Elixirr International plc

good afternoon and welcome to the elixir international plc investor presentation throughout this recorded presentation investors will be in a slowly mode questions are encouraged and will be submitted at any time via the q a tab situated on the right hand corner of your screen simply type in your questions and press send the company may not be in a position to answer every question it receives during the meeting itself however the company can review all questions submitted today and publish responses where it's appropriate to do so before we begin i'd like to submit the following poll i'm now like tango steven newton ceo good afternoon

Those of you who have not met me, I'm Steve Newton, founder and CEO, co-founder with Graham. And Nick is our CFO and M is our investor relations lead. So you'll hear from all four of us in this presentation. But let's start off with where we are as a business and how we feel about it. I was reflecting over the weekend on the 17 years that we've been building this company. and I actually can't believe we're almost feel like we've been founded for this moment you know if I think back to the dot-com time you know there was this whole story about the high street was dead and you know there was so many technology was going to change the way business operated and there'd be so many different people being out of business yeah retail suffered but it's had to adjust itself and use different channels and different leaders And people are saying this about AI to consultancies. And to be honest, it creates a massive opportunity for us. Just like the digital revolution is still ongoing, we're still helping clients to use the internet technologies to be able to access their client bases and increase their revenue. And AI is going to be that 30-year gift for us too. This is 30 years on and we're still helping clients on dot-com stuff. AI is that next gift for consultancy. The one thing I would say, if you look at why I founded this firm with Graham, having spent some time in IBM, Accenture, KPMG, I found those businesses lacked accountability, were very bureaucratic, and relied heavily on large pyramids. In businesses like those, the power came from managing lots of people. And I was very frustrated with that and actually thought that value-add should be where the power comes from. And so, finally, AI has turned up on our doorstep and actually gives us a level playing field. Because those huge pyramids don't matter anymore. Our firm has been built to be able to leverage technology. And as a pyramid, no such thing as a pyramid, just a tube, right? We want to give high-value services to our clients. And what AI does for us means we aren't disadvantaged because of the lack of massive pyramids that the big firms have. In actual fact, it levels our playing field massively. And if you think about the things that I've spoken about in this business before, the reason that it's outperformed and has delivered such a wonderful set of results is because our quality of our service is simply better than the big brands. And it has to be better because the brand power doesn't exist for us. It's growing, but it doesn't exist in the same way it exists for the big brands. So we actually have to deliver day to day on the ground better. And that is true for the companies we buy as much as it is for the companies that the company we are today. So we all have this ethos of building fantastic quality. And the other thing that is a weakness in our business potentially is market access compared to the big brands. And our acquisition strategy has been a proven tool to address that. You know, we've done 80 million pounds of revenue through selling to each other's clients since we initiated our our our acquisition strategy it's just working fantastically well so those two things are key but then you add in the fact that ai has just eradicated the weakness of not having a huge pyramid and we literally are built for this moment so it's really exciting and i i couldn't be more enthusiastic about where we are and emmy's going to spend a lot of time talking to you about how we're using ai both with our clients thank you and uh and internally but here's some of the headline things that I just want to pull out all of these points are covered in depth in the rest of the presentation so I'm not going to spend a lot of time talking about them the results Nick's going to go through in a lot of detail but just the important thing on the results that I'd like to point out from my perspective is all three of those metrics are super important because you can't deliver on all three of those if we're not keeping our quality we're not containing our costs and we're not growing aggressively and what I'm super proud of is that all those things are happening and the team have done an absolutely fantastic job of keeping all of those leaders in balance and we've done that ever since we listed on the markets. Clients are everything to us, you know, we don't exist without our clients and to grow from 27 clients last year, 27 gold clients last year to 34 this year is just testament again to the team's ability to expand and impress our clients so much so that they want to buy more and more from us so that's just fantastic news and just talking and and of course the relationship thing Graham's going to touch on a little bit later and if you talk about the global reach and and the strategic acquisitions Graham will again go through these but just my perspective on this is every company we've bought so far the CEO of that company or founder of that company is still with us even after all the earnings have happened And what does that tell you? It tells you that they believed on the tin when they signed up to join us that this was a platform that could really help them scale their business and that would give them opportunities to produce a better performance for their clients. But they're professionals and they'd only