Elixirr International (LSE:ELIX) — Interim Results

0:01 Good afternoon, and welcome to the ELIXIR INTERNATIONAL PLC Interim Results Investor Presentation. Throughout the recorded meeting, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q and A tab situated on the right hand corner of your screen. Just simply click Q and A, type in your question and press send. Company may not be in a position to answer every question received 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'd now like to hand you over to Steven Newton, CEO. Good afternoon, sir.

0:31 Good afternoon, and thanks to everyone that's on the presentation who's taking the interest in our half one results, which we are very, very pleased with as we'll take you through the rest of this presentation. Each of my team will introduce themselves as they pick up from me in various areas of the presentation. So once again, thanks for joining us, and, hopefully, this is an interesting conversation. And please feel free to submit your questions, and we'll get to as many of those as you can throughout the conversation if we see them or probably at the end. So but, anyway, thanks for attending. Let me first tell you what we're gonna do. I'll give you bit of an introduction. I think Nick will then look at financial performance. Graham's gonna have a look at the business review. Amy is gonna talk through some our client situation, and then I will be looking at the summary and outlook. So that's pretty much what we're going through. In terms of the introduction, let me give you a few points.

1:22 There's a quote here, but really I wanna pull out two important points here is, you know, many, many investors at time of IPO were concerned that once pre IPO options have vested, we would have a potential for senior leadership to leave the firm or want to leave the firm or to cash out and that kind of thing. But it's interesting for investors to note that we had a whole bunch of pre IPO options. Best, a couple of months ago, And I think it's 80 oh, sorry. It's 97, 98% of all of those shares are still held by the people who have those shares based. They either convert them into their equity in order to receive the dividend, or they they they keep continue to hold the options. And the one thing we also did with those options listing is we actually we actually funded that not out of issuing paper because we actually bought shares, and we used those purchases to to satisfy those option those option vestings, which mean we have no knowledge. So it's it's just a classic example of how we as investors ourselves in this company try and make sure that we continue to to ensure that we have our our investors' interest at heart because we are, and it also shows you the strength of the belief of my team that are all pre IPO investors in this this company in the future of this business. So that's why I wanted to highlight that point in particular.

2:47 And then the second point that I you might say, why am I making a big thing about an award? But we've got plenty of awards, but this one is an interesting one. Why? And I wanted to highlight it for for you. This is an award by Forbes where they put us on the world's best management consulting list for the first time. And the reason this is so important is that it's not something you apply for. And it's something that paid through their access to the market or talking to the market, other of clients, etcetera, people say, who are the best consultancies out there? They do their own research, and they came up with this. And the interesting thing about this for investors too is that since IPO, we've been on a distinctive path of diversification in the business to in order to make the business as resilient as possible, and you'll see in our results how that has been manifesting itself. But the important thing is that Forbes have recognized this by saying that, you know, we're recognized in 13 different industries, which is fantastic because the more industries we're in, the more resilient our business is.

3:43 And it's for example, if if banking is going bad, it could be that consumer goods are doing well, for example. And and, likewise, the 14 functional areas of consulting that we recognized in does exactly the same thing. So, you know, if it's not technology that's doing well, it could be business changes that's doing well. It's cost reduction that's doing poorly. It could be, you know, a market entry strategy could be doing well. So the good thing about this is these are the two points I wanted to highlight at a sort of macro level is that, you know, we've got a very, very committed leadership team, and our business is very, very strongly diversified and has started to be recognized by the market. And it's not something that we're notice that we have applied for. It's actually the market is genuinely recognizing it. So just some points there. Some some highlights for the half one of twenty four. Fantastic revenue growth, 28% revenue growth. Underlying organic, 14%.

4:37 I always say that organic growth should be between 1025% for us on a on a sustainable basis. The reason is if we go any faster than that, I think you start dropping quality. I mean, obviously, Greg will talk a little bit about this, but we're obviously complementing our organic growth strategy with inorganic growth, and you can see that manifesting itself in these results as well. Full record revenue months, I always feel that's a bit strange because if you're a growing business, every month should be a record month in some respects, but there is and, actually, all six months are a record month when you compare them to, say, January to January, February to February of the previous year, March to March, but there were four record months continuously or four record months in the period as well. So this shows that the business is growing. So this is a good thing for us.

5:24 And, of course, our EBITDA is following in line with that. So Nick, who's my COO, have been doing a fantastic job of making sure that costs stay in line with revenue growth so that we actually continue to deliver fantastic EBITDA. Mentioned the development of the brand. The most prestigious award there is, obviously, FTE is a good one, but it's something that you kind of apply for, whereas the Forbes one is is completely, know, as I mentioned earlier on the on the previous conversation, a function of them doing their own market research to speak to the clients and and that kind of thing. So and with regards to clients, you can see we've got 30 brand new clients in the group this quarter sorry, this quarter, this half, and that's fantastic. And there's I'm able to take you through some detailed analysis of our client work and and our client portfolio, which I think will be very interesting to you. And this this on this inorganic growth point, the the thing that if you've been an investor with us for some time, that one of the important things about our business that I think Graham will talk about a little bit later is this ability for us to complement our organic growth inorganic growth, but also importantly, that we can take client relationships we have in both of those pools, so our existing clients and our acquired companies.

6:35 We can cross sell to one another's clients different services. And you can see here that 8,000,000 across sell in this half, which is fantastic. It's an 82% growth over half one twenty three. So we're really starting to maximize this opportunity of cross selling, which is really fueling our growth, which is fantastic. And perhaps why, you know, when you see the industry is suffering, you see a lot of press statements out there about companies retrenching, consulting companies retrenching. We're actually capturing market share, and we're doing it through these various mechanisms. And one of the underlying points here is the quality of our business. So that's fantastic. And then that's the point I wanna make here about sharing the value with employees. I mentioned this I said 98, I think, of the previous slide. It's actually 97 of those options stayed in the hands of the people who had the had the best. What's really important about the equity participation in the firm is everyone feels like an owner.

