Registered No: 8211361
Cambridge Cognition Holdings plc
Annual Report and Accounts
31 December 2021
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 CONSOLIDATED FINANCIAL STATEMENTS
PARENT COMPANY STATEMENT OF FINANCIAL POSITION
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
PAGE
2
3-10
11-12
13-16
17-18
19-30
31
32
33
34
35-54
55
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57-58
Cambridge Cognition Holdings plc
Corporate Directory
Directors:
Registered Office:
Steven Powell
Matthew Stork
Richard Bungay
Debra Leeves
(Non-Executive Chairman)
(Chief Executive Officer)
(Non-Executive Director)
(Non-Executive Director)
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
Brown Rudnick LLP
8 Clifford Street
London
W1S 2LQ
Barclays
28 Chesterton Road
Cambridge
CB4 3AZ
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Panmure Gordon (UK) Ltd.
One New Change
London
EC4M 9AF
Dowgate Capital Limited
15 Fetter Lane
London
EC4A 1BW
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Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2021
CHIEF EXECUTIVE’S REVIEW
Financial summary
-
-
-
-
-
Revenue up 50% to £10.1m (2020: £6.7m)
Gross profit up 49% to £8.1m (2020: £5.4m)
Profit for the year £0.5m (2020: £0.4m loss)
Profit per share 1.4 pence (2020: 1.5 pence loss per share)
Cash balance of £6.8m at 31 December 2021 (31 December 2020: £3.0m)
Operational highlights
Contracted order book £17.0m at 31 December 2021 (31 December 2020: £11.2m)
Record sales intake of £15.7m (2020: £12.7m)
-
- Major contract wins, including a £2.3m large cohort study
-
- Well-managed growth leading to profitability
-
-
Proprietary speech technology for clinical trials in validation trials
Completed spin-out of digital phenotyping business, Monument Therapeutics
Overview
2021 has been a landmark year and inflection point for the Company. With considerable momentum from
successes in 2020, the Company delivered record sales, 50% revenue growth, and profitability in 2021. I am
grateful to both the investors who have supported us and our team for their commitment and hard work as we
have grown the business.
Cambridge Cognition’s goal is to improve the health of people around the world by discovering and delivering
more effective brain health assessments. The Company’s leading computerised cognitive assessment, CANTABTM,
was developed with this in mind at Cambridge University. We have subsequently built upon that position with a
suite of in-clinic and home-based digital and verbal cognitive tests and electronic Clinical Outcomes Assessment
(“eCOA”) instruments.
We have continued to focus on commercial execution to drive sales of our innovative solutions for clinical trials.
At the same time, there has been increased demand with an acceleration of the trend towards virtual clinical
trials and more investment in Central Nervous System (“CNS”) drug development. These dynamics resulted in
substantial orders and subsequent revenue growth for both our software and services. We consistently provided
value for our loyal and growing customer base of leading academics, top 20 pharmaceutical and biotech
companies.
There were some more delays to clinical trials due to the pandemic in 2021 – fewer than in 2020 – and once
again the impact on revenues were offset by new contract gains. With our experience in, and infrastructure for,
web-based assessment we were able to support customers with at-home-measurement as part of a virtual or
hybrid clinical trial.
In addition to delivering a strong performance in 2021, the contract wins over the year mean we are well prepared
for 2022 and beyond with a contracted order book of over £17 million at the start of 2022, of which at least £7.5
million is expected to be recognised as revenue in 2022, subject to customer delivery schedules. This gives the
Company excellent visibility of revenue into the year ahead.
Cambridge Cognition has a reputation for leading in the development of novel digital cognitive assessments. This
is evident from the widespread use of CANTAB™ amongst the academic research community, the leading
members of which frequently advise pharmaceutical companies on clinical trial design. The evidence for
CANTAB™ continues to build and there are now over 2,500 publications of studies across over 100 therapeutic
areas. We were also pleased with the progress made developing and publishing on new short, high frequency
cognitive assessments on mobile phones.
We took a major step forward in 2021 with considerable scientific communication on our proprietary speech
technology, NeuroVocalixTM, a fully automated voice platform that is being specifically developed for clinical trials.
Over the year, we completed the platform product development, moving it from an R&D environment to our
regulatory compliant production environment, and are working on verbal assessments for the platform and
validation clinical trials.
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Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2021
Our strategic focus on clinical trials saw us finalise the spin-out of a digital phenotyping business, Monument
Therapeutics, retaining a minority shareholding and the potential for royalties in the future.
Financial Results
Revenue grew by 50% to £10.1m (2020: £6.7m). Revenue is recognised over the term of the contracts and so
the £10.1m revenue recognised in 2021 was from contracts won both in 2021 and in prior years.
We anticipate the £17.0m contracted orderbook at the end of December 2021 will generate at least £7.5m of
revenue to be recognised in 2022 with the balance to be recognised in subsequent years.
Recognised revenue split by type was as follows:
2021
2020
Increase
Increase
Software
Services
Total Software & Services
Hardware
£m
3.6
5.6
9.2
0.9
Total Revenue
10.1
£m
2.7
3.7
6.4
0.3
6.7
£m
0.9
1.9
2.8
0.6
3.4
33%
51%
44%
300%
50%
Services revenue grew by 51% as more implementation and bespoke development work was carried out.
Software revenue improved by 33% but, given the time lag between contract signature and software usage, we
would expect this to grow further in 2022.
Hardware sales have increased considerably as a percentage of revenue in 2021; the hardware, which is procured
from third parties, is only supplied by Cambridge Cognition when specifically requested by a customer to support
a project. Hardware sales had been expected to decline as digital devices become ubiquitous, however, we now
integrate wearable devices into our solution and so increased the supply of these in 2021.
Gross profit was £8.1m (80.2% margin) compared with £5.4m (80.4% margin) in 2020. The additional spending
on hardware was offset by a reduction in third party costs.
Administrative expenses increased by 28% to £7.8m (2020: £6.1m) primarily as a result of an increase in
headcount post the COVID-19 recovery, which accounts for £1m of the increase. The remainder is due to
increased legal, professional and third-party services costs.
As planned, investment in research and development, which is necessary to maintain the company’s position at
the forefront of the sector, was more targeted in 2021 and this resulted in R&D spend of £1.7m (2020: £1.5m).
Profit before tax was £0.3m (2020: loss before tax £0.6m). R&D tax credits were £0.2m (2020: £0.2m). The
post-tax profit for the year was £0.5m (2020: post tax loss £0.4m), which equates to earnings per share of 1.4
pence (2020: 1.5 pence loss per share).
Cash inflow from operating activities was £3.9m (2020: £1.0m), driven by the high value of sales orders. Sales
contracts for clinical trials typically include an amount of cash billable upon signing, and as such an invoice is
raised (and cash subsequently collected) as contracts are executed and before revenue is recognised.
After investing activities total cash inflow was £3.8m, and the year-end cash balance was £6.8m, which provides
a solid platform for growth (31 December 2020: £3.0m).
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Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2021
Operational Review
Cambridge Cognition had a productive year in 2021, progressing major contracts and achieving a number of
milestones, while carefully managing costs. The achievements spanned winning sizeable new contracts,
improving the Group’s brand position, continuing innovative developments, and spinning-out a drug development
business.
Record sales order intake. Our commercialisation activities resulted in record sales orders of £15.7m in 2021.
There were three main contributors: first, with excellent customer service – seen in survey responses – we
routinely see clients contracting multiple times over many years; secondly, we have been targeting new
therapeutic areas with the potential for increasing use of cognitive assessments; and thirdly, we have been
continuing to lead with new solutions and so increased average order values for clinical trials by 30%.
Large contract wins. As announced, to maintain visibility for investors, we won several large multi-year
contracts: three announcements totalling £2.9m in contract value for schizophrenia trials, a £0.5m contract for
at-home testing, £1.4m for digital health and wearables, a £2.2m contract for a large cohort study, a £1m
contract for a late phase cancer trial, and £0.5m for a non-CNS electronic Cognitive Outcomes Assessment
(“eCOA”) study.
Leading brand position in the scientific community. As leaders in cognitive assessment, Cambridge
Cognition continued to hold a prominent position in the scientific community over 2021. This included presenting
cutting-edge data at more than 20 conferences around the world and writing our own and supporting
pharmaceutical companies to author papers using data from our assessments. We collaborated with leading
pharmaceutical companies, such as Novartis, to present as well. We also secured more research partnerships
with prestigious consortia, such as the BrainHealth Registry.
Proprietary speech technology for clinical trials productised and being validated. Verbal
neuropsychological tests are highly sensitive to the early signs of neurodegeneration in older adults. However,
their dependence on in-person testing and manual scoring means they are costly and can be unsuitable for large-
scale screening and home-based monitoring. To address this, Cambridge Cognition developed a fully automated
voice platform, NeuroVocalix™. In 2021, we completed its productisation, setting the Company up with the
potential to serve more customers with a proprietary platform capable of automating the delivery and scoring of
key cognitive assessments for clinical trials within the security requirements of this highly regulated industry.
We are working on a battery of tests and validation trials with two leading universities; these are essential to
fully commercialise the solution.
Completed spin-out of digital phenotyping business. Having won a sizeable grant to investigate digital
phenotyping, we incubated a new business, raised seed funding and spun it out. Monument Therapeutics is now
operating as a wholly independent business with a license from Cambridge Cognition. The initial shareholding
was diluted by additional fundraising by Monument Therapeutics to extend their runway before a Series A
investment round. Upon successful commercialisation of Monument Therapeutics’ drug development
programmes, Cambridge Cognition will be paid royalties.
Strategic Review
Cambridge Cognition serves a niche, high value requirement for CNS outcomes assessments with differentiated
software and services offerings with intellectual property protection. Our strategy is to focus primarily on the
clinical trials market as the assessments can be used to demonstrate the efficacy or safety of a potential new
therapeutic agent and therefore provide extremely valuable information for a pharmaceutical or biotech company.
We also serve the healthcare and academic markets, direct in some markets and via distributor in others.
We have a strong position in our core market for cognitive outcomes assessments and have made good initial
progress in the eCOA market. Our recent market analysis, supported by market research and in-depth interviews
with our target customers, has demonstrated that there continues to be a considerable potential for growth.
We expect the dynamic market for clinical trial outcomes assessments to continue to evolve rapidly. We are
seeing several favourable trends that could continue well into the future:
1. Market growth is predicted to be 17%1 and 30%2 for the eCOA market and the cognitive outcomes
assessment market for clinical trials respectively.
2. There has been a pre-existing gradual trend away from ‘pen-and-paper’ questionnaires administered by
clinicians or raters in clinical trials towards objective digital measures, whether in clinic or at home. More
recently, this has been overtaken by the requirement for digital measurements at home.
3. The COVID-19 pandemic reduced access to clinical trial sites and accelerated the adoption of virtual or hybrid
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Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2021
clinical trials, with a 50% increase compared to 20203. Virtual assessments enable patients to participate in
clinical trials from home and can be more cost-effective, inclusive and representative.
4.
Industry is increasingly investing in CNS drug development. In 2021, pharmaceutical companies sponsored
the delivery of more than 850 CNS trials, up 10% on 20204. This investment is set to continue in 2022 and
beyond with more than 1,800 neurological products in preclinical development5.
5.
Investment in new digital biomarkers for many conditions and symptoms, sometimes from an existing or
new digital assessment or wearable device and sometimes combining data from multimodal sources.
During the second half of 2021, having delivered much of the strategy set in 2019, we conducted a major review
and have set out plans for the next phase of growth. The areas of focus are:
•
Increasing market share and sales of cognitive assessments and eCOA solutions with proactive preparation
of new assessments, increased sales and marketing capacity, and commercial distribution agreements for
new territories and market sectors.
• Developing new intellectual property to serve the evolving demands of the industry for digital assessments
and biomarkers. The potential for these is considerable with hundreds of clinical trials already using pen-
and-paper cognitive assessments that could be automated. Our primary programme is our voice-based
cognitive assessment solution, NeuroVocalix™. We are also completing a battery of quick assessments for
use on mobile phones. We are developing these in-house and validating them with leading academic
institutions and major pharmaceutical companies.
Pursuing opportunities for inorganic growth through corporate development activities, such as partnership
and licensing-in software and/or services. As is normal after an early stage of widespread investment in a
new field, there have been some acquisitions in the sector and further consolidation is likely in the longer-
term. Against this backdrop, in 2022 and beyond we will review our inorganic growth options by evaluating
complementary products and services that could increase the breadth of our offering and gain scale
efficiencies. We have a leading position in our core business area, a strong platform and a robust balance
sheet to support corporate business development.
