Cambridge Cognition Holdings plc
ANNUAL REPORT & ACCOUNTS 2017
Cambrdge Cognition A4 Annual Cover.indd 1
23/03/2017 11:42
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
2
3-9
10-11
12-13
14-15
16-21
22
23
24
25
26-44
45
46
47-48
Cambridge Cognition Holdings plc
Corporate Directory
Directors:
Michael Lewis
Steven Powell
Nicholas Walters
Eric Dodd
Nicholas Kerton
Andrew Blackwell
(Non-Executive Chairman)
(Chief Executive Officer)
(Chief Financial Officer)
(Non-Executive)
(Non-Executive)
(Non-Executive, resigned 1 July 2017)
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
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
finnCap
60 New Broad Street
London
EC2M 1JJ
Dowgate Capital Stockbrokers Limited
82 St John Street
London
EC1M 4JN
2
Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2017
CHIEF EXECUTIVE’S REVIEW
Financial summary
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(cid:120)
(cid:120)
(cid:120)
Total revenues of £6.73m (2016: £6.88m)
Gross profit increased to £6.11m (2016: £5.89m)
Adjusted* loss before tax of £0.07m (2016: profit of £0.20m)
Loss before tax of £0.28m (2016: profit of £0.11m)
Loss per share of 1.3 pence per share (2016: earnings of 1.4 pence per share)
Cash balance of £1.86m (2016: £2.38m)
*Adjusted for share-based payments charge
Operational highlights
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(cid:120)
(cid:120)
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(cid:120)
Revenues excluding hardware up 5% at £6.62m (2016: £6.32m)
Service revenues up 33% at £3.30m, representing 49% of group revenue
Core business sales orders increased by 18%
Increased number of pharmaceutical partnerships for near patient technologies centred on CANTAB
Recruit and Cognition Kit
Further investment in R&D and enhanced commercial infrastructure
Continued investment in technology innovation underpinned by grant funding
Launch of web based testing and CANTAB Prime ‘white label’ solutions
Established new US office in Boston, MA
Overview
2017 was a year of continued market development and investment in technology development for the Group.
Total revenue was similar to last year despite the prior year’s results including two large contracts not repeated
in 2017. Sales of core software and service products were up 5% on the previous year reflecting an increasingly
expanded product range and a drive towards partner income to reduce dependence on variable clinical trial
revenue.
The change in the revenue mix, with service income increasing from 36% to 49% of Group revenue and a more
diverse customer base, confirms that the long-term growth strategy remains on track. The number of sales orders
for core products increased 18% in 2017 in comparison to 2016 demonstrating the depth and reach of our
commercial team is growing as a result of the investments made in 2016.
Recruit and web-based testing product revenues and sales opportunities have continued to grow as we
increasingly transition our cognitive testing nearer to patients and clinical trial subjects and position the
Company’s offer in all stages of the drug development process. The increased diversity of the product mix enables
the Company to provide solutions to customers at all stages of clinical development and in an expanding number
of disease applications and this is expected to translate into short term and medium term revenue growth.
The Group continues to expand its technology base, most recently with the commercialisation of wearable
technology and the introduction of new programmes with voice technology and data analytics. This resulted in
an increase in R&D costs from £0.89m in 2016 to £1.13m in 2017. Our wearables technology received an excellent
endorsement with one of the initial studies reporting 95 per cent compliance and the importance of our voice
technology developments was recognised by the award of an Innovate UK grant to underpin some of the costs
of development.
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Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2017
Financial Results
Group revenues for 2017 and 2016 by product segment are as follows:
2017 £m
2016 £m
Change £m
Change %
Software
Services
Total Software & Services
Hardware
Total Group Revenues
3.32
3.30
6.62
0.11
6.73
3.84
2.48
6.32
0.56
6.88
(0.52)
0.82
0.30
(0.45)
(0.15)
(13.5)
33.1
4.7
(80.4)
(2.2)
Total revenues fell £0.15m (2%) in comparison to 2016. However, revenue from software and services grew by
£0.30m (5%) in comparison to 2016. As the table illustrates, the small reduction in total revenues can be, in
part, attributed to a fall in hardware sales, which is no longer a key product field following the migration to a
cloud platform in 2015 but was inflated in 2016 by a single contract with a large hardware component.
As previously announced, the Company had expected to sign two large contracts with a combined value of
approximately £2.3m in the last quarter of the year. The larger of these two projects is expected to commence
in the first half of 2018 and we look forward to updating the market in due course.
Service revenues have grown 33% reflecting the positive strategic steps taken to diversify our product offering.
Not only does this category include the traditional project and study management services but also the increasing
amount of consultancy and bespoke development work being undertaken for customers for Recruit and wearable
projects.
Software revenues are down 13.5% reflecting the absence of a major contract win in the year bearing in mind
that software revenue is recognised at the start of any project. However, we are achieving a greater number of
sales in more stages of the drug development process and across more disease areas than previously.
Gross profit grew from £5.89m in 2016 to £6.11m in 2017, a growth of 4%. Hardware is sold at a far lower gross
margin than our high margin software and services, and so the reduced level of hardware sales has resulted in
an increased margin of 91% (86% in 2016).
Administration costs rose from £5.86m in 2016 to £6.49m in 2017, a rise of £0.63m or 11%. As noted above,
there was a £0.24m rise in research and development costs and an increase of £0.54m in our sales and marketing
spend. Though changes in the sales team were substantially completed in 2016, the impact of the costs over a
full year drove this increase. These increases apart, our operational and corporate costs remain under tight
control.
The loss before tax in the year was £0.28m, against a profit before tax of £0.12m in 2016. The R&D tax credits
available as cash was restricted this year given the profit returned in 2016. The loss attributable to shareholders
after tax credit and minority interests is £0.26m, which equates to a loss per share for the year of 1.3 pence.
This contrasts to a profit per share of 1.4 pence in 2016.
Despite the loss, operating cash before movements in working capital remained positive at £0.01m. Working
capital movements included a small increase in receivables, payments of expenses accrued in 2016 and the
depletion of deferred revenues which drove net cash from operating activities to an outflow of £0.62m (2016:
£0.47m inflow). Capital expenditure remained stable at £0.05m. Cash outflow was mitigated by £0.19m of
proceeds from exercised share options, and totalled £0.48m. The cash balance of £1.86m at year-end means
that the Group remains sufficiently resourced for its ongoing operations and implementation of the current
strategic plan.
The balance sheet remains satisfactory, with the reduction in cash being more than reflected in a £0.66m
reduction in current liabilities. The Group has no long-term debt.
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Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2017
Operational Review
As reported in last year’s strategic report, we identified that we could realise efficiency gains in commercial
operations by combining the previously separate business units of Pharmaceutical Clinical Trials and Academic
Research into a single, product sales group. This reorganisation was completed with effect from 1st January 2017
and our Operational Review is no longer categorised along these lines.
During the year we have continued to support drug development companies in their pursuit of new treatments
but with a particular focus on four disease areas, Alzheimer’s disease, Parkinson’s disease, Schizophrenia and
Depression. Our expertise, extensive data resources and investment in R&D in these areas has maintained our
position as a leading provider of cognitive assessments to the research community and pharmaceutical companies
involved in drug development in these areas.
Away from our core areas of disease focus in March we announced the publication of Amgen’s EBBINGHAUS
study. We supported this landmark study with not only software but also data analytics. Given both the number
of participants and time points and its focus in cardiovascular disease this study highlighted that use of CANTAB
software is not limited to cognitive assessment in the CNS field alone.
The introduction of web based testing, also in March, has enabled researchers to run testing of trial participants
remotely. A highly significant innovation, this enables studies to gather digital cognitive biomarkers at frequent
time-points for more accurate and rapid data to aid earlier decision-making and conduct large-scale research
projects virtually, reducing the overall running costs of studies using proven neuropsychological assessments.
