Final Results

RNS Number : 0554V

Elixirr International PLC

12 April 2021

 

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 2020.

 

Financial Highlights

· Revenue increased by 24% to 30.3m (2019^§: 24.5m)

· Adjusted EBITDA* of 9.7m (FY19: 3.7m)

· Adjusted EBITDA* margin increased by four percentage points to 32.1% (FY19: 28.1%)

· Profit before tax was 5.8m (FY19: £1.7m)

· Following a successful IPO on AIM in July 2020 raising £18.6m of net proceeds, the Group is debt-free with net cash of £17.5m

^§ 12 months ended 31 December 2019 (including the predecessor entity Elixirr Partners LLP through which the business traded prior to 1st July 2019). FY19 represents the six month period ended 31 December 2019.

* Adjusted EBITDA represents operating profit, adjusted for depreciation, amortisation and exceptional items.

Operating Highlights

· Leveraged our long-standing ability to work remotely to continue to support our clients through the Covid-19 environment, resulting in continued growth in revenue through the year and strong pipeline for the year ending 31 December 2021

· Significant improvement in gross profit and adjusted EBITDA margins, demonstrating the high value of our services with tight control over service pricing and costs

· Progress on all four elements of our four pillar growth strategy, including:

1.  Stretching existing Partners - revenue per client-facing Partner increased and we implemented a share option scheme to stretch this further

2.  Promoting Partners from within - one of our experienced Principals was promoted to the Partner team and a further Principal was promoted to Partner effective January 2021

3.  Hiring new Partners - one new Partner joined in 2020, with three new US hires in 2021 so far

4.  Inorganic growth through acquisitions - the acquisition of Coast Digital Limited in October 2020 to enable a full end-to-end digital service and, as announced today, we have acquired a procurement and self-funded transformation business, The Retearn Group Limited in April 2021. The Company continues to search and have discussions with potential acquisition targets to enhance one or more of Elixirr's capabilities, industries or geographical coverage

 

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

"I am very proud of the continued growth through the year and our achievements against our four pillar growth strategy. With a strong foundation in place, the Board looks to the future with great optimism. We will continue to help businesses navigate their biggest challenges, support our growing team and the communities in which we operate. The performance of the business to date, combined with the support of our high-quality shareholder base, positions the Company well for continued strong growth and success."

 

For further Information please contact:

Elixirr International plc Stephen Newton, CEO Graham Busby, CFO
Public and Investor Relations contacts: Caroline Pitt finnCap Ltd (Nominated Adviser & Sole Broker) Christopher Raggett, Simon Hicks, Kate Bannatyne (Corporate Finance) Alice Lane, Sunila De Silva (ECM)	[e-mail]                 [phone]

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

In my first statement to you as Chairman of the Board, I am pleased to introduce Elixirr's first annual report following the Group's successful admission to the AIM market of the London Stock Exchange. Despite the challenging environment which 2020 presented, the business performed exceptionally well, and its first set of full year financial results are ahead of the market expectations set at the time of the Group's IPO in July 2020.

The Group delivered strong revenues over the year of £30.3 million, a 24% increase from £24.5 million in the 12 months ended 31^st December 2019 (including its predecessor business), with three record months of revenue achieved during FY20. Adjusted EBITDA of £9.7 million represents a 32% EBITDA margin. This performance is due to our focus on excellent client service with our entrepreneurial Partner team strengthening and growing key accounts.

During the year Elixirr continued to support its clients to address their key challenges, with the Group's services in high demand, particularly in the areas of digital transformation and innovation. COVID-19 brought some challenges, but the Group reacted quickly to the pandemic, putting necessary measures in place during the initial uncertainty, and adjusting quickly to a new way of working to ensure seamless continuation of service to our clients. On behalf of the Board, I would like to thank the whole team for their dedication and resilience throughout this period.

STRATEGY

The Board was pleased to see that the business continued to deliver on all facets of its four pillar growth strategy during FY20. Organic growth in revenue and profit was delivered by improved performance at the individual Partner level, augmented by new additions into the Partner team from both existing talent within the Group and external hires.

Inorganic growth is an exciting opportunity for the Group, given our unique House of Brands platform providing an opportunity for businesses to join us and access new clients and new markets, with significant cross-selling opportunities between our various brands. A particular highlight in FY20 was the acquisition of a full-service digital marketing firm, Coast Digital, adding to the breadth and depth of the Group's expertise in this area. Combined with our existing digital business, Den Creative, we can now offer clients an end-to-end digital service - an area of critical importance to our clients, particularly in the current climate.

The Group's placing of shares during the IPO was oversubscribed and raised gross proceeds of £20m for the Group. This fundraising has provided the Group with a strong balance sheet to grow the business further through strategic acquisition opportunities.  The IPO also achieved its other objectives of raising the profile of the Elixirr brand and providing liquidity for our equity to make it more valuable to incentivise our Partner team, our employees and the shareholders of new brands that we may acquire, and attract new investors. We implemented an EMI Share Option Scheme ("EMI Scheme") to incentivise our employees and Partner team, aligning their interests with those of our shareholders. 

GOVERNANCE

An important part of the Group's AIM listing has been fulfilling the Group's transition from a private to public company. Since the Company's IPO on 9^th July 2020, Elixirr has complied with the QCA Corporate Governance Code and in the current uncertain economic environment, management of risk remains a key focus for the Board. The Elixirr Board and its Committees meet regularly to oversee the Group's corporate activities.

The Notice of Annual General Meeting will be made available on our website at: www.elixirr.com/investors .

With a strong foundation in place, the Board looks to the future with great optimism. We will continue to help businesses navigate their biggest challenges, support our growing team and the communities in which we operate.  The performance of the business to date, combined with the support of our high-quality shareholder base, positions the Company well for continued strong growth and success.

Gavin Patterson

Non-Executive Chairman

9^th April 2021

CEO'S Report

OVERVIEW

I am delighted to present to you Elixirr's first set of Annual Results. Elixirr is a high returns business, serving globally recognised clients with a proposition that challenges the traditional consulting market. We are a 'firm of entrepreneurs', focusing on building long-term, trusted relationships with clients by consistently delivering bespoke, innovative, impactful solutions. We work across the value chain, from strategy to execution including digital design and product development, leveraging our established global innovation network of start-ups and relationships with venture capital firms. This year the Group has reached some incredible milestones and achieved stellar results - testament to our dedicated team, and the continued support of our fantastic clients.

July 2020 marked the biggest achievement for Elixirr to date, with the firm listing on the AIM market of the London Stock Exchange. As one of the few companies to IPO during 2020, and the first to IPO onto the AIM market since lockdown was put into place, it was certainly a highlight for me during the year, and since founding Elixirr in 2009. The listing was a significant undertaking, and its success was made possible by our dedicated internal team and external advisers who managed the process expertly to meet our timetable without any distraction from managing the business. Not only has the IPO helped to accelerate our expansion into new clients and markets, but crucially it has reinforced the ownership mentality and entrepreneurial culture that has existed since the business was founded - giving team members the ability to be an owner through owning shares and/or earning share options through their own performance. This has strengthened the resolve of the team to continually raise the bar for clients, key to our firm's success.

Since Elixirr was formed, we have endeavoured to tackle our clients' toughest business challenges, and 2020 undoubtedly posed the biggest disruption many businesses had experienced to date. I am incredibly proud of my team's versatility and seamless adjustment to working in this new environment, and they have continued to provide an exceptional service to our clients. From helping businesses put rapid measures in place to enable remote working, to speeding up the digitalisation of products and services - from building a new digital bank to redefining the way customers are serviced through digital channels to rapidly accelerating consumer goods and retailers' ecommerce capabilities - we have done some fantastic work to ensure businesses can endure the challenges they have faced, and thrive in the quickly changing landscape.

In March 2020 we put decisive measures in place in response to the pandemic, to increase the resilience of the Group given initial uncertainty about the impact of the pandemic on the business and the wider economy. We wanted to be proactive in responding to any market shock, rather than reactive, and therefore placed a small proportion of our team on furlough, and all team members including the directors accepted salary reductions over the months of April and May. In fact, the business performed very strongly through the pandemic and we have since voluntarily repaid the furlough grants to HMRC and reimbursed the pay reductions to team members. I am pleased to be able to report that the Company does not expect any material adverse impact from the pandemic over the long term.

In 2020 we also aimed to increase our brand presence and there have been notable increases in our online following, resulting in increased client leads that have led to direct project wins. The Group achieved multiple shortlistings and accolades over the course of 2020, winning three awards - "Best Web Design", "Best Web Development" and "Best Usability" at 'The Drum Recommends Digital' and a Drum B2B marketing award for "Digital Transformation Initiative of the Year", having designed and built a digital onboarding solution for our client Apex Group. Recently Elixirr was selected for the 2021 IAOP® Global Outsourcing 100 list for providing excellence in outsourcing advisory services, reinforcing Elixirr's role as a trusted advisor in this area.