•
Importantly, to achieve these strategic goals, we are carefully managing our investment and growth. We have
several underlying enabling activities:
1. Having an outstanding team. We are supporting our existing team and recruiting people to implement the
new contracts we are winning and also to complete the projects outlined above. Recruitment has lagged
delivery slightly in this difficult market for hiring though we are making progress.
2. Upgrading our systems and protecting against cyberattacks. We are working on moving – we are live in one
country – to Amazon Web Services (AWS) to have more flexible server capacity and access to more
microservice usage. We continue to run a full cybersecurity programme.
3. Enabling efficient growth. For example, we set out and have now implemented a plan to open a software
development unit in a lower cost overseas country. This will over time reduce our costs while increasing
output.
We have started implementing this new strategy and the enabling activities in order to make further progress in
2022.
COVID-19
Throughout the pandemic, our first priority has been the safety and welfare of our staff, people in our local
environment, suppliers and customers. The Group has cloud-based systems and has been fully operational
throughout, working virtually at times.
We have seen an acceleration of interest in virtual and hybrid clinical trials. Orders for at-home testing with our
cognitive assessments have grown rapidly. We have leveraged a publication that showed that our most popular
cognitive assessments provide the same results at home as they do in the clinic6.
At the start of the pandemic, many clinical trials were delayed. This was less the case in 2021 compared to 2020.
We do expect this to reduce over time. Uncertainty persists, however, and so we will continue to carefully monitor
the situation and adjust plans as necessary.
Russia & Ukraine
The war in Ukraine is a concern for all and our thoughts are with those affected. We have no employees or
service providers that are based in Ukraine or Russia. However, although based elsewhere, a small number of
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Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2021
the Company’s pharmaceutical and academic clients run trials at sites in these countries. We continue to
communicate with affected customers, monitor the situation, and do all we can to support them.
We have a few direct customers in the region, all academic centres that use our academic solution, and have
halted any new contracts with Russian centres at this time. This has had no effect on the Company’s current
revenues.
Board Changes
Two appointments have been made to the Company’s senior management team post period end in April 2022.
Stephen Symonds has joined as Chief Financial Officer and is expected to be appointed to the board in due
course. Nick Walters, previous CFO who has provided transition support since the departure of Michael Holton,
is now handing over to Stephen. The Board wish both Nick and Michael well in their future endeavours. Francesca
Cormack was appointed to be Chief Scientist to oversee our science leadership and research & development and
Jenny Barnet, Chief Science Officer, will step down to concentrate on leading our spin-out, Monument
Therapeutics.
Outlook
We made excellent progress in 2021, delivering strong growth in orders, revenues and cash generation, together
with moving into profitability and earnings ahead of market expectations. Furthermore, with a strong contracted
order book providing excellent visibility of revenue through 2022 and well-beyond, we expect the Group is well
placed for further success. There does remain some uncertainty due to COVID-19 and the wider impact of the
war in Eastern Europe, though these are considered limited at this time.
We have set out three growth strategies to expand market share in current markets, automate more assessments
as demand increases for virtual clinical trials and seeking corporate business development opportunities. Each of
these represents exciting growth opportunities for Cambridge Cognition.
With this clear growth strategy, together with a substantial pipeline of opportunities in an expanding market, we
believe Cambridge Cognition is positioned to deliver substantial, sustainable shareholder value in 2022 and
beyond.
Matthew Stork
Chief Executive Officer
13th May 2022
References.
1. GrandView Research 2018 eCOA Report 2018-20225
2. Astute Analytica. 2021. US Cognitive Assessment Market. 2017-2027.
3. TrialTrove (accessed 15.02.22)
4. Source: TrialTrove (accessed 15.02.2022)
5. Source: PharmaProjects (accessed 15.02.2022)
6. https://www.jmir.org/2020/8/e16792
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Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2021
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 2021 being the Group’s first profitable year since 2016.
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 2023. The monitoring of cash and future projected cash flows, as well as the sales pipeline is included
in monthly reporting 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. As well as driving commercial
success, 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 continued success in this area over the last year and more. However, the
rate of future growth will be determined by the take up of these products in the various markets we serve.
Covid-19
The Group adapted well to the challenges posed by Covid-19, and the increased interest in remote clinical trials
is likely to be a long-term benefit to the Group. Operationally, the Group adapted quickly and well to remote
working. The business remains fully operational, and we believe the business can withstand reasonable downside
risk. However there remains some uncertainty as to when operations will return to near normal, and as such the
situation is under constant review.
Brexit and related changes
The United Kingdom has left the European Union (‘EU’). The Group kept the situation during 2021 under review
and there have not been any immediate, detrimental impacts either in 2021 or 2022 to date. Nonetheless, the
Group remains watchful, and in particular to the following factors: Regulations, especially General Data Protection
Regulations (‘GDPR’), imports and exports; currency changes; inputs on the broader economy; and employees
who are EU nationals.
Cybersecurity
Cybersecurity has become an increasing risk for all businesses, though particularly those offering cloud-based IT
services, and indeed a competitor, ERT, was down for a period in 2020 due to a cyber attack. The business takes
the threat seriously using several specialist, expert consultants to assess and put in place measures as best
possible to prevent ransomware, social engineering, and insider threats. Vulnerability is assessed by a well
known third party specialist company on an ongoing monthly basis with a deep assessment every six months.
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Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2021
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 and rewards commensurate with their seniority 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 2021, two customers accounted for more than 10% of the revenue of the business,
amounting to just over 20% in total. Over recent years, the increased diversity of our product offering has led to
an increased diversity in both our products and our customer base that has continued to mitigate this risk.
Nonetheless, there is a risk that the loss of a major customer would result in a revenue shortfall.
KEY PERFORMANCE INDICATORS
The Directors have monitored the performance of the Group with particular reference to the key performance
indicators being revenue and sales orders, operating margin and cash flow. An overview of the financial results
for the year is provided on page 3.
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. Unfortunately, this
cannot be readily measured in the style of a KPI. The directors are pleased with the successes in developing
products during 2021, and the plans for continued innovation.
9
Cambridge Cognition Holdings plc
Strategic Report for the year ended 31 December 2021
SECTION 172(1) STATEMENT
The directors consider, both individually and collectively that they have taken decisions in a manner they consider,
in good faith, would be most likely to promote the success of the Group for the benefit of its stakeholders, having
regard to the matters set out in s172(1) of the Companies Act 2006:
The likely consequences of any decision in the long-term: the long-term success of the Group is always a key
factor when making strategic decisions. Strategic Plans are prepared every year focussing on a minimum three-
year period.
The interests of the Group’s employees: the Group’s employees are our key asset and hence we take their
wellbeing and development very seriously. The Group believes it offers competitive remuneration packages and
seeks to engage employees regularly. The Group has worked hard to maintain contact with employees even with
many employees working from home, principally through fortnightly town hall meetings, but also ensuring that
line managers are staying close to their teams. All employee surveys on relevant issues have been undertaken
each quarter in 2021 and the Group has implemented appropriate action plans as a consequence.
The need to foster the Group’s business relationships with suppliers, customers and other: the Group has a
dynamic relationship with our customers with regular contacts across organisations; we also seek to have
constructive and mutually beneficial relationships with our suppliers. Customers are regularly asked for specific
feedback, a feedback survey is completed at the end of each study we support and the feedback received is used
to help shape future engagements. Shareholders are also a key stakeholder and we seek to engage shareholders
through both generic and specific outreach, covering both financial results and our innovation and future plans.
The impact of the Group’s operations on the community and the environment. The Group’s aims to execute its
operations with due regard to the environment. Charities are supported by donations, fundraising, allowing
employees two days leave for charitable activities and the donation of equipment.
The desirability of the Group maintaining a reputation for high standards of business conduct: integrity of
individuals and corporate integrity are at the heart of all we do and embedded in our culture through formal (e.g.
Standard Operating Procedures) and informal means.
The need to act fairly as between members of the Group: no single set of stakeholders is prioritised over another
– all decisions aim to be equitable across all stakeholders.
Approved by the Board of Directors and signed on behalf of the Board.
Matthew Stork
Chief Executive Officer
13th May 2022
10
Cambridge Cognition Holdings plc
Report of the Directors for the year ended 31 December 2021
The Directors present their report on the affairs of the Group and Company together with the financial statements
for the year ended 31 December 2021. The Group financial statements are prepared under international
accounting standards in conformity with the requirements of the Companies Act 2006.
PRINCIPAL ACTIVITIES
Cambridge Cognition Holdings plc (‘the Company’) and its subsidiaries (together, ‘the Group’) specialises in
improving brain health by developing and marketing near-patient cognitive testing techniques. The likely future
developments of the business and the nature of research and development activities are discussed in the strategic
report.
GOING CONCERN AND FINANCIAL RISK MANAGEMENT
The Directors have assessed the Group’s ability to continue as a going concern, in particular in light of the ongoing
Covid-19 pandemic situation. As noted in the Strategic Review, the business has remained fully operational to
date and order intake in 2021 was excellent.
Whilst having proper regard to the continuing uncertainties brought by the pandemic, the Directors believe that
the Group will remain a going concern for the foreseeable future. Accordingly, the accounts have been prepared
on the going concern basis. More details are given in note 3.2 to the financial statements.
Further information on the Group’s financial risk management strategy can be found in note 26 to the accounts.
SHARE ISSUES
The issued share capital of the Company is set out at Note 20 to the accounts.
DIRECTORS
The Directors who held office at 31 December 2021 and their interest in the share capital of the Company were:
Ordinary Shares of 1p each
Name
13th May 2022
31 December 2021 31 December 2020
Steven Powell (Chairman)
Matthew Stork
Richard Bungay
Debra Leeves
216,375
125,000
216,375
125,000
216,375
125,000
-
-
-
50,000
50,000
50,000
Other directors who served in the year, details of appointment and resignation dates are given in the
Remuneration Report.
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, the Remuneration
Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law, the
Directors have to prepare the Group financial statements in accordance with UK-adopted international accounting
standards (“IFRS”) and have elected to prepare the Parent Company financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice and applicable law including FRS 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:
-
select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
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Cambridge Cognition Holdings plc
Report of the Directors for the year ended 31 December 2021
-
-
state whether the applicable IFRSs, or for the Parent Company, UK Generally Accepted Accounting
Practice have been followed, subject to any material departures disclosed and explained in the 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:
•
•
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.
AUDITOR
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
Matthew Stork
Director
13th May 2022
12
Cambridge Cognition Holdings plc
Corporate Governance Report for the year ended 31 December
2021
Chairman’s Statement
As Chairman of the Cambridge Cognition Holdings plc (“the Company”) Board, it is my responsibility to ensure
that the Board is performing its role effectively and has the capacity, ability, structure and support to enable it
to continue to do so.
We believe that a sound and well understood governance structure is essential to maintain the integrity of the
Group in all its actions, to enhance performance and to impact positively on our shareholders, staff, customers,
suppliers and other stakeholders.
In 2018, the Company adopted the QCA Corporate Governance Code (“the QCA Code”) as the benchmark for
measuring our adherence to good governance principles. These principles provide us with a clear framework for
assessing our performance as a board and as a company, and the report below shows how we apply the Code’s
ten guiding principles in practice.
The QCA Code requires that some disclosures are available on the Company website, whilst others are required
in the Company’s Annual Report and Accounts and the Company has followed this recommendation. The
corporate governance disclosure on our website can be found at
http://www.cambridgecognition.com/investors/corporate-governance/
All members of the Board of the Company believe in the value and importance of good corporate governance.
The Chairman is personally responsible for establishing and monitoring corporate governance.
The Company is listed on the AIM Market of the London Stock Exchange (“AIM”).
The Board considers that it does not depart from any of the principles of the QCA Code and the Board continues
to monitor and develop its governance processes to maintain best practice. The Board recognises the
importance of our wider stakeholders in delivering our strategy and business sustainability.
Steven Powell
Chairman
Disclosure of those principles recommended for the Annual Report and Accounts under the QCA
Code
Principle 1: Establish a strategy and business model which promotes long-term value for
shareholders
The Company has a rolling three-year detailed strategic plan that is updated and approved by the Board
annually. This is supported by an annual operating plan, which is also subject to Board review.