From the expansion of the product range in 2016 we have had continued success with our new products, which
have contributed strongly to the results for 2017 helping to diversify the product offering and reduce our exposure
to the variability of revenue streams from large clinical trials.
In particular, we announced in November 2017 that in a study sponsored by Takeda Pharmaceuticals, Cognition
Kit wearable technology demonstrated exceptional levels of patient compliance, with users 95% or more
compliant with evaluations of their mood and cognitive function. This demonstrates that high frequency, near-
patient testing will be well tolerated by patients validating our initial investment in these technologies. Revenue
from wearable technology projects totalled £0.60m in 2017 compared with £0.04m in 2016 when the technology
was first commercialised.
We also announced the launch of our CANTAB Prime offering during the year answering a market demand to
make our technologies available in other formats; often for use in non-clinical trial applications and therefore a
potential source of longer term, annuity income. CANTAB Prime uses modular software architecture to apply
existing product components within the customer framework enabling the collection, analysis and reporting of
cognitive measures from within third party platforms. CANTAB Prime can offer a ‘white-label’ solution to a
multitude of users across a spectrum of market segments. CANTAB Prime has already opened up new
opportunities previously closed to us; in particular, where users were not willing to adopt a product that stood in
isolation outside their core systems. Initial deals incorporating CANTAB Prime executed in the first year of launch
have generated over £0.20m of revenue.
As part of a move to patient-centric technology advancements, we also announced results of the first move away
from touch screen testing toward a new delivery format. We have an ongoing programme to use automated voice
recognition technology to monitor patient response to pain and depression treatments. To ensure that we can
continue to innovate within the constraints of our financial resources we were pleased to report that we have
been awarded grant funding of £0.29m from Innovate UK to advance our work in biomarkers in this field. We
expect this project to conclude and commence commercialisation in late 2018.
We continue to work with customers and partners to develop technologies and applications that meet the
demands of the market both now and in the future. We see that these demands continually combine and cut
across the traditional view of clinical, research and healthcare applications – the CANTAB Prime concept is a key
example of that. Our approach of focussing on customer need and identifying the practical use of our innovations
early in the research cycle is helping us drive meaningful and exciting innovation.
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Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2017
Innovation
Two years ago, the Group adopted a new strategy for growth which, in addition to a new market development
approach, included a reinvigorated R&D programme with investment in both technology development and
neuroscience. The expanded R&D group, under the leadership of Dr Jenny Barnett, CSO and Ricky Dolphin, CTO,
has already yielded several important additions to the CANTAB estate including Cognition Kit, Recruit and Prime
which are making a significant impact on revenue growth. Through this activity, the Group is also enhancing its
profile as technology leader, which in turn is having a positive impact on commercial activities.
Looking ahead, the Group’s key R&D activities are focussed on four main areas:
1. Continued product enhancement and database expansion in the Group’s key strategic areas of Alzheimer’s
disease, depression, Parkinson’s disease and Schizophrenia.
2. Continued development of remote, patient centric, testing solutions to support pharmaceutical partners with
their digital health solutions as well as improving clinical trial efficiency. CANTAB Recruit for remote trial subject
screening has already been used in two of the world’s largest Alzheimer’s disease studies with over 30,000 subject
assessments completed and this type of solution affords the Group the opportunity to develop Software as a
Service (SaaS) income.
3. Monitoring of brain health through speech. The Group has already delivered the first prototype cognitive tests
delivered by an automated voice platform and this has resulted in new, filed intellectual property. The next step
will be the development of voice delivered technology which incorporates artificial intelligence to provide in depth
analysis of cognitive health based on voice biomarkers.
4. In parallel with enhancement of current products for cognitive assessment of patients suffering from
depression, the Group is also working to bring a new package of products to market for cognitive assessment of
mental health. This will incorporate new and novel tests for measurement of social cognition. We now know that
aspects of social cognition – emotional processing, decision-making and recall for example – are core symptoms
of not just disorders like schizophrenia and autism but are also highly prevalent in eating disorders, substance
abuse, and neurological conditions like frontotemporal dementia. These types of symptoms are hugely important
to patients’ quality of life since they affect relationships and employment. They have been under-recognised
historically because they are hard to measure. Recognising these difficulties, and potentially improving them
using personalised digital tools such as the Emotional Bias Intervention which we are developing with our
academic collaborators is an important new target across CNS disorders.
These four programmes are expected to deliver products and technologies for commercialisation in the next two
years and will provide solutions to the increasing global appetite for digital health solutions. This in turn will have
a positive impact on revenue growth and company profile and provide a rich source of news-flow.
The impact of the new accounting standard for revenues: IFRS 15
The Group is adopting the new revenue accounting standard, IFRS 15, using the prospective method with effect
from 1 January 2018. While the current results are not impacted by the new standard, its impact is significant
enough that we have set out an estimate of what the results would have been had the standard been adopted in
the preparation of accounts in earlier years.
The main impact of IFRS 15 on the Group’s accounts is that software revenue from Connect, Recruit, Mobile and
Insight products will now be recognised over the period that the software is used by customers rather than
recognised at the start of the contract.
In previous years, there have been fluctuations in results from one year to the next dependent on whether a year
includes a large contract win or not. We believe this new standard will result in a smoother spread of revenue
over the life of a contract.
As noted above, prior year results have not been restated for accounting purposes, however, our estimate of
revenues on an IFRS 15 basis is as follows:
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Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2017
As reported previously Estimated under IFRS 15 Difference
2015 £5.04m
2016 £6.88m
2017 £6.73m
Outlook
£4.98m
£5.15m
£6.89m
(£0.06m)
(£1.73m)
£0.16m
The challenges of global brain health continue to rise with an ever increasing economic cost. The products and
technologies developed by the Group over the past five years to supplement the core technology have seen a
gradual progression of our offering in line with customer needs. With a clear focus on the needs of patients and
healthcare providers in our four core disease states, we have driven testing closer to the patient using wearable
and voice activated technologies. This provides a data rich assessment of brain health and provides a detailed
assessment of pharmaceutical and non-pharmaceutical intervention in these complex disease areas.
With growing recognition as an innovator in cognitive assessment, we are now building partnerships with our
new technologies that will drive further revenue growth. With a strong sales order pipeline the Board expects
further growth to be delivered this year.
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Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2017
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, with 2016 being the Group’s first and so far only profitable year.
Profitability depends on the success and market acceptance of current and new products and investment in sales
infrastructure, without which the Group will make losses and consume cash. Until the profitable commercialisation
of new products and markets is proved sustainable the Group will carefully monitor costs and cash flow with
reference to ensuring the Group is able to continue as a going concern. In particular, the rate of investment in
new technologies will be limited to the extent of any surplus cash reserves of the Group and the positive cash
flow derived from the core business and recently launched products.
The directors have prepared a strategic plan, including financial forecasts and cash flows, for the period to
December 2020. The monitoring of cash and future projected cash flows, as well as the sales pipeline is included
in the monthly finance report to the Board.
Product and market development
Future success of the Group is principally focussed on growth of near term revenues through existing products
as well as the successful commercialisation of innovative new products and services. The ability to transition
current products to new markets and the development of new products and services for both existing and new
markets will determine how successful the Group will be in growing. As noted in the Strategic Report, we have
seen early successes in our most recent product innovations. However, there can be no certainty that new
products will be adopted or new markets successfully opened and this will determine the extent of future growth
prospects.
Uncertainty remains around the impacts of Brexit. The directors and management continue to monitor
developments and plan for potential impacts.
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 to ensure that the Group’s products remain competitive and at the forefront
of the sector. The Group files patent applications as it strives to protect and 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.
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 2017, one customer accounted for 14% of the total revenue of the business though no other
customer accounted for more than 10%. In 2016 the two biggest customers accounted for 21% and 11% of the
total revenue. 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 is sufficient to compensate would result in a revenue shortfall.