stay if that was true. So to me, the really important point is the stickiness of those senior leaders when they come and join us because they see this model as a perfect model and a platform for them. It's going to spend a lot of time talking to you about our AI engine. I mean, it's just a massive market. And you can see here the amount of projects we're doing is simply, well, it's fantastic. And it's growing all the time. Every client is going to talk to us about this. and obviously all of you know about our main market listing this is an important step for us because we want to obviously increase our liquidity and we have this ambition of being a 250 company and as soon as possible and it's almost inevitable that we can have that's going to happen in the next 12 to 18 months so that's a very exciting journey for us too and then the entrepreneurial ownership of the company's super critical platform plank cornerstone whichever word you like to use that underpins the character with which our people turn up every day you know owners care more than people who rent things so our employees are all owners and this is a key characteristic not all obviously actually they all are because they all have options but what i love about this is that 84 of them actually buy into the company which is a massive testament if they walk in this building every day they are critical intelligent people and they're not going to stand here and go wow I'm going to put my own personal income on the line to invest in a company that I don't believe has got a stellar future so that's a huge testament to the delivery of the team in the six years now we've been a listed company we've heard a number of things from investors repeatedly which We've been slowly trying to help people understand why these concerns are not real concerns. On the face of it, they look like concerns, but if you look at what underpins this business and how it's been built, almost every single one of them is actually a strength to us. I've spoken about AI already. The one thing I haven't mentioned, and I won't steal Anne's thunder here because she's going to go into this in a lot of detail, but This is a massively growing market. Estimates are that it's a 13.8 billion consulting market today, and it's going to go to 73.1 billion in 2033. That's 27% CAGR in and of itself in one service line, if you like. And, you know, we're so well positioned for this. Our acquisitions of ILAP, the data analytics and responsum that Graham led, um have been truly transformative for us in that regard we are we are so well positioned it's unbelievably good um people uh the people walk in and out the door every day and what happens if they don't turn up tomorrow i don't actually know a business that's not a people business so even technology businesses rely on people so it's it's a interesting observation but you know the thing that we've built here is a real stickiness around ownership And you look at how this is performing in the market. My partners are increasing their revenue. You can see again this year. I think when we listed it was around 2.5, Nick, 2.7 per partner. It's now at 4.4. It just shows how the combination of giving people ownership alongside giving them more things to offer to their clients of high quality gives you the kind of growth that you need from the performance at the partner level. Acquisitions and execution risk. I think we've proved that through our acquisitions we're actually growing our business in a very balanced way I think it's 34% this year on the previous slide and of that around 15% Nick is organic and the balance is inorganic and we're getting that balance right you know I think I've always said investors can expect somewhere between 10 and 20% organic growth and that again in inorganic and the combination gives us what we've been delivering since we IPO'd and you know we've been able to prove integration you can see the 80 million number referenced earlier as well as this year alone 37 million that's 25% of our revenue that we would not have got if we didn't have this model because we could only sell to those clients because they're part of our group structure now so it's a fantastic And it's really great to see this whole thing coming together, as I said in my introduction. Just a quick touch on the market quality. You know, we've seen, since the main board listing, we've seen 400% growth in daily average value traded and a 71% reduction in bid-off spreads. The cost of trading is going down for our stock and, of course, the liquidity is improving. As we get bigger, as more people recognize us as a quality stock, that's only going to improve. Dilution, a constant concern from investors. Guess what? I'm still the biggest shareholder, constant concern from me. I will do anything in my power not to dilute. I only dilute for things that add value to this company. And you can see there we've managed this very carefully. Three times equity value growth since IPO with only 11% dilution. And Nick will go into a lot of detail on this. And again, just referencing my employees are buying into this business, hand over fist. Revenues, are you project driven? Well, yes, it's true. Our revenues are project driven, but like any business that is about value, it's the quality of the relationship and the value you deliver every day. And you can see that our top 10 clients have been with us eight and a half years. This isn't a trivial statistic. This is because they trust us, they value our opinions, and we've delivered quality for all of that period. And as you can see, we make good margins. So they respect us enough to pay us what we deserve and allow us to make our margins because we create value for them. Graham will go into a lot more detail on this, so I won't drain this, but you can see a number of other statistics on there. I think I'd like to now hand over to Nick to give you a bit more detail on the financial performance. And so please take it away, Nick.

