

 

OVERVIEW

 

In 2021 we worked across the value chain from strategy to execution whilst evolving our offering to meet market demands - continuing to get to the crux of our clients' key board room issues. Our team of consultants across the globe worked on more projects than ever before for business leaders and C-suite executives, helping them to solve critical business challenges with future-first innovation and strategy-led thinking.

 

Organic growth continues to underpin the business's success, and this was sustained in 2021 by expanding existing key accounts and maintaining high levels of client retention - of the 2021 client base, 50% were repeat business. We pride ourselves on a reputation of quality and building long-term relationships with clients, and our growth this year is testament to the excellence of our people and the lasting impact we make each day. In 2021 we continued to focus on deepening existing relationships, growing the value of multiple key accounts, so that we now have more than a dozen clients where each generates more than £1m of revenue for the Group. This continues to be a major focus for the Group in 2022.

 

Another crucial element of our organic growth is bringing on new clients and expanding into new markets. In 2021 we brought on over 80 new clients. We have also increased our penetration in growing industries, expanding our work in the healthcare, insurance and public sector areas as we continue to diversify the business alongside our traditional strengths in financial services, retail and digital.

 

As the fastest growing consulting market by spend in the world, the US continues to be our biggest focus area of growth geographically. Proving the commitment of the team there, we have seen incredible traction in this market over the past few years, and 2021 was no different. Our annual growth of 100% in the US in 2021 can be attributed to increasing revenues from existing clients and bringing in new logos - nearly doubling our US clients year-on-year. This was all supported by growth in both our US Partner team and the number of chargeable consultants joining the US team.

 

The importance of sustainability continues to grow, and in 2021 we have been guiding our clients in this space more than ever before, helping them to reduce their carbon footprints substantially. We have put sustainability at the centre within the spectrum of our capabilities - from helping clients reduce their digital carbon emissions, to supply chain assessments, helping to ensure businesses are equipped to make a real, maintainable impact into the future.

 

Our reputation in the market and amongst our clients is ever-increasing, and we were delighted to be recognised with multiple industry accolades in 2021. As a Group, we were nominated for 14 awards in a variety of categories and sectors. We were proud to earn a place on the 'Global Outsourcing 100' by the International Association for Outsourcing Professionals, also winning multiple Drum awards for our digital marketing credentials and being listed as a leading management consultant by the FT for our operations & supply chain services. I was also very proud personally to be recognised as a 'Global Leader in Consulting' by US Consulting Magazine again for 'Excellence in Execution'.

 

PERFORMANCE

 

I am delighted with the performance of Elixirr in the last twelve months. The Group delivered a record revenue result over the year of £50.6 million, a 67% increase from FY 20. In 2021, we delivered eight record months of revenue as the business grew throughout the year. I am particularly pleased that we have continued to achieve exceptional growth in the US market with a 100% increase in revenues compared with FY 20 - the US is a focal market for the Group.

 

Our Adjusted EBITDA of £15.7 million in FY 21 represented 31% of revenue, demonstrating Elixirr's positioning as a high value, high returns business.

 

GROWTH STRATEGY

 

We have made great progress over 2021 across all three organic elements of our four-pillar growth strategy - increasing revenue per Partner, bringing multiple new Partners into the business, and promoting Partners from within.

 

2021 saw exceptional progress of hires into our Partner team, with six new appointments into the team. All were selected based on their extensive networks, and respective industry expertise spanning financial services, media, TMT and healthcare.

 

We were also delighted to promote two Principals, both who truly embody the culture of Elixirr having been with the firm for almost a decade each, bringing huge value to the Partner team. Together, they set a great example of the potential career opportunities for those at junior grades, with one of those promoted having progressed through the business all the way from Analyst, our entry grade.

 

Whilst our roots remain in core strategy consulting, we are constantly seeking to add to the breadth and depth of our services. Therefore, our fourth growth pillar - acquiring new businesses - remained a key part of our strategy in 2021. Having expanded our digital capabilities in recent years, we were looking to further deepen our specialisms in 2021 and were delighted to announce the acquisition of Retearn in April 2021. Their procurement and self-funded transformation expertise has been hugely valuable alongside our traditional consulting work, and we have seen multiple cross-sell opportunities with clients across the Group.

 

One of the key strategic geographies for Elixirr is the US, and our dedicated internal M&A team has had an acute focus on this geography since our IPO. In March 2022 we were pleased to announce the acquisition of US firm iOLAP, and the scale and offering of the firm make this one of Elixirr's most significant milestones to date. Combining iOLAP's expertise in data and analytics with Elixirr's deep strategic and business consulting experience will continue to ensure we stay at the heart of key boardroom challenges, and I expect it to hugely influence our traction in the market in FY 22 and beyond.

 

OUR PEOPLE

 

We have continued to grow our team across the globe in the past year, more than doubling the number of hires we made from 2020 to 2021. We are committed to creating a firm of equal opportunity, with individuals measured purely by the work they do. 60% of our promotions in 2021 were female employees and over half of our hires last year were people from ethnic minority backgrounds. Diversity of thought is what truly matters to us, and that means diversity of people. It is with this attitude that we build a world-class team. Our male-to-female ratio across the firm is 58/42, and we speak over 28 languages. We welcome analysts from the best universities and business schools in the world and a plethora of previous careers, be it in industry, consulting, start-ups, or professional sport. This strategy continues to be complemented by our inorganic growth strategy, as we acquire businesses and their diverse teams.

 

With the challenges COVID-19 presented during 2020 in travel and gatherings, we were pleased in 2021 to finally bring our teams together from across the world for our yearly 'Indaba' event - a cultural immersion for new joiners across the Group to understand and experience Elixirr's core values.

 

Our culture has been formed on the premise of building a firm of entrepreneurs - a team who think and act like business owners, rather than traditional employees. Listing the firm allowed us to enable our team to become shareholders in Elixirr, and in June 2021 we introduced an optional Employee Share Purchase Plan ('ESPP') in addition to our existing employee option schemes. This really highlighted the commitment our people have and the tenure they expect with the business, as we had an uptake of over 50% for the ESPP scheme in its first year. Those who joined the ESPP enjoyed an average gain of 21% on their investment during FY 21. The recent ESPP enrolment for FY 22 has increased to 73% of the team, demonstrating huge commitment to the firm by the vast majority of our team.

 

OUTLOOK

 

Despite the challenges presented by the pandemic, macro-economic and more recently geo-political conditions since we listed in 2020, we have continued to demonstrate strong financial performance and have not only realised but exceeded our growth ambitions. The combination of keeping our clients central to our services, offering a unique proposition in the market, with relentless ambition and a focus on our strategy, puts us in a strong position as a Group.

 

Despite the current geo-political uncertainty, the Directors expect further growth in revenue and Adjusted EBITDA during FY 22. Including the impact of the acquisition of iOLAP, the Board's current expectation is that full year FY 22 revenue will be in the range of £70 million - £75 million with an Adjusted EBITDA margin in the range of 27 - 28%.

 

Stephen Newton

 

Founder & Chief Executive Officer

 

1^st April 2022

 

 

Financial Review

 

	Year ended 31 December 2021	Year ended 31 December 2020	% change
Revenue	£50.6m	£30.3m	+67%
Gross profit	£17.7m	£11.2m	+58%
Adjusted EBITDA*	£15.7m	£9.7m	+62%
Adjusted EBITDA margin*	31%	32%	-3%
Profit before tax	£12.2m	£5.8m	+109%
Adjusted diluted earnings per share*	24.2p	15.3p	+58%
Dividend per share	4.1p	2.2p	+86%
Free cash flow	£13.6m	£11.2m	+21%
Net cash	£31.8m	£17.5m	+82%

 

* In order to provide better clarity to the underlying performance of the Group, Elixirr uses adjusted EBITDA and adjusted earnings per share as alternative performance measures ('APMs').

 

GROUP RESULTS

 

The Board is pleased to report that the Group has performed exceptionally well this financial year, continuing to grow revenue despite global macro uncertainty. The Group has seen organic growth in new and existing client accounts, delivering high-quality client service, as we continue to build long-term, trusted relationships with our clients. The Group successfully acquired Retearn in FY 21, integrating their product offerings and teams into the Group and delivering on enhanced capabilities to our client base. The Group has maintained healthy margins and good cash generation, ending the year in a strong financial position. In FY 21 the Group delivered revenue of £50.6 million and profitability continues to be strong with an Adjusted EBITDA of £15.7 million at a 31% margin.    

 

REVENUE

 

Revenue increased by 67% to £50.6 million in FY 21 compared with £30.3 million in FY 20, with eight record months of revenue achieved during the year. Revenue growth was driven by both organic revenue growth of 35% and the impact of the acquisitions of Coast Digital Limited ('Coast Digital') and Retearn of 32%.

 

The double-digit growth in revenues is testament to the Group's relentless focus on continuing to build long-term, trusted relationships with our clients by consistently delivering innovative, impactful solutions to solve our clients' key business challenges. The Group's revenue growth is reflective of continuing strong demand for its existing service offering as well as the leveraging of new service capability to clients from the acquisitions of Coast Digital and Retearn.

 

Revenue growth was achieved in all geographic regions (UK, USA and Rest of World) in which the Group operates, and we have continued to achieve exceptional growth in the US market, having doubled revenues compared with FY 20. We are also pleased to report that revenue per client-facing Partner grew during the year, despite the difficult market environment, reflecting the quality and resilience of our Partner team.   

 

GROUP PROFITABILITY

 

Group gross profit increased by 58% to £17.7 million (FY 20: £11.2 million), reflecting revenue growth, strong consultant utilisation and investment in the team. The investment in the team included an increase in the average team headcount to deliver revenue, implementation of the ESPP, granting of share options and promotion-related pay increases.

 

Administrative expenses increased by 27%, principally reflecting the increased share-based payment costs in FY 21 as a result of share option grants. Further detail of share-based payments is set out in note 24 of the Group and Company Financial Statements of this report.

 

Group Adjusted EBITDA grew 62% and was delivered at a 31% margin (FY 20: 32%). The increased costs associated with the resumption of travel and business development activities were partially offset by improved profitability as a result of improved utilisation of consultants.  

 

Profit before tax (after exceptional items) grew 109% to £12.2 million (FY 20: £5.8 million) and was delivered at an improved margin of 24.0% (FY 20: 19%). Further detail of exceptional items is set out in note 5 of the Group and Company Financial Statements of this report.

 

NET FINANCE EXPENSE

 

Net finance expense of £0.22 million for FY 21 includes interest on the Group lease liability. The net finance expense decreased by 67% due to not having incurred preference dividends in FY 21 as a result of the 10% non-redeemable cumulative preference shares having been extinguished in FY 20 as part of the Group restructure transactions explained further in note 22 of the Group and Company Financial Statements. As at 31^st December 2021 the Group has no interest rate risk exposure.    

 

TAXATION

 

The Group's tax charge for FY 21 was £2.0 million, reflecting a lower effective tax rate of 17% compared with 18% in FY 20. This was largely due to research and development tax relief claimed for prior periods and allowable trademark amortisation deductions. The Group's cash tax payment in the year was £2.5 million (FY 20: £1.2 million). For further detail on taxation see notes 8 and 9 of the Group and Company Financial Statements. Adjusted profit after tax, used in calculating adjusted earnings per share, is shown after adjustments for the applicable tax on adjusting items as set out in note 6.

 

EARNINGS PER SHARE

 

Adjusted diluted earnings per share increased by 58% to 24.2p. Adjusting items and their tax impacts are set out in note 6. As at 31^st December 2021, 11,339,056 share options (excluding acquisition options for fixed monetary amounts and ESPP matching grants) were outstanding.

