Elixirr International Regulatory News (ELIX)

Elixirr International plc

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

RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2020

Elixirr International plc (AIM:ELIX), an established, global award-winning challenger consultancy, is pleased to report its unaudited interim results for the six months ended 30 June 2020 (H1 20).

Elixirr was incorporated on 12 December 2018 but was dormant from this date until 1 July 2019 when it acquired the business and assets of Elixirr Partners LLP. As such, the interim financial statements present the six month period from 1 January to 30 June 2020 with no comparatives for the condensed consolidated statement of comprehensive income or condensed consolidated statement of cashflows. The Company's ordinary shares were admitted to AIM, the market of that name operated by the London Stock Exchange ("AIM") ("Admission"), in July 2020.

For the purposes of the financial and operating highlights and interim management report the Directors considered it appropriate to use the audited results for the six months to 31 December 2019 as comparatives. The audited results for the six months to 31 December 2019 are as disclosed in the historical financial information section of the Company's Admission Document dated 6 July 2020.

Financial Highlights

Elixirr is proud to report the following financial highlights for the Group for the six month period to 30 June 2020:

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

Operating Highlights

Commenting on the results, Stephen Newton, Chief Executive Officer said:

"After a successful admission to AIM in early July this year, we remain committed to being the challenger consultancy in alignment with the Board's strategic objectives and our four-pillar growth strategy.

I am very proud that we have continued to grow through the H1 20 period and to announce that we achieved our record monthly revenue in the month of June and then again in the month of July, especially given the economic turmoil that the world is currently experiencing as a result of this pandemic. Our success through these times is largely due to my dedicated entrepreneurial team who have developed innovative solutions to help our clients react and take advantage of the business environment. I would like to thank all our clients for their fantastic support and their continued trust in all of my team.

Our pipeline for the coming months is full of exciting opportunities for the growth of the firm, our Elixirr people and most importantly for delivering value to our clients. We are confident that we will continue to progress with our objectives for the remainder of the year and into the future."

Enquiries:

For enquiries, please refer to our Investor Contacts page:

https://www.elixirr.com/investors/investor-contacts

Elixirr International plc +44 (0)20 7220 5410  

Stephen Newton, Chief Executive Officer

Graham Busby, Chief Financial Officer

Public and Investor Relations investor-relations@elixirr.com

Caroline Pitt

Jazz Berry

finnCap Ltd (Nominated Adviser & Sole Brokers) +44 (0)20 7220 0500

Christopher Raggett

Simon Hicks

Kate Bannatyne

Notes to editors

Elixirr International plc (AIM: ELIX) is an established, global, award-winning management consultancy. The company challenges the larger consultancies by delivering innovative and bespoke solutions to a repeat, globally-recognised client base.

This announcement is released by Elixirr International plc and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR). It is disclosed in accordance with Elixirr's obligations under Article 17 of MAR. For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is being made on behalf of the Company by Graham Busby, Chief Financial Officer.

Disclaimer

This announcement contains certain statements that are, or may be, forward looking statements with respect to the financial condition, results of operations, business achievements and/or investment strategy of the Company. Such forward looking statements are based on the Board's expectations of external conditions and events, current business strategy, plans and the other objectives of management for future operations, and estimates and projections of the Company's financial performance. Though the Board believes these expectations to be reasonable at the date of this document they may prove to be erroneous. Forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, achievements or performance of the Group, or the industry in which the Group operates, to be materially different from any future results, achievements or performance expressed or implied by such forward looking statements.

INTERIM MANAGEMENT REPORT

We are pleased to report that the Group continues to make positive progress on its strategic growth objectives and has performed well in the first half of the financial year. As we noted in our recent AIM Admission Document, the Group aims to achieve continued growth through our four-pillar growth strategy which includes stretching existing partners, promoting partners from within, hiring new partners and through the acquisition of complementary businesses.

Financial Performance Review1

In the six-month period ended 30 June 2020 the Group delivered revenue of £13.55m and adjusted EBITDA of £4.55m representing a 33.6% margin.

Profit before tax increased by 51.5% to £2.62m and adjusted basic earnings per share increased by 29.9% to 8.21p.

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

§ Adjusted basic earnings per share is calculated using profit after tax, adjusted for amortisation, exceptional items and their related tax impacts.

