Registered No: 8211361
Cambridge Cognition Holdings plc
Annual Report and Accounts
31 December 2013
Cambridge Cognition Holdings plc
Contents
CHIEF EXECUTIVE OFFICER'S REVIEW
CORPORATE DIRECTORY
STRATEGIC REPORT
REPORT OF THE DIRECTORS
CORPORATE GOVERNANCE REPORT
REMUNERATION REPORT
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF
CAMBRIDGE COGNITION HOLDINGS PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
COMPANY BALANCE SHEET
NOTES TO THE FINANCIAL STATEMENTS
NOTICE OF ANNUAL GENERAL MEETING
PAGE
1-3
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5-6
7-8
9
10
11
12
13
14
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16-39
40
41-43
44-49
Cambridge Cognition Holdings plc
Chief Executive Officer’s Review
I am pleased to provide a report on our first full year results since our admission to AIM in April this reporting
year. During the second half of the year we have continued to build a platform for future growth. We now have
two commercial centres, in both the US (Chicago) and UK (London), and are well placed to accelerate our sales
activities and address the growing need for advanced research, diagnosis and treatment of mental health
worldwide. C ambridge remains our core science and technology hub.
In April last year, the C ompany listed on the AIM market of the London Stock Exchange and raised £5.0m
(before expenses) from institutional investors to accelerate the roll-out of Cantab Mobile product and aid the
expansion of the e-Health business in the UK and internationally. Our efforts have already attracted the
attention of the Prime Minister who at the G8 Dementia Summit in December 2013 commented: “The dementia
challenge is huge, but there is hope in the extraordinary work of companies like C ambridge Cogni tion, working
to develop new tests for Alzheimer’s disease.”
Financial Results
Revenue in the period was £4.15m (2012: £5.68m), with the main reduction being within our clinical trials
business. Revenues from our Cantab Solutions products (formerly CANTABelect) reduced in the period to
£2.50m (2012: £4.21m), as a result of fewer new studies incorporating cognitive assessments in 2013, and a
shift in the timing of expected orders from pharmaceutical clients. Revenues from our academic business
continued to grow with sales from Cantab Research Suite products (formerly CANTABeclipse) up 8% to £1.49m
(2012: £1.38m). Cantab Mobile, the C ompany’s newly launched iPad based product for the primary healthcare
market, is progressing well from a low starting base and achieved revenues of £158,000 (2012: £98,000).
Overall gross profit came in at £3.66m (2012: £4.47m), showing an improvement in gross profit margin to
88.2% (2012: 78.6%). Adjusted EBITDA (adjusted for restructuring costs and one-off expenses associated with
the Admission to AIM) showed a loss of £2.19m (2012: £1.42m loss) and we recorded a loss before tax of
£2.99m (2012: £1.58m loss). This translated into a loss per share of 21.3p (2012: 26.4p).
There was a net cash outflow from operations during the period of £2.47m (2012: outflow of £0.70m). During
the period the C ompany received £4.41m in net proceeds from the placing of new ordinary shares with
institutional investors and, after the payment of a further £0.3m of deferred consideration, cash balances at 31
December 2013 amounted to £2.26m (as at 31 December 2012: £0.64m).
Operating Review
2013 was very much a year of structural change for Cambridge C ognition to enable the C ompany to focus on
our commercial strategy and to take advantage of our unique position within the process of understanding and
treating mental health – from initial research, through to drug discovery and into the diagnosis and treatment
of patients.
An important aspect of this structural change was to establish a robust commercial infrastructure to drive
future growth, funded through the £1.4m reduction in the overall cost base established in the first half of the
year. During the year we established a new commercial sales office in C hicago with four full time employees,
led by an experienced US national as C hief C ommercial Officer, overseeing the commercialisation of our
products and developing targeted line extensions.
We now have full customer service teams in C hicago, Illinois, and C entral London, with C ambridge remaining
our centre of excellence for the C ompany’s core science and technology.
During the year I took on the role of Chief Executive Officer of the Company and Nick Walters was appointed as
C hief Financial Officer. We further strengthened the board following the year end with the appointment of Eric
Dodd as a Non-Executive Director. Eric brings significant corporate and financial experience and knowledge,
including within public companies, to the board of Cambridge Cognition and I look forward to working with Eric
at this exciting stage of our development.
We have established a new three year strategic focus for the business and set demandin g management
objectives to deliver growth across the C ompany. We have also put into place a new corporate identity and
corporate branding to reflect our new commercial focus. Our newly launched website is available at
www.cambridgecognition.com and we expect to increase the commercial functionality of the website over time.
1
Cambridge Cognition Holdings plc
Chief Executive Officer’s Review (continued)
Cantab Mobile (Mobile e-Health)
CANTABmobile is our approved CE-marked Class II medical device, which addresses the need to rapidly detect
early memory loss or signs of cognitive impairment. The product runs on an iPad and is targeted at mainstream
primary healthcare markets and is based on tests previously only available to pharmaceutical companies and
academia for specialist trials and research.
Last month Health Secretary Jeremy Hunt renewed the Government’s commitment to speed up diagnosis times
for suspected dementia sufferers pledging £90m in additional funding. Cantab Mobile is perfectly suited to
achieve this goal, enabling healthcare providers to quickly detect the earliest sign of dementia using a simple
iPad test. In addition, the new direct enhanced services (DES) that are offered to GPs to reward practices for
undertaking additional services specifically address the timely assessment of patients who may be at risk of
dementia. Cantab Mobile is an attractive product for GPs looking to qualify for funds under the Quality and
Outcomes Framework for the provision of these services.
Whilst the establishment of our UK sales and marketing team has taken longer than expected, we are now well
positioned to capitalise on the opportunity for wider dementia diagnosis in the UK. We now have over 415
Cantab Mobile licences being used in trials throughout the UK and a total of 145 Cantab Mobile customers who
have either purchased or are running pilots, including 24 Clinical C ommissioning Groups (C C Gs), a number of
private healthcare groups, a pharmacy chain and clinical centres in Germany and Sweden.
We still have an excellent trial conversion rate, however given the timing of the full commercial launch last year
many of the C CGs we are working with have had already fixed annual spending budgets. Despite this, interest
for the product remains strong and we expect to benefit from the allocation of 2014 budgets. We are currently
engaged in active discussions with 126 of the 211 CCGs in the UK. The new financial year has already seen an
uplift in Cantab Mobile sales and we expect to benefit from much greater awareness of Cantab Mobile across
C C Gs.
The UK Brain Health C entre Initiative funded under the Technology Strategy Board Biomedical C atalyst
Programme is progressing on plan. The major technical development stages of the cognitive and neurological
assessment tools are now complete, including a specialist version of the Cantab Mobile product. The integrated
data platform and the clinical and operations teams are in place, with the component technologies undergoing
usability testing in patients.
We were very pleased to see our first sales of Cantab Mobile into Europe during the period with new customers
in clinical centres in Germany and Sweden. We are in the early stages of looking into channel partnerships to
accelerate our routes into new geographical markets (particularly the US and Europe) and we expect to provide
a further update at our next financial results.
Cantab Solutions (Clinical Trials)
Our clinical trials business continues to be challenging with revenues down on the comparative period to
£2.50m (2012: £4.21m). As mentioned at the time of our half yearly results pharmaceutical companies are
being more cautious in their implementation of trials relating to the C entral Nervous System (C NS). Despite
having little control of the timing of orders we ha ve taken a number of steps to address this businesses
performance and return to growth.
Given the marked reduction in the number of ‘big pharma’ conducting C NS trials and an increase in activity
from smaller biotech companies we have focused the team on sm aller clinical trials. In particular we have
identified a number of Human Abuse Liability studies, looking at the potential a drug has for addiction or
whether a patient can build up a tolerance to a drug, where our Cantab Solutions products can be applied.
These studies have a greater success rate and an increased chance to migrate to Phase 2 -4 and so represent a
good opportunity for us.
With the opening of the C hicago office we have relocated our sales efforts with a greater emphasis on the US
where we see a much richer opportunity for new business and our UK focus remains on rebuilding our pipeline
and maintaining a steady flow of sales from UK based clinical trials.
Cantab Research Suite (Academic)
The academic business continues to make a steady contribution to the C ompany, with revenues up 8% over
the previous year. Whilst this business has historically provided good quality earnings with good visibility, we
2
Cambridge Cognition Holdings plc
Chief Executive Officer’s Review (continued)
have applied little proactive marketing effort to this business. The team has been refocused and with a stronger
sales push we have seen a healthy uplift in leads and orders at the end of 2013 an d we are on track to deliver
challenging growth targets for 2014.
Outlook
C ambridge Cognition now has a clear strategic focus and we have in place a commercial infrastructure which
will allow us to convert our wealth of scientific know-how into sustainable and growing commercial sales. We
are better positioned to deliver significant revenue growth in the future as a product focused business with
effective routes to market in the UK as well as other international territories. We look forward to 2014 trading
with optimism.
We have been very pleased with the positive start to trading in the first quarter of the new financial year. We
have seen a number of NHS procurement submissions for Cantab Mobile early in the year which we expect to
see convert into sales presently. Outside of the UK we are encouraged by the first assessment of Cantab Mobile
in the US and we recorded our first sale into Sweden for this product. Whilst the first quarter was a slow start
for our clinical trials business we have seen a subsequent acceleration of sales and have recently signed
contracts relating to six new studies and so we remain on target to deliver growth in this market in 2014. We
also expect to see the benefits of our newly appointed Business Development Director for Europe, who
alongside our new US VP Business Development will work to drive our clinical trials sales.
We are on target to launch three new products in Q3 for both clinical and academic applications. We have
successfully completed the first stage of beta testing for these products which will provide the basis of a new
platform for future product development.
I would like to thank my colleagues for their hard work, as well as our shareholders and customers for their
support during 2013. We have worked hard to refocus the business on commercial success and I am confident
that we will return the business to growth in 2014.
Nick Kerton
Chief Executive Officer
12 March 2014
3
Cambridge Cognition Holdings plc
Corporate Directory
Directors:
Dr. Jane Worlock (Chairman)
Dr. Nicholas Kerton (Chief Executive Officer)
Dr. Andrew Blackwell (Chief Scientific Officer)
Nicholas Walters (Chief Financial Officer)
Michael Lewis (Non-executive)
Eric Dodd (Non-executive)
Secretary:
Nicholas Walters
Registered Office:
Tunbridge Court
Tunbridge Lane
Bottisham
C ambridge
C B25 9TU
Company number:
8211361
Auditor:
Legal Advisers:
Bankers
Registrars
Nominated Advisor
and Broker
Grant Thornton UK LLP
C hartered Accountants
Statutory Auditor
101 C ambridge Science Park
Milton Road
C ambridge
C B4 0FY
Baker Botts (UK) LLP
41 Lothbury
London
EC 2R 7HF
Barclays
28 C hesterton Road
C ambridge
C B4 3AZ
C apita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
finnC ap
60 New Broad Street
London
EC 2M 1JJ
4
Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2013
REVIEW OF BUSINESS
A review of the Group’s activities is detailed under ‘Operating Review’ in the C hief Executive’s Review.
PRINCIPAL RISKS AND UNCERTAINTIES
The Group is exposed to a number of risks and uncertainties in the undertaking of its day to day operations.