The Company’s Strategic Report, including an assessment of principal risks and uncertainties and key
performance indicators can be found on pages three to ten of this Annual Report and Accounts.
Principle 4: Embed effective risk management, considering both opportunities and threats,
throughout the organisation
Risks are considered as part of the strategic planning process referred to above. The CEO is also ultimately
responsible for the quality management of the Company and reports to the Board on key matters. The Board
will periodically receive presentations on specific operational and financial risks.
The principal risks and uncertainties of the Group are summarised on pages eight and nine of this Annual
Report and Accounts.
13
Cambridge Cognition Holdings plc
Corporate Governance Report for the year ended 31 December
2021
Principle 5: Maintain the Board as a well-functioning, balanced team led by the Chair
The Board consists of two executive directors, the non-executive Chairman and two further independent
directors. The non-executive Chairman holds some shares, especially from his time as the Group’s CEO. One
non-executive director holds shares after the March 2020 placing. These holdings are not considered material.
All Directors are expected to devote sufficient time to their duties as may be necessary. Typically, this would be
around two days per month for the non-executive directors.
The Board is provided with monthly business and finance reports from the CEO and CFO respectively. Further
information will be given to the Board for discussion at meetings as relevant.
The Board is supported by three sub-committees: the Audit Committee, the Remuneration Committee and the
Nomination Committee. All non-executive directors sit on all sub-committees. Board and Committee attendance
for 2021 is as follows:
Board
Audit
Nomination
Remuneration
No. of Meetings
S. Powell
M. Stork
R. Bungay
D. Leeves
M.Holton
N. Walters
10
10
10
9
9
4
3
1
1
-
1
1
-
-
2
2
-
2
2
-
-
3
3
-
3
3
-
-
Principle 6: Ensure that between them the Directors have the necessary up-to-date experience,
skills and capabilities
Profiles of each of the Directors are given below.
Principle 7: Evaluate board performance based on clear and relevant objectives, seeking continuous
improvement
Since the Company’s listing in 2013, board evaluation has been an informal process led by the Chairman and
principally consisting of one-on-one meetings to gather, compare and consider the views of each of the
directors. This approach has, to date, been deemed appropriate given the small size of the Company.
On adoption of the QCA code, the Board intended to conduct formal internal performance reviews every year
supplemented by an external evaluation review as required. The Covid-19 pandemic and remote working
meant this was not undertaken in 2021.
Principle 8: Promote a corporate culture that is based on ethical values and behaviours
The Board ensures that the Company culture is based on ethical values through the following means:
The employee handbook clearly setting out values and employment codes
All new employees benefit from an induction programme which emphasises our ethical values and behaviours
These behaviours are re-iterated through the various employee communication and reward channels
Particular training on topics relating to ethical behaviour, ranging from compliance in clinical trials to share
dealing rules are given at regular intervals and attendance monitored
Standard Operating Procedures (“SOPs”) that outline the Company’s processes and the values that underpin
them are required to be read by employees and documentation of compliance maintained
Receiving monthly reports from human resources and other departments to ensure that any instances of
behaviours not being recognised or respected are considered and resolved appropriately
14
Cambridge Cognition Holdings plc
Corporate Governance Report for the year ended 31 December
2021
Principle 10: Communicate how the Company is governed and is performing by maintaining a
dialogue with shareholders and other relevant stakeholders
Descriptions of the work of the Board and its Committees is provided below. The Remuneration Report is on
pages 17 and 18.
Further information on the Company’s corporate governance framework, including on those principle of the
QCA code not listed here can be found at http://www.cambridgecognition.com/investors/corporate-
governance/
Director profiles
Dr Steven Powell Chairman
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.
Dr Matthew Stork Chief Executive Officer
Dr Stork has over twenty-five years’ experience of managing companies in the med tech sector and expertise
in AI, IT, diagnostics, medical equipment, and pharmaceuticals. Before becoming CEO of Cambridge Cognition
in 2019, he held managing director and divisional leadership roles within GE Healthcare Digital, InHealth Group,
ArjoHuntleigh, Canon Medical Systems (formerly Toshiba) and Smith & Nephew. He has a degree in pharmacy
from the University of Bath, a PhD in Artificial Intelligence in Medicine from King’s College London, and an MBA
from London Business School.
Richard Bungay Non-Executive Director
Mr. Bungay has over 25 years' experience in corporate roles with R&D-based companies within the
biotechnology and pharmaceutical sector, including as Chief Financial Officer (CFO) of both public and private
companies, with a particular focus on financing, investor relations and business development. A chartered
accountant, Mr Bungay is currently CEO/CFO of Diurnal Group plc, the AIM quoted specialty pharmaceutical
company targeting patient needs in chronic endocrine diseases. Prior to that, Mr Bungay held CFO and Chief
Operating Officer roles at Mereo BioPharma Group plc as well as being CFO of Glide Technologies and Verona
Pharma plc.
Debra Leeves Non-Executive Director
Ms Leeves is currently CEO of Vertual, the leading provider of virtual and augmented reality training simulation
systems in radiotherapy. She has over 25 years of experience in the medical technology and biotechnology
industries, and has previously been COO of Beckley Canopy Therapeutics, CEO of Physeon and also held senior
roles with companies such as Rex Bionics, Avita Medical, Merck, GlaxoSmithKline, GE Healthcare and Pfizer.
Board sub-committees
The Board is supported by three sub-committees, the Audit Committee, Nomination Committee and
Remuneration Committee.
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, recognition and fair value of investments, adequacy of
15
Cambridge Cognition Holdings plc
Corporate Governance Report for the year ended 31 December
2021
systems of internal control and going concern. The Committee notes the auditors’ inclusion of revenue
recognition and going concern as key audit matters.
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 Group’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.
16
Cambridge Cognition Holdings plc
Remuneration Report for the year ended 31 December 2021
Remuneration Committee
The Company has established a Remuneration Committee. The members of the Remuneration Committee are:
Steven Powell (Chair)
Richard Bungay
Debra Leeves
The Committee makes recommendations to the Board. No director plays a part in any discussion about his own
remuneration.
The Company is not required to publish a Directors’ Remuneration Report, but the below information is given in
the interests of transparency and good governance.
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 was as follows:
Current Directors:
Executive Directors:
Matthew Stork (1)
Nicholas Walters (6)
Michael Holton (7)
Non-Executive Directors:
Steven Powell (2)
Richard Bungay (3)
Eric Dodd (4)
Debra Leeves (5)
Total
Salary
/Fee
£’000
Benefits
Bonus
Pension
£’000
£’000
£’000
2021
Total
£’000
2020
Total
£’000
248
12
205
45
30
-
30
570
-
-
-
-
-
-
-
-
204
-
-
-
-
-
-
204
15
-
11
-
-
-
-
26
467
12
216
45
30
-
30
800
388
70
-
45
9
18
30
560
1. Appointed to the Board 23 May 2019
2. Executive Director until 23 May 2019, Non-Executive Director thereafter
3. Appointed to the Board on 14 September 2020
4. Resigned from the Board on 28 July 2020
5. Appointed to the Board on 1 July 2019
6. Resigned from the Board on 27 May 2021
7. Appointed to the Board on 27 May 2021 and Resigned from the Board on 1 November 2021
Payments were also made to third parties for the services of Steven Powell and Nicholas Walters, not included
in the table above. See note 27 to the consolidated financial statements.
17
Cambridge Cognition Holdings plc
Remuneration Report for the year ended 31 December 2021
Share Options:
Granted
Steven Powell
July 2015
Matthew Stork
Matthew Stork
Matthew Stork
Matthew Stork
Matthew Stork
Nicholas Walters
October
2019
June 2020
November
2020
April 2021
November
2021
June 2020
Performance Criteria
Number of
Options
62,500
Performance
criteria
Vested (1)
Exercise price
in pence
82.5 pence
Exercise period
To July 2025
392,858
196,429
103,774
90,000
40,000
60,000
(2)
(3)
(4)
(5)
(6)
(3)
28 pence
28 pence
53 pence
125 pence
140 pence
28 pence
October 2022 to
September 2023
June 2023 to May
2024
November 2023 to
October 2024
April 2024 to March
2031
November 2024 to
October 2031
June 2023 to May
2024
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 120 pence.
This condition was fulfilled on 4 May 2017.
2. 50% of these options will vest if the average closing mid-market price of an Ordinary Share for any three
month period before 30 September 2022 exceeds 100 pence and on the last day of that period exceeds 90
pence. 50% of these options will vest if the average closing mid-market price of an Ordinary Share for any
three month period before 30 September 2022 exceeds 150 pence and on the last day of that period
exceeds 135 pence.
3. 50% of these options will vest if the average closing mid-market price of an Ordinary Share for any three
month period before 31 May 2023 exceeds 77.5 pence and on the last day of that period exceeds 70
pence. 50% of these options will vest if the average closing mid-market price of an Ordinary Share for any
three month period before 30 September 2022 exceeds 115 pence and on the last day of that period
exceeds 105 pence.
4. 50% of these options will vest if the average closing mid-market price of an Ordinary Share for any three
month period before 31 May 2023 exceeds 90 pence and on the last day of that period exceeds 80 pence.
50% of these options will vest if the average closing mid-market price of an Ordinary Share for any three
month period before 30 September 2022 exceeds 130 pence and on the last day of that period exceeds
115 pence.
5. 50% of the Options granted will vest if the average closing mid-market price of an Ordinary Share for any
three month period exceeds 142 pence, with the price on the last day of that period being at least 120
pence, and the last day of this period being no later than 30 April 2024. 50% of the Options granted will
vest if the average closing mid-market price of an Ordinary Share for any three month period exceeds 170
pence, with the price on the last day of that period being at least 145 pence, and the last day of this period
being no later than 30 April 2024.
6. 50% of the Options granted will vest if the average closing mid-market price of an Ordinary Share for any
three month period exceeds 170 pence, with the price on the last day of that period being at least 145
pence, and the last day of this period being no later than 30 April 2024. 50% of the Options granted will
vest if the average closing mid-market price of an Ordinary Share for any three month period exceeds 170
pence, with the price on the last day of that period being at least 145 pence, and the last day of this period
being no later than 30 April 2024.
18
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 2021, 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 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 UK-adopted international accounting standards. 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:
•
•
•
•
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 2021 and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in accordance with UK adopted
international accounting standards;
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.
Conclusions relating to going concern
We are responsible for concluding on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the group’s and the parent company’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report
to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify the auditor’s
opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future
events or conditions may cause the group or the parent company to cease to continue as a going concern.
A description of our evaluation of management’s assessment of the ability to continue to adopt the going concern
basis of accounting, and the key observations arising with respect to that evaluation is included in the Key Audit
Matters section of our report.
19
Cambridge Cognition Holdings plc
Independent auditor’s report to the members of Cambridge
Cognition Holdings plc
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the group’s and the parent company’s
ability to continue as a going concern for a period of at least twelve months from when the financial statements
are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
The responsibilities of the directors with respect to going concern are described in the ‘Responsibilities of directors
for the financial statements’ section of this report.
Our approach to the audit
Overview of our audit approach
Overall materiality:
Group: £278,000, which represents 2.75% of the group’s
Revenue.
Parent company: £195,000, which represents 2% of the parent
company’s total assets.
Key audit matters were identified as:
Materiality
Key audit
matters
•
•
going concern (same as last year)
revenue recognition (same as last year)
We performed an audit of the financial information of the
component using component materiality (full-scope audit
Scoping
procedures) on the financial information of Cambridge Cognition
Holdings Plc and of Cambridge Cognition Limited.
We performed an audit of one or more classes of transactions,
account balances or disclosures relating to significant risks of
material misstatement of the Group
financial statements
(specific-scope audit procedures) on Cambridge Cognition LLC.
Analytical procedures at Group level (analytical procedures) were
performed on CANTAB Corporate Health Limited, Cambridge
Cognition Trustees Limited and Cognition Kit Limited.
There were no changes in scope from prior year.
In total, our audit procedures covered 100% of the Group’s net
assets, 100% of the Group’s revenue and 100% of the Group’s
profit before tax.
20
Cambridge Cognition Holdings plc
Independent auditor’s report to the members of Cambridge
Cognition Holdings plc
Key audit matters
Key audit matters are those matters that, in our professional
judgement, 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
Description
Audit
reponse
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.
KAM
Disclosures Our results
In the graph below, we have presented the key audit matters, significant risks and other risks relevant to the
audit.