8
Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2017
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
2017 result 2016 result Movement
Revenue
£6.73m
£6.88m
Order pipeline
£1.97m
£2.68m
£0.15m
decrease
(2%)
£0.71m
decrease
(26%)
Summary management
commentary
Whilst the headline figure has
decreased,
underlying
the
strength of our key software and
services areas, as well as new
product growth, gives us a sound
base for the future.
Although the number of orders
has increased 18%, highlighting
the increased diversity of our
product offering, the absence of
any large orders in 2017 led to a
reduction in the pipeline.
Operating margin
(4%)
2%
Cash flow
£0.48m
outflow
£1.57m
inflow
6 percentage
point
decrease
As well as the revenue result, this
reflects the investments made in
research and development and
the sales infrastructure.
Decrease in
inflow of
£2.05m
The outflow in 2017 was driven by
working capital movement. Cash
flow
from operating activities
before working capital movement
was positive.
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, and in particular
the increased investment in research and development. Unfortunately, this cannot be readily measured in the
style of a KPI. The directors are pleased with the innovation successes during 2017, 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
21st March 2017
9
Cambridge Cognition Holdings plc
Report of the Directors for the year ended 31 December 2017
The Directors present their report on the affairs of the Group and Company together with the financial statements
for the year to 31 December 2017. 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’) is a neuroscience
digital health company specialising in improving brain health by developing and marketing near-patient cognitive
testing technologies for pharmaceutical and healthcare industries worldwide.
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, 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 25.
SHARE ISSUES
The issued share capital of the Company is set out at Note 19 to the accounts. During 2017, 268,635 Ordinary
shares were issued to satisfy the exercise of employee share options.
DIRECTORS
The Directors who held office at 31 December 2017 and their interest in the share capital of the Company were:
Name
Michael Lewis (Chairman)
Steven Powell
Nicholas Walters
Eric Dodd
Nicholas Kerton
Ordinary Shares of 1p each
2017
33,375
70,541
2016
33,375
70,541
186,937
186,937
-
-
22,899
172,900
On 1 July 2017, Andrew Blackwell resigned 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 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:
(cid:120)
select suitable accounting policies and then apply them consistently;
10
Cambridge Cognition Holdings plc
Report of the Directors for the year ended 31 December 2017
(cid:120) make judgements and accounting estimates that are reasonable and prudent;
(cid:120)
(cid:120)
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:
(cid:120)
(cid:120)
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 1 March 2018 were:
Name
Euroblue Investments Limited
Hargreave Hale
Michael Buxton
Octopus Investments Nominees Ltd
AXA Investment Mangers UK Limited
Artemis Fund Managers Ltd
AUDITOR
No. of
Ordinary
Shares
4,312,714
3,246,110
2,889,589
2,232,779
714,285
714,285
%
20.8
15.7
14.0
10.8
3.5
3.5
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
21st March 2018
11
Cambridge Cognition Holdings plc
Corporate Governance Report for the year ended 31 December
2017
The Directors are committed to a high standard of corporate governance and although the Company is not
obliged to comply with the UK Corporate Governance Code, the twelve principles of good governance produced
by the Quoted Companies Alliance have been adopted by the Company as far as is practicable and appropriate
given its size, stage of development and status as a Company whose securities are traded on AIM. Without
such a sound governance platform the Company will be unable to achieve the strategic ambitions set out in the
Strategic Report.
The Board
The Board of Cambridge Cognition Holdings plc is responsible for the long term financial success of the
business. 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, 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 thirty years operational and investment
experience in pharmaceutical and healthcare companies in the UK, USA and Scandinavia. Including his current
role at Cambridge Cognition he has held five CEO roles, three in public companies. In 2003, he joined Gilde
Healthcare, a pan-European life sciences investment fund as a partner and remained an adviser to the fund
until 2016.
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.
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, Stanmore Implants
Worldwide Holdings Limited and KBC plc. Mr Dodd is presently Chief Financial Officer at ATTRAQT PLC, an AIM-
listed software company.
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.
The Board is responsible for the long term success of the Company. The Chairman’s role is to ensure the Board
operates effectively and functions in such a way as to meet its objectives each year. The Chief Executive’s role
is to ensure the executive team implements and successfully delivers on the strategy to ensure the long term
success of the Company. The Non-Executive Directors are expected to offer constructive challenge to the
executives and input to the strategic thinking as well as contribute to the working of the three committees
detailed below.
Board Committees
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 and Nicholas Kerton. The Nomination
Committee is comprised of Michael Lewis (Chair), Eric Dodd and Nicholas Kerton. The Remuneration Committee
is comprised of Michael Lewis (Chair), Eric Dodd and Nicholas Kerton.
12
Cambridge Cognition Holdings plc
Corporate Governance Report for the year ended 31 December
2017
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
systems of risk management and internal control. 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 main issues considered by the Committee during the year in relation to the financial statements included
the appropriateness of revenue recognition policies, adequacy of systems of internal control and going concern.
The Committee notes the auditors’ inclusion of revenue occurrence as a key audit matter.
No significant fees were paid in the year to the auditors for services other than audit and tax compliance and
related work. The independence and objectivity of the auditors is important to the Company and the Committee
keeps track of fees paid to the auditors for any change in this position. Periodically the Audit Committee
chairman speaks directly with the audit partner to set out the needs of the committee and to receive any
feedback without the presence of any executive directors.
The Committee also reviews the Group’s risk management and continues to believe that the Company’s risk
management strategy properly addresses the main risk areas.
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. Every director appointed by the Board is subject to re-
election by the shareholders at the AGM following their appointment and every third AGM thereafter.
The Remuneration Committee’s responsibilities include determining the remuneration of the executive
directors, reviewing the design of all share incentive plans and determining 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.
Board and Committee attendance during 2017 was as follows:
Board
Audit
Nomination
Remuneration
No. of Meetings
M. Lewis
Dr S. Powell
N. Walters
E. Dodd
Dr N. Kerton
8
8
8
8
7
8
1
1
-
-
1
1
4
4
-
-
4
4
2
2
-
-
1
2
13
Cambridge Cognition Holdings plc
Remuneration Report for the year ended 31 December 2017
The Company has established a Remuneration Committee. The members of the Remuneration Committee are:
Michael Lewis (Chair)
Eric Dodd
Nicholas Kerton
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:
Salary
/Fee
£’000
Benefits
Bonus
Pension
£’000
£’000
£’000
2017
Total
£’000
2016
Total
£’000
Current Directors:
Remuneration as Executives:
Steven Powell
Nicholas Walters
Nicholas Kerton*
Remuneration as Non-Executives:
Michael Lewis
Eric Dodd
Andrew Blackwell**
Nicholas Kerton
Total
150
48
-
44
30
15
30
317
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
150
48
-
44
30
15
30
317
174
77
17
44
30
30
27
399
* Resigned as an Executive Director and appointed as a Non-Executive Director on 15 February 2016
** Resigned as Non-Executive Director on 1 July 2017
Payments were also made to third parties for the services of Nicholas Walters. See note 26 to the consolidated
financial statements.
14
Cambridge Cognition Holdings plc
Remuneration Report for the year ended 31 December 2017
Share Options:
Granted
Nicholas Kerton
Sept 2014
Number of
Options
75,000
Performance
criteria
Vested (1)
Exercise price
in pence
60 pence
Exercise period
To 30 Sep 2024
Steven Powell
July 2015
Nov 2016
62,500
550,000
Vested (2)
(3)
82.5 pence
1 penny
Dec 2017 - July 2025
Nov 2019 – Nov 2026
Nicholas Walters
Nov 2016
150,000
(3)
1 penny
Nov 2019 – Nov 2026
Performance Criteria
(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
120 pence. This condition was fulfilled on 4 May 2017
(3) 55% of these options will vest if the average closing mid-market price of an Ordinary Share for the
final 10 trading days of 2018 is greater than 140 pence per share. A pro rata sliding scale will apply if
the average closing mid-market price of an Ordinary Share for the final 10 trading days of 2018 is
between 100 pence and 140 pence. 45% of the options granted will vest if the cumulative revenue of
the Company reported in the audited accounts for the three financial years ended 31 December 2018
exceeds £23m.