 

CASH FLOW

 

The Group's net cash position increased by 82% to £31.8 million (FY 20: £17.5 million) with a 21% increase in free cash flow due to improved operating cash flow generation driven by business growth and efficient working capital management. The Group enjoyed strong cash generation with net cash flow generated from operations of £14.3 million in FY 21 (FY 20: £12.2 million), including some working capital timing benefit. The Group continues to see conversion of adjusted EBITDA less tax to operating cash of c.100%.

 

Net cash utilised in investing activities reflects £2.9 million cash consideration for the acquisition of Retearn plus additional cash consideration of £0.4 million for surplus cash on acquisition, net of cash of £0.7 million acquired on acquisition. A further £0.6 million for surplus cash on acquisition of Coast Digital was also paid in FY 21.

 

Net cash generated from financing activities of £3.1 million represents net inflow for Employee Benefit Trust ('EBT') share sales less purchases of £2.1 million plus net Partner loan repayments (net of associated section 455 tax charge) of £2.7 million, less dividend payment of £1.0 million and office lease payments of £0.7 million.

 

STATEMENT OF FINANCIAL POSITION

 

Net assets as at 31^st December 2021 totalled £86.0 million (FY 20: £70.7 million). The increase in net assets is as a result of share premium of £5.2 million for Ordinary shares issued as consideration for the acquisition of Retearn and gain on sale of shares by the EBT, retained profit for the year of £11.0 million (after FY 20 final dividend of £1.0 million offset by £1.2 million add back of share-based payments charge), partially offset by net EBT share purchases of £0.9 million. 

 

DIVIDENDS

 

No interim Ordinary share dividends were paid in relation to FY 20 or FY 21. The Company paid a final Ordinary share dividend in respect of FY 20 of 2.2 pence per Ordinary share in August 2021. The Directors are proposing a final Ordinary share dividend in respect of FY 21 of 4.1 pence per Ordinary share, representing an 86% increase in dividend per share compared with FY 20.

 

 

Group Statement of Comprehensive Income

For the year ended 31^st December 2021

 

 

		Year ended 31 December 2021	Year ended 31 December 2020
	Note	£'000s	£'000s
Revenue	4	50,611	30,318
Cost of sales		(32,913)	(19,128)
Gross profit		17,698	11,190
Administrative expenses		(5,161)	(3,982)
Operating profit before exceptional items	5	12,537	7,208
Depreciation		670	730
Amortisation of intangible assets		1,378	1,741
Share-based payments		1,152	47
Adjusted EBITDA	6	15,737	9,726
Exceptional items	5	(154)	(730)
Operating profit	5	12,383	6,478
Finance income		29	20
Finance costs		(246)	(680)
Net finance expense	7	(217)	(660)
Profit before taxation	5	12,166	5,818
Taxation	8	(2,022)	(1,024)
Profit for the period		10,144	4,794
Other comprehensive income
Items that may be subsequently reclassified to profit and loss:
Currency translation on foreign currency net investments		123	(26)
Other comprehensive income, net of tax		123	(26)
Total comprehensive income		10,267	4,768
Basic earnings per Ordinary share (p)	11	22.04	11.73
Diluted earnings per Ordinary share (p)	11	20.01	10.75

 

 

All results relate to continuing operations.

 

The notes form part of these accounts.

 

 

Group and Company Statements of Financial Position

As at 31^st December 2021

 

 

		Group		Company
		31 December 2021	31 December 2020	31 December 2021	31 December 2020
	Note	£'000s	£'000s	£'000s	£'000s
Assets
Non-current assets
Intangible assets	13	56,193	51,188	-	-
Property, plant and equipment	15	5,496	5,545	-	-
Investments	16	-	-	63,807	55,156
Other receivables	17	1,535	596	1,104	-
Loans to shareholders	17	3,991	7,784	3,991	6,672
Deferred tax asset	9	1,197	161	-	161
Total non-current assets		68,412	65,274	68,902	61,989
Current assets
Trade and other receivables	17	6,963	4,220	1,928	3,000
Cash and cash equivalents	18	31,795	17,503	13,576	10,678
Total current assets		38,758	21,723	15,504	13,678
Total assets		107,170	86,997	84,406	75,667
Liabilities
Current liabilities
Trade and other payables	19	12,055	8,107	134	403
Loans and borrowings	20	485	448	-	-
Corporation tax		1,150	1,157	11	61
Other creditors	21	436	612	436	612
Total current liabilities		14,126	10,324	581	1,076
Net current assets		24,632	11,399	14,923	12,602
Non-current liabilities
Loans and borrowings	20	4,760	4,837	-	-
Deferred tax liability	9	623	547	-	-
Other non-current liabilities	21	1,620	601	1,370	406
Total non-current liabilities		7,003	5,985	1,370	406
Total liabilities		21,129	16,309	1,951	1,482
Net assets		86,041	70,688	82,455	74,185
Equity
Share capital	22	52	52	52	52
Share premium	22	24,952	19,729	24,952	19,729
Capital redemption reserve		2	2	2	2
EBT share reserve	23	(2,193)	(1,248)	(2,193)	(1,248)
Merger relief reserve	22	46,870	46,870	46,870	46,870
Foreign currency translation reserve		51	(72)	-	-
Retained earnings		16,307	5,355	12,772	8,780
Total shareholders' equity		86,041	70,688	82,455	74,185

 

As permitted by section 408 of the Companies Act 2006, a separate statement of comprehensive income of the parent Company has not been presented. The Company's profit for the year was £4,006,320 (FY 20: £9,397,979).

 

The notes form part of these accounts.

 

The Financial Statements were approved by the Board of Directors on 1^st April 2022 and were signed on its behalf by:

 

Stephen Newton

 

Director

 

 

Group Statement of Changes in Equity

For the year ended 31^st December 2021

 

	Share capital	Share premium	Capital redemption reserve	EBT share reserve	Merger relief reserve	Foreign currency translation reserve	Retained earnings	Total
Group	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
As at 31 December 2019 and 01 January 2020	3	-	-	-	43,497	(46)	1,182	44,636
Comprehensive income
Profit for the period	-	-	-	-	-	-	4,794	4,794
Other comprehensive income	-	-	-	-	-	(26)	-	(26)
Transactions with owners
Share issues	1	23	-	-	-	-	-	24
Contributions of equity, net of transaction costs	-	18,583	-	-	-	-	-	18,583
Share issue as consideration for a business combination	-	1,123	-	-	-	-	-	1,123
Preference shares reclassified from loans and borrowings	50	-	-	-	-	-	-	50
Share buy-backs at par and cancelled	(2)	-	2	-	(3,127)	-	(820)	(3,947)
Acquisition of Ordinary shares	-	-	-	(1,198)	-	-	-	(1,198)
Acquisition of Redeemable Preference shares	-	-	-	(50)	-	-	-	(50)
Redesignation/conversion of shares	-	-	-	-	6,500	-	-	6,500
Share-based payments	-	-	-	-	-	-	47	47
Deferred tax recognised in equity	-	-	-	-	-	-	152	152
As at 31 December 2020 and 01 January 2021	52	19,729	2	(1,248)	46,870	(72)	5,355	70,688
Comprehensive income
Profit for the period	-	-	-	-	-	-	10,144	10,144
Other comprehensive income	-	-	-	-	-	123	-	123
Transactions with owners
Share issue as consideration for a business combination	-	2,154	-	-	-	-	-	2,154
Dividends	-	-	-	-	-	-	(1,014)	(1,014)
Share-based payments	-	-	-	-	-	-	1,152	1,152
Deferred tax recognised in equity	-	-	-	-	-	-	670	670
Sale of Ordinary shares	-	3,069	-	2,705	-	-	-	5,774
Acquisition of Ordinary shares	-	-	-	(3,650)	-	-	-	(3,650)
As at 31 December 2021	52	24,952	2	(2,193)	46,870	51	16,307	86,041

 

The notes form part of these accounts. Please refer to note 29 for explanations of reserve accounts.

 

 

Company Statement of Changes in Equity

For the year ended 31^st December 2021

 

	Share capital	Share premium	Capital redemption reserve	EBT share reserve	Merger relief reserve	Retained earnings	Total
Company	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
As at 31 December 2019 and 01 January 2020	3	-	-	-	43,497	4	43,504
Comprehensive income
Profit for the period	-	-	-	-	-	9,397	9,397
Other comprehensive income	-	-	-	-	-	-	-
Transactions with owners
Share issues	1	23	-	-	-	-	24
Contributions of equity, net of transaction costs	-	18,583	-	-	-	-	18,583
Share issue as consideration for a business combination	-	1,123	-	-	-	-	1,123
Preference shares reclassified from loans and borrowings	50	-	-	-	-	-	50
Share buy-backs at par and cancelled	(2)	-	2	-	(3,127)	(820)	(3,947)
Acquisition of Ordinary shares	-	-	-	(1,198)	-	-	(1,198)
Acquisition of Redeemable Preference shares	-	-	-	(50)	-	-	(50)
Redesignation/conversion of shares	-	-	-	-	6,500	-	6,500
Share-based payments	-	-	-	-	-	47	47
Deferred tax recognised in equity	-	-	-	-	-	152	152
As at 31 December 2020 and 01 January 2021	52	19,729	2	(1,248)	46,870	8,780	74,185
Comprehensive income
Profit for the period	-	-	-	-	-	4,006	4,006
Transactions with owners
Share issue as consideration for a business combination	-	2,154	-	-	-	-	2,154
Dividends	-	-	-	-	-	(1,014)	(1,014)
Share-based payments	-	-	-	-	-	1,152	1,152
Deferred tax recognised in equity	-	-	-	-	-	(152)	(152)
Sale of Ordinary shares	-	3,069	-	2,705	-	-	5,774
Acquisition of Ordinary shares	-	-	-	(3,650)	-	-	(3,650)
As at 31 December 2021	52	24,952	2	(2,193)	46,870	12,772	82,455

 

 

The notes form part of these accounts. Please refer to note 29 for explanations of reserve accounts.

 

 

Group and Company Cash Flow Statements

For the year ended 31^st December 2021

		Group		Company
		31 December 2021	31 December 2020	31 December 2021	31 December 2020
	Note	£'000s	£'000s	£'000s	£'000s
Cash flows from operating activities:
Cash generated from operations	25	16,856	13,309	4,265	7,127
Taxation paid		(2,527)	(1,156)	(86)	-
Net cash generated from operating activities		14,329	12,153	4,179	7,127
Cash flows from investing activities:
Purchase of property, plant and equipment		(98)	(33)	-	-
Payment for acquisition of subsidiary, net of cash acquired		(3,179)	(1,449)	(4,000)	(2,710)
Interest received		33	17	32	8
Net cash utilised in investing activities		(3,244)	(1,465)	(3,968)	(2,702)
Cash flows from financing activities:
Issue of Ordinary share capital		-	18,607	-	18,607
Issue of Redeemable Preference shares		-	50	-	50
Non-redeemable Preference share dividend		-	(518)	-	(518)
Capital reduction and share buy-backs		-	(626)	-	(3,946)
EBT Ordinary share purchases		(3,649)	(1,198)	(3,649)	(1,198)
EBT Ordinary share sales		5,774	-	5,774	-
Redeemable Preference shares repurchased		-	(50)	-	(50)
Loans to shareholders		(4,500)	(9,839)	(4,500)	(6,673)
Loans repaid by shareholders		8,293	-	7,181	-
s455 tax paid re loans to shareholders		(1,104)	-	(1,104)	-
Repayment of borrowings		-	(1,625)	-	-
Lease liability payments		(448)	(623)	-	-
Interest paid		(246)	(293)	-	(20)
Ordinary share dividends paid to shareholders		(1,014)	-	(1,014)	-
Net cash generated from financing activities		3,106	3,885	2,688	6,252
Net increase in cash and cash equivalents		14,191	14,573	2,898	10,678
Cash and cash equivalents at beginning of the period		17,503	3,001	10,678	-
Effects of exchange rate changes on cash and cash equivalents		101	(71)	-	-
Cash and cash equivalents at end of the period		31,795	17,503	13,576	10,678

 

The notes form part of these accounts.