During the six months ended 30 June 2020, Elixirr continued to grow revenue in spite of the turbulent market conditions. Revenue increased by 3.2% to £13.55m (H2 19: £13.13m). 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 realised a gross profit margin of 39.1%, up 5 percentage points when compared with H2 19. This improved profitability is the result of a combination of improved utilisation of consultants and a tighter control of the cost base.

Adjusted EBITDA grew 23.2% to £4.55m (H2 19: £3.70m) and was delivered at an improved margin of 33.6% (H2 19: 28.1%). The increased EBITDA margin is as a result of the improved gross profit margin discussed above as administrative expenses remained consistent.

Profit before tax (after exceptional items) increased by 51.5% to £2.62m (H2 19: £1.73m). Further detail of exceptional items is set out in Note 3.

Adjusted basic earnings per share increased by 29.9% to 8.21p (H2 19: 6.32p) and basic earnings per share increased by 70.5% to 5.42p (H2 19: 3.18p).

Net assets as at 30 June 2020 totalled £49.34m (31 December 2019: £44.64m). The increase in net assets is as a result of the retained profit for the period (£1.99m increase in retained earnings), conversion of preference shares to ordinary shares (£6.50m increase in merger relief reserve), offset by capital returns to shareholders of £3.95m.

Net cashflow generated from operations increased to £6.17m (H2 19: £1.34m). Operating cash conversion was in excess of 100% due to the build up of provisions which will be paid out during H1 21.

The Group's net cash position decreased to £1.92m as at 30 June 2020 (H2 19: £3.0m) as a result of cash outflows from financing activities due to the pre-IPO share restructuring transactions. After the balance sheet date, the cash position increased by £18.2m due to the net proceeds of the IPO.

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1 All rounding and percentage change calculations are based on these financial statements and compared to the H2 19 period (six months ended 31 December 2019) as set out in the Historical Financial Information section of the AIM Admission Document, unless otherwise specified.

Operational and Revenue Review

Despite the turbulent market environment, the overall 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 with the aim of solving clients' business challenges. The relevance of digital transformation and the solutions that we provide have become of critical importance to many companies 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 have ensured continued strong trading through the Covid-19 period.

Elixirr is well positioned to assist our clients in innovating and adapting during these unprecedented times. Some of our recent activity during the period includes:

- Designing and implementing a bank's Mobile and Online digital banking solution

- Setting up and running a client's Digital PMO

- Designing and launching a client's Business Transformation Office

Growth strategy

Elixirr's growth strategy and future success is centred around the four pillars of:

We incentivise our partner team to grow sales, deepen existing client relationships and develop opportunities with new clients, both through a financial year bonus scheme and equity incentives.

During June 2020, all the non-founder partners acquired additional equity in the firm through purchases of ordinary shares from the founder partners, financed by loans from the Company to the non-founder partners. This has fully aligned the entire partner team with the overall success of the Group.

In addition, the Group implemented an Enterprise Management Incentive ("EMI") share option scheme in May 2020 for all employees (refer to Note 6). In relation to partners, the EMI scheme provides strong financial incentives to materially increase revenue above current levels.

We are pleased to report that revenue per client-facing partner grew 3% during H1 20, despite the difficult market environment.

Promoting partners from within is an important element of our growth strategy. Partners who have previously been employees of the Group at more junior levels fully understand our business model, are committed to excellent client service and culturally integrated within our business. We have embraced the concept of 'growing our own timber' since the day we were founded.

We encourage talented employees to aspire to becoming partners. All employees are coached by a partner to develop to their full potential. We have 10 employees at principal level, the level below partner, with an average tenure in that role of 2 years.

One of our new partners was promoted from principal effective 1 May 2020, and we have recently announced the promotion of another principal in our team to partner with effect from 1 January 2021.

The EMI share option scheme launched during the period has aligned all employees' incentives (from partner through to every member of the support staff) with the overall success of the Group. We can already see that the scheme is driving behaviours that will lead to the successful growth of the Group. The scheme includes additional incentives for principals who are promoted to partner during the term of the scheme, which will reap rewards for both the individuals and Elixirr in the future.

Experienced partner level hires bring a new network of relationships to the business. We only hire new partners after investing a significant amount of senior management time in getting to know them and evaluating whether we believe they will be successful within our Group.