High
Potential
financial
statement
impact
Revenue
recognition
Accounting for investment in
Monument Therapeutics Ltd
Deferred
Revenue
Management
override of controls
Going concern
Trade
receivables
Share based
payments
Carrying amount of
intercompany loans
Carrying value
of goodwill
Low
Low
Extent of management judgement
High
Key audit matter
Significant risk
Other risk
Key Audit Matter – Group
How our scope addressed the matter – Group
Going Concern
assessed
We identified going concern as one of the most
significant
of material
misstatement due to fraud and error as a result
of the judgement required to conclude whether
there is a material uncertainty related to going
concern.
risks
In our evaluation of the directors’ conclusions, we
considered the inherent risks associated with the
21
In responding to the key audit matter, we
performed the following audit procedures:
• Obtained management’s assessment of
going
concern
and
supporting
information, including future budgets
and cashflow forecasts. We assessed
how the budgets and forecasts were
compiled,
including assessing
their
Cambridge Cognition Holdings plc
Independent auditor’s report to the members of Cambridge
Cognition Holdings plc
Key Audit Matter – Group
How our scope addressed the matter – Group
group’s and the parent company’s business model
accuracy
by
validating
the
including effects arising from macro-economic
reasonableness
of
underlying
uncertainties such as Brexit and Covid-19, we
assumptions;
assessed and challenged the reasonableness of
•
Critically evaluated the revenue and cost
estimates made by the directors and the related
projections underlying the model with
disclosures and analysed how those risks might
reference to market information, past
affect the group’s and the parent company’s
performance of the Group as well as any
financial
resources or ability
to continue
known post balance sheet events;
operations over the going concern period.
• Obtained management’s
sensitivity
The directors have considered the impacts of
macro-economic events such as Brexit and Covid-
19 and have sensitised their forecast accordingly.
The global economic uncertainty increases the
extent of judgement and estimation uncertainty
associated with management’s assessment and
the determination of the Group’s ability to
continue as a going concern.
analysis and
reverse
stress
test
forecasts and obtained an understanding
of management’s plans and options for
mitigating actions; and
•
Assessed the adequacy of the going
concern disclosures included within the
financial statements.
Relevant disclosures in the Annual Report and
Accounts 2021
Our results
• Financial statements: Note 3.2, Going
Concern
The financial statements explain in note 3.2 that
the Directors have formed a judgement that it is
appropriate to adopt the going concern basis of
preparation for the Group and parent company
financial statements.
The Strategic Report sets out the future outlook
and provides an analysis of the performance of
the Group in the financial year and of its position
at the end of the year.
The Report of the directors also explains the
directors assessment of going concern.
Revenue Recognition
We identified revenue recognition as one of the
most significant assessed risks of material
misstatement due to fraud and error as a result
judgements made by
of
the
the
management
separate
in
performance obligations and
selecting an
appropriate method for measuring progress.
identifying
significant
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 there are risks
of fraud in revenue recognition.
The nature of the Group’s revenue includes
providing multiple products or services as part of
a single arrangement. These products and
services may include, but are not limited to,
licences of IP, sale of hardware, study set up, data
Based on the work we have performed, we have
not identified any material uncertainties relating
to events or conditions that, individually or
collectively, may cast significant doubt on the
Group’s and the parent company’s ability to
continue as a going concern for a period of at least
twelve months
financial
statements are authorised for issue.
from when
the
In responding to the key audit matter, we
performed the following audit procedures:
• Obtained management’s assessment of
income recognition in accordance with
IFRS 15 ‘Revenue from Contracts with
Customers’ and evaluated the revenue
recognition policies for consistency and
compliance with IFRS15.
•
For a sample of contracts, we:
-
ensured
that
the
performance
obligations have been appropriately
identified in accordance with the
Group’s accounting policy;
-
verified that revenue recognised in
the year relates to amounts allocated
22
Cambridge Cognition Holdings plc
Independent auditor’s report to the members of Cambridge
Cognition Holdings plc
Key Audit Matter – Group
How our scope addressed the matter – Group
management
study management
services, support services, training, and other
maintenance services.
services,
A number of the products or services may be sold
together as a bundled contract. Determining
whether the products or services are distinct from
the other goods and services in an arrangement
is key to the appropriate recognition of revenue.
Management apply significant judgement to:
-
identify
the
separate
performance
obligations in an arrangement based on the
terms of the contract and the Group’s
customary business practices;
-
determine whether
the
performance
obligation is satisfied over time or at a point
in time; and
-
select an appropriate method for measuring
progress of that performance obligation if it
is satisfied over time.
to performance obligations that were
satisfied in the year;
-
inspected evidence of delivery of
products or rendering of services,
such as delivery of licence keys,
number of assessments completed in
the period, and notifications that the
assessments have been completed;
-
evaluated the significant judgements
made by management in identifying
the separate performance obligations
and selecting an appropriate method
for measuring progress;
-
inspected evidence
that
invoices
raised relate to milestones met in the
period
in accordance with
the
payment schedule agreed with the
customer; and
-
recalculated the revenue recognised
for performance obligations delivered
over time and checked the accuracy of
deferred
revenue
and
accrued
income;
• Obtained an understanding of
the
performance and progress of material
contracts through discussions with the
internal study managers to corroborate
that revenue has been recognised as
performance obligations have been
satisfied; and
•
Recalculated
the deferred
income
element of a sample of revenue contracts
to test the completeness of the deferred
income creditor at year end.
Relevant disclosures in the Annual Report and
Accounts 2021
Our results
• Financial statements: Note 3.3, Revenue
Recognition
The Group’s accounting policy on revenue
recognition is set out in note 3.3 to the financial
statements and related disclosures are included
in note 5.
Based on our audit work, we did not identify any
material misstatement in the revenue recognised
in the year to 31 December 2021.
We consider the Group’s disclosures to be in
accordance with IFRS15.
Our application of materiality
We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of
identified misstatements on the audit and of uncorrected misstatements, if any, on the financial statements and
in forming the opinion in the auditor’s report.
Materiality was determined as follows:
23
Cambridge Cognition Holdings plc
Independent auditor’s report to the members of Cambridge
Cognition Holdings plc
Materiality measure
Group
Parent company
Materiality for
financial statements
as a whole
We define materiality as the magnitude of misstatement in the financial
statements that, individually or in the aggregate, could reasonably be
expected to influence the economic decisions of the users of these financial
statements. We use materiality in determining the nature, timing and extent
of our audit work.
Materiality threshold
£278,000, which is approximately
2.75% of the Group’s revenue.
£195,000, which is approximately
2% of the parent company’s total
assets
Significant
judgements made by
auditor in determining
the materiality
Significant revision of
materiality threshold
that was made as the
audit progressed
In determining materiality, we made
the following significant judgements:
In determining materiality, we made
the following significant judgements:
- We selected revenue as the
- We selected total assets as
benchmark as it is less
benchmark as the parent
volatile and reflective of the
company is not a trading
activity levels and scale of
entity, therefore total
the Group’s business.
Revenue is also a key
assets are of most
relevance to users of the
performance measure for
financial statements.
the Group and is therefore
of most interest to
stakeholders.
- We determined 2% as an
appropriate benchmark
percentage due to the size
- We determined 2.75% as
of the parent company’s
an appropriate benchmark
total assets.
percentage as the Group
has no debt and the
business is relatively stable
and not complex.
Materiality for the current year is
higher than the level that we
determined for the year ended 31
December 2020 to reflect the
increase in the Group’s revenue for
the year.
Our preliminary assessment of
materiality at the planning stage of
our work was based on the Period 9
(30 September 2021) management
information. We re-assessed
materiality during our advanced
audit procedures based on Period 11
(30 November 2021) management
information.
We then finally re-assessed
materiality based on the Group’s
revenue for the year ended 31
December 2021 once these figures
were provided for audit and
adjusted our audit procedures
accordingly.
Materiality for the current year is
higher than the level that we
determined for the year ended 31
December 2020 to reflect the
change in the measurement
percentage from 1% of total assets
last year to 2% this year.
Our preliminary assessment of
materiality at the planning stage of
our work was based on the Period 9
(30 September 2021) management
information. We re-assessed
materiality during our advanced
audit procedures based on Period 11
(30 November 2021) management
information.
We then finally re-assessed
materiality based on the parent
company’s total assets as at 31
December 2021 once these figures
were provided for audit and
adjusted our audit procedures
accordingly
Performance
materiality used to
We set performance materiality at an amount less than materiality for the
financial statements as a whole to reduce to an appropriately low level the
24
Cambridge Cognition Holdings plc
Independent auditor’s report to the members of Cambridge
Cognition Holdings plc
Materiality measure
Group
Parent company
drive the extent of
our testing
probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the financial statements as a whole.
Performance
materiality threshold
£180,000, which is 65% of financial
statement materiality.
£127,000, which is 65% of financial
statement materiality.
Significant
judgements made by
auditor in determining
the performance
materiality
Significant revision of
performance
materiality threshold
that was made as the
audit progressed
In determining performance
materiality, we made the following
significant judgements:
In determining performance
materiality, we made the following
significant judgements:
-
the strength of the control
-
the strength of the control
environment and our
environment and our experience
experience auditing the
auditing the financial
financial statements of the
statements of the Group,
Group, including the effect
including the effect of
of misstatements identified
misstatements identified in
in previous audits.
previous audits.
-
our risk assessment – there
-
our risk assessment – there
have been significant changes
have been significant changes
to the finance team during the
to the finance team during the
year, which could increase the
year, which could increase the
risk of material fraud or error
risk of material fraud or error
During the performance of our
work significant changes to the
finance team personnel
occurred, including a change to
the CFO. We re-assessed the
performance materiality
threshold percentage in light of
the potential audit risks
assessed at this time and
adjusted our audit procedures
accordingly.
During the performance of our
work significant changes to the
finance team personnel
occurred, including a change to
the CFO. We re-assessed the
performance materiality
threshold percentage in light of
the potential audit risks
assessed at this time and
adjusted our audit procedures
accordingly.
Specific materiality
We determine specific materiality for one or more particular classes of
transactions, account balances or disclosures for which misstatements of
lesser amounts than materiality for the financial statements as a whole
could reasonably be expected to influence the economic decisions of users
taken on the basis of the financial statements.
Specific materiality
We determined a lower level of
specific materiality for the following
areas:
We determined a lower level of
specific materiality for the following
areas:
-
-
-
Directors’ remuneration
Related party transactions
Audit fees
-
-
-
Directors’ remuneration
Related party transactions
Audit fees
Communication of
misstatements to the
audit committee
We determine a threshold for reporting unadjusted differences to the audit
committee.
25
Cambridge Cognition Holdings plc
Independent auditor’s report to the members of Cambridge
Cognition Holdings plc
Materiality measure
Group
Parent company
Threshold for
communication
£13,900 and misstatements below
that threshold that, in our view,
warrant reporting on qualitative
grounds.
£9,800 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 company
Group revenue
£10,094,000
PM
£180,000
65%
FSM
£278,000
2.75 %
Total assets
£9,776,000
PM
£127,000,
65%
FSM
£195,000
2%
TFPUM
£98,000 35%
TFPUM
£68,000 35%
FSM: Financial statements materiality, PM: Performance materiality, TFPUM: Tolerance for potential
uncorrected misstatements
An overview of the scope of our audit
We performed a risk-based audit that requires an understanding of the Group’s and the parent company’s
business and in particular matters related to:
Understanding the group, its components, and their environments, including Group-wide controls
We obtained an understanding of the Group and its environment, including Group-wide controls as follows:
•
The Group’s accounting process is structured around the centralised Group finance function based at the
Group’s head office in Cambridge, UK, which provides accounting and administrative support for the Group’s
operations; and
•
The Group has two trading subsidiaries, Cambridge Cognition Limited (registered in UK) and Cambridge
Cognition LLC (registered in USA), and a non-trading parent company based in UK. Other entities within the
Group are not involved in the core operations of the Group.
Identifying significant components
• We identified and evaluated the components to assess their significance and to determine the planned audit
response based on a measure of materiality. We determined significance as a percentage of the total assets
and revenue.
26
Cambridge Cognition Holdings plc
Independent auditor’s report to the members of Cambridge
Cognition Holdings plc
Type of work to be performed on financial information of parent and other components (including how it
addressed the key audit matters)
Based on our assessment of the Group as above, we focused our Group audit scope primarily on the two trading
subsidiaries, which were the significant components, and the parent company.