Upon his resignation as a Non-Executive Director on 1 July 2017, Andrew Blackwell forfeited 112,567
options. On 11 October 2017, he exercised 225,135 options at an exercise price of 70 pence.
On 31 December 2016, 62,500 options in favour of Steven Powell were forfeited as the performance
criteria of a share price of at least 200 pence for two consecutive dealing days before 31 December 2016
was not met.
15
Cambridge Cognition Holdings plc
Independent Auditor’s Report to the Members of Cambridge Cognition
Holdings plc
Independent auditor’s report to the members of Cambridge Cognition Holdings Plc
Opinion
Our opinion on the financial statements is unmodified
We have audited the financial statements of Cambridge Cognition Holdings Plc (the ‘parent company’) and
its subsidiaries (the ‘group’) for the year ended 31 December 2017 which comprise the Consolidated
statement of comprehensive income, the Consolidated statement of financial position, the Consolidated
statement of changes in equity, the Consolidated statement of cash flows, the Parent company statement of
financial position, the Parent company statement of changes in equity and notes to the Consolidated and
Parent company financial statements, including a summary of significant accounting policies. 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, including Financial Reporting
Standard 101 ‘Reduced Disclosure Framework’ (United Kingdom Generally Accepted Accounting Practice).
In our opinion:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
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 2017 and of the group’s loss for the year 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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities
for the audit of the financial statements section of our report. We are independent of the group and the parent
company in accordance with the ethical requirements that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Who we are reporting to
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.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to
report to you where:
(cid:120)
(cid:120)
the directors’ use of the going concern basis of accounting in the preparation of the financial
statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that
may cast significant doubt about the group’s or the parent company’s ability to continue to adopt the
16
Cambridge Cognition Holdings plc
Independent Auditor’s Report to the Members of Cambridge Cognition
Holdings plc
going concern basis of accounting for a period of at least twelve months from the date when the
financial statements are authorised for issue.
Overview of our audit approach
(cid:120) Overall group materiality: £202,000, which represents 3% of the
group's revenue;
(cid:120) Key audit matter was identified as revenue occurrence;
(cid:120) We performed full scope audit procedures on the financial statements
of Cambridge Cognition Holdings Plc and Cambridge Cognition
Limited which itself accounts for 68% of the group loss before tax.
(cid:120) We performed targeted audit procedures on the financial information
of Cambridge Cognition LLC and Cantab Corporate Health Limited
and performed analytical procedures on Cambridge Cognition Trustees
Limited.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters included those that had the
greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of
the engagement team. These matters were addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter – Group
Revenue Occurrence
Under International Standard on Auditing
(UK) 240 ‘The Auditor’s Responsibilities
Relating to Fraud in an Audit of Financial
Statements’, there is a rebuttable presumed
risk that revenue may be misstated due to
the improper recognition of revenue.
Revenue is a material figure in the financial
statements (2017 £6,730,000; 2016
£6,876,000). The group has a high volume
of revenue transactions, which exposes the
Group to the risk of invalid transactions
within the revenue population not being
captured
We therefore identified revenue occurrence
as a significant risk, which was one of the
most significant assessed risks of material
misstatement.
How the matter was addressed in
the audit – Group
Our audit work included, but was not
restricted to:
(cid:120) Evaluating the group’s stated
accounting policies in respect of
revenue recognition, whether these
were consistent with International
Accounting Standard (IAS) 18
‘Revenue’ and whether they were
applied accurately and consistently by
the group.
(cid:120) Testing a sample of signed contracts,
ensuring revenue recognised agreed to
the contract and is in line IAS 18 and
group accounting policy.
(cid:120) Agreeing a sample of invoices raised to
milestones per the contract terms.
(cid:120) Recalculating the year end accrued and
deferred revenue balances for a sample
of contracts.
17
Cambridge Cognition Holdings plc
Independent Auditor’s Report to the Members of Cambridge Cognition
Holdings plc
Key Audit Matter – Group
How the matter was addressed in
the audit – Group
(cid:120) For other revenue streams, we agreed a
sample of sales invoices to cash
receipts.
The group's accounting policy on revenue
recognition is shown in note 3.3 to the
financial statements and related disclosures
are included in note 5.
Key observations
Our audit work did not identify any
material misstatements in the occurrence of
revenue recognised in the year or any
material instances of revenue not being
recognised in accordance with the stated
accounting policy.
We did not identify any Key Audit Matters relating to the audit of the financial statements of the parent
company.
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that
the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use
materiality in determining the nature, timing and extent of our audit work and in evaluating the results of that
work.
Materiality was determined as follows:
Materiality Measure Group
Financial statements
as a whole
£202,000 which is 3% of group
revenue. This benchmark is
considered the most
appropriate because the group’s
results fluctuate annually.
Materiality for the current year
is lower than the level that we
determined for the year ended
31 December 2016 to reflect
the decrease in group revenues.
18
Parent
£10,000 which is 5% of losses
before tax. This benchmark is
considered the most
appropriate because the entity
is cost based and not revenue
generative.
Materiality for the current year
is similar to the level that we
determined for the year ended
31 December 2016.
Cambridge Cognition Holdings plc
Independent Auditor’s Report to the Members of Cambridge Cognition
Holdings plc
Performance
materiality used to
drive the extent of
our testing
Specific materiality
Communication of
misstatements to the
audit committee
75% of financial statement
materiality.
75% of financial statement
materiality.
We also determine a lower level
of specific materiality for
certain areas such as directors'
remuneration and related party
transactions on the basis that
these are material by nature.
£10,000 and misstatements
below that threshold that, in
our view, warrant reporting on
qualitative grounds.
We also determine a lower level
of specific materiality for
certain areas such as directors'
remuneration and related party
transactions on the basis that
these are material by nature.
£1,000 and misstatements
below that threshold that, in
our view, warrant reporting on
qualitative grounds.
The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance
for potential uncorrected misstatements.
Overall materiality - group
Overall materiality - parent
25%
75%
Tolerance for
potential uncorrected
mistatements
Performance
materiality
25%
75%
An overview of the scope of our audit
Our audit approach was a risk-based approach founded on a thorough understanding of the group's business,
its environment and risk profile and in particular included:
(cid:120)
(cid:120) Assessing the risk of material misstatement to the group’s financial statements. We considered the
transactions undertaken by each entity and therefore where the focus of our work was required;
Full scope audit procedures were completed for the main trading subsidiary, Cambridge Cognition
Limited. Targeted audit procedures were performed for Cambridge Cognition LLC and Cantab
Corporate Health Limited. Analytical procedures were performed on Cambridge Cognition Trustees
Limited. All accounting is centralised and we completed our onsite audit work at the group’s main
operating location with all audit work undertaken by the group audit team;
(cid:120) The entities which were subject to full scope procedures made up of 48% of group revenue and the
remainder was subject to targeted audit procedures. The group total assets subject to full scope
procedures amounted to 77% and the remainder was subject to targeted audit procedures.
(cid:120) The audit risks identified for the main trading component, Cambridge Cognition Limited, are the same
(cid:120)
audit risks identified for the group as a whole; and
Full scope audit procedures were performed for the parent company, Cambridge Cognitions Holdings
Plc, which is a non-trading holding company.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report set out on pages 3 to 15, other than the financial statements and our auditor’s
19
Cambridge Cognition Holdings plc
Independent Auditor’s Report to the Members of Cambridge Cognition
Holdings plc
report thereon. Our opinion on the financial statements does not cover the other information and, except to
the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material misstatement of the other information. If, based
on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
Our opinion on other matters prescribed by the Companies Act 2006 is unmodified
In our opinion, based on the work undertaken in the course of the audit:
(cid:120)
(cid:120)
the information given in the strategic report and the report of the directors for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the report of the directors have been prepared in accordance with
applicable legal requirements.