Following on from our landmark year in 2020, we considered that 2021 was the right time to refresh our visual identity. We have distilled and evolved Elixirr's brand strategy through strategically led design, producing an identity that has our values at its core. Our brand platform has always been, and remains, 'The Challenger Consultancy'. Building on this foundational idea, we have produced a holistic identity which epitomises our approach in solving our clients' toughest business challenges. Our bold new aesthetic and brand architecture is designed to evolve and progress in parallel with the Group's significant growth ambitions.

PERFORMANCE

The Group delivered a record revenue result over the year of £30.3 million, a 24% increase from the 12 months ended 31^st December 2019 (including our predecessor entity Elixirr Partners LLP through which the business traded prior to 1^st July 2019). In 2020, we delivered three record months of revenue, specifically in June, July and September 2020 respectively. I am particularly pleased to report that we have continued to achieve exceptional growth in the US market with a 49% increase in revenues compared with the 12 months ended 31^st December 2019 (including our predecessor entity Elixirr Partners LLP).

Our gross profit margin of 37% was three percentage points higher than in 2019 due to controlled staffing and higher rates of utilisation, plus lower travel and business development expenditure as a result of the restrictions in place.

Our Adjusted EBITDA of £9.7 million in the year ended 31^st December 2020 represented 32% of revenue, demonstrating Elixirr's positioning as a high value, high returns business.

GROWTH

A key part of our business strategy is our four pillar growth model, and we made great progress in each aspect of these over the course of 2020:

1. Stretching our existing Partners

2. Promoting Partners from within

3. Hiring new Partners

4. Acquiring new businesses

My Partner team have performed exceptionally well in FY20 - with revenue and Adjusted EBITDA per client-facing Partner having increased in 2020 despite the difficult market environment. We have always incentivised our Partner team to grow sales, deepen existing client relationships and develop opportunities with new clients, through bonus and equity incentives. The IPO enabled the restructuring of the Company to provide increased equity participation to fully embed the entrepreneurial culture in the Partner team and ensure 100% alignment with shareholders' interests.

Our clients are at the core of what we do, and we aim to form long-term partnerships with them from initial engagements, based on the quality of our service and delivery. We deepened our client relationships throughout 2020, including signing a new volume deal with a large regional bank to be their digital and overall bank transformation partner until 2022. We have worked with multiple new clients during lockdown, demonstrating how successfully our team were able to embrace remote working and build new, remote relationships to deliver a seamless service to our clients, both existing and new.

As part of our organic growth strategy, we seek to grow the talent within our Group, with six of Elixirr's longstanding client facing Partners having worked in junior grades before making Partner. One of our experienced Principals was promoted to the Partner team in 2020, and we continue to focus on developing the grade, with targets tailored to prepare them for operating at Partner level. A further Principal was promoted to Partner effective January 2021. In 2020 we implemented an EMI Share Option Scheme that appropriately incentivises the Principal grade with options that vest for performance and on achieving promotion to Partner.

External hires with existing networks and industry expertise remained a key focus in 2020 and continues to be into 2021. The appointment of two new non-executive directors in July 2020 saw us deepen the strength of the Board, and we hired a new Partner during 2020 who brought invaluable experience in the financial services sector.

We recently welcomed three new Partners in the US, bringing a wealth of consulting and industry expertise to the team, and the US remains a key focus for both our organic and inorganic growth pillars. We have embedded relationships with our US clients and expanded two UK-based accounts into US projects and revenue, whilst also increasing our US-based team over the course of the year.

A key part of the Group's inorganic growth is building on our in-house expertise and expanding the variety of services we can offer to clients. In 2017 we acquired Den Creative Limited, a digital and creative business. This started our House of Brands strategy, giving boutique businesses and their passionate founders a unique platform for growth without giving up the clients, brand and culture they have spent so much time cultivating. The capital raised in our July 2020 IPO has given us the funds to acquire further complementary businesses to enhance one or more of Elixirr's capabilities, industries or geographical coverage.

In October 2020, the Group acquired Coast Digital Limited, a high-quality digital marketing firm. This acquisition has extended the Group's existing digital capabilities and complements our design and digital Den Creative business. We now have a full-service digital offering for clients, including technical, design and marketing. In addition, we can combine these services with our core consulting service and provide an integrated service to clients to enable them to realise the true potential of their digital aspirations.

In April 2021, simultaneously with the publication of our results, we are pleased to also announce the acquisition of The Retearn Group Limited, a procurement and transformation consultancy that enables clients to be as lean, efficient and profitable as possible. Their services enable clients to self-fund their transformation and growth aspirations (which are key areas our core consulting business works with our clients on) through savings elsewhere in the business. Their services will become increasingly vital as businesses face financial pressures in the aftermath of the pandemic, and they are a fantastic addition to our House of Brands and to the offerings we can provide to our clients.

Our clients' needs will always be the crucial factor in future acquisitions, as we continue to seek new expertise in growing markets. With support from a dedicated internal acquisition team, we have made strong progress in identifying opportunities and bringing targets through stages of our pipeline, shortlisting over 100 firms from a database of 30,000 between July and December 2020. These firms are at different stages in our pipeline, and will continue to be a priority focus of our strategy in 2021, and into the future.

OUTLOOK AND FUTURE DEVELOPMENTS

Trading in Q1 2021 has been strong with revenue increasing by more than 60% (including the impact of the acquisition of Coast Digital Limited) compared with Q1 2020. We have a strong pipeline of projects for Q2 and, although we have more limited visibility over the second half of 2021 due to the project-based nature of our work, the directors' current expectation is that 2021 revenue (including the impact of the acquisition of The Retearn Group Limited) will be in the range of £44-47 million with an Adjusted EBITDA margin of approximately 29%.

We formed Elixirr in the financial crisis, and 2020 proved our resilience during another testing period. With a fantastic team, and a reformed structure facilitated by our IPO, we are well placed to continue our positive trajectory, working towards my ultimate goal as Founder - to build the best consulting firm in the world.

Stephen Newton

Founder & CEO

9^th April 2021

Financial Review¹

	Year ended 31 December 2020	Six months ended 31 December 2019
Revenue	30.32m	13.13m
Gross profit	11.19m	4.48m
Gross profit margin	36.9%	34.1%
Adjusted EBITDA	9.72m	3.70m
Adjusted EBITDA margin	32.1%	28.1%
Profit before tax	5.82m	1.73m
Profit before tax margin	19.2%	13.2%
Adjusted basic earnings per share	16.72p	6.32p
Basic earnings per share	11.73p	3.18p

GROUP RESULTS

The Board is pleased to report that the Group has performed exceptionally well this financial year and has continued to grow revenue despite the turbulent market conditions. The Group has seen organic growth in new and existing client accounts as we continue to build long-term, trusted relationships with our clients. The Group also successfully acquired Coast Digital Limited and grew margins whilst maintaining healthy cash generation, ending the year in a strong financial position. In the year ended 31^st December 2020 the Group delivered revenue of £30.32m and adjusted EBITDA of £9.72m at a 32.1% margin.

¹ The Group commenced trading on 1 July 2019. Prior to that date, the business was operated through a predecessor entity, Elixirr Partners LLP. Consequently, annual comparatives are not available for the Group.

REVENUE

Revenue increased to £30.32m in 2020 compared to £13.13m for the Group in the six-month period ending 31^st December 2019. A more relevant comparison is the 24% increase in revenue from £24.5m in 2019 for the Group plus its predecessor entity, Elixirr Partners LLP.

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 relevance of digital transformation and the solutions that we provide have become of critical importance to many businesses due to the impact of COVID-19.

COVID-19 has had minimal impact on trading with employees able to work remotely to continue to provide exceptional service to our clients. The ability to react quickly is embedded in the Elixirr culture and we have continued to support our clients with remote working and digital delivery, which ensured continued strong trading through the COVID-19 period.

Revenue growth was achieved in all geographic regions in which the Group operates, and we have continued to achieve exceptional growth in the US market with a 49% increase in revenues compared with the 12 months ended 31^st December 2019 (including Elixirr Partners LLP). We are also pleased to report that revenue per client-facing Partner grew during the year, despite the difficult market environment, reflecting the high quality of our Partner team.

GROUP PROFITABILITY

The Group realised a gross profit margin of 36.9%, up 2.8 percentage points when compared with the 34.1% in the six months ended 31^st December 2019. This improved profitability is the result of a combination of improved utilisation of consultants with tight control over service pricing and our cost base. In particular, the lockdown environment resulted in lower spend on travel and business development.

Adjusted EBITDA of £9.72m was delivered at an improved margin of 32.1% when compared with the 28.1% in the six months ended 31^st December 2019. The increased EBITDA margin is because of the improved gross profit margin discussed above.

Profit before tax (after exceptional items) of £5.82m was also delivered at an improved margin of 19.2% compared with 13.2% for the six-month period ended 31^st December 2019. 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 £0.66m includes preference dividends of £0.39m paid up to 9^th June 2020 on the 10% non-redeemable cumulative preference shares which were extinguished as part of the Group restructure transactions explained further in note 23 of the Group and Company Financial Statements. As at 31^st December 2020 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. 