During the period, we hired one new client-facing partner with a strong financial services background. He is already demonstrating that he can deliver revenue to our business.

Just after the period end (in July 2020), we have hired a further client-facing partner who will start on 1 October 2020. He brings both consulting and business executive experience including in media, tech, digital, strategy and private equity.

We have also strengthened our Board with two new external directors, Ms C Stranner and Mr S Retter. They joined the Board as Independent Non-Executive Directors prior to Admission in July 2020.

Elixirr is pursuing a buy-and-build strategy to accelerate the overall growth of the Group and has identified and analysed a pipeline of potential acquisitions to enhance one or more of our capabilities, industries or geographical coverage. The Company aims to work with founders of high-quality boutique firms to accelerate their growth under a 'House of Brands' strategy, allowing each firm to maximise their collective strengths, whilst retaining control of their own brands respectively.

After reaching out to a number of target companies, we are currently in active discussions with 8 companies. These targets include companies which operate in industries and geographies that Elixirr do not currently serve, as well as offer their clients complementary capabilities to Elixirr's current services.

We expect that any transaction will include an element of Company equity within the consideration to align the incentives of the selling shareholders with the future success of the Group.

Outlook

Since the period ended 30 June 2020, the Group has traded well with revenues and margins proving resilient in the face of the Covid-19 pandemic. The Group continues to win mandates assisting with the transition to remote working and facilitating the business shifts necessary to cope with the anticipated change to customer habits. June and July 2020 represented record months for the Group in terms of revenue recorded.

As such, the Board anticipates that the Group's revenue will be strong in the financial year ending 31 December 2020 with further growth in revenue in H2 20 on the level achieved in H1 20. Full year FY20 operating margins are expected to be greater than H2 2019. The Group continues to trade in-line with the Directors' expectations.

The Board sees further opportunities arising from the current change reverberating through its core clients' industries. This, alongside a strong financial performance in the first half of the year, good visibility over current work-in-progress and pipeline opportunities, and a belief in the fundamental growth strategy and business model, give the Directors confidence in the Group's prospects for the current financial year and beyond.

Gavin Patterson Stephen Newton

Chairman Chief Executive Officer

Interim condensed consolidated statement of comprehensive income

For the six months ended 30 June 2020

No comparatives have been disclosed - please refer to note 1.1 for further explanation.

The attached notes form part of these interim condensed consolidated financial statements.

Interim condensed consolidated statement of financial position

As at 30 June 2020

Interim condensed consolidated statement of cash flows

For the six months ended 30 June 2020

No comparatives have been disclosed - please refer to note 1.1 for further explanation.

Interim condensed consolidated statement of changes in equity

For the six months ended 30 June 2020

No comparatives have been disclosed for the period 1 January - 30 June 2019 - please refer to note 1.1 for further explanation.

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.

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 consolidated statement of comprehensive income.

Notes to the interim condensed consolidated financial statements

1. Basis of preparation and significant accounting policies

1.1. General information

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

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

The Company was incorporated on 12 December 2018 but was dormant from this date until 1 July 2019. An acquisition occurred in July 2019 resulting in the Company no longer being dormant. As such, the interim financial statements present the period from 1 January to 30 June 2020 with no comparative period.

The consolidated financial statements were authorised for issue in accordance with a resolution of the Directors on 14 September 2020.

1.2. Basis of preparation

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and should be read in conjunction with the Group's last annual consolidated financial statements, as at and for the 6 month period ended 31 December 2019 as disclosed in the historical financial information section of the Company's Admission Document dated 6 July 2020. They do not include all of the information required for a complete set of IFRS financial statements, however, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statements. 

Statutory accounts

Financial information contained in this document does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 ("the Act").

The financial information provided for the current six month period ended 30 June 2020 is unaudited. The financial information provided for the period to 31 December 2019 was audited.

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

These financial statements consolidate the financial statements of the Company and its subsidiary undertakings as at 30 June 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 1.6.1.

1.5. Going concern

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

1.6. Principal accounting policies

Please refer to the Group's historical financial information section of the Company's Admission Document dated 6 July 2020 for full disclosures of the principal accounting policies that have been adopted in the preparation of these interim condensed consolidated financial statements. The key accounting policies that affected the Group in the period are documented below.

1.6.1. Significant judgements and estimates

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 is 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.