•
•
Audit of the financial information of the component using component materiality (full-scope audit) was
performed on the financial information of the parent company and Cambridge Cognition Limited; and
Audit of one or more account balances, classes of transactions or disclosures of the component (specific-
scope audit) was performed on the financial information of Cambridge Cognition LLC, where the extent of
our testing was based on our assessment of the risks of material misstatement and of the size of the Group’s
operations at that location.
•
At the Group level we also tested the consolidation process and carried out analytical procedures for the
remaining three components (CANTAB Corporate Health Limited, Cambridge Cognition Trustees Limited and
Cognition Kit Limited) to confirm our conclusion that there were no significant risks of material misstatement
of the aggregated financial information of those remaining components.
• We identified the going concern assumption and revenue recognition as key audit matters and the procedures
performed in respect of these have been included in the key audit matters section of our report.
Performance of our audit
•
As documented above, the Group has a centralised function based at the Group’s head office in Cambridge,
UK. All procedures were performed by the Group audit engagement team, there are no component
auditors; and
•
The audit was performed wholly remotely given the Covid-19 restrictions and the Group’s preference.
Changes in approach from previous period
•
There has been no change in our assessment of scoping the Group audit from prior year.
Other information
The directors are responsible for the other information. The other information comprises the information included
in the annual report and accounts, other than the financial statements and our auditor’s 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:
•
•
the information given in the strategic report and the directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable
legal requirements.
27
Cambridge Cognition Holdings plc
Independent auditor’s report to the members of Cambridge
Cognition Holdings plc
Matter 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
directors’ report.
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:
•
•
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit
have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors for the financial statements
As explained more fully in the directors’ responsibilities statement, 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.
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.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures
in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities,
including fraud. Owing to the inherent limitations of an audit, there is an unavoidable risk that material
misstatements in the financial statements may not be detected, even though the audit is properly planned and
performed in accordance with ISAs (UK).
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:
• We obtained an understanding of the legal and regulatory frameworks applicable to the parent company and
the Group and the industry in which they operate. We determined that the following laws and regulations
were most significant: UK-adopted international accounting standards, Companies Act 2006, AIM Rules for
Companies, QCA Corporate Governance Code and the relevant tax compliance regulations in the jurisdictions
in which the Group operates. In addition, we concluded that there are certain significant laws and regulations
that may have an effect on the determination of the amounts and disclosures in the financial statements,
28
Cambridge Cognition Holdings plc
Independent auditor’s report to the members of Cambridge
Cognition Holdings plc
including laws and regulations relating to employment matters, data security and protection, and clinical
trials regulations.
• We obtained an understanding of how the parent company and the Group is complying with those legal and
regulatory frameworks by making inquiries of management, those responsible for legal and compliance
procedures and the company secretary. We corroborated our inquiries through our review of board minutes
and minutes of Audit Committee meetings;
• We enquired of management and the Audit Committee, whether they were aware of any instances of non-
compliance with laws and regulations or whether they had any knowledge of actual, suspected or alleged
fraud. We corroborated this through our review of professional fees incurred during the year;
•
These audit procedures were designed to provide reasonable assurance that the financial statements were
free from fraud or error. The risk of not detecting a material misstatement due to fraud is higher than the
risk of not detecting one resulting from error and detecting irregularities that result from fraud is inherently
more difficult than detecting those that result from error, as fraud may involve collusion, deliberate
concealment, forgery or intentional misrepresentations. Also, the further removed non-compliance with laws
and regulations is from events and transactions reflected in the financial statements, the less likely we would
become aware of it;
• We assessed the susceptibility of the parent company’s and the Group’s financial statements to material
misstatement, including how fraud might occur. Audit procedures performed by the Group engagement team
included:
§
identifying and assessing the design effectiveness of controls management has in place to prevent
and detect fraud;
§
challenging assumptions and judgements made by management in making its significant accounting
estimates;
§
obtaining management’s calculation for the share based payment, including the underlying fair value
of the options granted and challenging assumptions made. The fair values were agreed to Valuations
Reports provided by Throgmorton and assumptions used verified for reasonableness;
§
obtaining managements calculation and understanding of the basis of the fair value of investment in
Monument Therapeutics Ltd. and how management have formed their judgement regarding the
discounts applied;
§
§
utilising valuations specialists to evaluate management’s fair value model and discounts applied;
utilising a valuation specialist to test the discounted cashflow model used in management’s
impairment calculation;
§
identifying and testing journal entries, in particular any large or unusual journal entries recorded in
the general ledger and other adjustments made in the preparation of the financial statements; and
§
assessing the extent of compliance with direct laws and regulations that may have an effect on the
determination of the amounts and disclosures in the financial statements.
• We completed audit procedures to conclude on the compliance of disclosures in the annual report and
financial statements with applicable financial reporting requirements.
• We communicated relevant laws and regulations and potential fraud risks to all Group engagement team
members and remained alert to any indications of fraud or non-compliance with laws and regulations
throughout the audit.
•
The Group’s management and Audit Committee have not noted any matters of non-compliance with laws
and regulations or fraud that were communicated with the Group engagement team.
-
-
-
-
Assessment of the appropriateness of the collective competence and capabilities of the engagement
team included consideration of the engagement team’s
understanding of, and practical experience with audit engagements of a similar nature and complexity
through appropriate training and participation;
knowledge of the industry in which the client operates; and
understanding the legal and regulatory requirements specific to the entity.
29
Cambridge Cognition Holdings plc
Independent auditor’s report to the members of Cambridge
Cognition Holdings plc
•
It is the Group audit engagement partner’s assessment that the Group audit engagement team collectively
had the appropriate competence and capabilities to identify or recognise non-compliance with laws and
regulations.
• We completed audit procedures to conclude on the compliance of disclosures in the annual report and
financial statements with applicable financial reporting requirements.
Use of our report
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.
Paul Brown
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Cambridge
13 May 2022
30
Cambridge Cognition Holdings plc
Consolidated statement of comprehensive income
Revenue
Cost of sales
Gross profit
Administrative expenses
Other operating income
Operating loss
Interest received
Finance costs
Profit/(loss) before tax
Tax received
5
6
7
10
10
11
10,094
(2,015)
8,079
(7,829)
14
264
-
(11)
253
197
6,741
(1,324)
5,417
(6,093)
32
(644)
4
(9)
(649)
211
Profit/(loss) for the year
450
(438)
Other comprehensive income
Items that may subsequently be reclassified to profit or
loss
Exchange differences on translation of foreign operations
21
Total comprehensive income for the year
Earnings per share (pence)
Basic earnings per share
Diluted earnings per share
12
14
464
1.4
1.4
93
(345)
(1.5)
(1.5)
All items of income are attributable to the equity holders in the Parent.
The above results relate to continuing operations.
31
Cambridge Cognition Holdings plc
Consolidated statement of financial position
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Investments
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Notes
At 31 December
2021
At 31 December
2020
£'000
£’000
13
14
15
16
17
22
373
52
49
474
126
5,130
6,810
379
138
-
517
51
2,648
3,047
Total current assets
12,066
5,746
Total assets
Liabilities
Current liabilities
Trade and other payables
Total liabilities
Equity
Share capital
Share premium
Other reserves
Own shares
Retained earnings
Total equity
Total liabilities and equity
12,540
6,263
19
11,908
6,206
11,908
6,206
20
20
21
21
312
11,151
6,125
(78)
(16,878)
632
-
12,540
312
11,151
6,111
(78)
(17,439)
57
6,263
The financial statements on pages 31 to 54 were approved by the Board of Directors and authorised for issue
on 13th May 2022 and were signed on its behalf by:
Matthew Stork
Chief Executive Officer
32
Cambridge Cognition Holdings plc
Consolidated statement of changes in equity
Balance at
1 January 2020
Loss 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
in trust
Credit to equity for equity-
settled share-based payments
Share
capital
£'000
Share
premium
Other
reserves
Own
shares
Retained
earnings
Total
£'000
£'000
£'000
£'000
£'000
242
9,943
6,018
(81)
(17,066)
(944)
-
-
-
70
-
-
-
-
-
-
1,330
(122)
-
-
-
93
93
-
-
-
-
-
-
-
-
-
-
3
-
3
(438)
(438)
-
93
(438)
(345)
-
-
(3)
68
65
Transactions with owners
70
1,208
Balance at
1 January 2021
Profit for year
Other comprehensive income
Total comprehensive income for
the year
Credit to equity for equity-
settled share-based payments
Transactions with owners
312
11,151
6,111
(78)
(17,439)
-
-
-
-
-
-
-
-
-
-
-
14
14
-
-
-
-
-
-
-
450
-
450
111
111
1,400
(122)
-
68
1,346
57
450
14
464
111
-
Balance at
31 December 2021
312
11,151
6,125
(78)
(16,878)
632
33
Cambridge Cognition Holdings plc
Consolidated statement of cash flows
Notes
Year to
31 December
2021
Year to
31 December
2020
£'000
£’000
Net cash flows from operating activities
22
3,945
1,010
Investing activities
Interest received
Purchase of property, plant and equipment
Purchase of investment
Net cash flow used in investing activities
Financing activities
Proceeds from the issue of share capital
Share issue costs
Interest payments
Lease payments
-
(56)
(49)
(105)
-
-
(11)
(86)
4
(42)
-
(38)
1,400
(122)
(9)
(113)
Net cash flows from financing activities
(97)
1,156
Net increase in cash and cash equivalents
Cash and cash equivalents at start of year
Exchange differences on cash and cash equivalents
3,743
3,047
20
2,128
901
18
Cash and cash equivalents at end of year
22
6,810
3,047
34
Cambridge Cognition Holdings plc
Notes to the financial statements
1. General information
Cambridge Cognition Holdings plc (‘the Company’) and its subsidiaries (together, ‘the Group’) develops and
markets digital solutions to assess brain health.
The Company is a public limited company which is listed on the AIM market 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.
The consolidated financial statements have been prepared in accordance with UK-adopted international
accounting standards. The accounting policies adopted are consistent with those followed in the preparation of
the consolidated financial statements for the year ended 31 December 2020. The financial statements have
been prepared under the historical cost convention. The accounts are presented in Pounds Sterling (“£”), and to
the nearest £1,000.
The subsidiary undertakings included within the Consolidated Financial Statements as at 31 December 2021 are
given in note 15.
2. Outlook for adoption of future Standards (new and amended)
At the date of authorisation of the Consolidated Financial Statements, the standards and amendments that are
in issue but not yet effective 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. All of the Group’s
subsidiaries are wholly owned.
3.2 Going concern
The Directors have assessed the Group’s ability to continue as a going concern. As noted in the Strategic Review,
the business has remained fully operational to date and order intake in 2021 was excellent.
The Group has a base case forecast for the period to 30th June 2023 with a growth case and downside case also
being forecast. The base case is built on the current view of orders to be taken and the recognition of revenue
and billing milestones associated with orders already taken.
The base case shows strong performance, driven by existing orders and supports a positive cash balance right
through the going concern review period, with a positive outlook thereafter. The downside case also shows
positive cash through the going concern review period and would allow for further expenditure modifications
not yet budgeted.
Whilst having proper regard to the continuing uncertainties brought by the pandemic, the Directors believe that
the Group will remain a going concern for the foreseeable future. Accordingly, the accounts have been prepared
on the going concern basis.
3.3 Revenue recognition
Revenue is accounted for in accordance with IFRS 15 Revenue from contracts with customers.
To determine whether to recognise revenue, the Group follows a five-step process:
Identifying a contract with a customer
Identifying the performance obligations
Determining the transaction price
Allocating the transaction price to the performance obligations
Recognising revenue when or as performance obligations are satisfied
The Group often enters into contracts where a bundle of products or services are provided. Contracts are assessed
and obligation(s) are separated by applying the five steps to each element of the contract to decide how revenue
should be recognised. The Group’s portfolio of products and services each have defined characteristics and
performance obligations that inform revenue recognition decisions and the policy applied.
Management assesses the value of the standalone transaction prices of each unbundled element and believe
them to be appropriately reflected in the contract prices for the respective element, which are the result of arm’s
length market price negotiations with customers. Each are capable of being sold and used by customers
35
Cambridge Cognition Holdings plc
Notes to the financial statements
3. Significant accounting policies (continued)
3.3 Revenue recognition (continued)
individually, and each are clearly identified within the contract. These values are then used for revenue
recognition judgements related to the performance of obligations which fall within one of the accounting policies
stated below depending upon the specific characteristic of that contract. Each of these are described below.