7:28 And what that means is is that we we we take everything really personally in regards to our clients, and we know that the value comes from serving our clients properly. And I think our clients see this, and this is why we are actually generating a a capture of market share where other consultancies are suffering a little bit more than than than what we are in fact not suffering. So this is the highlights of the the half, and I think we're very, very pleased with that. If I then just give you a sense of something else, we know we we throw this thing around called the challenge consultancy. That's what we like to be, but some people may say why. And and I the first point I've touched on is the firm of entrepreneurs. I mean, it really is true that my partners can go to KPMG, for example, and earn if you look on CapriSize, you can look at KPMG's average partner earnings, so they can get a million a year on average.

8:21 Whereas my partners can get maximum sorry. A million a year, which means 5,000,000 over five years. Right? Whereas my partners can get 200,000 base salary, 2,000 per pound £200,000 Base salary, £200,000 bonus. That's over over the same five year period is 2,000,000. So that's 3,000,000 short of what their opportunity cost is for, say, working in a KPMG, which I think all of my partners at the very least could get that job. There are other there are other professional services firms out there that that that actually pay more. But I use that because I at at a base level, every one of my partners could take one of those those roles in my view. And so they're giving up treatment. What do we give them? We give them equity. They participate in options, and they participate in in buying buying equity too. So when they buy equity, they've got the downside risk as well as the upside risk.

9:13 And all of this means that they are fully vested in the company. You know, they their their remuneration comes from the growth of this company and equity and share price growth. And when some people may say, but what happens when the share price is doing badly? Well, actually, they're five year investors by definition. You know, they they they're coming in with a five year vesting period on their equity.

9:34 They're coming in with a with with that whole structure in place. And so they're making a long term investment decision in the company, and every single day they're working in the company, and they can see how their investment is doing. They have all this insider information every single day when they sit down and sit as we sit as a partner group, and there's a real sense of ownership there. And it's very, very different to what I've seen in other consultancies because I've worked in three of the best brands out there myself in my career. So this is a distinctive feature that makes us a challenger. We this is not what other consultant firms do, and this actually drives a behavior with our clients that is truly distinctive and differentiated and and why we perform so well in the marketplace when when the marketplace is is on the face of it suffering. The other thing, we have big firm expertise.

10:20 You know, we we have all the the skills and capability of what the big firms can provide, and in some cases, far better skills, actually. But we are unencumbered by the bureaucracy of those large firms. You know, we're actually very proud of where we are at a, give or take, forecasting a 104 to a 110,000,000 turnover this year, but we're tiny in the scheme of things. This is a massive market. I mean, the companies like KPMG, McKinsey, BCG, these companies are so much, so much larger larger than us. So we could be as nimble as anything, creative, disruptive. Our clients love the way we work. We respond we're far more responsive, and it just makes a real difference with our clients, and and that's why we continue to capture market. The other thing we do is we we focus on the technologies that are going to disrupt and well, do disrupt and will continue to disrupt our clients' businesses going forward. And a and a great example of this is AI when we built we bought the artificial intelligence business last year.

11:19 And the reason we do this is because it's I like to use the example of the Internet. You know? It's almost thirty years ago that the Internet became mainstream as a business change tool, if you like, or business a tool that businesses could use. And I remember the .com bubble, those of you around, where everyone thought that the high street was dead. You know? Something the whole world's gonna change. The high street's dead. There's gonna be no shop shopping out there. Everyone's gonna buy everything online. That's not true. Okay? But and bubble burst. But we're still thirty years later helping customers work out how best to use the Internet through digital strategies, change journeys, all that kind of thing. So it's the it's almost like the gift that keeps on giving to consultancies. AI is exactly the same thing. It's not a one and done thing. AI is a technology that will be deployed in multiple different ways in varying diff different guises over the next thirty, forty, fifty years, and we're continuously changing. And if we're at the forefront of the of the expertise in that area, it puts you in a very, very good place to be able to to consult over the years to come in this area of expertise. And and that's a fairly unique thing that we're doing, and we can do this because we're so nimble and and and relatively small compared to all the behemoths in this industry. Okay?

12:37 Then the other thing that we invested in back end of last year was Insignium, but this is truly a distinctive feature that that Insignium when they they were the first pioneers in sort of breakthrough transformation. And what we mean by this is there's often transformation plans built by many, many consultancies, but they tend to be the nuts and bolts, execution, roadmaps, all that kind of good stuff. But the one thing that often causes these journeys to fail is that the leadership are not aligned behind the vision. And so they're all pulling slightly in different directions, and this causes a lot of these transformations to fail. So a good example is Insignia had a client where they were they were serving a big motor manufacturer that was losing a 100,000,000 a year, and they'd been losing a 100,000,000 a year for the the past five years.

13:25 And they had two or three CEOs during that period. Leadership had changed a few times. They had they spent fortunes of consulting firms to be able to write them transformation plans, drive out costs, do all the things you need to do to try turn a business around. And, yeah, they kept failing. And the reason was that leadership were never aligned around exactly what needed to be done. And what Insipium had a particular expertise in, and we've already seen this come to fruition in in some of our clients, in our in some of our cross sell opportunity, is that they have this ability to be able to well, this technique to be able to get all leadership aligned behind the journey of transformation that needs to resolve that business problem of a 100,000,000 loss, for example. And literally, in that instance, within twelve months, that company is making a loss. They had to get the leadership aligned before you start writing the project and program plans. And this is another distinctive feature we bring to our change journeys for our client style with the acquisition of the second.

14:22 I think that's what I would like to say on the introduction. I hope those are the salient points that really resonate with you as investors with regards to, a, how we are challenger and b, some of the key features of our performance this year that I wanted to point out, and I'll hand over to Nick who will take us through the financial performance.

14:43 Thanks, Stephen. Nick Willard, Finance Director and Company Secretary. So I'll run through the financial performance for half one twenty four. As Steven said, we're very pleased with the financial results for the period. Revenue is 53,000,000, so up 28% on the prior year period, of which 14% is organic. Gross profit up 21%. Adjusted EBITDA of 15,100,000, up 23%. And our adjusted EBITDA margin at 29%, marginally below the 30% in the prior period, including the impact of Insignium, which we acquired with an EBITDA margin of 17% when we acquired that in December 23. Profit before tax, 12,000,000, is up 22% in line with the increase in EBITDA. And adjusted diluted EPS is up 16% to 21.5 p for the half half year period. That increase proportionally is below the profit before tax increase, not because we had any increase in dilution, but because of the increase in the in our effective tax rate given the increase in UK corporation tax rates to 25%, in the previous year.

