Registered No: 8211361
Cambridge Cognition Holdings plc
Annual Report and Accounts
31 December 2015
Cambridge Cognition Holdings plc
Contents
CORPORATE DIRECTORY
STRATEGIC REPORT
REPORT OF THE DIRECTORS
CORPORATE GOVERNANCE REPORT
REMUNERATION REPORT
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
CAMBRIDGE COGNITION HOLDINGS PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
PARENT COMPANY STATEMENT OF FINANCIAL POSITION
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
PAGE
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3-8
9-10
11-12
13-14
15
16
17
18
19
20-39
40
41
42-44
Cambridge Cognition Holdings plc
Corporate Directory
Directors:
Michael Lewis (Non-Executive Chairman)
Steven Powell (Chief Executive Officer)
Nicholas Walters (Chief Financial Officer)
Andrew Blackwell (Non-Executive)
Eric Dodd (Non-Executive)
Nicholas Kerton (Non-Executive)
Secretary:
Nicholas Walters
Registered Office:
Tunbridge Court
Tunbridge Lane
Bottisham
Cambridge
CB25 9TU
Company number:
8211361
Auditor:
Legal Advisers:
Bankers
Registrars
Nominated Advisor
and Joint Broker
Joint Broker
Grant Thornton UK LLP
Chartered Accountants
Statutory Auditor
101 Cambridge Science Park
Milton Road
Cambridge
CB4 0FY
Baker Botts (UK) LLP
41 Lothbury
London
EC2R 7HF
Barclays
28 Chesterton Road
Cambridge
CB4 3AZ
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
finnCap
60 New Broad Street
London
EC2M 1JJ
Hybridan LLP
20 Ironmonger Lane
London
EC2V 8EP
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Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2015
CHIEF EXECUTIVE’S REVIEW
Key Highlights:
•
•
•
•
Revenue reduction reflects transition of business to Connect cloud-based platform
Continued growth and development in underlying, core businesses of pharmaceutical clinical trials and
academic research
Expansion of US commercial team accommodated without significant increase in operating costs
Product and technology development resulted in online testing and wearable testing capabilities and
extension of intellectual property estate
Overview:
2015 was a year of significant change following an enforced change in the management team bringing a
renewed focus on the core product businesses and an acceleration in development of healthcare technology
projects. In both the academic and pharmaceutical clinical trials businesses we have stepped up our investment
in innovative marketing programmes and expanded our sales team; particularly in the USA where we have now
established a permanent office. In parallel we have filed new patents to underpin innovative technologies for
healthcare markets following a period of accelerated development and we have forged a number of key
relationships to translate these technologies into revenue generating opportunities. We anticipate that this
partnering approach will deliver faster growth rates than could be achieved by the group alone given our
limited resources.
The migration of our software products to the cloud based Connect platform has had a significant impact on our
results for 2015. This development increases the accessibility of our products and is important to the long term
future of the business. However, this migration resulted in a £0.75m decline in hardware sales in 2015 as
customers were no longer bound to purchase a touch screen computer from the Company as they are now able
to download the software onto tablets sourced themselves. This reduction in hardware sales has also led to an
improvement in gross margins.
Notwithstanding lower hardware sales, for the second year running both the Pharmaceutical Clinical Trials and
Academic Research businesses were both profitable and cash flow positive. The profit made from these
businesses has been fully invested in the Healthcare Technology business.
Group financial results
The trading performance was broadly similar to the prior year, with the
exception of the decline in hardware sales due to the move to Connect.
Revenues fell by £0.76m in the year which is equivalent to the decline
in hardware revenue. Despite an increase in the number of contract
wins year-on-year, there was only marginal growth in software
revenues. This is because 2014 recognised revenue from a single
substantial contract win which skews the overall growth trajectory.
Group
2015 2014
£’000 £’000
Revenue
5,042 5,802
Hardware
Software
Other
329 1,080
4,592 4,583
121 139
Gross margins rose to 88% from the 2014 level of 85%. This was largely driven by the reduction in hardware
sales over the year (which have a lower margin than software and services) and is another reason why this
reduction in hardware sales will benefit the business in future years.
Despite our continued investment in Healthcare Technology and in a US facility, including an overall headcount
increase of 12%, administrative expenses of £5.62m were held to within 1% of the 2014 level. An increase of
£0.52m in pay costs was offset by strong cost control in other overheads. Grant income increased to £0.51m
(2014: £0.34m), reflecting increased collaborative work.
These factors combined to produce an operating loss before exceptional item of £0.66m (2014: £0.30m). In
addition, the group investigated the opportunity to acquire another business during the last quarter of 2015.
This transaction failed to complete and the related cost of £0.21m has been disclosed as an exceptional item in
the financial statements.
The taxation credit on research and development projects has been reduced in the year to £0.09m (2014:
£0.12m) reflecting the maturity of the development cycle of our underlying products. Consequently, the loss
per share has increased to 4.6 pence per share, or 3.4 pence per share before exceptional items (2014: 1.1
pence per share).
The reduction in cash balances to £0.76m at the year end was in line with the operating result. Excluding the
impact of the exceptional item, working capital generated £0.12m of cash in the year. Investment in fixed
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Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2015
assets of £0.13m included both the establishment of the office in the US and investment in our network
infrastructure.
Pharmaceutical Clinical Trials
Since 2002 Cambridge Cognition has supplied the world’s leading pharmaceutical companies with CANTAB™
cognitive assessment software, expert scientific consultancy for trial design and operational support services.
The Company now provides a range of cloud-based products to enrich neurological pharmaceutical
development from initial patient recruitment through phases I-IV clinical trials and post-marketing studies,
thereby accelerating the development of safe and effective treatments for neurological disorders.
The reduction in Pharmaceutical Clinical Trials revenue comprises
entirely the reduction in hardware sales arising from the migration to
CANTAB Connect. Hardware sales were down £0.54m on last year.
Pharma
2015 2014
£’000 £’000
The operating profit for the business unit was £0.20m (2014: £0.46m)
reflecting a combination of the reduction in hardware sales and an
increase in headcount following the expansion of the US-based clinical
sales team during the reporting period.
Revenue
3,395 3,926
Segment Profit
197 458
Having opened the US office toward the end of Q1 2015, the benefit of this facility on the Pharma results is
expected to impact fully in 2016.
The product offer has changed significantly over the year as tests have been migrated to the new Cloud based
‘Connect’ product. The Company also restructured its support services in H2 2015 to be able to offer additional
revenue generating services in clinical trial design and data analytics which, together, cement the Company’s
position as a leader in the neuroscience field.
Academic Research
Cambridge Cognition products for academic and biotechnology research have been used in 800 universities and
research institutions worldwide leading to 1,600+ peer-reviewed publications and over 100,000 citations;
making CANTAB™ the world’s most highly validated cognitive assessment software.
The academic and biotechnology markets are key to the overall Cambridge Cognition business as they
represent an opportunity for the group’s products to be validated in a variety of clinical applications by key
opinion leaders. Throughout the reporting period we have continued to secure business globally, including
increased sales in Australia and the Far East, and we anticipate increasing software revenues in the coming
year in all geographic territories. In particular we will target smaller and pilot academic projects and early stage
biotechnology academic spin-off companies to strengthen the future sales pipeline.
The major investment in the US facility during the year is expected to generate a return next year as our
greater understanding of the US academic market begins to generate more business.
Hardware revenue in the Academic Research business was also impacted
by the move to CANTAB Connect. Total revenue fell by 7.9% to £1.54m
(2014: £1.68m) with a £0.18m decline in hardware revenue being
slightly offset by modest growth in software and service sales. The
decline in revenue and the increased investment in the US facility
impacted on the operating profit for the business unit, which was £0.30m
(2014: £0.84m).
