Annual Report
& Accounts
2022
Cambridge Cognition Holdings plc
Results for the year ended 31 December 2022
Contents
Corporate Directory
Chair’s Statement
Chief Executive Officer’s Review
Chief Financial Officer’s Review
Risks & Uncertainties
Report of the Directors
Corporate Governance Report
Remuneration Report
2
3-4
5-14
15-17
18-20
21-23
24-28
29-32
Independent Auditor’s Report to the Members of Cambridge Cognition Holdings plc
33-43
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
44
45
46
47
48-77
78
79
80-82
Corporate Directory
(Non-Executive Chair)
(Chief Executive Officer)
(Chief Financial Officer)
(Non-Executive Director)
(Non-Executive Director)
Directors:
Registered Office:
Steven Powell
Matthew Stork
Stephen Symonds
Richard Bungay
Debra Leeves
Tunbridge Court
Tunbridge Lane
Bottisham
Cambridge
CB25 9TU
Company Number:
8211361
Auditor:
Grant Thornton UK LLP
Chartered Accountants
Statutory Auditor
101 Cambridge Science Park
Legal Advisers:
Bankers:
Registrars:
Milton Road
Cambridge
CB4 0FY
Taylor Wessing LLP
5 New Street Square
London
EC4A 3TW
Barclays
28 Chesterton Road
Cambridge
CB4 3AZ
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Nominated Advisor
and Joint Broker:
Panmure Gordon (UK) Limited
40 Gracechurch Street
London
EC3V 0BT
Joint Broker:
Dowgate Capital Limited
15 Fetter Lane
London
EC4A 1BW
1
Cambridge Cognition | Annual Report & Accounts 2022
2
Cambridge Cognition | Annual Report & Accounts 2022
Chair’s Statement
2022 was a pivotal year for our business, with significant
achievements at all levels of the organisation. We achieved
growth in like-for-like orders and revenues, underlying business
profitability, cash generation and major progress in innovation. In
addition, two acquisitions also further expanded our technology
capabilities and future revenue growth.
Cambridge Cognition’s strategy is to develop and
In April 2022, we were pleased to welcome Stephen
commercialise unique, well-protected, high-value
Symonds as Chief Financial Officer and he was
solutions supported by extensive scientific evidence
appointed to the Board in August 2022. Stephen
and expertise for central nervous system (“CNS”)
brings a wealth of top-four audit and clinical trial
clinical trials. There has been excellent progress in
market expertise at a senior level and is already
delivering this strategy, and we believe Cambridge
making a strong contribution. The Board has
Cognition is exceptionally well-placed for the future.
concluded that with the Company’s continued
Over the year, the Board has continued to focus
would be beneficial later in 2023 to bring further
on careful capital allocation as the Company
independent guidance, scrutiny and experience.
growth, adding a further Non-Executive Director
has expanded organically and inorganically.
The acquisitions of Clinpal (the trading name
Cambridge Cognition is positioned for accelerated
for eClinicalHealth Limited) in October 2022 and
revenue growth and sustainable profitability in
Winterlight Labs Inc at the start of 2023 enhance
the coming years, both from its existing offerings
our portfolio which have the benefit of expanding
and new products in development. The Board
the addressable market for our products as well
expects the Company to grow rapidly and deliver
as potential market share which is expected
substantial, sustainable shareholder value in both
to increase revenue growth. We also expect
the short and medium term.
their solutions to prompt incremental use of the
Company’s existing products.
Steven Powell
Chairman
2 May 2023
Financial Highlights
Cambridge Cognition had a transformative year in 2022, recording 25% revenue growth
and a profit before acquisition-related costs, continuing to commercialise and develop
new solutions, and making two bolt-on acquisitions (including one completed post
period end), as it enhances its position as a leading digital health tech provider for CNS
clinical trials.
Corporate & Operational Highlights
25% revenue growth year-on-year
and underlying profitability.
Major contract wins, including two
over £2m for sizeable clinical trials.
Innovative new product
development and acquisitions that
added to the technology offering
and expanded the addressable
market.
Leading market position with
unique digital technology solutions
and full commercial coverage
of the clinical trial market for
cognitive assessments.
Sales order intake of £13.1m, up
8% on like-for-like prior year (2021:
£12.1m excluding £3.6m of large
one-off orders).
Contracted order book increased
to £19.1m following the acquisition
of Winterlight Labs on 10 January
2023.
Revenue
Gross profit
Profit for the year
Loss per share
Cash balance
up 25%
2022 £12.6m
2021 £10.1m
up 21%
2022 £9.3m
2021 £7.7m
£0.1m
adjusted for acquisition-related
expenses of £0.5m
2021: £0.5m
1.3 pence
2021: 1.4 pence
earnings per share
£8.3m
31 December 2022
2021 £6.8m
3
Cambridge Cognition | Annual Report & Accounts 2022 4
Cambridge Cognition | Annual Report & Accounts 2022 Chief Executive
Officer’s Review
I am delighted by Cambridge Cognition’s performance
in 2022. We worked on a record number of clinical trials
and increased revenue substantially, while laying the
foundations for further growth in future years. In tandem
with this growth, we have focused on delivering high-value
technology solutions and excellent customer service.
Our overarching strategy is to develop and
l
Invested in sales and marketing, bolstering our
commercialise a unique set of high-value solutions
brand presence and providing full coverage
for CNS clinical trials. Those solutions are well
across the US and Europe. Additionally, we have
protected and supported by extensive scientific
established a distributor relationship in Asia to
evidence and expertise. Our product offerings
expand our reach further.
and capabilities have undergone a step-change
through customer-oriented product development
These accomplishments position Cambridge
and strategic acquisitions. Specifically, we have:
Cognition to secure more contracts and capture
a more substantial share of the growing market
l Further developed our suite of leading cognitive
opportunity.
assessments, making them accessible on more
devices, in more than 50 languages, and in any
Overall, our 2022 financial results were very strong,
country.
with revenue growth of 25% to £12.6m (2021: £10.1m)
l Set up a global software infrastructure
and orders growth of 8% (on a like-for-like basis)
that adheres to stringent data protection
over 2021 to £13.1m. Administrative expenses were well
requirements and enables us to store patient
managed during the year, and although the gross
data locally, as mandated by regulations.
margin percentage was slightly down on the prior
l Acquired leading voice-based and decentralised
year, this was in line with expectations. In 2022 we
Activity has been high in the first quarter of
2023, and a positive response from customers
to developments in 2022 and early 2023. The
Company ended 2022 with a strong contracted
order book of £17.6m which increased further to
£19.1m in January 2023 following the acquisition of
Winterlight. Moreover, with the broadened portfolio
and additional business capabilities, we have a solid
platform to achieve future profitable growth.
Market Overview
Cambridge Cognition operates across three main
business areas:
1. Pharmaceutical clinical trials: The Company has
a fully serviced digital outcomes assessment
solution including software, configuration (with
customisation options), consulting, and reporting
services that accounts for approximately 90% of
revenue.
2. Academic research: The supply of cognitive
outcomes assessments is via a software-
as-a-service solution for use in research by
academics.
clinical trial solutions to establish the broadest
changed our accounting policy for cost of sales and
3. Healthcare: The Company has two products
offering in CNS-related outcomes measurement.
have included pay costs directly related to revenue
l Brought in expert-level capability in machine
(with the prior year restated to the same basis).
learning for digital biomarkers, deep knowledge
of computational linguistics, and new clinical
The financial results for the year were tempered
trial solutions, such as electronic consent and
by a slightly slower-than-expected final quarter
telemedicine.
as we experienced delays and scope reduction
l Expanded our software team to accelerate
associated with large orders. Market forecasts
the development of new modules, opening an
suggest that this is not representative of a long-
office and recruiting an entire team of software
term trend. The Company’s strategy is designed to
developers in South Africa.
address intermittent slow periods through a broader
product offering and increasing volumes across all
contract sizes.
to aid in the triage and diagnosis of cognitive
impairment, one for primary care practitioners
and one for secondary care specialists, that
are FDA and EU-approved medical devices.
Demand is currently limited as there is minimal
reimbursement; this may change with more
interest in using digital cognitive biomarkers for
healthcare with new drugs being approved for
Alzheimer’s disease.
5
Cambridge Cognition | Annual Report & Accounts 2022 6
Cambridge Cognition | Annual Report & Accounts 2022 Chief Executive Officer’s Review
Primarily related to clinical trials, five areas
paper methods to collect outcomes. Taking a
represent substantial market opportunities
proportion of the reported global market for all
for the Company:
1. Digital Cognitive Outcomes Assessments
Approximately 500-600 clinical trials each year
use measures of cognition1. The traditional
therapeutic areas, the eCOA market for CNS
disorders was estimated to be £160m in 2022,
growing at 15% per annum5.
4.
In-Clinic, Hybrid and Virtual/Decentralised
assessment method requires clinicians to ask
Clinical Trial Systems
patients questions and score the answers, and
Pharmaceutical companies and CROs depend
can be subjective, costly, and inconvenient.
on various information technology systems to
Touchscreen or voice-based cognitive
effectively communicate with patients, schedule
assessments, can be used alongside or even
events, gather and analyse clinical data, and
replace traditional assessment methods. The
prepare reports. Among the most used modules
US market for digital cognitive assessments was
are e-Consent, which captures participation
estimated at £70m in the US in 2022 and growing
at 10% per annum2.
agreements, Electronic Document Management
(“EDC”), which stores all the clinical data, and
Telehealth, which enables clinician-patient
2. Automated Quality Assurance
consults. A wide range of providers offer one
In later phase clinical trials for diseases such
or more of these systems, with some designed
as Alzheimer’s and Parkinson’s Disease, patient
for in-clinic or virtual use or both. No provider
consults are reviewed for quality assurance. This
currently markets a CNS-dedicated solution. The
is a new market opportunity for the Company;
global market for these solutions in CNS virtual
our new offering automates part of the process
and enables quality assurance at a lower overall
clinical trials was estimated to be £140m per
annum growing at 15%6.
cost. We commissioned independent market
research and estimate the market opportunity
could be £16m per annum within five years3.
5. Patient Recruitment
There is a market opportunity for Cambridge
Cognition to recruit patients for a wide range
3. Electronic Clinical Outcomes Assessment
of CNS clinical trials. Recruitment is notoriously
(“eCOA”)
eCOA systems are designed to capture
challenging: less than half of studies meet
enrolment goals7. We collaborate with several
patient, carer, or clinician-reported data on a
partners to provide clinical consulting, patient
patient’s outcomes during a clinical trial. This is
tracking systems and clinical screening as part
accomplished through using licensed questions
of a dedicated patient recruitment offering. The
or scales that are usually widely used in clinical
CNS clinical trial patient recruitment market,
studies. Uptake is gradual and clinical trial
sites report that they use eCOA half the time
or less4. The remainder still rely on pen-and-
excluding advertising, is estimated at £100m
annually growing at 10% per annum8.
Operational Review
In 2022, the Group significantly enhanced its
operational capability and performance across
commercial, clinical services, product development,
people management, and delivery. We successfully
provided solutions to a more extensive customer
base than ever before.
Considerable investment has been made in
expanding our commercial team, increasing the
number of sales and sales support staff from four
to eight. These investments were made towards the
end of the year, with the aim of making an impact
in 2023. As a result, we now have full coverage of the
cognitive assessment market for clinical trials, a new
sales team dedicated to virtual clinical trials, and an
experienced proposal management function.
We achieved 100% on-time-in-full delivery of
clinical trial starts and a continued high customer
service record, enhancing our brand position as a
gold-standard provider of assessments. Excellent
clinical project management and scientific support
were provided to academic customers, scientific
collaborators, and pharmaceutical clients.
The numerous publications and presentations
referencing new data by Cambridge Cognition
employees, leading scientists, and pharmaceutical
companies continue to provide valuable evidence
to help secure contracts. The total number of
papers citing studies using the Company’s
assessments now stands at over 3,000. Two notable
examples of such partnerships in 2022 are the
Company’s participation in the IdeaFast project to
develop new digital biomarkers of fatigue, and the
Brain Health Registry programme, to understand
mild cognitive impairment globally.
Cambridge Cognition has continued to provide
a single-source service by shipping hardware
to support clinical trials. Chip shortages and
production delays throughout 2022 increased the
challenge of obtaining and shipping hardware to
clients. Despite this, we achieved all contractual
obligations and established an additional inventory
of the most used tablets and mobile phones.
Over the year, the Company transformed its
product development function, introducing new
systems and roles to streamline and improve the
efficacy of product development and maintenance.
We recruited considerable expertise in the product
and research and development teams with several
senior-level new starts.
Software development resources were enhanced
by opening a new office in South Africa. The region
boasts a large pool of highly skilled software
developers. As a result of natural attrition in the
UK, most of the Company’s software development
capacity at the year-end was based in South Africa.