15:50 We closed the half with net cash of 22,100,000, so still a very strong, balance sheet position and generated free cash flow of £7,000,000 in the half in the six month period. That's more than doubled on the same period in the prior year.

16:07 And just I just wanted to put the those financial results in into, some context. If you look at the graph on the right hand side of the slide, you'll see how we've done in the years since IPO and a couple of years before that. And you see that actually the delivery of results in this half is is really, for us, just a continuation of that track record of delivery that we've had in every year. Now we we sometimes joke internally when we're looking at acquisitions, we see a lot of business plans like this. We don't see many companies actually with this track record of actual delivery. And then I think the other thing worth putting out on the on the graph there is if you look at our half one twenty four results, they're actually very similar to our full year f y twenty one results. So revenue, EBITDA, profit before tax is all very similar to full year '21. So we've we've doubled in that time.

16:56 Now we're providing the same transparency in terms of the components of our revenue growth as we've done in previous reporting periods. So this chart here shows you the the components of our progression of revenue from 41,600,000 in half one twenty three to 53,000,000 in half one twenty four. And just going across the across the the graph from from left to right, I mean, we always have some end of life clients, which is a which is just a typical part of our business, and, obviously, our focus is always on more than replacing projects and clients that come to a natural end with with growth in our existing client base and with new clients. We we grew our existing clients on a net basis by 4,100,000 compared to the previous six month period, and we're very pleased that our new client growth was 6,400,000.

17:45 So that was up significantly from the 4,300,000 in the same period in the in the first half of twenty three. And then adding the acquisitions of 5,700,000 that we primarily the revenue that we purchased with Insignium takes us to 53. But from an organic perspective, we're very happy that, you know, out of that total 28 growth, 14% was was organic. Now providing you the same progression of revenue, but from a partner perspective, as we've talked about before, we absolutely have a focus on performance throughout the organization, but particularly with at our our partner our partner level. And we make sure we actively manage the partner team. We're actively growing it through our four pillar growth strategy, hiring, promoting, and acquiring, and stretching our existing partners, but also managing those few people within our partners team who underperform. And so if you can look at the graph from left to right, you'll see the negative bar for the exited partners. Now those exited partners were averaging naught 800,000 for the half.

18:49 So those parts performing to level below that which we expect. Our established partners added a million of revenue net, but we're very happy that the established partners' average revenue per partner for the half year period increased by 18% to 2,560,000, so approximately 5,000,000 on on an annualized basis. Our promoted partners, add added an extra 4,600,000 of revenue, an average 1,540,000 of revenue per partner. Our promoter partners always performed strongly, and come into the role with a, some revenue from their exist from their existing clients. And then we the hired partners in the period added 1,900,000 of revenue, an average of 1,260,000 revenue per partner. And then the acquisitions, Insignium and ResponseSim in in the period this year added 6,600,000.

19:40 So overall, we there there was a small increase in revenue per partner for the half from 2,060,000 to 2,090,000, but we've managed that progression in revenue per partner at the same time as significantly growing the client facing partner team from about 20 to 25 in the period and absorbing the lower revenue per partner, given the nature of the work they do that came with the acquisition of Insignia. From a cash perspective, I mean, this continues to be, you know, by far the most cash generative business that I've worked in in my career. Our cash over the six month period increased from 18,100,000 to 22,100,000. Operating cash flow of 7,600,000 was up 3,800,000 on the prior comparable period, and that's despite 400,000 additional cash tax for the reason I mentioned earlier.

20:32 The financing activities, there weren't any large m and a pair payments in the period. So the majority of that 3,400,000 is the interim dividend of 2,500,000 that we paid back in February. But we continue to have a strong cash position, you know, which funds which funds m and a dividends, and buying shares into our EBT to offset dilution as as Steve mentioned before. From balance sheet perspective, I mean, the balance sheet is very strong. Our debt position our debt collection continues to be good. We have no concerns with debtors, given the blue chip nature of our client base. Perhaps one thing just to point out on here if and if you're trying to reconcile the numbers, the increase in net assets in the six month period is is only about 3,000,000, so less than the increase in profit after tax.

21:22 And that's because this six month period has both dividends in it. The the interim dividend that we declared in January and paid in February, and then the final dividend that we although we paid it off the period end in August, that was accrued at the AGM in June, so it's accrued in these numbers.

21:39 Now I'll hand over to Graham for the business review. Thanks, Nick. Hello, everyone. Graham Busby, CFO, and I also drive our inorganic activities. So I'll I'll talk you through that shortly. Just to remind you how we think about the business in terms of growth. There are four ways to grow a consulting company, three of them organic and one of them inorganic. And just to step you through them. So the first is stretching our existing partners. That's essentially giving them more things to go talk to their clients about that they can then, off the back of it, sell more and and increase revenue per partner. We can hire new partners and get their black books as they join and obviously look to convert those into clients.

22:26 And we can promote partners from within, you know, from our principal level up into the partner level, and often they're sat on a big account and are doing really well, hence the promotion, and we can help them do better and and grow more, and then we can buy businesses. So just to step you through some of the detail in each. So stretch stretching our partners. So we had a a half earlier this year where the established partners generated £2,560,000 per partner. That was up 18% on the half one from '23. That was partly reflected by increasing their revenue targets, but also by strengthening the client relationships that they had. And, you know, we're very proud that the increase in our our clients generating over £1,000,000, what we call gold clients, increased from 18 to 22 versus the same period last year. So that that is a a lever that's going well.

23:21 From hiring partners, we hired one partner in in the period, and they came in to actually help turbocharge our BD function. And it was actually introduced over 50 new opportunities across the partner team already, probably 60 by now. So she's done a fantastic job and working with the partners to convert those. We've also hired two more partners since the end of the period. One to build out our cybersecurity practice and the other to help build our financial services expertise, particularly in capital markets risk and regulation. So So we're excited at what they're gonna do and the impact they're gonna have. Promotions, it was fantastic. We actually affected the first part of promotion from within one of our acquisitions.