Academic
2015 2014
£’000 £’000
Revenue
1,544 1,675
Segment Profit
303 841
Healthcare Technology
To date, the principal usage of computerised cognitive assessment has been in the controlled environment of
academic and industrial clinical research. These applications, whether in the laboratory or in the clinic, rely on
infrequent snapshots to characterise profiles of impairment, recovery and decline and require a subject to
travel to the investigating centre. Such sparse sampling of behaviour will often miss clinically significant
changes, which can impact on quality of life and limit the ability to quantify the effects of neurological and
medical conditions and their treatments.
The need for more effective measures of brain health has never been greater with the World Health
Organization reporting that mental ill health is now the leading cause of disability worldwide and the global cost
of mental illness is predicted to increase to over $6 trillion by 2030. However, the cost of transporting patients
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Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2015
to clinical centres for treatment and monitoring is a significant burden on healthcare systems - in the USA the
cost of transporting patients to their point of care is in excess of $5 billion per annum. With the evolution of
effective data transmission, storage and analysis brought about by the digital revolution it is now
technologically feasible for detailed point-of-care assessment and diagnosis
Cambridge Cognition is committed to bringing high-frequency measurement to patients and to provide them
with tools to monitor daily variations in their cognitive health and, importantly, link these to data about their
lifestyle, medication and physical health.
The Company began its digital healthcare innovation with the launch of CANTAB Mobile, a Class II medical
device, now used routinely in the UK NHS to identify patients exhibiting the earliest signs of Alzheimer's
disease and the product has, to date, measured the cognitive performance of 22,000 patients. Given the
clinical acceptance of CANTAB Mobile, in December 2015 we gained a CE mark extension for and launched a
related product CANTAB Insight, which allows in-depth evaluation of at risk patients to detect underlying signs
of common mental health problems such as depression, schizophrenia and dementia at a very early stage.
Whilst Mobile targeted the elderly for early signs of Alzheimer’s disease, Insight not only targets a wider range
of mental health problems but can be used from early adulthood.
Equipped with these two products we established our first product distribution agreements for the marketing of
Mobile and Insight for clinical applications and these distributors are now preparing to launch these products
internationally. Outside of the clinical sector, the Company formed a joint venture with Shandwell Limited to
explore the opportunities for CANTAB Mobile and Insight in the corporate healthcare market. CANTAB
Corporate Health Limited secured its first sales in H2 2015 and has built a notable pipeline of commercial
interest in the product in the expectation of reporting significant income within its first year of trading.
In parallel with the extension of Mobile and Insight usage, in mid-2015 we initiated an accelerated development
programme to translate cognitive assessment tests to near-patient applications. As a result we were rapidly
able to file two patent applications in the field of monitoring patient cognition with wearable technology to take
advantage of the evolving smart watch and smart phone technologies. Both patents provide an opportunity for
consumers to receive high-quality, continuous monitoring of bio-behavioural measures which, if deviating from
a baseline, would trigger cognitive testing through a mobile device without the need for visits to healthcare
providers or other professionals.
The speed of development has further increased post the reporting period when we announced a technology
collaboration with Ctrl Group for the design and development of a wearable device for near-user cognitive
testing. By collecting data using a wearable device the new technology being developed will provide healthcare
practitioners with a richer and more natural profile of mental health to improve the understanding, diagnosis
and treatment of cognitive disorders.
This wearable platform, together with a new online testing format for trial recruitment will provide our
pharmaceutical customers with tools to enhance the efficiency of clinical trial recruitment and monitoring as
well as, in the medium-term, provide the means to monitor the health of patients being treated with a
particular therapy. This activity will generate revenues in the near term and also provide important validating
data for these products. The validating data can then be used to support the marketing of these products direct
to patient groups via channel partners in line with our established healthcare strategy. For pharmaceutical
companies, understanding the real world impact of interventions will support clinical trials of drug development
candidates and marketed treatments for chronic diseases.
Outlook
The achievements of 2015, in particular the new joint venture arrangements and the expansion of the group’s
intellectual property estate, are a solid platform for future growth. 2016 has started well with a strong order
book and improved sales pipeline. We also start the year with an enlarged commercial team in place unlike the
prior year. As we look ahead, we have a renewed focus on accelerating revenue growth in both the academic
research and pharmaceutical clinical trials businesses. This will be achieved by investing further in commercial
infrastructure and deploying online testing for clinical trials recruitment and wearable technology for 24 hour
patient assessment in conjunction with pharmaceutical partners.
In parallel we will continue to develop the healthcare business through partnerships as exemplified by the
appointment of distributors for CANTAB Mobile and the formation of CANTAB Corporate Health with Shandwell
Limited for the occupational health market.
To support our plans, we completed an oversubscribed placing of 3,386,111 Ordinary shares of 1 pence each
on 25th April 2016 at a price of 37 pence per share to raise gross proceeds of £1.25 million.
Operationally, in 2015 we reported that both Andy Blackwell and Nick Kerton were moving to Non-executive
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Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2015
roles. Nick’s move was a result of him having to take an extended leave of absence from the Company due to a
serious medical condition. I am delighted to report that Nick responded well to his treatment and is an active
non-executive member of the Board. These changes however resulted in us building a restructured
management team which is now fully operational and well placed to drive the commercial growth of the
Company in 2016 and beyond. We would however like to acknowledge the key roles played by both Andy and
Nick in the development of the Company.
Finally we would like to acknowledge and thank our colleagues, partners and shareholders for their support
over the past year as we transitioned the Company into what will be a new phase of its development and
growth.
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Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2015
PRINCIPAL RISKS AND UNCERTAINTIES
The group is exposed to a number of risks and uncertainties in undertaking 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 and investment in sales infrastructure, without which the group will continue to make
losses and consume cash. Until the commercialisation of new products and markets is successful the group will
carefully monitor cost and cash flow with reference to ensuring the group is able to continue as a going
concern. In particular the rate of investment in the Healthcare Technology business will be limited to the
extent of any surplus cash reserves of the group and the positive cash flow derived from the Pharmaceutical
Clinical Trials and Academic Research businesses.
The directors have prepared a strategic plan, including financial forecasts and cash flows, for the period to
December 2018. The monitoring of cash and future projected cash flows, as well as the sales pipeline is
therefore included in the regular board review.
Product and market development
Future success of the group is principally focussed on growth of near term revenues through the Pharma and
Academic business units and the successful commercialisation of the Healthcare Technology business. The
ability to transition current products to new markets and the development of new products for both existing
and new markets will determine how successful the group will be in growing the division. At the present time
there can be no certainty that new products will be adopted or new markets successfully opened and this could
limit future growth prospects.
Technology and regulation
The success of the group and its ability to compete effectively with other companies partly depends upon its
ability to protect its intellectual property and exploit its technology. During the year significant development
work has continued on the product range across all three divisions to ensure that the group’s products remain
competitive.at the forefront of the sector. Two patent applications were filed in the year as the group strives to
enhance its intellectual property.
Growth management
The group's ability to manage its growth effectively requires it to continue to improve its operations, financial
and management controls, reporting systems and procedures and to train, motivate and manage its
employees. During the year, significant recruitment in business development and other functions has occurred
and this needs to continue in 2016. The group’s future success depends 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 2015 the two biggest customers accounted for 17% and 13% (2014: 14% and 13%)
of the total revenue of the business although no other customer accounted for more than 10%. Measures are
being taken to continue to diversify the customer base by growing revenues in other areas as the loss of a key
customer could 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 compensate would result in a revenue shortfall.