7
Cambridge Cognition | Annual Report & Accounts 2022 8
Cambridge Cognition | Annual Report & Accounts 2022 Chief Executive Officer’s Review
Investments have been made in the management
The acquisition of Winterlight was completed in
Having made the two recent acquisitions, we
team, training for people managers, and role-
January 2023. Winterlight, based in Toronto, Canada,
have prioritised our go-to-market strategy for
Innovation Review
specific training and development. We saw
has developed machine-learning-based voice
the combined business including opportunities
some pay inflation as we ensured salaries were
assessments using free-speech inputs or those
to cross-sell from the enlarged portfolio, and
competitive for the sector. At the same time, we
that require deductive reasoning or interpretation,
the focus is now on integrating operations and
reduced our recruitment costs substantially during
as well as a unique automated quality assurance
supporting functions. These are critical next steps
a growth period through more successful direct
service for clinicians. Winterlight has an excellent
to ensure we achieve the expected acquisition
hires managed by our internal team.
customer list, including five of the top ten global
returns. While the Company remains open to other
Corporate Business
Development Review
life sciences companies, and limited overlap with
corporate business development opportunities,
Cambridge Cognition’s existing customer base,
such as partnerships, licensing opportunities, or
providing the potential to cross-sell and generate
mergers and acquisitions, future opportunities will
further revenue growth.
be considered primarily in relation to contribution to
the Company’s profit.
Cambridge Cognition has a well-established
reputation for leadership in the sector and a history
of firsts, which supports the brand’s reputation and
creates unique differential advantages. These are
protected mainly through trademarks, copyright,
and some patents, establishing our intellectual
property (or ‘moat’).
With continued investment in innovation in 2022,
the three companies, Cambridge Cognition, Clinpal,
and Winterlight all made major advances.
Over the last two years, Cambridge Cognition
The acquisition of Winterlight was completed
had established an ambitious strategic roadmap
for a total amount payable of £7.0m. As at the
to develop new product and service offerings,
acquisition date, Winterlight had a strong pipeline
including building out modules to support clinic-
of opportunities and a contracted order book of £1.5
based and virtual clinical trials and developing a
million (reduced subsequently from the previously
free-speech-based verbal cognitive assessment.
announced £2.5m as a Winterlight customer failed
To accelerate the development of the business and
to secure adequate financing and is now seeking
respond to demand, we made two acquisitions to
a sale of its assets). As well as actively cross-selling
obtain those technologies and competencies.
solutions at this time, the unique quality assurance
In October 2022, the Company acquired Clinpal™
on a large tender for cognitive assessments and
(the trading name for eClinicalHealth Limited), a
clinician services as a single provider, differentiating
offering has enabled Cambridge Cognition to bid
digital technology provider of virtual clinical trial
us from competitors.
solutions that has been working on trials for three
of the world’s top ten largest pharmaceutical
In November 2022, Cambridge Cognition also
companies. With a patient-centric platform that
entered into an agreement with Luca Healthcare to
connects patients, sites, and pharmaceutical
commercialise our suite of cognitive assessment
companies, Clinpal™ enables all the essential steps
tools in the China market. Luca Healthcare, which has
in a clinical trial.
existing contracts with pharmaceutical companies
in other therapeutic areas, is now offering solutions
Clinpal was acquired for a total amount payable of
for CNS clinical trials and developing a healthcare
£1.7m, and the acquisition is expected to positively
solution. Our assessments are hosted on a secure
contribute to profitability in 2024. The Clinpal
cloud-based server in China and can be run
acquisition immediately allowed the Company to
seamlessly on Luca Healthcare’s platform using
offer full in-clinic and virtual clinical trial solutions,
Application Process Interfaces (“APIs”).
including specialised CNS clinical trial patient
recruitment solutions. This has already enabled
us to respond to a tender issued by a top-ten
pharmaceutical company for a recruitment contract.
9
Cambridge Cognition | Annual Report & Accounts 2022 1 0
Cambridge Cognition | Annual Report & Accounts 2022 Chief Executive Officer’s Review
CANTAB™ Cognitive Assessments
The use of these daily assessments is gaining
The in-house solution developed by Cambridge
Cambridge Cognition’s core product CANTAB™
traction. Two major pharmaceutical companies
constitutes most of the Company’s revenues. It
published the results of their studies in 2022:
comprises 15 main tasks that cover all the cognitive
domains typically measured in a clinical trial.
1. Takeda, together with the University of
Cognition progressed by:
l Establishing a roadmap for multi-language
support development in 2023, essential for
the widespread use of assessments in clinical
In 2022, the number of publications supporting
Toronto, presented data showing that a
trials.
CANTAB™ grew to 2,850 and as at the end of April
short daily task was well correlated with the
2023 stands at over 3,000.
CANTAB™ assessments are available on Apple
iPads™ and most can be accessed through a web
pen and paper version concluding that it
could help with guiding treatment choice for
patients with depression9.
l Creating a short daily assessment prototype
for a pharmaceutical company with a well-
known verbal assessment but with daily
monitoring, allowing for quicker observation
of drug effects and potentially shorter and
browser. In 2022, a development project enabled
2. Sage published data showing that patients
more efficient trials.
screen resizing and demonstrated validity of results
with Parkinson’s and Alzheimer’s disease
for an assessment on a mobile phone as well. This
development will enable use of CANTAB™ in a much
improved using a novel drug as measured
by two quick daily cognitive assessments10.
broader context in the future.
Daily Cognitive Assessments
In 2022, the Company broadened its existing range
of daily mobile phone assessments by developing
four additional prototypes, due for launch in 2023.
Three of these are screen-based, and one voice-
based. This will bring the Group’s total number of
short daily assessments covering the main cognitive
domains to six by the end of the current year.
Early in 2023, Sage also published data
showing that they could demonstrate
the day-by-day impact of their drug on
cognitive function.
These new daily assessment are ground-
breaking, novel application of digital
technologies with the potential to objectively
demonstrate drug effects in ways that have not
been possible before.
Voice-based Cognitive Assessments
Significant progress was made in 2022, both
within the Company and by Winterlight, in
advancing the development of voice-based
cognitive assessments.
l Agreeing on collaborations with two major
universities to validate existing assessments.
These projects took considerable time,
from initial discussion to full grant funding
and commencing work though are now
underway.
Winterlight achieved a number of milestones
with its free-speech solution. These milestones
Academic Collaborations
include:
As well as co-creating solutions with
pharmaceutical companies, Cambridge Cognition
l Adding additional languages to bring the
participated in several widely recognised academic
total number to nine (more than any other
collaborations in 2022. Some of the most high-
company in the sector).
profile ones include: the EU IMI grant-funded
l Establishing a quality assurance solution
IDEA-FAST study to identify digital endpoints for
for clinical trials with considerable market
fatigue; the US NIHR-funded Brain Health Registry
potential.
that assesses cognition worldwide; the Deep
l
Improving its automated solution with better
and Frequent Phenotyping longitudinal study of
speech recognition to simplify and reduce
dementia and AI Brain, an EU Horizon grant-funded
transcription costs.
study developing multi-modal biomarkers for
Cambridge Cognition is now the only company
showcasing our solutions and gathering data, these
offering such a wide range of automated
have provided reference points for and contact
voice-based cognitive assessments. These
with target customers. By way of example, 13 major
have the potential to replace many of the
pharmaceutical companies take part in IDEA-FAST.
dementia longitudinal study on dementia. As well as
existing assessments commonly conducted in
clinical trials.
1 1
Cambridge Cognition | Annual Report & Accounts 2022 1 2
Cambridge Cognition | Annual Report & Accounts 2022
Chief Executive Officer’s Review
Clinical Trial Solutions
2022 saw significant progress in clinical trial
solutions through the combined efforts of
Cambridge Cognition and Clinpal. Prior to
the acquisition, a proportion of the software
development for the Clinpal solution was completed
by Cambridge Cognition under contract. Progress
made in the year included:
l Moving from installed solutions in data centres to
cloud-based servers in two regions with a plan
to open a third in 2023. This improves patient
data management and facilitates compliance.
l The Clinpal solution added patient-data
management communication features designed
for a global virtual study that started in 2022.
l A next-generation patient application for Android
and iOS was designed for the IMI grant-funded
Radial clinical trial due to start in 2023.
l New or upgraded modules for eConsent and
Telehealth with the release set for Q2 2023.
Combined Product Offering
A key objective is to provide a unified solution
incorporating modules developed by Cambridge
Cognition, Clinpal, or Winterlight. All three solutions
feature APIs to allow seamless functionality within
a single front-end user interface. This currently
puts us in a strong position to select one of the
solutions to run as the customer user interface while
incorporating modules from the other two. We are
now bidding with solutions that integrate the
three platforms.
We plan to converge all three solutions, which will
require time and investment. We plan to accomplish
this gradually, likely on a module-by-module basis,
as we perform maintenance or make improvements
to the system taking the best of each platform.
In the medium term, there is the opportunity
to create multi-modal digital biomarkers by
combining solutions. As well as using touchscreen
and voice data, this could also include actigraphy
or other clinical information to provide even greater
accuracy of diagnostic information. This is an
exciting area of future development that is likely to
be funded by grants or development partners.
Growth Strategy
Our overarching goal is to achieve profitable
growth. Our strategy in the short to medium term
from 2023-2025 is to complete development and
commercialise our unique set of well-protected,
high-value, and validated solutions. In addition,
our strategy includes having a watching-brief
on the healthcare market with the readiness to
promote our medical devices should demand and
reimbursement surface.
To achieve our strategic goals, Cambridge
Cognition’s areas of focus for 2023 are:
1. Driving sales of existing products, including
Winterlight and Clinpal and winning a greater
volume of clinical trial work for our broader
portfolio, including combined offerings.
2. Establishing partnerships with high-impact
organisations in the sector, such as major
pharmaceutical companies and CROs.
3.
Investing in innovation to maintain our brand position
and complete the development of our offering.
4. Realising synergies from acquisitions and
ensuring continued customer focus as we
integrate the three businesses.
5. Focusing on our people and ensuring
Cambridge Cognition is a ‘great place to work’.
Economic & Political
Environment
Amidst the COVID-19 pandemic, there was a surge
in the adoption of digital solutions, with virtual trials
gaining remarkable traction among our customers.
This interest continues.
The ongoing war in Ukraine was and continues to be
a cause for concern, and our thoughts are with all
those affected, including several academic centres
in the region that use our solution. No contracts are
being progressed with Russian centres at this time.
The conflict has had no material effect on revenues.
Inflation has had an impact on salary levels and
may be contributing to a reduced investment in
the development of CNS drugs. This could lead
to a short-term decline in demand. We expect
the situation to normalise during 2023 and do not
anticipate any material impact on the Group’s
overall performance.
Corporate Outlook
The Company had a strong contracted order book
at the end of 2022 that provides excellent revenue
visibility through 2023 and a promising pipeline of
further opportunities for the year. With our broader
portfolio, we expect a considerable step-up in our
total addressable market and there is the potential
for a considerable increase in investment in CNS
drugs with the successes recently in Alzheimer’s
Disease with new drugs being approved. There
does remain some uncertainty around the global
macroeconomic outlook, though that is expected to
be transitory to our markets.
The Company has extensive market opportunities
within existing and new growth markets. We
estimate average growth rates across the markets
we are targeting to currently be approximately 10
percent per annum, and we believe our revenue
growth will exceed this rate of market growth. We
will continue to manage costs carefully and aim to
move back into profitability.
The outlook is very exciting as we have a full
commercial team and a much broader portfolio and
can win many more sizeable contracts as we build on
our current position over the coming years.
Despite a turbulent global economic and political
environment, 2022 was an excellent year for
Matthew Stork
Chief Executive Officer
Cambridge Cognition. We saw remarkable growth in
2 May 2023
orders, strong revenue growth, cash generation, and
considerable progress in innovation and corporate
business development.
References:
1. Global Data, April 2023.
2. Astute Analytica (2021) US Cognitive Assessment Market; Adjusted using internal data to 10% from 2022.
3. Extrapolated from independent market research report commissioned by Cambridge Cognition.
4. DT Consulting, Clinical Digital Tracker, 2022.
5. Grandview Research (2023), eCOA Market Analysis; Adjusted by CNS studies as a proportion of all.
6. Estimate from Global Data, April 2023, and Assessing the Financial Value of Decentralised Clinical Trials, Therapeutic Innovation & Regulatory
Sciences, 57, 209-19, 2023.
7. Strategies to improve recruitment to randomised trials. Cochrane Database Syst Rev. 2018 Feb 22;2(2).
8. Grandview Research (2022), Clinical Trial Patient Recruitment Market; Adjusted by CNS studies as a proportion of all.
9. An App-Based DSST for Assessment of Cognitive Deficits in Adults With Major Depressive Disorder: Evaluation Study, JMIR Ment Health 2022;9(10).