24:10 Nick started on the January 1 as a partner, and hopefully, that will be the first of many from our acquisitions. And actually, it's good to know that of our current team of partners, which is, you know, 30 plus, 10 of them have been promoted. So we're very keen on growing our own timber as we call it internally because they generally they understand the culture, they know the infrastructure of the business, they have great client relationships and and they generally make fantastic partners. So the more we can do in that space, the better. And acquisitions. I'll come to this in a bit more detail later about where we're looking, but just to let you know one step, you know, we screened over 700 targets in h one this year, but I'll step through some of the strategy of that in a second so I'm not repeating myself.

24:57 Before doing that, I just wanted to show an illustrative model here to highlight the relationship between our growth and dilution. We did this a couple of years ago and I think investors found it very useful to understand the relationship, if you like, between that. You know, some investors have questioned whether or not if we have a unicorn and a billion dollar, billion pounds market cap ambition in the next three to five years, is that gonna mean they get overly diluted because of our equity model and the options that staff has? And I think, you know, this model will hopefully allay those fears to show you actually how how it will play out using the, you know, assumptions that are based on averages of the past three or four years and and extrapolating them forward. So just a bit of context, we have, since IPO, diluted less than 5%, but actually nearly tripled the equity value 2.9 times in that period.

25:53 Now that dilution could have been more than 12% from acquisitions and

25:58 the vesting of options if we hadn't managed that dilution through using cash and shares in the EBT. So that is something that we will continue to do. And this model actually shows that we can triple equity value again for around a 21% dilution using fairly conservative assumptions, I'll come to in a second. It I think it would hopefully be interesting to know that if we use the cash generated in that period instead of printing paper, we could actually reduce that dilution down to 2%. So there's a range there between 221% depending on how much cash we deploy to this. But for, you know, tripling equity value, personally, having a sizable shareholding in this business, I would take that investment any day. And just to show you the high just to show you the main assumptions that are in there, there's some equity assumption, dilution assumptions.

26:50 From an equity point of view, the model assumes a 20% organic growth rate. So we haven't actually put acquisitions in here that will obviously speed things up. There's a 28% EBITDA average margin. We have been, you know, between 2830%, even over 30% since IPO. 70% of EBITDA going into free cash flow in the model, and we also haven't assumed a multiple increase. This model is down at £6.25 share price, which is a 9.2 EBITDA EBITDA multiplier. We've kept that consistent. Now, you know, we would expect and hope that there will be a market correction in our share price, and and that will actually increase back to previous levels. And if that happens, all this all these numbers shift to the left.

27:37 From a dilution perspective, we've assumed that the existing employees and partners, that the shares they have that the options they have actually have a dilutive impact at the end of the year, the share price for the end of that year in the model. We've assumed four to 10 new partners depending on the year to achieve the growth. We've assumed that employees grow at the same rate as the organic growth rate, so 20% increase. We've assumed average participation into our employee share purchase plan for both existing and future employees. And I think, importantly, again, a question that we've had is, you know, how do you incentivize the partner team once their current options package runs out? What we've done in this model is we've extended for those partners the same options package again going forward with the same kind of assumptions in there to to keep them, you know, hungry if you like, to keep keep growing with us.

28:32 And actually, you know, we've we've assumed that from an average perspective, people roll into our option scheme, people perform in the same way, and they leave our business in in the same way as they have in the last three or four years. So all of those numbers and those averages have been applied to this model and shows how we, you know, will achieve a billion pounds whilst controlling dilution for our for our investor community.

29:00 This is a representation of some of the acquisitions we've made and to show how we think about transforming our service offerings. So, you know, the way that we look at acquisitions is it will add to our capability, you know, giving and then we'll talk in a second about having more more capability to talk to clients about. Will it add and either increase our presence in the geography or open up a new geography? And will it, again, open up a new or increase what we have in terms of industry? So capability, geography, and industry. Starting on the left, we actually added digital innovation to a large degree with our Denham Coast acquisitions. We then went in '21 with Return who added, you know, the the supply chain procurement cost, and this gave us a really nice kind of countercyclical capability if you like. When when markets are good, there's a lot of focus on revenue growth innovation.

29:59 When markets are less good, clients tend to focus on, you know, operational efficiencies and cost, and we can do both. So we can pivot, you know, that diversification allows us in different markets to change what we talk to our clients about, what we deliver to our clients, or we can package them up in any market in any type of market condition and and do them together.

30:21 Eilap and Responsen came in 2022 and 2023. That gave us fantastic data and technology as well as artificial intelligence. I'll just give you an example of artificial intelligence of a project. So we we had a US telecom leader create they wanted to create a company wide AI capability and they asked us to help help them do that. And they actually wanted to use generative AI to decrease the time it took a sales rep to identify a prospect all the way through to qualification and then outreaching that prospect. So we connect we connected a 360 degree view of the customer. We used generative AI. We built a chatbot. We did a lot of data engineering. And, actually, the results were pretty pretty amazing, actually. So very quickly, 93% increase in sales prospecting productivity, a 90% reduction in the time to first contact for the sales team, and we increased the revenue for these AI enabled representatives by 83% in the following quarter.

31:22 So, you know, the AI solution we put in had a demonstrable impact. And we that is one example of of many that we're doing with with our client set. And Insignia, Steve mentioned, you know, they came in December last year, and that really gave us that breakthrough kind of cultural transformation capability. It also gave us an industry angle because they are very strong in biotech, healthcare, and pharmaceutical. And we are actively and have won projects in this space from a consulting point of view and a data point of view into this marketplace. I saw someone asked a question around what industries are we looking at. That is one we are definitely looking to leverage with with Insignia's help and and network.

32:09 All of this culminated in the numbers that Steve said. So to date, £30,000,000 plus of cross sell. So if you think about the business, we have a organic business that grows. If we buy revenue, we buy that revenue, but then we can create new revenue together. So we've created over £30,000,000 new revenue that none of us would have by ourselves, and actually 8,000,000 of that came in h one this year versus h one last year. Something else we've been doing is is looking how we can get back to our communities. And in particular, South Africa has been part of ELIXIS heritage since very, very early days. We started working with South African clients in January 21. Right. That's from 2011. Actually, from my birth class. Okay. That's true.