 

 

Notes to the Financial Statements

 

1.   BASIS OF PREPARATION

 

1.1.  General information

 

Elixirr International PLC (the "Company") and its subsidiaries' (together the "Group") principal activities are the provision of consultancy services.

 

The Company is a limited company incorporated in England and Wales and domiciled in the UK. The address of the registered office is 12 Helmet Row, London, EC1V 3QJ and the Company number is 11723404.

 

1.2.  Basis of preparation

 

The financial statements have been prepared in accordance with UK adopted international accounting standards.

 

The presentational currency of these financial statements and the functional currency of the Group is pounds sterling.

 

1.3.  Basis of consolidation

 

These financial statements consolidate the financial statements of the Company and its subsidiary undertakings as at 31^st December 2021.

 

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. The acquisition method of accounting has been adopted. The financial statements of subsidiaries are prepared for the same reporting period as the parent Company, using consistent accounting policies.

 

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

 

1.4.  Measurement convention

 

The consolidated financial information has been prepared under the historical cost convention. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

The preparation of the consolidated financial information in compliance with IFRS requires the use of certain critical accounting estimates and management judgements in applying the accounting policies. The significant estimates and judgements that have been made and their effect is disclosed in note 2.1.

 

1.5.  Going concern

 

The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operation for the foreseeable future. The Group's forecasts and projections, taking into account reasonable possible changes in trading performance, show that the Group has sufficient financial resources, together with assets that are expected to generate cash flow in the normal course of business. Accordingly, the Directors have adopted the going concern basis in preparing these consolidated financial statements. 

 

 

2.   SIGNIFICANT ACCOUNTING POLICIES

 

The principal accounting policies adopted in the preparation of the financial statements of the Group and Company, which have been applied consistently to the period presented, are set out below.

 

2.1.  Judgements and key sources of estimation uncertainty

 

The preparation of the financial statements requires management to make estimates and judgements that affect the reported amounts of assets, liabilities, costs and revenue in the financial statements. Actual results could differ from these estimates. The judgements, estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant.

 

In the process of applying the Group's accounting policies, the Directors have made no judgements (excluding those involving estimations), which are considered to have a significant effect on the amounts recognised in the financial statements for the year ending 31^st December 2021.

 

The key sources of estimation uncertainty that could cause an adjustment to be required to the carrying amount of assets or liabilities within the next accounting period are:

 

·   Revenue is recognised in line with time worked on a project unless the engagement is conditional or contingent. Management review accrued revenue to determine whether there is any likelihood of any amendments or provisions required based on project progress and relationship with the client.

 

·     Full provision is made for loss making projects in the period in which the loss is first foreseen, and for the cost of conditional or contingent engagements prior to the event occurring. Estimation is required of costs to complete and the provision necessary.

 

·    The Group's policy on recognising an impairment of the trade receivables balance is based on a review of individual receivable balances, their ageing and management's assessment of realisation. This review and assessment is conducted on a continuing basis and any material change in management's assessment of trade receivable impairment is reflected in the carrying value of the asset.

 

·    Provisions for dilapidations are accrued based on estimation of the cost expected to crystallise on vacating leased premises.

 

·     In determining the fair value of intangible assets arising on business combinations, management is required to estimate the timing and amount of future cash flows applicable to the intangible assets being acquired. 

 

·     Amortisation period of trademarks and customer relationships is an estimate based on the expected useful life and is assessed annually for any changes based on current circumstances.

 

·     Management has estimated the share-based payments expense under IFRS 2. In determining the fair value of share-based payments, management has considered several internal and external factors in order to judge the probability that management and employee share incentives may vest and to assess the fair value of share options at the date of grant. Such assumptions involve estimating a number of future performance and other factors.

 

·  The Coast Digital and Retearn contingent consideration calculations under IFRS 3 contain estimation uncertainty, as the earn-out potentially payable in each case is linked to the future performance of the acquiree. In estimating the fair value of the contingent consideration, at both the acquisition date and financial year end, management has estimated the potential future cash flows of the acquirees and assessed the likelihood of an earn-out payment being made. These estimates could potentially change as a result of events over the coming years.    

 

2.2.  Revenue recognition

 

Revenue is measured as the fair value of consideration received or receivable for satisfying performance obligations contained in contracts with clients, excluding discounts and Value Added Tax. Variable consideration is included in revenue only to the extent that it is highly probable that a significant reversal will not be required when the uncertainties determining the level of variable consideration are resolved. This occurs as follows for the Group's various contract types:

 

·     Time-and-materials contracts are recognised over time as services are provided at the fee rate agreed with the client where there is an enforceable right to payment for performance completed to date.

 

·     Fixed-fee contracts are recognised over time based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided where there is an enforceable right to payment for performance completed to date. This is determined based on the actual inputs of time and expenses relative to total expected inputs.

 

·     Performance-fee contracts are recognised when the right to consideration arises on having met the relevant performance-related elements.

 

·     Contingent-fee contracts, over and above any agreed minimum fee, are recognised at the point in time that the contingent event occurs and the Group has become entitled to the revenue.

 

Where contracts include multiple performance obligations, the transaction price is allocated to each performance obligation based on its stand-alone selling price. Where these are not directly observable, they are estimated based on expected cost-plus margin. Adjustments are made to allocate discounts proportionately relative to the stand-alone selling price of each performance obligation.

 

Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting increase or decrease in estimated revenues or costs are reflected in the statement of comprehensive income in the period in which the circumstances that give rise to the revision became known.

 

For time-and-materials and fixed-fee contracts, fees are normally billed on a monthly basis. For performance-fee and contingent-fee contracts, fees are normally billed and paid when entitlement to the revenue has been established. If the revenue recognised by the Group exceeds the amounts billed, a contract asset is recognised. If the amounts billed exceed the revenue recognised, a contract liability is recognised. Contract assets are reclassified as receivables when billed and the consideration has become unconditional because only the passage of time is required before payment is due.

 

The Group's standard payment terms require settlement of invoices within 30 days of receipt.

 

The Group does not adjust the transaction price for the time value of money as it does not expect to have any contracts where the period between the transfer of the promised services to the client and the payment by the client exceeds one year.

 

2.3.  Business combinations, goodwill and consideration

 

Business combinations

 

The Group applies the acquisition method of accounting to account for business combinations in accordance with IFRS 3, 'Business Combinations'.

 

The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the consideration transferred over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. All transaction related costs are expensed in the period they are incurred as operating expenses. If the consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in the income statement.

 

The Group acquired the trade and some of the assets of Elixirr Partners LLP, an entity under common control, on 1^st July 2019.

 

Transactions with entities under common control are not within the scope of IFRS 3 "Business Combinations".  In these circumstances IAS 8 requires the Directors to develop a policy that is relevant to the decision-making needs of the users and that is reliable as there is no specific applicable standard or interpretation.

 

Having considered the nature of the transaction, noting that some assets were not transferred with the business and the anticipation of a future corporate transaction, the Directors chose to apply IFRS 3 as this was considered to be the most appropriate method to reflect the acquisition. 

 

On 28^th October 2020 the Group acquired 100% of the share capital and voting interests of Coast Digital, a digital marketing business. The difference between the fair value of the purchase consideration of £4,999,521 and the fair value of the identifiable assets acquired and liabilities assumed of £2,143,683 was recognised as goodwill of £2,855,838.  The goodwill is attributable to the company's workforce and working methodologies and it is not deductible for tax purposes.

 

On 9^th April 2021 the Group acquired 100% of the share capital and voting interest of Retearn, a procurement, transformation and insights consultancy firm. The difference between the fair value of the purchase consideration of £7,361,052 and the fair value of the identifiable assets acquired and liabilities assumed of £2,103,563 was recognised as goodwill of £5,257,489.  The goodwill is attributable to the company's workforce and working methodologies and it is not deductible for tax purposes. Please refer to note 14 for further details.

 

Goodwill

 

Goodwill is initially measured at cost and any previous interest held over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in the income statement.

 

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired.

 

The Group performs impairment reviews at the reporting period end to identify any goodwill or intangible assets that have a carrying value that is in excess of its recoverable amount. Determining the recoverability of goodwill and the intangible assets requires judgement in both the methodology applied and the key variables within that methodology. Where it is determined that an asset is impaired, the carrying value of the asset will be reduced to its recoverable amount with the difference recorded as an impairment charge in the income statement.

 

In accordance with IAS 36, the Group has tested goodwill for impairment at the reporting date. No goodwill impairment was deemed necessary as at 31^st December 2021. For further details on the impairment review please refer to note 13.

 

Contingent and non-contingent deferred consideration on acquisition

 

Contingent and non-contingent deferred consideration may arise on acquisitions. Non-contingent deferred consideration may arise when settlement of all or part of the cost of the business combination falls due after the acquisition date. Contingent deferred consideration may arise when the consideration is dependent on future performance of the acquired company.

 

Deferred consideration associated with business combinations settled in cash is assessed in line with the agreed contractual terms. Consideration payable is recognised as capital investment cost when the deferred or contingent consideration is not employment-linked. Alternatively, consideration is recognised as remuneration expense over the deferral or contingent performance period, where the consideration is also contingent upon future employment. Where the consideration is settled in shares, the consideration is classified as equity, it is not re-measured, and settlement is accounted for within equity. Otherwise, subsequent changes to fair value of the deferred consideration are recognised in the statement of comprehensive income.

 

2.4.  Taxation

 

Income tax expense represents the sum of the tax currently payable and deferred tax.

 

Current tax

 

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profits as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's and Company's liability for current tax is calculated using tax rates that have been enacted or substantially enacted by the reporting end date.

 

Deferred tax

 

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary differences arise from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.  

 

2.5.  Foreign currency translation

 

Functional and presentational currency

 

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The financial statements are presented in 'sterling', which is the Group's and Company's functional currency and presentation currency.

 

On consolidation, the results of overseas operations are translated into sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.

 

Transactions and balances

 

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

 

2.6.  Intangible assets

 

Intangible assets are measured at cost less accumulated amortisation and any accumulated impairment losses. Intangible assets acquired in a business combination are initially measured at their fair value (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and any accumulated impairment losses.   

 

Intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset under IAS 38. Such assets are only recognised if either:

 

·    They are capable of being separated or divided from the company and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, identifiable asset or liability, regardless of whether the company intends to do so; or

 

·   They arise from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.

 

The cost of such intangible assets is the fair value at the acquisition date. All intangible assets acquired through business combinations are amortised over their estimated useful lives. The significant intangibles recognised by the Group, their useful economic lives and the methods used to determine the cost of the intangibles acquired in business combinations are as follows:

 

Intangible asset	Useful economic life	Valuation method
Trademark	33.33% reducing balance method	Relief from Royalty method
Customer relationships	10% reducing balance method	Multi-Period Excess Earnings method

 

2.7.  Tangible assets

 

Tangible fixed assets are stated at cost net of accumulated depreciation and accumulated impairment losses.

 

Costs comprise purchase costs together with any incidental costs of acquisition.

 

Depreciation is provided to write down the cost less the estimated residual value of all tangible fixed assets by equal instalments over their estimated useful economic lives on a straight-line basis. The following rates are applied:

 

Tangible fixed asset	Useful economic life
Leasehold improvements	Over the life of the lease
Computer equipment	3 years
Fixtures and fittings	3 years

 

 

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, if there is an indication of a significant change since the last reporting date. Low value equipment including computers is expensed as incurred.