The key business risks affecting the Group and how they are managed are set out below:
Financial
The Group has a history of operating losses. Profitability depends on the success and market acceptance of
current and new products without which the Group will continue to make losses and consume cash . Until the
commercialisation of new products and markets is successful the Group carefully monitors cost and cash flow to
ensure the Group is able to continue as a going concern. The directors have prepared a business plan and
cashflow forecast for the period to 2015. The key assumptions are the level and timing of sales which are
expected to increase significantly over this period, and the sales pipeline is therefore included in the regular
board review.
Technology and regulation
The success of the Group and its ability to compete effectively with other companies partly depe nds upon its
ability to protect its intellectual property, obtain patent protection in its key markets and exploit its technology.
Significant development work continues to be undertaken on its e-health product before commercialisation can
be fully exploited and such development work will continue thereafter to ensure that the Group’s products
remain at the forefront of the sector. The clinical evaluation, manufacture and marketing of the Group's
products remains subject to regulatory approval by gov ernment and regulatory agencies, and these
requirements are incorporated into the business plan and product roadmap monitored by the board.
Growth management
The Group's ability to manage its growth effe ctively will require it to continue to improve its operations,
financial and management controls, reporting systems and procedures, and to train, motivate and manage its
employees and, as required, to install new management information and control systems. The Group will
require additional management and systems as it seeks to establish sales and marketing infrastructure in the
UK, the US and the rest of Europe and moreover, the Group’s future success depends in part on its ability to
hire, train and retain key technical, scientific, regulatory, sales and marketing personnel. The Group seeks to
recruit and retain high calibre staff through offering share ownership incentives and rewards commensurate
with their seniority in the business and maintaining open communication with employees.
Reliance on key customers
The Group maintains close relationships with a number of customers but aims not to be overly dependent on
any one of them. During 2013 one customer accounted for £1,091,000 or 26% of the total revenue of the
business. This level of dependence on one customer was particularly pronounced as a consequence of the
decline in the levels of business in the C linical division. Measures are being taken to correct this
overdependence by growing revenues in other areas as the loss of a key customer would impact the Group in
the short term although as the Group increases in size the impact of any loss is reduced. There is a risk that
the loss of a major customer before any growth in revenue was sufficient to co mpensate would result in a
revenue shortfall.
5
Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2013
KEY PERFORMANCE INDICATORS
The directors have monitored the performance of the Group with particular reference to the key performance
indicators being revenue and order pipeline, operating margin and cash flow. An overview of the financial
results for the year is provided under ‘Financial Results’ in the C hief Ex ecutive’s Review. Revenue and
operating results are below the prior year resulting in higher operating cash outflows. The results reflect the
restructuring of the business as outlined in the ‘Operating Review’ in the C hief Executive’s Review.
The Group monitors progress on a regular basis and will add to the key performance indicators as
circumstances dictate.
Approved by the Board of Directors
And signed on behalf of the Board
Nick Walters
C ompany Secretary
6
Cambridge Cognition Holdings plc
Report of the Directors for the year ended 31 December 2013
The Directors present their report on the affairs of the Group and C ompany together with the financial
statements for the year to 31 December 2013. The financial statements are prepared under International
Financial Reporting Standards (EU-adopted IFRS).
PRINCIPAL ACTIVITIES
C ambridge Cognition Holdings plc ('the C ompany') and its subsidiaries (together, 'the group') develops and
commercialises computerised neuropsychological tests for s ale worldwide, principally in the UK, the US and
Europe. The group trades through its UK subsidiary C ambridge C ognition Limited.
GOING CONCERN AND FINANCIAL RISK MANAGEMENT
Having reviewed the financial forecasts and business plan of the C ompany and its subsidiaries and taking into
account the level of cash resources available to them, the directors have, at the time of approving the financial
statements, a reasonable expectation that the C ompany and the Group have adequate resources to continue in
operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of
accounting in preparing the financial statements.
Further information on the Group’s financial risk management strategy can be found in note 30.
SHARE ISSUES
The issued share capital of the C ompany is set out at Note 24 to the accounts. Since listing on the Alternative
Investment Market, no further shares have been issued during the year.
DIRECTORS
The Directors who held office at 31 December 2013 and their interest in the share capital of the company.
Name
Jane Worlock
Nicholas Kerton
Andrew Blackwell
Nicholas Walters
Michael Lewis
Ordinary Shares of 1p each
2012*
123,503
169,117
2013
14,285
281,095
-
14,285
-
247,008
-
-
*Prior year holdings represent shares held in C ambridge Cognition Limited
Eric Dodd was appointed a director of the company on 1st January 2014. He holds no interest in the share
capital of the company.
Directors’ remuneration and share options
Details of Directors’ remuneration and share options are provided within the Remuneration Report and are in
addition to the interests in shares shown above.
DIRECTORS’ RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS
The Directors are responsible for preparing the Report of the Directors and the financial statements in
accordance with applicable law and regulations.
C ompany law requires the Directors to prepare such financial statements for each financial year. Under that
law, the Directors have elected to prepare the Group financial statements in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union and have elected to prepare the
parent company financial statements in accordance with United Kingdom Generally Accepted Accounting
Practice. Under company law the Directors must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs and of the profit or loss of the C ompany and Group for
that year. In preparing these financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
7
Cambridge Cognition Holdings plc
Report of the Directors for the year ended 31 December 2013
state whether the applicable IFRSs, or for the parent company, applicable UK GAAP have been followed,
subject to any material departures disclosed and explained in the C ompany’s financial statements
Prepare the financial statements on a going concern basis unless it is inappropriate to presume that the
C ompany will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the C ompany's transactions and disclose with reasonable accura cy at any time the financial position of the
C ompany and to enable them to ensure that the financial statements comply with the C ompanies Act 2006.
They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Directors confirm that:
So far as each Director is aware, there is no relevant audit information of which the C ompany’s auditor
is unaware; and
The Directors have taken all steps that they ought to have taken as Directors to make themselves aware
of any relevant audit information and to establish that the auditor is aware of that information.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the C ompany's website. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.
DIRECTORS’ INDEMNITY ARRANGEMENTS
During the year the C ompany purchased Directors' and Officers' liabilities insurance in respect of itself and its
directors.
SUBSTANTIAL SHAREHOLDERS
The C ompany’s major shareholders at 31 December 2013 were:
Name
Euroblue Investments Limited
Octopus Investments Nominees Ltd
Michael Buxton
Pall Mall Investors
Axa Investment Managers UK Ltd
Artemis Fund Managers Ltd
AUDITOR
No. of
Ordinary Shares
3,285,714
3,071,428
2,889,589
2,537,339
714,285
714,285
%
19.5%
18.2%
17.1%
15.0%
4.2%
4.2%
A resolution to re-appoint Grant Thornton UK LLP as the Company’s auditor will be proposed at the forthcoming
Annual General Meeting. In accordance with normal practice, the Directors will be authorised to determine the
Auditor’s remuneration.
Approved by the Board of Directors
And signed on behalf of the Board
Nick Walters
C ompany Secretary
8
Cambridge Cognition Holdings plc
Corporate Governance Report for the year ended 31 December
2013
The Board of C ambridge C ognition Holdings plc is responsible for the long term financial success of the
business. The Directors recognise the value and importance of high standards of corporate governance and so
far as is practicable and appropriate for a company of its size, stage of development and nature as a C ompany
whose securities are traded on AIM, follows the principles of the UK C orporate Governance C ode, whilst not
complying in full with its provisions.
The C ompany has adopted a code for share dealings by directors and employees which is appropriate for an
AIM company and which complies with Rule 21 of the AIM Rules on “Restrictions on deals”.
The C ompany has established an Audit Committee, a Nomination Committee and a Remuneration C ommittee.
The Audit C ommittee is comprised of Michael Lewis (C hair), Jane Worlock and Nicholas Walters. The
Nomination C ommittee is comprised of Jane Worlock (C hair), Michael Lewis and Nicholas Kerton. The
Remuneration C ommittee is comprised of Eric Dodd (C hair), Michael Lewis and Jane Worlock.
The Audit C ommittee’s responsibilities include making recommendations to the Board on the appointment of
the C ompany’s auditors, approving the auditor’s fees, reviewing the findings of the audit and monitorin g and
reviewing effectiveness of the Company’s internal audit function. The audit C ommittee is also responsible for
monitoring the integrity of the financial statements of the Company, including its annual and half yearly reports
and interim management statements.
The Nomination Committee’s responsibilities include reviewing the structure, size and composition of the Board,
making recommendations to the Board concerning membership of Board committees and identifying and
nominating candidates for the Board for Board approval.
The Remuneration C ommittee’s responsibilities include determining the remuneration of the executive
directors, reviewing the design of all share incentive plans and determine each year whether awards will be
made, and if so, the overall amount of such awards, the individual awards to executive directors and the
performance targets to be used.
9
Cambridge Cognition Holdings plc
Remuneration Report for the year ended 31 December 2013
The C ompany has established a Remuneration Committee. The members of the Remuneration C ommittee are
and the committee is chaired by:
Eric Dodd (C hair)
Michael Lewis
Jane Worlock
The C ommittee makes recommendations to the board. No director plays a part in any discussion about his own
remuneration.
C omponents of Executives Directors’ remuneration
Executive remuneration packages are prudently designed to attract, motivate and reta in directors of the high
calibre needed to enhance the group’s market position and to reward them for increasing value to
shareholders. The performance measurement of the executive directors and key members of senior
management and the determination of their annual remuneration package are undertaken by the C ommittee.
There are five main elements of the remuneration package for the executive directors and senior management:
• Basic annual salary;
• Benefits-in-kind;
• Annual bonus payments;
• Share option incentives; and
• Pension arrangements.
Non-Executive Directors’ remuneration
The remuneration of Non-Executive Directors is determined by the Board and reflects their anticipated time
commitment to fulfill their duties. The Non-Executive Directors remuneration is subject to the same principles
of the Group Remuneration policy. The letters of appointment of Non-Executive Directors can be terminated
with one months notice given by either party.
Directors’ remuneration (audited)
The remuneration of the Directors is as follows:
Salary/Fee C omp for
Benefits
Bonus
Pension
2013
Total
2012 Total
Loss of
Office
£’000
£’000
C urrent Directors:
Executive
Nicholas Kerton
Andrew Blackwell
Nicholas Walters
Non Executive
Jane Worlock
Michael Lewis
Eric Dodd
Former Directors:
Ruth Keir
David Blair
J Hainlein
E Hayton
M Bauer
Total
£’000
£’000
£’000
£’000
£’000
70
150
8
57
25
-
232
130
2
2
2
678
-
-
-
-
-
-
30
30
-
-
-
60
-
1
-
-
-
-
2
2
-
-
-
5
-
40
-
-
-
-
-
-
-
-
-
40
6
14
-
-
-
-
6
6
-
-
-
32
76
205
8
57
25
-
270
168
2
2
2
815
-
193
-
139
-
-
231
113
18
15
8
717
Share Options (re-denominated where appropriate):
Granted
Number of
Options
Performance
criteria
Exercise price in
pence
Exercise period
Andrew Blackwell
April 2013
April 2013
April 2013
112,568
112,568
112.567
-
-
-
70 pence
70 pence
70 pence
Apr 2014 – Apr 2023
Apr 2015 – Apr 2023
Apr 2016 – Apr 2023
10
Cambridge Cognition Holdings plc
Co. regd no: 8211361
Independent Auditor’s Report to the Members of Cambridge Cognition
Holdings plc
We have audited the financial statements of Cambridge Cognition Holdings Plc for the year ended 31 December 2013
which comprise the consolidated statement of comprehensive income, the consolidated statement of changes in
equity, the consolidated statement of financial position, the consolidated statement of cash flows, the related notes
and the parent company balance sheet and related notes. The financial reporting framework that has been applied in
the preparation of the group financial statements is applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in the
preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards
(United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company’s members, as a body, in accordance with C hapter 3 of Part 16 of the
C ompanies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities Statement set out on pages 5 and 6, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing
Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting C ouncil's website
at www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion:
the financial statements give a true and fair view of the state of the group's and of the parent company's affairs
as at 31 December 2013 and of the group's loss for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as ado pted by the
European Union;
the parent company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the C ompanies Act 2006
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and the Directors' Report for the financial year for which
the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to
you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit
have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Alison Seekings
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
C ambridge
12th March 2014
11
Cambridge Cognition Holdings plc
Co. regd no: 8211361
Consolidated Statement of Comprehensive Income
Revenue
C ost of sales
Gross profit
Administrative expenses
Other income
Operating (loss)
Analysed as:
Adjusted EBITDA
Depreciation
Restructuring costs
AIM listing expenses
Operating (loss)
Finance income
Finance costs
(Loss) before tax
Income tax
Loss and total comprehensive income for the period
attributable to the equity shareholders of the parent
Earnings per share (pence)
Basic earnings per share
Diluted earnings per share
Notes
Year to
31 December
2013
Year to
31 December
2012
£’000
£’000
5
7
8
11
12
13
4,148
(490)
3,658
(6,761)
145
5,684
(1,217)
4,467
(5,921)
-
(2,958)
(1,454)
(2,193)
(1,417)
(40)
(352)
(373)
(37)
-
-
(2,958)
(1,454)
3
(35)
-
(122)
(2,990)
(1,576)
129
-
(2,861)
(1,576)
(21.3)
(21.3)
(26.4)
(26.4)
The above results relate to continuing operations.