Matters on which we are required to report under the Companies Act 2006
In the light of the knowledge and understanding of the group and the parent company and its environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report or the
report of the directors.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
(cid:120)
(cid:120)
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
(cid:120)
(cid:120) we have not received all the information and explanations we require for our audit
Responsibilities of directors for the financial statements
As explained more fully in the directors’ responsibilities statement set out on pages 10 and 11, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the group or the
parent company or to cease operations, or have no realistic alternative but to do so.
20
Cambridge Cognition Holdings plc
Independent Auditor’s Report to the Members of Cambridge Cognition
Holdings plc
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
David Newstead
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Cambridge
21 March 2018
21
Cambridge Cognition Holdings plc
Consolidated Statement of Comprehensive Income
Revenue
Cost of sales
Gross profit
Administrative expenses
Other operating income
(Loss)/ profit before tax
Income tax
(Loss)/ profit for the year
Attributable to:
Equity holders in the Parent
Non-controlling interest
Earnings per share (pence)
Basic and diluted earnings per share
Other comprehensive income
(Loss)/ profit for the year
Items that may subsequently be reclassified to profit or
loss
Exchange differences on translation of foreign operations
Total comprehensive income for the year
Notes
Year to
31 December
2017
Year to
31 December
2016
5
7
10
11
£’000
6,730
(622)
6,108
£’000
6,876
(986)
5,890
(6,485)
(5,860)
93
(284)
6
(278)
(257)
(21)
(278)
86
116
106
222
272
(50)
222
(1.3)
1.4
(278)
222
38
(240)
4
226
All items of other comprehensive income are attributable to the equity holders in the Parent.
The above results relate to continuing operations.
22
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
Notes
At 31 December
2017
At 31 December
2016
£'000
£’000
12
13
15
16
352
88
440
33
2,246
1,859
352
117
469
37
2,177
2,384
4,138
4,598
4,578
5,067
18
1,547
2,206
Total liabilities
1,547
2,206
Equity
Share capital
Share premium account
Other reserves
Own shares
Retained earnings
Equity attributable to Parent
Non-controlling interest
19
20
20
207
7,707
6,023
(43)
(10,863)
3,031
-
204
7,517
5,985
(47)
(10,748)
2,911
(50)
Total equity
3,031
2,861
Total liabilities and equity
4,578
5,067
The financial statements on pages 22 to 44 were approved by the Board of Directors and authorised for issue
on 21st March 2018 and were signed on its behalf by:
Steven Powell
Chief Executive Officer
23
Cambridge Cognition Holdings plc
Consolidated statement of changes in equity
Share
capital
Share
premium
Other
reserves
Own
shares
Retained
earnings
£'000
£'000
£'000
£'000
£'000
Non-
controlling
interest
£'000
Total
£'000
170
6,412
5,981
(51)
(11,099)
-
1,413
-
-
-
-
-
-
34
1,219
-
-
-
(114)
-
-
34
1,105
-
4
4
-
-
-
-
-
-
-
-
-
-
4
-
4
272
-
272
-
-
(4)
83
79
204
7,517
5,985
(47)
(10,748)
(50)
-
222
4
(50)
226
-
-
-
-
-
-
1,253
(114)
-
83
1,222
2,911
-
-
-
-
-
(50)
(50)
204
7,517
5,985
(47)
(10,748)
(50)
2,861
-
-
-
3
-
-
3
-
-
-
-
190
-
-
190
-
-
38
38
-
-
-
-
-
-
-
-
-
4
-
4
-
(257)
(21)
(278)
-
-
38
(257)
(21)
(240)
-
(4)
217
213
(71)
-
-
-
-
193
-
217
410
71
-
207
7,707
6,023
(43)
(10,863)
-
3,031
Balance at
1 January 2016
Profit for the year
Other comprehensive
income
Total comprehensive
income for the year
Issue of new share
capital
Share issue costs
Transfer on allocation of
shares held in trust
Credit to equity for
equity-settled share-
based payments
Transactions with
owners
Equity attributable to
Parent
Non-controlling interest
Balance at
31 December 2016
Profit for year
Other comprehensive
income
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
Transfer of accumulated
loss on acquisition of
non-controlling interest
Balance at
31 December 2017
24
Cambridge Cognition Holdings plc
Consolidated statement of cash flows
Notes
Year to
31 December
2017
Year to
31 December
2016
£'000
£’000
Net cash flows from operating activities
21
(624)
473
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 cash flows from financing activities
Net (decrease)/ increase in cash and cash equivalents
Cash and cash equivalents at start of year
Exchange differences on cash and cash equivalents
(48)
(48)
193
193
(479)
2,384
(46)
(44)
(44)
1,139
1,139
1,568
756
60
Cash and cash equivalents at end of year
21
1,859
2,384
25
Cambridge Cognition Holdings plc
Notes to the financial statements
1. General information
Cambridge Cognition Holdings plc (‘the Company’) and its subsidiaries (together, ‘the Group’) is a neuroscience
digital health company specialising in improving brain health by developing and marketing near-patient cognitive
testing technologies for pharmaceutical and healthcare industries worldwide.
The Company is a public limited company which is listed on the Alternative Investment Market (‘AIM’) of the
London Stock Exchange (symbol: 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 the principal trading company, Cambridge Cognition Limited was formed 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.
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 2016. The financial
statements have been prepared under the historical cost convention.
The subsidiary undertakings included within the consolidated financial statements as at 31 December 2017 are
given in note 14.
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):
(cid:120)
(cid:120)
(cid:120)
IFRS 9 Financial Instruments (effective 1 January 2018) - the Group is largely unaffected by IFRS 9
given the nature of its activities. Management has reviewed the impact of consideration of the expected
lifetime credit losses on its trade debtors balance and believes the impact will be immaterial to the
financial statements.
IFRS 15 Revenue from contracts with customers (effective 1 January 2018) – see note 27 for
discussion of the impact of IFRS 15 on the Group
IFRS 16 Leases (effective 1 January 2019) – see note 22 for discussion of the impact of IFRS 16 on
the Group.
All other Standards and Interpretations that are in issue but not yet effected 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. Where a
subsidiary is not wholly-owned, it is consolidated in full, and the percentage not owned by the Group is recorded
as a non-controlling interest.
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.
26
Cambridge Cognition Holdings plc
Notes to the financial statements
3. Significant accounting policies (continued)
3.3 Revenue recognition
The following is a description of revenue recognition policy under the existing accounting standard (IAS 18). For
an overview of the impact of the introduction of IFRS 15, see note 27.
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:
(cid:120)
(cid:120)
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.
(cid:120)
(cid:120)
(cid:120)
Revenue recognised in Statement of Comprehensive Income but not yet invoiced is held on the Statement of
Financial Position within ‘Accrued income’. 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, including consultancy 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. Where the grant
relates directly to the Group’s principal activities, it is taken as revenue. Where the grant relates to payments for
the use of the Group’s products or resources to support broader projects, the grant is taken as other income.
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.
27
Cambridge Cognition Holdings plc
Notes to the financial statements
3. Significant accounting policies (continued)
3.5 Leasing (continued)
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 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.
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 of 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 the period in which they arise.
On consolidation, assets and liabilities have been translated into the UK pound at the closing rate at the reporting
date. Income and expenses have been translated into the UK pound at the average rate over the reporting period.
Exchange differences are charged or credited to other comprehensive income and recognised in the currency
translation reserve in equity.
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 both
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.
28
Cambridge Cognition Holdings plc
Notes to the financial statements
3. Significant accounting policies (continued)
3.9 Taxation (continued)
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.