10. Sage Therapeutics Conference Poster at CTAD 2022.
1 3
Cambridge Cognition | Annual Report & Accounts 2022 1 4
Cambridge Cognition | Annual Report & Accounts 2022
Chief Financial Officer’s Review
The Company delivered another strong performance in 2022
with growth in the contracted order book and revenues,
coupled with continued positive cash generation that has
enabled the completion of two acquisitions, one in October
2022 and one in January 2023.
This review includes a comparison of the financial
KPIs used to measure progress over the year:
Recognised revenue split by type was as follows:
Revenue
Software
Services
Total Software & Services
Hardware
Total Revenue
2022 £m
2021 £m
Increase £m
Increase
5.0
6.5
11.5
1.1
12.6
3.6
5.6
9.2
0.9
10.1
1.4
0.9
2.3
0.2
2.5
39%
16%
25%
22%
25%
2022
£12.6m
2021
Movement
Three large, one-off contracts won in 2021 were for
Maintaining our position at the forefront of the
supplying and supporting digital wearables for CNS
sector requires a sustained focus on research
£10.1m
£1.5m
clinical trials in 2022. These had a high third-party cost
and development, a subset of our administrative
KPI
Revenue
Gross margin
Profit before tax
73.9%
76.1%
(220)bps
£0.6m loss
£0.3m profit
£(0.9)m
Profit after tax
(after adjusting for acquisition related expenses)
£0.1m
£0.5m
£(0.4)m
Investment in R&D
£2.2m
£1.7m
£0.5m
Sales orders
£13.1m
£12.1m
£1.0m
of sales component that reduced overall gross margin
expenses. In 2022, a total of £2.2m was invested,
percentage in 2022. Gross profit was £9.3m (73.9%
an increase from £1.7m in 2021. These funds were
margin) compared with £7.7m (76.1% margin) in 2021.
primarily allocated towards developing novel
high-frequency cognitive assessments to broaden
In 2022, we have changed our accounting policy
the portfolio, moving to Amazon Web Services,
for cost of sales and now include pay costs directly
strengthening our cybersecurity, and conducting
related to revenue, with the prior period restated.
essential maintenance of existing products. R&D
The impact on the current year was to include
spending as a percentage of revenue was 17.4%
£477,000 (2021: £394,000) of pay costs in cost of
in 2022 (2021: 16.8%), reflecting our continued
sales that would have been in administrative
investment in our product portfolio, and we expect
Contracted order book
£17.6m
£17.0m
£0.6m
expenses under the previous accounting policy.
this to decrease as revenue grows.
Cash
£8.3m
£6.8m
£1.5m
Revenues & Gross Profit
We are pleased to report that our revenue grew by
25%, reaching £12.6m compared to £10.1m in 2021.
A large proportion of our contracts are for clinical
trials, which usually commence three to six months
after the signing of the contract and run for several
months or even a few years. As a result, most of the
revenue recognised in the year came from orders
won in previous years, with the remaining balance
from in-year contract wins.
We anticipate the £19.1m contracted order book
as of 10 January 2023 (following the acquisition
of Winterlight) will generate, subject to customer
delivery schedules, at least £9.5m of revenue to
be recognised in 2023, with the balance to be
recognised in subsequent years.
Services revenue grew by 16% in 2022 as more
implementation and bespoke development work
were carried out, as well as the additional data and
study management provided as part of our support
to larger clinical trials. Software revenue increased
by 39%, but given the time lag between contract
signature and software usage, we would expect this
to grow further in 2023. Hardware, which is procured
from third parties, is supplied by the Company to
support specific projects.
Expenditure
Capital Expenditure & Cash
Administrative expenses, excluding acquisition
Capital expenditure was £0.2m, primarily related
expenses, increased by 29% to £9.6m (2021: £7.4m),
to IT hardware and office equipment. We have not
driven by two main factors. Firstly, investment in
capitalised any development expenditure in the year.
commercial activities increased considerably
as the team expanded to provide complete
Excluding acquisition-related costs we had a
market coverage and to support further sales of
marginal loss before tax of £0.1m (2021: profit before
decentralised clinical trial modules. Secondly, we
tax of £0.3m). R&D tax credits receivable were £0.2m
expanded our in-house software and product
(2021: £0.2m). The post-tax loss for the year was
teams to develop new and existing solutions to
£0.4m (2021: profit after tax of £0.5m), which equates
meet customer demands and provide future sales
to a loss per share of 1.3 pence (2021: 1.4 pence
opportunities. As with many technology companies,
earnings per share).
there was inflationary pressure on pay during the
year, which we have addressed in part with the
addition of a software team based in South Africa.
1 5
Cambridge Cognition | Annual Report & Accounts 2022 1 6
Cambridge Cognition | Annual Report & Accounts 2022 Chief Financial Officer’s Review
Risks & Uncertainties
As of 31 December 2022, cash was at £8.3m
While low double digit revenue growth is expected
(31 December 2021: £6.8m), and the cash inflow
in 2023, the positive impact of acquisitions and
from operating activities during the year was £1.7m
continued investment in product development is
(2021: £3.9m), again driven by sales orders. During
expected to see a decrease in cash balances and
the year, £1.1m of cash was utilised to acquire
operating losses for the year. With this investment
eClinicalHealth Limited. Sales contracts for clinical
and the associated increase in scale, we anticipate
trials typically include a billable amount upon
a return to profitability in the second half of 2024
signing, which means that cash flow is generally
and growth in profitability thereafter.
ahead of revenue recognition.
The Company will continue to manage costs
The Company continues to hold an investment in
carefully with a focus on realising synergies as we
Monument Therapeutics Limited (“Monument”), the
review our operational structure following recent
digital phenotyping drug development business that
acquisitions. We anticipate that administrative
was spun out in 2021. The investment in Monument is
expenses and research and development costs
carried at fair value and reflects the risks attributable
will reduce through 2023 relative to revenues whilst
to early-stage biotechnology companies.
we continue to invest in the product portfolio and
Monument’s progress with early clinical trials
increase sales coverage.
remains on track and aligned with our expectations.
It is currently seeking Series A investment.
We have set out five strategies to help improve
Financial Outlook
people’s health globally while generating future
revenue growth above expected rates of growth,
currently estimated at more than 10%, in the
markets in which we are operating. Accordingly, the
Cambridge Cognition ended 2022 with sufficient
Company is targeting revenue growth in excess of
cash to acquire Winterlight and fund expected
the market growth with increasing levels of growth
growth through to profitability. We are optimally
in the medium-term driving towards material
positioned for further growth in orders of our existing
profitability in 2025.
solutions and to support our continued commercial
expansion. Considered investments will continue to
Stephen Symonds
be made to achieve our strategic goals.
Chief Financial Officer
2 May 2023
Principal Risks & 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:
for both existing and new markets will determine
how successful the Group will be in growing. As
noted in the Chief Executive Officer’s Review, 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.
Financial
The Group has a history of operating losses, with
2021 being the Group’s first profitable year since
2016, and this continued in 2022 with a profit
after tax excluding acquisition related expenses.
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. The
Group will continue to carefully monitor costs and
cash flow to ensure 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, as well as the
integration of acquisitions.
The Directors have prepared a strategic plan,
including financial forecasts and cash flows, for
the period to December 2025. 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
Brexit and Related Changes
The United Kingdom has left the European Union
(‘EU’). The Group has kept the situation under
review and there have not been any detrimental
impacts 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. The Group takes the threat
seriously, continuously monitoring and updating
threat management software and 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.
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
1 7
Cambridge Cognition | Annual Report & Accounts 2022 1 8
Cambridge Cognition | Annual Report & Accounts 2022 of the sector. The Group files patent applications
pleased with the successes in developing products
as it strives to protect and enhance its intellectual
during 2022, and the plans for continued innovation.
property.
Growth Management
Section 172(1) Statement
The Group’s ability to manage its growth effectively
requires it to continue to improve its operations,
The directors consider, both individually and
financial and management controls, reporting
collectively that they have taken decisions in a
systems and procedures and to train, motivate and
manner they consider, in good faith, would be most
manage its employees. The Group’s future success
likely to promote the success of the Group for the
depends on its ability to hire, train and retain key
benefit of its stakeholders, having regard to the
technical, scientific, regulatory, sales and marketing
matters set out in s172(1) of the Companies Act 2006:
personnel. The Group seeks to recruit and retain
high calibre staff through offering share ownership
The likely consequences of any decision in the long-
and rewards commensurate with their seniority and
term: the long-term success of the Group is always
maintaining open communication with employees.
a key factor when making strategic decisions.
Strategic Plans are prepared every year focussing
Reliance on Key Customers
on a minimum three-year period.
The Group maintains close relationships with a
number of customers but aims not to be overly
The interests of the Group’s employees: the
dependent on any one of them. During 2022, three
Group’s employees are our key asset and hence
customers accounted for more than 10% of the
we take their wellbeing and development very
revenue of the business, amounting to just over 34%
seriously. The Group believes it offers competitive
in total. Over recent years, the increased diversity
remuneration packages and seeks to engage
of our product offering has led to an increased
employees regularly. The Group has worked
diversity in both our products and our customer
hard to maintain contact with employees as we
base that has continued to mitigate this risk.
adopt to our new hybrid ways of working, through
Nonetheless, there is a risk that the loss of a major
regular team meetings and office events as well
customer would result in a revenue shortfall.
as fortnightly town hall meetings. The Group has
Key Performance Indicators
also invested in training for people managers and
implemented individual development plans for all
employees. All employee surveys on relevant issues
have been undertaken during 2022 and the Group
The Directors have monitored the performance
has implemented appropriate action plans as a
of the Group with particular reference to the key
consequence.
performance indicators being revenue and sales
orders, gross margin and cash flow. An overview of
The need to foster the Group’s business
the financial results for the year is provided in the
relationships with suppliers, customers and
Chief Financial Officer’s Review.
other: the Group has a dynamic relationship
Shareholders are also a key stakeholder and we
The need to act fairly as between members of the
seek to engage shareholders through both generic
Group: no single set of stakeholders is prioritised
and specific outreach, covering both financial
over another – all decisions aim to be equitable
results and our innovation and future plans.
across all stakeholders.
The impact of the Group’s operations on the
The Strategic Report comprises the Chief Executive
community and the environment. The Group’s aims
Officer’s Review, Chief Financial Officer’s Review and
to execute its operations with due regard to the
the Risks and Uncertainties.
environment. Charities are supported by donations,
fundraising, allowing employees two days leave for
Approved by the Board of Directors and signed on
charitable activities and the donation of equipment.
behalf of the Board.
with our customers with regular contacts across
The desirability of the Group maintaining a
The Group monitors progress on a regular basis
organisations; we also seek to have constructive
and will add to the key performance indicators as
and mutually beneficial relationships with our
circumstances dictate. The directors value greatly
suppliers. Customers are regularly asked for specific
the progress and innovation demonstrated by
feedback, a feedback survey is completed at the
the Group. Unfortunately, this cannot be readily
end of each study we support and the feedback
measured in the style of a KPI. The directors are
received is used to help shape future engagements.
reputation for high standards of business conduct:
Matthew Stork
integrity of individuals and corporate integrity are
Chief Executive Officer
at the heart of all we do and embedded in our
2 May 2023
culture through formal (e.g. Standard Operating
Procedures) and informal means.
1 9
Cambridge Cognition | Annual Report & Accounts 2022 2 0
Cambridge Cognition | Annual Report & Accounts 2022 Report of the Directors
The Directors present their report on the affairs of the Group and Company together with the
financial statements for the year ended 31 December 2022. The Group financial statements are
prepared in accordance with UK adopted 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
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 28 to
developing and marketing near-patient cognitive
testing techniques. The likely future developments
the accounts.
of the business and the nature of research and
development activities are discussed in the
strategic report.
Share Issues
Going Concern & Financial Risk
Management
The Directors have assessed the Group’s ability to
continue as a going concern through June 2024.
As noted in the Chief Financial Officer’s Review, the
business has a strong contracted order book as well
as having a strong cash balance at 31 December
2022. Whilst the Group expects to have net cash
outflows during 2023 it has sufficient cash resources
The issued share capital of the Company is set
out at note 22 to the accounts. Subsequent to the
year end the Company issued 3,445,595 ordinary
shares as part consideration for the acquisition of
Winterlight, see note 14.
Directors
The Directors who held office at 31 December
2022 and their interest in the share capital of the
for its current strategy.
Company were:
The Directors believe that the Group will remain a
going concern for the foreseeable future.
Name
2 May 2023
31 December 2022
31 December 2021
Ordinary Shares of 1p each
Steven Powell (Chairman)
Matthew Stork
Stephen Symonds
Richard Bungay
Debra Leeves
226,375
161,450
32,950
10,000
60,000
216,375
147,950
22,950
-
50,000
216,375
125,000
-
-
50,000
Other directors who served in the year, details of
l select suitable accounting policies and then
appointment and resignation dates are given in the
apply them consistently;
Remuneration Report.