Total comprehensive income equates to the loss for the period reported above.
12
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Consolidated statement of changes in equity
Share
capital
£'000
61
-
-
7
-
7
68
68
-
-
Balance at 1 January 2012
Total comprehensive income
for the year
Reclassification following lapse
of options
Issue of new share capital
C redit to equity for equity
settled share based payments
Transactions with owners
Balance at 31 December
2012
Balance at 1 January 2013
Total comprehensive income
for the period
Reclassification following
conversion of loan
Issue of new share capital
101
Premium of new share capital
Share issue costs
C redit to equity for equity-
settled share-based payments
-
-
-
6,922
(587)
-
Transactions with owners
101
6,335
Share
premium
Own
shares
Other
reserve
Equity
reserves
Retained
earnings
£'000
£'000
£'000
£'000
£'000
Total
£'000
-
-
-
-
-
-
-
-
-
-
-
(204)
5,860
196
(6,289)
(376)
-
-
-
-
-
121
-
-
-
(1,576)
(1,576)
(28)
-
-
28
-
-
128
141
141
-
121
(28)
169
269
(204)
5,981
168
(7,696)
(1,683)
(204)
5,981
168
(7,696)
(1,683)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,861)
(2,861)
(168)
168
-
-
-
-
-
-
-
-
101
6,922
(587)
238
238
(168)
406
6,674
Balance at 31 December
2013
169
6,335
(204)
5,981
-
(10,151)
2,130
13
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Consolidated statement of financial position
Assets
Non-current assets
Goodwill
Property, plant and equipment
Total non-current assets
Current assets
Inventories
Trade and other receivables
C ash and cash equivalents
Total C urrent assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Provisions
Total liabilities
Equity
Share capital
Share premium account
Other reserve
Own shares
Equity reserve
Retained earnings
Total equity
Notes At 31 December
2013
At 31 December
2012
£'000
£’000
14
15
17
18
22
23
24
25
352
53
405
123
976
2,261
352
72
424
113
1,219
641
3,360
1,973
3,765
2,397
1,635
-
3,780
300
1,635
4,080
169
6,335
5,981
(204)
-
(10,151)
68
-
5,981
(204)
168
(7,696)
2,130
(1,683)
Total liabilities and equity
3,765
2,397
The financial statements on pages 12 to 39 were approved by the Board of Directors and authorised for issue
on 12th March 2014 and were signed on its behalf by:
Nicholas Kerton
C hief Executive Officer
12th March 2014
14
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Consolidated statement of cash flows
Notes
Year to
31 December
2013
Year to
31 December
2012
£'000
£’000
Net cash flows from operating activities
26
(2,472)
(701)
Investing activities
Payment of deferred consideration
Purchase of property, plant and equipment
Net cash flow used in investing activities
Financing activities
Proceeds from the issue of share capital net
26
Net cash flows from financing activities
Net increase in cash and cash equivalents
C ash and cash equivalents at start of period
Cash and cash equivalents at end of period
26
(300)
(21)
(321)
4,413
4,413
1,620
641
2,261
-
(55)
(55)
6
6
(750)
1,391
641
15
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
1. General information
C ambridge Cognition Holdings plc (‘the Company’) and its subsidiaries (together, ‘the Group’) develops and
commercialises computerised neuropsychological tests for sale worldwide, principally in the UK, the US and
Europe. The group trades through its UK subsidiary C ambridge C ognition Limited (“C C L”).
The C ompany is a public limited company which listed on the Alternative Investment Market (‘AIM’) of the
London Stock Exchange (COG) in April 2013 and is incorporated and domiciled in the UK. The address of its
registered office is Tunbridge C ourt, Tunbridge Lane, Bottisham, C ambridge, C B25 9TU.
As part of the IPO process, Cambridge Cognition Holdings plc, a newly incorporated entity, became the new
group holding company with effect from 12 April 2013. The consolidated financial statements are presented a s
a continuation of the financial statements of the legal subsidiary except the equity structure reflects the equity
of the new parent, with the comparatives restated using the exchange ratio established in the share exchange
agreement dated April 2013.
The Group develops and commercialises computerised neuropsychological tests. In the decade since C C L’s
formation in 2002, it has created a well-established business through sales of its proprietary C ANTAB®
(C ambridge Neuropsychological Test Automated Batte ry) software into academic and pharmaceutical research
locations around the world.
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (‘IFRS’) as adopted by the European Union, IFRIC interpretations and the C ompanies Act 2006
applicable to companies operating under IFRS. The accounting policies adopted are consistent with those
followed in the preparation of the consolidated financial statements for the year ended 31 December 2012
incorporated in the AIM admission document. The financial statements have been prepared under the historical
cost convention.
The Group has chosen to utilise the exemption available under IFRS 1, ‘First time adoption of IFRS’, for
reassessing acquisitions completed before 31 December 2009. The goodwill arising on business combinations of
the Group prior to 31 December 2009 remains unchanged up to 1 January 2010 and is subject to an annual
impairment review. The date of transition to IFRS was 1st January 2010.
Companies in the consolidated financial information
The subsidiary undertakings included within the consolidated financial statements as at 31 December 2013 are
as follows:
Company
Name
C ambridge
C ognition
Limited
C ambridge
C ognition
Trustees Ltd
C ambridge
C ognition LLC
Country of
registration/
incorporation
UK
UK
Principal Activity
Date
Incorporated
Class of
shares
%
Development and sale of
computerised
neuropsychological tests
Investment company
12 Dec 2001 Ordinary
100
5 June 2002
Ordinary
100
USA
Non-trading company
11 July 2006 Ordinary
100
2. Outlook for adoption of future Standards (new and amended)
At the date of authorisation of the C onsolidated Financial Information, the following Standards and
Interpretations which have not been applied in the C onsolidated Financial Information were in issue but not yet
effective (and in some cases had not yet been adopted by the EU):
IFRS 9 Financial Instruments
IFRS 10 C onsolidated Financial Statements (effective 1 January 2014)
IFRS 11 Joint Arrangements (effective date 1 January 2014)
IFRS 12 Disclosure of Interests in Other Entities (effective 1 January 2014)
IAS 27 (Revised), Separate Financial Statements (effective 1 January 2014)
IAS 28 (Revised), Investments in Associates and Joint Ventures (effective 1 January 2014)
Amendments to IFRS 10, IFRS 11, & IFRS 12 Transition Guidance
16
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
During the year the following standards came into effect:
IFRS 13 Fair Value Measurement (effective 1 January 2013)
IAS 19 Employee Benefits (effective 1 January 2013)
Amendments to IFRS 7 (effective 1 January 2013)
Annual improvements 2009-2011
IAS 12 (Amendment) Deferred Tax (effective 1 January 2013)
The Directors do not expect that the adoption of the standards listed above will have a material impact on the
C onsolidated Financial Information of the Group in future periods.
3. Significant accounting policies
3.1 Basis of consolidation
The consolidated financial statements incorporate the results of the company and of its subsidiaries.
Subsidiaries are entities over which the company has the power to govern the financial and operating policies
so as to obtain benefits from its activities.
All intra-group transactions, balances, income and expenses ar e eliminated in full on consolidation.
The share exchange by C ambridge C ognition Holdings plc is outside the scope of IFRS 3 and hence is not
treated as a business combination. The principles of reverse acquisition accounting have been applied with the
financial statements being a continuation of the results and balances of the legal subsidiary. Share capital
represents the equity structure of the legal parent with comparatives restated using the exchange ratio of
1.138 established on acquisition. The difference between the equity of the legal parent and the issued equity
instruments of Cambridge Cognition Limited pre combination is recognised as a separate component of equity.
The amount recognised as retained earnings are those of C ambridge C ognition L imited pre combination
together with the results of the whole Group post transaction date .
3.2 Going concern
At the time of approving the financial statements, and based on a review of the group’s forecasts and business
plan, the directors have a reasonable expectation that the C ompany and the Group have adequate resources to
continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern
basis of accounting in preparing the financial statements.
3.3 Business combinations
The Group has made no acquisitions or disposals during the period under review. As noted above the Group
has chosen to utilise the exemption available under IFRS 1, ‘First time adoption of IFRS’.
3.4 Goodwill
Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the
acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount
of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest
(if any) in the entity over the net of the acquisition-date amounts of the identifiable assets acquired and the
liabilities assumed.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment
testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from synergies
arising from the combination. C ash-generating units to which goodwill has been attributed under IFR S 3
Business Combinations are tested for impairment annually, or more frequently when there is an indication that
the unit may be impaired. If the recoverable amount of the cash -generating unit is less than the carrying
amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill
allocated to the unit and then to the other assets of the unit pro -rata on the basis of the carrying amount of
each asset in the unit. An impairment loss recognised for goodwill is not re versed in a subsequent period.
3.5 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts
receivable for goods and services provided in the normal course of business, net of discounts, VAT and other
sales-related taxes.
Sales of goods and licences
The Group recognises revenue when all the following conditions are satisfied:
the significant risks and rewards of ownership of the goods are transferred to the buyer;
the Group retains neither continuing managerial involvement to the degree usually associated with
ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the economic benefits associated with the transaction will fl ow to the entity; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
17
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
3.5 Revenue recognition (cont.)
Revenue recognised in the income statement but not yet invoiced is held on the balance sheet within ‘Trade
and other receivables’. Revenue invoiced but not yet recognised in the income statement is held on the balance
sheet within ‘Deferred revenue’
Revenue is classified as follows:
Supply of software licences
Sales from software licences are recognised in full when the licences are provided since there is no significant
ongoing obligation to the Group.
Supply of product
Supply of product consists of hardware sold in conjunction with software licence fees and associated other
services. Revenue is recognised on despatch of the product when the significant risks and rewards of
ownership are transferred to the buyer.