32:56 Well, I started in twenty twenty eleven. And, you know, it's been a very important market since then. It's contributed, you know, around 10% of our revenue in total since IPO. So we've been thinking and figuring out how can we get back into that community, and actually the purchase of Eilap gave us a a fantastic platform to do that. So Eilap, if you remember or if you do not know, we have over 200 data engineers and data scientists in Croatia, which is a data and AI now center of excellence for us. And we wanted to replicate that in South Africa by using the brilliant skills we have there, but we also have an academy in Croatia with some of the local universities. So we created a couple of months ago a a free eight week IT program in Cape Town for university graduates to bring and we had a lot of people come in from Croatia and and around the world actually, but to focus on data analytics and to upscale promising South African talent.

33:54 Why did we do it? There was, you know, giving back to the community was a big factor, but also there was a commercial reason, you know, bringing that talent into South Africa or helping develop that talent in South Africa. You know, they have fantastic time zone. They have the language, and they have a brilliant graduate community coming out of the university. And, you know, it's exactly what we're looking for for for our youngsters. And, also, with Croatia joining the EU, you know, there has been some cost pressure as part of that, and this allows us to hedge against that to keep keep delivering the services to our client. We had over 60 applicants to this first academy. We're hoping that will increase significantly in the next one. And we actually offered, I think we had 20 of those applicants that joined Okay. Joined the actual eight week course, and we gave 60% towards that twelve twelve of them a job offer last week. So that was a really nice All accepted. All accepted. So that was a fantastic thing for for the whole team, actually.

34:58 And just final from me is just to give you an overview of inorganic growth. As I said, that that is something that I'm focusing on. I've got a dedicated team working with me on that. We look at it programmatically. So we're looking at one or two deals a year and looking at kind of 10 to 20% of equity value to increase.

35:19 That is a proven m and a strategy that that creates more shareholder value than doing lots of small ones or or one massive one. So this is something that you should should be looking out for in the future. We've done it for the last five years and and we'll continue to. I've mentioned this gets us into new geography. Well, US, the last three acquisitions have have been been in US for every $4 spent on consulting in The US. You know, dollars 2 are spent in Europe, dollars 1 in Asia. So it is the world's biggest market. So there's no coincidence that the last three acquisitions we've done have been in The US, and we have a healthy pipeline in that space. But also, you know, looking into Europe, maybe it's the DACH region, maybe it's the Nordics, you know, we will at some point be looking to buy into those geographies.

36:06 And looking at boardroom issues, so adding those capabilities that that the partner team can use. You know, cyber is a a one one that we're looking at at the moment. We've we've inorganically sorry. We've organically bought in a partner to run run that and build that. We could

36:22 supercharge that with the right acquisition underneath. And, you know, there are other things. It could be market research, competitor intelligence, things that we do bits of today, but that needs to do more of, and our clients are asking us for that. Industry additive, I mentioned. Can I just make a point on on this side of the point? The the partner we've hired is an ex McKinsey partner who who built their cybersecurity business. So the interesting thing about why I bring that up is we're starting to attract talents of expertise caliber, if you like, into our business, and they like our equity participation model as a as a way of performing

36:58 in the consulting industry, if you like. So it's another interesting angle there. Yeah. Yeah. Exactly. And the industry angle I've I've mentioned I mentioned how Sydney was that a great kind of stepping stone for us into into their industries. Other industries that we're looking at, energy, oil and gas, you know, we we have a few clients in those spaces. We don't that they are huge industries for some of the bigger consultancies, so we are looking to buy into those spaces. But everything has to be high quality. We're not gonna lower the quality bar.

37:30 One of the reasons on the right hand side is you look at the numbers from due diligence to deals, you can see that we pull out of, you know, nearly half of the companies that we actually get into DD with. So that means we've signed heads of terms and essentially just need to close the deal, but that's when we do our proper DD. And oftentimes, we'll find that the quality just isn't where it needs to be. And rather than reduce high quality going forward, we'd rather pass on that deal.

37:58 And just finally, from a deal structure point of view, you know, it's dependent on the leaders in the cap table and, you know, what's gonna happen our side versus their side, but we want to align the leaders coming in with, you know, a significant portion of of equity in ELIXIA because then, you know, that yes. They'll take cash off the table, but if there's a chunk of equity, that aligns them to our partner team and that aligns them to wanting, you know, to be successful, successful integration, successful future. So that is the way that we do structure along along with our deals.

38:35 So with that, I will hand over to Em to take you through some of our clients. Thanks, Graham. Afternoon for everybody. My name is Em Carly Smith. I'm one of the client facing consulting partners at ELIXENT. As we have as we've grown, we've been intentionally increasing our resilience by diversifying our client base. As you can see on the left hand side of this slide, in the last twelve months to June 24, our top 10 clients actually stand across eight different industries. So our top 10 clients all being gold clients of over 1,000,000, and and actually all of these were over 2,000,000.

39:21 And at the same time as diversifying our client base across different industries, we've also diversified our client concentration. So in 2020, we had 52% of our clients concentrated in the top five. That's reduced to 33% as of the last twelve months to June 24. In 2020, we had 80% of our clients concentrated across our top 10, and that's reduced to 49% in the last twelve months to June 24. And at the same time, we've increased the number of gold clients. So it was nine gold clients in 2020 and '20 two gold clients as at June 24. And the number of our clients that we serve across the business has also grown with our growth. So we've gone from approximately 50 clients to now well over 230.

40:14 And as we've been diversifying our client base and deepening our client relationships, we've also been building our challenger consultancy brand. So back at the IPO, we had some feedback from the market that we needed to improve our marketing and our business development efforts, and that's exactly what we did. We set about hiring the best marketing team to help us grow the revenue that was being created through what we call cold marketing leads. So as you can see, here on the

40:44 graph, the darker purple area is the revenue that we are starting to generate from those cold leads, those outreaches that we're getting compliance who are coming to us through our website. And some of those impressive logos are at the bottom right of the slide. So in the, year to date to August, we had contracted for the whole of the year 4,300,000 of cold lead revenue. At the same time, as increasing our marketing efforts with our challenger brand, we've also hired a business development team. So Nicola and Bob are now heading up that team very successfully, having brought in 1,300,000 of contracted revenue for the year as at August. Obviously, that will have gone up by now for their efforts in business development, networking amongst their existing networks, new networks, and attending events on behalf of the partner team to bring those new leads into us and work with us to convert them.