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Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2015
KEY PERFORMANCE INDICATORS
The directors have monitored the performance of the group with particular reference to the key performance
indicators being revenue and clinical order pipeline, operating margin and cash flow. An overview of the
financial results for the year is provided earlier in this report.
KPIs at a glance:
KPI
2015
result
2014
result
Revenue
£5.04m
£5.80m
Movement
Summary management commentary
£0.76m, 13%
reduction
The reduction is due almost entirely to the
reduction in hardware revenue. The core software
and services business has grown year on year.
Clinical
pipeline
order
£2.52m
£2.46m
Increase
£0.06m
of
Excluding hardware the pipeline has grown
£0.18m or 8%.
Operating
before
margin
exceptional item
(13%)
(5%)
8 percentage
point decline
The decline represents a drop in operating profit
of £0.36m, as well as a decline in revenue. This is
driven by
revenues, as
administrative costs are at the same level as
2014.
reduced hardware
Cash flow
£0.76m
outflow
£0.74m
outflow
Increase
outflow
£0.02m
in
of
Cash outflow in the year is broadly in line with
trading profit.
The group monitors progress on a regular basis and will add to the key performance indicators as
circumstances dictate. The directors value greatly the progress and innovation demonstrated by the group, but
this cannot be readily measured in the style of a KPI. The directors are pleased with the innovation successes
during 2015, and the plans for continued innovation going forward.
Approved by the Board of Directors and signed on behalf of the Board.
Steven Powell
Chief Executive Officer
10th May 2016.
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Cambridge Cognition Holdings plc
Report of the Directors for the year ended 31 December 2015
The Directors present their report on the affairs of the Group and Company together with the financial
statements for the year to 31 December 2015. The Group financial statements are prepared under
International Financial Reporting Standards (EU-adopted IFRS).
PRINCIPAL ACTIVITIES
Cambridge 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.
GOING CONCERN AND FINANCIAL RISK MANAGEMENT
Having reviewed the financial forecasts and business plan of the Company and its subsidiaries and taking into
account the level of cash resources available to them, noting in particular the successful placing of 3,386,111
Ordinary shares of 1 pence each on 25th April 2016 at a price of 37 pence per share to raise gross proceeds of
£1.25 million, the directors have, at the time of approving the financial statements, a reasonable expectation
that the Company and the Group have adequate resources to continue in 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 27.
SHARE ISSUES
The issued share capital of the Company is set out at Note 21 to the accounts. Following the exercise of
options, 112,568 Ordinary shares were issued during the year at a price of £0.70 each.
DIRECTORS
The Directors who held office at 31 December 2015 and their interest in the share capital of the company were:
Name
Michael Lewis (Chairman)
Steven Powell
Nicholas Walters
Andrew Blackwell
Eric Dodd
Nicholas Kerton
Ordinary Shares of 1p each
2014
2015
27,969
27,969
-
119,369
131,095
-
-
119,369
281,095
-
172,900
172,900
On 1 July 2015, Andrew Blackwell stepped down as Chief Scientific Officer and an Executive Director, but
remains on the Board as a Non-Executive Director.
On 6 July 2015, Steven Powell was appointed as Chief Operating Officer and joined the Board. On 15 February
2016, Steven Powell was appointed Chief Executive Officer. On the same date, Nicholas Kerton left his post as
Chief Executive Officer but remains on the Board as a Non-Executive Director.
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 Strategic Report, the Report of the Directors and the financial
statements in accordance with applicable law and regulations.
Company 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 Accounting Standards and applicable
laws including Financial Reporting Standard 101 ‘Reduced Disclosure Framework’. Under company law the
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Cambridge Cognition Holdings plc
Report of the Directors for the year ended 31 December 2015
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 Company and Group for that year. In preparing these
financial statements, the Directors are required to:
l
l
l
l
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
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 Company’s financial statements
prepare the financial statements on a going concern basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Company's transactions and disclose with reasonable accuracy at any time the financial position of the
Company and to enable them to ensure that the financial statements comply with the Companies 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:
l
l
so far as each Director is aware, there is no relevant audit information of which the Company’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 Company'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 Company purchased Directors' and Officers' liabilities insurance in respect of itself and its
directors.
SUBSTANTIAL SHAREHOLDERS
The Company’s major shareholders at 31 December 2015 were:
Name
Euroblue Investments Limited
Octopus Investments Nominees Ltd
Michael Buxton
Hargreave Hale
WH Ireland
LGT Capital Management
Axa Investment Managers UK Ltd
Artemis Fund Managers Ltd
AUDITOR
No. of
Ordinary Shares
3,540,714
3,035,781
2,889,589
1,014,120
851,454
755,000
714,285
714,285
%
20.8%
17.8%
17.0%
6.0%
5.0%
4.4%
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
Company Secretary
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Cambridge Cognition Holdings plc
Corporate Governance Report for the year ended 31 December
2015
The Board of Cambridge Cognition 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 Company
whose securities are traded on AIM, adopts policies and principles of good corporate governance.
The current members of the Board of Directors are:
Michael Lewis – Non-Executive Chairman – Mr Lewis has 25 years global Health and Pharma industry
experience. He is currently Executive Chairman of iPlato an m-Health provider with 9M patient connections in
the UK, Chairman of Haem02, a biotechnology company developing artificial human haemoglobin, and
Chairman of Glyconics Ltd, developing diagnostics for COPD director of Mikale Ltd. Mr Lewis is also a lecturer,
speaker and invited Chair of innovation sessions at NHS Expo, Chairs the KTN Medtech group, and was past
Chair of the Assisted Living Innovation platform. He previously has held senior roles at Gambro (Brussels),
Boston Scientific (Paris), C.R. Bard (New Jersey), Sybron (Switzerland) and Becton Dickinson (UK).
Dr. Steven Powell – Chief Executive Officer – Dr Powell graduated in microbiology from the University of Wales
and was awarded a PhD from the University of Aberdeen. He has over 30 years operational and investment
experience in pharmaceutical and healthcare R&D and his operational experience includes appointments with
Beecham Pharmaceuticals (GSK), Whatman, Chiroscience, Celsis, Active Biotech, KS Biomedix and Plethora
Solutions. During this time he has held four CEO roles, two in public companies. In 2003, he joined Gilde
Healthcare, a pan-European life sciences investment fund and remains an adviser to the fund. To date, Dr
Powell has co-founded four companies of which two have been sold and has invested in multiple biotechnology
companies. In 2011, Dr Powell established a successful interim management practice focused on healthcare
and technology companies.
Nicholas Walters – Chief Financial Officer - A chartered accountant, Mr Walters has served as Finance Director,
Deputy Chairman and Chairman on a number of Boards. Mr Walters has over thirty years’ experience across a
wide range of industry sectors and a track record for addressing the fundamentals in these companies and
setting them up for sustainable growth. He has experience of start-ups in both the USA and the Far East as
CFO.
Dr. Andrew Blackwell – Non-Executive Director - Following an MA and a PhD in psychology from the University
of St Andrews, Dr Blackwell undertook postdoctoral
training
in cognitive neuropsychology and
psychopharmacology at the University of Cambridge, working closely with the main inventors of CANTAB,
Professors Trevor Robbins and Barbara Sahakian. Dr Blackwell has published numerous papers in quality
journals, including Science, American Journal of Psychiatry and Neuropsychopharmacology. He joined
Cambridge Cognition in 2006 and was appointed as a director and Chief Scientific Officer in 2007. Dr Blackwell
became a Non-Executive Director in July 2015.