TAXATION

The Group's tax charge for the year was £1.0m, reflecting a lower effective tax rate compared with the six-month period ended 31^st December 2019. This was largely due to utilisation of foreign losses from prior periods and allowable trademark amortisation deductions. The Group's cash tax payment in the year was £1.2m and includes section 455 tax payments which are recoverable in future periods. For further detail on taxation see notes 9 and 10 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

Basic earnings per share was 11.73p and, after adjusting for the after-tax impact of adjusting items the adjusted basic earnings per share was 16.72p. Adjusting items and their tax impacts are set out in note 6.   

CASH FLOW

The Group's net cash position increased to £17.5m compared with £3.0m at 31^st December 2019. The Group enjoyed strong cash generation with net cashflow generated from operations of £12.2m in the year ended 31^st December 2020, including some working capital timing benefit. The Group continues to see conversion of adjusted EBITDA less tax to operating cash at close to 100%.

Net cash utilised from investing activities reflects £2.3m cash consideration for the acquisition of Coast Digital plus additional cash consideration of £0.6m for surplus cash on acquisition (with a further £0.6m payable in 2021), net of cash of £1.4m acquired on acquisition. 

Net cash generated from financing activities of £3.9m represents funds raised in the successful IPO in July 2020 (£18.6m), net of funds used to make loans to Partners (£9.8m, principally to enable them to acquire shares to the Company to align their interests with other shareholders), repayment of bank debt (£1.6m) and purchases of shares by the Employee Benefit Trust (£1.2m).

The Group is debt-free as at 31^st December 2020 (other than its office lease capitalised under IFRS 16), having paid down its bank debt and loans from shareholders in July 2020. 

STATEMENT OF FINANCIAL POSITION

Net assets as at 31^st December 2020 totalled £70.7m (31^st December 2019: £44.6m). The increase in net assets is as a result of the capital raised on IPO (£18.6m), retained profit for the year (£4.8m increase in retained earnings), conversion of preference shares to ordinary shares (£6.5m increase in merger relief reserve), partially offset by a capital reduction and share buy backs of £3.9m and Employee Benefit Trust share purchases of £1.2m. 

DIVIDENDS

No interim or final ordinary dividends were paid in relation to the year ended 31^st December 2019 and no interim ordinary dividend has been paid in relation to the year ended 31^st December 2020. The Directors are proposing a final ordinary dividend in respect of the financial year ended 31^st December 2020 of 2.2p per share.

Group Statement of Comprehensive Income

For the year ended 31^st December 2020

		Year ended 31 December 2020	Period ended 31 December 2019
	Note	£	£
Revenue	4	30,317,956	13,131,544
Cost of sales		(19,128,402)	(8,648,144)
Gross profit		11,189,554	4,483,400
Administrative expenses		(3,982,110)	(2,232,267)
Operating profit before exceptional items	5	7,207,444	2,251,133
Depreciation		730,098	335,049
Amortisation of intangible assets		1,740,548	1,109,581
Share-based payments		46,906	-
Adjusted EBITDA	6	9,724,996	3,695,763
Exceptional items	5	(729,573)	(265,042)
Operating profit	5	6,477,871	1,986,091
Finance income		20,121	740
Finance costs		(679,736)	(327,931)
Net finance expense	7	(659,615)	(327,191)
Profit on disposal of subsidiary	8	-	68,432
Profit before taxation	5	5,818,256	1,727,332
Taxation	9	(1,023,826)	(544,937)
Profit for the period		4,794,430	1,182,395
Other comprehensive income
Items that may be subsequently reclassified to profit and loss:
Currency translation on foreign currency net investments		(25,594)	(46,330)
Other comprehensive income, net of tax		(25,594)	(46,330)
Total comprehensive income		4,768,836	1,136,065
Basic earnings per ordinary share (p)	12	11.73	3.18
Diluted earnings per ordinary share (p)	12	10.75	3.18

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 2020

		Group		Company
		31 December 2020	31 December 2019	31 December 2020	31 December 2019
	Note	£	£	£	£
Assets
Non-current assets
Intangible assets	14	51,187,719	49,324,429	-	-
Property, plant and equipment	16	5,545,581	6,205,926	-	-
Investments	17	-	-	55,155,737	50,000,000
Other receivables	18	595,652	416,318	-	-
Loans to shareholders	18	7,783,743	-	6,672,229	-
Deferred tax asset	10	160,734	-	160,734	-
Total non-current assets		65,273,429	55,946,673	61,988,700	50,000,000
Current assets
Trade and other receivables	18	4,219,719	5,912,135	2,999,774	137,377
Cash and cash equivalents	19	17,503,287	3,001,420	10,677,953	-
Total current assets		21,723,006	8,913,555	13,677,727	137,377
Total assets		86,996,435	64,860,228	75,666,427	50,137,377
Liabilities
Current liabilities
Trade and other payables	20	8,106,644	4,714,717	403,162	133,886
Loans and borrowings	21	448,296	1,372,629	-	-
Corporation tax		1,156,783	790,276	61,244	-
Other creditors	22	611,725	-	611,725	-
Total current liabilities		10,323,448	6,877,622	1,076,131	133,886
Net current assets		11,399,558	2,035,933	12,601,596	3,491
Non-current liabilities
Loans and borrowings	21	4,837,445	12,660,741	-	6,500,000
Deferred tax liability	10	547,104	538,089	-	-
Other non-current liabilities	22	600,801	147,730	406,071	-
Total non-current liabilities		5,985,350	13,346,560	406,071	6,500,000
Total liabilities		16,308,798	20,224,182	1,482,202	6,633,886
Net assets		70,687,637	44,636,046	74,184,225	43,503,491
Equity
Share capital	23	52,283	3,331	52,283	3,331
Share premium	23	19,728,902	-	19,728,902	-
Capital redemption reserve		1,614	19	1,614	19
EBT share reserve	24	(1,248,444)	-	(1,248,444)	-
Merger relief reserve	23	46,869,966	43,496,650	46,869,966	43,496,650
Foreign currency translation reserve		(71,924)	(46,330)	-	-
Retained earnings		5,355,240	1,182,376	8,779,904	3,491
Total shareholders' equity		70,687,637	44,636,046	74,184,225	43,503,491

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 £9,397,979 (2019: £3,510). 

The notes form part of these accounts.

The Financial Statements were approved by the Board of Directors on 9^th April 2021 and were signed on its behalf by:

Stephen Newton

Director

Group Statement of Changes in Equity

For the year ended 31^st December 2020

	Share capital	Share premium	Capital redemption reserve	EBT share reserve	Merger relief reserve	Foreign currency translation reserve	Retained earnings	Total
Group	£	£	£	£	£	£	£	£
As at 31 December 2018 and 01 January 2019	1	-	-	-	-	-	-	1
Comprehensive income
Profit for the period	-	-	-	-	-	-	1,182,395	1,182,395
Other comprehensive income	-	-	-	-	-	(46,330)	-	(46,330)
Transactions with owners
Contributions of equity, net of transaction costs	3,349	-	-	-	43,496,650	-	-	43,499,999
Share buybacks	(19)	-	19	-	-	-	(19)	(19)
As at 31 December 2019 and 01 January 2020	3,331	-	19	-	43,496,650	(46,330)	1,182,376	44,636,046
Comprehensive income
Profit for the period	-	-	-	-	-	-	4,794,430	4,794,430
Other comprehensive income	-	-	-	-	-	(25,594)	-	(25,594)
Transactions with owners
Share issues	231	22,611	-	-	-	-	-	22,842
Contributions of equity, net of transaction costs	461	18,583,313	-	-	-	-	-	18,583,774
Share issue as consideration for a business combination	22	1,122,978	-	-	-	-	-	1,123,000
Preference shares reclassified from loans and borrowings	50,001	-	-	-	-	-	-	50,001
Share buy-backs at par and cancelled	(1,763)	-	1,595	-	(3,126,684)	-	(820,294)	(3,947,146)
Acquisition of Ordinary shares	-	-	-	(1,198,188)	-	-	-	(1,198,188)
Acquisition of Redeemable Preference shares	-	-	-	(50,256)	-	-	-	(50,256)
Redesignation/conversion of shares	-	-	-	-	6,500,000	-	-	6,500,000
Share-based payments	-	-	-	-	-	-	46,906	46,906
Deferred tax recognised in equity	-	-	-	-	-	-	151,822	151,822
As at 31 December 2020	52,283	19,728,902	1,614	(1,248,444)	46,869,966	(71,924)	5,355,240	70,687,637

The notes form part of these accounts. Please refer to note 30 for explanations of reserve accounts.