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. For impairment review purposes
the value in use is assessed with reference to cash flows arising from the Board approved three-year plan using
a 7.5% discount rate. If this calculation suggests the recoverability of goodwill is sensitive to any of these factors,
appropriate scenario modelling is performed.
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:
(cid:120)
(cid:120)
(cid:120)
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.
29
Cambridge Cognition Holdings plc
Notes to the financial statements
3. Significant accounting policies (continued)
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.
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:
(cid:120)
(cid:120)
(cid:120)
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 as the proceeds received, net of direct
issue costs.
Financial liabilities
Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
30
Cambridge Cognition Holdings plc
Notes to the financial statements
3. Significant accounting policies (continued)
3.13 Financial instruments (continued)
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.
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 23.
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 12.
31
Cambridge Cognition Holdings plc
Notes to the financial statements
4. Critical accounting judgements and key sources of estimation uncertainty (continued)
Capitalisation of development costs
The point at which development costs meet the criteria for capitalisation is critically dependent on management
judgement of the probability of future economic benefits. No development was completed in the year which met
the requirements for capitalsation under IAS 38 – Intangible Assets. The research and development expenditure
primarily relates to ongoing research as outlined in the Strategic Report. Therefore, no development costs have
been capitalised during 2017 (2016: £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 23. 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.
5. Segmental Information
An analysis of the Group’s revenue for each major product and service category is as follows:
Software
Services
Hardware
2017
£'000
3,322
3,302
106
6,730
2016
£'000
3,837
2,487
552
6,876
The accounting policies of the reportable segments are the same as the accounting policies described in note 3.
Costs cannot be directly attributed to the products and services above so profit measures are not presented.
Geographical information
The revenue from external customers by geographical location is detailed below:
United Kingdom
United States of America
European Union
Rest of world
All non-current assets are held in the United Kingdom.
Information about major customers
2017
£'000
1,087
4,094
578
971
6,730
2016
£'000
746
4,042
1,101
987
6,876
Revenue amounting to £966,000 (2016: £1,440,000 and £745,000) of reported sales can be attributed to one
(2016: two) customer who accounted for more than 10% of reported revenue for the related year. No other
customers accounted for more than 10 per cent of reported revenue.
6. Other operating income
Other operating income is made up of the following:
Grant income
Sub-lease income
32
2017
£'000
2016
£'000
47
46
86
-
Cambridge Cognition Holdings plc
Notes to the financial statements
7. Operating (loss)/ profit
Operating (loss)/ profit has been arrived at after charging/ (crediting):
Net foreign exchange losses/ (gains)
Research and development costs
Depreciation of property, plant and equipment
Staff costs (see note 9)
8. 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
Audit-related assurance services
Taxation compliance services
Other taxation advisory services
Total non-audit fees
Fees payable to affiliate firms of the Company’s auditor:
Taxation compliance services
Total fees payable to affiliate firms of the Company’s auditor
9. Staff costs
The average monthly number of employees (including executive directors) was:
Operations
Sales and business development
Administrative support
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Other pension costs (see note 24)
Share-based payments charge (see note 23)
2017
£'000
32
1,129
77
4,341
2016
£'000
(164)
890
68
3,810
2017
£'000
2016
£'000
14
21
35
8
9
2
19
45
45
14
21
35
7
8
10
25
14
14
2017
Number
2016
Number
40
12
12
64
2017
£'000
3,605
315
204
217
4,341
33
14
12
59
2016
£'000
3,280
277
170
83
3,810
33
Cambridge Cognition Holdings plc
Notes to the financial statements
10. Taxation
Corporation tax:
Current year
Adjustments in respect of prior years
Deferred tax (see note 17)
Total tax (credit)
2017
£'000
2016
£'000
4
(10)
(6)
-
(6)
-
(106)
(106)
-
(106)
Corporation tax is calculated at 19.25% (2016: 20.00%) of the estimated taxable loss (2016: profit) for the year.
The tax charge for each year can be reconciled to the (loss)/ profit per statement of comprehensive income as
follows:
(Loss)/ profit before tax on continuing operations
Tax at the UK corporation tax rate of 19.25%
(2016: 20.00%)
Expenses not deductible for tax purposes
Deduction on exercise of share options
Movement in unprovided deferred tax
Adjustment in respect of prior years
Foreign tax charge
Tax (credit) for the year
2017
£’000
2016
£'000
(284)
116
(55)
69
(216)
202
23
40
(6)
(57)
(10)
(106)
4
(6)
-
(106)
The credit in respect of prior years relates to the receipt of R&D tax credits in respect of 2015 (2016: also in
respect of 2015). No claim has yet been made for 2016 or 2017 and no credit has been recognised in the
financial statements.
11. Earnings per share
The calculation of the basic and diluted earnings per share (“EPS”) is based on the following data:
Earnings
Earnings for the purposes of basic and diluted EPS per share being net (loss)/
profit attributable to owners of the Company
Number of shares
Weighted average number of ordinary shares for the purposes of basic EPS
2017
£'000
(257)
2017
'000
20,398
2016
£'000
272
2016
'000
19,402
Weighted average number of ordinary shares for the purposes of diluted EPS
20,398
19,473
For 2017, the effect of options would be to reduce the loss per share and as such the diluted loss per share is
the same as the basic loss per share.
For 2016, the impact of diluted shares is so minimal that there is no impact on EPS when rounded to 0.1 pence.
34
Cambridge Cognition Holdings plc
Notes to the financial statements
12. Goodwill
Cost and net book value
At 1 January 2017 and 31 December 2017
At 1 January 2016 and 31 December 2016
Goodwill
£'000
352
352
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might
be impaired. Forecast cash flows for 2018 and beyond validate the value in use of the goodwill and no impairment
provision is required.
13. Property, plant and equipment
Leasehold
Improvements
£'000
Fixtures
and fittings
£'000
Total
£'000
Cost
At 1 January 2016
Additions
Disposals
At 31 December 2016
At 1 January 2017
Additions
Disposals
At 31 December 2017
Depreciation
At 1 January 2016
Charge for the year
Disposals
At 31 December 2016
At 1 January 2017
Charge for the year
Disposals
At 31 December 2017
Net Book value
At 31 December 2017
At 31 December 2016
76
-
-
76
76
-
-
76
47
13
-
60
60
13
-
73
3
16
461
45
(2)
504
504
48
-
552
349
55
(1)
403
403
64
-
467
85
101
537
45
(2)
580
580
48
-
628
396
68
(1)
463
463
77
-
540
88
117
35
Cambridge Cognition Holdings plc
Notes to the financial statements
14. Subsidiaries and joint ventures
Details of the Company’s subsidiaries at 31 December 2017 are as follows:
Name
Place of
incorporation
(or registration)
and operation
Cambridge Cognition Limited
United Kingdom
Cambridge Cognition Trustees Limited
United Kingdom
Cambridge Cognition LLC
Delaware, United
States of America
Proportion
of
ownership
interest
%
100%
100%
100%
Cantab Corporate Health Limited
United Kingdom
100%
Cognition Kit Limited
United Kingdom
50%
Proportion
of
voting
power held
%
100%
100%
100%
100%
50%
On 31 May 2017, the Group purchased the 30% of Cantab Corporate Health Limited that it did not previously
own for the nominal value of the shares, £30.
The results and assets of Cognition Kit Limited are immaterial to the Group. Accordingly, detailed joint venture
disclosures have not been presented.
All the above companies, except Cambridge Cognition Limited, are held via Cambridge Cognition Limited. All UK
entities have their Registered Office at the Company’s registered office. The Registered office of Cambridge
Cognition LLC is 2750 Rasmussen Road, Park City, UT 84098, USA.
All holdings are in ordinary shares.
15. Inventories
Finished goods and goods for resale
2017
£'000
2016
£'000
33
37
During the year inventories with a total value of £77,000 (2016: £343,000) were included in the income
statement as an expense.