The timing of payments received from customers is based on contractual terms, is typically received at multiple
points throughout a contract and does not necessarily match the timing of revenue recognition. To the extent
that payments are received ahead of income recognition, these amounts are carried within the statement of
financial position within trade and other payables as deferred income on contracts with customers. Where
payments are received after revenue recognition these are carried in the statement of financial position within
trade and other receivables as accrued income from contracts with customers.
Software:
The Group sells licences to use its software and/or its software hosting platform. These licences can take different
forms, which are described in turn below:
Software licences hosted on our servers:
Where software is hosted on our servers the revenue is recognised over a period of time, as we have a continuing
performance obligation to provide services (e.g. to ensure our servers are available). Customers will also benefit
from software and service enhancements which improve the functionality of the software during the licence
period. These improvements are not standalone products and are included in the originally contracted price and
so are not accounted for separately.
•
•
•
For contracts where the software value is greater than or equal to £20,000, and software is sold on a
cost per assessment basis, the Group uses the assessment price to recognise revenue as the
assessments are used, as this represents the customers’ consumption of their benefits of the contract,
and the Group’s simultaneous performance of its obligations.
For contracts where the software value is less than £20,000, and software is sold on a cost per
assessment basis, the Group uses a portfolio estimate of the revenue being recognised over 12 months.
This period has been chosen as it best represents the average life of this portfolio of contracts.
For contracts where the licence is sold for unlimited uses over a limited period of time, the revenue is
taken equally over the course of the licence period.
Software breakage:
Software is generally sold as non-refundable and so at the end of a contract any remaining deferred software
revenue is taken to the income statement. In addition, breakage will also be taken where software assessments
on a project have not been used for 12 months, and management is not able to establish that the related project
is ongoing.
Software licences not hosted on our servers:
Where software is not hosted on our servers, it is used as it exists at the point in time the licence is granted and
as such revenue is recognised at that point in time. The time of recognition is once the licence has been delivered
to the customer, either through delivery of a physical software key or installation on the client systems, as this
is when the customer takes control of the asset and can direct its use. It is also when the Group’s performance
obligations are satisfied as the Group is not responsible for hosting the software and is unable to make further
software enhancements.
Services:
The Group provides a range of services that include supporting clinical studies, bespoke software development
and scientific consultancy. Some services will be ongoing services provided over a period of time, whilst some
will be clearly tied to a deliverable or other project milestone.
Services delivered at a point in time:
Some services, such as training and delivery of scientific reports will be delivered at a point in time and as such
will be recognised at a point in time, as the performance obligation is discharged on delivery, as this is when the
customer obtains control of the related asset or consumes the benefit.
Services delivered over a period of time:
When services are delivered over a period of time (e.g. study support services) the revenue is recognised equally
over the relevant period, using the output method. In some instances, the period in question may be for the life
of the contract, and in these instances management will estimate the length of the contract for this purpose, and
hence can measure the proportion of time passed to measure the value of revenue that can be recognised. When
that estimate changes, revenue that has not yet been recognised will be adjusted prospectively to match the
36
Cambridge Cognition Holdings plc
Notes to the financial statements
3. Significant accounting policies (continued)
3.3 Revenue recognition (continued)
revised estimate. Study support services can be separated into set-up, ongoing management and close out
phases with separate performance obligations. Where material and clearly identifiable, these phases will be
recognised separately. Where immaterial or not clearly identifiable, these revenues will be recognised evenly
over the course of the total relevant period.
In some cases, whilst the end product is a specific deliverable, it may be that the work required is executed over
an extended period of time. In these cases, management may make an estimate of revenue earned to date
considering the progress towards satisfying the performance obligation. This will normally be measured by the
output method – i.e. what proportion of the deliverable has been completed. This is measured by observable
milestones, for example story-points completed in a software build or over time where such observable milestones
do not exist.
Customer support services:
Aside from any specific services contracted, our customers have access to our customer support team should
they have problems with their software. The life of this support matches the life of the software licence (as
support can only be required whilst a licence is held), and as such this support is not separated from the software
licence revenue recognition as described above.
Hardware:
The Group does not manufacture hardware, but will acquire, configure and sell hardware to customers as part of
the Group’s offering. Hardware revenue is recognised when hardware is despatched to the customer, as the
performance obligation is discharged at this point.
Bill and hold arrangements:
On some occasions, a customer may ask that we purchase and configure hardware on their behalf and then store
the hardware awaiting specific despatch instructions. In these cases, the customer assumes ownership of the
assets even though they may still be in our physical possession. Once all of the specific criteria under IFRS 15
are met, the Group will recognise this hardware revenue, even though the hardware has not yet been despatched.
The Group will normally bill ahead of revenue recognition, and so it is common that a contract liability is created.
In particular, software amounts are normally billed on contract signature. These amounts are held on the
Statement of Financial Position within ‘Deferred income on contracts with customers’. Where revenue is
recognised in the Statement of Comprehensive Income but not yet invoiced, a contract asset is held on the
Statement of Financial Position within ‘Accrued income on contracts with customers’.
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 Sales commissions
Commissions are accrued and subsequently paid based on the contractual terms reached with the salesperson.
Commissions relate to the whole of the respective customer contract and so are apportioned on the same basis
as revenue recognition. Where commissions are paid related to revenues that are not expected in the same
accounting period, the commission amount is capitalised and held as an asset on the balance sheet, before being
expensed in proportion with the related revenue, which will be recognised in accordance with the policy in 3.3
above.
3.6 Costs of sales
Cost of sales includes costs arising in meeting our obligations to customers. The most significant items include
third party costs for services and hardware, sales commissions, and the costs of hosting customer data. All other
costs are included within administration costs unless separate presentation on the face of the statement of
comprehensive income is mandated.
3.7 Leasing
A contract contains a lease if the contract gives the Group the right to control the use of an asset for a period of
time. On commencement of a lease, the lease liability is measured at the present value of the contracted lease
payments, using an estimation of the Group’s incremental cost of borrowing, or a rate implicit in the contract if
that can be determined. Right-of-use assets are measured at cost compromising the amount of the initial
investment of the lease liability and restoration costs.
37
Cambridge Cognition Holdings plc
Notes to the financial statements
3. Significant accounting policies (continued)
3.7 Leasing (continued)
Subsequent to initial recognition, the lease liability is increased for the related finance charges and reduced for
instalments paid. The asset is depreciated on a straight-line basis over the shorter of the length of the lease or
the asset’s useful life. Upon any subsequent modifications to the lease, the values are reassessed in line with the
process outlined for commencement above. Where a lease ends it is eliminated from the recorded cost and
depreciation values.
Should the Group enter into any leases with a period of under 12 months, or for assets with a low value, these
costs would be recognised directly into the income statement. For 2021, there are no such assets.
3.8 Foreign currencies
The individual financial statements of each subsidiary are presented in the currency of the primary economic
environment in which it operates (its functional currency). The UK pound is the 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, with differences recorded in the income statement. At each reporting date, monetary assets
and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date.
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 monthly rates over the
reporting period. Exchange differences are charged or credited to other comprehensive income and recognised
in the currency translation reserve in equity.
3.9 Post employment benefit costs
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
3.10 Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported
in the income statement because it excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is
calculated using tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of
assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the
computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities
are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it
is probable that taxable profits will be available against which deductible temporary differences can be utilised.
However, such assets and liabilities are not recognised if the temporary difference arises from the initial
recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries
except where the Group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it
is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or
the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the reporting
date. Deferred tax is charged or credited in the income statement, except when it relates to items charged or
credited in other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive
income.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the
Group intends to settle its current tax assets and liabilities on a net basis.
38
Cambridge Cognition Holdings plc
Notes to the financial statements
3. Significant accounting policies (continued)
3.10 Taxation (continued)
Research and Development tax credits
The Group applies for Research and Development tax credits in respect of each financial year. The credit is
recognised when the application is submitted, as the Group has an established history of successful claims, and
this is the point where an estimated value is reliable. The tax credit is accounted for within the taxation charge
or credit for the year.
3.11 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.
3.12 Tangible and intangible assets
Property, plant and equipment
Property, plant 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:
Leased buildings (right of use)
Fixtures, fittings and equipment
Leasehold improvements
-
-
-
Period of contracted use (i.e. length of lease)
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 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.
Purchased licences
Where a licence for software used in the provision of services to customers is purchased and controlled by the
Group, the amount is capitalised and amortised over the period of the licence as long as future economic benefits
are expected. The amortisation charge is charged to cost of sales.
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 the Group can demonstrate all of the
following:
-
-
-
-
-
-
the technical feasibility of completing the intangible asset so that it will be available for use or sale
its intention to complete the intangible asset and use or sell it
its ability to use or sell the intangible asset
how the intangible asset will generate probable future economic benefits. Among other things, the entity
can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself
or, if it is to be used internally, the usefulness of the intangible asset
the availability of adequate technical, financial and other resources to complete the development and to use
or sell the intangible asset
its ability to measure reliably the expenditure attributable to the intangible asset during its development
39
Cambridge Cognition Holdings plc
Notes to the financial statements
3. Significant accounting policies (continued)
3.12 Tangible and intangible assets (continued)
Internally-generated intangible assets – research and development expenditure (continued)
Where no internally generated intangible asset can be recognised, development expenditure is recognised as an
expense in the period in which it is incurred. Costs are allocated to research and development activities based on
estimates of the proportion of time incurred by the relevant employees on such activities, plus third-party costs
and consumables.
3.13 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where
applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their
present location and condition. Cost is calculated using the First-In-First-Out method. Net realisable value
represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing,
selling and distribution.
3.14 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 and financial liabilities
are initially measured at fair value, plus or minus directly attributable transaction costs.
Financial assets
Financial assets are subsequently measured at amortised cost. The Group currently holds no assets at fair value
through profit and loss or fair value through other comprehensive income. Accordingly, where the Group believes
that there is a change in the fair value of a financial instrument (e.g. a trade receivable is considered
unrecoverable) this amount will be adjusted through the income statement. A financial asset is derecognised
once the contractual rights expire (e.g. when cash has been received for a trade receivable).
Expected credit losses on trade receivables
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables and contract assets. The Group estimates expected credit losses
by taking the credit losses over the preceding 36 months and comparing this to the revenue over the same
period. The historical rates are adjusted to reflect current conditions and the Group’s view of economic conditions
over the expected lives of the receivables. The percentage derived is then applied to the outstanding trade
receivables. This has resulted in an immaterial amount and as such no provision has been booked.
Financial liabilities
All the Group’s financial liabilities are subsequently measured at amortised cost using the effective interest
method, with interest expense recognised on an effective yield basis. Financial liabilities are derecognised when
the related obligation is discharged, cancelled or expires.
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 are recognised as the proceeds are received, net of direct issue
costs.
Hedge accounting
The Group does not have any relationships that qualify for hedge accounting.
3.15 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 24.
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.
40
Cambridge Cognition Holdings plc
Notes to the financial statements
3. Significant accounting policies (continued)
3.16 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 the ‘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.
3.17 Investments
The Group measures equity investments at fair value, with changes in fair value recognised in other gains/(losses)
in the consolidated statement of comprehensive income.
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.
Revenue recognition
As noted in section 3.3 above, many of the judgements in relation to revenue recognition are directed by the
characteristics of the contractual obligation being discharged. Accordingly, a limited amount of management
judgement is required. Whilst these judgements do not carry a significant level of estimation uncertainty, they
are nonetheless described below.
The extent to which, and the way in which, contracts are separated into their component parts and the values
attributed to those parts. This is based on the detail as per the contract, but other methods could be used that
would yield different results;
Whether software licences are granted to allow the customer the benefit of use of the Group’s intellectual property
over a period of time (including benefitting from future maintenance and improvements) or whether that right is
given as the intellectual property exists at the point of time the licence is granted. In the case of the former,
software is recognised over the period of use, for the latter revenue is recognised when the customer receives
control of the licence;
The adoption of the portfolio approach for lower value sales and the recognition criteria applied judgements of
the upper limit (£20,000) and the period of recognition (12 months) impact the method of valuation and hence
the amount recognised in the financial statements;
Where performance obligations are satisfied over time, the length of time remaining for performance, and
whether this needs revising over time. These judgements are based on best available information from customers
at any given point in time, but can change given the nature of the customer’s business; and
The deferral and subsequent recognition of commissions in cost of sales, which is recognised in the same
proportion as the revenue it is associated with.