 

2.8.  Impairments of tangible and intangible assets

 

At each reporting end date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

 

The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit and loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

 

Where an impairment subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit and loss.

 

2.9.  Employee benefits

 

Post-retirement benefits

 

The Group pays into defined contribution pension schemes on behalf of employees that are operated by third parties. The assets of the schemes are held separately from those of the Group in independently administered funds.

 

The amount charged to the income statement represents the contributions payable to the scheme in respect of the accounting period.

 

Share-based payments

 

The cost of share-based employee compensation arrangements, whereby employees receive remuneration in the form of share options, is recognised as an employee benefit expense in the statement of profit and loss.

 

The total expense to be apportioned over the vesting period of the benefit is determined by reference to the fair value (excluding the effect of non-market based vesting conditions) at the grant date. Fair value is measured by use of Black Scholes option valuation model.

 

At the end of each reporting period the assumptions underlying the number of awards expected to vest are adjusted for the effects of non-market based vesting conditions to reflect conditions prevailing at that date. The impact of any revisions to the original estimates is recognised in the statement of profit or loss, with a corresponding adjustment to equity.

 

Please refer to note 24 for further details.

 

2.10.     Earnings per share

 

The Group presents basic and diluted earnings per share on an IFRS basis. In calculating the weighted average number of shares outstanding during the period, any share restructuring is adjusted to allow comparability with other periods. 

 

Basic earnings per share is calculated by dividing the profit attributable to the Group's Ordinary shareholders by the weighted average number of Ordinary shares outstanding during the period.

 

The calculation of diluted earnings per share assumes conversion of all potentially dilutive Ordinary shares, which arise from share options outstanding. A calculation is performed to determine the number of share options that are potentially dilutive based on the number of shares that could have been acquired at fair value from the future assumed proceeds of the outstanding share options.

 

2.11.     Financial instruments

 

The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement. Financial instruments are recognised on trade date when the Group becomes a party to the contractual provisions of the instrument. Financial instruments are recognised initially at fair value plus, in the case of a financial instrument not a fair value through profit and loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument. Financial instruments are de-recognised on the trade date when the Group is no longer a party to the contractual provisions of the instrument.

 

Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings and trade and other payables.

 

Trade and other receivables and trade and other payables

 

Trade and other receivables are recognised initially at transaction price less attributable transaction costs. Trade and other payables are recognised initially at transaction price plus attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any expected credit losses in the case of trade receivables. If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments discounted at a market rate of interest for a similar debt instrument.

 

Unbilled revenue

 

Unbilled revenue is recognised at the fair value of consultancy services provided at the reporting date reflecting the stage of completion (determined by costs incurred to date as a percentage of the total anticipated costs) of each assignment. This is included in contract assets.

 

Interest-bearing borrowings

 

Interest-bearing borrowings are recognised initially at the present value of future payments discounted at a market rate of interest. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method, less any impairment losses.

 

Cash and cash equivalents

 

Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose only on the cash flow statement.

 

Preference shares

 

Preference shares, which are non-redeemable with non-discretionary dividends, have both equity and liability elements.

 

The liability element is calculated as the present value of the future contractual cash flows, discounted at a market rate of interest, estimated at 10%. This amount is recorded as a liability on an amortised cost basis until extinguished or converted. The equity element is calculated as the residual value (i.e. the difference between the proceeds from the issue of the shares less the liability component) and is recognised and included in shareholders' equity.

 

The dividends on the preference shares are recognised in the profit or loss as finance costs.

 

Contingent consideration

 

Contingent deferred consideration may arise on acquisitions where the consideration is dependent on the future performance of the acquired company. In circumstances where the acquiree will receive contingent consideration in a variable number of shares and is not employment-linked, the Group has recognised a financial liability at the fair value of the contingent consideration. Subsequent changes to the fair value of the contingent consideration are recognised in the statement of comprehensive income.

At the balance sheet date the contingent consideration liability represents the fair value of the remaining contingent consideration valued at acquisition. The contingent consideration liability for acquisitions under IFRS 3 contains estimation uncertainty as they relate to future expected performance of the acquired business. In estimating the fair value of the contingent consideration, management have assessed the potential future cash flows of the acquired business and the likelihood of an earn-out payment being made.     

 

2.12.     Provisions

 

A provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation as a result of a past event, that can be reliably measured and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects risks specific to the liability.

 

2.13.     Right-of-use assets: Leases

 

The Group leases two properties in the UK from which it operates.

 

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

 

·      Leases of low value assets; and

 

·      Leases with a duration of twelve months or less.

 

Lease liabilities are measured at the present value of contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Group's incremental borrowing rate on commencement of the lease is used. This has been estimated at 5.0 percent. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.

 

Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:

 

·      Lease payments made at or before commencement of the lease;

 

·      Initial direct costs incurred; and

 

·     The amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset (typically leasehold dilapidations).

 

Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.

 

When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to be made over the revised term, which are discounted at the same discount rate that applied on lease commencement. An equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term.

 

2.14.     Financing income and expenses

 

Financing expenses comprise interest payable, finance charges on shares classified as liabilities, finance leases recognised in the income statement using the effective interest method and the unwinding of the discount on provisions.

 

Financing income includes interest receivable on funds invested.

 

Interest income and interest payable are recognised in the statement of comprehensive income as they accrue, using the effective interest method.

 

2.15.     Standards issued but not yet effective

 

At the date of authorisation of these financial statements, there is expected to be no material impact to the Group or Company's financial statements from IFRSs, IFRICs or other standards or interpretations that have been issued but which are not yet effective.

 

At the date of authorisation of these financial statements, the Group has not applied the following new and revised IFRSs that have been issued but are not yet effective:

 

·      IAS 1 Presentation of liabilities as current or non-current

 

·      IAS 1 Disclosure of accounting policies

 

·      IAS 8 Definition of accounting estimates

 

The new standards, listed above, are not expected to have a material impact on the Group or Company in the current or future reporting periods and on foreseeable future transactions.

 

3.   ALTERNATIVE PERFORMANCE MEASURES

 

In order to provide better clarity to the underlying performance of the Group, Elixirr uses adjusted EBITDA and adjusted earnings per share as alternative performance measures. These measures are not defined under IFRS. These non-GAAP measures are not intended to be a substitute for, or superior to, any IFRS measures of performance, but have been included as the Directors consider adjusted EBITDA and adjusted earnings per share to be key measures used within the business for assessing the underlying performance of the Group's ongoing business across periods. Adjusted EBITDA excludes the following items from operating profit: non-cash depreciation and amortisation charges, share-based payments and non-recurring exceptional costs. Adjusted EPS excludes the following items from profit after tax: amortisation charges, share-based payments and non-recurring exceptional items and their related tax impacts. Please refer to note 6 for reconciliations to Alternative Performance Measures ('APMs').

 

4.   SEGMENT REPORTING

 

	FY 21	FY 20
Group	£'000s	£'000s
Revenue from contracts with customers arises from:
United Kingdom	22,375	10,077
USA	12,588	6,305
Rest of World	15,648	13,936
	50,611	30,318

 

IFRS 8 requires that operating segments be identified on the basis of internal reporting and decision-making. The Group is operated as one global business by its executive team, with key decisions being taken by the same leaders irrespective of the geography where work for clients is carried out. Management therefore consider that the Group has one operating segment. As such, no additional disclosure has been provided under IFRS 8.

 

The Company is a holding Company operating in the UK with its assets and liabilities given in the Company Statement of Financial Position. Other Company information is provided in the other notes to the accounts.

 

5.   PROFIT BEFORE TAXATION

 

The following items have been included in arriving at profit before taxation:

 

	FY 21	FY 20
Group	£'000s	£'000s
Depreciation of property, plant and equipment:
- Owned assets	138	147
- Leased assets	532	583
Amortisation of intangible assets	1,378	1,741
Share-based payments	1,152	47
Foreign exchange (gains)/losses	(16)	44
Exceptional items	154	730

 

The exceptional items totaling £153,707 in FY 21 include non-recurring costs associated with the acquisition of Retearn, Coast Digital and other merger and acquisition activities. The exceptional items totaling £729,573 in FY 20 include non-recurring costs associated with the pre-initial public offering ('IPO') capital restructuring, IPO on the Alternative Investment Market ('AIM') and EMI share option scheme (refer to note 24).

 

During the year the Group obtained the following services from the Company's auditors as detailed below:

 

	FY 21	FY 20
Group	£'000s	£'000s
Services provided by the Company's auditors:
Audit fees - parent Company and consolidated accounts	22	20
Audit fees - subsidiary companies	67	58
Other services:
Due diligence	36	21
IPO fees	-	144

 

 

6.   RECONCILIATIONS TO ALTERNATIVE PERFORMANCE MEASURES ("APMS")

 

As set out in note 3, Elixirr uses adjusted EBITDA and adjusted earnings per share as alternative performance measures.

                       

The table below sets out the reconciliation of the Group's adjusted EBITDA and adjusted profit before tax from profit before tax:

 

	FY 21	FY 20
Group	£'000s	£'000s
Profit before tax	12,166	5,818
Adjusting items:
Exceptional items (note 5)	154	730
Amortisation of intangible assets	1,378	1,741
Share-based payments	1,152	47
Adjusted profit before tax	14,850	8,336
Depreciation	670	730
Net finance expense (note 7)	217	660
Adjusted EBITDA	15,737	9,726

 

The table below sets out the reconciliation of the Group's adjusted profit after tax to adjusted profit before tax:

 

	FY 21	FY 20
Group	£'000s	£'000s
Adjusted profit before tax	14,850	8,336
Tax charge	(2,022)	(1,024)
Tax impact of adjusting items	(566)	(478)
Adjusted profit after tax	12,262	6,834

 

Adjusted profit after tax is used in calculating adjusted basic and adjusted diluted EPS. Adjusted profit after tax is stated before adjusting items and their associated tax effects.

 

Adjusted EPS is calculated by dividing the adjusted profit after tax for the period attributable to Ordinary shareholders by the weighted average number of Ordinary shares outstanding during the period. Adjusted diluted EPS is calculated by dividing adjusted profit after tax by the weighted average number of shares adjusted for the impact of potential Ordinary shares.

 

Potential Ordinary shares are treated as dilutive when their conversion to Ordinary shares would decrease EPS. Please refer to note 11 for further details.

 

	FY 21	FY 20
Group	p	p
Adjusted EPS	26.64	16.72
Adjusted diluted EPS	24.19	15.32

 

 

7.   NET FINANCE EXPENSE

 

	FY 21	FY 20
Group	£'000s	£'000s
Finance income:
On short term deposits and investments	29	20
	29	20
Finance costs:
On bank loans and overdrafts at amortised cost	-	(31)
Preference share dividend	-	(387)
On lease liability	(246)	(262)
	(246)	(680)
Net finance expense	(217)	(660)

 

 

8.   Taxation on profit on ordinary activities

 

Analysis of tax charge:

 

	FY 21	FY 20
Group	£'000s	£'000s
Current tax
In respect of the current year	2,926	1,248
Adjustments in respect of prior periods	(398)	(75)
Total current tax	2,528	1,173
Deferred tax
In respect of the current year	(506)	(149)
Total deferred tax	(506)	(149)
Income tax expense	2,022	1,024

 

 

Numerical reconciliation of income tax expense:

 

The tax assessed on the profit on ordinary activities for the year is lower than the standard rate of corporation tax in the UK of 19%.