41:41 Some of the statistics on the bottom of the screen here, just a couple to to call out. Obviously, our following on LinkedIn has has increased. Our website and direct website traffic has increased. But most notably, our revenue from marketing leads in h one twenty twenty four was a 133% above what it was in h one twenty twenty three. And finally, a case study about one of our trusted clients that we have become trusted advisers too. So we we had a client which was a large financial services business, and there was an individual within that client who loved the way that we worked with her. And between 2012 and 2021, we generated £17,000,000 from this specific client relationship within this financial services organization.

42:34 And we developed a really deep relationship with this stakeholder. And at the time of IPO, when surveyed for her views, she told us that she felt that ELIXIN was willing to do whatever it took to make clients satisfied. And the likelihood to recommend was 10 out of 10. That client, that individual, actually then decided to go into consultancy herself. So she took on a senior leadership role at an established consultancy. The financial services organization continues to be a client, albeit this individual left and moved into the world consultancy. But immediately that she got there, she realized that not all consultancies are built equal. And she wasn't really believing and buying into the culture and the approach of the firm that she she had joined. She felt surrounded by bureaucracy.

43:24 She felt there was a lack of entrepreneurial approach that she'd become used to receiving as a recipient of consulting services from ELIXIR. And she also felt the quality bar that was being delivered at that consultancy was weaker than what she had become accustomed to receiving from ELIXIT. And so her her few years in consultancy soon trans translated into her move back to industry where she immediately decided to reengage us. And we're incredibly proud with the quote at the bottom right of this slide where this client has told us that she knew that we stood head and shoulders above the competition and that our diverse range of services is fantastic. And that diverse range of services exactly speaks to what Graham was talking about in terms of the acquisitions we've made in growing the capabilities that we have client as client consulting partners have to bring to our clients and grow those relationships into those gold accounts.

44:20 I'll now hand back to Steven, who is going to summarize and talk you through our outlook. Outlook. Thank you. Yeah. So thank you for listening so far to us. Just to summarize, there are other main points I'd like to highlight. I mean, we haven't mentioned this number specifically in this conversation, but we have had a 37% revenue CAGR since 2019, which is the year before our IPO. And that's a combination of the the acquisition and organic strategy working hand in hand. You know, that's a very, very, well, it's a fantastic growth CAGR over that period. You know, we all we've bought our forecast. We're using 20 to 25 to get to that billion dollar number. You know, we hope to get in this range, but, you know, we we also wanna be realistic, and we we're forecasting in the range of 20 to 25%.

45:09 EBITDA, we still think we're gonna maintain our EBITDA, and we have done 29 to 32% EBITDA since IPO, which is fantastic. You know, the other thing I mentioned is that we're such an entrepreneurial firm. I mean, Anne spoke about our clients here. You know, she this lady went into one of those big firms that we all talk about the top 10 and really did not see that same thing that she saw within us. This comes from our partner team owning 55% of the share capital, and I'm very, very motivated like I described around the way to value this firm for them is through equity growth, which for you all listening on this call should give you a lot of comfort that if these partners are still here and if they're still investing and they're not selling their shares and they're staying in the company, they all believe in the growth of this business and that it's massively undervalued and that we we see a big upside, not only in in a rerating in in in the share price because those of you who follow the market would have seen that Alpha FMC got bought by a private equity firm at 14 and a half EV EBITDA, whereas I think Graham mentioned we're at 9.6 at the moment EV EBITDA. So there's a V rating to come, plus the growth that we expect in this business going forward with all of the models we have in place, the diversification, etcetera. And you can see the revenue per partner increase there over the period from 2019 to 2023.

46:24 We're reorganizing our business as we mature to be very client led. So I'm a great believer of being in three different businesses that organize themselves differently. But the best by far that I've seen and what we've seen play out in our business is that we had an industry orientation where the client comes first, not the capability. We get lots of capabilities, but we we focus ourselves around the client's business problems, and then we use our capabilities to solve those problems. So we we go into market in a industry way. And one big differentiator I would say to the brands like the top the big four is that being a company with a single p and l means that we can move talent to the problem no matter where it is in the world. Whereas you're finding those big consultancies, they're actually franchise models, and they're actually national franchise models.

47:11 And there's a massive transfer of pricing cost between those businesses, and it is a friction point to delivering the talent to the right situation for the right clients in the right location. I've experienced that firsthand. We have done that in our business, which is fantastic. You can see the increasing number of gold clients there, 22%. I mentioned it. Six acquisitions Graham has done since we've we've well, actually, done five since and one. So we've done six acquisitions. This half, 8,000,000 across sale revenue. I think the number was 82% up of last year's last half. Fantastic. And, you know, the the the the brand is growing as Ed spoke about. You know, 32% of our clients rate us better than McKinsey, Boston, and Bain, which are arguably the pinnacle of the industry in terms of comparison to us. 100% applicants a 100 applicants per role. So when people say, how are you ensuring your quality bar is high? It's really important to understand. We had a thousand applicant 4,000 applicants last year from university.

48:09 The university graduates love our brand. They love our positioning. It's not staid. It's not traditional. It's modern. It's disruptive. It's a challenger. Different remuneration model, far more entrepreneurial. The full thousand applicants, we take 20. So we get the pick of the of the bunch. And these applicants aren't coming from they're coming from the best universities, Oxford, Cambridge, Berkeley, Stanford, MIT, you name it. They we we get fantastic applicants, and and and that's a really positive thing that fuels the bottom of our engine because this is that kind of business where if we're putting talent in at the bottom, we see performance at the top. So speaking of speaking of that, of that, the outlook. You know, we have a proven track record. We've never missed a number. We've actually upgraded eight times.