Supply of associated services
Sales of clinical testing services are recognised based on work done subject to achieving milestones set out in
the related service agreements, provided a right to consideration has been established. Sales from training are
recognised as the training services are performed.
A number of the above elements may be sold together as a bundled contract. Revenue is recognised separately
for each component if it is considered to represent a separable good or service and a fair value can be reliably
established. The Group derives fair value for its professional services based on day rates for consultants.
Where software is included within a bundled arrangement, the residual value of the contract is ascribed to the
software after a fair value has been allocated to all other components.
Interest income
Interest income is recognised when it is probable that the economic benefits will flow to the Group and the
amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying
amount on initial recognition.
3.6 Grants
Grants of a revenue nature are credited to profit and loss to match with the expenses incurred.
3.7 Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are classified as operating leases.
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the
relevant lease.
In the event that lease incentives are received at the time the entity enters into an operating lease agreement,
such incentives are recognised as a liability and recycled through profit and loss over the term of the lease
agreement. The aggregate benefit of incentives is recognised in profit and loss as a reduction to rental expense
on a straight-line basis, except where another systematic basis is more representative of the time patter n in
which economic benefits from the leased asset are consumed.
3.8 Foreign currencies
The individual financial statements of each subsidiary are presented in the currency of the primary economic
environment in which it operates (its functional currency). The UK pound is the predominant functional
currency of companies within the Group and presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other th an the
entity’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates
of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign
currencies are retranslated at the rates prevailing at that date.
Exchange differences are recognised in profit or loss in the period in which they arise.
3.9 Borrowing costs
The Group has incurred no borrowing costs attributable to the acquisition, construction or productio n of
qualifying assets.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
18
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
3. Significant accounting policies (continued)
3.10 Operating profit
Operating profit is stated after charging restructuring costs but before finance income and finance costs.
3.11 Retirement benefit costs
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
3.12 Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as
reported in the income statement because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability
for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance
sheet date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of
assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the
computation of taxable profit, and is accounted for using the balance sheet liability method. Deferr ed tax
liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available against which deductible temporar y differences
can be utilised. However such assets and liabilities are not recognised if the temporary difference arises from
the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other
assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries
except where the group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent
that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled
or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the
balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to
items charged or credited in other comprehensive income, in which case the deferred tax is also dealt with in
other comprehensive income.
Deferred tax assets and liabilities are offset when there is a le gally enforceable right to set off current tax
assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority
and the Group intends to settle its current tax assets and liabilities on a net basis.
3.13 Tangible and intangible assets
(a) Property, plant and equipment
The Group has held no land and buildings for the period covered by the consolidated financial statements.
Fixtures and equipment are stated at cost less accumulated depreciation and any recognised impairment loss.
Depreciation is provided at rates calculated to write off the cost of fixed assets, less their estimated residual
value, over their expected useful lives on the following bases:
Fixtures, fittings & equipment
Leasehold improvements -
25% - 33% per annum straight line
-
straight line over 5 years or over the term of the lease
The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognised in profit and loss on the transfer of the risks and
rewards of ownership.
The Group has no class of tangible fixed asset that has been revalued. On transition to IFRS the net book
values were based on historic cost or fair value recognised at the date of acquisition.
19
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
3. Significant accounting policies (continued)
3.13 Tangible and intangible assets (cont.)
(b) Internally-generated intangible assets – research and development expenditure
The Group undertakes research and development expenditure in view of developing new products. Expenditure
on research activities is recognised as an expense in the period in which it is incurred.
An internally-generated intangible asset arising from the group’s development is recognised only if all of the
following conditions are met:
an asset is created that can be identified (such as software and new processes);
it is probable that the asset created will generate future economic benefits, for example it is
technically and commercially feasible and the group has sufficient resources to complete
development; and
the development cost of the asset can be measured reliably.
Where no internally-generated intangible asset can be recognised, development expenditure is recognised as
an expense in the period in which it is incurred.
3.14 Impairment of intangible assets
At each balance sheet date, the Group performs an impairment review in respect of goodwill and reviews the
carrying amounts to determine whether there is any impairment. For the purposes of impairment testing,
goodwill is allocated to each of the Group’s cash generating units. Any impairment loss is recognised as an
expense in the income statement in the period in which it was identified. An impairment loss recognised for
goodwill is not reversed in a subsequent period.
3.15 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where
applicable, direct labour costs and those overheads that have been incurred in brin ging the inventories to their
present location and condition. Cost is calculated using either the First-In-First-Out method or, for fast moving
items, the average cost method. Net realisable value represents the estimated selling price less all estimated
costs of completion and costs to be incurred in marketing, selling and distribution.
3.16 Financial instruments
Financial assets and financial liabilities are recognised in the Group’s balance sheet when the Group becomes a
party to the contractual provisions of the instrument.
Financial assets
Financial assets are classified into the following specified categories: financial assets at ‘fair value through profit
or loss’ (“FVTPL”), ‘held-to-maturity’ investments, ‘available-for-sale’ (“AFS”) financial assets and ‘loans and
receivables’. The classification depends on the nature and purpose of the financial assets and is determined at
the time of initial recognition.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of
allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash flows (including all fees and points paid or received that form an integ ral part of the
effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt
instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets
classified as at FVTPL.
Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted
in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised
cost using the effective interest method, less any impairment. Interest income is recognised by applying the
effective interest rate, except for short term receivables when the recognition of interest would be immaterial.
20
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
3. Significant accounting policies (continued)
3.16 Financial instruments (cont.)
Impairment of financial assets
Financial assets, are assessed for indicators of impairment at each balance sheet date. Financial assets are
impaired where there is objective evidence that, as a result of one or more events that occurred after the initial
recognition of the financial asset, the estimated future cash flows of the investment have been affected.
For all financial assets, objective evidence of impairment could include:
significant financial difficulty of the issuer or counterparty; or
default or delinquency in interest or principal payments; or
it becoming probable that the borrower will enter bankruptcy or financial re -organisation.
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired
individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for
a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the
number of delayed payments in the portfolio past the average credit period, as well as observable changes in
national or local economic conditions that correlate with default on receivables.
For financial assets carried at amortised cost, the amount of the impairment is the differences between the
asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial
asset’s original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with
the exception of trade receivables, where the carrying amount is reduced through the use of an allowance
account. When a trade receivable is considered uncollectible, it is written off against the allowance account.
Subsequent recoveries of amounts previously written off are credited against the allowance a ccount. C hanges
in the carrying amount of the allowance account are recognised in profit or loss.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset
expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the
asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of
ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset
and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and
rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and
also recognises a collateralised borrowing for the proceeds received.
Financial liabilities and equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangement.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting
all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of
direct issue costs.
Compound instruments
The component parts of compound instruments (convertible bonds) issued by the Group are classified
separately as financial liabilities and equity in accordance with the substance of the co ntractual arrangement.
At the date of issue, the fair value of the liability component is estimated using the prevailing market interest
rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortised cost basis
using the effective interest method until extinguished upon conversion or at the instrument’s maturity date.
The equity component is determined by deducting the amount of the liability component from the fair value of
the compound instrument as a whole. This is recognised and included in equity, net of income tax effects, and
is not subsequently remeasured.
21
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
3. Significant accounting policies (continued)
3.16 Financial instruments (cont.)
Financial liabilities
Financial liabilities are classified as either ‘financial liabilities at FVTPL’ or ‘other financial liabilities’.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is
designated as at FVTPL.
A financial liability is classified as held for trading if:
it has been incurred principally for the purpose of repurchasing it in the near term; or
on initial recognition it is part of a portfolio of identified financial instruments that the Group manages
together and has a recent actual pattern of short-term profit-taking; or
it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading may be designated as at FVTPL upon ini tial
recognition if:
such designation eliminates or significantly reduces a measurement or recognition inconsistency that
would otherwise arise; or
the financial liability forms part of a group of financial assets or financial liabilities or both, which is
managed and its performance is evaluated on a fair value ba sis, in accordance with the Group’s
documented risk management or investment strategy, and information about the grouping is provided
internally on that basis; or
it forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial
Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to
be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement
recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on
the financial liability and is included in the ‘other gains and losses’ line item in the income statement. Fair value
is determined in the manner described in note 31.
Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective interest
method, with interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments through the expected life of the financial liability, or, where
appropriate, a shorter period, to the net carrying a mount on initial recognition.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged,
cancelled or they expire.
Derivative financial instruments
The Group has not entered into transactions with derivative financial instruments.
Embedded derivatives
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives
when their risks and characteristics are not closely related to those of the host contracts and the host contracts
are not measured at FVTPL.
An embedded derivative is presented as a non-current asset or a non-current liability if the remaining maturity
of the hybrid instrument to which the embedded derivative relates is more than 12 months and is not expected
to be realised or settled within 12 months. Other derivatives are presented as current assets or current
liabilities.
22
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
3. Significant accounting policies (continued)
3.17 Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be
made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation.
Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying
amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a
third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received
and the amount of the receivable can be measured reliably.
3.18 Share-based payments
Equity-settled share-based payments to employees and others providing similar services are measured at the
fair value of the equity instruments at the grant date. The fair value excludes the effect of non -market-based
vesting conditions. Details regarding the determination of the fair value of equity -settled share-based
transactions are set out in note 28.
The fair value determined at the grant date of the equity -settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that will
eventually vest. At each balance sheet date, the Group revises its estimate of the number of equity instruments
expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of
the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the
revised estimate, with a corresponding adjustment to equity reserves.
3.19 Employee Benefit Trust
In order to facilitate the exercise of share options the group maintains an Employee Benefit Trust (EBT). This is
consolidated in accordance with IAS 27 and SIC 12. The costs of purchasing own shares held by the EBT are
deducted from equity. Neither the purchase nor sale of own shares leads to a gain or loss being recognised in
the Group’s profit and loss account or statement of total recognised gains and losses. When shares are
subsequently transferred to employees for less than their purchase price the difference is a realised loss
recognised directly in reserves.
4. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group’s accounting policies, which are described in note 3, the directors are required
to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are
not readily apparent from other sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects only that period,
or in the period of the revision and future periods if the r evision affects both current and future periods.
Critical judgements in applying the Group’s accounting policies
The following are the critical judgements that the directors have made in the proce ss of applying the Group’s
accounting policies and that have the most significant effect on the amounts recognised in the C onsolidated
Financial Information.
Revenue recognition
Trading operations within the Group recognise revenue with regard to amounts chargeable to customers under
service contracts. The policy is to recognise revenue in respect of testing services upon achievement of
milestones set out in the related agreements. This is expected to approximate to the timing of the physical
performance of the service activity on such contracts.
23
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
4. Critical accounting judgements and key sources of estimation uncertainty (continued)
In making its judgement, management consider the detailed criteria for the recognition of revenue from the
provision of continuous services set out in IAS 18 Revenue. The Directors are satisfied that the significant risks
and rewards are transferred and that recognition of the revenue in equal instalments over the duration of the
contractual period is appropriate.
Goodwill
The Group reviews the carrying value of its goodwill balances by carrying out impairment tests at least on an
annual basis. These tests require estimates to be made of the value in use of its CGUs which are dependent on
estimates of future cash flows and long-term growth rates of the CGUs. Further details of these estimates are
set out in Note 14.
Recovery of deferred tax assets
Deferred tax assets have not been recognised for deductible temporary differences and tax losses as
management considers that there is not sufficient certainty that future taxable profits will be available to utilise
those temporary differences and tax losses.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is determined using a Black -Scholes
model, with the assumptions detailed in note 28. The accounting estimates and assumptions relating to equity
settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the
next annual reporting period but may impact expenses and equity.