Company Statement of Changes in Equity

For the year ended 31^st December 2020

	Share capital	Share premium	Capital redemption reserve	EBT share reserve	Merger relief reserve	Retained earnings	Total
Company	£	£	£	£	£	£	£
As at 31 December 2018 and 01 January 2019	1	-	-	-	-	-	1
Comprehensive income
Profit for the period	-	-	-	-	-	3,510	3,510
Other comprehensive income	-	-	-	-	-	-	-
Transactions with owners
Contributions of equity, net of transaction costs	3,349	-	-	-	43,496,650	-	43,499,999
Share buy-backs	(19)	-	19	-	-	(19)	(19)
As at 31 December 2019 and 01 January 2020	3,331	-	19	-	43,496,650	3,491	43,503,491
Comprehensive income
Profit for the period	-	-	-	-	-	9,397,979	9,397,979
Other comprehensive income	-	-	-	-	-	-	-
Transactions with owners
Share issues	231	22,611	-	-	-	-	22,842
Contributions of equity, net of transaction costs	461	18,583,313	-	-	-	-	18,583,774
Share issue as consideration for a business combination	22	1,122,978	-	-	-	-	1,123,000
Preference shares reclassified from loans and borrowings	50,001	-	-	-	-	-	50,001
Share buy-backs at par and cancelled	(1,763)	-	1,595	-	(3,126,684)	(820,294)	(3,947,146)
Acquisition of Ordinary shares	-	-	-	(1,198,188)	-	-	(1,198,188)
Acquisition of Redeemable Preference shares	-	-	-	(50,256)	-	-	(50,256)
Redesignation/conversion of shares	-	-	-	-	6,500,000	-	6,500,000
Share-based payments	-	-	-	-	-	46,906	46,906
Deferred tax recognised in equity	-	-	-	-	-	151,822	151,822
As at 31 December 2020	52,283	19,728,902	1,614	(1,248,444)	46,869,966	8,779,904	74,184,225

The notes form part of these accounts. Please refer to note 30 for explanations of reserve accounts.

Group and Company Cash Flow Statements

For the year ended 31^st December 2020

		Group		Company
		Year ended 31 December 2020	Period ended 31 December 2019	Year ended 31 December 2020	Period ended 31 December 2019
	Note	£	£	£	£
Cash flows from operating activities:
Cash generated from operations	26	13,308,770	1,417,656	7,126,856	19
Taxation paid		(1,156,233)	(73,508)	-	-
Net cash generated from operating activities		12,152,537	1,344,148	7,126,856	19
Cash flows from investing activities:
Purchase of property, plant and equipment		(32,534)	(4,975)	-	-
Payment for acquisition of subsidiary, net of cash acquired		(1,448,566)	588,149	(2,710,014)	-
Interest received		16,976	740	7,940	-
Net cash (utilised)/generated from investing activities		(1,464,124)	583,914	(2,702,074)	-
Cash flows from financing activities:
Issue of ordinary share capital		18,606,616	-	18,606,616	-
Issue of redeemable preference shares		50,000	-	50,000	-
Non-redeemable preference share dividend		(518,483)	-	(518,483)	-
Capital reduction and share buy-backs		(625,537)	-	(3,944,868)	(19)
EBT Ordinary share purchases		(1,198,188)	-	(1,198,188)	-
Redeemable preference shares repurchased		(50,256)	-	(50,256)	-
Net loans to shareholders		(9,838,994)	-	(6,672,229)	-
Proceeds from borrowings		-	2,000,000	-	-
Repayment of borrowings		(1,625,000)	(375,000)	-	-
Lease liability payments		(622,629)	(282,286)	-	-
Interest paid		(292,630)	(194,054)	(19,421)	-
Net cash generated from financing activities		3,884,899	1,148,660	6,253,171	(19)
Net increase in cash and cash equivalents		14,573,312	3,076,722	10,677,953	-
Cash and cash equivalents at beginning of the period		3,001,420		-	-
Effects of exchange rate changes on cash and cash equivalents		(71,445)	(75,302)	-	-
Cash and cash equivalents at end of the period		17,503,287	3,001,420	10,677,953	-

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.

The Company was incorporated on 12^th December 2018 but was dormant from this date until 1^st July 2019.  An acquisition occurred in July 2019 resulting in the Company no longer being dormant. As such, the comparative financial statements present the trading period from 1^st July to 31^st December 2019.

1.2.  Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards and interpretations issued by the International Financial Reporting Standards Interpretations Committee ("IFRIC") as adopted by the European Union ("IFRS").

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 2020.

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.

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.

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

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. 

The fair value of the purchase consideration was £50,000,000 and the nature of the consideration was shares issued. The difference between the fair value of the purchase consideration and the fair value of the identifiable assets acquired and liabilities assumed was recognised as goodwill.  The goodwill is attributable to the company's workforce and working methodologies and it is not deductible for tax purposes.

On 28^th October 2020 the Group acquired 100% of the share capital and voting interests of Coast Digital Limited, 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. Please refer to note 15 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 2020. For further details on the impairment review please refer to note 14.

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 25 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. 

The calculation of diluted earnings per share assumes conversion of all potentially dilutive ordinary shares, which arise from share options outstanding.

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 probably 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 per cent. 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 and had not yet been adopted by the UK Endorsement Board:

· Amendments to IFRS 3 (effective date 1^st January 2020)

· Amendments to IAS 1 and IAS 8 (effective date 1^st January 2020)

· Revised Conceptual Framework for Financial Reporting (effective date 1^st January 2020)

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 a key measures used within the business for assessing the underlying performance of the Group's ongoing business across periods. Adjusted EBITDA excludes from operating profit, non-cash depreciation and amortisation charges and non-recurring exceptional costs. Adjusted EPS excludes from profit after tax, amortisation charges 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

	Year ended 31 December 2020	Period ended 31 December 2019
Group	£	£
Revenue from contracts with customers arises from:
United Kingdom	10,077,323	4,327,582
USA	6,305,346	2,428,082
Rest of World	13,935,287	6,375,880
	30,317,956	13,131,544

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 recorded 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:

	Year ended 31 December 2020	Period ended 31 December 2019
Group	£	£
Depreciation of property, plant and equipment:
- Owned assets	146,777	52,591
- Leased assets	583,321	282,458
Amortisation of intangible assets	1,740,548	1,109,581
Share-based payments	46,906	-
Foreign exchange (gains)/losses	43,756	24,698
Exceptional items	729,573	265,042

The exceptional items totalling £729,573 in 2020 include non-recurring costs associated with the pre-initial public offering (IPO) capital restructuring, IPO on the AIM market (refer to note 23) and EMI share option scheme (refer to note 25). The exceptional items totalling £265,042 in 2019 include costs associated with the acquisition that occurred in July 2019 and a strategic review of the options for the Group. 

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

	Year ended 31 December 2020	Period ended 31 December 2019
Group	£	£
Services provided by the Company's auditors:
Audit fees - parent Company and consolidated accounts	20,000	26,000
Audit fees - subsidiary companies	57,500	31,000
Other services:
Due diligence	20,770	-
IPO fees	144,000	-

6.  Reconciliations to Alternative Performance Measures ("APMs")

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 from operating profit, non-cash depreciation and amortisation charges and non-recurring exceptional costs. Adjusted EPS excludes from profit after tax, amortisation charges and non-recurring exceptional items and their related tax impacts.

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

	Year ended 31 December 2020	Period ended 31 December 2019
Group	£	£
Profit before tax	5,818,256	1,727,332
Adjusting items:
Exceptional items (note 5)	729,573	265,042
Amortisation of intangible assets	1,740,548	1,109,581
Share-based payments	46,906	-
Adjusted profit before tax	8,335,283	3,101,955
Depreciation	730,098	335,049
Profit on disposal of subsidiary	-	(68,432)
Net finance expense (note 7)	659,615	327,191
Adjusted EBITDA	9,724,996	3,695,763

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

	Year ended 31 December 2020	Period ended 31 December 2019
Group	£	£
Adjusted profit before tax	8,335,283	3,101,955
Tax charge	(1,023,826)	(544,937)
Tax impact of adjusting items	(477,568)	(204,985)
Adjusted profit after tax	6,833,889	2,352,033

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 12 for further detail.

	Year ended 31 December 2020	Period ended 31 December 2019
Group	p	p
Adjusted EPS	16.72	6.32
Adjusted diluted EPS	15.32	6.32

7.  Net finance expense

	Year ended 31 December 2020	Period ended 31 December 2019
Group	£	£
Finance income:
On short term deposits and investments	20,121	740
	20,121	740
Finance costs:
On bank loans and overdrafts at amortised cost	(30,759)	(56,264)
Preference share dividend	(387,106)	(131,377)
On lease liability	(261,871)	(140,290)
	(679,736)	(327,931)
Net finance expense	(659,615)	(327,191)

8.  Profit on disposal of subsidiary

	Year ended 31 December 2020	Period ended 31 December 2019
Group	£	£
Profit on disposal of subsidiary	-	68,432

On 31^st July 2019, Medius Consulting Limited, a direct subsidiary company, was sold back to the previous majority shareholder.