36
Cambridge Cognition Holdings plc
Notes to the financial statements
16. Trade and other receivables
Amount receivable for the sale of goods and services
Allowance for doubtful debts
Prepayments and accrued income
Other receivables
2017
£'000
1,201
-
1,201
854
191
2,246
2016
£'000
1,454
(30)
1,424
596
157
2,177
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 which are past due at the year-end (see below for aged
analysis) 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 46 days in 2017 (2016: 66 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 year
(Decrease)/ increase in provision
Balance at the end of the year
2017
£'000
72
8
-
36
116
2017
£'000
30
(30)
-
2016
£'000
97
219
27
191
534
2016
£'000
20
10
30
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.
A total of £34,000 of bad debt was written off in the year, £30,000 of which had been previously provided as
above.
17. Deferred Tax
At the reporting date, the Group has unused tax losses of £8.7 million (2016: £8.5 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. Losses may be carried forward indefinitely. No deferred tax asset has
been recognised in respect of share options.
37
Cambridge Cognition Holdings plc
Notes to the financial statements
18. Trade and other payables
Amounts falling due within one year
Trade payables
Social security and other taxes
Other payables
Accruals and deferred income
2017
£'000
278
92
28
1,149
1,547
2016
£'000
265
71
20
1,850
2,206
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs.
The average credit period taken for trade purchases is 48 days (2016: 28 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.
19. Share capital
Issued and fully paid
20,697,870 (2016: 20,429,235) Ordinary Shares of £0.01 each
2017
£’000
2016
£’000
207
204
During 2017, 268,635 Ordinary shares were issued to satisfy the exercise of employee share options.
20. Own Shares Reserve and Other Reserve
Own Shares Reserve
2017
£’000
2016
£’000
43
47
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 2017 was 102,693 (2016: 112,193).
During the year employees exercised 8,000 share options at an exercise price of £0.01 and 1,500 share options
at £0.70 which were satisfied by the Employee Benefit Trust. A transfer of £4,000 was made from Own Shares
Reserve to Retained Earnings in respect of these exercised options.
The Other Reserve in the consolidated statement of changes in equity is made up of £5,981,000 which arose
when the Company became the new Group holding company in April 2013, and £42,000 of cumulative exchange
differences on the translation of foreign operations.
38
Cambridge Cognition Holdings plc
Notes to the financial statements
21. Notes to the cash flow statement
(Loss)/ profit before tax
Adjustments for:
Depreciation of property, plant and equipment
Share-based payment expense
Operating cash flows before movements in working capital
Decrease in inventories
(Increase) in receivables
(Decrease)/ increase in payables
Cash generated by operations
Tax credit received less tax paid
Net cash from operating activities
Cash and cash equivalents
Cash and bank balances
2017
£'000
2016
£'000
(284)
116
77
217
10
4
(52)
(592)
(630)
6
(624)
2017
£'000
1,859
68
83
267
21
(575)
567
280
193
473
2016
£'000
2,384
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.
22. Operating lease arrangements
Lease payments under operating leases
recognised as an expense in the year
2017
£'000
2016
£'000
171
162
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
2017
£'000
98
-
-
2016
£'000
139
91
-
Operating lease payments represent rentals payable by the Group for rent. Property rental across three buildings
has an average of 7 months to expiry at 31 December 2017.
IFRS 16 Leases will apply to the Group from 1 January 2019. On application, operating leases with a duration of
greater than one year will be recognised as both a fixed asset and a financial liability. These will be realised
subsequently in the income statement through depreciation and a combination of cash payments and finance
charges respectively. The exact values will depend on the length and cost of leases contracted at that time. As
can be seen from above, the only operating leases the Group presently holds relate to property.
39
Cambridge Cognition Holdings plc
Notes to the financial statements
23. 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:
2017
2016
Number of
share
options
Weighted
average
exercise price
(in £)
Number of
share
options
Weighted
average
exercise price
(in £)
Outstanding at beginning of year
Exercised during the year
Granted during the year
Forfeited during the year
Outstanding at the end of the year
2,155,708
(278,135)
287,200
(371,167)
1,793,606
0.35
0.70
0.01
0.71
0.17
1,874,888
(10,000)
1,150,000
(859,180)
2,155,708
0.68
(0.01)
0.01
(0.61)
0.35
Exercisable at the end of the year
391,406
0.73
333,374
0.64
The options outstanding at 31 December 2017 had a weighted average remaining contractual life of 8.4 years.
Options were granted on 9 May 2017, 28 July 2017 and 1 November 2017. The performance conditions attached
to some of these options are such that options vest dependent on the Company achieving certain performance
hurdles. The performance conditions, which are both market and non-market conditions, have been incorporated
into the measurement by actuarial modelling. The aggregate of the estimated fair values of the options granted
is £270,000. The inputs into the Binomial Option model for the main tranche of performance related options were
as follows:
Share price at date of issue
Exercise price
Expected volatility
Expected life
Risk-free rate
Expected dividend yields
May 2017
123p
1p
43%
3 years
0.12%
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 £217,000 (2016: £83,000), related to equity-settled share-based
payment transactions.
24. 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 £204,000 (2016: £170,000) represents contributions payable to these
schemes by the Group at agreed rates. As at 31 December 2017, contributions of £19,000 (2016: £18,000) due
in respect of the current reporting year had not been paid over to the schemes.
40
Cambridge Cognition Holdings plc
Notes to the financial statements
25. 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 2017.
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
2017
£'000
1,859
3,031
2016
£'000
2,384
2,861
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
2017
£'000
2016
£'000
1,859
1,391
2,384
1,538
771
1,015
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, which includes projections to at least the end
of the present year. The Group maintains cash and cash equivalents to meet its liquidity requirements for up to
a 30-day period.
At 31 December 2017, the Group’s financial liabilities had contractual maturities which are summarised below:
Trade payables
Other payables
2016
£'000
Within 1 year Within 1 year
2017
£'000
278
493
771
246
769
1,015
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.
41
Cambridge Cognition Holdings plc
Notes to the financial statements
25. 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
Qatari Riyal
Liabilities
Assets
2017
£'000
31
3
-
2016
£'000
11
-
-
2017
£'000
1,124
246
4
2016
£'000
1,139
147
207
A movement in the £/$ exchange rate of +/- 5% from 31 December 2016 to the date of realising the US dollar
net asset position would result in a gain/loss of £55,000 (2016: £56,000). Similarly, with the Euro, the gain/loss
would be £12,000 (2016: £7,000), and with the Qatari Riyal the gain/loss would be negligible (2016: £10,000).
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.
26. 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.
Transactions with Cognition Kit Limited
Cognition Kit Limited is the Group’s 50% owned joint venture.
During the year the Group invoiced £56,115 (2016: nil) to Cognition Kit Limited, representing both the value of
time and expenses of the Group. At year-end a balance of £5,000 was owed to the Group by Cognition Kit Limited.
The Group has also accrued for the repayment of £59,421 of revenue for time spent by the Group’s personnel in
relation to Cognition Kit Limited (2016: £35,198 accrued in relation to time and expenses).
Further, the Group paid Cognition Kit Limited £6,538 in referral fees in the year (2016: nil). No balance was
outstanding at 31 December 2017 (2016: nil).
42
Cambridge Cognition Holdings plc
Notes to the financial statements
Remuneration of directors and key management personnel
The remuneration of 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. The key management personnel of the Group at 31
December 2017 consist of the Directors and three additional senior staff.
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
2017
£'000
2016
£'000
631
12
-
148
791
609
9
-
72
690
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 2017 the Group incurred consultancy fees of £36,000 (2016: £48,000) from MCR
Holdings, a partnership of which Nicholas Walters is a partner. At 31 December 2017 a balance of £2,714 (2016:
£5,481) was outstanding to MCR Holdings.