5. Revenue
An analysis of revenue is as follows:
Continuing operations
Sales of software licences, goods and associated services:
C antab Mobile (E-Health)
C antab Research Suite (Academic)
C antab Solutions (Clinical Trials)
2013
£'000
2012
£'000
158
1,493
2,497
98
1,379
4,207
4,148
5,684
Revenue from the sale of hardware is incidental to the provision of software and associated services.
6. Business and geographical segments
Products and services from which reportable segments derive their revenues
Information reported to the Group’s Chief Executive for the purposes of resource allocation and assessment of
segment performance is focused on the location of markets in which the Group operates. The Group’s
reportable segments under IFRS 8 are therefore as follows:
C antab Mobile
C antab Research Suite
C antab Solutions
-
-
-
Medical software for use in healthcare delivery settings
C ognitive test products for researchers working in a non
regulated environment, typically in academia
Products and services for use in regulated clinical trials
24
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
6. Business and geographical segments (continued)
Segment revenues and results
The following is an analysis of the Group’s revenue and results by reportable segment:
Revenue
External sales
Result
Segment result
C entral administration costs
Other income
Operating loss
Finance income
Finance costs
Loss before tax
Tax
Loss after tax
Revenue
External sales
Result
Segment result
C entral administration costs
Operating (loss)
Finance costs
Loss before tax
Tax
Loss after tax
Mobile
2013
£'000
Research
Suite
2013
£'000
Solutions
2013
£'000
Consolidated
2013
£'000
158
1,493
2,497
4,148
(945)
1,014
216
285
(3,394)
151
(2,958)
3
(35)
(2,990)
129
(2,861)
Mobile
2012
£'000
Research
Suite
2012
£'000
Solutions
2012
£'000
C onsolidated
2012
£'000
98
1,379
4,206
5,683
(681)
851
1,258
1,428
(2,882)
(1,454)
(122)
(1,576)
-
(1,576)
25
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
6. Business and geographical segments (continued)
The accounting policies of the reportable segments are the same as the accounting policies described in note 3.
Segment profit represents the profit earned by each segment without allocation of the share of central
administration costs including Directors’ salaries, investment revenue and finance costs, and income tax
expense. This is the measure reported to the C hief Executive for the purpose of resource allocation and
assessment of segment performance.
C entral administration costs comprise principally the employment related costs and other overheads incurred
by the group.
Segment net assets
C antab Mobile (E-Health)
C antab Research Suite (Academic)
C antab Solutions (Clinical Trials)
Total allocated assets
Unallocated assets
C onsolidated total assets
All assets are based in the UK.
2013
£'000
2012
£'000
10
215
410
2
211
845
635
3,130
1,058
1,339
3,765
2,397
For the purposes of monitoring segment performance and allocating reso urces between segments the group
monitors the assets of each segment. Inventory and trade receivables are allocated to reportable segments.
Due to the size and nature of the other assets within the group these are monitored on a consolidated basis.
Goodwill has been allocated to reportable segments as described in note 14.
Geographical information
The revenue by geographical location is detailed below:
United Kingdom
United States of America
European Union
Rest of world
Revenue from external
customers
2013
£'000
1,754
1,059
790
545
2012
£'000
2,350
1,663
1,235
436
4,148
5,684
Information about major customers
Revenue amounting to £1,091,000 of reported sales can be attributed to one customer in 2013. The customer
was in the C linical business in the UK. No other customers accounted for more than 10 per cent of reported
revenue.
26
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
7. Other operating income
Other operating income is made up of the following:
Grant income
8. Loss for the year
Loss for the year has been arrived at after charging/(crediting):
Net foreign exchange losses
Research and development costs
Depreciation of property, plant and
equipment
AIM listing expenses
Restructuring costs
9. Auditor’s remuneration
The analysis of the auditor’s remuneration is as follows:
Fees payable to the company’s auditor for the audit of:
the company’s annual accounts
the subsidiaries’ annual accounts
Total audit fees
Taxation compliance services
Other services
Total non-audit fees
10. Staff costs
The average monthly number of employees (including executive directors) was:
Operations
Business development
Administrative support
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Other pension costs (see note 29)
Share based payments charge
27
2013
£'000
2012
£'000
145
-
2013
£'000
10
1,240
40
373
352
2012
£'000
75
1,089
37
-
-
2013
£'000
2012
£'000
10
16
26
6
11
17
-
16
16
2
-
2
2013
Number
2012
Number
37
6
10
53
2013
£'000
3,124
305
174
238
38
6
9
53
2012
£'000
2,732
269
164
141
3,841
3,606
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
11. Finance costs
Interest on bank overdrafts and loans
Interest on convertible loan notes
The unwinding of discount effect on convertible loan notes is explained in note 20.
12. Tax
C orporation tax:
C urrent year
Adjustments in respect of prior years
Deferred tax (see note 21)
2013
£'000
-
35
2012
£'000
7
115
35
122
2013
£'000
2012
£'000
-
(129)
(129)
-
(129)
-
-
-
-
C orporation tax is calculated at 23.25% (2012: 24.5%) of the estimated taxable profit for the year.
The tax charge for each year can be reconciled to the profit per statement of comprehensive income as follows:
Loss before tax on continuing operations
Tax at the UK corporation tax rate of 23.25%
(2012 : 24.5%)
Expenses not deductible for tax purposes
C apital allowances in excess of depreciation
Unrelieved tax losses arising
Fixed asset differences
Other short term timing differences
Adjustment in respect of prior years
Tax (credit)/expense for the year
2013
£’000
2012
£'000
(2,990)
(1,576)
(695)
(386)
178
7
501
9
-
(129)
(129)
82
(7)
276
9
26
-
-
The credit in respect of prior years relates to the receipt of R&D tax credits in respect of 2011 and 2012. No
claim has yet been made for 2013 and no credit has been recognised in the financial statements.
28
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
13. Earnings per share
From continuing operations
The calculation of the basic and diluted earnings per share is based on the following data:
Earnings
Earnings for the purposes of basic and diluted earnings per share being net loss
attributable to owners of the Company
2013
£'000
2012
£'000
(2,861)
(1,576)
2013
'000
2012
‘000
Number of shares
Weighted average number of ordinary shares for the purposes of basic and
diluted earnings per share
13,423
5,979
As the effect of options and the convertible loan would be to reduce the loss per share the diluted loss per
share is the same as the basic loss per share.
14. Intangible fixed assets
Cost and net book value
At 1 January 2012 & 31 December 2012
At 1 January 2013 & 31 December 2013
Goodwill
£'000
352
352
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (C GUs)
that are expected to benefit from that business combination. The carrying amount of goodwill had been
allocated to Academic.
The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill
might be impaired.
The recoverable amounts of the Academic C GUs is determined from value in use calculations. The key
assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected
changes to selling prices and direct costs during the period. Management estimates discount rates using pre -
tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU.
The growth rates are based on management growth forecasts. The Group has conducted a sensitivity analysis
on the impairment test of the C GUs carrying value.
The Group prepares cash flow forecasts derived from the most recent financial budgets approved by
management for the next two years.
29
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
15. Property, plant & equipment
Leasehold
Improvements
£'000
Fixtures &
fittings
£'000
Total
£'000
Cost
At 1 January 2012
Additions
At 31 December 2012
At 1 January 2013
Additions
At 31 December 2013
Depreciation
At 1 January 2012
C harge for the year
At 31 December 2012
At 1 January 2013
C harge for the year
At 31 December 2013
Net Book value
At 31 December 2013
At 31 December 2012
38
-
38
38
-
38
37
1
38
38
-
38
-
-
268
55
323
323
21
344
215
36
251
251
40
291
53
72
306
55
361
361
21
382
252
37
289
289
40
329
53
72
16. Subsidiaries
Details of the C ompany’s subsidiaries at 31 December 2013 are as follows:
Name
Place of
incorporation
(or registration)
and operation
C ambridge Cognition Limited
United Kingdom
Proportion
of
ownership
interest
%
100%
Proportion
of
voting
power held
%
100%
C ambridge Cognition Trustees
Limited
C ambridge Cognition LLC
17. Inventories
Finished goods and goods for resale
United Kingdom
100%
100%
Delaware, United
States of America
100%
100%
2013
£'000
123
123
2012
£'000
113
113
During the year inventories with a total value of £383,000 (2012: £725,000) were included in the income
statement as an expense.
30
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
18. Trade and other receivables
Amount receivable for the sale of goods
Allowance for doubtful debts
Prepayments
Other receivables
2013
£'000
512
(25)
487
303
186
976
2012
£'000
944
(23)
921
279
19
1,219
Trade receivables
Trade receivables disclosed above are classified as loans and receivables and are measured at amortised cost.
The average credit period offered on sales of goods varies amongst the group with Academic customers having
payment on receipt and Pharma customers having payment terms ranging from 30 days to 90 days. The Group
has recognised an allowance for doubtful debts based on estimated irrecoverable amounts determined by
reference to past default experience of the counterparty and an analysis of the counterparty’s current financial
position.
Trade receivables disclosed above include amounts (see below for aged analysis) which are past due at the
year-end but against which the Group has not recognised an allowance for doubtful receivables. There has not
been a significant change in credit quality and the amounts (which include interest accrued on overdue
receivable balances) are still considered recoverable. The average age of these receivab les is 42 days in 2013
(2012: 43 days).
Ageing of past due but not impaired receivables:
31-60 days
61-90 days
91-120 days
Total
Movement in the allowance for doubtful debts:
Balance at the beginning of the period
Increase in provision
Balance at the end of the period
2013
£'000
245
36
16
2012
£'000
133
35
15
297
183
2013
£'000
23
2
2012
£'000
20
3
25
23
In determining the recoverability of a trade receivable the Group considers any change in the credit quality of
the trade receivable from the date credit was initially granted up to the reporting date. The concentration of
credit risk is limited due to the customer base being large and unrelated. Management considers that all the
above financial assets that are not impaired or past due are of good credit quality.
19. Borrowing
Unsecured borrowing at amortised cost
C onvertible loan notes
Total borrowings
Amount due for settlement within 12 months
2013
£'000
-
-
-
2012
£'000
2,029
2,029
2,029
The principal features of the Group’s convertible loa n notes are detailed in note 20.
31
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
20. Convertible loan notes
The convertible loan notes were issued during 2008 at issue prices of £1,500,000, £100,000, £100,000 and
$200,000 respectively. The notes were convertible into C ordinary shares of C ambridge C ognition Limited on
the listing of the Group. In April 2013 they were then exchanged for shares in C ambridge C ognition Holdings
plc.
The net proceeds received from the issue of the convertible loan notes have been split between a financial
liability element and an equity component, representing the fair value of the embedded option to convert the
financial liability into equity of the C ompany, as follows:
Proceeds of issue of convertible loan notes
Equity component
Liability component at date of issue
Accrued interest charge at 1 January 2010
Liability component at 1 January 2010
Interest charged
Liability component at 31 December 2010 and 1 January 2011
Interest charged
Principal and interest repaid
Liability component at 31 December 2011 and 1 January 2012
Interest charged
Principal and interest converted
Liability component at 31 December 2012
Interest charged
Principal and interest converted on listing of the Company
£’000
1,809
(197)
1,612
334
1,946
197
2,143
170
(277)
2,036
115
(122)
2,029
35
(2,064)
The equity component of £196,571 was credited to equity reserve and transferred to retained earnings on
conversion of the loan.