9.  Taxation on profit on ordinary activities

Analysis of tax charge:

	Year ended 31 December 2020	Period ended 31 December 2019
Group	£	£
Current tax
In respect of the current year	1,248,026	577,734
Adjustments in respect of prior periods	(75,016)	60,351
Total current tax	1,173,010	638,085
Deferred tax
In respect of the current year	(149,184)	(93,148)
Total deferred tax	(149,184)	(93,148)
Income tax expense	1,023,826	544,937

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%.

	Year ended 31 December 2020	Period ended 31 December 2019
Group	£	£
Profit before taxation	5,818,256	1,727,332
Profit on ordinary activities multiplied by rate of Corporation tax in UK of 19% (2019:19%)	1,105,469	328,193
Effects of:
Exceptional items not deductible	138,619	50,358
Expenses not deductible	97,641	50,054
Difference in overseas tax rates	-	45,022
Closing deferred tax rate lower/(higher) than main current tax rate	-	10,959
Adjustments in respect of prior periods	(75,016)	60,351
Deferred tax release re trademarks	(137,952)	-
Utilisation of foreign losses from prior periods	(104,935)	-
Total taxation	1,023,826	544,937

10.  Deferred tax

Net deferred tax liability/(asset)

The balances comprise temporary differences attributable to:

	Group		Company
	31 December 2020	31 December 2019	31 December 2020	31 December 2019
	£	£	£	£
Deferred tax liability
Property, plant and equipment	64,320	57,153	-	-
Intangible assets	482,784	480,936	-	-
	547,104	538,089	-	-
Deferred tax asset
Share-based payments	(160,734)	-	(160,734)	-
	(160,734)	-	(160,734)	-
Net deferred tax liability/(asset)	386,370	538,089	(160,734)	-

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	Other	Total
	£	£	£	£	£
On incorporation	-	-	-	-	-
Acquisition of business	65,137	569,500	-	(3,400)	631,237
Charged/(credited) to profit and loss	(7,984)	(88,564)	-	3,400	(93,148)
At 31 December 2019	57,153	480,936	-	-	538,089
Acquisition of business	7,167	142,120	-	-	149,287
Charged/(credited) to equity	-	-	(151,822)	-	(151,822)
Charged/(credited) to profit and loss	-	(140,272)	(8,912)	-	(149,184)
At 31 December 2020	64,320	482,784	(160,734)	-	386,370

11.  Ordinary dividends

No interim or final ordinary dividends were paid in relation to the year ended 31^st December 2019 and no interim ordinary dividend has been paid in relation to the year ended 31^st December 2020. The Directors are proposing a final ordinary dividend in respect of the financial year ended 31^st December 2020. Please refer to post balance sheet events note 29 for final ordinary dividend proposed.

12.  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:

	Year ended 31 December 2020	Period ended 31 December 2019
Basic and Diluted EPS
Profit attributable to the ordinary equity holders of the Group used in calculating basic and diluted EPS (£)	4,794,430	1,182,395
Basic earnings per ordinary share (p)	11.73	3.18
Diluted earnings per ordinary share (p)	10.75	3.18
	Year ended 31 December 2020	Period ended 31 December 2019
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) (£)	6,833,889	2,352,033
Adjusted basic earnings per ordinary share (p)	16.72	6.32
Adjusted diluted earnings per ordinary share (p)	15.32	6.32
	Year ended 31 December 2020	Period ended 31 December 2019
	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	40,871,621	37,221,200
Number of dilutive shares	3,746,287	-
Weighted average number of ordinary shares used as the denominator in calculating non-adjusted and adjusted diluted EPS	44,617,908	37,221,200

13.  Employees and directors

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

	Year ended 31 December 2020	Period ended 31 December 2019
Group	Number	Number
Directors, management and partners	18	20
Provision of services	92	89
Administration	12	10
	122	119

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:

	Year ended 31 December 2020	Period ended 31 December 2019
Group	£	£
Wages and salaries	12,867,326	5,493,975
Social security costs	1,723,690	688,445
Pension costs	251,467	133,170
Share-based payment charge	46,906	-
	14,889,389	6,315,590

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 £251,467 (2019: £133,170) for the period ended 31^st December 2020. Contributions amounting to £36,162 (2019: £34,550) were payable to the fund as at 31^st December 2020 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
	Year ended 31 December 2020	Period ended 31 December 2019	Year ended 31 December 2020	Period ended 31 December 2019
	£	£	£	£
Aggregate emoluments including short term employee benefits	4,050,222	1,091,475	27,750	1,667
	4,050,222	1,091,475	27,750	1,667

There was no share-based payment charge in respect of key management personnel.

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

14.  Goodwill and intangible fixed assets

	Goodwill	Trademarks	Customer relationships	Total
Group	£	£	£	£
Cost
On incorporation	-	-	-	-
Acquisition of business	43,299,010	7,135,000	-	50,434,010
At 31 December 2019	43,299,010	7,135,000	-	50,434,010
Acquisition of business (note 15)	2,855,838	-	748,000	3,603,838
At 31 December 2020	46,154,848	7,135,000	748,000	54,037,848
Amortisation
On incorporation	-	-	-	-
Charge for the period	-	(1,109,581)	-	(1,109,581)
At 31 December 2019	-	(1,109,581)	-	(1,109,581)
Charge for the year	-	(1,728,336)	(12,212)	(1,740,548)
At 31 December 2020	-	(2,837,917)	(12,212)	(2,850,129)
Net book value
At 31 December 2019	43,299,010	6,025,419	-	49,324,429
At 31 December 2020	46,154,848	4,297,083	735,788	51,187,719

The Company has no intangible assets.

Goodwill

Goodwill arising on the acquisition of a business in 2019 relates to the acquisition of Elixirr Consulting Limited on 15^th July 2019.

Goodwill on acquisition of a business in the current year represents the goodwill on acquisition of Coast Digital Limited 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 15).

Goodwill impairment review

The breakdown of goodwill by acquisition is listed below:

	31 December 2020	31 December 2019
	£	£
Elixirr Consulting Limited	43,299,010	43,299,010
Coast Digital Limited	2,855,838	-
	46,154,848	43,299,010

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 and Coast Digital Limited 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 either Elixirr Consulting Limited or Coast Digital Limited using the value in use calculation.

Number of years of cash flows used and budgeted growth rate

The recoverable amount of the cash generating unit ("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 Limited. 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
	31 December 2020	31 December 2019	31 December 2020	31 December 2019
	£	£	£	£
On current cash flow projections, the discount rate would need to exceed the % alongside for there to be any impairment; and	26.0%	24.0%	25.1%	-
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.	15.6%	12.0%	22.0%	-

Customer relationships

Current year additions represent the fair value of customer relationships from the acquisition of Coast Digital Limited. Refer note 15 for further details.

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

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

15.  Business combinations

On 28^th October 2020 the Group acquired 100% of the share capital and voting interests of Coast Digital Limited ("Coast Digital"), a digital marketing business.

The acquisition extends the existing digital capabilities of the Group, so that the Group can offer a full-service digital capability to its clients. The acquisition also complements Elixirr's creative and technical business, Den Creative Limited.

The Group acquired Coast Digital Limited for a total consideration of £5.0 million, consisting of:

· An initial cash consideration of £2.2 million;

· The issue of 444,752 ordinary shares of 0.005 pence each in the capital of the Company ("Ordinary shares") at a price of 252.5 pence per Ordinary share (being the closing mid-market price of an Ordinary share on 27^th October 2020), equating to approximately £1.1 million;

· Potential earn-out payments in new Ordinary Shares totalling a maximum of £0.4 million which are contingent on Coast Digital achieving EBITDA targets in 2021 and 2022;

· Additional cash consideration of £1.2 million based on the working capital and surplus cash of Coast Digital at acquisition.

Of the £5.0 million consideration, £2.9 million was paid during the year and £1.1 million was satisfied through the issue of Ordinary shares (see note 23). The remaining £1.0 million is recorded within liabilities, of which £0.6 million is recorded within current liabilities and £0.4 million in non-current liabilities (refer note 22).

The earn-out consideration of £0.4 million has been estimated by management based on anticipated future EBITDA and the impact of discounting is considered to be immaterial.

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

Included within exceptional items is an amount of £156,216 for stamp duty, legal and advisory fees in relation to the acquisition.

Coast Digital contributed £983,997 to the Group's revenue and £166,264 to the Group's profit before tax for the period from the date of acquisition to the 31^st December 2020. If the acquisition of Coast Digital had been completed on 1^st January 2020, Group revenues for the year would have been £34.1 million and Group profit before tax would have been £6.4 million.