Eric Dodd – Non-Executive Director – Mr Dodd brings significant experience in board-level positions to the
Company, including having been Chief Financial Officer of Antisoma plc, Morse plc and Stanmore Implants
Worldwide Holdings Limited, a rapidly growing medical devices company supported by venture capital
investors. Mr Dodd is presently Chief Financial Officer at KBC Advanced Technologies plc.
Dr. Nicholas Kerton – Non-Executive Director – Dr Kerton is an experienced director of public and private
companies in the healthcare industry. Having completed a Ph.D. in Organic Synthetic Chemistry at Nottingham
University, he progressed through the Wellcome Foundation, and then joined DuPont and Whatman Reeve
Angel plc in senior business development and sales roles before moving into microbiology as Managing Director
of Malthus Instruments, a subsidiary of Radiometer of Denmark. Dr Kerton was a member of the management
team who established Celsis PLC, one of the first biotechnology companies to float on the London Stock
Exchange, led the successful sale of Maybridge to Fisher Scientific International, founded Lab21 (a molecular
diagnostics service funded by Merlin Biosciences) during which time he acquired three companies, and
managed the Sirigen Group from initial venture capital funding in 2008 through to selling the business to
Becton Dickinson in August 2012.
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Cambridge Cognition Holdings plc
Corporate Governance Report for the year ended 31 December
2015
The Company 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 Company has established an Audit Committee, a Nomination Committee and a Remuneration Committee.
The Audit Committee is comprised of Eric Dodd (Chair), Michael Lewis, Nicholas Kerton and Andrew Blackwell.
The Nomination Committee is comprised of Andrew Blackwell (Chair), Michael Lewis, Eric Dodd and Nicholas
Kerton. The Remuneration Committee is comprised of Michael Lewis (Chair), Eric Dodd, Nicholas Kerton and
Andrew Blackwell.
The Audit Committee’s responsibilities include making recommendations to the Board on the appointment of
the Company’s auditors, approving the auditor’s fees, safeguarding the objectivity and independence of the
auditors, reviewing the findings of the audit and monitoring and reviewing effectiveness of the Company’s
internal audit function. The audit Committee 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 Committee’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. Annual performance evaluation is based on targets set at the outset of each
year and bonuses paid, as appropriate, in line with the agreed incentive plan.
12
Cambridge Cognition Holdings plc
Remuneration Report for the year ended 31 December 2015
The Company has established a Remuneration Committee. The members of the Remuneration Committee are:
Michael Lewis (Chair)
Eric Dodd
Nicholas Kerton
Andrew Blackwell
The Committee makes recommendations to the board. No director plays a part in any discussion about his own
remuneration.
Components of Executive Directors’ remuneration
Executive remuneration packages are prudently designed to attract, motivate and retain 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 Committee.
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 month’s notice given by either party.
Directors’ remuneration (audited)
The remuneration of the Directors is as follows:
Current Directors:
Remuneration as Executives:
Nicholas Kerton
Andrew Blackwell*
Nicholas Walters
Steven Powell**
Remuneration as Non-Executives:
Michael Lewis
Eric Dodd
Andrew Blackwell*
Former Directors:
Jane Worlock***
Total
Salary/Fee Benefits Bonus
Pension
£’000
£’000
£’000
£’000
2015
Total
£’000
2014
Total
£’000
153
49
48
10
44
30
15
-
349
-
1
-
-
-
-
-
-
1
-
-
-
-
-
-
-
-
-
-
5
-
-
-
-
-
-
5
153
55
48
10
44
30
15
-
355
192
111
56
-
40
30
-
16
445
* Resigned as Executive Director and appointed as a Non-Executive Director on 1 July 2015
** Appointed 6 July 2015
*** Resigned 8 May 2014
Payments were also made to third parties for the services of Nicholas Walters and Steven Powell. See note 28
to the consolidated financial statements.
13
Cambridge Cognition Holdings plc
Remuneration Report for the year ended 31 December 2015
Share Options:
Andrew Blackwell
Nicholas Kerton
Nicholas Walters
Steven Powell
Performance Criteria
Granted
Apr 2013
Apr 2013
Apr 2013
Sept 2014
Sept 2014
Sept 2014
Sept 2014
Sept 2014
Sept 2014
Sept 2014
July 2015
July 2015
Number of
Options
112,568
112,568
112,567
Performance
criteria
-
-
-
Exercise price
in pence
70 pence
70 pence
70 pence
Exercise period
To Apr 2023
To Apr 2023
Apr 2016 – Apr 2023
75,000
75,000
250,000
75,000
250,000
75,000
75,000
62,500
62,500
(1)
(2)
(3)
(4)
(5)
(3)
(5)
(6)
(7)
60 pence
60 pence
60 pence
60 pence
60 pence
60 pence
60 pence
To 30 Sep 2024
To 30 Sep 2024
To 30 Sep 2024
To 30 Sep 2024
To 30 Sep 2024
To 30 Sep 2024
To 30 Sep 2024
82.5 pence
82.5 pence
To 8 July 2025
To 8 July 2025
(1) Options vest once the average of the closing price of shares in the Company over two consecutive
dealing days, as derived from the London Stock Exchange Daily Official List, has equalled or exceeded
90 pence. This condition was fulfilled on 1 October 2015
(2) Options vest once the average of the closing price of shares in the Company over two consecutive
dealing days, as derived from the London Stock Exchange Daily Official List, has equalled or exceeded
115 pence. This condition must be met prior to 31 December 2016
(3) Options vest once the average of the closing price of shares in the Company over two consecutive
dealing days, as derived from the London Stock Exchange Daily Official List, has equalled or exceeded
120 pence. This condition must be met prior to 31 December 2016
(4) Options vest once the average of the closing price of shares in the Company over two consecutive
dealing days, as derived from the London Stock Exchange Daily Official List, has equalled or exceeded
150 pence. This condition must be met prior to 31 December 2016
(5) Options vest once the average of the closing price of shares in the Company over two consecutive
dealing days, as derived from the London Stock Exchange Daily Official List, has equalled or exceeded
200 pence. This condition must be met prior to 31 December 2016
(6) Options vest once the average of the closing price of shares in the Company over two consecutive
dealing days, as derived from the London Stock Exchange Daily Official List, has equalled or exceeded
120 pence. This condition must be met prior to 31 December 2017
(7) Options vest once the average of the closing price of shares in the Company over two consecutive
dealing days, as derived from the London Stock Exchange Daily Official List, has equalled or exceeded
200 pence. This condition must be met prior to 31 December 2017
14
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 period ended 31 December
2015 which comprise the consolidated statement of comprehensive income, the consolidated and parent company
statements of financial position, the consolidated and parent company statements of changes in equity, the
consolidated statement of cash flows, and the 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 Chapter 3 of Part 16 of the
Companies 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 9 and 10, 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 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 Council's website
at www.frc.org.uk/auditscopeukprivate.
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 2015 and of the group's loss for the period then ended;
•
•
•
the group financial statements have been properly prepared in accordance with IFRSs as adopted 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 Companies Act
2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and 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.
David Newstead
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Cambridge
12th May 2016
15
Cambridge Cognition Holdings plc
Consolidated Statement of Comprehensive Income
Revenue
Cost of sales
Gross profit
Administrative expenses
Other income
Operating (loss) before exceptional item
Exceptional item
Notes
Year to
31 December
2015
Year to
31 December
2014
5
7
8
9
£’000
5,042
(590)
4,452
(5,620)
509
£’000
5,802
(866)
4,936
(5,583)
343
(659)
(304)
(208)
-
Operating (loss) after exceptional item
(867)
(304)
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 and diluted earnings per share
Basic and diluted earnings per share excluding exceptional items
12
13
-
-
(867)
85
9
-
(295)
122
(782)
(173)
(4.6)
(3.4)
(1.1)
(1.1)
The above results relate to continuing operations.