 

	FY 21	FY 20
Group	£'000s	£'000s
Profit before taxation	12,166	5,818
Profit on ordinary activities multiplied by rate of corporation tax in UK of 19% (FY 20: 19%)	2,312	1,105
Effects of:
Exceptional items not deductible	29	139
Expenses not deductible	65	98
Difference in overseas tax rates	125	-
Adjustments in respect of prior periods	51	(75)
R&D tax relief in respect of prior periods	(450)	-
Deferred tax release re trademarks	(110)	(138)
Utilisation of foreign losses from prior periods	-	(105)
Total taxation	2,022	1,024

 

 

 

9.   Deferred tax

 

Net deferred tax asset/(liability):

 

The balances comprise temporary differences attributable to:

 

	Group		Company
	FY 21	FY 20	FY 21	FY 20
	£'000s	£'000s	£'000s	£'000s
Deferred tax liability
Property, plant and equipment	(52)	(64)	-	-
Intangible assets	(571)	(483)	-	-
Total deferred tax liability	(623)	(547)	-	-
Deferred tax asset
Share-based payments	966	161	-	161
Short-term timing differences	231	-	-	-
Total deferred tax asset	1,197	161	-	161
Net deferred tax asset/(liability)	574	(386)	-	161

 

The deferred tax liability on intangible assets relates to trademarks and customer relationships and those on property, plant and equipment relate to accelerated capital allowances.  

 

The deferred tax asset recognised represents the future tax effect of share-based payment charges in respect of options that are yet to vest. Deductions in excess of the cumulative share-based payment charge recognised in the statement of comprehensive income are recognised in equity.

 

 

Movements in deferred tax:

 

	Property, plant and equipment	Intangible assets	Share-based payments	Short-term timing differences	Total
	£'000s	£'000s	£'000s	£'000s	£'000s
At 31 December 2019	(57)	(481)	-	-	(538)
Acquisition of business	(7)	(142)	-	-	(149)
Credited to equity	-	-	152	-	152
Credited to profit and loss	-	140	9	-	149
At 31 December 2020	(64)	(483)	161	-	(386)
Acquisition of business	(2)	(214)	-	-	(216)
Credited to equity	-	-	670	-	670
Credited to profit and loss	14	126	135	231	506
At 31 December 2021	(52)	(571)	966	231	574

 

 

10.  Ordinary dividends

 

No interim Ordinary share dividends were paid in relation to FY 20 or FY 21. The Company paid a final Ordinary share dividend in respect of FY 20 of 2.2 pence per Ordinary share on 13^th August 2021. 

 

The Directors are proposing a final Ordinary share dividend in respect of FY 21. Please refer to post balance sheet events note 28 for final Ordinary share dividend proposed.

 

 

11.  Earnings per share

 

The Group presents non-adjusted and adjusted basic and diluted earnings per share ('EPS') for its Ordinary shares. Basic EPS is calculated by dividing the profit for the period attributable to Ordinary shareholders by the weighted average number of Ordinary shares outstanding during the period.

 

Diluted EPS takes into consideration the Company's dilutive contingently issuable shares. The weighted average number of Ordinary shares used in the diluted EPS calculation is inclusive of the number of share options that are expected to vest subject to performance criteria, as appropriate, being met.

 

The profits and weighted average number of shares used in the calculations are set out below:

 

	FY 21	FY 20
Basic and Diluted EPS
Profit attributable to the Ordinary equity holders of the Group used in calculating basic and diluted EPS (£'000s)	10,144	4,794
Basic earnings per Ordinary share (p)	22.04	11.73
Diluted earnings per Ordinary share (p)	20.01	10.75

 

	FY 21	FY 20
Adjusted Basic and Diluted EPS
Profit attributable to the Ordinary equity holders of the Group used in calculating adjusted basic and diluted EPS (note 6) (£'000s)	12,262	6,834
Adjusted basic earnings per Ordinary share (p)	26.64	16.72
Adjusted diluted earnings per Ordinary share (p)	24.19	15.32
	FY 21	FY 20
	Number	Number
Weighted average number of shares
Weighted average number of Ordinary shares used as the denominator in calculating non-adjusted and adjusted basic EPS	46,031,070	40,871,621
Number of dilutive shares	4,655,445	3,746,287
Weighted average number of Ordinary shares used as the denominator in calculating non-adjusted and adjusted diluted EPS	50,686,515	44,617,908

 

 

 

12.  Employees and directors

 

The monthly average number of persons employed by the Group during the year, analysed by category, was as follows:

 

	FY 21	FY 20
Group	Number	Number
Directors, management and partners	25	18
Provision of services	180	92
Administration	20	12
	225	122

 

 

The average number of persons employed and staff costs includes both executive and non-executive directors.

 

The aggregate payroll costs of these persons were as follows:

 

	FY 21	FY 20
Group	£'000s	£'000s
Wages and salaries	22,085	12,867
Social security costs	2,748	1,724
Pension costs	453	251
Share-based payment charge	1,152	47
	26,438	14,889

 

 

Defined contribution pension schemes are operated by third parties on behalf of the employees of the Group. The assets of the schemes are held separately from those of the Group in independently administered funds. The pension charge represents contributions payable by the Group to the funds and amount to £453,023 for FY 21 (FY 20: £251,467). Contributions amounting to £55,897 (FY 20: £36,162) were payable to the fund as at 31^st December 2021 and are included in creditors.         

                                                                                               

Key management personnel include the Directors and senior managers across the Group who together have authority and responsibility for planning, directing and controlling the activities of the Group. The total compensation (including employers' national insurance) paid in respect of key management personnel for services provided to the Group is as follows:

 

 

                                                           

	Group		Company
	FY 21	FY 20	FY 21	FY 20
	£'000s	£'000s	£'000s	£'000s
Aggregate emoluments including short term employee benefits	4,773	4,095	144	72
	4,773	4,095	144	72

 

 

The share-based payment charge in respect of key management personnel was £162,640 (FY 20: Nil).

 

Details of the Directors' remuneration, including salary, bonus, share option awards, pension and other benefits are included in the tables within the Directors' Report.

 

 

13.  Goodwill and intangible fixed assets

 

	Goodwill	Trademarks	Customer relationships	Total
Group	£'000s	£'000s	£'000s	£'000s
Cost
At 31 December 2019	43,299	7,135	-	50,434
Acquisition of business	2,856	-	748	3,604
At 31 December 2020	46,155	7,135	748	54,038
Acquisition of business (note 14)	5,257	-	1,126	6,383
At 31 December 2021	51,412	7,135	1,874	60,421
Amortisation
At 31 December 2019	-	(1,110)	-	(1,110)
Charge for the period	-	(1,728)	(12)	(1,740)
At 31 December 2020	-	(2,838)	(12)	(2,850)
Charge for the year	-	(1,233)	(145)	(1,378)
At 31 December 2021	-	(4,071)	(157)	(4,228)
Net book value
At 31 December 2020	46,155	4,297	736	51,188
At 31 December 2021	51,412	3,064	1,717	56,193

 

The Company has no intangible assets.

 

Goodwill

 

Goodwill arising on the acquisition of a business in FY 20 relates to the acquisition of Coast Digital on 28^th October 2020.

 

Goodwill arising on the acquisition of a business in FY 21 relates to the acquisition of Retearn and was calculated as the fair value of initial consideration paid less the fair value of the net identifiable assets at the date of the acquisition (see note 14).

 

Goodwill impairment review

 

The breakdown of goodwill by acquisition is listed below:

 

	FY 21	FY 20
	£'000s	£'000s
Elixirr Consulting Limited	43,299	43,299
Coast Digital Limited	2,856	2,856
The Retearn Group Limited	5,257	-
	51,412	46,155

 

Following initial recognition, goodwill is subject to impairment reviews, at least annually, and measured at fair value less accumulated impairment losses. Any impairment is recognised immediately in the consolidated statement of comprehensive income and is not subsequently reversed.

 

Key assumptions used in value in use calculation

 

The key assumptions for the value in use calculation are those regarding:

 

·      number of years of cash flows used and budgeted EBITDA growth rate;

 

·      discount rate; and

 

·      terminal growth rate.

 

The carrying values of goodwill for Elixirr Consulting Limited, Coast Digital and Retearn are reflected in the above table and are calculated as the fair value of the consideration payable for the acquisition less the net assets on acquisition. No impairment is indicated for Elixirr Consulting Limited, Coast Digital or Retearn using the value in use calculation.                                                              

                                                                                                                                               

Number of years of cash flows used and budgeted growth rate

 

The recoverable amount of the CGU is based on a value in use calculation using specific cash flow projections over a five-year period and a terminal growth rate thereafter.

 

The budget for the following financial year forms the basis for the cash flow projections for a CGU. The cashflow projections for the four years subsequent to the budget year reflect the Directors' expectations based on market knowledge, numbers of new engagements and the pipeline of opportunities.      

                                                                                                                                               

Discount rate

 

The Group's post-tax weighted average cost of capital has been used to calculate a discount rate of 10% for the Group and 17% for Coast Digital and Retearn. This reflects current market assessments of the time value of money for the period under review and the risks specific to the Group and company acquired.

 

Terminal growth rate

 

An appropriate terminal growth rate is selected, based on the Directors' expectations of growth beyond the five-year period. The terminal growth rate used is 2%.

 

Sensitivity to changes in assumptions

 

With regard to the value in use assumptions, the Directors believe that reasonably possible changes in any of the above key assumptions would not cause the carrying value of the unit to exceed its recoverable amount. In forming this view, the Directors have considered the following:

 

	Elixirr Consulting Limited		Coast Digital Limited		The Retearn Group Limited
	FY 21	FY 20	FY 21	FY 20	FY 21	FY 20
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
On current cash flow projections, the discount rate would need to exceed the % alongside for there to be any impairment; and	27.1%	26.0%	33.9%	25.1%	24.6%	-
In the case of no increase in future cash flows above those projected for the following year, the discount rate would have to exceed the % alongside for there to be any impairment.	23.6%	15.6%	29.9%	22.0%	23.4%	-

 

Customer relationships

 

FY 20 additions represent the fair value of customer relationships from the acquisition of Coast Digital.

 

FY 21 additions represent the fair value of customer relationships from the acquisition of Retearn. Refer to note 14 for further details.

 

The fair value has been determined by applying the Multi-Period Excess Earnings method to the cash flows expected to be earned from customer relationships. The key management assumptions are in relation to forecast revenues, margins and discount factors. The fair value represents the present value of the earnings the customer relationships generate.  

 

A useful economic life of 10 years for Coast Digital and 11 years for Retearn has been deemed appropriate based on the average realisation rate of cumulative cash flows. The projected cash flows have been discounted over this period. The amortisation charge since acquisition is recognised within administrative expenses.

 

14.  Business combinations

 

On 9^th April 2021 the Group acquired 100% of the share capital and voting interests of Retearn, a UK-based procurement, transformation and insights consultancy firm. Their services enable clients to self-fund their transformation and growth aspirations through savings elsewhere in the business.

 

The acquisition brings specialists in self-funded transformation, and allows the Group to meet demand from clients to find savings to fund strategic initiatives.

 

The Group acquired Retearn for a total consideration of approximately £7.4 million, consisting of:

 

·      An initial cash consideration of £2.15 million;

 

·   The issue of 543,939 Ordinary shares of 0.005 pence each in the capital of the Company ("Ordinary shares") at a price of 396 pence per Ordinary share (being the closing mid-market price of an Ordinary Share on 8^th April 2021), equating to an additional £2.15 million;

 

·   Potential earn-out payments of up to £0.73 million in cash and up to £1.96 million in Ordinary shares totalling a maximum of £2.7 million which are contingent on Retearn achieving revenue growth and EBITDA margin targets in periods up to 30^th June 2024;

 

·   An additional surplus cash consideration of £0.4 million based on the working capital of Retearn at completion.