In calculating the goodwill arising, the fair value of the net assets of Coast Digital 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 liability. Customer relationships were assessed to be separately identifiable assets, recognised at fair value and are included within intangible assets below. Refer to note 14 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 Coast Digital:

	Fair value
	£
Assets
Non-current assets
Intangible assets	748,000
Property, plant and equipment	31,771
Total non-current assets	779,771
Current assets
Trade and other receivables	1,139,797
Cash and cash equivalents	1,410,159
Total current assets	2,549,956
Total assets	3,329,727
Liabilities
Current liabilities
Trade and other payables	(811,691)
Corporation tax	(178,066)
Loans and borrowings	-
Total current liabilities	(989,757)
Non-current liabilities
Loans and borrowings	-
Deferred tax liability	(149,287)
Other non-current liabilities	(47,000)
Total non-current liabilities	(196,287)
Total liabilities	(1,186,044)
Fair value of net assets acquired	2,143,683
Goodwill (note 14)	2,855,838
Fair value of purchase consideration	4,999,521
Cash and cash equivalents in subsidiaries acquired	1,410,159

16.  Property, plant and equipment

	Right of use asset	Furniture and Fittings	Leasehold Improvements	Computer Equipment	Total
Group	£	£	£	£	£
Cost
On incorporation	-	-	-	-	-
Acquisition of business	5,918,591	65,112	499,084	53,213	6,536,000
Additions				4,975	4,975
At 31 December 2019	5,918,591	65,112	499,084	58,188	6,540,975
Acquisition of business (note 15)	-	6,540	-	25,231	31,771
Disposals	-	-	(5,449)	(1,668)	(7,117)
Additions	-	-	11,471	26,511	37,982
At 31 December 2020	5,918,591	71,652	505,106	108,262	6,603,611
Depreciation
On incorporation	-	-	-	-	-
Charge for the period	(263,049)	(24,967)	(28,612)	(18,421)	(335,049)
At 31 December 2019	(263,049)	(24,967)	(28,612)	(18,421)	(335,049)
Disposals	-	-	5,449	1,668	7,117
Charge for the year	(526,118)	(37,527)	(125,057)	(41,396)	(730,098)
At 31 December 2020	(789,167)	(62,494)	(148,220)	(58,149)	(1,058,030)
Net book value
At 31 December 2019	5,655,542	40,145	470,472	39,767	6,205,926
At 31 December 2020	5,129,424	9,158	356,885	50,113	5,545,581

The Company has no property, plant and equipment.

The lease liability in respect of the right-of-use asset was £5,285,741 (2019: £5,711,949).

17.  Investments

	Group companies
Company	£
Cost/carrying value
On incorporation	-
Acquisition of business	50,000,000
At 31 December 2019	50,000,000
Acquisition of business (note 15)	5,155,737
At 31 December 2020	55,155,737

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	At 31 December 2020	At 31 December 2019
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%	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%	-

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

18.  Receivables

	Group		Company
	31 December 2020	31 December 2019	31 December 2020	31 December 2019
	£	£	£	£
Non-current assets
Loans to shareholders	7,783,743	-	6,672,229	-
Other receivables	595,652	416,318	-	-
	8,379,395	416,318	6,672,229	-
Current assets
Trade receivables	3,789,810	4,337,968	-	-
Less: allowance for doubtful debts	(19,980)	-	-	-
Trade receivables - net	3,769,830	4,337,968	-	-
Prepayments and deposits	373,419	227,188	21,511	-
Contract assets	38,956	72,743	-	-
Amounts owed by group companies	-	-	2,975,118	137,377
Other receivables	37,514	1,274,236	3,145	-
	4,219,719	5,912,135	2,999,774	137,377

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 a 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 period.

Loans to shareholders represent amounts owed to the Company and Elixirr Consulting Limited 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 £20,416 (2019: £14,471).

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 at 31^st December 2020, please refer to note 27.

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

	Gross carrying amount	Loss allowance	Net carrying amount
Group	£	£	£
< 31 days	2,201,013	-	2,201,013
31-60 days	1,318,221	-	1,318,221
61-90 days	224,675	-	224,675
91-120 days	25,921	-	25,921
121+ days	19,980	(19,980)	-
At 31 December 2020	3,789,810	(19,980)	3,769,830

The ageing of trade receivables of the Group as at 31^st December 2019:

	Gross carrying amount	Loss allowance	Net carrying amount
Group	£	£	£
< 31 days	4,013,559	-	4,013,559
31-60 days	264,031	-	264,031
61-90 days	60,378	-	60,378
91-120 days	-	-	-
121+ days	-	-	-
At 31 December 2019	4,337,968	-	4,337,968

19.  Cash and cash equivalents

	Group		Company
	31 December 2020	31 December 2019	31 December 2020	31 December 2019
	£	£	£	£
Cash at bank and in hand	17,503,287	3,001,420	10,677,953	-
	17,503,287	3,001,420	10,677,953	-

Cash at bank includes £6,005,550 on 95-day notice deposit and £4,002,055 on 50% instant and 50% 32-day notice deposit which earned interest at 0.45% and 0.25% respectively during the year ended 31^st December 2020. 

The other cash at bank earns interest at floating rates based on daily bank deposit rates.

20.  Trade and other payables

	Group		Company
	31 December 2020	31 December 2019	31 December 2020	31 December 2019
	£	£	£	£
Trade payables	525,502	638,667	57,793	-
Other taxes and social security costs	1,576,994	553,000	5,533	823
Preference share dividend payable	-	131,377	-	131,377
Accruals	4,963,132	2,547,891	33,344	-
Contract liabilities	935,041	659,544	-	-
Other payables	105,975	184,238	-	19
Amounts owed to group companies	-	-	306,492	1,667
	8,106,644	4,714,717	403,162	133,886

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 Limited 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 period end. Trade payables are non-interest bearing and are normally settled monthly.

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

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

21.  Loans and borrowings

	Group		Company
	31 December 2020	31 December 2019	31 December 2020	31 December 2019
	£	£	£	£
Current liabilities
Bank loan	-	750,000	-	-
Right of use lease liability	448,296	622,629	-	-
	448,296	1,372,629	-	-
Non-current liabilities
Bank loan	-	875,000	-	-
Right of use lease liability	4,837,445	5,285,741	-	-
Non-redeemable Preference shares treated as liability	-	6,500,000	-	6,500,000
	4,837,445	12,660,741	-	6,500,000

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

	Right of use lease liability
Group	£
On incorporation	-
Acquisition of business	6,190,657
Interest payable	140,290
Repayment of lease liabilities	(422,577)
At 31 December 2019	5,908,370
Interest payable	261,871
Repayment of lease liabilities	(884,500)
At 31 December 2020	5,285,741

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:

	31 December 2020
	£
Lease liability less than one year	693,864
Lease liability greater than one year and less than five years	2,775,456
Lease liability greater than five years	3,122,388
Total liability	6,591,708
Finance charges included above	(1,305,967)
	5,285,741

Preference shares

On 9 June 2020 the £6.5m liability element of the 10% Non-redeemable Cumulative Preference shares was transferred to equity as a result of the redesignation to Class B Ordinary shares and Deferred shares (refer note 23). 

The Preference dividend was paid up to date of redesignation on 9^th June 2020.

Bank loan

Following the IPO, on 15^th July 2020, the Group's bank loan was repaid in full from the proceeds of the Placing.

22.  Other creditors and other non-current liabilities

	Group		Company
	31 December 2020	31 December 2019	31 December 2020	31 December 2019
	£	£	£	£
Other creditors
Deferred consideration	611,725	-	611,725	-
	611,725	-	611,725	-
Other non-current liabilities
Dilapidations	194,730	147,730	-	-
Contingent consideration	406,071	-	-	-
	600,801	147,730	-	-

Other creditors include deferred consideration which represents surplus cash payable to the former shareholders of Coast Digital Limited (note 15).

Other non-current liabilities include earn-out payments arising from the acquisition of Coast Digital Limited (note 15). These payments are contingent on performance and fall due beyond 12 months from the reporting date.

23.  Share capital, share premium and merger relief reserve

	As at 31 December 2020
	Issued shares	Par value	Merger relief reserve	Share premium
Group and Company	Number
£0.00005 Ordinary shares	45,642,542	2,282	46,869,965	19,728,902
£1 Redeemable Preference shares	50,001	50,001	-	-
	45,692,543	52,283	46,869,965	19,728,902

	As at 31 December 2019
	Issued shares	Par value	Merger relief reserve	Share premium
Group and Company	Number
£1 Class A Ordinary shares	1,000	1,000	14,913,900	-
£1 Class B Ordinary shares	1,331	1,331	20,153,920	-
10% Non-redeemable Cumulative Preference shares	1,000	1,000	8,428,830	-
	3,331	3,331	43,496,650	-

Initial Public Offering and Listing

The Admission Document for the Company's initial public offering (IPO) and admission to the 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 £18.6m (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
On incorporation	-	-	-	-
At 31 December 2019	-	-	-	-
Redesignation/conversion	35,981,200	1,799	46,869,965	22,611
IPO share issue, net of transaction costs	9,216,590	461	-	18,583,313
Share issue as consideration for a business combination (note 15)	444,752	22	-	1,122,978
At 31 December 2020	45,642,542	2,282	46,869,965	19,728,902

Redeemable Preference shares

On 22^nd June 2020 50,001 Redeemable Preference shares with a nominal value of £1.00 each were issued to a Director, Stephen Newton. 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 from the Director during the year and are now 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
On incorporation	-	-	-	-
At 31 December 2019	-	-	-	-
Reclassified from loans and borrowings	50,001	50,001	-	-
At 31 December 2020	50,001	50,001	-	-

Class A Ordinary shares

The Class A Ordinary shares do not entitle the holder to participate in dividends nor share in the proceeds of winding up the Company. On a show of hands every holder of class A 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.