Total comprehensive income equates to the loss for the period reported above.
16
Cambridge Cognition Holdings plc
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
Cash and cash equivalents
Total Current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Total liabilities
Equity
Share capital
Share premium account
Other reserve
Own shares
Retained earnings
Total equity
Notes
At 31 December
2015
At 31 December
2014
£'000
£’000
14
15
17
18
352
141
493
58
1,641
756
352
64
416
185
1,632
1,519
2,455
3,336
2,948
3,752
20
1,535
1,703
21
22
1,535
1,703
170
6,412
5,981
(51)
169
6,335
5,981
(174)
(11,099)
(10,262)
1,413
2,049
Total liabilities and equity
2,948
3,752
The financial statements on pages 16 to 39 were approved by the Board of Directors and authorised for issue
on 10th May 2016 and were signed on its behalf by:
Steven Powell
Chief Executive Officer
17
Cambridge Cognition Holdings plc
Consolidated statement of changes in equity
Balance at 1 January
2014
Total comprehensive income
for the year
Issue of new share capital
Transfer on allocation of
shares held in trust
Credit to equity for equity-
settled share-based
payments
Transactions with owners
Balance at 31 December
2014
Balance at 1 January
2015
Total comprehensive income
for the period
Issue of new share capital
Transfer on allocation of
shares held in trust
Credit to equity for equity-
settled share-based
payments
Transactions with owners
Balance at 31 December
2015
-
-
-
-
-
-
-
-
92
92
78
-
Share
capital
£'000
Share
premium
Other
reserve
Own
shares
Retained
earnings
Total
£'000
£'000
£'000
£'000
£'000
169
6,335
5,981
(204)
(10,151)
2,130
(173)
(173)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30
(30)
-
30
92
62
169
6,335
5,981
(174)
(10,262)
2,049
169
6,335
5,981
(174)
(10,262)
2,049
-
1
-
-
1
-
77
-
-
77
-
-
-
-
-
(782)
(782)
123
(123)
-
68
68
123
(55)
146
170
6,412
5,981
(51)
(11,099)
1,413
18
Cambridge Cognition Holdings plc
Consolidated statement of cash flows
Net cash flows from operating activities
23
(708)
(693)
Notes
Year to
31 December
2015
Year to
31 December
2014
£'000
£’000
Investing activities
Purchase of property, plant and equipment
Net cash flow used in investing activities
Financing activities
Proceeds from the issue of share capital net
Net cash flows from financing activities
(133)
(133)
78
78
(49)
(49)
-
-
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at start of period
(763)
1,519
(742)
2,261
Cash and cash equivalents at end of period
23
756
1,519
19
Cambridge Cognition Holdings plc
Notes to the financial statements
1. General information
Cambridge 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 Company is a public limited company which is listed on the Alternative Investment Market (‘AIM’) of the
London Stock Exchange (COG) and is incorporated and domiciled in the UK. The address of its registered office
is Tunbridge Court, Tunbridge Lane, Bottisham, Cambridge, CB25 9TU.
In the period since Cambridge Cognition Limited’s formation in 2002, it has created a well-established business
through sales of its proprietary CANTAB® (Cambridge Neuropsychological Test Automated Battery) software
into academic and pharmaceutical research locations around the world. More recently, focus has increasingly
turned to applications serving primary healthcare markets.
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 Companies 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 2014. The
financial statements have been prepared under the historical cost convention.
The subsidiary undertakings included within the consolidated financial statements as at 31 December 2015 are
given in note 16.
2. Outlook for adoption of future Standards (new and amended)
No standards or interpretations that impacted the Group financial statements came into effect during the year.
At the date of authorisation of the Consolidated Financial Statements, the following Standards and
Interpretations which have not been applied in the Consolidated Financial Statements were in issue but not yet
effective (and in some cases had not yet been adopted by the EU):
•
•
•
IFRS 9 Financial Instruments (effective 1 January 2018)
IFRS 15 Revenue from contracts with customers (effective 1 January 2018)
IFRS 16 Leases (effective 1 January 2019)
Management has not yet commenced detailed analysis of how these new standards may impact the calculation
and presentation of the Group’s financial statements. It is not anticipated that any of these standards will be
early adopted.
All other Standards and Interpretations are considered to have no impact on the Group as they do not apply to
the Group at present.
3. Significant accounting policies
3.1 Basis of consolidation
The consolidated financial statements incorporate the results of the company and of its subsidiaries.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
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 Company 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.
The directors reached their conclusion following the successful placing of Ordinary shares referred to in Note 29
to the accounts.
20
Cambridge Cognition Holdings plc
Notes to the financial statements
3. Significant accounting policies (continued)
3.3 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 flow to the entity; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
•
•
•
Revenue recognised in Statement of Comprehensive Income but not yet invoiced is held on the Statement of
Financial Position within ‘Trade and other receivables’. Revenue invoiced but not yet recognised in the
Statement of Comprehensive Income is held on the Statement of Financial Position 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, which can include straight-line recognition
or be subject to achieving milestones set out in the related service agreements, provided a right to
consideration has been established. For example, study management services will normally be recognised over
the length of the contract, whereas 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.
3.4 Grants
Grants of a revenue nature are credited to profit and loss to match with the expenses incurred.
3.5 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 released 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 pattern in
which economic benefits from the leased asset are consumed.
21
Cambridge Cognition Holdings plc
Notes to the financial statements
3. Significant accounting policies (continued)
3.6 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 functional currency the
Company and presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the
entity’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates
of the transactions. At each reporting 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.
3.7 Post employment benefit costs
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
3.8 Exceptional items
Where, in the opinion of the Directors, an event or a series of closely linked events that are outside the normal
operations of the business have a material impact on the operating result, the impact of this event will be
disclosed separately on the face of the income statement. Other key metrics, for example earnings per share,
may also include a distinction which excludes any exceptional items. In all cases, amounts will be shown but
excluding and including exceptional items.
3.9 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 reporting
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. Deferred 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 temporary 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 reporting 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
reporting 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 legally 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.
22
Cambridge Cognition Holdings plc
Notes to the financial statements
3. Significant accounting policies (continued)
3.10 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. Cash-generating units to which goodwill has been attributed under IFRS 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 reversed in a subsequent period.
3.11 Tangible and intangible assets
(a) Property, plant and equipment
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 and equipment
Leasehold improvements
-
-
25% - 33% per annum straight line
straight line over the lesser of 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.
(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.
3.12 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 bringing the inventories to their
present location and condition. Cost is calculated using the First-In-First-Out 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.
3.13 Financial instruments
Financial assets and financial liabilities are recognised in the Group’s Statement of Financial Position 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.
23
Cambridge Cognition Holdings plc
Notes to the financial statements
3. Significant accounting policies (continued)
3.13 Financial instruments (continued)
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 integral 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.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting 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 account. Changes
in the carrying amount of the allowance account are recognised in profit or loss.
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.
Financial liabilities
Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
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 amount 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.
24
Cambridge Cognition Holdings plc
Notes to the financial statements
3. Significant accounting policies (continued)
3.14 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 25.
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 reporting 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.