The interest expensed for the year is calculated by applying an effective interest rate of 9.3 per cent to th e
liability component for the 40 month period since the loan notes were issued until the date of conversion. The
liability component is measured at amortised cost.
21. Deferred Tax
At the balance sheet date, the group has unused tax losses of £8.5 million (2012: £6.4 million) available for
offset against future profits. No deferred tax asset has been recognised in respect of these losses as there is
uncertainty over the timing of future taxable profits. Other losses may be carried forward indefinit ely.
22. Trade & other payables
Amounts falling due within one year
C onvertible loans (Note 20)
Trade payables
Social security and other taxes
Other payables
2013
£'000
-
526
92
1,017
2012
£'000
2,029
461
91
1,199
1,635
3,780
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs.
The average credit period taken for trade purchases is 52 days (2012 : 47 days). For all suppliers no interest is
charged on the trade payables. Group policy is to ensure that payables are paid within the pre -agreed credit
terms and to avoid incurring penalties and/or interest on late payments. The Directors consider that the
carrying amount of trade payables approximates their fair value.
32
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
23. Provisions
C urrent
2013
£'000
2012
£'000
-
300
£300,000 was payable to C eNeS Pharmaceuticals plc in relation to the initial acquisition of Cambridge Cognition
in the event that the company was either sold or obtained a listing on a recognised stock exchange. The
C ompany listed on AIM in April 2013 and the obligation of £300,000 was settled from the proceeds raised at
the time of the listing.
24. Share capital
Issued and fully paid
16,885,105 Ordinary Shares of £0.01 each
2013
£
169
6,852,658 Ordinary Shares were issued to the holders of shares in C ambridge C ognition Limited in exchange
for their shares immediately prior to the public offering in April 2013.
2,889,589 Ordinary Shares were issued in exchange for the surrender of the C onvertible Loan Note (see Note
20).
7,142,858 Ordinary Shares were placed with investors at a price of 70p per share in April 2013.
No other shares were issued during the year.
25. Own Shares
Own Shares Reserve
2013
£
2012
£
204
204
The Own Shares Reserve represents the cost of shares acquired by the Cambridge Cognition Employee Benefit
Trust to satisfy options under the group’s share options schemes. The number of shares held by the Employee
Benefit Trust at 31 December 2013 was 488,683 (2012: 429,423).
33
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
26. Notes to the cash flow statement
Loss for the year
Adjustments for:
Finance costs
Depreciation of property, plant and equipment
Share-based payment expense
Increase/(decrease) in provisions
Operating cash flows before movements in working capital
(Increase)/Decrease in inventories
Decrease in receivables
(Decrease) in payables
C ash generated by operations
Interest received/(paid)
Net cash from operating activities
Cash and cash equivalents
C ash and bank balances
2013
£'000
2012
£'000
(2,861)
(1,576)
35
40
238
-
(2,548)
(10)
243
(157)
122
37
141
300
(976)
59
470
(247)
(2,472)
(694)
-
(7)
(2,472)
(701)
2013
£'000
2,261
2012
£'000
641
C ash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three
months or less, net of outstanding bank overdrafts. The carrying amount of these assets is approximately equal
to their fair value.
Financing activities
Proceeds from the issue of share capital (£4,413,000) excludes non cash consideration in respect of the
conversion of the loan during the year.
27. Operating lease arrangements
Lease payments under operating leases
recognised as an expense in the year
2013
£'000
140
2012
£'000
136
At the balance sheet date, the group had outstanding commitments for future minimum lease payments under
non-cancellable operating leases, which fall due as follows:
Within one year
In the second to fifth years inclusive
After five years
2013
£'000
78
5
1
2012
£'000
69
6
1
Operating lease payments represent rentals payable by the group for rent, phone systems, copiers and
franking machines. Property rental on 2 units had 6 months to expiry at 31 December 2013, with an option to
extend for a further year at the then prevailing market rate. The property rental on another unit had 12 months
to expiry at the 31 December 2013. The average rental period for other leases is 6 years.
34
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
28. Share based payments
Equity-settled share option scheme
The C ompany has a share option scheme for key employees of the G roup. The options in 2012 were options
over ordinary shares in C ambridge Cognition Limited. Further to the acquisition by the C ompany, employees
exchanged their existing options for options over the ordinary shares in the C ompany at the exchange rate of
1.138:1. The vesting periods vary between 0 and 3 years. Options are forfeited if the employee leaves the
Group before the options vest. Details of the share options outstanding during the year are as follows.
2013
2012
Number of
share
options
Weighted
average
exercise price
(in £)
Number of
share options
Weighted
average
exercise price
(in £)
Outstanding at beginning of period
Exercised during the period
Option modification
Option modification
Exchanged during the year
Granted during the period
Forfeited during the period
331,884
(24,868)
(255,000)
255,000
42,364
1,116,758
(346,794)
Outstanding at the end of the period
1,119,344
Exercisable at the end of the period
385,741
0.60
(0.01)
(0.47)
(0.009)
0.26
0.57
(0.68)
0.43
0.30
625,898
(549,014)
-
-
-
255,000
-
0.13
(0.01)
-
-
-
0.47
-
331,884
0.60
161,884
0.73
The options outstanding at 31 December 2013 had a weighted average exercise price of £0.43, and a weighted
average remaining contractual life between 0 and 3 years.
In 2013, options were granted on 22 April 2013 and 8 November 2013. The aggregate of the estimated fair
values of the options granted on those dates is £269,489. The inputs into the Black-Scholes model are as
follows:
Weighted average share price
Weighted average exercise price
Expected volatility
Expected life
Risk-free rate
Expected dividend yields
2013-
April
2013-
November
81p
70p
50%
5 years
0.5%
0.0%
70p
70p
50%
5 years
0.5%
0.0%
2012
47p
81p
200%
5 years
0.5%
0.0%
Expected volatility was determined by considering the expected share price movements and other comparable
listed companies in the sector. The expected life used in the model has been adjusted, based on
management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural
considerations.
The Group recognised total expenses of £238,000 (2012: £141,000), related to equity-settled share-based
payment transactions.
35
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
29. Retirement benefit schemes
Defined contribution schemes
The group operates a defined contribution retirement benefit scheme for all qualifying employees. The assets of
the scheme are held separately from those of the group in funds under the control of independent trustees.
The total cost charged to income of £174,000 (2012: £164,000) represents contributions payable to these
schemes by the group at agreed rates. As at 31 December 2013, contributions of £23,000 (2012: £17,000) due
in respect of the current reporting period had not been paid over to the schemes.
30. Financial instruments
Capital risk management
The Group manages its capital to ensure the Group is able to continue as a going concern while maximising the
return to stakeholders through optimising the balance between the Group debt and equity. The Group had no
borrowings at 31 December 2013. To satisfy these objectives the Group successfully raised £5 million (before
expenses) in equity during the year.
The current capital structure of the Group consists of cash and cash equivalents and equity attributable to
equity holders of the parent, comprising issued capital, reserves and retained earnings as follows:
C ash and cash equivalents
Equity shareholder funds
2013
£'000
2,261
2,130
2012
£'000
641
(1,683)
The Group is not subject to any externally imposed capital requirements.
Significant accounting policies
Details of the significant accounting policies and methods adopted (including the criteria for recognition, the
basis of measurement and the bases for recognition of income and expenses) for each class of financial asset,
financial liability and equity instrument are disclosed in note 3.
Categories of financial instruments
Financial assets classified as loans and receivables
C ash and bank balances
Trade and other receivables
Liabilities
Financial liabilities at amortised cost
Financial liabilities designated at FVTPL
2013
£'000
2012
£'000
2,261
650
641
1,108
1,073
-
1,701
1,988
Financial risk management objectives
The Group’s Finance function is responsible for all aspects of corporate treasury. It co -ordinates access to
financial markets, monitors and manages the financial risks relating to the operations of the Group through
internal reports which analyse exposures by degree and magnitude. The risks reviewed include market risk
(including currency risk), fair value interest rate risk and price risk, credit risk, liquidity risk and cash flow
interest rate risk.
Liquidity Risk
Liquidity risk is that the Group might be unable to meet its obligations. The Group manages its liquidity needs
by monitoring cash outflows due in day-to-day business. The Board reviews an annual 12 month financial
projection as well as information regarding cash balances on a monthly basis. The Group maintains cash and
cash equivalents to meet its liquidity requirements for up to a 30-day period.
36
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
30. Financial instruments (continued)
Liquidity Risk (cont.)
At 31 December 2013, the Group’s financial liabilities had contractual maturities which are summarised below:
Trade payables
Other payables
C onvertible loan
2013
£'000
Within 6
months
526
503
-
-----------
1,029
-----------
2012
£'000
Within 6
months
461
652
1,988
----------
3,101
----------
Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates
and interest rates (see below). The Group has limited exposure to foreign currency exchange rates and does
not believe the use of financial derivatives is appropriate.
There has been no change to the Group’s exposure to market risks or the manner in which these risks are
managed and measured.
Foreign currency risk management
The Group undertakes transactions denominated in foreign currencies; consequently exposures to exchange
rate fluctuations arise.
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at
the year end were as follows:
US Dollar
EURO
Liabilities
2013
£'000
7
-
2012
£'000
18
1
Assets
2013
£'000
647
229
2012
£'000
324
155
A movement in the £/$ exchange rate of +/- 5% from 31 December 2013 to the date of realising the US dollar
net asset position would result in a gain/loss of £32,000 (2012: £15,000). Similarly with the Euro, the
gain/loss would be £11,000 (2012: £8,000).
Credit risk management
C redit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial
loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and
obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from
defaults. The Group makes appropriate enquiries of the counter party and independent third parties to
determine credit worthiness. Use of other publicly available financial information and the Group’s own trading
records is made to rate its major customers. The Group’s exposure and the credit worthiness of its
counterparties are continuously monitored and the aggregate value of transactions is spread amongst approved
counterparties. Credit exposure is also controlled by counterparty limits that are reviewed and approved by
Group management continuously.
The Group does not have any significant credit risk exposure to any single counterparty or group of
counterparties having similar characteristics. The Group defines counterparties as having similar characteristics
if they are related entities.
The carrying amount recorded for financial assets in the C onsolidated Financial Statements is net of impairment
losses and represents the Group’s maximum exposure to credit risk. No guarantees have been given in respect
to third parties.
37
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
30. Financial instruments (continued)
Fair value of financial instruments
Fair value of financial instruments carried at amortised cost
The directors consider that the carrying amounts of financial assets and financial liabilities recorded at
amortised cost in the C onsolidated Financial Statements approximate their fair values.
The financial instruments held by the Group that are measured at fair value all relate to financial liabilities
measured at fair value through profit and loss (FVTPL) using methods associate d with Level 3.
Financial liabilities at FVTPL
Financial liabilities designated at FVTPL
Total
Financial liabilities at FVTPL
Financial liabilities designated at FVTPL
Total
2013
Level 1
Level 2
Level 3
£'000
Total
£'000
-
-
-
-
2012
-
-
-
-
Level 1
Level 2
Level 3
£'000
Total
£'000
-
-
-
-
1,988
1,988
1,988
1,988
There were no transfers between Level 1 and 2 during the period under review. There were no financial
instruments outstanding at 31 December 2013.
Significant assumptions used in determining fair value of financial assets and liabilities
C onvertible notes
The fair value of the liability component of convertible notes is determined assuming redemption on 31
December 2012 and using a 9.34 per cent interest rate.