On 22^nd June 2020 there was a subdivision of 1,000 £1 Class A Ordinary shares to 100,000 Class A Ordinary shares with nominal value of £0.01 each. On 22^nd June 2020 there was a redesignation of the £0.01 Class A Ordinary Shares to 27,745 Class B Ordinary shares and 72,255 Deferred shares.

Movements in Class A Ordinary shares:

	Issued shares	Par value	Merger relief reserve	Share premium
Group and Company	Number
On incorporation	1	1	-	-
Share issue/exchange	999	999	14,913,900	-
At 31 December 2019	1,000	1,000	14,913,900	-
Subdivision	99,000	-	-	-
Redesignation/conversion	(100,000)	(1,000)	(14,913,900)	-
At 31 December 2020	-	-	-	-

Class B Ordinary shares

The shares do not entitle the holder to receive notice of, attend or vote at general meetings. 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 Ordinary shareholders, Non-redeemable Preference shareholders and Redeemable Preference shareholders.

During the period there was a £818,016 buyback of 9 £1.00 class B Ordinary shares and 5,300 £0.01 Class B Ordinary shares. On 31^st January 2020 a subdivision of Class B Ordinary shares took place. The nominal value of these shares changed from £1.00 to £0.01. On 22^nd June 2020 there was a further subdivision of each Class B Ordinary share to Class B Ordinary shares with nominal value of £0.00005 each. On 22^nd June 2020 there was a redesignation of each Class B share to Ordinary shares on the basis of one Class B Ordinary share to one Ordinary share.

Movements in Class B Ordinary shares:

	Issued shares	Par value	Merger relief reserve	Share premium
Group and Company	Number
On incorporation	-	-	-	-
Share issue/exchange	1,350	1,350	20,153,920	-
Share buy-back at par and cancelled	(19)	(19)	-	-
At 31 December 2019	1,331	1,331	20,153,920	-
Share buy-back at par and cancelled	(9)	(9)	-	-
Subdivision	130,878	-	-	-
Share buy-back at par and cancelled	(5,300)	(53)	-	-
Redesignation/conversion	(46,375)	(464)	-	-
Subdivision	16,024,475	-	-	-
Redesignation to Ordinary shares	(16,105,000)	(805)	(20,153,920)	-
At 31 December 2020	-	-	-	-

Class B Founder Ordinary shares

The shares do not entitle the holder to receive notice of, attend or vote at general meetings. 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 Ordinary shareholders, Non-redeemable Preference shareholders and Redeemable Preference shareholders.

On 9^th June 2020 there was a redesignation of 3,119 £0.01 Class B Founder Ordinary shares to Class B Ordinary shares on the basis of one Class B Founder share to one Class B Ordinary share. On 22^nd June 2020 there was a subdivision of each Class B Founder shares to Class B Founder shares with nominal value of £0.00005 each. On 22^nd June 2020 there was a redesignation of each Class B Founder share to Ordinary shares on the basis of one Class B Founder share to one Ordinary share.

Movements in Class B Founder Ordinary shares:

	Issued shares	Par value	Merger relief reserve	Share premium
Group and Company	Number
On incorporation	-	-	-	-
At 31 December 2019	-	-	-	-
Redesignation/conversion	99,381	994	-	-
Subdivision	19,776,819	-	-	-
Redesignation to Ordinary shares	(19,876,200)	(994)	-	-
At 31 December 2020	-	-	-	-

Class C Ordinary shares

The shares do not entitle the holder to receive notice of, attend or vote at general meetings. 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 Class B Ordinary shares, Class B Founder shares, Ordinary shareholders, Non-Redeemable Preference shareholders and Redeemable Preference shareholders.

On 11^th February 2020, a share issue took place whereby 20,309 Class C Ordinary shares were issued at a price of £0.99 per share. During the period there was a £2,309 buyback of 2,332 Class C Ordinary shares. On 6^th May 2020 there was an allotment of 2,763 £0.01 Class C Ordinary shares at a price of £0.99 per share. On 16^th June 2020 there was a redesignation of 20,740 £0.01 Class C Ordinary shares into 235 Class B Ordinary shares and 20,505 Deferred shares.

Movements in Class C Ordinary shares:

	Issued shares	Par value	Merger relief reserve	Share premium
Group and Company	Number
On incorporation	-	-	-	-
At 31 December 2019	-	-	-	-
Share issue	20,309	203	-	19,903
Share buy-back and cancelled	(2,332)	(23)	-	-
Share issue/allotment	2,763	27	-	2,708
Redesignation/conversion	(20,740)	(207)	-	(22,611)
At 31 December 2020	-	-	-	-

Deferred shares

The shares do not entitle the holder to receive notice of, attend or vote at general meetings. The shares do not 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 nominal amounts paid on the shares held after the sum of £1m per share has been distributed to the holders of Class B Ordinary shares.

On 22^nd June 2020 there was a buy-back of 150,934 Deferred shares for an aggregated consideration of £1.00.

Movements in Deferred shares:

	Issued shares	Par value	Merger relief reserve	Share premium
Group and Company	Number
On incorporation	-	-	-	-
At 31 December 2019	-	-	-	-
Redesignation/conversion	150,934	1,509	-	-
Share buy-back and cancelled	(150,934)	(1,509)	-	-
At 31 December 2020	-	-	-	-

Non-redeemable Preference shares

The shares are entitled to dividends at the rate of 10% of Group profit after tax per annum. If insufficient profits are available in a particular financial year, the dividends accumulate and are payable when sufficient profits are available. The shares do not participate in the winding up of the company and have no voting rights attached to them. The opening balance of the 10% Non-redeemable Cumulative Preference shares represents the fair value of the equity element of the Preference shares at date of issue of £8,429,830.

On 1^st June 2020 there was a reduction in the share premium account by £3,126,684.48 through the cancellation of 168 Preference shares with a nominal value of £1.00 each. On 9^th June 2020 there was a subdivision of each Preference share with a nominal value of £1.00 each to Preference shares with nominal value of £0.01 each. On 9^th June 2020 the non-redeemable preference shares were redesignated to 25,026 £0.01 Class B Ordinary shares and 58,174 £0.01 Deferred shares.

Movements in Non-redeemable Preference shares:

	Issued shares	Par value	Merger relief reserve	Share premium
Group and Company	Number
On incorporation	-	-	-	-
Share issue/exchange	1,000	1,000	8,428,830	-
At 31 December 2019	1,000	1,000	8,428,830	-
Share buy-back and cancelled	(168)	(168)	(3,126,684)	-
Subdivision	82,368	-	-	-
Redesignation/conversion	(83,200)	(832)	(5,302,146)	-
At 31 December 2020	-	-	-	-

24.  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:

	As at 31 December 2020
	Shares held in EBT	Weighted average cost	Total cost
Group and Company	Number
Ordinary shares	704,667	1.70	1,198,188
Redeemable Preference shares	50,001	1.01	50,256
	754,668		1,248,444

25.  Share-based payments

Share Option Plans

On 8^th May 2020 a Share Option Plan was implemented. A total of 28,725 options over £0.01 Class B Ordinary shares were granted to the employees and senior management of the Group which vest over periods up to 6 years with performance criteria attached. As a result of the redesignation of £0.01 Class B Ordinary shares to £0.00005 Ordinary shares (please refer note 23) this represents 5,745,000 options over Ordinary shares at an exercise price of £0.43.

774,000 options were granted on 3^rd November 2020 to new and promoted employees at an exercise price of £2.50.

Details of share option awards made are as follows:

	Number of share options	Weighted average exercise price
Outstanding at the beginning of the year	-	-
Granted during the year	6,519,000	0.68
Exercised during the year	-	-
Forfeited during the year	(682,800)	0.43
Expired during the year	-	-
Outstanding at the year end	5,836,200	0.71
Exercisable at the year end	-	-

No share options were exercisable in the year.

The options outstanding at 31^st December 2020 had a weighted average remaining contractual life of 4 years and a weighted average exercise price of £0.71 per share.

The options were fair valued at the grant date using the Black Scholes option valuation model.

At the grant date, the exercise price of the options were aligned to the market price, hence the share-based payment charge calculated under IFRS 2 was immaterial for the year ended 31^st December 2020.