3.15 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 IFRS10. The costs of purchasing own shares held by the EBT are deducted
from equity under ‘Own Shares’ reserve. Neither the purchase nor sale of own shares leads to a gain or loss
being recognised in the Group’s profit and loss or other comprehensive income. 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 revision 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 process of applying the Group’s
accounting policies.
Revenue recognition
Trading operations within the Group recognise revenue with regard to amounts chargeable to customers under
service contracts. 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 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. See note 14.
Capitalisation of development costs
The point at which development costs meet the criteria for capitalisation is critically dependent on management
judgment of the probability of future economic benefits. No development was completed in the year ended 31
December 2015 whose benefits could be reliably evaluated separate from existing revenue streams. No
development costs have therefore been capitalised during 2015 (2014: £nil).
Recovery of deferred tax assets
Deferred tax assets have not been recognised for deductible temporary differences, share options 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 either a Black-
Scholes model or a Binomial Option model, with the assumptions detailed in note 25. 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 profit and loss and
equity.
25
Cambridge Cognition Holdings plc
Notes to the financial statements
5. Revenue
An analysis of revenue by reportable business unit is as follows:
Pharmaceutical Clinical Trials
Academic Research
Healthcare Technology
2015
£'000
2014
£'000
3,395
1,544
103
5,042
3,926
1,675
201
5,802
An analysis of the Group’s revenue for each major product and service category is as follows:
Hardware
Software and services
Other
6. Business and geographical segments
2015
£'000
2014
£'000
329
4,592
121
5,042
1,080
4,583
139
5,802
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 three types of market in which the Group operates. The Group’s
reportable segments under IFRS 8 are therefore as follows:
• Pharmaceutical Clinical Trials: Products and services for use in regulated pharmaceutical clinical trials
• Academic Research: Cognitive test products for researchers working in a non-regulated environment,
typically in academia
• Healthcare Technology: Medical software for use in healthcare delivery settings
26
Cambridge Cognition Holdings plc
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 profit/ (loss)
Central costs
Other income
Operating (loss) before exceptional item
Exceptional item
Operating (loss) after exceptional item and (loss)
before tax
Tax
(Loss) after tax
Revenue
External sales
Result
Segment profit/ (loss)
Central costs
Other income
Operating (loss)
Finance income
(Loss) before tax
Tax
(Loss) after tax
Pharmaceutical
Clinical Trials
2015
£'000
Academic
Research
2015
£'000
Healthcare
Technology
2015
£'000
Consolidated
2015
£'000
3,395
1,544
103
5,042
197
303
(1,102)
(602)
(566)
509
(659)
(208)
(867)
85
(782)
Pharmaceutical
Clinical Trials
2014
£'000
Academic
Research
2014
£'000
Healthcare
Technology
2014
£'000
Consolidated
2014
£'000
3,926
1,675
201
5,802
458
841
(992)
307
(954)
343
(304)
9
(295)
122
(173)
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 with an allocation of support function costs.
Central costs represent the Company’s corporate costs. This measure is reported to the Chief Executive for the
purpose of resource allocation and assessment of segment performance. The methodology for measuring
segment profit was updated during the year and prior year comparatives have been restated accordingly.
27
Cambridge Cognition Holdings plc
Notes to the financial statements
6. Business and geographical segments (continued)
Segment net assets
Pharmaceutical Clinical Trials
Academic Research
Healthcare Technology
Total allocated assets
Unallocated assets
Consolidated total assets
2015
£'000
2014
£'000
895
510
12
1,417
1,531
2,948
865
686
10
1,561
2,191
3,752
For the purposes of monitoring segment performance and allocating resources 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 from external customers by geographical location is detailed below:
United Kingdom
United States of America
European Union
Rest of world
Information about major customers
2015
£'000
1,054
2,620
785
583
5,042
2014
£'000
1,337
2,806
1,233
426
5,802
Revenue amounting to £854,000 and £660,000 (2014: £798,000 and £777,000) of reported sales can be
attributed to two customers who each accounted for more than 10% of reported revenue for the related year.
Both these customers were in the Pharmaceutical Clinical Trials business unit and in the USA. No other
customers accounted for more than 10 per cent of reported revenue.
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 (gains)
Research and development costs
Depreciation of property, plant and equipment
Staff costs (see note 11)
9. Exceptional item
2015
£'000
2014
£'000
509
343
2015
£'000
(18)
1,304
56
3,587
2014
£'000
(70)
1,242
38
3,060
In the final quarter of 2015, the company investigated the possibility of acquiring a US based Group. The
acquisition was not completed. Expenses, which principally related to professional fees, totalled £208,000. As
these expenses are of a magnitude and nature that the Directors consider to be outside of the Group’s normal
operating business, they have been separately disclosed as an exceptional item.
28
Cambridge Cognition Holdings plc
Notes to the financial statements
10. 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
Fees payable to affiliate firms of the Company’s auditor:
Other services
11. 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 26)
Share-based payments charge (see note 25)
2015
£'000
2014
£'000
12
18
30
6
7
13
11
11
17
28
6
7
13
-
2015
Number
2014
Number
43
9
14
66
2015
£'000
3,067
269
183
68
3,587
40
7
12
59
2014
£'000
2,600
247
121
92
3,060
29
Cambridge Cognition Holdings plc
Notes to the financial statements
12. Taxation
Corporation tax:
Current year
Adjustments in respect of prior years
Deferred tax (see note 19)
Total tax (credit)
2015
£'000
2014
£'000
-
(85)
(85)
-
(85)
-
(122)
(122)
-
(122)
Corporation tax is calculated at 20.25% (2014: 21.49%) 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 20.25%
(2013: 21.49%)
Expenses not deductible for tax purposes
Unrelieved tax losses arising
Deduction on exercise of share options
Movement in unprovided deferred tax
Adjustment in respect of prior years
Tax (credit) for the year
2015
£’000
2014
£'000
(867)
(295)
(176)
(63)
72
-
(45)
149
(85)
(85)
41
48
(18)
(8)
(122)
(122)
The credit in respect of prior years relates to the receipt of R&D tax credits in respect of 2014 (2014: in respect
of 2013). No claim has yet been made for 2015 and no credit has been recognised in the financial statements.
13. Earnings per share
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
2015
£'000
2014
£'000
(782)
(173)
Earnings for the purposes of basic and diluted earnings per share excluding
exceptional item
(574)
(173)
Number of shares
Weighted average number of ordinary shares for the purposes of basic and
diluted earnings per share
2015
'000
2014
'000
16,831
16,439
As the effect of options would be to reduce the loss per share the diluted loss per share is the same as the
basic loss per share.
30
Cambridge Cognition Holdings plc
Notes to the financial statements
14. Goodwill
Cost and net book value
At 1 January 2015 and 31 December 2015
At 1 January 2014 and 31 December 2014
Goodwill
£'000
352
352
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs)
that are expected to benefit from that business combination. The carrying amount of goodwill had been
allocated to Academic Research.
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might
be impaired. In the year to 31 December 2015 the Academic business CGU produced a segment profit of
£303,000 (see note 6) and with encouraging prospects for 2016 and beyond, the carrying value of goodwill is
fully supported by the Academic results and no impairment provision is required.