 

Of the £7.4 million consideration, £2.89 million was paid in cash during the year, £2.15 million was satisfied through the issue of new Ordinary shares and £0.56 million was satisfied through shares sold from the EBT. The remaining £1.4 million is recorded within liabilities, of which £0.23 million is recorded within current liabilities and £1.17 million in non-current liabilities (refer to note 21). The remaining earn out consideration of £1.4 million has been estimated by management based on anticipated future revenue growth and EBITDA and the impact of discounting is considered to be immaterial.

 

The Ordinary shares issued pursuant to the acquisition are subject to the same restrictions as certain other shareholders of the Company, as described in the Company's IPO Admission Document. These restrictions consisted of a lock-in arrangement until 8^th July 2021 and certain further limitations to the sale of shares until 8^th July 2024.

                                                                                               

Included within exceptional items is an amount of £139,633 for stamp duty, legal and advisory fees in relation to the acquisition. Retearn contributed £5.89 million to the Group's revenue and £1.22 million to the Group's profit before tax for the period from the date of acquisition to 31^st December 2021. If the acquisition of Retearn had been completed on 1^st January 2021, Group revenues for FY 21 would have been £52.62 million and Group profit before tax would have been £12.48 million.

 

In calculating the goodwill arising, the fair value of the net assets of Retearn have been assessed, and there were no fair value adjustments deemed necessary, other than for the recognition of customer relationship intangibles and the related deferred tax. Customer relationships were assessed to be separately identifiable assets, recognised at fair value and are included within intangible assets below. Refer to note 13 for further details.

 

The table below sets out the amounts recognised as of the acquisition date for each major class of assets acquired and liabilities assumed, the consideration and goodwill on the acquisition of Retearn:

 

	Fair value
	£'000s
Assets
Non-current assets
Intangible assets	1,126
Property, plant and equipment	14
Total non-current assets	1,140
Current assets
Trade and other receivables	1,407
Cash and cash equivalents	681
Total current assets	2,088
Total assets	3,228
Liabilities
Current liabilities
Trade and other payables	754
Corporation tax	155
Loans and borrowings	-
Total current liabilities	909
Non-current liabilities
Loans and borrowings	-
Deferred tax liability	215
Other non-current liabilities	-
Total non-current liabilities	215
Total liabilities	1,125
Fair value of net assets acquired	2,104
Goodwill (note 13)	5,257
Fair value of purchase consideration	7,361
Cash and cash equivalents in subsidiaries acquired	681

 

 

 

 

15.  Property, plant and equipment

 

	Right of use asset	Furniture and Fittings	Leasehold Improvements	Computer Equipment	Total
Group	£'000s	£'000s	£'000s	£'000s	£'000s
Cost
At 31 December 2019	5,918	65	499	58	6,540
Acquisition of business	-	7	-	25	32
Disposals	-	-	(5)	(2)	(7)
Additions	-	-	11	27	38
At 31 December 2020	5,918	72	505	108	6,603
Acquisition of business (note 14)	-	-	-	14	14
Disposals	-	-	-	(15)	(15)
Additions	509	17	-	81	607
At 31 December 2021	6,427	89	505	188	7,209
Depreciation
At 31 December 2019	(263)	(25)	(29)	(18)	(335)
Disposals	-	-	5	2	7
Charge for the year	(526)	(38)	(125)	(41)	(730)
At 31 December 2020	(789)	(63)	(149)	(57)	(1,058)
Disposals	-	-	-	15	15
Charge for the year	(532)	(7)	(76)	(55)	(670)
At 31 December 2021	(1,321)	(70)	(225)	(97)	(1,713)
Net book value
At 31 December 2020	5,129	9	356	51	5,545
At 31 December 2021	5,106	19	280	91	5,496

 

 

The Company has no property, plant and equipment.

 

The lease liability in respect of the right-of-use asset was £5,245,110 (FY 20: £5,285,741) and relates to property leases.

 

 

16.  Investments

 

	Group companies
Company	£'000s
Cost/carrying value
At 31 December 2019	50,000
Acquisition of business	5,156
At 31 December 2020	55,156
Acquisition of business	7,499
Group companies share-based payments	1,152
At 31 December 2021	63,807

 

The Group has no investments.

 

The undertakings in which the Company's interest at the year-end is 20 percent or more are as follows:

 

Subsidiary undertakings	Country of incorporation	Principal activity	Registered office	FY 21	FY 20
Elixirr Consulting Limited	England and Wales	Consultancy	12 Helmet Row, London, EC1V 3QJ	100%	100%
Elix-IRR Consulting Services Limited (indirect)**	England and Wales	Services to the Group	12 Helmet Row, London, EC1V 3QJ	100%	100%
Elix-IRR Consulting Services (South Africa) Limited (indirect)	England and Wales	Services to the Group	12 Helmet Row, London, EC1V 3QJ	100%	100%
Elixirr LLC (indirect)	United States	Consultancy	2711 Centerville Road, Suite 400, Wilmington, Delaware 19808	100%	100%
Elixirr Consulting AI Limited (indirect)*	England and Wales	Dormant activities	12 Helmet Row, London, EC1V 3QJ	-	100%
Elixirr Creative Limited (indirect)**	England and Wales	Information technology consultancy	12 Helmet Row, London, EC1V 3QJ	100%	100%
Den Creative Limited (indirect)	England and Wales	Information technology consultancy	12 Helmet Row, London, EC1V 3QJ	100%	100%
Elixirr Services Limited (indirect)	England and Wales	Dormant activities	12 Helmet Row, London, EC1V 3QJ	100%	100%
Coast Digital Limited	England and Wales	Information technology consultancy	12 Helmet Row, London, EC1V 3QJ	100%	100%
The Retearn Group Limited	England and Wales	Consultancy	12 Helmet Row, London, EC1V 3QJ	100%	-

 

* Elixirr Consulting AI Limited applied to be struck off the Companies House register on 19^th October 2021 and was dissolved on 26^th January 2021.

 

** Elix-IRR Consulting Services Limited and Elixirr Creative Limited applied to be struck off the Companies House register on 23^rd December 2021 and were dissolved on 22^nd March 2022.

 

 

17.  Receivables

 

	Group		Company
	FY 21	FY 20	FY 21	FY 20
	£'000s	£'000s	£'000s	£'000s
Non-current assets
Loans to shareholders	3,991	7,784	3,991	6,672
Other receivables	1,535	596	1,104	-
	5,526	8,380	5,095	6,672
Current assets
Trade receivables	6,432	3,790	-	-
Less: allowance for doubtful debts	-	(20)	-	-
Trade receivables - net	6,432	3,770	-	-
Prepayments and deposits	487	373	18	22
Contract assets	12	39	-	-
Amounts owed by group companies	-	-	1,908	2,975
Other receivables	33	38	2	3
	6,963	4,220	1,928	3,000

 

 

The Company was due £1,907,873 as at 31^st December 2021 from Elixirr Consulting Limited for management charges net of costs incurred by Elixirr Consulting Limited on behalf of the Company. As at 31^st December 2020, the Company was due £2,975,118 from other Group companies including £10,000 from Elix-IRR Consulting Services (South Africa) Limited and £2,965,118 from Elixirr Consulting Limited for preference share dividend, management charges and an Ordinary share dividend net of costs incurred by Elixirr Consulting Limited on behalf of the Company for the year.

 

Loans to shareholders represent amounts owed to the Company in FY 21, and amounts owed to the Company and Elixirr Consulting Limited in FY 20 by shareholders, who are senior employees of the Group. The loans to shareholders are interest-free and expected to be repaid beyond one year.

 

Non-current other receivables include property deposits and section 455 tax receivable.

 

Trade receivables are non-interest bearing and receivable under normal commercial terms. Management considers that the carrying value of trade and other receivables approximates to their fair value. The carrying value of non-current other receivables and loans to shareholders is considered to be a reasonable approximation of their fair value, but has not been discounted to present value.     

 

The impairment loss included in administrative expenses in the statement of comprehensive income for the period in respect of bad and doubtful trade receivables was nil (FY 20: £20,416).

 

The expected credit loss on trade and other receivables was not material at the current or prior year ends. For analysis of the maximum exposure to credit risk, please refer to note 26.

 

The ageing of trade receivables of the Group as at 31^st December 2021:

 

	Gross carrying amount	Loss allowance	Net carrying amount
Group	£'000s	£'000s	£'000s
< 31 days	4,599	-	4,599
31-60 days	1,299	-	1,299
61-90 days	444	-	444
91-120 days	90	-	90
121+ days	-	-	-
At 31 December 2021	6,432	-	6,432

 

 

The ageing of trade receivables of the Group as at 31^st December 2020:

 

	Gross carrying amount	Loss allowance	Net carrying amount
Group	£'000s	£'000s	£'000s
< 31 days	2,201	-	2,201
31-60 days	1,318	-	1,318
61-90 days	225	-	225
91-120 days	26	-	26
121+ days	20	(20)	-
At 31 December 2020	3,790	(20)	3,770

 

 

18.  Cash and cash equivalents

 

	Group		Company
	FY 21	FY 20	FY 21	FY 20
	£'000s	£'000s	£'000s	£'000s
Cash at bank and in hand	31,795	17,503	13,576	10,678
	31,795	17,503	13,576	10,678

 

 

Cash at bank includes £4,003,457 (FY 20: £6,005,550) on 95-day notice deposit and £4,003,092 (FY 20: £4,002,055) on 50% instant and 50% 32-day notice deposit which earned interest at an average of 0.45% and 0.25% respectively during the year. 

 

 

 

 

19.  Trade and other payables

 

	Group		Company
	FY 21	FY 20	FY 21	FY 20
	£'000s	£'000s	£'000s	£'000s
Trade payables	825	526	32	58
Other taxes and social security costs	1,138	1,577	5	6
Accruals	8,081	4,962	97	33
Contract liabilities	2,007	935	-	-
Other payables	3	106	-	-
Amounts owed to group companies	-	-	-	306
	12,055	8,107	134	403

 

As at 31^st December 2020, the Company owed £306,492 to other Group companies including £1,564 owed to Elixirr LLC and £304,928 to Coast Digital for a portion of the cash consideration on acquisition paid by Coast Digital to selling shareholders.

 

The fair value of trade and other payables approximates to book value at the year end. Trade payables are non-interest bearing and are normally settled monthly.

 

Trade payables comprise amounts outstanding for trade purchases and ongoing costs.

 

Contract liabilities arise from the Group's revenue generating activities relating to payments received in advance of performance delivered under a contract. These contract liabilities typically arise on short-term timing differences between performance obligations in some milestone or fixed fee contracts and their respective contracted payment schedules.

 

 

20.  Loans and borrowings

 

	Group		Company
	FY 21	FY 20	FY 21	FY 20
	£'000s	£'000s	£'000s	£'000s
Current liabilities
Right of use lease liability	485	448	-	-
	485	448	-	-
Non-current liabilities
Right of use lease liability	4,760	4,837	-	-
	4,760	4,837	-	-

 

 

The movement in the right of use lease liability was as follows:

 

	Right of use lease liability
Group	£'000s
At 31 December 2019	5,908
Interest payable	262
Repayment of lease liabilities	(885)
At 31 December 2020	5,285
Additions	407
Interest payable	246
Repayment of lease liabilities	(694)
At 31 December 2021	5,245

 

 

The additions in FY 21 relate to a new property lease entered into by Coast Digital.

 

As disclosed in the summary of significant accounting policies, the discount rate used in determining the present value of the lease liability was 5%.