The inputs into the model were as follows:

	Year ended 31 December 2020
Weighted average share price at grant date	0.68
Weighted average exercise price	0.68
Volatility	15.00%
Weighted average vesting period	5
Risk free rate	0.05%
Expected dividend yield	1.50%

On 28^th October 2020, in conjunction with the acquisition of Coast Digital (refer to note 15), share options were issued to certain management of Coast Digital. These options are employment-linked with vesting contingent on Coast Digital achieving EBITDA targets in 2021, 2022 and 2023.

The number of option shares to be issued will be variable and determined with reference to the share price at the date of vesting. The options have a fair value of £1.1 million and were issued with 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 £2.50. The options outstanding at 31^st December 2020 had a weighted average remaining contractual life of 3.5 years and a weighted average exercise price of £0.00005 per share.

 

26.  Cash flow information

Cash generated from operations:

	Group		Company
	31 December 2020	31 December 2019	31 December 2020	31 December 2019
	£	£	£	£
Profit before taxation	5,818,256	1,727,332	9,450,311	4,333
Adjustments for:
Depreciation and amortisation	2,470,646	1,444,630	-	-
Net finance expense	659,615	327,931	8,336	-
Share-based payments	46,906	-	46,906	-
Decrease/(Increase) in trade and other receivables	1,557,977	(4,732,493)	(2,474,234)	(140,868)
Increase/(decrease) in trade and other payables	2,711,614	2,625,558	95,725	136,554
Foreign exchange	43,756	24,698	(188)	-
	13,308,770	1,417,656	7,126,856	19

Reconciliation of liabilities from financing activities:

	Borrowings	Non-redeemable Preference Shares	Leases	Total
Group	£	£	£	£
On incorporation	-	-	-	-
Acquisition of business	-	-	6,190,657	6,190,657
Cash flows	1,594,811	-	(446,151)	1,148,660
Other changes	30,189	6,631,377	163,864	6,825,430
Balance 31 December 2019	1,625,000	6,631,377	5,908,370	14,164,747
Cash flows	(1,655,759)	(518,483)	(884,500)	(3,058,742)
Other changes	30,759	(6,112,894)	261,871	(5,820,264)
Balance 31 December 2020	-	-	5,285,741	5,285,741
	Borrowings	Non-redeemable Preference Shares	Total
Company	£	£	£
On incorporation	-	-	-
Cash flows	-	-	-
Other changes	-	6,631,377	6,631,377
Balance 31 December 2019	-	6,631,377	6,631,377
Cash flows	(19,421)	(518,483)	(537,904)
Other changes	19,421	(6,112,894)	(6,093,473)
Balance 31 December 2020	-	-	-

Other changes include non-cash movements, including accrued interest expense and Non-redeemable Preference shares treated as a financial liability.

27.  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
	31 December 2020	31 December 2019	31 December 2020	31 December 2019
	£	£	£	£
Financial assets
Financial assets that are debt instruments measured at amortised cost	29,725,838	9,102,686	20,325,300	137,377
Financial liabilities
Financial liabilities measured at amortised cost	11,815,392	18,195,087	397,629	6,633,886
Financial liabilities at fair value through profit and loss	406,071	-	406,071	-

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

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

Financial liabilities at fair value through profit and loss comprise contingent consideration on acquisition of Coast Digital Limited.

The Group is exposed to a variety of financial risks through its use of financial instruments which result from its operating activities. All 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
	31 December 2020	31 December 2019	31 December 2020	31 December 2019
	£	£	£	£
Trade receivables	3,769,830	4,337,968	-	-
Contract assets	38,956	72,743	-	-
Other receivables	8,413,765	1,690,555	9,647,347	137,377
Cash and cash equivalents	17,503,287	3,001,420	10,677,953	-
	29,725,838	9,102,686	20,325,300	137,377

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 profile of trade receivables is monitored regularly by management. Any debtors over 30 days are reviewed by the management team 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 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	525,502	-	-	-	-	525,502	525,502
Loan borrowings	-	-	-	-	-	-	-
Lease liabilities	346,932	346,932	1,387,728	3,469,320	1,734,660	7,285,572	5,285,741
Financial liabilities at fair value through profit and loss	-	203,036	203,036	-	-	406,071	406,071
	872,434	549,968	1,590,764	3,469,320	1,734,660	8,217,145	6,217,314

Contractual maturities of financial liabilities of the Group as at 31^st December 2019:

	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	638,667	-	-	-	-	638,667	638,667
Loan borrowings	405,830	398,298	903,188	-	-	1,707,316	1,625,000
Lease liabilities	446,151	441,151	1,387,728	3,469,320	1,792,482	7,536,832	5,908,370
Preference shares treated as liability	-	131,377	-	-	-	131,377	6,500,000
	1,490,648	970,826	2,290,916	3,469,320	1,792,482	10,014,192	14,672,037

Interest rate risk

As at 31^st December 2020 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.

As at 31^st December 2019, the loan facilities that the Group had in place (see note 21) were exposed to interest rate risk. Included within loans and borrowings was a bank loan, which was exposed to interest rate risk as interest was charged on the bank loan at 3.25% over LIBOR. As at 31^st December 2019 the balance drawn down on the bank loan was £1,625,000.

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 increased/(decreased) the profit before tax and equity by the following amounts:

	31 December 2020	31 December 2019
	£	£
1% increase	-	(9,375)
1% decrease	-	9,375

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 ensure 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:

	31 December 2020		31 December 2019
	USD	EUR	USD	EUR
Cash & cash equivalents	$2,629,971	€ 174,713	$311,861	€ 145

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.

	31 December 2020	31 December 2019
	£	£
10% weakening of functional currency	208,203	23,515
10% strengthening of functional currency	(208,203)	(23,515)

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 £70.7m as at 31^st December 2020 (2019: £44.6m).

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.

28.  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 13 for key management personnel compensation disclosures. The Directors' Report contains details of Board remuneration.

In the year ended 31^st December 2020, 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 at 31^st December 2020.

In the period ended 31^st December 2019 the Group made payments on behalf of a related party, Elixirr Partners LLP, totalling net £844,697. This amount was included in current receivables (£1,020,049) and current liabilities (£175,352) at 31^st December 2019.

Gavin Patterson, independent non-executive chairman of the Board, provided consulting services to the Company totalling £45,021 during the year ended 31^st December 2020.

Travel and marketing costs include the hire of an aeroplane from Aviation E LLP. Stephen Newton, a Director, is a member of Aviation E LLP. The total expense incurred during the year was £19,845 with £6,696 outstanding at the year end. 

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. These were part repaid along with repayment of the opening balance during the year. A balance remained outstanding at the period end as follows:

	£
On incorporation	-
Loans advanced	169,876
At 31 December 2019	169,876
Loans advanced	6,230,002
Loan repayments	(2,544,036)
At 31 December 2020	3,855,842

Loans were advanced by Founders and Directors who financed 50% of the loan by the Company to non-Founder shareholders for their acquisition of shares in the Company. The loan from founding shareholders and Directors was repaid in July 2020 with interest. A reconciliation of the loans from Founders and Directors is set out below:

At 31 December 2019	-
Loans from Founders	(3,544,374)
Interest on loans from Founders	(19,421)
Loans repaid to Founders	3,563,795
At 31 December 2020	-

Company related party transactions are disclosed in notes 18 and 20.

29.  Events after the reporting date

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

The Group acquired The Retearn Group Limited for a maximum consideration of £7.0 million, plus an additional cash payment based on working capital at completion. The consideration consists of:

· An initial cash consideration of £2.15 million;

· A proposed issue of ordinary shares of 0.005 pence each in the capital of the Company ("Ordinary Shares") at the closing mid-market price of an Ordinary Share on 8^th April 2021, equating to approximately £2.15 million;

· Potential earn out payments of up to £0.65 million in cash and up to £2.05 million in new Ordinary Shares totalling a maximum of £2.7 million which are contingent on The Retearn Group Limited achieving revenue growth and EBITDA margin targets in periods up to 30^th June 2024.

An additional cash payment will be made based on the working capital of The Retearn Group Limited at completion. At the time of this annual report being authorised for issue the amount of this payment has not been determined.

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

If the acquisition of The Retearn Group Limited had been completed on 1^st January 2020, Group revenues for the year would have been £36.9 million and Group profit before tax would have been £6.8 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 The Retearn Group Limited has not been made given the limited amount of time available between the acquisition date and the date this annual report was authorised for issue.

Elixirr Consulting AI Limited, an indirect held subsidiary undertaking of the Group, was struck off the Companies House register on 19^th January 2021 and dissolved on 26^th January 2021.

The Directors are proposing a final ordinary dividend in respect of the financial year ended 31^st December 2020 of 2.2p per share. A resolution to this effect will be proposed at the forthcoming Annual General Meeting.

30.  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.

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.

31.  Ultimate controlling party

There is no ultimate controlling party as at 31^st December 2020. At 31^st December 2019, the ultimate controlling party was Stephen Newton. He ceased to have control following the completion of the share restructuring disclosed in note 23.

 

END

 

 

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