15. Property, plant and equipment
Leasehold
Improvements
£'000
Fixtures
and fittings
£'000
Total
£'000
Cost
At 1 January 2014
Additions
At 31 December 2014
At 1 January 2015
Additions
Disposals
At 31 December 2015
Depreciation
At 1 January 2014
Charge for the year
At 31 December 2014
At 1 January 2015
Charge for the year
Disposals
At 31 December 2015
Net Book value
At 31 December 2015
At 31 December 2014
38
-
38
38
38
-
76
38
-
38
38
9
-
47
29
-
344
49
393
393
95
(27)
461
291
38
329
329
47
(27)
349
112
64
382
49
431
431
133
(27)
537
329
38
367
367
56
(27)
396
141
64
31
Cambridge Cognition Holdings plc
Notes to the financial statements
16. Subsidiaries
Details of the Company’s subsidiaries at 31 December 2015 are as follows:
Name
Place of
incorporation
(or registration)
and operation
Cambridge Cognition Limited
United Kingdom
Proportion
of
ownership
interest
%
100%
Proportion
of
voting
power held
%
100%
Cambridge Cognition Trustees
Limited
Cambridge Cognition LLC
United Kingdom
100%
100%
Delaware, United
States of America
100%
100%
In addition, Cantab Corporate Health Limited was incorporated in England and Wales in September 2015, with
the Group owning 70% of the company, with 70% voting power. Cantab Corporate Health did not commence
trading until 2016, and as such is not included in these consolidated financial statements.
17. Inventories
Finished goods and goods for resale
2015
£'000
2014
£'000
58
185
During the year inventories with a total value of £234,000 (2014: £654,000) were included in the income
statement as an expense.
32
Cambridge Cognition Holdings plc
Notes to the financial statements
18. Trade and other receivables
Amount receivable for the sale of goods
Allowance for doubtful debts
Prepayments and accrued income
Other receivables
2015
£'000
1,008
(20)
988
226
427
1,641
2014
£'000
1,058
(20)
1,038
381
213
1,632
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 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 are still considered recoverable. The average age of
these receivables is 59 days in 2015 (2014: 67 days).
Ageing of past due but not impaired receivables:
31-60 days
61-90 days
91-120 days
121 or more days
Movement in the allowance for doubtful debts:
Balance at the beginning of the period
(Decrease) in provision
Balance at the end of the period
2015
£'000
168
126
11
37
342
2015
£'000
20
-
20
2014
£'000
178
108
61
-
347
2014
£'000
25
(5)
20
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. Deferred Tax
At the reporting date, the group has unused tax losses of £8.4 million (2014: £8.3 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 indefinitely. No
deferred tax asset has been recognised in respect of share options.
33
Cambridge Cognition Holdings plc
Notes to the financial statements
20. Trade and other payables
Amounts falling due within one year
Trade payables
Social security and other taxes
Other payables
Accruals and deferred income
2015
£'000
486
70
24
955
1,535
2014
£'000
543
79
99
982
1,703
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs.
The average credit period taken for trade purchases is 44 days (2014: 44 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.
21. Share capital
Issued and fully paid
17,043,124 (2014: 16,930,556) Ordinary Shares of £0.01 each
2015
£’000
2014
£’000
170
169
During the year 112,568 Ordinary shares were issued following the exercise of share options at an exercise
price of £0.70 per share.
No other shares were issued during the year.
22. Own Shares
Own Shares Reserve
2015
£’000
2014
£’000
51
174
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 2015 was 122,193 (2014: 415,783).
During the year employees exercised 293,590 share options at an exercise price of £0.01. A transfer of
£123,000 was made from Own Shares Reserve to Retained Earnings in respect of these exercised options.
34
Cambridge Cognition Holdings plc
Notes to the financial statements
23. Notes to the cash flow statement
(Loss) before tax
Adjustments for:
Depreciation of property, plant and equipment
Share-based payment expense
Operating cash flows before movements in working capital
Decrease/ (Increase) in inventories
(Increase) in receivables
(Decrease)/ Increase in payables
Cash generated by operations
Tax credit received
Interest received/(paid)
Net cash from operating activities
2015
£'000
2014
£'000
(867)
(295)
56
68
(743)
127
(44)
(168)
(828)
38
92
(165)
(62)
(663)
68
(822)
120
129
-
(708)
-
(693)
Included in the cash flows for 2015 are £9,000 cash payments in respect of the exceptional item. The
remaining £199,000 is included in the movement in payables line item.
Cash and cash equivalents
Cash and bank balances
2015
£'000
2014
£'000
756
1,519
Cash 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.
24. Operating lease arrangements
Lease payments under operating leases
recognised as an expense in the year
2015
£'000
2014
£'000
173
173
At the reporting 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
2015
£'000
115
45
-
2014
£'000
163
82
-
Operating lease payments represent rentals payable by the group for rent, copiers and franking machines.
Property rental across four buildings has an average of 15 months to expiry at 31 December 2015. The average
outstanding rental period for other leases is 34 months.
35
Cambridge Cognition Holdings plc
Notes to the financial statements
25. Share-based payments
Equity-settled share option scheme
The Company has a share option scheme for key employees of the Group. 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:
2015
2014
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
Granted during the period
Forfeited during the period
Outstanding at the end of the period
1,850,426
(406,158)
547,200
(116,580)
1,874,888
0.53
(0.20)
0.83
(0.81)
0.68
1,119,344
(118,351)
875,000
(25,567)
1,850,426
0.43
(0.01)
0.60
(0.67)
0.53
Exercisable at the end of the period
369,661
0.65
705,911
0.38
The options outstanding at 31 December 2015 had a weighted average remaining contractual life of 8.6 years.
Options were granted on 9 July 2015. The performance conditions attached to these options are such that
options vest dependent on the company achieving certain share price hurdles. The performance conditions,
which are market conditions, have been incorporated into the measurement by actuarial modelling. The
aggregate of the estimated fair values of the options granted is £60,933. The inputs into the Binomial Option
model are as follows:
Share price at date of issue
Exercise price
Expected volatility
Expected life
Risk-free rate
Expected dividend yields
July 2015
83p
83p
35%
10 years
1.60%
0.0%
Expected volatility was determined by considering the expected share price movements and other comparable
listed companies in the sector. For each option tranche a minimum share price hurdle for the options to vest
was set in accordance with the individual terms set out in the option contracts.
The Group recognised total expenses of £68,000 (2014: £92,000), related to equity-settled share-based
payment transactions.
26. Post-employment 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 £183,000 (2014: £121,000) represents contributions payable to these
schemes by the group at agreed rates. As at 31 December 2015, contributions of £17,000 (2014: £17,000) due
in respect of the current reporting period had not been paid over to the schemes.
36
Cambridge Cognition Holdings plc
Notes to the financial statements
27. 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 2015.
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:
Cash and cash equivalents
Equity shareholder funds
2015
£'000
756
1,413
2014
£'000
1,519
2,049
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
Cash and bank balances
Trade and other receivables
Financial liabilities at amortised cost
Trade and other payables
2015
£'000
2014
£'000
756
1,339
1,519
1,092
920
1,037
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), credit risk and liquidity 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.
At 31 December 2015, the Group’s financial liabilities had contractual maturities which are summarised below:
Trade payables
Other payables
2014
£'000
Within 1 year Within 1 year
2015
£'000
486
434
920
543
494
1,037
Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange 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.
37
Cambridge Cognition Holdings plc
Notes to the financial statements
27. Financial instruments (continued)
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
2015
£'000
40
-
2014
£'000
25
-
Assets
2015
£'000
921
179
2014
£'000
989
214
A movement in the £/$ exchange rate of +/- 5% from 31 December 2015 to the date of realising the US dollar
net asset position would result in a gain/loss of £44,000 (2014: £48,000). Similarly with the Euro, the
gain/loss would be £9,000 (2014: £11,000).
Credit risk management
Credit 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 Statement of Financial Position 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.
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 Statement of Financial Position approximate their fair values.