1.6.2. Revenue recognition

Revenue is measured as the fair value of consideration received or receivable for satisfying performance obligations contained in contracts with clients, including expenses and disbursements but 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 the revision became known.

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

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

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

1.6.3. Business combinations

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 values 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 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 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.

1.6.4. Foreign currency translation

Functional and presentational currency

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

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

Transactions and balances

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

1.6.5. Intangible assets

Intangible assets are measured at cost less accumulated amortisation and any accumulated impairment losses.

Trademarks acquired in a business combination are recognised at fair value at the acquisition date. Trademarks have a finite useful life and are subsequently carried at cost or fair value (depending on how acquired) less accumulated amortisation and impairment losses.

The Group amortises intangible assets with a limited useful life using the following methodology:

Trademarks - 33.33% reducing balance method

1.6.6. 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. The goodwill is tested annually for impairment irrespective of whether there is an indication of impairment.

1.6.7. 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:

Leasehold improvements - Over the life of the lease

Computer equipment - 3 years

Fixtures and fittings - 3 years

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

1.6.8. Employee benefits

Post-retirement benefits

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

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

Share-based payments

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

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

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

Please refer to Note 6 for further details.

1.6.9. Earnings per share

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

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

1.7. 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.

2. Operating segments

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

3. Exceptional items

Exceptional items during the period relate to non-recurring costs associated with the pre-IPO capital restructuring, IPO on AIM (refer to Note 9) and EMI share option scheme (refer to Note 6).

4. Finance income and expenses

5. Loans and borrowings

Preference shares

On 9 June 2020 the £6.5m liability element of the 10% non-redeemable cumulative preference shares was extinguished as a result of the redesignation to Class B Ordinary shares and Deferred shares (refer note 7). A preference dividend has been accrued up to date of redesignation on 9 June 2020 as detailed in note 4.

On 22 June 2020 50,001 Redeemable Preference shares with a nominal value of £1.00 each were issued. There are no voting rights attached to the Redeemable Preference shares. The Redeemable Preference shares 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.

Loans from shareholders

Loans from shareholders represents amounts owed to founder shareholders who financed 50% of the loan by the Company to non-founder shareholders for their acquisition of shares in the Company. The loan from founder shareholders was repaid in July 2020.

6. Share-based payments

On 8 May 2020 an EMI Share Option Plan was implemented.

This granted a total of 28,725 options over £0.01 Class B Ordinary shares to the employees 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 on 22 June 2020, this represents 5,745,000 options over Ordinary shares.

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 is considered to be immaterial for the six months ended 30 June 2020.

7. Share capital, share premium and merger relief reserve

Movements in 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 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 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 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 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 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 31 January 2020, 102,500 Class B Ordinary shares were redesignated into 102,500 Class B Founder Ordinary shares.

On 22 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 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 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 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 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 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 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 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 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 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 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 June 2020 there was a buyback of 150,934 Deferred shares for an aggregated consideration of £1.00.

Movements in Non-redeemable Preference shares

The merger relief balance as at 31 December 2019 for 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.

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.

On 1 June 2020 there was a reduction in the merger relief reserve by £3,126,684.48 through the cancellation of 168 preference shares with a nominal value of £1.00 each.

On 9 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 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.

8. 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:

9. Post balance sheet events

Initial Public Offering and Listing

The Admission Document in relation to the Company's initial public offering (IPO) and admission to AIM was published on 6 July 2020. The Company placed 9,216,590 new ordinary shares (the "Placing") and selling shareholders placed 2,304,148 existing ordinary shares at 217 pence per share. The Company received net proceeds of approximately £18.2m (after deduction of estimated commissions, fees and expenses payable by the Company).

The Company's ordinary shares were admitted to trading on AIM on 9 July 2020, under the ticker "ELIX" and the ISIN GB00BLPHTX84.

Immediately following Admission and at the date of this report, 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

Debt repayment

Following the IPO, the Group's bank loan was repaid in full from the proceeds of the Placing (loan balance as at 30 June 2020: £1,250,000. Refer to Note 5 for details). The shareholder loan balances included in note 5 were also repaid in July 2020.

10. Ultimate controlling party

At 31 December 2019, the ultimate controlling party of the Group was Stephen Newton. Following the completion of the pre-IPO share capital restructuring completed in June 2020, there is no ultimate controlling party as at 30 June 2020.