 

Maturity analysis of contracted undiscounted cashflows of the right of use lease liability are as follows:

 

	FY 21	FY 20
	£'000s	£'000s
Lease liability less than one year	727	694
Lease liability greater than one year and less than five years	3,031	2,775
Lease liability greater than five years	2,632	3,122
Total liability	6,390	6,591
Finance charges included above	(1,145)	(1,306)
	5,245	5,285

 

 

21.  Other creditors and other non-current liabilities

 

	Group		Company
	FY 21	FY 20	FY 21	FY 20
	£'000s	£'000s	£'000s	£'000s
Other creditors
Contingent consideration	436	612	436	612
	436	612	436	612
Other non-current liabilities
Dilapidations	250	195	-	-
Contingent consideration	1,370	406	1,370	406
	1,620	601	1,370	406

 

 

Other creditors and other non-current liabilities include earn-out payments which are contingent on performance and arose from the acquisition of Retearn and Coast Digital.

 

Other non-current liability payments fall due beyond 12 months from the reporting date.

 

 

22.  Share capital, share premium and merger relief reserve

 

	FY 21
	Issued shares	Par value	Merger relief reserve	Share premium
Group and Company	Number	£	£'000s	£'000s
£0.00005 Ordinary shares	46,186,481	2,309	46,870	24,952
£1 Redeemable Preference shares	50,001	50,001	-	-
	46,236,482	52,310	46,870	24,952

 

	FY 20
	Issued shares	Par value	Merger relief reserve	Share premium
Group and Company	Number	£	£'000s	£'000s
£0.00005 Ordinary shares	45,642,542	2,282	46,870	19,729
£1 Redeemable Preference shares	50,001	50,001	-	-
	45,692,543	52,283	46,870	19,729

 

 

The total number of voting rights in the Company at 31^st December 2021 was 46,186,481 (FY 20: 45,642,542).

 

In FY 20 there was some restructuring of share classes. Different classes of shares (Class A Ordinary shares, Class B Ordinary shares, Class B Founder Ordinary shares, Class C Ordinary shares, Deferred shares and Non-redeemable Preference shares) were in existence during FY 20, but these were re-designated or bought back and cancelled during FY 20 and there were none in issue at 31^st December 2020 or 31^st December 2021. Please refer to FY 20 annual financial statements for further information regarding the restructuring of these share classes.   

Initial Public Offering and Listing

 

In FY 20 the Admission Document for the Company's IPO and admission to AIM market was published on 6^th July 2020. The Company placed 9,216,590 new Ordinary shares and selling shareholders placed 2,304,148 existing shares at 217 pence per share. The Company received net proceeds of approximately £18.2m (after deduction of estimated commissions, fees and expenses payable by the Company).                                                                                                     

 

The Company's Ordinary shares were admitted to trading on the AIM market of the London Stock Exchange on 9^th July 2020, under the ticker "ELIX" and the ISIN GB00BLPHTX84.

 

Immediately following Admission, the Company's issued share capital (including the additional Ordinary shares issued pursuant to the Placing) were as follows:

·     £2,260, comprising 45,197,790 Ordinary shares of £0.00005 each (all of which is fully paid or credited as fully paid);

·      £50,001, comprising 50,001 Redeemable preference shares of £1.00 each.

 

Ordinary shares

 

On a show of hands every holder of Ordinary shares present at a meeting, in person or by proxy, is entitled to one vote, and on a poll each share is entitled to one vote.  The shares entitle the holder to participate in dividends, and to share in the proceeds of winding up the Company in proportion to the number of and amounts paid on the shares held. These rights are subject to the prior entitlements of the Redeemable Preference shareholders.

 

Movements in Ordinary shares:

 

	Issued shares	Par value	Merger relief reserve	Share premium
Group and Company	Number	£	£'000s	£'000s
At 31 December 2019	-	-	-	-
Redesignation/conversion	35,981,200	1,799	46,870	23
IPO share issue, net of transaction costs	9,216,590	461	-	18,583
Share issue as consideration for a business combination	444,752	22	-	1,123
At 31 December 2020	45,642,542	2,282	46,870	19,729
Share issue as consideration for a business combination (note 14)	543,939	27	-	2,154
Sale of Ordinary shares from the EBT	-	-	-	3,069
At 31 December 2021	46,186,481	2,309	46,870	24,952

 

 

Redeemable Preference shares

 

On 22^nd June 2020, 50,001 Redeemable Preference shares with a nominal value of £1.00 each were issued. There are no voting rights attached to the Redeemable Preference shares.  The Redeemable Preference shares were initially classified as a financial liability at date of issue. The shares were reclassified from loans and borrowings to share capital when the Company bought back the shares in FY 20 and are held in the EBT.  The Redeemable Preference shares are entitled to dividends at a rate of 1% per annum of paid up nominal value. The shares have preferential right, before any other class of share, to a return of capital on winding-up or reduction of capital or otherwise of the Company.  The Redeemable Preference shares are redeemable 100 years from the date of issue or at any time prior at the option of the Company.

 

Movements in Redeemable Preference shares:

	Issued shares	Par value	Merger relief reserve	Share premium
Group and Company	Number	£	£'000s	£'000s
At 31 December 2019	-	-	-	-
Reclassified from loans and borrowings	50,001	50,001	-	-
At 31 December 2020 and 31 December 2021	50,001	50,001	-	-

 

 

23.  EBT share reserve

 

The Employee Benefit Trust ('EBT') is accounted for under IFRS 10 and is consolidated on the basis that the parent has control, thus the assets and liabilities of the EBT are included on the Company and Group statement of financial position and shares held by the EBT in the Company are presented as a deduction from equity. The EBT share reserve comprises of Ordinary and Redeemable Preference shares bought and held in the Group's EBT.

 

The below table sets out the number of EBT shares held and their weighted average cost:

 

	FY 21
	Shares held in EBT	Weighted average cost	Total cost
Group and Company	Number	£	£'000s
Ordinary shares	547,225	3.92	2,143
Redeemable Preference shares	50,001	1.01	50
	597,226		2,193
	FY 20
	Shares held in EBT	Weighted average cost	Total cost
Group and Company	Number	£	£'000s
Ordinary shares	704,667	1.70	1,198
Redeemable Preference shares	50,001	1.01	50
	754,668		1,248

 

 

24.  Share-based payments

 

Share Option Plans

 

During FY 21, a total of 7,700,430 (FY 20: 6,519,000) share options were granted to employees and senior management.

 

Details of share option awards made are as follows:

 

	Number of share options	Weighted average exercise price
Outstanding at the beginning of the year	5,836,200	0.71
Granted during the year	7,700,430	4.52
Forfeited during the year	(2,197,574)	2.88
Outstanding at the year end	11,339,056	2.87
Exercisable at the year end	-	-

 

 

No share options were exercisable in the year.

 

The options outstanding as at 31^st December 2021 had a weighted average remaining contractual life of 4 years (FY 20: 4 years) and a weighted average exercise price of £2.87 (FY 20: £0.71) per share. The weighted average of the estimated fair values of the options outstanding as at 31^st December 2021 is £2.95 (FY 20: £2.45) per share.

 

The options were fair valued at the grant date using the Black Scholes option valuation model. The inputs into the model were as follows:

 

	FY 21	FY 20
Weighted average share price at grant date (£)	5.07	0.68
Weighted average exercise price (£)	4.52	0.68
Volatility (%)	21.69%	15.00%
Weighted average vesting period (years)	5	5
Risk free rate (%)	0.34%	0.05%
Expected dividend yield (%)	1.14%	1.50%

 

 

Reasonable changes in the above inputs do not have a material impact on the share-based payment charge in FY 21. 

 

On 28^th October 2020, in conjunction with the acquisition of Coast Digital, share options were issued to certain management of Coast Digital. These options are employment-linked and vesting is contingent on Coast Digital achieving EBITDA targets in FY 21, FY 22 and FY 23.  The options have a fair value of £1.1 million and was determined using the share price at the date of grant of £2.50. The Coast Digital options outstanding at 31^st December 2021 had a weighted average remaining contractual life of 2.5 years and a weighted average exercise price of £0.00005 per share.

 

On 12^th April 2021, in conjunction with the acquisition of Retearn (refer to note 14), share options were issued to selling shareholders. These options are employment-linked and vesting is contingent on Retearn and individual selling shareholders achieving revenue growth targets in FY 21, FY 22, FY 23 and FY 24.  The options have a fair value of £1.3 million and were issued at an exercise price of £0.00005 per share. The fair value of the options was determined using the share price at the date of grant of £4.70. The options outstanding at 31^st December 2021 had a weighted average remaining contractual life of 2.5 years and a weighted average exercise price of £0.00005 per share.

 

The Coast Digital and Retearn share options referred to above are excluded from the reconciliation set out above of the number of options outstanding. The share options are for a fixed monetary consideration where the number of share options is variable and determined with reference to the share price at the date of vesting.

 

Employee Share Purchase Plan ('ESPP')

 

On 16^th June 2021, an ESPP was implemented for FY 21. Under the scheme all of the employees of the Group (excluding Partners) are eligible to contribute a percentage of their gross salary (5% - 20%) to purchase shares in the Company and the Company awarded the employees with matching shares on the basis of one matching share for every one employee share held on 1^st January 2022. The matching shares vest equally over a 5 year period with the first share vesting on 31^st January 2023.

 

 

25.  Cash flow information

 

Cash generated from operations:

	Group		Company
	FY 21	FY 20	FY 21	FY 20
	£'000s	£'000s	£'000s	£'000s
Profit before taxation	12,166	5,818	4,051	9,450
Adjustments for:
Depreciation and amortisation	2,048	2,471	-	-
Net finance expense/(income)	217	660	(20)	8
Share-based payments	1,152	47	-	47
(Increase)/decrease in trade and other receivables	(1,336)	1,558	531	(2,474)
Increase/(decrease) in trade and other payables	2,625	2,712	(295)	96
Foreign exchange	(16)	44	(2)	-
	16,856	13,309	4,265	7,127

 

 

Reconciliation of liabilities from financing activities:

	Borrowings	Non-redeemable Preference Shares	Leases	Total
Group	£'000s	£'000s	£'000s	£'000s
At 31 December 2019	1,625	6,631	5,908	14,164
Cash flows	(1,656)	(518)	(885)	(3,059)
Other changes	31	(6,113)	262	(5,820)
Balance 31 December 2020	-	-	5,285	5,285
Cash flows	-	-	(694)	(694)
Other changes	-	-	654	654
Balance 31 December 2021	-	-	5,245	5,245

 

 

	Borrowings	Non-redeemable Preference Shares	Total
Company	£'000s	£'000s	£'000s
At 31 December 2019	-	6,631	6,631
Cash flows	(20)	(518)	(538)
Other changes	20	(6,113)	(6,093)
Balance 31 December 2020 and 31 December 2021	-	-	-

 

Other changes in FY 21 include non-cash movements, including accrued interest expense and an additional property lease. Other changes in FY 20 include non-cash movements, including accrued interest expense and Non-redeemable Preference Shares treated as a financial liability.

 

 

26.  Financial instruments and financial risk management

 

Carrying amount of financial instruments

 

The Group's and Company's financial instruments may be analysed as follows:

 

	Group		Company
	FY 21	FY 20	FY 21	FY 20
	£'000s	£'000s	£'000s	£'000s
Financial assets
Financial assets that are debt instruments measured at amortised cost	43,795	29,726	20,579	20,325
Financial liabilities
Financial liabilities measured at amortised cost	16,162	11,815	129	398
Financial liabilities at fair value through profit and loss	1,806	406	1,806	406

 

 

Financial assets measured at amortised cost comprise cash, trade receivables and other receivables.

 

Financial liabilities measured at amortised cost comprise loans and borrowings, trade payables and other payables.