38
Cambridge Cognition Holdings plc
Notes to the financial statements
28. Related party transactions
Balances and transactions between the Company and its subsidiaries, which are related parties, have been
eliminated on consolidation and are not disclosed in this note. 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 Committee 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
2015
£'000
2014
£'000
527
5
-
47
579
479
9
-
50
538
Payments in respect of each director are set out in the Remuneration Report. The audited section of that Report
forms part of the financial statements.
Other transactions
In addition to the above, during 2015 the Group incurred consultancy fees of £48,000 (2014: £64,000) from
MCR Holdings, a partnership of which Nicholas Walters is a partner. At 31 December 2015 a balance of
£12,965 (2014: £5,517) was outstanding to MCR Holdings.
Since Steven Powell’s appointment as a Director on 6 July 2015, the Group has incurred consultancy fees of
£40,448 from The Truffaldino Partnership, a company of which Steven Powell is a Director. At 31 December
2015 a balance of £11,863 was outstanding to The Truffaldino Partnership.
29. Post Balance Sheet Event
On 25 April 2016 the Group announced the placing of 3,386,111 new Ordinary Shares of 1 pence each at a
price of 37 pence per share to raise gross proceeds of £1.25 million.
39
Cambridge Cognition Holdings plc
Parent Company statement of financial position
Assets
Non-current assets
Investments
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Total liabilities
Equity
Share capital
Share premium account
Own shares
Retained earnings
Total equity
Notes
At 31 December
2015
At 31 December
2014 (Restated)
£'000
£’000
2
3
4
5
207
207
195
195
4,763
40
4,920
41
4,803
4,961
5,010
5,156
260
156
260
156
170
6,412
(51)
(1,781)
169
6,335
(174)
(1,330)
4,750
5,000
Total liabilities and equity
5,010
5,156
The financial statements of Cambridge Cognition Holdings plc on pages 40 to 44 were approved and authorised
for issue by the board on 10th May 2016 and were signed on its behalf by:
Steven Powell
Chief Executive Officer
40
Cambridge Cognition Holdings plc
Parent Company statement of changes in equity
Balance at 1 January 2014
Issue of new share capital
Transfer on allocation of shares held in
trust
Credit to equity of equity-settled
share-based payments
(Loss) for the year
At 31 December 2014
At 1 January 2015
Issue of new share capital
Transfer on allocation of shares held in
trust
Credit to equity of equity-settled
share-based payments
(Loss) for the year
At 31 December 2015
Share
capital
£’000
Share
premium
£’000
Own
shares
£’000
Retained
earnings
£’000
Total
£’000
169
6,335
(204)
(938)
5,362
-
-
-
-
-
-
-
-
-
30
-
-
-
(30)
92
(454)
169
6,335
(174)
(1,330)
-
-
92
(454)
5,000
169
6,335
(174)
(1,330)
5,000
1
-
-
-
77
-
-
-
-
-
123
-
-
(123)
68
(396)
170
6,412
(51)
(1,781)
78
-
68
(396)
4,750
41
Cambridge Cognition Holdings plc
Notes to the parent company financial statements
1. Significant accounting policies
1.1 Basis of accounting
The separate financial statements of the company are presented as required by the Companies Act 2006. They
have been prepared under the historical cost convention and in accordance with applicable United Kingdom
Accounting Standards and law. United Kingdom accounting standards have been updated and the Company has
elected to use Financial Reporting Standard – ‘The Reduced Disclosure Framework’ (FRS 101) as its accounting
base from 1 January 2014. FRS 101 is more closely aligned to International Financial Reporting Standards
(“IFRS”) which is the accounting base of the Group. FRS 101 also affords qualifying companies some disclosure
exemptions. The company has taken advantage of the following disclosure exemptions:
- Early application of the amendment to FRS 101 allowing exemption from presenting an opening
statement of financial position at the beginning of the earliest comparative period presented
- Disclosure exemption allowing no cash flow statement or related notes to be presented
- Disclosure exemption allowing the company not to disclose related party transactions when transactions
are entered into wholly within the Group
- Disclosure exemption around Key Management Personnel compensation (though see note 28 of the
Group accounts and the Directors Remuneration Report)
- Capital management disclosures (though see note 27 of the Group accounts)
- Disclosure exemption on the effect of future accounting standards
- Disclosure exemption on share-based payment information disclosures (IFRS 2), as this information has
been presented for the Group in note 25 of the consolidated financial statements
- Disclosure exemption on financial instrument disclosures (IFRS 7) as this information has been
presented for the Group is in note 27 of the consolidated financial statements.
The principal accounting policies are summarised below. They have all been applied consistently throughout the
period from transition. The accounts are presented in Pounds Sterling (“£”), and to the nearest £1,000.
No profit and loss account is presented for Cambridge Cognition Holdings plc as provided by section 408 of the
Companies Act 2006. The company’s loss after tax for the financial year was £396,000 (2014: £454,000).
1.2 Investments
Fixed asset investments in subsidiaries 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 Financial instruments
The company’s financial instruments accounting policy is as per the Group’s policy (see note 3.13).
1.4 Going concern
The directors have, at the time of approving the financial statements, a reasonable expectation that the
Company 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.
1.5 Employee Benefit Trust
An Employee Benefit Trust (EBT) is maintained in order to facilitate the exercise of employee 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 Company’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.
42
Cambridge Cognition Holdings plc
Notes to the parent company financial statements
2. Investments
Cost
At 1 January 2015
Additions
At 31 December 2015
Provisions for impairment
At 31 December 2014 and At 31 December 2015
Net Book value
At 31 December 2015
At 31 December 2014
Investment in
Subsidiaries
£'000
195
12
207
-
207
195
The following were subsidiary undertakings at the end of the year and have all been included in the
consolidated accounts.
Name
Cambridge Cognition Limited
Country
of
Operation
England
Proportion of
Ownership and
Voting Power Held
100%
Cambridge Cognition Trustees Limited
Cambridge Cognition LLC
England
USA
100%
100%
Nature of Business
Development and sale of
computerised
neuropsychological tests
Trustee company
Sales office
In addition, Cantab Corporate Health Limited was incorporated in England and Wales in September 2015, with
the Group controlling 70% of the issued equity. Cantab Corporate Health did not commence trading until 2016.
3. Trade and other receivables
Amounts due from subsidiary undertakings
Other receivables
4. Trade and other payables
Trade payables
Social security and other taxes
Accruals
5. Share capital
2015
£’000
4,738
25
4,763
2014
£'000
4,911
9
4,920
2015
£’000
131
13
116
260
2014
£'000
32
16
108
156
The details on the share capital of the Company are provided at note 21 to the Group’s accounts.
43
Cambridge Cognition Holdings plc
Notes to the parent company financial statements
6. Reconciliation from ‘old UK GAAP’ to FRS 101
As described in note 1, FRS 101 replaces ‘old UK GAAP’ effective from 1 January 2014 and is used for the first
time in preparing these financial statements. The company has one reconciling item, in that FRS 101 requires
that interest-free loans be revalued in the loan debtor’s accounts, but not in the loan creditor’s. To avoid this
inconsistency, the Company now receives interest at a rate of 7.5% per annum on loans to Cambridge
Cognition Limited.
Total equity at 31
December 2014
£’000
Total equity at 1
January 2014
£’000
Loss for
2014
£'000
As originally presented under ‘old UK GAAP’
Recognition of interest receivable
As presented in these financial statements
4,659
341
5,000
5,362
-
5,362
(795)
341
(454)
7. Post Balance Sheet Event
The details of the post balance sheet event are provided at note 29 to the Group’s accounts.
44