38
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the financial statements
31. Related party transactions
Balances and transactions between the C ompany and its subsidiaries, which are related parties, have been
eliminated on consolidation and are not disclosed in this no te. Transactions between the Group and other
related parties are disclosed below.
Remuneration of directors and key management personnel
The remuneration of the senior Executive Management C ommittee members, who are the key management
personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24 Related
Party Disclosures.
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
2013
£'000
2012
£'000
720
32
60
161
973
672
44
-
131
847
Payments in respect of each director are set out in the Remuneration Report.
Other transactions
During 2013 the company incurred professional fees of £8,765 (2012: £41,199) from Pall Mall Partners Limited.
Wholly owned subsidiaries of Pall Mall Partners Limited are shareholders in C ambridge C ognition Holdings plc.
Pall Mall Partners Limited had, until earlier this year, three directors on the Cambridge Cognition Limited bo ard.
Fees includes £5,786 (2012: £40,500) in respect of director's services. At the year end a balance of £Nil (2012:
£11,166) was outstanding to Pall Mall Partners Limited.
During 2013 the Group incurred consultancy fees of £28,000 (2012 : £Nil) from MCR Holdings, a partnership of
which N. Walters is a partner. At the year end a balance of £7,657 (2012: £Nil) was outstanding to MC R
Holdings.
39
Cambridge Cognition Holdings plc
Parent Company Balance Sheet
Fixed assets
Investments
Current assets
Debtors
C ash at bank
Creditors: amounts falling due within one year
Net current (liabilities)/assets
Total assets less current liabilities
Capital and reserves
C alled-up equity share capital
Share premium account
Investment in own shares
Share-based payment reserve
Profit and loss account
Equity Shareholders’ Funds
Note
2013
£’000
3
4
5
6
7
152
3,802
1,501
─────────
5,303
(93)
─────────
5,210
─────────
5,362
═════════
169
6,335
(204)
166
(1,104)
─────────
5,362
═════════
The financial statements of Cambridge C ognition Holdings plc on pages 40 to 43 were approved and authorised
for issue by the board on 12th March 2014 and were signed on its behalf by:
Nick Kerton
Director
40
Cambridge Cognition Holdings plc
Co. regd. no: 8211361
Notes to the parent company financial statements
The company was incorporated on 12th September 2012. These are the company’s first financial statements
since incorporation.
1. Significant accounting policies
1.1 Basis of accounting
The separate financial statements of the company are presented as required by the C ompanies Act 2006. They
have been prepared under the historical cost convention and in accordance with applicable United Kingdom
Accounting Standards and law.
The principal accounting policies are summarised below. They have all been applied consistently throughout the
period from incorporation.
The company has taken advantage of the exemption of FRS8 from disclosing transactions with other members
of the Group.
No profit and loss account is presented for Cambridge Cognition Holdings plc as provided by section 408 of the
C ompanies Act 2006.
1.2 Investments
Fixed asset investments in subsidiaries and associates are shown at cost less provision for impairment.
For investments in subsidiaries acquired for consideration including the issue of shares qualifying for merger
relief, cost is measured by reference to the nominal value only of the shares issued. Any premium is ignored.
1.3 Going concern
The directors have, at the time of approving the financial statements, a reasonable expectation that the
C ompany has adequate resources to continue in operational existence for the foreseeable future. Thus they
continue to adopt the going concern basis of accounting in preparing the financial statements.
1.4 Share-based payments
The C ompany issues equity-settled share-based payments to its directors, as well as employees (including
directors) of its subsidiary, Cambridge C ognition Limited. In accordance with FRS 20, for all grants of share
options and awards the cost of these payments is measured at fair value at the date of grant. Where
employees are rewarded using share-based payments, the fair values of employees’ services are determined
indirectly by reference to the fair value of the instrument granted to the employee. The fair value is appraised
at the grant date and excludes the impact of non-market vesting conditions. That fair value is expensed on a
straight-line basis over the vesting period for the related options based upon the C ompany’s estimate of the
shares that will eventually vest, with a corresponding credit to “other reserves” for directors providing services
solely to the C ompany. The fair value for directors and employees of the C ompany’s subsidiary is added to the
cost of the investment in that subsidiary. No expense is recognised for awards that do not ultimately vest as a
result of the relevant employee ceasing to be employed by the Group. Fair value is measured using the Black-
Scholes Option Pricing Model.
Upon exercise of share options, the proceeds received net of any directly attributabl e transaction costs up to
the value of the shares issued are allocated to share capital with any excess being recorded as share premium.
1.5 Employee Benefit Trust
An Employee Benefit Trust (EBT) is maintained in order to facilitate the exercise of these share options. This is
aggregated into the parent company in accordance with UITF Abstract 38. The costs of purchasing own shares
held by the EBT are deducted from equity. Neither the purchase nor sale of own shares leads to a gain or loss
being recognised in the C ompany’s profit and loss account or statement of total recognised gains and losses.
When shares are subsequently transferred to employees for less than their purchase price the difference is a
realised loss recognised directly in reserves.
2. Share based payments
The company has granted options to directors over ordinary shares. The vesting period ranges between 0 and 3
years. If the options remain unexercised after a period of 10 years from the date of the grant, the options
expire. Options are forfeited if the employee leaves the company before the options vest. The share options
issued by C ambridge C ognition Limited were replaced by options over shares in Cambridge C ognition Holdings
plc.
41
Cambridge Cognition Holdings plc
Notes to the parent company financial statements
2. Share based payments (cont.)
Movement in the number of share options outstanding and their related average weighted exercise prices are
as follows:
Granted
Forfeited
Outstanding at end of year
Exercisable at period end
2013
No
WAEP
pence
898,798
(346,794)
─────────
552,004
═════════
70
70
──────
70
══════
133,091
═════════
70
══════
The fair value of options are calculated using the Black Scholes Pricing Model. The weighted average fair value
of options granted during the period was 26 pence. The significant inputs into the model in respect of these
options were the exercise price shown below, volatility of 50%, dividend yield of nil, expected option life of
between 2 and 5 years and an annual risk free rate of 0.5%.
At 31 December 2013 552,004 options remain outstanding all of which were granted on 22nd April 2013 with an
exercise price of 70 pence.
Employees of the company’s subsidiary, C ambridge Cognition Limited have also been granted options over the
C ompany’s shares. These are dealt with at note 28 to the consolidated financial statements.
3. Fixed asset investments
Cost
At Incorporation
Additions
At 31 December 2013
Provisions for impairment
At Incorporation and At 31 December 2013
Net Book value
At 31 December 2013
Investment in
Subsidiaries
£'000
-
152
152
-
152
The following were subsidiary undertakings at the end of the year and have all been included in the
consolidated accounts.
Name
C ountry of
Operation
C ambridge Cognition Limited
England
Proportion of
Ownership and
Voting Power
Held
100%
C ambridge Cognition Trustees Limited
C ambridge Cognition LLC
England
USA
100%
100%
Nature of Business
Development and sale of
computerised neuropsychological
tests
Trustee company
Sales office
42
Cambridge Cognition Holdings plc
Notes to the parent company financial statements
4. Debtors
Amounts due from subsidiary undertakings
Other debtors
5. Creditors : amounts falling due within one year
Trade creditors
Social security and other taxes
Other creditors
6. Share capital
2013
£'000
3,786
16
3,802
2013
£'000
61
16
16
93
The details on the share capital of the C ompany are provided at note 24 to the Group’s accounts.
7. Reconciliation of Movement in Reserves and Shareholders Funds
On incorporation
Issue of shares
Share issue costs
Loan to Trustees of Employee
Benefit Trust
Provision for Share-based payment
Loss for the year
C alled up
Share
C apital
£’000
-
169
-
-
Share
premium
Own
Shares
£’000
-
6,922
(587)
-
£’000
-
-
-
(204)
Share-
based
Payment
£’000
-
-
-
-
Profit and
Loss
£’000
-
-
-
-
Total
£’000
-
7,091
(587)
(204)
-
-
-
-
-
-
166
-
-
(1,104)
166
(1,104)
At 31 December 2013
169
6,335
(204)
166
(1,104)
5,362
43
Cambridge Cognition Holdings plc
Notice of Annual General Meeting
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the Annual General Meeting (“Meeting”) of Cambridge Cognition Holdings plc
(“Company”) will be held at finnCap, 60 New Broad Street, London, EC2M 1JJ on 8 May 2014 at 10 a.m.
ORDINARY RESOLUTIONS
To consider and, if thought fit, to pass the following ordinary resolutions:
1.
2.
3.
4.
5.
6.
To receive and, if approved, to adopt the Directors’ and Auditor’s Reports and Statements of Accounts
for the financial year ended 31 December 2013 (the “Annual Report”) and to note that the Directors
do not recommend the payment of any dividend for the year ended on that date.
To re-appoint Grant Thornton LLP as auditors of the Company to hold office from the conclusion of the
Meeting to the conclusion of the next meeting at which the accounts are laid before the C ompany.
To authorise the Directors of the C ompany (together, the “Directors”, and each a “Director”) to
determine the remuneration of the auditors.
That Eric Dodd be and is hereby re -appointed as a Director in accordance with the articles of
association of the C ompany.
That Nick Walters be and is hereby re -appointed as a Director in accordance with the articles of
association of the C ompany.
That the Directors be and they are hereby generally and unconditionally authorised for the purposes of
section 551 of the C ompanies Act 2006 (the “2006 Act”) to exercise all the powers of the C ompany to
allot and to make offers or agreements to allot shares or grant rights to subscribe for or to convert
any securities into shares in the C ompany (together the “Relevant Securities”) up to an aggregate
nominal amount of sixty eight thousand and four pounds and sixteen pence provided that this
authority shall expire fifteen months from the date of this Resolution 6 or on the conclusion of the
C ompany’s Annual General Meeting to be held in 2015 if earlier (the “Period of Authority ”), save
that the C ompany may before the expiry of the Period of Authority make offers or agreements which
would or might require Relevant Securities to be allotted or granted after such expiry and the
Directors may allot Relevant Securities in pursuance of any such offer or agreement as if the authori ty
conferred by this Resolution 6 had not expired and that this authority shall be in substitution to all
previous authorities conferred upon the directors pursuant to section 551 of the 2006 Act and without
prejudice to the allotment of any Relevant Securities already made or to be made pursuant to such
authorities.
SPECIAL RESOLUTION
To consider and, if thought fit, pass Resolution 7 which will be proposed as a special resolution:
7.
That, subject to and conditional upon the passing of Resolution 6 above a nd pursuant to the authority
conferred by Resolution 6 above, the Directors be and are hereby generally empowered in accordance
with section 571 of the 2006 Act to allot equity securities (as defined by section 560(1) of the 2006
Act) pursuant to the authority conferred by Resolution 6 as if section 561(1) of the 2006 Act did not
apply to any such allotment, provided that this power shall be limited to:
(a)
the allotment of equity securities up to an aggregate nominal amount of four hundred and
sixty four pounds and sixteen pence in connection with the potential exercise of options
granted to non-employees;
44
Cambridge Cognition Holdings plc
Notice of Annual General Meeting
(b)
the allotment of equity securities up to an aggregate nominal amount of fifty thousand, six
hundred and fifty five pounds sterling provided that this author ity may only be used in
connection with a rights issue or other pro rata offer in favour of holders of ordinary shares
where the equity securities respectively attributable to the interests of the ordinary
shareholders at such record dates as the directors may determine are proportionate (as
nearly as they may be) to the respective numbers of equity securities held or deemed to be
held by them or otherwise allotted in accordance with rights attaching to such equity
securities, subject to such exclusions or other arrangements as the Directors may consider
necessary or expedient in relation to equity shares, fractional entitlements, record dates,
legal difficulties in or under the laws of any territory or the requirements of a regulatory body
or by virtue of any other matter whatsoever; and
(c)
in any other case in addition to the authorities set out above, to exercise all the powers of the
C ompany to allot equity securities up to an aggregate nominal amount of sixteen thousand,
eight hundred and eighty five pounds sterling,
and shall expire fifteen months from the date of this Resolution 7 or if earlier on the conclusion of the
Annual General Meeting of the C ompany to be held in 2015 except that the C ompany may, before
such expiry make an offer or agreement which would or might require Relevant Securities as the case
may be to be allotted after such expiry and the Directors may allot Relevant Securities in pursuance of
such offer or agreement as if the power conferred by this Resolution 7 had not expired.