Directors’ Remuneration & Share
Options
l make judgements and accounting estimates
that are reasonable and prudent;
l state whether the applicable IFRSs, or for the
Parent Company, UK Generally Accepted
Accounting Practice have been followed, subject
Details of Directors’ remuneration and share options
to any material departures disclosed and
are provided within the Remuneration Report and
are in addition to the interests in shares shown
explained in the financial statements; and
l prepare the financial statements on a going
above.
concern basis unless it is inappropriate to
presume that the Company will continue in
Directors’ Responsibilities for the
Financial Statements
business.
The Directors are responsible for preparing the
accounting records that are sufficient to show and
Strategic Report, the Report of the Directors, the
explain the Company’s transactions and disclose
Remuneration Report and the financial statements
with reasonable accuracy at any time the financial
in accordance with applicable law and regulations.
position of the Company and to enable them to
The Directors are responsible for keeping adequate
Company law requires the Directors to prepare
the Companies Act 2006. They are also responsible
financial statements for each financial year. Under
for safeguarding the assets of the Company and
that law, the Directors have to prepare the Group
hence for taking reasonable steps for the prevention
financial statements in accordance with UK-
and detection of fraud and other irregularities.
ensure that the financial statements comply with
adopted international accounting standards (“IFRS”)
and have elected to prepare the Parent Company
The Directors confirm that:
financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice
l so far as each Director is aware, there is
and applicable law including FRS 101 ‘Reduced
no relevant audit information of which the
Disclosure Framework’. Under company law the
Company’s auditor is unaware; and
Directors must not approve the financial statements
l
the Directors have taken all steps that they ought
unless they are satisfied that they give a true and
to have taken as Directors to make themselves
fair view of the state of affairs and of the profit or
aware of any relevant audit information and
loss of the Company and Group for that year. In
to establish that the auditor is aware of that
preparing these financial statements, the Directors
information.
are required to:
2 1
Cambridge Cognition | Annual Report & Accounts 2022 2 2
Cambridge Cognition | Annual Report & Accounts 2022 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
Stephen Symonds
Chief Financial Officer
2 May 2023
Corporate Governance Report
Chair’s Statement on Corporate
Governance
As Chair 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
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 Chair 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
Chair
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, comprising the
Chief Executive Officer’s Review, Chief Financial
Officer’s Review and an assessment of principal risks
and uncertainties and key performance indicators
can be found on pages 5 to 20 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 18 and 19 of this Annual
Report and Accounts.
2 3
Cambridge Cognition | Annual Report & Accounts 2022
Cambridge Cognition | Annual Report & Accounts 2022 2 4
Principle 5: Maintain the Board as a well-
The Board is provided with monthly business and
functioning, balanced team led by the Chair
finance reports from the CEO and CFO respectively.
The Board consists of two executive directors,
Further information will be given to the Board for
the non-executive Chairman and two further
discussion at meetings as relevant.
independent directors. The non-executive Chair
holds some shares, especially from his time as the
The Board is supported by three sub-committees:
Group’s CEO. The other two non-executive directors
the Audit Committee, the Remuneration Committee
hold shares as of the date of this report. These
and the Nomination Committee. All non-executive
holdings are not considered material.
directors sit on all sub-committees. Board and
Committee attendance for 2022 is as follows:
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.
No. of Meetings
Steven Powell
Matthew Stork
Richard Bungay
Debra Leeves
Stephen Symonds
Board
Audit
Nomination
Remuneration
10
10
10
10
10
6
1
1
-
1
1
-
2
2
-
2
2
-
4
4
-
4
4
-
l 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.
l 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.
l 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.
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 29 to 32.
Further information on the Company’s corporate
governance framework, including on those principle
of the QCA code not listed here can be found
at www.cambridgecognition.com/investors/
corporate-governance
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 on
page 27.
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. A review was undertaken in 2022.
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:
l The employee handbook clearly setting out
values and employment codes.
l All new employees benefit from an induction
programme which emphasises our ethical
values and behaviours.
l These behaviours are re-iterated through the
various employee communication and reward
channels.
2 5
Cambridge Cognition | Annual Report & Accounts 2022 2 6
Cambridge Cognition | Annual Report & Accounts 2022
Director Profiles
Dr Steven Powell Chair
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 of
operational and investment experience in pharmaceutical and healthcare
companies in the UK, USA and Scandinavia. He has held six CEO roles, three in
public companies. His current roles include CEO of French oncology company,
Ribonexus, and Chair of Norwegian oncology development company,
Hemispherian. 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.
Stephen Symonds Chief Financial Officer
Mr Symonds is an experienced finance professional and was previously the
Chief Financial Officer of Envigo, a private equity backed provider of pre-clinical
services for the pharmaceutical industry, where he spent eight years. Prior to that,
he spent a decade with KPMG, working on a wide-ranging portfolio of clients.
Earlier in his career, he built a broad experience in a variety of small to medium-
size accounting companies and as the finance lead in a family-owned business.
He is a fellow of the Association of Chartered Certified Accountants.
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. A chartered
accountant, Mr Bungay is currently CEO of Imophoron Limited, a private company
developing treatments for infectious diseases. Prior to this, Mr Bungay was CFO
then CEO of Diurnal Group plc, the AIM quoted specialty pharmaceutical company
targeting patient needs in chronic endocrine diseases, where he led the sale of the
company to Neurocrine Biosciences. 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.
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 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, fair value of
investments, adequacy of systems of internal
control, fair values arising from business
combinations and cost of sales classification. The
Committee notes the auditors’ inclusion of revenue
recognition as the only key audit matter.
No significant fees were paid in the year to the
auditors for services other than audit and tax
compliance and related work. The independence
and objectivity of the auditors is important to the
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.
2 7
Cambridge Cognition | Annual Report & Accounts 2022 2 8
Cambridge Cognition | Annual Report & Accounts 2022 Remuneration Report
Remuneration Committee
The Company has established a Remuneration
Committee. The members of the Remuneration
Committee are:
l Steven Powell (Chair)
l Richard Bungay
l Debra Leeves
The Committee makes recommendations to the
Board. No director plays a part in any discussion
about their 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:
l Basic annual salary;
l Benefits-in-kind;
l Annual bonus payments;
l Share option incentives; and
l Pension arrangements.
Non-Executive Directors’
Remuneration
The remuneration of Non-Executive Directors
is determined by the Board and reflects their
anticipated time commitment to fulfil their duties.
The Non-Executive Directors’ remuneration is subject
to the same principles of the Groups Remuneration
Richard Bungay (3)
policy. The letters of appointment of Non-Executive
Directors can be terminated with one month’s
notice given by either party.
Debra Leeves (7)
Total
Directors’ Remuneration (audited)
The remuneration of the Directors was as follows:
Current Directors:
Executive Directors:
Matthew Stork (1)
Stephen Symonds (6)
Nicholas Walters (4)
Michael Holton (5)
Non-Executive Directors:
Steven Powell (2)
Salary/Fee
Benefits
Bonus
Pension
2022 Total
2021 Total
£’000
£’000
£’000
£’000
£’000
£’000
264
83
-
45
30
30
452
-
1
-
-
-
-
-
1
63
87
-
-
-
-
-
15
5
-
-
-
-
342
176
-
-
45
30
30
467
-
12
216
45
30
30
150
20
623
800
1. Appointed to the Board 23 May 2019
5. Appointed to the Board on 27 May 2021 and Resigned from the Board
2. Executive Director until 23 May 2019, Non-Executive Director thereafter
on 1 November 2021
3. Appointed to the Board on 14 September 2020
6. Appointed to the Board on 3 August 2022
4. Resigned from the Board on 27 May 2021
7. Appointed to the Board on 1 July 2019
2 9
Cambridge Cognition | Annual Report & Accounts 2022 3 0
Cambridge Cognition | Annual Report & Accounts 2022 Remuneration Report
Share Options
Number of
Performance
Exercise price
Exercise
Granted
Options
criteria
in pence
period
Steven Powell
July 2015
62,500
Vested (1)
82.5 pence
To July 2025
Matthew Stork
October 2019
392,858
Vested (2)
28 pence
To September 2023
Matthew Stork
June 2020
196,429
Matthew Stork
November 2020
103,774
Matthew Stork
April 2021
90,000
Matthew Stork
November 2021
40,000
Matthew Stork
July 2022
171,297
Nicholas Walters
June 2020
60,000
Stephen Symonds
July 2022
152,671
(3)
(4)
(5)
(6)
(7)
(3)
(7)
28 pence
53 pence
125 pence
140 pence
1 pence
28 pence
1 pence
June 2023
to May 2024
November 2023
to October 2024
April 2024
to March 2031
November 2024
to October 2031
July 2025
to July 2032
June 2023
to May 2024
July 2025
to July 2032
Performance Criteria
1. Options vested 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,
equalled or exceeded 120 pence. This condition
was fulfilled on 4 May 2017.
2. 50% of these options vested if the average
closing mid-market price of an Ordinary
Share for any three month period before 30
3. 50% of these options vested if the average
6. 50% of the Options granted vested if the average
closing mid-market price of an Ordinary Share
closing mid-market price of an Ordinary Share
for any three month period before 31 May 2023
for any three month period exceeds 170 pence,
exceeds 77.5 pence and on the last day of that
with the price on the last day of that period
period exceeds 70 pence. 50% of these options
being at least 145 pence, and the last day of this
will vest if the average closing mid-market price
period being no later than 30 April 2024. 50%
of an Ordinary Share for any three month period
of the Options granted will vest if the average
before 30 September 2022 exceeds 115 pence
closing mid-market price of an Ordinary Share
and on the last day of that period exceeds
for any three month period exceeds 170 pence,
105 pence.
with the price on the last day of that period
being at least 145 pence, and the last day of this
4. 50% of these options vested if the average closing
period being no later than 30 April 2024.
mid-market price of an Ordinary Share for any
three month period before 31 May 2023 exceeds
7. 50% of the Options granted vested if the
90 pence and on the last day of that period
Company exceeds compound annual
exceeds 80 pence. 50% of these options will vest
growth targets in adjusted revenue over the
if the average closing mid-market price of an
performance period, being the 3 year financial
Ordinary Share for any three month period before
year ending 31 December 2024. 50% of the
30 September 2022 exceeds 130 pence and on the
Options granted will vest if the Total Shareholder
last day of that period exceeds 115 pence.
Return (TSR) is in excess of the median value of
the TSR Comparator Group.
5. 50% of the Options granted vested 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
September 2022 exceeds 100 pence and on the
period being no later than 30 April 2024.
last day of that period exceeds 90 pence. 50%
of these options vested 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. These conditions were
fulfilled on 30 September 2022.
3 1
Cambridge Cognition | Annual Report & Accounts 2022 3 2
Cambridge Cognition | Annual Report & Accounts 2022 Independent Auditor’s Report to the
Members of Cambridge Cognition
Holdings plc
Independent Auditors Report to the members of Cambridge
Cognition Holdings plc
Commercial in confidence
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 2022, which comprise the Consolidated statement of
comprehensive income, the consolidated and parent company statement of financial position, consolidated and
parent company statement of changes in equity, consolidated statement of cash flows, 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 2022 and of the group’s loss 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.
Commercial in confidence
Independent Auditors Report to the members of Cambridge
Cognition Holdings plc
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.
Our evaluation of the directors’ assessment of the group’s and the parent company’s ability to continue to adopt
the going concern basis of accounting included:
•
•
•
•
•
•
discussions with management of their assessment of the Group’s ability to continue as going concern;
assessing the reasonableness of projected cashflow and working capital assumptions and evaluating the
revenue and cost projections underlying the cashflow model;
assessing the accuracy of management’s historical forecasting by comparing management’s forecasts for
the years ended 31 December 2022 and 31 December 2021 to the actual results for those periods and
considering the impact on the base-case cashflow forecast.
assessing how these cash flow forecasts were compiled, assessing their appropriateness by applying
relevant sensitivities to the underlying assumptions, and challenging those assumptions including revenue
growth assumptions;
evaluating management’s reverse stress test to identify the scenario which would result in the removal of
the cash headroom during the assessment period and assessing the probability of such a scenario; and
assessing the adequacy of related disclosures within the annual report.
In our evaluation of the directors’ conclusions, we considered the inherent risks associated with the group’s and
the parent company’s business model including effects arising from macro-economic uncertainties such as inflation,
we assessed and challenged the reasonableness of estimates made by the directors and the related disclosures
and analysed how those risks might affect the group’s and the parent company’s financial resources or ability to
continue operations over the going concern period.
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.
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.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
3 3
25
Cambridge Cognition | Annual Report & Accounts 2022 3 4
24
Cambridge Cognition | Annual Report & Accounts 2022
Independent Auditors Report to the members of Cambridge
Cognition Holdings plc
Independent Auditors Report to the members of Cambridge
Cognition Holdings plc
Commercial in confidence
Commercial in confidence
Our approach to the audit
Materiality
Key audit
matters
Scoping
Overview of our audit approach
Overall materiality:
Group: £230,000, which represents approximately 2% of the group’s
revenue.