48:57 We we have a global team that's invested in our business. We've we've diversified since I care in multiple industries, multiple capabilities. You know, we're maturing our acquisition strategy. It is mature. It's it's continuing to to keep us fueled on that on that front and give us new markets, new industries, new geographies. We've we've got ourselves fairly recession proof in the sense that the the consulting industry itself, for those of you who don't know, has grown so I think it's a 9% CAGR for the last twenty years. And, you know, that's phenomenal. That's gone through two recessions. Reason that is is because the the business is becoming more complicated, not less. When you find all those technologies, and people can't be experts in everything. And so they look to consultancies to help them in good and bad markets. Right? In bad markets, they may be looking for cost reduction. In good markets, they may be looking for growth or acquisitions, etcetera. So as long as you build yourself a sufficiently diversified portfolio of capabilities and you need a sufficiently diversified portfolio of of industries, you know, you could be fairly resilient to market conditions in this industry. That one of the best kept secrets is the consulting industry.

50:01 So why you find very few listed consulting companies because partners tend to keep all of that guidance for themselves, but we're using a different model trying to incentivize around the equity growth and include investor participation in this. And I mentioned our brand is starting to be built, and we're starting to become very respected. Point to the Forbes recognition as a a fantastic example of, obviously, clients out there are talking about us to third parties, which is brilliant. In terms of outlook, we're we're expecting 28% revenue, or we had 28% revenue growth in half one for record revenue months. But for an on an outlook basis, you know, we're expecting a 104 to a 110,000,000, and we are expecting in our EBITDA range. Can see this start to manifest itself in the months that we've had such half a. So we have a strong outlook for the year, and we are very confident that the business is gonna continue to perform as we have, you know, that the common thing made about we often see business plans like our performance, we expect to continue to deliver performance like our actual performance going forward. So thank you for your time.

51:09 And for those of you that are investors, thank you for investing us and believing in us. And for those of you who aren't investors, hopefully, this presentation has helped you understand our business a bit better, and you would consider taking the investment and standing alongside us with my whole team who are trying to grow this business as best they can. So thank you for your time, and I think we hand back. Absolutely, Steven. Thank thank you and the team for the presentation. It's fantastic. Ladies and gentlemen, do please continue to submit your questions just using the q and a tab situated on the right hand corner of the screen. But just for the team to take a few moments to review those questions submitted today. I'd like to remind you the recording of the presentation, along with a copy of the slides and the published Q and A, can be accessed via your investor dashboard. You can see, we have received a number of questions throughout today's presentation. Thanks to all the investors who have submitted those. Nick, perhaps I could come to you and if I may just ask you to read out the question where appropriate to do so, direct it to the team, and I'll pick up from you at the end.

52:04 Yep. Okay. So thank you. If I start one of the first questions, how are end markets looking at the moment compared to the last couple of years? Better or worse? Should I answer that one? Okay. Yeah. So I did make a comment on the consulting industry per se. I presume you're talking about our clients' markets in this case. I think a lot of clients are facing difficulty, and, you know, they are often help asking us to help them through those difficulties, whether it's to reduce costs or, you know, perhaps focusing on the areas of critical importance. I would say how does that translate into the consulting industry? I think if you're a high quality outfit, you you will sustain or grow your position in these markets. Right? Because it's like anything, when McKinsey announcing that they are cutting 200 heads or 2,000 heads or whatever they're doing, you know, it's never wasted the crisis.

52:56 You know, what they're doing there is they're getting rid of people that are perhaps the bottom half of the pyramid. And that's not too bad for consulting firms. Actually, at times, you need to do that that kind of pruning, and they use the sentiment in the market to to deliver on that. And it's it's the same with consultancies themselves as clients hire them. You know? They were always like consultancies. No matter what the market conditions, they were always buying. It's a question on what's your quality bar. Are you in the top half of the pyramid or the bottom half of the pyramid? If you're the top half of the pyramid, you're safe, and you probably will grow your position because there is more work to do, and they're probably overcut. So the question is is not really what's the market doing, but how is the the our business tailored to address that market? And and I believe that the quality is the the key, and how do you make sure you deliver on that quality is you have people who are fully vested in the performance of the business at a fundamental level, which is ultimately the equity performance.

53:52 And that's why I believe we are performing so well in the context of difficult conditions for our clients. Next question is about staff churn. What what what what's that like? I mean, I mean, our staff churn is is very much like historically been, you know, in total, it's an it averages number like 17%. But, of course, you know, our regretted attrition is much less than that. So, you know, our our equity model means that the strong performance in our business, you know, very much have long have long tenure and are incentivized to be part of the growth of the firm. So, you know, we make no apologies to the fact we're a high performance culture, and, of course, that does mean that we have some people who who who self select out of it. But, for for from our point of view, I think, you know, our staff churn is is somewhere we're quite happy, with where it is.

54:39 We've got a couple of clients or selling questions. How do you identify and manage cross selling opportunities to and maximize that? And then in relation to, obviously, all all sort of firms lose clients each year, what's our strategy regarding sort of blend of acquiring new customers versus retaining customers? Do want take the first one? Yeah. Can do. Yeah. And then maybe you take the second. So on on the cross sell question, it's so relevant to to one of my clients. So for the last two years, I've been building what is now the the firm's largest client. And that has been through capitalizing on that opportunity that those cross sell capabilities have brought us. So as a partner team, we meet on a quarterly basis. We discuss our clients very transparently. We discuss the position that we're all in in terms of building our our revenue profiles for the year. And that inspires conversations and discussions and ideas about ways we can deepen our client relationships across different capabilities.

55:41 So I am very able and willing to pick up the phone to my partners of other capabilities to bring in those capabilities to solve my clients' problems whilst building on the relationships that we may start at a point of data and end up in a point of digital marketing, for example. So the the cross sell opportunity has definitely increased our ability as individual partners to grow our own accounts while bringing in those capabilities of our subject matter expert partners that have been acquired. Perfect. And then the the next question was all companies lose clients each year. What's our strategy regarding customer acquisition versus retention? So, yeah, look, all companies do lose clients each year. Often, that'll be because either they haven't done a good job or because a project comes to an end. It could be a long term project that they've just completed.

56:31 Happy to say that we do not get asked to leave for the former, but sometimes a project does come to an end. And Nick Nick took you through the revenue bridge where in the half, nearly it was £4,800,000 of projects did come to an end called end of life as as he referred to it. And, you know, what is our strategy to counter that is is the it's the bars that were increases in that chart. So how can we get existing clients, you know, buying more things from us? And it's just described how we do that. How do we get new clients? You know, we've we've been investing heavily into our BD function with Bob and Nicola as an example. You know, that is a good way of bringing in new clients, hiring new partners with new black books. That is a way of getting new clients. So we are completely focusing on that all the time.