Thanks, Stephen. Good morning, everyone. Before I present the numbers for FY25, just to put this into context, this is our track record in the six years since IPO. So, I mean, I think we are presenting today an excellent set of financial results. But actually, this is an excellent set of financial results. is in the context really of what we've done every year so if you look at the year since 2020 38% revenue CAGR 35% EBITDA CAGR 30% average EBITDA margin and very close to that number this year. And we've delivered that growth through the same four pillar growth strategy that we've had since our AIM IPO in 2020. Stretching partners, driving up the revenue for partner, promoting principles into the partner team and hiring partners from outside the firm and the acquisition strategy that Steve's already mentioned. So turning now to the numbers for FY25, Revenue almost 150 million 149.6 million up 34% gross profit up 39% adjusted EBITDA 44.3 million up 42% and our adjusted EBITDA margin of 29.6% that's up 1.6 percentage points on the previous year Adjusted profit before tax followed in the same similar proportions, up 38%. This obviously reflects the impact of interest now that we have our debt facility that we funded the TRC acquisition. And adjusted diluted EPS up 36%, following closely the increase in EBITDA and adjusted profit before tax, just reflecting a slightly higher share count given the shares that we issued for the TRC consideration. We are pleased today in our results to be able to announce our final dividend for FY25 which will result in a total dividend for FY25 of 22.6 pence. That's up 27% year on year and it's the financial results that have enabled us to increase the dividend by that amount and that's without any reduction in dividend cover. Our dividend cover as a proportion of adjusted profit is a slightly higher dividend cover than the previous year. And the business continues to be very cash generative, free cash flow just higher than 31 million, that's up 11% up on the previous year, not quite as big an increase as the profit metrics given the very strong working capital performance that we had in the prior year. Turning to revenue in a little bit more detail, this bridge is the bridge we give each year just to explain the different components of our move in revenue. So overall, the increase year on year was 111 million to almost 150 million. And then the first three elements of the chart are our organic elements. so we always have some projects and programs of work with clients coming to an end and that's the negative 14 you see on there that's matched by depth and additional work sold to existing clients we have in the previous year which is positive 14.5 million and new clients almost 17 million there and the net of those three first bars is 15 organic growth and that organic growth actually also includes the absorption of the weakening of the US dollar during the year. So the US dollar weakened about 3% during FY25, that had about a negative 2% impact on group revenue. So on a constant currency basis, that organic revenue growth would have been about 17%. And then added to that organic position, a 21 million contribution for revenue from the full year impact hypothesis acquired in late October 24, and So I mentioned the four pillar growth strategy. It's the same strategy we've had since IPO and it's a strategy that is working for us and we've got no intention of changing it. You see there on the right hand side the impact of stretching partners, giving partners more to sell as we do our acquisitions, having partners very incentivized through our equity incentive model that they work harder and they deliver more revenue each year per partner. You see in the year we increase revenue per partner from 4.1 million in 2024 to 4.4 million in 2025 and that's with 34 average that's an average number obviously our partner numbers now are higher than that given full year impact of TRC and additional partners that we've hired in early 26 so we have more than 40 client facing partners today we've also promoted principals to the partnership we've promoted three during the year and we've got two more both of them in the data and AI space being promoted this month in April 26 we've hired five new partners, two last year, three in early 2026, providing expertise across a lot of the core service lines that are really in demand at the moment, AI, ERP, financial services and acquisitions. Graham will talk in more detail about those, but obviously we did the TRC acquisition during the period and Kavada and early in 2026. Cash generation, this continues as a finance person to be my favourite part of the financial results of our business. We closed the year with moving into a net debt position of 24 million from a cash position of 7.5 million in FY24. Our operating cash flow continues to be strong, 33 million of operating cash flow that translates to 31 million of free cash flow. we spent all of that money and slightly more on acquisitions the the large part of that was the trc acquisition of the year which accounted for 29 million pound cash outflow we bought ebt share purchases and ebt share purchases totaled 13.7 million that's the bulk of that 15 million bar you see in the middle that number is higher than normal we had restricted share awards last year which was a one-off Purchase associated with the board transition. So normalising for that and the £1 million increase in EBT share stocks that we had over the year normalises that number to about £8 million as a net purchase number in the year. And we paid £8 million in cash dividends and that number would be about £11 million given the dividend we've just announced for FY25. We've closed the year with £24 million of net debt. We continue to have a lot of leverage. We have £80 million of debt facilities. With an EBITDA number last year of £42 million, that leverage level is only about 0.6 times. So we're very comfortable with the leverage that we have available to us and our ability to service that. From a balance sheet perspective, just a couple of key numbers rather than go through the entire slide. Obviously, the intangible assets went up given the acquisition of TRC in the year. Trade and other receivables also went up given the increase in size of the business organically and also the addition of TRC. As I said in previous years, we have blue-chip clients. We have no concerns with our recoverability of our trade debtors and our debtor data in line with expectations. would have been collected some time ago now. Contingent consideration, we now have at year end 42 million of contingent consideration on the balance sheet. We've paid almost all of the earn outs for acquisitions prior to TRC. There's just 2 million left for previous acquisitions. There's 40 million on the balance sheet for TRC. About 22 million of that will be paid this year for their top up, given their strong performance in FY25. now obviously over there is compartment about five million of consideration that's not in these numbers that will be in the FY 26 balance sheet and then loads of borrowings if you strip out the capitalise office this is from that number we were borrowing we had 29 million pounds borrowed on deficits at year end and 24 million of net debt now I'll hand over to Em who's going to start the business review by talking about AI thanks Nick