Parent company: £98,000, which represents approximately 1% of the
parent company’s total assets.
Key audit matters were identified as :
• Revenue recognition (same as previous year).
Our auditor’s report for the year ended 31 December 2021 included one
key audit matter that has not been reported as a key audit matter in our
current year’s report. This relates to going concern which has not been
included in the current year due to the level of cash held by the group in
comparison to its cost base and the level of the group’s contracted order
book.
We performed full scope audits of the two financially significant
components - Cambridge Cognition Limited and Cambridge Cognition LLC
and the parent company using a component materiality. Together with 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 one other
subsidiary. In total, our audit procedures covered 97% of the Group’s total
assets, 100% of the Group’s revenue and 85% of the Group’s loss before
tax
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 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.
Description
Audit
reponse
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
Low
Low
Valuation of acquired intangibles
arising on the acquisition of
eClinicalHealth
Revenue
recognition
Valuation of investment in
Monument Therapeutics Ltd
Management
override of
controls
Going concern
Capitalisation of
development costs
Extent of management judgement
High
Key audit matter
Significant risk
Other risk
3 5
26
27
Cambridge Cognition | Annual Report & Accounts 2022 3 6
Cambridge Cognition | Annual Report & Accounts 2022
Independent Auditors Report to the members of Cambridge
Cognition Holdings plc
Independent Auditors Report to the members of Cambridge
Cognition Holdings plc
Key Audit Matter – Group
How our scope addressed the matter – Group
Materiality was determined as follows:
Commercial in confidence
Commercial in confidence
Revenue recognition
We identified revenue recognition as one of the
most significant assessed
risks of material
misstatement due to fraud.
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.
We pinpointed the significant risk to those software
and services contracts, where
is
recognised over time, which were ongoing at the
year end. Such contracts require management to
estimate the level of completion and as a result
there is a risk that revenue could be recognised in
the wrong accounting period.
revenue
In responding
performed the following audit procedures:
the key audit matter, we
to
• Obtained an understanding of the control
environment around the revenue process and
reviewed the design and implementation of
relevant controls.
• Evaluated the Group’s revenue recognition
policies for consistency and compliance with
from Contracts with
IFRS15 Revenue
Customers.
• For a sample of contracts ongoing at the year
end which related to the provision of software
and services we:
- Obtained the contract
- Considered whether
the performance
obligations identified by management were
consistent with the contract
- Agreed the transaction price to the contract
the
various
and assessed
to
transaction
performance obligations
the allocation of
price
the
-
to
Inspected evidence of occurrence of the
service and recalculated the expected
revenue recognised in the year comparing
our expectation
that calculated by
management. This included verifying a
sample of study start dates to an external
source and obtaining evidence for the
estimated completion dates. Where we
noted
of
management the reasons for this and
to
corroborated
supporting documentation.
variances we
explanations
enquired
the
Relevant disclosures in the Annual Report and
Accounts 2022
• Financial statements: Note 3.3
‘Revenue
recognition’ and Note 5 ‘Critical accounting
judgements and key sources of estimation
uncertainty’
Our results
We did not identify from our audit procedures
indicators of inappropriate revenue recognition.
We identified a number of differences between
management’s calculations and the expected
study timelines. The impact of these variances was
immaterial individually and in aggregate. We have
therefore concluded that revenue recognition is
materially consistent with the stated accounting
policies.
We did not identify any key audit matters relating to the audit of the financial statements of the parent company.
Our application of materiality
We 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 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
£230,000, which is approximately 2%
of the group’s revenue.
£98,000, which is approximately 1% of the
parent company’s total assets.
Significant judgements
made by auditor in
determining materiality
In determining materiality, we made
the following significant judgements
In determining materiality, we made the
following significant judgements:
We have determined revenue to be
the most appropriate benchmark as
the Group is essentially operating at
a breakeven level.
We selected total assets as benchmark as the
parent company is not a trading entity,
therefore total assets are of most relevance to
users of the financial statements.
Materiality for the current year is lower than the
level that we determined for the year ended 31
December 2021 due to a percentage of 2% of
total assets having been used in the year
ended 31 December 2021. The reduction in
percentage followed consideration of industry
materiality benchmarks for entities of similar
size.
Total revenue is the most appropriate
reflection of the Group's level of
activity. It is also a key performance
indicator used by management.
Materiality for the current year is
lower than the level that we
determined for the year ended 31
December 2021 due to a percentage
of 2.75% of group revenue having
been used in the year ended 31
December 2021.The reduction in
percentage applied to revenue was
as a result of the increased
complexity of the group and
consideration of industry materiality
benchmarks for entities of similar
size.
Performance
materiality used to
drive the extent of
our testing
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 probability that the
aggregate of uncorrected and undetected misstatements exceeds materiality for the
financial statements as a whole.
Performance
materiality threshold
£160,000, which is approximately
70% of financial statement
materiality.
£68,000, which is approximately 70% of
financial statement materiality.
3 7
28
29
Cambridge Cognition | Annual Report & Accounts 2022 3 8
Cambridge Cognition | Annual Report & Accounts 2022
Independent Auditors Report to the members of Cambridge
Cognition Holdings plc
Independent Auditors Report to the members of Cambridge
Cognition Holdings plc
Commercial in confidence
Commercial in confidence
Significant judgements
made by auditor in
determining
performance
materiality
In determining performance
materiality, we made the following
significant judgements:
the strength of the control
environment and our experience
auditing the financial statements of
the Group, including the effect of
misstatements identified in previous
audits.
In determining performance materiality, we
made the following significant judgements:
the strength of the control environment and our
experience auditing the financial statements of
the Group, including the effect of
misstatements identified in previous audits.
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 directors’
remuneration.
We determined a lower level of specific
materiality directors’ remuneration.
Communication of
misstatements to the
audit committee
Threshold for
communication
We determine a threshold for reporting unadjusted differences to the audit committee.
£11,500 and misstatements below
that threshold that, in our view,
warrant reporting on qualitative
grounds.
£4,900 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
Revenue
£12,613k
PM
£160k, 70%
FSM
£230k, 2%
Total assets
£9,878k
PM
£68k, 70%
FSM
£98k, 1%
TFPUM
£70k, 30%
TFPUM
£30k, 30%
FSM: Financial statements materiality, PM: Performance materiality, TFPUM: Tolerance for potential uncorrected
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. We performed
walkthroughs across our identified risk areas such as management override of control and revenue.
•
•
•
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.
The Group’s revenue is generated by its two main subsidiaries, Cambridge Cognition Limited (registered
in the UK) and Cambridge Cognition LLC (registered in USA); and
eClinicalHealth Limited was acquired during the year. Due to the timing of the acquisition its contribution to
the group’s revenue in the year was immaterial.
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 group’s revenue,
as revenue recognition was identified as a key audit matter.
The significant components identified were Cambridge Cognition Limited and Cambridge Cognition LLC.
Type of work to be performed on financial information of parent and other components (including how it addressed
the key audit matters)
For those components which were scoped as significant as well as Cambridge Cognition Holdings plc, full-scope
audit procedures were performed based on component materiality. In order to address the audit risks identified
during our planning procedures, including the key audit matter as set out above, a further one component
(eClinicalHealth Limited) was subject to 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.
At the Group level we also tested the consolidation process and the accounting for the acquisition of eClinicalHealth
Limited including the valuation of the acquired intangibles.
Performance of our audit
As set out above, the Group has a centralised function based at the Group’s head office in Cambridge. All work
was performed by the group engagement team.
We identified revenue recognition as the key audit matter and the procedures performed in respect of that have
been included in the key audit matters section of our report.
Audit approach
Full-scope audit
Specific-scope audit
Analytical procedures
No. of
components
3
% coverage
total assets
95%
% coverage
revenue
100%
1
5
2%
3%
-
-
% coverage LBT
85%
-
15%
misstatements
3 9
30
31
Cambridge Cognition | Annual Report & Accounts 2022 4 0
Cambridge Cognition | Annual Report & Accounts 2022
Independent Auditors Report to the members of Cambridge
Cognition Holdings plc
Independent Auditors Report to the members of Cambridge
Cognition Holdings plc
Commercial in confidence
Commercial in confidence
Changes in approach from previous period
In the current year Cambridge Cognition LLC has been assessed as financially significant due to its contribution to
the group’s revenue, whereas Cambridge Cognition Holdings plc has not been deemed financially significant due
its size. In the prior year Cambridge Cognition Holdings plc was deemed financially significant with Cambridge
Cognition LLC not being deemed financially significant.
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. The directors are responsible for the other information contained within
the Annual report and Accounts. 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.
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 themselves. 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.
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 their 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
As explained more fully in the directors’ responsibilities statement set out on pages 22 and 23 , 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. 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,
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 the results of our enquires to relevant supporting documentation;
• 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:
o identifying and assessing the design effectiveness of controls management has in place to prevent and
detect fraud;
o challenging assumptions and judgements made by management in making its significant accounting
estimates; and
o journal entry testing, with a focus on those journal entries identified, as posing a higher risk of material
misstatement, based on an assessment of quantitative and qualitative risk factors.
4 1
32
33
Cambridge Cognition | Annual Report & Accounts 2022 4 2
Cambridge Cognition | Annual Report & Accounts 2022
Independent Auditors Report to the members of Cambridge
Cognition Holdings plc
Commercial in confidence
• 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;
•
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 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.
• We completed audit procedures to conclude on the compliance of disclosures in the annual report and financial
statements with applicable financial reporting requirements.
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.
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.
Andrew Hodgekins
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Cambridge
2 May 2023
Consolidated Statement of
Comprehensive Income
Year to
31 December 2021
Year to
31 December 2022
Revenue
Cost of sales
Gross profit
Administrative expenses excluding acquisition expenses
Administrative expenses – acquisition related
Total administrative expenses
Other operating income
Operating (loss) / profit
Interest receivable
Finance costs
(Loss) / profit before tax
Tax credit
(Loss) / profit for the year
Notes
6
7
8
11
11
12
Other comprehensive (loss) / income
Items that may subsequently be reclassified to profit or loss
Exchange differences on translation of foreign operations
23
Total comprehensive (loss) / income for the year
(Loss)/ earnings per share (pence)
13
Basic earnings per share
Diluted earnings per share
All items of income are attributable to the equity holders in the Parent.
The above results relate to continuing operations.
£’000
12,613
(3,291)
9,322
(9,616)
(479)
(10,095)
156
(617)
9
(16)
(624)
215
(409)
(302)
(711)
(1.3)
(1.3)
(Restated)
£’000
10,094
(2,409)
7,685
(7,435)
-
(7,435)
14
264
-
(11)
253
197
450
14
464
1.4
1.4
4 3
34
Cambridge Cognition | Annual Report & Accounts 2022 4 4
Cambridge Cognition | Annual Report & Accounts 2022
Consolidated Statement
of Financial Position
Consolidated Statement
of Changes in Equity
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Investments
Total non-current assets
Current assets
Inventories
Trade and other receivables
Current tax receivable
Cash and cash equivalents
Total current assets
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
At 31 December
At 31 December
2022
£’000
2021
£’000
Notes
Share
Share
Other
Own
Retained
capital
premium
reserves
shares
earnings
Total
£’000
£’000
£’000
£’000
£’000
£’000
Balance at 1 January 2021
312
11,151
6,111
(78)
(17,439)
57
15
16
17
18
19
24
21
22
23
23
1,421
188
49
1,658
216
4,680
231
8,322
13,449
15,107
15,012
15,012
312
11,151
5,823
(71)
(17,120)
95
15,107
373
52
49
474
126
4,935
195
6,810
12,066
12,540
11,908
11,908
312
11,151
6,125
(78)
(16,878)
632
12,540
Profit for year
Other comprehensive income
Total comprehensive income for the year
Credit to equity for equity-settled
share-based payments
Transactions with owners
Balance at 31 December 2021
Balance at 1 January 2022
Loss for year
Other comprehensive income
Total comprehensive income for the year
Transfer of own shares
Credit to equity for equity-
settled share-based payments
Transactions with owners
-
-
-
-
-
312
312
-
-
-
-
-
-
-
-
-
-
-
11,151
11,151
-
-
-
-
-
-
-
14
14
-
-
6,125
6,125
-
(302)
(302)
-
-
-
-
-
-
-
-
450
450
-
14
450
464
111
111
111
111
(78)
(16,878)
632
(78)
(16,878)
632
-
-
-
7
-
7
(409)
(409)
-
(302)
(409)
(711)
(7)
-
174
174
167
174
95
Balance at 31 December 2022
312
11,151
5,823
(71)
(17,120)
The financial statements on pages 44 to 77 were approved by the Board of Directors and authorised for
issue on 2 May 2023 and were signed on its behalf by:
Stephen Symonds
Chief Financial Officer
4 5
Cambridge Cognition | Annual Report & Accounts 2022 4 6
Cambridge Cognition | Annual Report & Accounts 2022
Consolidated Statement of
Cash Flows
Notes to the Financial
Statements
Notes
24
Net cash flows from operating activities
Investing activities
Interest received
Purchase of property, plant and equipment
Purchase of investment
Net cash flow used in investing activities
Financing activities
Proceeds from exercise of share options
Repayment of borrowings
24
Interest payments
Lease payments
Net cash flows used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at start of year
Exchange differences on cash and cash equivalents
Cash and cash equivalents at end of year
24
Year to
Year to
31 December 2022
31 December 2021
£’000
1,668
9
(189)
-
(180)
1
(133)
-
-
(132)
1,356
6,810
156
8,322
£’000
3,945
-
(56)
(49)
(105)
-
-
(11)
(86)
(97)
3,743
3,047
20
6,810
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 2021, except as stated
in note 4. 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 2022
are given in note 17.