57:23 And then acquisitions, you know, that is a good way again to add clients into the mix and to literally acquire new clients within an acquisition. So all of those, you know, they they align really nicely to our four pillar growth strategy, and it's something that we, you know, we talk about, if not every day, then every other day. Okay. The next question is from Keith. Your gross margin percent is lower than many other professional services businesses. Why is this, and can you increase it? Well, I I mean, think I mean, our our gross margin, it may I mean, we put I think we probably put more costs into cost of sales and therefore lower gross margin than perhaps other companies do. So for example, all of our people cost goes into into cost of sales.

58:10 I mean and and I guess our focus is very much on the EBITDA margin. Yeah. The allocation of costs between growth cost of sales and and operating expenses, I mean, is is really interesting, but it's actually not the important factor for us. It's adjusted EBITDA margin after all of those costs. And and I think it's fair to say, I mean, we're very proud of that sort of average 30 EBITDA margin we achieve. And we look I mean, as Graham has said, he's looked at literally hundreds and thousands of acquisition targets, and very, very few of those achieve that same level of profitability that we do. So we think that's a strong position that we're in at the moment, and we expect to sustain it sustain it going forward. I mean, I think of the 640 companies you've looked at, it five? Yeah. A a handful of had a better EBITDA margin than this. So, you know, if you engage 640, yeah, we're in the top five in terms of how we run our business.

59:06 Goodness to make it clear. So I think we've got two more questions. So how many other consultants do your top 10 clients use? How long is a piece of string? You know, I mean, some of them smaller businesses might only use a handful of consultants, whereas, you know, pick a tier one bank, they'll use 50 different consultants across digital data and and, you know, strategy. So it really does depend on the scale of the business. Yeah. But, you know, that is why if we can keep differentiating ourselves, making ourselves stand out, you know, investing in those areas of emerging tech and making it relevant to the business, that's where we see our differentiator in the way that we make a difference.

59:52 And then the last question we have is with the strategy to grow to the unicorn, how much future revenue can you see at any point in time? Yeah. So just it's probably worth describing how we manage the business in that context. So you get two types of businesses. If you take an Accenture type business, it's got long tail revenue. They do a lot of outsourcing, and they do a lot of systems integration, and that's the the lion's share of their revenue stream. And that's got long contract visibility. So outsourcing deals, three to five to ten years, and systems integration projects can run as, like, a year to three years type of thing. So they kinda can you can see this long future future order book of revenue. In strategy firms, you don't get that. So the the contracts are much shorter contract, duration contracts, more discrete packages of work, but they're higher value. So you look at Accenture's margin, EBITDA margin, for example. I think, Nick, we looked at it the other day, 17% ish, somewhere around there. Whereas we're a strategy type firm, more higher value consulting, but the downside to that is higher EBITDA, where we're in the 30 range. The downside is you don't have the long tail revenue visibility.

1:01:02 So the way we counter that is two ways, really. It's the diversification that we spoke about and spoke about at length in our previous investor presentation that we touched on today. The multiple industries, multiple capabilities, and multiple geographies, and we've done an exceptional job of doing that since ICL. That makes the business resilient and robust because you've got many different angles at protecting the business against headwinds. The other thing that is crucially important is how we operate as a team and the accountability all of us have to the performance the individual performance at a revenue and at a at a EBITDA level. So every every week, we get the partner group together, and they go through the pipeline, and they go through their full cost pipeline for a rolling three months for you. Okay? And that's updated every week. And then once a quarter, we do a rolling twelve month view.

1:01:53 So we and that's a physical in in in the room conversation. So we we get them all together once a quarter, and we do that for a twelve month view, and then we do it every week for a for a three month view. And that gives us pretty robust views over time. We can understand how good our forecasting is. We understand how much we can rely on the forecasting. We can see where, clearly, the puts and takes in everyone's forecast. We we we never get them quite right. But overall, across the thirty thirty or certified client facing partners, we get pretty close. So, hence, we've been able to be as reliable with our numbers that we we we present to you guys. We we we spent a lot of time we spent a lot of time managing what we see going forward and how we address those things. We see weaknesses.

1:02:39 We take action immediately because we're seeing it every week. Right? So it's not something that it's it's literally the way we run the business. So hopefully, that gives you a good understanding of that. Fantastic. That's all the questions. Okay. Excellent. Thank you very much indeed for taking all those questions. Of course, any further questions that come through, the company will be able to review those. And with published responses where appropriate to do so on the Investor Me company platform. Just before redirecting investors to provide you you with their feedback, know it's particularly important to you. Stephen, if I could just ask you just for a few closing comments, please. Yes. So I think I said it at at the end of the presentation, but thank you for those of you that are investors. Thank you for supporting us. And for those of you who are thinking of investing, hopefully, this presentation has given you a good sense of of of who we are and what we're trying to achieve. I think just to leave you with, you know, the most important thing I think for financial investors is that every single one of my partners are significant financial investors in this business.

1:03:38 And we live this business every day, and we continue to invest in it every day. And and that should give you a lot of faith in the future view of this business because my partners wouldn't be here if they didn't see the future view. And you might say that people walk out the door, but they've they've they're long term investors. They come to this business with a five year view. Since ICLONAL, I think we've only lost one partner who left for their dream job in industry, which was this is an individual that that had been with us for years. We made her a partner from principal. It was a regretted loss, obviously. But interestingly, that job has ended, and she's come back and is an associate with us because she believes in this business and wants to wants to help this business grow. So, hopefully, I can leave you with that as a as a closing statement. We are all investors alongside you, you know, and we believe in this business. It's got a lot of a lot of future ahead of it and some some really interesting things that could even go way beyond 1,000,000,000.

1:04:38 Perfect, Steven. Thank you and the team for updating investors today. Could I please ask investors not to close the session? You should now automatically be redirected to provide your feedback in order the team can better understand your views and expectations. This will only take a moment to complete, and that's greatly valued by the company. On On behalf of the management team of ELIXIRR INTERNATIONAL PLC, we'd like to thank you for attending today's presentation. That concludes today's session, and good afternoon to you all.