In addition to the above, during 2016 the Group incurred consultancy fees of £21,000 from Actionreaction
Limited, a company of which Nicholas Kerton is a director. At 31 December 2016 a balance of £2,000 was
outstanding to Actionreaction Limited. No transactions with Actionreaction Limited occurred in 2017 and no
balance is owing.
27. Introduction of IFRS 15: Revenue from contracts with customers
IFRS 15 became effective for the Group on 1 January 2018. The Group has chosen to adopt IFRS 15 as of 1
January 2018 and recognise the cumulative effect of the initial application at that date. This means that the
results for 2017 and 2016 as presented in these financial statements are presented under IAS 18: Revenues.
Differences between IAS 18 and IFRS 15 for the Group
There are three changes in accounting policy for the Group given the adoption of IFRS 15.
1) For licences that are hosted on our own servers, we are now measuring these in one of two ways:
a.
b.
For contracts where we also provide study and data management services, and also for any
other contract greater than £20,000 in value, we are allocating a per assessment price to the
assessments sold and amortising the deferred revenue over the period the assessments are
used.
For all other sales, we are recognising revenue on a straight line period of 12 months. This
period has been chosen as it best represents the average life of this portfolio of contracts.
In either of these cases, the customer purchases a right to use our intellectual property as it exists
throughout the licence period, and our performance obligation is therefore executed over a period of
time.
2) For licences that are not hosted on our own servers, we now only recognise the revenue when the licence
period commences, even if the order has been placed and accepted, and software prepared, prior to this
date. In this case, the customer purchases a right to use our intellectual property at the point in time
the licence commences, and so our performance obligation is discharged upon delivery of the licence.
3) Where commissions are paid based on revenues that are not expected to be recognised within 12
months, the commission is capitalised and held as an asset on the balance sheet, before being amortised
in line with the related revenue.
43
Cambridge Cognition Holdings plc
Notes to the financial statements
Adjustment to be posted to the accounts dated 1 January 2018
As described above, the Group posted an adjustment to its accounts on 1 January 2018. This adjustment impacts
the balance sheet, with the corresponding value being debited or credited to accumulated reserves.
The value of this adjustment with respect to each of the three changes detailed above was as follows:
1) Deferred revenue increased by £1,843,000
2) Deferred revenue increased by £164,000
3) An asset of £50,000 created
This resulted in a total debit to opening reserves of £1,957,000
The following table shows the 31 December 2017 values as per these financial statements and the revised balance
as at 1 January 2018.
Balance sheet caption
Prepayments and accrued income
(part of trade and other receivables)
Total assets
Accruals and deferred income (part
of trade and other payables)
Total liabilities
Retained earnings
Total equity
Total liabilities and equity
As presented at 31
December 2017 (£’000)
854
As
revised on 1
January 2018 (£’000)
904
Difference
(£’000)
50
4,578
1,149
1,547
(10,863)
3,031
4,578
4,628
3,156
3,554
(12,820)
1,074
4,628
50
2,007
2,007
(1,957)
(1,957)
50
Results for 2017 and 2016 under IFRS 15
As explained above, the audited financial results have not been restated for IFRS 15.
For information, the summary below shows management’s estimate of key results had IFRS 15 been applied to
prior periods.
2017 – as
reported (£’000)
2017 – revised for
IFRS 15 (£’000)
Revenue
Cost of sales
Gross profit
(Loss)/ profit
before tax
(Loss)/ profit for
the year
6,730
(622)
6,108
(284)
(278)
6,896
(636)
6,260
(132)
(126)
2016 – as
reported
(£’000)
6,876
(986)
5,890
116
2016 – revised
for IFRS 15
(£’000)
5,149
(934)
4,215
(1,559)
222
(1,453)
44
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
Retained earnings
Total equity
Notes
At 31 December
2017
At 31 December
2016
£'000
£’000
2
3
4
5
351
351
5,117
562
5,679
232
232
4,976
699
5,675
6,030
5,907
62
62
207
7,707
(1,946)
152
152
204
7,517
(1,966)
5,968
5,755
Total liabilities and equity
6,030
5,907
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 £197,000 (2016: £217,000).
The financial statements of Cambridge Cognition Holdings plc on pages 45 to 48 were approved and authorised
for issue by the Board on 21st March 2018 and were signed on its behalf by:
Steven Powell
Chief Executive Officer
45
Cambridge Cognition Holdings plc
Parent Company statement of changes in equity
Balance at 1 January 2016
(Loss) for the year
Issue of new share capital
Share issue costs
Credit to equity of equity-settled share-
based payments
Transactions with owners
At 31 December 2016
Balance at 1 January 2017
(Loss) for the year
Issue of new share capital
Credit to equity of equity-settled share-
based payments
Transactions with owners
At 31 December 2017
Share
capital
£’000
Share
premium
£’000
Retained
earnings
£’000
Total
£’000
170
6,412
-
34
-
-
-
1,219
(114)
-
(1,832)
(217)
-
-
83
4,750
(217)
1,253
(114)
83
34
204
1,105
7,517
83
1,222
(1,966)
5,755
204
7,517
-
3
-
3
-
190
-
190
(1,966)
(197)
-
217
5,755
(197)
193
217
217
410
207
7,707
(1,946)
5,968
46
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. The Company has elected to use Financial Reporting Standard – ‘The Reduced
Disclosure Framework’ (FRS 101). The Company has taken advantage of the following disclosure exemptions
afforded by FRS 101:
- 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 26 of the Group
accounts and the Directors Remuneration Report)
- Capital management disclosures (though see note 25 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 23 of the consolidated financial statements
- Disclosure exemption on financial instrument disclosures (IFRS 7) as this information has been presented
for the Group in note 25 of the consolidated financial statements.
The principal accounting policies are summarised below. They have all been applied consistently throughout the
year. The accounts are presented in Pounds Sterling (“£”), and to the nearest £1,000.
1.2 Investments
Fixed asset investments in subsidiaries are shown at cost less provision for impairment. The Company accounts
for share options granted to the employees of subsidiary undertakings by recognising an increased investment
in the subsidiary, with the corresponding credit recognised in reserves.
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.
Assets and shares of the EBT are not consolidated into the Parent company. Own shares, as previously
presented, in the statement of changes in equity have been reclassified to conform with current accounting
treatment under IAS 27. 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.
47
Cambridge Cognition Holdings plc
Notes to the Parent Company financial statements
2. Investments
Cost
At 1 January 2017
Additions
At 31 December 2017
Provisions for impairment
At 31 December 2016 and At 31 December 2017
Net Book value
At 31 December 2017
At 31 December 2016
Investment in
Subsidiaries
£'000
232
119
351
-
351
232
The subsidiary undertaking at the end of the year was as follows:
Name
Cambridge Cognition Limited
Country
of
Operation
United
Kingdom
Proportion of
Ownership and
Voting Power Held
100%
Nature of Business
Development and sale of
computerised
neuropsychological tests
Other Group subsidiaries, all of which are owned indirectly through Cambridge Cognition Limited are detailed in
note 14 of the Group accounts. All subsidiaries have been included in the consolidated accounts.
3. Trade and other receivables
Amounts due from subsidiary undertakings
Other receivables
2017
£’000
5,103
14
5,117
2016
£'000
4,951
25
4,976
£5,100,000 of the amounts due from subsidiary undertakings is considered a long term loan to Cambridge
Cognition Limited, and the Company receives interest at a rate of 7.5% per annum on this amount. The remaining
balance is of an operating nature and is cleared regularly.
4. Trade and other payables
Trade payables
Social security and other taxes
Accruals
5. Share capital
2017
£’000
2016
£'000
27
13
22
62
31
13
108
152
The details on the share capital of the Company are provided at note 19 to the Group’s accounts.
6. Employment costs
The only employees of the Company are the Directors. 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.
48
Perivan Financial Print 249646