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 through June 2024. As noted
in the Chief Financial Officer’s Review, the business has a strong contracted order book as well as having a
strong cash balance at 31 December 2022. Whilst the Group expects to have net cash outflows during 2023
it has sufficient cash resources for its current strategy.
The Group has a base case forecast for the period at least 12 months from the date of these financial
statements 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.
4 7
Cambridge Cognition | Annual Report & Accounts 2022 4 8
Cambridge Cognition | Annual Report & Accounts 2022 Notes to the Financial Statements
Software licences hosted on our servers:
3. Significant accounting policies continued
Where software is hosted on our servers the revenue is recognised over a period of time, as we have a
The base case shows strong performance, driven by existing orders and supports a positive cash balance
continuing performance obligation to provide services (e.g. to ensure our servers are available). Customers
right through the going concern review period, with a positive outlook thereafter. The downside case also
will also benefit from software and service enhancements which improve the functionality of the software
shows positive cash through the going concern review period and would allow for further expenditure
during the licence period. These improvements are not standalone products and are included in the
modifications not yet budgeted.
originally contracted price and so are not accounted for separately.
The Directors believe that the Group will remain a going concern for the foreseeable future. Accordingly, the
l For contracts where the software value is greater than or equal to £20,000, and software is sold on a cost
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.
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.
l For contracts where the software value is less than £20,000, and software is sold on a cost per
To determine whether to recognise revenue, the Group follows a five-step process:
assessment basis, the Group uses a portfolio estimate of the revenue being recognised over 12 months.
l
l
Identifying a contract with a customer
Identifying the performance obligations
l Determining the transaction price
l Allocating the transaction price to the performance obligations
l Recognising revenue when or as performance obligations are satisfied
This period has been chosen as it best represents the average life of this portfolio of contracts.
l 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
The Group often enters into contracts where a bundle of products or services are provided. Contracts
software revenue is taken to the income statement. In addition, breakage will also be taken where software
are assessed and obligation(s) are separated by applying the five steps to each element of the contract
assessments on a project have not been used for 12 months, and management is not able to establish that
to decide how revenue should be recognised. The Group’s portfolio of products and services each have
the related project is ongoing.
defined characteristics and performance obligations that inform revenue recognition decisions and the
policy applied.
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
Management assesses the value of the standalone transaction prices of each unbundled element and
and as such revenue is recognised at that point in time. The time of recognition is once the licence has
believe them to be appropriately reflected in the contract prices for the respective element, which are the
been delivered to the customer, either through delivery of a physical software key or installation on the client
result of arm’s length market price negotiations with customers. Each are capable of being sold and used
systems, as this is when the customer takes control of the asset and can direct its use. It is also when the
by customers individually, and each are clearly identified within the contract. These values are then used
Group’s performance obligations are satisfied as the Group is not responsible for hosting the software and
for revenue recognition judgements related to the performance of obligations which fall within one of the
is unable to make further software enhancements.
accounting policies stated below depending upon the specific characteristic of that contract. Each of these
are described below.
Services:
The timing of payments received from customers is based on contractual terms, is typically received at
development and scientific consultancy. Some services will be ongoing services provided over a period of
multiple points throughout a contract and does not necessarily match the timing of revenue recognition.
time, whilst some will be clearly tied to a deliverable or other project milestone. The Group recognises the
To the extent that payments are received ahead of income recognition, these amounts are carried within
revenue from services over time only where it has the right to payment for services as they are performed.
The Group provides a range of services that include supporting clinical studies, bespoke software
the consolidated 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
Services delivered at a point in time:
consolidated statement of financial position within trade and other receivables as accrued income from
Some services, such as training and delivery of scientific reports will be delivered at a point in time and as
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:
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.
4 9
Cambridge Cognition | Annual Report & Accounts 2022 5 0
Cambridge Cognition | Annual Report & Accounts 2022
Notes to the Financial Statements
3. Significant accounting policies continued
Services delivered over a period of time:
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 operating income.
When services are delivered over a period of time (e.g. study support services) the revenue is recognised
equally over the relevant period, as the customer has access to the benefit of those services, using the
3.5 Sales commissions
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 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
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
recognised 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 Consolidated Statement of Comprehensive Income is mandated.
measured by observable milestones, for example story-points completed in a software build or over time
3.7 Leasing
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 Consolidated Statement of Financial Position within ‘Deferred income on contracts with customers’.
Where revenue is recognised in the Consolidated Statement of Comprehensive Income but not yet invoiced,
accrued income is held on the Consolidated Statement of Financial Position within ‘Accrued income from
contracts with customers’.
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 comprising the amount of the
initial investment of the lease liability and restoration costs. 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.
Where the Group enters into 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.
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 presentational 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 profit or loss. 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 Other reserves.
5 1
Cambridge Cognition | Annual Report & Accounts 2022 5 2
Cambridge Cognition | Annual Report & Accounts 2022
Notes to the Financial Statements
3. Significant accounting policies continued
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
The tax credit is accounted for within the taxation charge or credit for the year.
3.11 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 assets, less their
estimated residual value, over their expected useful lives on the following bases:
l Leased buildings (right of use)
l Leasehold improvements
l Fixtures, fittings and equipment
Period of contracted use (i.e. length of lease)
straight line over the lesser of 5 years or the term of the lease
25% - 33% per annum straight line
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
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the
ownership.
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
3.12 Intangible assets
The Group uses the acquisition method of accounting for the acquisition of subsidiaries. The consideration
is measured at the fair value of the assets given equity instruments issued and liabilities incurred or
assumed at the date of exchange. Costs directly attributable to the acquisition are expensed in the year.
Identifiable assets acquired and liabilities assumed in a business combination are measured initially at
their fair values at the acquisition date. Goodwill represents the excess of the cost of the acquisition over
the Group’s interest in the fair value of net identifiable assets and liabilities acquired. Goodwill is measured
at cost less accumulated impairment losses. Where the fair value of identifiable assets, liabilities and
contingent liabilities exceed the fair value of consideration paid, the excess is credited in full to the profit or
other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
loss on the acquisition date.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in
Purchased licences
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 profit or loss, 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.
Research and Development tax credits
The Group applies for Research and Development tax credits in respect of each financial year. As the Group
has an established history of successful claims, the credit is recognised when an estimated value is reliable.
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:
l
l
l
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
l 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
l
l
5 3
Cambridge Cognition | Annual Report & Accounts 2022 5 4
Cambridge Cognition | Annual Report & Accounts 2022 Notes to the Financial Statements
3. Significant accounting policies continued
Amortisation
Amortisation is charged to the consolidated statement of comprehensive income to allocate the cost of
intangible assets over their estimated useful economic lives, using the straight line method.
The estimated useful economic lives of intangible assets are as follows:
l Technology based assets
straight line over 5-11 years
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 IAS 36
Impairment of Assets 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
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.
of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.
3.15 Share-based payments
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 10.0% discount rate. If this calculation suggests the recoverability of
goodwill is sensitive to any of these factors, appropriate scenario modelling is performed.
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.
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 26.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on
a straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that will
eventually vest. At each reporting date, the Group revises its estimate of the number of equity instruments
expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision
of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the
revised estimate, with a corresponding adjustment to equity reserves.
3.14 Financial instruments
Financial assets and financial liabilities are recognised in the Group’s Consolidated Statement of Financial
3.16 Employee Benefit Trust
Position when the Group becomes a party to the contractual provisions of the instrument. Financial assets
(excluding investments held at fair value) and financial liabilities are initially measured at fair value, plus or
minus directly attributable transaction costs.
Financial assets excluding investments held at fair value
In order to facilitate the exercise of share options the Group maintains two Employee Benefit Trusts (EBTs).
These are consolidated in accordance with IFRS10. The costs of purchasing own shares held by the EBTs 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
Financial assets excluding investments held at fair value are subsequently measured at amortised cost.
recognised directly in reserves.
Accordingly, where the Group believes that there is a change in the value of a financial instrument (e.g.
a trade receivable is considered unrecoverable) this amount will be adjusted through the profit or loss. A
3.17 Investments
financial asset is derecognised once the contractual rights expire (e.g. when cash has been received for a
The Group measures equity investments at fair value, with changes in fair value recognised in other gains/
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
(losses) in the Consolidated Statement of Comprehensive Income.
4. Significant changes in the current reporting period
During the year, the Group has seen an increase in contracts requiring higher levels of study support and
data management services as well as logistics that require the Group’s operations staff to provide a
greater proportion of time to these activities. Therefore, the Group has reconsidered its accounting policy
5 5
Cambridge Cognition | Annual Report & Accounts 2022 5 6
Cambridge Cognition | Annual Report & Accounts 2022
Notes to the Financial Statements
4. Significant changes in the current reporting period continued
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
for the presentation of expenses in the income statement to include staff and related costs relating to
underlying investment.
the delivery of those services within cost of sales. The prior year income statement has been restated for
the reclassification of costs between cost of sales and administrative expenses. As a result, the prior year
Accounting for investment in Monument Therapeutics Limited
has been restated to reflect an increase in cost of sales of £394,000 with a corresponding decrease in
Although the Company holds more than 20% of the voting shares in Monument, the Company recognises
administrative expenses. The overall operating profit for 2021 remains unchanged.
its holding as an investment because 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.
5. 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
Business combinations
required to make judgements, estimates and assumptions about the carrying amounts of assets and
Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their
liabilities that are not readily apparent from other sources. The estimates and associated assumptions are
fair values at the acquisition date. Goodwill represents the excess of the cost of the acquisition over the
based on historical experience and other factors that are considered to be relevant. Actual results may
Group’s interest in the fair value of net identifiable assets and liabilities acquired.
differ from these estimates.
Goodwill
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
The Group reviews the carrying value of its goodwill balances by carrying out impairment tests at least
estimates are recognised in the period in which the estimate is revised if the revision affects only that period
on an annual basis. These tests require estimates to be made of the value in use of its CGUs which are
or in the period of the revision and future periods if the revision affects both current and future periods.
dependent on estimates of future cash flows and long-term growth rates of the CGUs. See note 15.
Revenue recognition
Capitalisation of development costs
As noted in section 3.3 above, many of the judgements in relation to revenue recognition are directed
The point at which development costs meet the criteria for capitalisation is critically dependent on
by the characteristics of the contractual obligation being discharged. Accordingly, a limited amount of
management judgement of the probability to reliably measure the future economic benefits. The research
management judgement is required. Whilst these judgements do not carry a significant level of estimation
and development expenditure primarily relates to ongoing research as outlined in the Chief Executive
uncertainty, they are nonetheless described below:
Officer’s Review. Therefore, no development costs have been capitalised during 2022 (2021: £nil).
l The extent to which, and the way in which, contracts are separated into their component parts and the
Recovery of deferred tax assets
values attributed to those parts. This is based on the detail as per the contract, but other methods could
Deferred tax assets in excess of any deferred tax liabilities have been recognised only to the extent that
be used that would yield different results;
there are deferred tax liabilities with no excess recognised for other deductible temporary differences,
l Whether software licences are granted to allow the customer the benefit of use of the Group’s
share options and tax losses as management considers that there is not sufficient certainty on when
intellectual property over a period of time (including benefitting from future maintenance and
future taxable profits will be available to utilise those temporary differences and tax losses. This judgement
improvements) or whether that right is given as the intellectual property exists at the point of time the
is reviewed at each year end and made based upon forecasts of taxable profit, considering the inherent
licence is granted. In the case of the former, software is recognised over the period of use, for the latter
uncertainties in these forecasts.
revenue is recognised when the customer receives control of the licence;
l The adoption of the portfolio approach for lower value sales and the recognition criteria applied
6. Revenue
judgements of the upper limit (£20,000) and the period of recognition (12 months) impact the method of
An analysis of the Group’s revenue for each major product and service category is as follows:
valuation and hence the amount recognised in the financial statements;
l 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
l 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 estimates and 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.
Software
Services
Hardware
2022
£’000
5,027
6,528
1,058
12,613
2021
£’000
3,609
5,638
847
10,094
Costs cannot be directly attributed to the products and services above so profit measures are not
presented.