Critical judgements in applying the Group’s accounting policies
The following are the critical judgements that the Directors, supported by management have made in the process
of applying the Group’s accounting policies. Where estimation uncertainty exists, the Directors, supported by
management, take account of all available information in forming their judgement.
Fair value of investments
The Group reviews the fair value of investments on an annual basis. This test requires a comparison of the
observable equity transactions, discounted for appropriate matters specific to the Group’s holding in the
underlying investment.
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 13.
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 capitalisation under IAS 38 Intangible Assets. The research and development expenditure
41
Cambridge Cognition Holdings plc
Notes to the financial statements
primarily relates to ongoing research as outlined in the Strategic Report. Therefore, no development costs have
been capitalised during 2021 (2020: £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 on when future taxable profits will be available to
utilise those temporary differences and tax losses. This judgement is reviewed at each balance sheet date and
made based upon forecasts of taxable profit, considering the inherent uncertainties in these forecasts.
5. Revenue
An analysis of the Group’s revenue for each major product and service category is as follows:
Software
Services
Hardware
2021
£'000
3,609
5,638
847
10,094
2020
£'000
2,751
3,679
311
6,741
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 located in the United Kingdom.
Information about major customers
2021
£'000
888
6,167
2,261
778
10,094
2020
£'000
425
4,606
984
726
6,741
Two customers account for more than 10 per cent of reported revenue in 2021, amounting to just over 20% of
the total (2020: none).
Revenue from contracts with customers
All revenue in 2021 and 2020 comes from contracts with customers.
Timing of revenue recognition
As explained in note 3.3, some software and services are recognised over a period of time, and some at a point
in time. The split of revenue in line with these factors is as follows:
Software – delivered over a period of time
Software – delivered at a point in time
Services – delivered over a period of time
Services – delivered at a point in time
Hardware – recognised at despatch or on satisfaction of bill and hold criteria
2021
£'000
3,344
265
4,694
944
847
10,094
2020
£'000
2,279
472
2,868
811
311
6,741
Of the £4.8m deferred revenue at 31 December 2020, £4.5m was recognised as revenue in 2021. Of the £2.7m
deferred revenue at 31 December 2019, £0.3m was recognised as revenue in 2021.
42
Cambridge Cognition Holdings plc
Notes to the financial statements
5. Revenue (continued)
Payment terms can vary from customer to customer and are subject to negotiation. Normally, software will be
invoiced at the point of initial sale and services invoiced as delivered. This will mean that a deferred revenue
balance is created in respect of software which will be reduced as the software is used.
Deferred commissions
Deferred commissions are presented as part of ‘other receivables’ in note 17. Management does not consider
any of these amounts impaired. The movement of this account specifically is as follows:
2021
£'000
440
(174)
462
728
2020
£'000
273
(127)
294
440
2021
£'000
2020
£'000
14
14
32
32
2021
£'000
297
1,660
143
6
5,100
2020
£'000
130
1,453
132
6
4,444
2021
£'000
2020
£'000
44
33
77
9
9
28
26
54
8
8
Opening balance
Amount of opening balance recognised in year
Net addition from sales in year
Closing balance
6. Other operating income
Other operating income is made up of the following:
Grant income
7. Operating profit/(loss)
Operating profit/(loss) has been arrived at after charging/(crediting):
Net foreign exchange (gains)/losses
Research and development costs
Depreciation of property, plant and equipment
Amortisation of intangibles
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
Taxation compliance services
Total non-audit fees
43
Cambridge Cognition Holdings plc
Notes to the financial statements
9. Staff costs
The average monthly number of employees (including directors) was:
Operations
Sales and business development
Administrative support
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Other pension costs (see note 25)
Share-based payments charge (see note 24)
10. Interest receivable and finance costs
Interest receivable comprises:
Interest on bank deposits
Finance costs comprise:
Unwinding of discount on lease creditor
2021
Number
2020
Number
42
9
9
60
40
7
11
58
2021
£'000
2020
£'000
3,811
4,321
352
440
228
213
111 68
4,444
5,100
2021
£'000
2020
£'000
-
4
2021
£'000
2020
£'000
11
9
44
Cambridge Cognition Holdings plc
Notes to the financial statements
11. Taxation
Corporation tax:
Current year
Adjustments in respect of prior years
Deferred tax (see note 18)
Total tax credit
2021
£'000
2020
£'000
(2)
(195)
(197)
-
(197)
2
(213)
(211)
-
(211)
Corporation tax is calculated at 19.00% (2020: 19.00%) of the estimated taxable loss for the year.
The tax credit for each year reconciles to the loss before tax as follows:
Loss before tax on continuing operations
Tax at the UK corporation tax rate of 19.00%
(2020: 19.00%)
Difference in foreign tax rates
Expenses not deductible for tax purposes
Deduction on exercise of share options
Movement in unprovided deferred tax on losses
Adjustment in respect of prior years
Foreign tax (credit)/charge
Tax credit for the year
2021
£’000
2020
£'000
253
(649)
48
17
26
(48)
(43)
(123)
5
3
(2)
117
(195)
(213)
(2)
2
(197)
(211)
The adjustment in respect of prior years relates to the receipt of R&D tax credits in respect of 2020 (2020: in
respect of 2019). No claim has yet been made for 2021 and no credit has been recognised in the financial
statements.
12. Earnings per share
The calculation of 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
attributable to owners of the Company
Number of shares
Weighted average number of ordinary shares for the purposes of basic EPS
2021
£'000
2020
£'000
450
(438)
2021
'000
31,170
2020
'000
29,776
Weighted average number of ordinary shares for the purposes of diluted EPS
31,519
29,776
45
Cambridge Cognition Holdings plc
Notes to the financial statements
13. Intangible assets
Cost
Goodwill
£'000
Licences
£'000
Total
£'000
At 1 January 2021 and 31 December 2021
352
Amortisation
At 1 January 2021
Charge for the year
At 31 December 2021
Net Book value
At 31 December 2021
At 31 December 2020
-
-
-
352
352
40
13
6
19
21
27
392
13
6
19
373
379
The goodwill held by the Group is held within Cambridge Cognition Limited and was recognised when the initial
trade and assets for Cambridge Cognition Limited were acquired in 2002. The initial amount recognised was the
difference between the amount paid for the trade and assets by Cambridge Cognition Limited and the fair value
of those assets. The goodwill represents Cambridge Cognition’s proprietary software. This software is used
across the Group’s product offerings, and the group monitors the value of the goodwill at the Cambridge
Cognition Limited level. Accordingly, the cash generating unit (“CGU”) for the purposes of testing impairment
under IAS 36 is the statutory entity of Cambridge Cognition Limited.
The recoverable value of the goodwill and other assets in Cambridge Cognition Limited has been assessed on a
value in use basis considering the three-year future forecasts for Cambridge Cognition Limited. These budgets
are a result of the overall Group budgeting process, and the key assumptions include sales order volumes,
business costs, and the related cash flows. This process considers both prior performance and future
projections based on both external and internal factors. A terminal value is calculated based on the third year
of forecasts with a nil growth rate. The discount rate used was 7.5%, consistent with the prior year.
As well as the scenario based on these forecasts, management has run alternative scenarios with reasonable
downside assumptions to test the valuation, in particular a reduction in sales orders taken by over 20% and
consequential impacts on results and cashflow. In all scenarios, the goodwill amount is recovered within the
initial three-year period. Accordingly, no impairment has been recorded.
14. Property, plant and equipment
Cost
At 1 January 2021
Additions
At 31 December 2021
Depreciation
At 1 January 2021
Charge for the year
Eliminated on expiry of lease
At 31 December 2021
Net Book value
At 31 December 2021
At 31 December 2020
Leased
Buildings
£’000
Leasehold
Improvements
£'000
Fixtures
and fittings
£'000
Total
£'000
39
-
39
38
1
-
39
-
1
628
32
660
585
24
-
609
52
43
793
56
849
655
143
-
798
52
138
126
24
150
32
118
-
150
-
94
46
Cambridge Cognition Holdings plc
Notes to the financial statements
15. Subsidiaries, joint ventures, associates and other investments
Details of the Company’s subsidiaries, joint ventures and associates at 31 December 2021 are as follows:
Name
Place of
incorporation
(or registration)
and operation
Cambridge Cognition Limited
United Kingdom
Proportion
of
ownership
interest
%
100%
Proportion
of
voting
power held
%
100%
Cambridge Cognition Trustees Limited
United Kingdom
100%
Cambridge Cognition LLC
Delaware, United
States of America
100%
Cantab Corporate Health Limited
United Kingdom
100%
Cognition Kit Limited
United Kingdom
50%
100%
100%
100%
50%
The results and assets of Cognition Kit Limited are immaterial to the Group. Accordingly, detailed 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 510 S. 200 W. Suite 200, Salt Lake City, UT 84101, USA.
All holdings are in ordinary shares.
Details of the Company’s other investments include:
Monument Therapeutics Limited
33%
The net cost of the investment in Monument is £49,000 and after an extensive fair value exercise it was
concluded that cost approximated to fair value and there was no requirement to adjust the carrying value of
the investment at 31st December 2021.
The Company recognises its holding in Monument as an investment. Although it holds more than 20% of the
voting shares, it does not have significant influence over the business due to the control exercised by all the
other major shareholders to the exclusion of the Company.
16. Inventories
Finished goods and goods for resale
2021
£'000
2020
£'000
126
51
During the year inventories with a total value of £251,000 (2020: £184,000) were included in the income
statement as an expense.
47
Cambridge Cognition Holdings plc
Notes to the financial statements
17. Trade and other receivables
Trade receivables from contracts with customers
Accrued income from contracts with customers
Prepayments
Deferred commissions
Other receivables
2021
£'000
2,047
401
1,592
728
362
5,130
2020
£'000
1,368
57
551
440
232
2,648
Trade receivables
Trade receivables disclosed above are classified as financial assets and are measured at amortised cost.
The average credit period offered on sales of goods varies from 30 days to 90 days.
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 impairment loss. There has not been a significant
change in credit quality and the amounts are still considered recoverable.
Aging of past due but not impaired receivables:
31-60 days
61-90 days
91-120 days
121 or more days
2021
£'000
652
299
4
79
1,034
2020
£'000
10
27
-
4
41
There is a provision for a credit loss of £13,000 (2020: £13,000). This loss is against a specific project from which
recovery is not presently anticipated. In determining the recoverability of a trade receivable the Group will also
consider 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. Under IFRS 9, we consider the expected credit losses on our receivables with reference to our past
experiences of credit losses and calculate an expected credit loss. The expected credit loss for the Group would
be immaterial and has not been booked in this or the prior year.
Debts of £10,000 were written off during the year (2020 – nil). A provision for credit loss of £115 was charged
to the income statement (2020: £13,000).
18. Deferred Tax
At the reporting date, the Group has unused tax losses of £12.8 million (2020: £13.8 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. The unprovided deferred tax asset amounts to approximately £2.5
million (2020: £2.6 million). Losses may be carried forward indefinitely. No deferred tax asset has been
recognised in respect of share options.
48
Cambridge Cognition Holdings plc
Notes to the financial statements
19. Trade and other payables
Amounts falling due within one year
Trade payables
Accruals
Deferred income on contracts with customers
Social security and other taxes
Lease liabilities
Other payables
2021
£'000
755
2,181
8,816
112
18
26
11,908
2020
£'000
298
864
4,833
85
98
28
6,206
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs.
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.
Deferred income on contracts with customers has increased during the year due to the volume of sales orders
received, and the amount of orders for which payments have been received ahead of revenue recognition.
20. Share capital
Issued and fully paid
31,170,093 (2020: 31,170,093) Ordinary Shares of £0.01 each
2021
£’000
2020
£’000
312
312
All ordinary shares carry equal voting and distribution rights. There are no other classes of shares.
21. Own shares reserve and other reserve
Own shares reserve
2021
£’000
2020
£’000
78
78
The Own shares reserve represents the cost of shares acquired by the two Cambridge Cognition Employee Benefit
Trusts to satisfy options under the Group’s share options schemes. The number of shares held by the UK
Employee Benefit Trust at 31 December 2021 was 36,765 (2020: 67,715). The number of shares held by the
Jersey-based Employee Benefit Trust at 31 December 2021 was 45,000 (2020: 48,250).