C ambridge Cognition Holdings plc
Tunbridge Court
Tunbridge Lane
Bottisham
C ambridge
C B25 9TU
By order of the board
NJC Walters
C ompany secretary
10 April 2014
45
Cambridge Cognition Holdings plc
Notice of Annual General Meeting
EXPLANATION OF RESOLUTIONS
The following notes give an explanation of the proposed resolutions.
Resolution 1 – Financial Statements and Directors’ Report
The C ompany is required to present the accounts for the year ended 31 December 2013 and the reports of the
directors and auditors to the Meeting for approval. These are contained in the Annual Report. Shareholde rs will
have the opportunity to put questions on the Annual Report to the directors at the Meeting.
Resolutions 2 and 3 – Auditors’ Re-appointment and Remuneration
Shareholders will be asked to confirm the re-appointment of Grant Thornton LLP as auditors of the Company to
hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual General
Meeting at which the C ompany’s accounts are laid, and to grant authority to the directors to determine their
remuneration.
Resolutions 4 and 5 – Election of Eric Dodd and Nick Walters as Directors
In accordance with the C ompany’s Articles of Association (the “Articles”), being directors appointed since
Admission, Eric Dodd and Nick Walters will be standing down and offering themselves for reappointment by the
shareholders as Directors of the C ompany.
Brief biographies of Eric and Nick can be found at: http://www.cambridgecognition.com/investors/board-of-
directors
Resolution 6 – Authority to Allot Ordinary Shares
The shareholders are asked to approve the resolution allowing the directors to allot ordinary shares. This is
similar to the authority put in place at the time of Admission which the new authority replaces. The resolution
would give the directors the authority to allot ordinary shares in the C ompany and to grant rights to subscribe
for or convert any security into ordinary shares in the C ompany up to an aggregate maximum nominal amount
of £68,004.16 (representing approximately 40 per cent of the total issued share capital of the Company as at 9
April 2014, being the latest practicable date prior to publication of this document and which is the maximum
amount of authority which the directors can seek without exceeding the Company’s authorised share capital).
The authority granted by this resolution will expire at the conclusion of the next Annual General Meeting of the
C ompany. The C ompany is proposing this resolution to give the Board of Direc tors flexibility to seek
subscriptions and to issue shares.
Resolution 7 – Disapplication of Pre-emption Rights
The shareholders are asked to approve the resolution which gives the directors the power to allot equity
securities for cash, without first having to offer such securities to existing shareholders in proportion to their
existing shareholdings. This is similar to the authority put in place at the time of Admission which the new
authority replaces. The authority would be limited to allotments or sales in connection with (a) the potential
exercise of options held by non-employees up to an aggregate maximum nominal amount of £464.16, (b) a
rights issue, open offer or other pre-emptive offer up to an aggregate maximum nominal amount of £50,655
(representing approximately 30 per cent of the entire issued share capital of the C ompany as at 9 April 2014,
being the latest practicable date prior to publication of this document) or (c) a general disapplication up to an
aggregate maximum nominal amount of £16,885 (representing approximately 10 per cent of the entire issued
share capital of the C ompany as at 9 April 2014, being the latest practicable date prior to publication of this
document). The authority granted by this resolution will expire upon the expiry of Resolution 6, being at the
conclusion of the next Annual General Meeting of the C ompany.
46
Cambridge Cognition Holdings plc
Notice of Annual General Meeting
NOTES
(1)
(2)
(3)
(4)
C REST members who wish to appoint a proxy or proxies by using the C REST electronic appointment
service may do so for the meeting and any adjournments of it by using the procedures described in
the C REST Manual. C REST Personal Members or other C REST sponsored members, and those C REST
members who have appointed voting service providers, should refer to their sponsors or voting service
providers, who will be able to take the appropriate action on their behalf.
For a proxy appointment or instruction made using the C REST service to be valid, the appropriate
C REST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with
Euroclear UK’s specifications and must contain the information required for those instructions as
described in the C REST Manual. The message, regardless of whether it relates to the appointment of a
proxy or to an amendment to the instruction given to the previously appo inted proxy, must, to be
valid, be transmitted so as to be received by the C ompany’s registrar, C apita Asset Services, The
Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU (ID RA10) by the latest time for receipt of
proxy appointments specified in the notice of meeting. For this purpose, the time of receipt will be
taken to be the time (as determined by the timestamp applied to the message by the C REST
Applications Host) from which the Company’s registrar is able to retrieve the message by enquiry to
C REST in the manner prescribed by C REST.
C REST members and, where applicable, their CREST sponsors or voting service providers should note
that Euroclear UK does not make available special procedures in C REST for any particular messages.
Normal system timings and limitations will, therefore, apply in relation to the input of C REST Proxy
Instructions. It is the responsibility of the CREST member concerned to take (or, if the C REST member
is a C REST Personal Member or sponsored member or has appointed voting s ervice providers, to
procure that its C REST sponsors or voting service providers take) such action as shall be necessary to
ensure that a message is transmitted by means of the CREST system by any particular time. In this
connection, CREST members and, where applicable, their CREST sponsors or voting service providers
are referred, in particular, to those sections of the C REST Manual concerning practical limitations of
the C REST system and timings.
The C ompany may treat as invalid a C REST Proxy Instruction in the circumstances set out in
Regulation 35(5) of the Uncertificated Securities Regulations 2011.
Any member entitled to attend, speak and vote at the meeting may appoint one or more proxies to
attend, speak and vote on his/her behalf. A proxy need not be a member of the C ompany but must
attend the Meeting. A member may appoint more than one proxy in relation to the Meeting provided
that each proxy is appointed to exercise the rights attached to a different share or shares held by that
member. To appoint more than one proxy you should contact the C ompany’s registrar, C apita Asset
Services, at the address below. To be valid, the form of proxy and the power of attorney or other
authority (if any) under which it is signed or a certified copy of such power o r authority must be
lodged at the offices of the C ompany’s registrar, C apita Asset Services, The Registry, 34 Beckenham
Road, Beckenham, Kent BR3 4TU by hand, or sent by post, so as to be received not less than 48 hours
before the time fixed for the holding of the Meeting or any adjournment thereof (as the case may be).
A pre-paid envelope has been provided for the return of your completed proxy card.
To appoint as your proxy a person other than the Chairman of the meeting, insert their full name on
the dotted line. If you sign and return this proxy form with no name inserted on the dotted line, the
C hairman of the meeting will be deemed to be your proxy. Where you appoint as your proxy someone
other than the C hairman, you are responsible for ensuring that they attend the meeting and are aware
of your voting instructions.
In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy,
will be accepted to the exclusion of the votes of any other joint holders. For these p urposes, seniority
shall be determined by the order in which the names stand in the C ompany’s relevant register of
47
Cambridge Cognition Holdings plc
Notice of Annual General Meeting
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
members for certificated or uncertificated shares of the C ompany (as the case may be) (the
“Register”) in respect of the joint holding.
In the case of a corporation, the form of proxy must be executed under its common seal or signed on
its behalf by a duly authorised attorney or duly authorised officer of the corporation. A corporation
which is a member can appoint one or more corporate represe ntatives who may exercise on its behalf
all of its powers as a member provided that they do not do so in relation to the same shares.
The completion and return of a form of proxy will not preclude a member from attending in person at
the meeting and voting should he/she wish to do so, but if a member appoints a proxy and attends
the meeting in person, the proxy appointment will automatically be terminated.
The C ompany, pursuant to Regulation 41 of the Uncertifica ted Securities Regulations 2001 has
specified that only those members entered on the Register at 6 p.m. on 6 May 2014 (the “Specified
Time”) shall be entitled to attend, speak and vote at the meeting in respect of the number of ordinary
shares in the capital of the Company held in their name at that time. Changes to the Register after the
Specified Time shall be disregarded in determining the rights of any person to attend and vote at the
meeting. Should the meeting be adjourned, for the purpose of determining the entitlement of
members to attend and vote (and for the purpose of determining the number of votes they may cast)
at the adjourned meeting, members must be entered on the Register at the time which is 48 hours
before the time fixed for the adjourned meeting or, if the C ompany gives notice of the adjourned
meeting, at the time specified in the notice.
Please indicate with an “X” in the space provided how you wish your votes to be cast in respect of the
Resolutions to be proposed. If you want your proxy to vote in a certain way on the Resolutions
specified, please place an “X” in the appropriate box. If you fail to select any of the given options your
proxy can vote as he/she chooses or can decide not to vote at all. The proxy can also do this on any
other Resolution that is put to the meeting. The “Vote Withheld” option is to enable you to abstain on
any particular Resolution. However, it should be noted that a “Vote Withheld” is not a vote in law and
will not be counted in the calculation of the proportion of the votes “For” and “Against” a Resol ution.
The appointment under this form of proxy may be terminated by the member prior to the
commencement of the meeting (or any adjournment of the meeting). To be valid, the notice of
termination of the authority of the person appointed to act as proxy must be deposited at the offices
of the C ompany’s registrar, C apita Asset Services, The Registry, 34 Beckenham Road, Beckenham,
Kent, at least 24 hours before the time fixed for the holding of the Meeting or any adjournment
thereof (as the case may be).
You may appoint more than one proxy if each proxy is appointed to exercise the rights attached to
different shares held by you. To appoint more than one proxy, additional forms may be obtained from
the C ompany’s registrar, C apita Asset Services, at the address given above or you may copy this
form. If necessary please indicate the number of ordinary shares in relation to which your proxy is
authorised to act. If you leave the number of ordinary shares blank, you will be deemed to have
appointed your proxy in relation to all ordinary shares held by you. Please indicate by ticking the box
provided, if the proxy appointment is one of multiple appointments being made by you. All forms must
be signed and should be returned together.
A copy of this notice and the Annual Report will be included on the C ompany’s website
(www.cambridgecognition.com).
As at 9 April 2014 (being the last business day prior to the publication of this Notice) the C ompany’s
issued share capital consists of 16,885,105 ordinary shares, carrying one vote each. Therefore, the
total voting rights in the C ompany as at 9 April 2014 are 16,885,105.
48
Cambridge Cognition Holdings plc
Notice of Annual General Meeting
(13)
Except as provided above, members who wish to communicate with the C ompany in relation to the
Meeting should do so using the following means: (1) by writing to the C ompany S ecretary at
C ambridge Cognition Holdings Plc, Tunbridge C ourt, Tunbridge Lane, Bottisham, Cambridge CB25 9TU;
or (2) by writing to the C ompany’s registrar, C apita Asset Services, The Regis try, 34 Beckenham
Road, Beckenham, Kent BR3 4TU. No other methods of communication will be accepted. In particular
you may not use any electronic address provided either in this Notice of Meeting in any related
documents (including the proxy form).
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