5 7
Cambridge Cognition | Annual Report & Accounts 2022 5 8
Cambridge Cognition | Annual Report & Accounts 2022 Notes to the Financial Statements
6. Revenue continued
Geographical information
The revenue from external customers by geographical location is detailed below:
Deferred commissions
Deferred commissions are presented as part of ‘Trade and other receivables’ in note 19. The Company does
not consider any of these amounts impaired. The movement of this account specifically is as follows:
United Kingdom
United States of America
European Union
Rest of World
2022
£’000
1,088
7,422
3,195
908
12,613
2021
£’000
888
6,167
2,261
778
10,094
Opening balance
Amount recognised in Statement of comprehensive income
Net addition from sales in year
Closing balance
7. Other operating income
Other operating income is made up of the following:
All non-current assets are located in the United Kingdom.
Information about major customers
Three customers account for more than 10 per cent of reported revenue in 2022, amounting to just over 34%
of the total (2021: two customers amounting to 20%).
Grant income
Revenue from contracts with customers
All revenue in 2022 and 2021 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 a point in time
2022
£’000
4,535
492
5,173
1,355
1,058
12,613
2021
£’000
3,344
265
4,694
944
847
10,094
Of the £8.8m deferred revenue at 31 December 2021, £6.0m was recognised as revenue in 2022. Of the £4.8m
deferred revenue at 31 December 2020, £4.5m was recognised as revenue in 2021.
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.
8. Operating (loss)/profit
Operating (loss)/profit has been arrived at after charging/(crediting):
Net foreign exchange (gains)/losses
Research and development costs
Depreciation of property, plant and equipment
Amortisation of intangible assets
Staff costs (see note 10)
2022
£’000
728
(332)
310
706
2021
£’000
440
(174)
462
728
2022
£’000
156
2021
£’000
14
2022
£’000
(163)
2,165
57
37
6,689
2021
£’000
297
1,660
143
6
5,643
5 9
Cambridge Cognition | Annual Report & Accounts 2022 6 0
Cambridge Cognition | Annual Report & Accounts 2022 Notes to the Financial Statements
9. Auditor’s remuneration
The analysis of the auditor’s remuneration is as follows:
11. Interest receivable and finance costs
Interest receivable comprises:
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
Tax advisory services
Total non-audit fees
10. 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 27)
Share-based payments charge (see note 26)
2022
£’000
2021
£’000
Interest on bank deposits
Finance costs comprise:
Bank charges
Unwinding of discount on lease creditor
12. Taxation
Corporation tax:
Current year
Adjustments in respect of prior years
Deferred tax (see note 20)
Total tax credit
107
43
150
9
20
29
2022
£’000
55
12
13
80
2022
£’000
5,736
496
283
174
44
33
77
9
-
9
2021
£’000
42
9
9
60
20211
£’000
4,864
440
228
111
1
The amounts disclosed in relation to 2021 have been restated to include £543,000 of commissions paid to the sales team which had erroneously
been omitted from the disclosure of wages and salaries.
6,689
5,643
2022
£’000
9
2022
£’000
16
-
16
2022
£’000
(98)
(117)
(215)
-
(215)
2021
£’000
-
2021
£’000
-
11
11
2021
£’000
(2)
(195)
(197)
-
(197)
6 1
Cambridge Cognition | Annual Report & Accounts 2022 6 2
Cambridge Cognition | Annual Report & Accounts 2022 Notes to the Financial Statements
12. Taxation continued
Corporation tax is calculated at 19% (2021: 19%) of the estimated taxable loss for the year.
The tax credit for each year reconciles to the loss before tax as follows:
Profit/(loss) before tax on continuing operations
Tax at the UK corporation tax rate of 19%
(2021: 19%)
Difference in foreign tax rates
Expenses not deductible for tax purposes
Deduction on exercise of share options
Movement in unrecognised deferred tax on losses
Adjustment in respect of prior years
Foreign tax (credit)/charge
R&D tax credit – current year
Tax credit for the year
2022
£’000
(624)
(118)
(3)
26
(7)
102
(117)
2
(100)
(215)
2021
£’000
253
48
17
26
(48)
(43)
(195)
(2)
-
(197)
The adjustment in respect of prior years relates to the receipt of R&D tax credits in respect of 2021 (2021:
in respect of 2020). No claim has yet been made for 2022, however the company is able to estimate the
expected amount that will be received for the year.
From 1 April 2023 the UK corporation tax rate will increase from 19% to 25%. Deferred tax assets and liabilities were
calculated at the substantively enacted corporation tax rates, taking into account any known future changes.
13. 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)/profit attributable to owners of the Company
Number of shares
Weighted average number of ordinary shares for the purposes of
basic EPS
Weighted average number of ordinary shares for the purposes of
diluted EPS
2022
£’000
(409)
2022
£’000
31,170
31,170
2021
£’000
450
2021
£’000
31,170
31,519
The diluted loss per share is considered to be the same as the basic loss per share. Potential dilutive shares
are not treated as dilutive where they would result in a loss per share.
14. Business combinations
eClinicalHealth Limited
On 25 October 2022, the Company acquired the entire share capital of eClinicalHealth Limited (“eCH”) , a UK
based provider of Decentralised Clinical Trials software, for a total amount payable of £nil. The fair value of
identifiable assets and liabilities acquired, purchase consideration and goodwill of eCH are as follows:
Property, plant and equipment
Intangible assets – technology based assets
Other current assets
Cash and cash equivalents
Deferred tax assets on losses
Trade and other payables
Other current liabilities
Deferred tax liabilities on intangible assets
Loans
Net liabilities assumed
Total purchase consideration
Goodwill
£’000
5
955
234
-
239
(740)
(451)
(239)
(133)
(130)
-
130
The Company considers that the total amount payable for the acquisition of eCH to be up to £1.7 million,
comprising assumed liabilities of £1.3 million and up to an additional £0.4 million of deferred amounts
payable, contingent on performance targets and continued service of key individuals that will be
recognised over the period from acquisition to December 2023. Deferred amounts that may be payable will
be settled in shares of Cambridge Cognition Holdings plc.
Since the acquisition date, eCH contributed £39,000 to the Group’s revenue and £0.1 million of loss for the
year ended 31 December 2022. Had the acquisition occurred on 1 January 2022 eCH would have contributed
£931,000 to the Group’s revenue and £82,000 to the loss for the year ended 31 December 2022.
Goodwill includes the estimated value attributable to the assembled workforce.
Winterlight Labs Inc
Subsequent to the year end, on 10 January 2023, the Company acquired the entire share capital of
Winterlight Labs Inc (“Winterlight”) a Toronto, Canada based company developing speech-based digital
biomarkers for the assessing cognitive function. The total amount payable was £7.0 million, comprising
£3.0 million in cash and £4.0 million in shares of Cambridge Cognition.
6 3
Cambridge Cognition | Annual Report & Accounts 2022
Cambridge Cognition | Annual Report & Accounts 2022 6 4
Notes to the Financial Statements
14. Business combinations continued
The preliminary fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill
of Winterlight are as follows:
Property, plant and equipment
Intangible assets – technology based assets
Intangible assets – trade name
Intangible assets – customer relationships and backlog
Trade and other receivables
Other current assets
Cash and cash equivalents
Deferred tax assets on losses
Trade and other payables
Deferred tax liabilities on intangible assets
Other current liabilities
Net assets acquired
Total purchase consideration
Goodwill
£’000
18
3,055
520
370
233
37
-
1,065
(182)
(1,065)
(281)
3,770
7,002
3,232
Goodwill includes the estimated value attributable to the assembled workforce.
15. Intangible assets
Technology
Goodwill
based assets
Licences
£’000
£’000
£’000
Total
£’000
352
-
-
-
352
352
130
482
-
-
-
482
-
-
-
-
-
-
955
955
-
32
32
923
40
13
6
19
21
40
-
40
19
5
24
16
392
13
6
19
373
392
1,085
1,477
19
37
56
1,421
Cost
At 1 January 2021 and 31 December 2021
Amortisation
At 1 January 2021
Charge for the year
At 31 December 2021
Net Book Value at 31 December 2021
Cost
At 1 January 2022
Acquisitions in the year
At 31 December 2022
Amortisation
At 1 January 2022
Charge for the year
At 31 December 2022
Net Book Value at 31 December 2022
6 5
Goodwill represents the excess of consideration over the fair value of the Group’s share of the net
identifiable assets of the acquired subsidiary at the date of the acquisition and is allocated to Cash
Generating Units (“CGUs”) for impairment testing. The goodwill balance is allocated to the following CGUs:
Cambridge Cognition
eClinicalHealth
2022
£’000
352
130
482
2021
£’000
352
-
352
The recoverable value of the goodwill and other assets are assessed on a value in use basis considering
the three-year future forecasts. These 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 10.0%.
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 carrying out its assessment of goodwill,
management believes that no impairment is required and no reasonably possible changes in assumptions
would lead to an impairment.
Cambridge Cognition | Annual Report & Accounts 2022 6 6
Cambridge Cognition | Annual Report & Accounts 2022 Notes to the Financial Statements
16. Property, plant and equipment
Cost
At 1 January 2021
Additions
At 31 December 2021
Depreciation
At 1 January 2021
Charge for the year
At 31 December 2021
Net Book Value at 31 December 2021
Cost
At 1 January 2022
Additions
Acquired through business combination
Disposals
At 31 December 2022
Depreciation
At 1 January 2022
Charge for the year
Disposals
At 31 December 2022
Net Book Value at 31 December 2022
Leased
Leasehold
Fixtures and
buildings
improvements
£’000
£’000
fittings
£’000
Total
£’000
126
24
150
32
118
150
-
150
-
-
-
150
150
-
-
150
-
39
-
39
38
1
39
-
39
10
4
(3)
50
39
3
(3)
39
11
628
32
660
585
24
609
52
660
179
1
(359)
481
609
54
(359)
304
177
793
56
849
655
143
798
52
849
189
5
(362)
681
798
57
(362)
493
188
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, Cambridge Cognition South Africa
Pty Ltd and eClinicalHealth Limited, are held via Cambridge Cognition Limited. All UK entities except
eClinicalHealth Limited have their Registered Office at the Company’s registered office. The Registered
Office of eClinicalHealth Limited is 48 St. Vincent Street, Glasgow, Scotland, G2 5HS. The Registered Office
of Cambridge Cognition LLC is 510 S. 200 W. Suite 200, Salt Lake City, UT 84101, USA. The Registered Office of
Cambridge Cognition South Africa Pty Ltd is Lower Ground Suite Building 9, Somerset Office Park 5, Libertas
Road, Bryanston, Gauteng, 2021, South Africa.
All holdings are in ordinary shares.
Details of the Company’s other investments include:
l Monument Therapeutics Limited
28.88%
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. The Company performed a review of the fair
value of the investment at 31 December 2022 and concluded that no change in the value was required.
18. Inventories
Finished goods and goods for resale
2022
£’000
216
2021
£’000
126
During the year inventories with a total value of £274,000 (2021: £251,000) were included in the Consolidated
Statement of Comprehensive Income as an expense.
17. Subsidiaries, joint ventures and other investments
Details of the Group’s subsidiaries and joint ventures at 31 December 2022 are as follows:
19.Trade and other receivables
Name
Place of
incorporation
Proportion
Proportion
(or registration)
of ownership
of voting
and operation
interest %
power held %
Cambridge Cognition Limited
Cambridge Cognition Trustees Limited
United Kingdom
United Kingdom
Cambridge Cognition LLC
Delaware, United States of America
Cantab Corporate Health Limited
Cognition Kit Limited
Cambridge Cognition South Africa Pty Ltd
eClinicalHealth Limited
United Kingdom
United Kingdom
South Africa
United Kingdom
100%
100%
100%
100%
50%
100%
100%
100%
100%
100%
100%
50%
100%
100%
Trade receivables from contracts with customers
Accrued income from contracts with customers
Prepayments
Deferred commissions
Other receivables
2022
£’000
2,073
206
1,132
706
563
4,680
2021
£’000
2,047
401
1,592
728
167
4,935
6 7
Cambridge Cognition | Annual Report & Accounts 2022 6 8
Cambridge Cognition | Annual Report & Accounts 2022
Notes to the Financial Statements
19. Trade and other receivables continued
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
2022
£’000
126
52
14
175
367
2021
£’000
652
299
4
79
1,034
At the reporting date, the Group has unused tax losses of £13.1 million (2021: £12.8 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 unrecognised deferred tax asset amounts to
approximately £3.3 million (2021: £2.5 million). Losses may be carried forward indefinitely. The unrecognised
deferred tax asset on share options amounts to £142,000 (2021: £50,000).