During the year employees exercised 30,950 (2020: 6,000) (net) share options at an exercise price of £0.01
each which were satisfied by the UK Employee Benefit Trust.
Other reserve – merger reserve
Other reserve – cumulative translation adjustment
Total other reserve
2021
£’000
5,981
144
6,125
2020
£’000
5,981
130
6,111
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.
49
Cambridge Cognition Holdings plc
Notes to the financial statements
22. Notes to the cash flow statement
Profit (Loss) before tax
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of software licences
Share-based payment expense
Finance costs
Interest receivable
Operating cash flows before movements in working capital
Decrease/(increase) in inventories
(Increase)/decrease in receivables
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
2021
£'000
2020
£'000
253
(649)
142
6
111
11
-
523
(75)
(2,285)
5,782
3,945
132
6
68
9
(4)
(438)
2
(1,010)
2,243
797
-
213
3,945
1,010
2021
£'000
2020
£'000
6,810
3,047
Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months
or less. The carrying amount of these assets is approximately equal to their fair value.
23. Lease arrangements
The Group holds leases for its headquarters and one additional storage building on the same site. These are the
Group’s only leases. A summary of the lease asset is within note 14, being the column ‘Leased Buildings’.
The changes in the lease liability are as follows:
Liability outstanding at the beginning of the year
Renewal lease signed
Lease repayments
Finance costs
Liability outstanding at year-end
2021
£'000
98
-
(86)
6
18
All remaining lease payments are due within one year. Included within the liability above is an amount of
£17,000 for restoration of the property at the lease’s end.
50
Cambridge Cognition Holdings plc
Notes to the financial statements
24. 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:
2021
2020
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
2,287,636
(38,259)
494,000
(216,287)
2,527,090
0.35
0.01
1.24
0.45
0.52
1,316,321
(6,000)
1,286,815
(309,500)
2,287,636
0.46
0.01
0.30
0.58
0.35
Exercisable at the end of the year
396,959
0.59
288,106
0.81
The options outstanding at 31 December 2021 had a weighted average remaining contractual life of 3.6 years
(2020 3.2 years). The exercise prices of share options outstanding at the period end was as follows:
2021
2020
Number of
share
options
Weighted
average
exercise price
(in £)
Number of
share
options
Weighted
average
exercise price
(in £)
Exercise price of one penny
Exercise price of 28 pence
Exercise price between 53 and 82.5 pence
Exercise price between 125 and 272 pence
Outstanding at the end of the year
160,843
1,427,857
455,458
482,932
2,527,090
0.01
0.28
0.66
1.29
0.52
200,602
1,592,144
456,958
37,932
2,287,636
0.01
0.28
0.66
1.63
0.35
Options were granted on 30 April 2021 and 15 November 2021. The performance conditions attached to some of
these options are such that options vest dependent on the Group 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 in April
is £155,000, and for those granted in November is £28,000. The inputs into the Monte Carlo stochastic and Black
Scholes models for the performance related options were as follows:
Share price at date of issue
Exercise price
Expected volatility
Expected life
Risk-free rate
Expected dividend yields
Share price at date of issue
Exercise price
Expected volatility
Expected life
Risk-free rate
Expected dividend yields
April 2021
121.0p
125.0p
6%
3 years
0.17%
0.0%
November 2021
136.5p
140.0p
6%
3 years
0.17%
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 in the option contracts.
The Group recognised a total charge of £111,000 (2020: £68,000) in relation to equity-settled share-based
payment transactions.
51
Cambridge Cognition Holdings plc
Notes to the financial statements
25. 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 £228,000 (2020: £213,000) represents contributions payable to these
schemes by the Group at agreed rates. As at 31 December 2021, contributions of £25,000 (2020: £26,000) due
in respect of the current reporting year had not been paid over to the schemes.
26. 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 2021 (2020: nil). The Group is not subject to any externally imposed capital
requirements.
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 shareholders funds
2021
£'000
6,810
632
2020
£'000
3,047
57
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 at amortised cost
Cash and bank balances
Trade and other receivables
Financial liabilities at amortised cost
Trade and other payables
2021
£'000
2020
£'000
6,810
2,388
3,047
1,521
3,092
1,373
Financial risk management objectives
The Group’s Finance function is responsible for all aspects of corporate treasury. It co-ordinates access to financial
markets and 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 of at least a further
12 months.
At 31 December 2021, the Group’s financial liabilities had contractual maturities which are summarised below:
Trade payables
Other payables
Lease liability
52
2020
£'000
Within 1 year Within 1 year
2021
£'000
755
2,319
18
3,092
298
977
98
1,373
Cambridge Cognition Holdings plc
Notes to the financial statements
26. Financial instruments (continued)
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 did not use financial derivatives
in 2020 or 2021.
There has been no change to the Group’s exposure to market risks or the manner in which these risks are
managed and measured.
Foreign currency risk management
The Group undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate
fluctuations arise.
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at
the year-end were as follows:
US Dollar
Euro
Qatari Riyal
Liabilities
Assets
2021
£'000
119
138
-
2020
£'000
83
39
-
2021
£'000
2,952
599
45
2020
£'000
2,922
766
45
A movement in the £/$ exchange rate of +/- 5% from 31 December 2021 to the date of realising the US dollar
net asset position would result in a gain of £142,000 (2020: £142,000). Similarly with the Euro, the gain/loss
would be £23,000 (2020: £36,000). With the Qatari Riyal, the gain/loss would be £2,000(2020: £2,000).
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 counterparty 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. The Group has calculated its expected credit
losses and the amount is immaterial. No guarantees have been given in respect to third parties.
Fair value of financial instruments
The Directors consider that the carrying amounts of financial assets and financial liabilities recorded in the
Statement of Financial Position approximate their fair values.
53
Cambridge Cognition Holdings plc
Notes to the financial statements
27. 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 £21,000 (2020: £66,000) in respect of the value of time and expenses of the
Group committed to the activities of Cognition Kit Limited - this has been recognised in revenue. At year-end a
balance of £nil (2020: £nil) was owed to the Group by Cognition Kit Limited.
Further, the Group was invoiced £253,000 with respect to Cognition Kit Limited in the year (2020: £41,000) –
this has been recognised as a cost of sale. The Group has also accrued costs in respect of licence fees and other
services payable to Cognition Kit Limited of £25,000 (2020: £8,000) – this has been included in accruals.
Transactions with Monument Therapeutics Limited
Monument Therapeutics Limited was invested in November 2020. The Group has been providing short term
funding for Monument Therapeutics Limited. At 31 December 2021 this amounted to £22,000 (2020: £21,000),
and has been included within other receivables in note 17. The accumulated net cost incurred on behalf of
Monument prior to the spin out was £49k.
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 2021 consist of the Directors and five additional senior staff (2020: the Directors and five additional
senior staff).
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
2021
£'000
1,402
55
30
57
1,544
2020
£'000
1,190
47
-
44
1,281
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 2021 the Group incurred consultancy fees of £2,000 (2020: £24,000) from MCR
Holdings, a partnership of which Nicholas Walters is a partner and consultancy fees of £nil (2020: £22,394) from
The Truffaldino Partnership, a company of which Steven Powell is a director. At 31 December 2021 a balance of
£nil (2020: £2,418) was outstanding to MCR Holdings.
54
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
Retained earnings
Total equity
Notes
At 31 December
2021
At 31 December
2020
£'000
£’000
2
3
4
5
555
555
3,997
5,224
506
506
8,738
517
9,221
9,255
9,776
9,761
443
443
312
11,151
(2,129)
251
251
312
11,151
(1,953)
9,333
9,510
Total liabilities and equity
9,776
9,761
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 £208,000 (2020: profit £943,000).
The financial statements of Cambridge Cognition Holdings plc on pages 54 to 57 were approved and authorised
for issue by the Board on 13th May 2022 and were signed on its behalf by:
Matthew Stork
Chief Executive Officer
55
Cambridge Cognition Holdings plc
Parent Company statement of changes in equity
Balance at 1 January 2020
Profit for the year
Issue of new share capital
Share issue costs
Credit to equity of equity-settled share-
based payments
Share
capital
£’000
242
Share
premium
£’000
9,943
Retained
earnings
£’000
(2,964)
-
70
-
-
-
1,330
(122)
-
943
-
-
68
Total
£’000
7,221
943
1,400
(122)
68
Transactions with owners
70
1,208
68
1,346
Balance at 1 January 2021
312
11,151
(1,953)
9,510
Loss for the year
Credit to equity of equity-settled
share-based payments
Transactions with owners
-
-
-
-
-
-
(208)
(208)
31
31
31
31
Balance at 31 December 2021
312
11,151
(2,130)
9,333
56
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:
o Disclosure exemption allowing no cash flow statement or related notes to be presented
o Disclosure exemption allowing the Company not to disclose related party transactions when transactions
are entered into wholly within the Group
o Disclosure exemption around Key Management Personnel compensation (though see note 27 of the Group
accounts and the Directors’ Remuneration Report)
o Capital management disclosures (though see note 26 of the Group accounts)
o Disclosure exemption on the effect of future accounting standards
o Disclosure exemption on share-based payment information disclosures (IFRS 2), as this information has
been presented for the Group in note 24 of the consolidated financial statements
o Disclosure exemption on financial instrument disclosures (IFRS 7) as this information has been presented
for the Group in note 26 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. The Company measures other equity
investments at fair value, with changes in fair value recognised in other gains/(losses) in the statement of
comprehensive income.
1.3 Financial instruments
The Company’s financial instruments accounting policy is as per the Group’s policy (see note 3.14).
Additionally, with respect to intercompany loans, these are assessed for expected credit losses and provision is
made where the recoverable value is less than the book value of the receivable.
1.4 Going concern
The Directors have assessed the Group’s ability to continue as a going concern. As noted in the Strategic Review,
the business has remained fully operational to date and order intake in 2021 was excellent.
The Group has a base case forecast for the period to 30th June 2023 with a growth case and downside also
being forecast. The base case is built on the current view of orders to be taken and the recognition of revenue
and billing milestones associated with orders already taken.
The base case shows strong performance, driven by existing orders and supports a positive and comfortable
cash balance through the end of the going concern review period, with a positive outlook thereafter. The worst
case also shows positive cash through the going concern review period and would allow for further expenditure
modifications not yet budgeted.
Whilst having proper regard to the continuing uncertainties brought by the pandemic, the Directors believe that
the Group will remain a going concern for the foreseeable future. Accordingly, the accounts have been prepared
on the going concern basis.
1.5 Employee Benefit Trust
Two Employee Benefit Trusts (EBTs) are maintained in order to facilitate the exercise of employee share options.
Assets and shares of the EBTs are not consolidated into the Parent company.
57
Cambridge Cognition Holdings plc
Notes to the Parent Company financial statements
2. Investments
Cost and net book value
At 1 January 2021
Additions
At 31 December 2021
Investment
£'000
506
49
555
During the year the company invested £49,000 in Monument Theraputics Limited.
The investments at the end of the year were as follows:
Name
Cambridge Cognition Limited
Monument Therapeutics Limited
Country
of
Operation
United
Kingdom
United
Kingdom
Proportion of
Ownership and
Voting Power Held
100%
Nature of Business
Development and sale of
computerised
neuropsychological tests
33%
Digital phenotyping
Other Group subsidiaries, all of which are owned indirectly through Cambridge Cognition Limited, are detailed
in note 15 of the Group accounts. All subsidiaries have been included in the consolidated accounts.
3. Trade and other receivables
Amounts due from subsidiary undertaking
Provision against amounts due from subsidiary undertaking
Amounts due from associates
Other receivables
2021
£’000
3,990
-
-
7
3,997
2020
£'000
8,696
-
21
21
8,738
Of the amounts due from subsidiary undertakings, £4.0m (2020:£8.5m) are considered a long-term loan to
Cambridge Cognition Limited, but are technically repayable on demand. The Company receives interest at a rate
of 7.5% per annum on this amount. At 31 December 2021, it was considered that Cambridge Cognition Limited
has the ability to repay the debt if it were called, and as such any impairment would be immaterial.
4. Trade and other payables
Trade payables
Social security and other taxes
Accruals
5. Share capital
2021
£’000
2020
£'000
83
20
340
443
29
21
201
251
The details on the share capital of the Company are provided at note 20 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.
58