 

Financial liabilities at fair value through profit and loss comprise contingent consideration arising on acquisitions.

 

The Group is exposed to a variety of financial risks through its use of financial instruments which result from its operating activities. All of the Group's financial instruments are classified as loans and receivables.

 

The Group does not actively engage in the trading of financial assets for speculative purposes. The most significant financial risks to which the Group is exposed are described below:

 

 

Credit risk

 

Generally the Group's and Company's maximum exposure to credit risk is limited to the carrying amount of the financial assets recognised at the reporting date, as summarised below:

 

	Group		Company
	FY 21	FY 20	FY 21	FY 20
	£'000s	£'000s	£'000s	£'000s
Trade receivables	6,432	3,770	-	-
Contract assets	12	39	-	-
Other receivables	5,557	8,414	7,001	9,647
Cash and cash equivalents	31,795	17,503	13,576	10,678
	43,796	29,726	20,577	20,325

 

Credit risk is the risk of financial risk to the Group if a counter party to a financial instrument fails to meet its contractual obligation. The nature of the Group's debtor balances, the time taken for payment by clients and the associated credit risk are dependent on the type of engagement.

 

The Group's trade and other receivables are actively monitored. The ageing profit of trade receivables is monitored regularly by management. Any debtors over 30 days are reviewed by the entire management group every week and explanations sought for any balances that have not been recovered.

 

Unbilled revenue is recognised by the Group only when all conditions for revenue recognition have been met in line with the Group's accounting policy.

 

Other receivables include amounts owed by senior employees for the acquisition of shares in the Company. The EBT holds legal title to these shares which will not be released to the beneficial owner prior to the repayment of the loan.

 

The Directors are of the opinion that there is no material credit risk at Group level.

 

Liquidity risk

 

Liquidity risk is the risk that the Group will encounter difficulty in meeting its obligations associated with its financial liabilities. The Group seeks to manage financial risks to ensure sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably.

 

The table below analyses the Group's financial liabilities into relevant maturity groupings based on their contractual maturities. The amounts disclosed in the tables are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances, because the impact of discounting is not significant.

 

Contractual maturities of financial liabilities of the Group as at 31^st December 2021:

 

	Less than 6 months	6-12 months	Between 1 and 2 years	Between 2 and 5 years	Over 5 years	Total contractual cashflows	Carrying amount of liabilities
Trade payables	825	-	-	-	-	825	825
Lease liabilities	347	380	761	2,270	2,632	6,390	5,245
Financial liabilities at fair value through profit and loss	436	-	670	700	-	1,806	1,806
	1,608	380	1,431	2,970	2,632	9,021	7,876

 

 

Contractual maturities of financial liabilities of the Group as at 31^st December 2020:

 

	Less than 6 months	6-12 months	Between 1 and 2 years	Between 2 and 5 years	Over 5 years	Total contractual cashflows	Carrying amount of liabilities
Trade payables	526	-	-	-	-	526	526
Lease liabilities	347	347	1,388	3,469	1,735	7,286	5,286
Financial liabilities at fair value through profit and loss	-	203	203	-	-	406	406
	872	550	1,591	3,469	1,735	8,218	6,218

 

Interest rate risk

 

As at 31^st December 2021 the Group has no interest rate risk exposure as following the IPO, on 15^th July 2020, the Group's bank loan was repaid in full from the proceeds of the Placing.

 

The Group has used a sensitivity analysis technique that measured the estimated change to the statement of comprehensive income and equity of a 1% increase or decrease in interest rates for each class of financial instrument, with other variables remaining unchanged. The sensitivity analysis is based on the assumptions that changes in market interest rates affect the interest of variable interest financial instruments. Under these assumptions, a 1% increase or decrease in market interest rate for all financial liabilities held by the Group would have an immaterial impact on the profit before tax and equity of the Group.                                                                                                                                                

Foreign currency risk

 

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily US Dollars. The Group monitors exchange rate movements closely and ensures adequate funds are maintained in appropriate currencies to meet known liabilities.

 

The Group's exposure to foreign currency risk at the end of the reporting period, expressed in Currency Units, was as follows:

 

	FY 21			FY 20
	USD '000s	EUR '000s	ZAR '000s	USD '000s	EUR '000s	ZAR '000s
Cash & cash equivalents	11,900	2	1,739	2,630	175	-
Trade receivables	1,450	101	-	-	-	-
Trade payables	(5)	(5)	(63)	-	-	-

 

 

The Group is exposed to foreign currency risk on the relationship between the functional currencies of the Group companies and the other currencies in which the Group's material assets and liabilities are denominated. The table below summaries the effect on profit and loss had the functional currencies of the Group weakened or strengthened against these other currencies, with all other variables held constant.    

                                                                       

                                                                                                                                               

	FY 21	FY 20
	£'000s	£'000s
10% weakening of functional currency	925	208
10% strengthening of functional currency	(925)	(208)

 

The impact of a change of 10% has been selected as this has been considered reasonable given the current level of exchange rates and the volatility observed both on a historical basis and market expectations for future movements.

 

Fair value of financial instruments

 

The fair values of all financial assets and liabilities approximates to their carrying value.
 

Capital risk management

 

The Group defines capital as being share capital plus all reserves, which amounted to £86.0 million as at 31^st December 2021 (FY 20: £70.7 million)

 

The Group's objectives when managing capital are to:

·    Safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders; and 

·      Maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

 

27.  Related party disclosures

 

Related parties, following the definitions in IAS 24, are the Group's subsidiary companies, members of the Board, key management personnel and their families, and shareholders who have control or significant influence over the Group. Refer to note 12 for key management personnel compensation disclosures. The Directors' Report contains details of Board remuneration.

 

On 27^th April 2021 a total of 604,524 options over Ordinary shares were granted to Directors and PDMRs of the Company at an exercise price of 545 pence. The options have a five year vesting period.

 

On 12^th May 2021 certain Directors and PDMRs of the Company sold 457,515 shares at a price of 500 pence in order to satisfy strong institutional demand. Each of the selling shareholders applied the proceeds to satisfy in part or in full the loans provided to them by the Group to acquire Ordinary shares prior to the Company's IPO.

 

On 13^th October 2021 certain Directors and PDMRs of the Company sold 553,643 shares at a price of 630 pence in order to satisfy strong institutional demand. Each of the selling shareholders with a loan balance outstanding to the Company applied the proceeds to satisfy in part or in full the loans provided to them by the Company to acquire Ordinary shares prior to the Company's IPO.

 

In FY 20, the Group offset £949,771 of amounts lent to shareholders to settle amounts owed to the Group by Elixirr Partners LLP. There was an outstanding liability with Elixirr Partners LLP of £105,074 included in current liabilities as at 31^st December 2020. The outstanding liability was settled with Elixirr Partners LLP in FY 21.

 

Gavin Patterson, independent non-executive chairman of the Board, provided consulting services to the Company totalling £25,000 (FY 20: £45,021) in FY 21.

 

In FY 20, travel and marketing costs include the hire of an aeroplane from Aviation E LLP, Stephen Newton a member of the Board is a member of Aviation E LLP. The total expense incurred was £19,845 with £6,696 outstanding as at 31^st December 2020. In FY 21 the £6,696 owing to Aviation E LLP was settled.

 

In FY 20 interest-free loans were made to key management personnel to acquire shares in the Company and to settle their liability to a related party, Elixirr Partners LLP. The loans were repaid along with repayment of the opening balance during FY 21. A reconciliation of the loans to key management personnel is shown below:

 

	£'000s
At 31 December 2019	170
Loans advanced	6,230
Loan repayments	(2,544)
At 31 December 2020	3,856
Loan repayments	(3,856)
At 31 December 2021	-

 

Company related party transactions are disclosed in notes 17 and 19.

 

28.    Events after the reporting date

                                   

On 17^th March 2022, the Group acquired 100% of the share capital and voting interests of iOLAP Inc. ('iOLAP'), a US-headquartered technology and data firm. The acquisition brings specialist data and analytics capabilities, including artificial intelligence (AI) and machine learning (ML), into the Group where there is existing demand for these services.

                                   

The Group acquired iOLAP for a maximum consideration payable of US$40.0 million (£30.4 million). The consideration consists of:

·      An initial cash consideration of US$25.2 million (£19.2 million);

·   Potential earn out payments of up to US$14.8 million (£11.3 million) in Ordinary shares which are contingent on iOLAP achieving revenue growth and EBITDA margin targets in periods up to 31st December 2024. This consideration will be satisfied at Elixirr's option to use either one or a combination of both approaches set out below in relation to the initial consideration.      

Of the US$25.2 million (£19.2 million) initial cash consideration, US$14.0 million (£10.6 million) was paid to the selling shareholders free of restrictions. The remaining balance of US$11.2 million (£8.5 million) is subject to a contractual commitment to use the after-tax amount (US$8.5 million) to purchase Ordinary shares in Elixirr at a price per share of £6.425 by 29^th April 2022. The Ordinary shares will be purchased, at Elixirr's option, either from the EBT, subject to sufficient available supply, or otherwise by way of a subscription for new Ordinary shares from Elixirr, or a combination of both. The balance of this element of the cash consideration (US$2.7 million) was paid to the sellers to settle their tax obligations relating to it.

 

The Ordinary shares purchased pursuant to the acquisition will be subject to a one-year lock-in arrangement and limitations on the Ordinary shares that each seller can sell in each of the following three years.

 

As part of the transaction, iOLAP's largest shareholder has agreed to sign up to a bonus and commitment agreement through which he will share a portion of the value of his consideration to a further six senior leaders in the firm. The sellers have also agreed to three-year restrictive covenant agreements.                

 

If the acquisition of iOLAP had been completed on 1 January 2021, Group revenues for the period would have been £66.8 million and Group profit before tax would have been £14.9 million.                                 

Disclosure of the amounts recognised as of the acquisition date for each major class of assets acquired and liabilities assumed, fair value adjustments and goodwill on the acquisition of iOLAP has not be made given the limited amount of time available between the acquisition date and the date this annual report was authorised for issue.   

 

On 3^rd March 2022, Elixirr Inc. was incorporated in Delaware as a direct subsidiary of Elixirr International Plc. Elixirr Inc. was used as the acquisition vehicle for iOLAP.                     

 

The Directors are proposing a final Ordinary dividend in respect of the financial year ended 31^st December 2021 of 4.1 pence per share.

 

As at 1^st April 2022, in accordance with the Financial Conduct Authority's Disclosure and Transparency Rules, the Company continues to have 46,186,481 Ordinary shares in issue, of which none are held in Treasury.

 

The total number of voting rights in the Company is 46,186,481. This figure of 46,186,481 may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

 

 

29.    Reserves

 

Share capital

Share capital represents the nominal value of share capital subscribed.

Share premium

The share premium account is used to record the aggregate amount or value of premiums paid when the Company's shares are issued at a premium, net of associated share issue costs.

Capital redemption reserve

The capital redemption reserve is a non-distributable reserve into which amounts are transferred following the redemption or purchase of the Company's own shares.

EBT share reserve

The EBT share reserve represents the cost of shares repurchased and held in the employee benefit trust ("EBT").

Merger relief reserve

This reserve records the amounts above the nominal value received for shares sold, less transaction costs in accordance with section 610 of the Companies Act 2006.

Foreign currency translation reserve

The foreign currency translation reserve represents exchange differences that arise on consolidation from the translation of the financial statements of foreign subsidiaries.

Retained earnings

The retained earnings reserve represents cumulative net gains and losses recognised in the statement of comprehensive income and equity-settled share-based payment reserves and related deferred tax on share-based payments.

 

 

30.    Ultimate controlling party

 

There is no ultimate controlling party as at 31^st December 2021.