21. 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
2022
£’000
1,038
1,356
12,294
177
18
129
15,012
2021
£’000
755
2,181
8,816
112
18
26
11,908
There is a provision for a credit loss of £14,000 (2021: £13,000). This loss is against a specific project
costs. For all suppliers no interest is charged on the trade payables. Group policy is to ensure that payables
denominated in US Dollar from which recovery is not presently anticipated. In determining the recoverability
are paid within the pre-agreed credit terms and to avoid incurring penalties and/or interest on late
of a trade receivable, the Group will also consider any change in the credit quality of the trade receivable
payments. The Directors consider that the carrying amount of trade payables approximates their fair value.
from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited
Deferred income on contracts with customers has increased during the year due to the volume of sales
due to the customer base being large and unrelated. Management considers that all the above financial
orders received, and the amount of orders for which payments have been received ahead of revenue
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing
assets that are not impaired or past due are of good credit quality. Under IFRS 9, we consider the expected
recognition.
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
22. Share capital
this year.
Debts of £nil were written off during the year (2021: £10,000). A provision for credit loss of £nil was charged to
the income statement (2021: £115).
20. Deferred tax
Deferred tax assets comprise of temporary differences attributable to:
Deferred tax asset recognised on business combination
Total deferred tax assets
Deferred tax liability for intangible assets
Total deferred tax liabilities
Net deferred tax asset/(liability)
2022
£’000
2021
£’000
239
239
239
239
-
-
-
-
-
-
Issued and fully paid
31,170,093 (2021: 31,170,093) Ordinary Shares of £0.01 each
312
312
2022
£’000
2021
£’000
All ordinary shares carry equal voting and distribution rights. There are no other classes of shares.
23. Own shares reserve and other reserve
Own shares reserve
2022
£’000
71
2021
£’000
78
6 9
Cambridge Cognition | Annual Report & Accounts 2022 7 0
Cambridge Cognition | Annual Report & Accounts 2022 Notes to the Financial Statements
23. Own shares reserve and other reserve continued
Reconciliation of liabilities arising from financing activities
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
Net Debt as 1 January
UK Employee Benefit Trust at 31 December 2022 was 36,765 (2021: 36,765). The number of shares held by the
Debt acquired in business combination
Jersey-based Employee Benefit Trust at 31 December 2022 was 38,150 (2021: 45,000).
During the year employees exercised 6,850 (2021: 30,950) share options at an exercise price of £0.01 each
which were satisfied by the Jersey-based Employee Benefit Trust.
Financing cash flows
Net Debt as at 31 December
Other reserves includes a merger reserve and cumulative translation adjustments:
Cash and cash equivalents
2022
£’000
-
133
(133)
-
2022
£’000
8,322
2021
£’000
-
-
-
-
2021
£’000
6,810
Cash and bank balances
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.
25. 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 16, 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
2022
£’000
18
-
-
-
18
All remaining lease payments are due within one year. Included within the liability above is an amount of
£18,000 for restoration of the property at the end of the lease.
Other reserve – merger reserve
Other reserve – cumulative translation adjustment
Total other reserve
2022
£’000
5,981
(158)
5,823
2021
£’000
5,981
144
6,125
The Other reserve in the consolidated statement of changes in equity includes £5,981,000 which arose when
the Company became the new Group holding company in April 2013.
24. Notes to the cash flow statement
(Loss) / profit before tax
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Share-based payment expense
Finance costs
Acquisition related expenses deferred amounts
Interest receivable
Operating cash flows before movements in working capital
Increase in inventories
Decrease/(increase) in receivables
Increase in payables
Cash generated by operations
Tax credit received less tax paid
Net cash from operating activities
2022
£’000
(624)
57
37
174
-
6
(9)
(359)
(88)
1,012
912
1,477
191
1,668
2021
£’000
253
142
6
111
11
-
-
523
(75)
(2,285)
5,782
3,945
-
3,945
7 1
Cambridge Cognition | Annual Report & Accounts 2022 7 2
Cambridge Cognition | Annual Report & Accounts 2022 Notes to the Financial Statements
26. 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:
2022
2021
Weighted
average
Weighted
average
Number of
exercise price
Number of
exercise price
share options
(in £)
share options
(in £)
2,527,090
(6,850)
822,703
(89,917)
3,253,026
977,620
0.35
0.16
0.01
0.61
0.39
0.37
2,287,636
(38,259)
494,000
(216,287)
2,527,090
396,959
0.35
0.01
1.24
0.45
0.52
0.59
Outstanding at beginning of year
Exercised during the year
Granted during the year
Forfeited during the year
Outstanding at the end of the year
Exercisable at the end of the year
The options outstanding at 31 December 2022 had a weighted average remaining contractual life of 4.3 years
(2021: 3.6 years). The exercise prices of share options outstanding at the period end was as follows:
2022
2021
Weighted
average
Weighted
average
Number of
exercise price
Number of
exercise price
share options
(in £)
share options
(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
962,279
1,417,857
389,958
482,932
3,253,026
0.01
0.28
0.63
1.29
0.39
160,843
1,427,857
455,458
482,932
2,527,090
0.01
0.28
0.66
1.29
0.52
Options were granted on 25 July 2022. 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
July is £690,000. 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
2022
£’000
128.5p
1p
74%
3 years
1.76%
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 £174,000 (2021: £111,000) in relation to equity-settled share-based
payment transactions.
27. 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 £283,000 (2021: £228,000) represents contributions payable to these
schemes by the Group at agreed rates. As at 31 December 2022, contributions of £45,000 (2021: £25,000) due
in respect of the current reporting year had not been paid over to the schemes.
28. Financial instruments
Capital risk management
The Group manages its capital to ensure the Group it 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 2022 (2021: £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
2022
£’000
8,322
95
2021
£’000
6,810
632
7 3
Cambridge Cognition | Annual Report & Accounts 2022 7 4
Cambridge Cognition | Annual Report & Accounts 2022 Notes to the Financial Statements
28. Financial instruments continued
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 fair value
Investments
Financial assets classified at amortised cost
Cash and bank balances
Trade and other receivables
Accrued income on contracts with customers
Financial liabilities at amortised cost
Trade and other payables
Deferred income on contracts with customers
2022
£’000
49
8,322
2,540
206
2,718
12,294
2022
£’000
49
6,810
2,388
401
3,092
8,816
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
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 exposure to foreign currency exchange rates, primarily US Dollar, through its operating
activities as well as having an investment in a US subsidiary. The Group continues to monitor its exposure to
foreign currency risk but did not use any financial derivatives in 2022 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
South African Rand
Liabilities
Assets
2022
£’000
313
28
-
1
2021
£’000
119
138
-
-
2022
£’000
1,876
116
62
-
2021
£’000
2,952
599
45
-
A movement in the £/$ exchange rate of +/- 5% from 31 December 2022 to the date of realising the US dollar
net asset position would result in a gain/loss of £78,000 (2021: £142,000). Similarly with the Euro, the gain/
loss would be £4,000 (2021: £23,000). With the Qatari Riyal, the gain/loss would be £2,000 (2021: £2,000). There
would be no gain/loss on a similar movement in South African Rand.
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
Credit risk management
financial projection as well as information regarding cash balances on a monthly basis, which includes
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial
projections of at least a further 12 months.
At 31 December 2022, the Group’s financial liabilities had contractual maturities which are summarised
below:
Trade payables
Other payables
Lease liability
7 5
2022
£’000
Within 1 year
2021
£’000
Within 1 year
1,038
1,662
18
2,718
755
2,319
18
3,092
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.
Cambridge Cognition | Annual Report & Accounts 2022 7 6
Cambridge Cognition | Annual Report & Accounts 2022 Parent Company Statement of
Financial Position
Notes to the Financial Statements
28. Financial instruments continued
The carrying amount recorded for financial assets in the Consolidated 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
Consolidated Statement of Financial Position approximate their fair values.
29. 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 £nil (2021: £21,000) 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 (2021: £nil) was owed to the Group by Cognition Kit Limited.
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
Further, the Group was invoiced £144,000 with respect to Cognition Kit Limited in the year (2021: £253,000) –
Trade and other payables
this has been recognised as cost of sales. The Group has also accrued costs in respect of licence fees and
other services payable to Cognition Kit Limited of £nil (2021: £25,000) – this has been included in accruals.
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 2022 consist of the Directors and five additional senior staff (2021: the Directors and five
additional senior staff).
Total liabilities
Equity
Share capital
Share premium
Retained earnings
Total equity
Total liabilities and equity
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
2022
£’000
1,265
79
-
58
1,402
2021
£’000
1,402
55
30
57
1,544
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.
30. Subsequent events
Subsequent to the year end, the Company acquired Winterlight Labs Inc for a total amount payable of
£7.0 million (see note 14).
7 7
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 £169,000 (2021: loss
£208,000).
The financial statements of Cambridge Cognition Holdings plc on pages 78 to 82 were approved and
authorised for issue by the Board on 2 May 2023 and were signed on its behalf by:
Stephen Symonds
Chief Financial Officer
Company number: 08211361
Cambridge Cognition | Annual Report & Accounts 2022 7 8
Notes
2
3
4
5
At 31 December
At 31 December
2022
£’000
978
978
3,969
4,931
8,900
9,878
461
461
312
11,151
(2,046)
9,417
9,878
2021
£’000
555
555
3,997
5,224
9,221
9,776
443
443
312
11,151
(2,130)
9,333
9,776
Cambridge Cognition | Annual Report & Accounts 2022 Parent Company Statement of
Changes in Equity
Notes to the Parent Company
Financial Statements
Share
capital
£’000
Share
premium
£’000
Retained
earnings
£’000
Balance at 1 January 2021
312
11,151
Loss for the year
Credit to equity of equity-settled share-
based payments
Transactions with owners
Balance at 1 January 2022
Loss for the year
Credit to equity of equity-settled share-
based payments
Transactions with owners
-
-
-
-
-
-
312
11,151
-
-
-
-
-
-
(1,953)
(208)
31
31
(2,130)
(169)
253
253
Balance at 31 December 2022
312
11,151
(2,046)
Total
£’000
9,510
(208)
31
31
9,333
(169)
253
253
9,417
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:
l Disclosure exemption allowing no cash flow statement or related notes to be presented
l Disclosure exemption allowing the Company not to disclose related party transactions when
transactions are entered into wholly within the Group
l Disclosure exemption around Key Management Personnel compensation (though see note 29 of the
Group accounts and the Directors’ Remuneration Report)
l Capital management disclosures (though see note 28 of the Group accounts)
l Disclosure exemption on the effect of future accounting standards
l Disclosure exemption on share-based payment information disclosures (IFRS 2), as this information has
been presented for the Group in note 26 of the consolidated financial statements
l Disclosure exemption on financial instrument disclosures (IFRS 7) as this information has been presented
for the Group in note 28 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 financial position.
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 2022 was strong.
The Group has a base case forecast for the period at least 12 months from the date of these financial statements
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.
7 9
Cambridge Cognition | Annual Report & Accounts 2022 8 0
Cambridge Cognition | Annual Report & Accounts 2022 Notes to the Parent Company Financial Statements
1. Significant accounting policies continued
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.
Other Group subsidiaries, all of which are owned indirectly through Cambridge Cognition Limited, are
detailed in note 17 of the Group accounts. All subsidiaries have been included in the consolidated accounts.
3. Trade and other receivables
2022
£’000
3,670
299
3,969
2021
£’000
3,990
7
3,997
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.
Amounts due from subsidiary undertaking
Other receivables
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.
2. Investments
Cost and net book value
At 1 January 2022
Additions in the year
At 31 December 2022
Investment
£’000
555
423
978
During the year the company acquired of the entire share capital of eClinicalhealth Limited, a virtual clinical
trial solution provider. The cost of investment includes deferred consideration at 31 December 2022 payable
based on the achievement of targets and the retention of key personnel in 2023 and acquisition related
expenses. Additions in the year also includes share-based payment charges of £186,000 related to employees
of subsidiary companies.
During the year the company formed a wholly owned subsidiary, Cambridge Cognition South Africa Pty Limited.
The nature of the business is software development. The investments at the end of the year were as follows:
Name
Proportion of
Ownership
Country of
and Voting
Operation
Power Held
Nature of
Business
Development and
Of the amounts due from subsidiary undertakings, £3.7m (2021: £4.0m) 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 2022, 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
2022
£’000
5
26
430
461
2021
£’000
83
20
340
443
5. Share capital
The details on the share capital of the Company are provided at note 22 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. The total
amount of remuneration paid to the Directors, including share-based payments is £891,000 (2021: £609,000).
7. Subsequent events
Subsequent to the year end, the Company acquired Winterlight Labs Inc for a total amount payable of £7.0
Cambridge Cognition Limited
United Kingdom
100%
sale of computerised
million, as detailed in note 14 of the Group accounts.
Monument Therapeutics Limited
United Kingdom
28.88%
Digital phenotyping
Cambridge Cognition South Africa Pty Limited
South Africa
100%
Software development
eClinicalHealth Limited
United Kingdom
100%
Virtual clinical trial solution
provider
neuropsychological tests
8 1
Cambridge Cognition | Annual Report & Accounts 2022 8 2
Cambridge Cognition | Annual Report & Accounts 2022 cambridgecognition.com